Answer:
There are at least 2 opportunity costs associated with of letting your colleague have another month:
- if you invested in the oil-well venture, you could have earned $5,100 x 36% = $1,836 in one year
- if you invested in the new IT stock, you could have earned $5,100 x 48% = $2,448 in one year
You could invest in one of these options, or divide your money and invest in both options, e.g. invest $2,000 in the oil company and $3,000 in the IT company. Each different investment proportion results in a different opportunity cost.
Explanation:
Opportunity costs are the benefits lost or extra costs associated to carrying out an investment or activity instead of another alternative. Sometimes you might have several opportunity costs for one investment, e.g. invest in the IT company which is risky, invest in corporate bonds which is less risky or invest in US securities which is a safe investment.
Question
Ellis Television makes and sells portable televisions. Each television regularly sells for $210. The following cost data per television is based on a full capacity of 10,000 televisions produced each period.
Direct material - $80
Direct Labour -$60
Manufacturing overhead(70% variable, 30% unavoidable fixed cos) -$40
A special order has been received by Ellis for a sale of 2,000 televisions to an overseas customer. The only selling costs that would be incurred on this order would be $6 per television for shipping. Ellis is now selling 6,000 televisions through regular channels each period. What should be the minimum selling price per television in negotiating a price for this special order?
Answer:
The minimum selling price = $174.
Explanation:
The minimum selling price to be acceptable for the special order be the same as the relevant variable cost of producing a unit.
The relevant variable cost = marginal cost of a unit
Marginal cost = Direct material + Direct labour + Variable manufacturing overhead + shipping cost
Marginal cost = 80 + 60 + (70%× 40) + 6
= 174
The minimum selling price = $174.
Note : The 30% balance of manufacturing overhead which represents unavoidable fixed costs is irrelevant for this decision. These are costs that would be incurred either way whether or not the special order is accepted.
Answer:
The increase in the monthly payment amount is $180
Explanation:
In order to calculate the increase in the monthly payment amount we would have to make the following calculation:
increase in the monthly payment amount=installment increase-installment
installment=(loan amount/1,000)*rate of interest
installment=($120,000/1,000)*4
installment=$480
installment increase=(loan amount/1,000)*rate of interest
installment increase=($120,000/1,000)*5.5
installment increase=$660
increase in the monthly payment amount=$660-$480
increase in the monthly payment amount=$180
The increase in the monthly payment amount is $180
Increasing the effectiveness of internal controls would have the greatest effect on r<span>educing the control risk.</span>
The risk control includes evaluation of potential losses and actions to reduce or eliminate risks. The potential risk factors in a firm's operations are identified (technical and non-technical aspects of the business, financial policies, and other policies).
Answer:
A base salary of $500,000 plus a stock option package for 250,000 shares, with 20% of shares maturing at the end of each of the next five years
Explanation:
This options will force the employee to stay in the firm for at least 5 years
Also it will tie his contribution to the market share
So their interest will be alinged with the company's interest of increasing his value and project better earnings through the five years program.
