A widely acknowledged problem with using the consumer price index as a measure of the cost of living is that it fails to account for the introduction of new goods.
More about consumer price index and its problem-
- A more accurate indicator of a nation's standard of living than per capita GDP is the consumer price index or CPI.
- It is based on the total cost of a fixed basket of goods and services purchased by an average customer in comparison to the cost of the same basket in a base year.
- The CPI can get a precise assessment of the cost of living by including a wide range of thousands of items and services with the set basket.
- It's crucial to keep in mind that the CPI is an index number or a percentage change from the base year rather than a monetary value like the GDP.
- Because CPI is based on a fixed basket of products, the CPI does not provide an entirely accurate measure of the cost of living, despite being a convenient approach to calculate the cost of living and the relative price level over time.
- The bias against substitution, the introduction of new products, and quality variations are three issues with the CPI that should be mentioned.
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Answer: Whether the costs are variable or fixed and whether they are directly traceable to the responsibility center.
Explanation:
The Responsibility Income Statement is one where the different centers in a business have their own sub income statement so that the activities of each center and their profitability is measured and monitored.
In this statement, costs are classified as Variable and Fixed so it is important that it is known whether the costs are variable or fixed.
As the statements are per center, the costs in them would have to be only those that are directly traceable to that center so that a truer reflection of the statements can be seen.
Answer:
a. Mortgage fraud
b. Since Maria will not be able to make her payments, she will most likely default on her loan payments. When she defaults on her loan payments, the cost of credit rises. One can however, sue the lender for mortgage fraud. If found guilty in a court of law, they will be punished for fraud.
Explanation:
a.
Fraud in basic terms means a deliberate omission or misrepresentation of facts for the purpose of deceives others. Mortgage fraud there for means a deliberate misrepresentation or omission of facts by a lender to a borrower with malicious financial intent to the borrowers. Any form of mortgage fraud is a criminal offense that is punishable in a court of law, since it usually involves huge amounts of money. An example is the mortgage scam that occurred in Sacramento, Calif where seven people were convicted in a $10 million mortgage scam in early 2019. Most people who fall victim to mortgage scams are not financially literate and there for they easily agree to the loan agreement without necessarily reading and understanding the loan agreement.
Financial literacy can be defined as a proficiency in financial principles like; financial planning, debt management and financial investments with the aim of being financially stable. Financial illiteracy can be defined as lacking financial principles and skills to make sound financial decisions.
In our case, Maria being financially illiterate fell victim to mortgage fraud since she signed a loan agreement that she did not quite understand. The lenders also committed a fraud since they knew that Maria did not understand the agreement but they did not educate her properly to ensure that she knew exactly what she was signing up for. This was a clear act of misrepresentation with the aim of fraud.
b.
Since Maria will not be able to make her payments, she will most likely default on her loan payments. When she defaults on her loan payments, the cost of credit rises. One can however, sue the lender for mortgage fraud. If found guilty in a court of law, they will be punished for fraud.
Answer:
a. 80,000 units
b. 95,000 units
Explanation:
The computation is shown below:
a.The anticipated break-even sales (units) is
As we know that
Break even point in units = Total fixed cost ÷ Contribution margin per unit
= $27,600,000 ÷ $345
= 80,000 units
Where,
Contribution margin per unit = Selling price per unit - Variable cost per unit
= $1,150 - $805
= $345
b. The units for realize operating income is
Unit sales for target profit = (Fixed expense + Target profit) ÷ Contribution margin per unit
= ($27,600,000 + $5,175,000) ÷ $345
= $32,775,000 ÷ $345
= 95,000 units
Answer:
3. No, due to unilateral mistake
Explanation:
Lacey and Cagney both had agreed to wok for 30 hours per week and the agreement is in written format since it is enforceable. Both of them are sharing 50% profits so both will have to share the duties equally. When Lacey makes an excuse and is working for 20 hours per week only Cagney can sues her and she is in a probability to win against her. Lacey should have informed Cagney about the vacation from school scenario before signing the contract.
