Eric works at an electronics store in a mall. Eric doesn't like to work hard, and it costs him $100 to do so. Eric's employer cannot observe whether Eric works hard. If Eric works hard, there is a 90% probability that electronics goods profits will equal $400 a day and a 10% probability that electronics goods profits will equal $100 a day. If Eric shirks, there is a 90% probability that electronics goods profits will equal $100 a day and a 10% probability that electronics goods profits will equal $400 a day. Suppose Eric is paid $200 if electronics goods profits are $400 a day and $50 if electronics goods profits are $100 a day. Eric will _____ because the net gain of _____ from shirking is _____ than the net gain of _____ from working hard.


Answer 1

Answer: work hard; $65; less; $85


The following can be deduced from the question:

The Expected profit from working hard will be:

= (90% × $200) + (10% × $50)

= (0.9 × $200) + (0.1 × $50)

= $180 + $5

= $185

Then, the profit will be the difference between revenue and coat which will be:

= $185 - $100

= $85

Then, the expected profit from shirking will be:

= (90% × $50) + (10% × $200)

= (0.90 × $50) + (0.10 × $200)

= $45 + $20

= $65

Then, the profit will be:

= $65 - $0

= $65

Eric will (work hard) because the net gain of ($65) from shirking is (less) than the net gain of ($85) from working hard.

Related Questions

Item 1 Lawrin is a real-estate salesperson whose compensation is commission-only. She earns a 3% commission on the sale price of each house that she sells and receives 1.5% commissions at the end of each month (the broker retains the rest per the employment agreement). During the month of July, Lawrin sold two houses totaling $445,260. What is her gross pay for the month of July



Gross pay= $13,357.8


Giving the following information:

Gross commission= 3%

Sales= $445,260

The gross pay is the amount earned before tax and other deductions. We need to use the following formula:

Gross pay= commission rate*sales

Gross pay= 0.03*445,260

Gross pay= $13,357.8

Your Competitive Intelligence team is predicting that the Chester Company will invest in adding capacity to their Cent product this year. Assume Chester's product Cent invests in increasing its capacity by 10% this year. Because of this new information, your company anticipates all other products in the Core segment will increase their capacity by the same amount. How much can the industry produce in the Core segment the next year


Question Completion:

Product    Segment    Capacity Next Round

Attic          Core           1,130

Axe          Core          1,200

City          Core          1,300

Cent  Core          1,550

Dome  Core           1,145

Dug          Core          1,023


Competitive Intelligence Team

The industry can produce 8,083 units in the Core segment next year.


a)Data and Calculations:

Product    Segment    Capacity      Increasing  New Capacity

                   Next Round     by 10%         next year

Attic          Core           1,130           113               1,243

Axe          Core          1,200         120         1,320

City          Core          1,300    130         1,430

Cent  Core          1,550    155         1,705

Dome  Core           1,145     115        1,260

Dug          Core          1,023    102         1,125

Total industry capacity   7,348        735              8,083

b) A Competitive Intelligence is an analysis for decision-makers that uncovers competitive gaps, products, and services.  It uses information about a firm's industry, business environment, and competitors' strategies to develop strategic initiatives and identify opportunities and threats facing the firm in the marketplace.

A company is considering issuing long-term debt. The debt would have a thirty-year maturity and a ten percent coupon rate. In order to sell the issue, the bonds must be underpriced at a discount of five percent of face value. In addition, the company would have to pay flotation costs of five percent of face value. The firm's tax rate is 21 percent. Given this information, the annualized after-tax cost of debt for the company would be ________.



Find detailed explanations below


First and foremost, the issue price of the bond is the face value minus adjustments for discount and flotation costs

issue price=$1000*(1-5%-5%)

issue price=$900

semiannual coupon=face value*coupon rate/2

semiannual coupon=$1000*10%/2

semiannual coupon=$50

number of semiannual coupons in 30 years=30*2=60

Using a financial calculator, pretax cost of debt is computed thus:

N=60(number of semiannual coupons)

PMT=50(semiannual coupon)


FV=1000(face value)


I/Y=5.58%(semiannual yield)

annual yield=5.58%*2=11.16%

after-tax cost of debt=annual yield*(1-tax rate)

tax rate=21%

after-tax cost of debt=11.16%*(1-21%)

after-tax cost of debt=8.82%

Alternative approach

Yield to Maturity [YTM] = Coupon Amount + [(Par Value – Bond Price) / Maturity Years] / [(Par Value + Bond Price)/2]

semiannual YTM=50+(1000-900)/30/(1000+900)/2

semiannual YTM=(50+3.33)/950

semiannual YTM=5.61%

annual YTM=5.61%*2=11.22%

after-tax cost of debt=11.22%*(1-21%)

after-tax cost of debt=8.86%

Tamarisk, Inc. is authorized to issue 2,250,000 shares of $1 par value common stock. During 2020, the company has the following stock transactions.
Jan. 15 Issued 880,000 shares of stock at $7 per share.
Sept. 5 Purchased 28,000 shares of common stock for the treasury at $8 per share.
Dec. 6 Declared a $0.50 per share dividend to stockholders of record on December 20, payable January 3, 2021.
Journalize the transactions for Tamarisk, Inc.



Date        Account Titles and Explanation     Debit$       Credit$

Jan.15      Cash (880,000*$7)                        6,160,000

                       Common Stock , $1 Par value        880,000

                       Paid in capital in excess of par value         5,280,000

Sept.5      Treasury Stock                               224,000

                        Cash (28,000*8)                                          224,000

Dec.6       Retained earnings                          440,000

                        Cash Dividend Payable                               440,000


Abell and Creek, LLC has prepared the following flexible budget figures for the current period and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance. Flexible Budget Price Variance Efficiency Variance Product A311 (total costs) $58,000 $1,500 F $3,000 U Product A325 (total costs) $42,000 $1,750 U $1,500 F Direct manufacturing labor only $71,000 $2,000 U $2,500 F Calculate the actual amount spent for Product A325 during the current period:



Abell and Creek, LLC

The actual amount spent for Product A325 during the current period is:

= $42,250.


a) Data and Calculations:

                                                      Flexible       Price      Efficiency

                                                       Budget   Variance    Variance

Product A311 (total costs)            $58,000    $1,500 F    $3,000 U

Product A325 (total costs)          $42,000    $1,750 U     $1,500 F

Direct manufacturing labor only $71,000   $2,000 U    $2,500 F

Actual amount spent for Product A325:

Flexible budget $42,000

Price variance         1,750 U

Efficiency variance 1,500 F

Actual  =            $42,250

Orin creates an irrevocable living trust to pass his 1/3rd of his assets, including stock in Petro Oil Company and other business investments, to his heirs. One advantage of this arrangement is that A. the trust earnings become public. B. the assets are doubled. C. Orin avoids having to pay death taxes on these assets. D. the assets can be transferred without going through probate.



C. Except it isn't Orin that will avoid the taxes, but his heirs.


Haley is expanding her tax preparation business and wants to reorganize it. She wants to better protect her personal assets from any liabilities associated with the business, and she wants to pay a lower tax rate on her business income. She also believes her business will benefit from oversight from a board of directors. Which form of business structure would clearly meet Haley's needs


Answer: Corporation


The form of business structure that would clearly meet Haley's needs is the corporation.

A corporation will give her limited liability therefore, her personal assets will be protected from any liabilities that's associated with the business.

Also, the tax rates for corporations are lower and also the business will benefit from oversight from a board of directors.

Baskin Promotions, Incorporated sells T-shirts decorated for a variety of concert performers. The company has developed the following budget for the coming year based on a sales forecast of 77,000 T-shirts: Sales $ 1,345,190 Cost of Goods Sold 786,940 Gross Profit 558,250 Operating Expenses ($100,000 is fixed) 406,460 Operating Income 151,790 Income Taxes (30% of operating income) 45,537 Net Income $ 106,253 Cost of goods sold and variable operating expenses vary directly with sales, and the income tax rate is 30% at all levels of operating income. If the concert season is slow due to poor weather, Baskin estimates that sales could fall to as low as 57,000 T-shirts. What unit cost did Baskin use in budgeting the cost of goods sold for the year





The computation of the unit cost used in budgeting the cost of goods sold for the year is shown below;

= Cost of goods sold ÷ number of t-shirts

= $786,940 ÷ 77,000 shirts

= $10.22

By dividing the number of t-shirts from the cost of goods sold we can get the cost of goods sold per unit

hence, the answer is $10.22

Vaughn Manufacturing had the following transactions during 2022:

1. Issued $272500 of par value common stock for cash.
2. Recorded and paid wages expense of $130800.
3. Acquired land by issuing common stock of par value $109000.
4. Declared and paid a cash dividend of $21800.
5. Sold a long-term investment (cost $6540) for cash of $6540.
6. Recorded cash sales of $872000.
7. Bought inventory for cash of $348800.
8. Acquired an investment in Zynga stock for cash of $45780.
9. Converted bonds payable to common stock in the amount of $1090000.
10. Repaid a 6-year note payable in the amount of $479600.

What is the net cash provided by financing activities?

a. $(228900).
b. $250700.
c. $861100.
d. $1318900.


Answer and Explanation:

The computation of the net cash provided by financing activities is given below:

Cash provided by financing activities

Issuance of the common stock for cash $272,500

Less: cash dividend paid -$21,800

Less: repaid note payable $479,600

Net cash used in financing activities -$228,900

The positive means cash inflow and the negative means cash outflow

Why wages differ
For each of the scenarios in the following table, indicate the most likely reason for the difference in earnings. Differences Differences in Human Capital Compensating in Natural Differential Labor
Scenario Ability Unions
1. A law firm hires Dina, a recent graduate from law school, and pays her an annual wage of $40,000. It also hires Ana, a second-year law student, and pays her an annual wage of $30,000. Dina and Ana were born in the same country, attended the same university, and studied in the same graduate program.
2. Major league soccer players earn more than minor league soccer players.
3. Three engineers have the same amount of schooling and work experience, but earn different wages. One is a computer engineer who designs and tests new computers for an annual wage of $55,000 per year. Another is a chemical engineer who works in a nuclear lab and performs experiments on radioactive materials for an annual wage of $70,000 per year. The third is a civil engineer who performs daily inspections of cables on a suspension bridge for an annual wage of $93,000 per year



Differences in human capital

Differences in Natural Ability

Compensating differentials


Human capital is an example of an intangible asset. It is the economic value attached to labours' skills and expertise.

Qualities of human capital includes

• Education.

• on-the-job training.

• Hard work

• experience

• Mental and emotional well-being.  

• People management.

• Communication skills.

In case 1, the law graduate is more educated than the student. thus, differences in human capital accounts for the pay difference

In case 2, the skills of the players differs and this accounts for pay differences

In case 3, pay differs by riskiness of the job. thus compensating differential is responsible for pay differences

What is the present value of 4360 to be received at the beginning of each of 30 periods discounted at 5% compound interest



The right solution is "70375.08".


Given that,

Present value,

= 4360

Interest rate,

= 5%

Time period,

= 30


The present value of inflows will be:

= [tex](1+rate)\times \frac{Present \ value[1-(1+Interest \ rate)^{-time \ period}]}{rate}[/tex]

= [tex]1.05\times 4360\times \frac{[1-(1.05)^{-30}]}{0.05}[/tex]

= [tex]4360\times 16.1410736[/tex]

= [tex]70375.08[/tex]

A museum of natural history opened a gift shop that operates throughout the year. Top-selling product is a bird feeder. Annual demand for the bird feeder is 933 units. Cost per order is $55. Annual holding cost per unit is $19. Assuming that the shop uses the EOQ as the order size, what would be the total holding cost for the bird feeder





EOQ or economic order quantity formula is given as:

[tex]EOQ = \sqrt{\frac{2DC_o}{H_c}}[/tex]

Where, D = demand per year

C_0 = ordering cost and H_c = holding cost per unit per year

[tex]EOQ = \sqrt{\frac{2\times933\times55}{19}}[/tex]

EOQ= 73.5 units

Since, the order size is EOQ then, total holding cost

= holding cost per unit per year × EOQ



Pransit, a truck driver, was involved in a truck collision with a passenger car driven by Sanjay. He sued Sanjay for negligence and Sanjay defended by claiming that Pransit was negligent in his driving. The jury heard both sides of the case and was instructed by the judge on the rules of negligence and defense of pure comparative negligence. The jury verdict concluded that Pransit suffered $60,000 damages and Sanjay was 75% negligent and Pransit was 25% negligent in contributing to his own harm. Pransit will recover: A. $15,000. B. $45,000 C. $60,000 D. nothing.



Pransit will recover:

B. $45,000


a) The rules of negligence and defense of pure comparative negligence will ensure that Pransit recovers some damages arising from the negligent deriving.  However, the extent of the amount he will recover depends on the percentage of the defendant's fault.  The implication is that Sanjay will be responsible for 75% of the damage while Pransit bears the remaining 25% (100% - 75%).

b) Amount of damages suffered by Pransit = $60,000

Percentage of Sanjay's negligence = 75%

Therefore, the damage liable to be paid by Sanjay to Pransit = $45,000 ($60,000 * 75%).

Lannister Manufacturing has a target debt-equity ratio of .95. Its cost of equity is 11 percent, and its cost of debt is 7 percent. If the tax rate is 24 percent, what is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)



WACC= 5.6%


Weighted average cost of capital is the average cost of all of the long-term types of finance used by a company weighted according to the that amount of finance used in relation to the total pool of fund

WACC = (Wd×Kd) + (We×Ke)

After-tax cost of debt = Before tax cost of debt× (1-tax rate)

Kd-After-tax cost of debt  

Ke-Cost of equity  

Wd-Weight f debt  

We-Weight of equity  

After tax cost of debt = (1-T)× Before-tax yield on debt

                                = (1-0.24)× 7


Cost of equity = 11%

WACC = (Wd×Kd) + (We×Ke)

We= 5%, Wd= 95%

WACC= (5.32× 95%) + (11%× 5%)

        = 5.6%

WACC= 5.6%


ProForm acquired 70 percent of ClipRite on June 30, 2017, for $770,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $450,000 was recognized and is being amortized at the rate of $12,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $330,000 at the acquisition date. The 2018 financial statements are as follows:
ProForm ClipRite
Sales $(820,000) $(640,000)
Cost of goods sold 545,000 410,000
Operating expenses 120,000 110,000
Dividend income (49,000) 0
Net income $ (204,000) $ (120,000)
Retained earnings, 1/1/18 $(1,100,000) $(870,000)
Net income (204,000) (120,000)
Dividends declared 120,000 70,000
Retained earnings, 12/31/18 $(1,184,000) $(920,000)
Cash and receivables $420,000 $320,000
Inventory 310,000 720,000
Investment in ClipRite 770,000 0
Fixed assets 1,200,000 700,000
Accumulated depreciation (400,000) (300,000)
Totals $ 2,300,000 $ 1,440,000
Liabilities $ (816,000) $ (220,000)
Common stock (300,000) (300,000)
Retained earnings, 12/31/18(1,184,000) (920,000)
Totals $(2,300,000) $(1,440,000)
ProForm sold ClipRite inventory costing $71,000 during the last six months of 2017 for $110,000. At year-end, 30 percent remained. ProForm sells ClipRite inventory costing $210,000 during 2018 for $270,000. At year-end, 10 percent is left.
Determine the consolidated balances for the following accounts:
Consolidated Balance
Cost of goods sold
Operating expenses
Dividend income
Net income attributable to noncontrolling interest
Noncontrolling interest in subsidiary, 12/31/18


Answer and Explanation:

The computation is shown below:

The amount of consolidated sales balance is  

Proform Sales 820,000

Cliprite Sales 640,000

Less: Intra-entity Sales -270,000

Consolidated Sales Balance $1,190,000

The amount of consolidated cost of goods sold balance is

Proform's Cost of Goods Sold Book Value 545,000

Cliprite's Cost of Goods Sold Book Value 410,000

Less: Intra-Entity Transfers -270,000

Adjusted Gross Profit Deferred in 2017 [(110,000 - 71,000) × 30%] -11,700

Deferral of 2018 Intra-Entity Gross Profit [(270,000 - 210,000) × 10%] 6,000

Consolidated Cost of Goods Sold Balance $679,300

The amount of consolidated operating expenses balance is  

Proform's Operating Expenses Book Value 120,000

Cliprite's Operating Expenses Book Value 110,000

Amortization of Intangible Assets 12,000

Consolidated Operating Expenses Balance $242,000

The amount of consolidated dividends balance is $0 as there is an elimination in consolidation.

The amount of net income attributed is  

Cliprite's Reported Income for 2018 120,000

Less: Amortization of Intangible Assets -12,000

Cliprite's Adjusted Net Income 108,000

Net Income Attributable to Non Controlling Interest (108,000 × 30%) $32,400

The amount of consolidated inventory balance is  

Proform's Operating Expenses Book Value 310,000

Cliprite's Operating Expenses Book Value 720,000

Intra-Entity Gross Profit [(270,000 - 210,000) ×  10%] -6,000

Consolidated Inventory Balance $1,024,000

The value of noncontrolling interest in subsidiary is  

30% of Opening Book Value [(870,000 + 300,000) × 30%) 351,000

Excess January 1 Intangible Allocation [(450,000 - 12,000 ÷ 2) × 30%)] 133,200

Net Income Attributable to Noncontrolling Interest 32,400

Dividends (70,000 ×  30%) -21,000

Non Controlling Interest, 12/31/18 $495,600

Primus, Inc., owns all outstanding stock of Sonston, Inc. For the current year, Primus reports net income (exclusive of any investment income) of $520,000. Primus has 50,000 shares of common stock outstanding. Sonston reports net income of $120,000 for the period with 40,000 shares of common stock outstanding. Sonston also has 10,000 stock warrants outstanding that allow the holder to acquire shares at $15.00 per share. The value of this stock was $30 per share throughout the year. Primus owns 5,900 of these warrants. What amount should Primus report for diluted earnings per share? (Round your intermediate percentage value to the nearest whole number and the final answer to 2 decimal places.) Diluted earnings per share



Primus, Inc.

Diluted earnings per share is:

= $14.51.


a) Data and Calculations:

                                           Primus, Inc.     Sonston, Inc.   Consolidated

Current net income            $520,000        $120,000       $640,000

Outstanding common stock   40,000            40,000            40,000

Outstanding stock warrants                              4,100               4,100

Total outstanding stock                                                           44,100

Diluted earnings per share = Total current net income/Total outstanding stock

= $640,000/44,100

= $14.51

b) Diluted EPS is an important capital ratio for stockholders as it shows the earnings that a stockholder will be entitled to if convertible shares such as employee stock options, warrants, and debts are actually converted into common stock.

Roll over the items and match the examples to the sales promotion type.PromotionExamplesAdvantagesDisadvantagesCouponPremiumsContestsSweepstakesSamplesLoyalty ProgramsPOP DisplaysRebatesStimulates demandBuilds goodwillGenerates excitementIncreases involvementEncourages trialCreates loyaltyProvides visibilityLow redemption ratesBuy for premiumMust be monitoredSales declineHigh cost and risk to firmDifficult to get a good locationMay be copied by competitors



    Coupon ⇒ 20% off  

    Premiums ⇒ Free Keychain

    Contests ⇒ 50-yard dash around the store

    Sweepstakes ⇒ Win a trip to the Olympics

    Samples ⇒ Ride the bike around the lot

     Loyalty Programs ⇒ Buy 9, get the 10th one free.

     POP Displays ⇒ Cash register display

     Rebates ⇒ Mail-in for $20 off

Under the good neighbor rule, a buyer of consumer goods, who gives value and does not have
actual or constructive knowledge of the security interest, acquires clear title if there has been no filing
a. True
b. False


the answer is true.

Nelson Won wants to withdraw $25,000 (including principal) from an investment fund at the end of each year for five years. How should he compute his required initial investment at the beginning of the first year if the fund earns 10% compounded annually



Initial Investment= $94,769.7


Giving the following information:

Annual payment (A)= $25,000

Interest rate (i)= 10%

Number of periods (n)= 5 years

To calculate the initial investment, we need to use the following formula:

PV= A*{(1/i) - 1/[i*(1 + i)^n]}

PV= 25,000*{(1/0.1) - 1/[0.1*(1.1^5)]}

PV= $94,769.7

If there were no beginning work in process and no ending work in process under the weighted-average process costing method, the number of equivalent units for direct materials, if direct materials were added at the start of the process, would be __________________ A. More than the units started or transferred in during the period. B. Equal to the units completed during the period. C. Less than the units completed during the period. D. Equal to total of units started and units completed during the period.



Equal to total of units started and units completed during the period


Equivalent units

These are said to be numbers of complete whole units that could be gotten from the material and effort evident or contained in partially completed units.

Equivalent units of production usually of weighted-average method is defined as the number of units taking oit or transferred to the next department or to finished goods during the timeframe in addition with the equivalent units in the departments' ending work in process inventory.

Equivalent Units of Production is simply known to be equal to the Units Transferred Out plus the Ending Units in Process.

Ending work-in-process

Beginning work in process is the addition that is Started in Process, minus units to be accounted for and minus units transferred out which will equal to ending work in process. Therefore, as a result of the fact that  no beginning work-in-process and ending work-in-process is evident, the units started during the period is also the completed units on the same period.

Santana Company exchanged equipment used in its manufacturing operations plus $2,000 in cash for similar equipment used in the operations of Delaware Company. The following information pertains to the exchange.
Santana Co. | Delaware Co.
Equipment (cost) $28,000 | $18,000
Accumulated depreciation 9,000 | 10,000
Fair value of equipment 14,000 | 16,000
Cash given up 2,000
Please indicate whether an account is an asset (A), liability (L), or equity (E) for journal entries, adjusting entries, and closing entries.
Prepare the journal entries to record the exchange on the book of Santana Co. and Delaware Co. Assume that the exchange lacks commercial substance.


Solution :

We know that the exchange takes place when the FMV receive is equal to the FMV given up.

Where the FMV = fair market value

The commercial substance means the future cash flows exchange.

The non monetary exchange refers to the cash which is less than 25% of the fair value exchange.

The journal entries for the Santana Corp. when the exchange lack the commercial substance are reported as :

Transaction                                           Debit ($)                 Credit ($)

Asset(new)                                           11,000

Accumulated depreciation(old)          9,000

Asset (old)                                                                       28,000

Cash                                                                                 2000

The journal entries for Delaware Corp. when the exchange lacks the commercial substance.

Transaction                                           Debit ($)                 Credit ($)

Asset(new)                                            16,000  

Accumulated depreciation (old)          10,000

Loss                                                                                      2500

Assets (old)                                                                           28,000                                  

During 2020, Lincoln Company hires 12 individuals who are certified to be members of a qualifying targeted group. Each employee works in excess of 600 hours and is paid wages of $13,600 during the year. Lincoln Company's work opportunity credit is_____.



The work opportunity credit is $28,800


As we can see that the employees work more than 400 hours so here the company would be eligible for taking the full credit

The credit should be claimed till 40% of the first $6,000 that could allowed maximum credit of $2,400 per employee

Work opportunity credit is

= (6000 × 40%) × 12 individuals

= $28,800

Hence, the work opportunity credit is $28,800

Jasper makes a $86,000, 90-day, 7% cash loan to Clayborn Co. Jasper's entry to record the transaction should be: Multiple Choice Debit Notes Receivable for $86,000; credit Cash $86,000. Debit Accounts Receivable $86,000; credit Notes Receivable $86,000. Debit Cash $86,000; credit Notes Receivable for $86,000. Debit Notes Payable $86,000; credit Accounts Payable $86,000. Debit Notes Receivable $86,000; credit Sales $86,000.



Debit Notes Receivable for $86,000; credit Cash $86,000


The journal entry to record the cash loan is given below;

Notes Receivable $86,000

           To Cash $86,000

(Being cash loan is recorded)

Here the note receivable is debited as it increased the assets and credited the cash as it decreased the assets

Therefore the first option is correct

The coffee shop across the street from your tiny apartment is your haven away from home -- great beverages, healthy snacks, an atmosphere that is convivial but not so lively that you can't focus on homework, and free wifi. It lacks only one thing: some way to print out your homework and other files when you need hard copy. Your college's libraries and computer labs provide printers, but you live three miles from campus, and it's a long walk or an inconvenient bus ride.

Write a letter to the owner of the coffee shop, encouraging her to set up a printing service to complement the free wireless access. Propose that the service run at break-even prices, just enough to pay for paper, ink cartridges, and the cost of the printer itself. The benefit to the shop would be enticing patrons to spend more time and therefore more of their coffee and tea money in the shop. You might also mention that you had to take the bus to campus to print this letter, so you bought your afternoon late somewhere else.


Answer: See explanation


Dear Mrs Parker,

I'm one of your numerous customers at your coffee shop and I must say it's really an amazing place and you're really doing a great job.

The purpose of writing this letter is to inform you about the few changes that you could make that'll bring further revenue to you and also be of immense benefit to your customers.

Firstly, I believe that you are aware that most of your customers are young people especially college students like myself. Printing out our school works and other printing works are really a challenge to us. There are no printing shops around and we've to take a bus back to the campus anytime we want to print and this is really costly and Tien consuming.

It'll be worth it if you consider setting up a printing service to complement the free wireless access. Apart from the fact that the printing service runs at break even price, the benefit to the shop would be enticing patrons to spend more time and therefore more of their coffee and tea money in the shop.

When the printing shop is opened, the college students among us will find it beneficial as we won't have to go back to the school campus in order to print.

Furthermore, when people come to the printing shop, they'll also realize that there's a coffee shop there as well, and this can bring about an increase in the demand for coffee which ultimately increases the revenue generated from the sale of coffee.

In conclusion, I hope this letter catches your attention which will be beneficial to everyone.

Peter Williams.

Clean123 Inc. performs $1,000 of cleaning services for a customer. After 30 days, the customer pays 50% of the involce with a check. How will
this transaction be recorded?
The customer's payment will be recorded as a debit to(blank)
and a credit to Accounts Receivable.



Debit to CashCredit to Accounts Receivable


When a Receivable pays their bill, the cash account will be debited to show that cash has come into the company because cash is an asset account and assets are debited when they increase.

Accounts Receivable is an asset account as well and when the Receivable pays, they are reducing the amount that they owe(as is the case here) so their account needs to be reduced. Assets are credited when they reduce so this will be credited.

For this question, use the Grove Analytics Financials. Calculate 2018 cash from financing activities for Grove Analytics. Hint: Remember to capture dividends. Also, remember that stock based compensation expense is a credit to common stock & APIC.
Below is income statement and balance sheet data for Grove Analytics. ($ in millions) Income statement 12/31/2018 Revenue 230 Operating expenses 68 Depreciation 20 Stock based compensation 13 Operating profit 129 Interest expense 5 Taxes 31 Net income 93 Balance sheet 12/31/2017 12/31/2018 Cash 50 Not provided Accounts receivable 20 25 Inventory 15 18 PP&E 30 40 Total assets 115 83 Accounts payable 8 11 Short term debt 20 22 Long term debt 48 60 Treasury stock (30) (40) Common stock & APIC 25 40 Retained earnings 44 95 Total liabilities & equity 115 188


Answer: -36


The 2018 cash from financing activities for Grove Analytics will be calculated as:

Issued short term debt = 22 - 20 = 2

Add: Issued long term debt = 60 - 48 = 12

Less: Purchase of treasury stock = 10

Add: Issue of common stock = (40 - 13 - 25) = 2

Less: Dividend paid = (44 + 93 - 95) = 42

Net cash used by financing activities = -36

13. A firm hires its labor in a perfectly competitive factor (or resource) market and sells its product in a perfectly competitive product market. a. Using correctly labeled side-by-side graphs, show each of the following: i. The equilibrium wage rate in the market ii. The labor supply curve the firm faces iii. The demand curve the firm faces iv. The number of workers that the firm hires



Attached below are the graphs


i) The Equilibrium wage rate in the market is determined by the Intersection of the labor demand and supply curve  as seen in the graph attached

ii) The Labor supply curve the firm faces is perfectly elastic in a perfectly competitive resource market

iii) The demand curve of the firm is perfectly elastic because in competitive market a slight change in price will cause a massive change in demand

iv) The firm will continue hiring as long as  MRP ≥ MFC

( MRP = marginal revenue product , MFC = marginal factor cost )

Rebecca Bennett is an 8-year-old who was recently diagnosed with diabetes mellitus. She is hospitalized with diabetic ketoacidosis, and she is beginning to learn about the disease process. Her parents are with her continually. She has an identical twin sister who is staying with her maternal grandparents.
Mrs. Bennett is concerned that Rebecca’s sister will also develop diabetes. Based on the preceding information, an acceptable response for the nurse to make would be to:________.
a. reassure the parents that the disease is not contagious.
b. discuss the hereditary and viral factors of type 1 diabetes.
c. discuss the hereditary factors of type 1 diabetes.
d. discuss the viral factors of type 1 diabetes.





The roles of money
Alex just graduated from college and is now in the market for a new car. He has saved up $4,000 for a down payment. He's deciding between a Super and a Duper. The Super is priced at $23,599, and the Duper is priced at $18,999. After agonizing over the decision, he decides to buy the Duper. He writes the dealership a check for $4,000 and takes out a loan for the remainder of the purchase price. Identify what role money plays in each of the following parts of the story. (Medium of exchange, unit of account, or store of value)
A. Sean writes a check for $4,000.
B. Sean can easily determine that the price of the Super is more than the price of the Duper.
C. Sean has saved $4,000 in his checking account.



Medium of exchange

unit of account

store of value


Money is anything that is generally accepted as a means of payment for goods and services and for repayment of debt.

Functions of money  

1. Medium of exchange : money can be used to exchange for goods and services. For example, by writing the check, he is exchanging money for a car

2. Unit of account : money can be used to value goods and services, For example, price was used to determine which was more expensive between the super and the duper

3. Store of value : money can retain its value over the long term, this it can be used as a store of value.  

Horatio Alger has just become product manager for Brand X. Brand X is a consumer product with a retail price of $1.00. Retail margins on the product are 33%, while wholesalers take a 12% margin. Brand X and its direct competitors sell a total of 20 million units annually; Brand X has 24% of this market. Variable manufacturing costs for Brand X are $0.09 per unit. Fixed manufacturing costs are $900,000. The advertising budget for Brand X is $500,000. The Brand X product manager's salary and expenses total $35,000. Salespeople are paid entirely by a 10% commission. Shipping costs, breakage, insurance, and so forth are $0.02 per unit.
1. What is the unit contribution for Brand X?
2. What is Brand X's break-even point?
3. What market share does Brand X need to break even?
4. What is Brand X's profit impact? Industry demand is expected to increase to 23 million units next year. Mr. Alger is considering raising his advertising budget to $1 million.
a. If the advertising budget is raised, how many units will Brand X have to sell to break even?
b. How many units will Brand X have to sell in order for it to achieve the same profit impact that it did this year?
c. What will Brand X's market share have to be next year for its profit impact to be the same as this year?
d. What will Brand X's market share have to be for it to have a $1 million profit impact?
5. Upon reflection, Mr. Alger decides not to increase Brand X's advertising budget. Instead, he thinks he might give retailers an incentive to promote Brand X by raising their margins from 33% to 40%. The margin increase would be accomplished by lowering the price of the product to retailers. Wholesaler margins would remain at 12%.
a. If retailer margins are raised to 40% next year, how many units will Brand X have to sell to break even?
b. How many units will Brand X have to sell to achieve the same profit impact next year as it did this year?
c. What would Brand X's market share have to be for its profit impact to remain at this year's level?
d. What would Brand X's market share have to be for it to generate a profit impact of $350,000?



Horatio Alger

1. The unit contribution for Brand X is = $0.79

2. Brand X's break-even point (in units) = 1,816,456 (in sales dollars) = $1,816,456

3. The market share that Brand X needs to break-even

= 9.1%

4. Brand X's profit impact is 48.9% or $2,347,000

a. If the advertising budget is raised, units that Brand X have to sell to break-even is:

= 2,449,367 units

b. The units that Brand X have to sell in order for it to achieve the same profit impact that it did this year is:

= 5,865,886 units

c. Brand X's market share have to be 25.5% next year for its profit impact to be the same as this year.

d. Brand X's market share have to be 16.2% for it to have a $1 million profit impact.

5. a. Break-even sales units = 2,474,138 units

b. Break-even sales units = 6,520,690 units

c. Brand X's market share have to be 32.6% for its profit impact to remain at this year's level.

d. Brand X's market share have to be 15.4% to generate a profit impact of $350,000.


a) Data and Calculations:

Retail price of Brand X = $1.00

Units sold = 24% of 20 million = 4,800,000 units

Total sales revenue =              $1.00  $4,800,000

Variable costs:

Manufacturing                         $0.09

Selling commision (10% of $1) $0.10

Other selling expense            $0.02

Total variable costs per unit   $0.21  $1,008,000

Contribution margin per unit $0.79  $3,782,000

Fixed costs:

Manufacturing                $900,000

Advertising                       500,000

Brand X manager's salary 35,000    $1,435,000

Net income =                                     $2,347,000

Fixed costs/Contribution margin per unit = $1,435,000/$0.79 = 1,816,456 units

The market share that Brand X needs to break-even

= 1,816,456/20,000,000

= 9.1%

Brand X's profit impact = 48.9% ($2,347,000/$4,800,000 * 100)

With increase in advertising budget to $1 million next year,

a. Units to break-even = $1,935,000/$0.79 = 2,449,367 units

b. Units to achieve same profit impact:

Sales increased by 15% (3/20 * 100)

Net income will increase to = $2,699,050 ($2,347,000 * 1.15)  to make the same impact

Therefore, the units to achieve same profit impact = ($1,935,000 + $2,699,050)/$0.79

= $4,634,050/$0.79

= 5,865,886 units

Market share next year = 25.5% (5,865,886/23,000,000)

Market share to achieve $1 million profit impact

= (FC + Profit target)/$0.79

=  $1,935,000 + $1,000,000)/$0.79

= $2,935,000/$0.79

= $3,715,190

= $3,715,190/$23,000,000 * 100 = 16.2%

Fixed costs = $1,435,000

Retailer's margin raise = 40% from 33%, a 21.2% increase or decrease in price

Therefore, the new selling price = $1.00 * (1 - 0.212) = $0.79

Variable cost = $0.21

Contribution margin = $0.58

To break-even, FC/Contribution margin per unit

= $1,435,000/$0.58

= 2,474,138 units

Break-even units to achieve profit of $2,347,000 = ($1,435,000 + $2,347,000)/$0.58

= 6,520,690 units

Sales = $5,151,345 (6,520,690 * $0.79)

Market sales revenue = $15,800,000 (20,000,000 * $0.79)

= $5,151,345/$15,800,000 * 100

= 32.6%

Market impact of $350,000

Break-even units ($1,435,000 + $350,000)/$0.58

= 3,077,586 units

Sales revenue = $2,431,293 (3,077,586 * $0.79)

Market revenue = $15,800,000 (20,000,000 * $0.79)

Market share = $2,431,293/$15,800,000 * 100

= 15.4%

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