Malander Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant
-day. During November, the kennel budgeted for 3,400 tenant-days, but its actual level of activity was 3,390 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for November: Data used in budgeting:
Fixed element per month Variable element per
tenant-day
Revenue - $ 28.00
Wages and salaries $ 2,700 $ 5.40
Food and supplies 500 10.20
Facility expenses 9,600 3.30
Administrative expenses 6,600 0.20
Total expenses $ 19,400 $ 19.10
Actual results for November:
Revenue $ 90,470
Wages and salaries $ 20,606
Food and supplies $ 35,838
Facility expenses $ 20,857
Administrative
expenses $ 7,518
The revenue variance for November would be closest
The short term investments earns from the favorable increases in the securities whereas the long term investments earns from the favorable increase in the stock price and the dividends earned for the year. So the risk for short term investment would be price risk which is that the price would not be favorable at the time when the firm will sell the securities whereas long term holders will bear more reinvestment risk which is that the firm will not find an equal opportunity if the project stops which will adversely affect the long term investors.
<u>Fiscal policy involves changing government spending and taxation. It involves a shift in the governments budget position. e.g. Expansionary fiscal policy involves tax cuts, higher government spending and a bigger budget deficit. Government spending is a component of AD.</u>
<u>Monetary policy involves influencing the demand and supply of money, primarily through the use of interest rates.</u>
<u>Monetary policy can also involve unorthodox policies such as open market operations and quantitative easing.</u>
<u>Monetary policy is usually carried out by an independent Central Bank^</u>