Answer:
$0.6 per unit
Explanation:
The computation of the variable rate per unit of output is shown below:
But before that first we have to determine the variable cost which is
= Total utilities cost - fixed cost
= $2,600 - $2,000
= $600
And the number of units produced is 1,000 units
So, the variable rate per unit of output for utilities cost is
= $600 ÷ 1,000 units
= $0.6 per unit
Answer: 16%
Explanation:
Interest rate on long term treasury securities is calculated below using following formula:
Interest rate = Real risk-free rate + inflation premium + default risk premium + liquidity premium + maturity risk premium
= 3% + 8% + 2% + 2% + 1%
= 16%
Interest rate on long term treasury securities is 16%.
Answer:
$4,455
Explanation:
The computation of total decrease in earnings (pretax) in Morris Dec. 31, 2021, income statement is given below:-
Interest expense upto 31 Dec 2021 = (Total present value of lease payment - Lease payment on July 1, 2021) × 6% × 6 ÷ 12
= ($58,500 - $7,500) × 6% × 6 ÷ 12
= $51,000 × 6% × 6 ÷ 12
= $1,530
Depreciation expense upto 31 Dec 2021 = Fair value of equipment ÷ Useful life × 6 ÷ 12
= $58,500 ÷ 10 × 6 ÷ 12
= $5,850 × 6 ÷ 12
= $2,925
So, the total decrease in earnings (pretax) in Morris Dec. 31, 2021, income statement = Interest expense upto 31 Dec 2021 + Depreciation expense upto 31 Dec 2021
= $1,530 + $2,925
= $4,455
Answer:
C. Most businesses decide to modernize and expand their manufacturing capacity, and to install new equipments to reduce labor cost
Explanation:
Interest rate is the cost attached to borrowed money. It is also the return for the risk of lending.
Businesses borrow to make profit in the future. They also borrow to finance the purchase of equipments. The interest on these loan is what stimulate the economy which encourages people to borrow, lend and spend.
When businesses continue to expand their production capacity and also install new equipment, such will lead to an increase in interest rate in the economy because most industries often times raise credit to finance assets purchase. An increase in demand for money raises interest rate and vice versa.
Other causes of high interest rate in an economy are;
- Inflation, which is the consistent rise in the prices of goods and services as a result of too much money in circulation. The higher the rate of inflation, the higher the interest rate.
-Government, through central bank, issuing directives on the effect of monetary policy on interest rate. This is done through open market operation.
When there is lower interest rate in the economy, amount paid as interest by consumers will be less hence have money to spend. This will also affect business as they will be able to buy equipments and produce more with cheap funds.
