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3 years ago

The Rock Company produces basketballs. It incurred the following costs during the year.

Business

1 answer:

AVprozaik [17]3 years ago

6 0

Answer:

Total cost under absorption costing= $81,400

Explanation:

The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.

Direct materials $14,400

Direct labor $25,600

Fixed manufacturing overhead $12,000

Variable manufacturing overhead $29,400

Total cost under absorption costing= $81,400

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Suppose that the six-month interest rate in the United States is 2%, while the six-month interest rate in Britain is 4%. Further

omeli [17]

After depositing these funds for 6 months, and earning a return of 4%, your deposit grows to 416,000pounds.

When you convert your 416,000pounds back to dollars, you end up with approximately $520,000, for a profit of about $20,000 over your original $500,000.

However, had you simply deposited your $500,000 in an account and accrued 2% interest, you would have $510,000 ($500,000 x 1.02), for a profit of $10,000.

This example illustrates that covered interest arbitrage does offer a significantly larger return than simply depositing the funds in a domestic account under internet rate parity.

<h3>What is the covered interest rate arbitrage?</h3>

The covered interest rate arbitrage is a trading strategy that enables an investor to:

Use favorable interest rate differentials.
Invest in a higher-yielding currency.
Hedge the exchange risk through a forward currency contract.

<h3>Data and Calculations:</h3>

Funds for covered interest arbitrage = $500,000

Forward rate = $1.22596

Six-month interest rate in the United States = 2%

Six-month interest rate in Britain = 4%

Spot rate = $1.25

Value of $500,000 in pounds = $400,000 ($500,000/$1.25)

Expected returns on deposit for 6 months = 4%

New value of $500,000 in pounds after 6 months = $416,000 ($400,000 x 1.04)

Dollar value of 416,000 pounds = $520,000 ($416,000 x $1.25)

The gain or profit from the original $500,000 funds = $20,000 ($520,000 - $500,000)

Thus, the example illustrates that covered interest arbitrage does offer a significantly larger return than simply depositing the funds in a domestic account under internet rate parity.

Learn more about covered interest arbitrage at brainly.com/question/14699039

4 0

2 years ago

Suppose Carla has $7000 to invest. Which investment yields the greater return over 4 years: 7% compounded quarterly or 6.85% com

o-na [289]

Answer:

The option with the quarterly compounding provides a higher future value.

Explanation:

Giving the following information:

Initial investment= $7,000

Number of years= 4 years

To calculate the future value, we need to use the following formula:

FV= PV*(1+i)^n

Quarterly compounding:

Interest rate (i)= 0.07/4= 0.0175

n= 4*4= 16

FV= 7,000*(1.0175^16)

FV= $9,239.51

Monthly compounding:

i= 0.0685/12= 0.00571

n= 4*12= 48

FV= 7,000*(1.00571^48)

FV= $9,200.07

The option with the quarterly compounding provides a higher future value.

6 0

3 years ago

Which statement is not true about life insurance companies? A. They sell contracts that offer financial protection against prema

Readme [11.4K]

Answer:

The statement which is not true about life insurance companies is:

B. They invest heavily in short-term highly marketable securities.

Explanation:

The option A is true about the life insurance companies as they sell contracts that offer financial protection against premature death and against living too long as this the main purpose of a life insurance policy.
These companies don't invest heavily in short-term highly marketable securities so the option B is not true about these companies.
The option C is true about the insurance companies as they have prediction about their inflows and outflows.
The option D is also correct as their liabilities are long-term in nature as the insurance policy is a long term policy.

7 0

4 years ago

To minimize the temptation for managers to act in their own self-interest, governance mechanisms exist for implementation consid

soldier1979 [14.2K]

Answer:

A board of directors that act in the best interests of the shareholders to create long term value.

Explanation:

Sarbane oxley acts is a law law that was created to protect the interest of every shareholder . One of its requirement is a good composition of the board of directors considering their skills and independent requirement. It also emphasize the need for strong compliance with ethical standard in the interest of the shareholders.

Therefore , one of the key responsibilities of the board of directors is to act in the best interests of shareholders to create long term values. By so doing , managerial behavior will be monitored for compliance to ethical standard

3 0

3 years ago

When a full set of general purpose financial statements is presented, comprehensive income and its components A. Appear as part

DochEvi [55]

Answer:

D) Must be reported in a presentation that includes the components of other comprehensive income and their total.

Explanation:

Comprehensive income (net income plus other comprehensive income) must be reported in a presentation that includes the components of other comprehensive income and their total.

4 0

3 years ago