Individual Problems 20-2 A colleague tells you that he can get a business loan from the bank, but the rate seems very high for what your colleague considers a low-risk loan. Use the following table to classify each explanation for the high rate as an instance of either adverse selection or moral hazard. Adverse Selection Moral Hazard Explanation for High Rate The bank cannot determine which borrowers are likely to pay back the loan and which are likely to default. The bank believes your friend, if given access to financing at low rates, would use the money frivolously. You advise your friend to sign a contract that restricts certain types of risky investments that he can undertake with the funds from the loan. Your advice is more likely to solve the problem of

All the conchs in Key West used to be good because of the abundance of fresh seafood in the area.

Key West is located in the Florida Keys, which is known for its rich marine life and fishing industry. The conch is a type of shellfish that is commonly found in the waters surrounding the Keys. In the past, the conchs in Key West were known to be of high quality and delicious because they were caught fresh and cooked immediately. Additionally, the conchs were often prepared in traditional Bahamian and Cuban styles, which added to their unique and flavorful taste. However, with the increase in tourism and commercial fishing in the area, the conch population has declined, and the quality of the conchs has suffered. Despite this, there are still some restaurants in Key West that pride themselves on using fresh, local seafood, including conch, to provide their customers with a delicious dining experience.

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If the maker of Monster energy drinks decided to promote its product at women's figure skating events, it would be failing to (option) b. create a consistent brand image.

Creating a consistent brand image is essential for companies to establish a strong and recognizable identity in the market. It involves aligning all aspects of the brand, including messaging, marketing strategies, and target audience, to maintain a cohesive and unified image. By promoting its product at women's figure skating events, the maker of Monster energy drinks would deviate from its current brand positioning, which targets young males who love extreme action and motor sports.

The primary target market for Monster energy drinks is young males who are associated with extreme sports and an active lifestyle. By promoting the product at women's figure skating events, the company would be targeting a different demographic, namely female figure skaters and their audience. This would create inconsistency in the brand's messaging and image, potentially confusing consumers and diluting the brand's identity.

Maintaining a consistent brand image is crucial for companies to build brand loyalty, establish a strong market presence, and effectively communicate their value proposition to the target audience. By consistently catering to the preferences and interests of their core target market, companies can develop a distinct and recognizable brand personality. Deviating from this positioning by promoting the product in unrelated events can undermine the brand's identity and weaken its connection with the intended audience.

In summary, if the maker of Monster energy drinks decided to promote its product at women's figure skating events, it would be failing to create a consistent brand image. Consistency in brand positioning and messaging is vital for establishing a strong and recognizable brand identity in the market.

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The not one of the three benefits of the multidivisional structure compared to the functional form is improved communication and coordination between different divisions and departments.

The multidivisional structure was initially designed to produce three major benefits over the functional form:

1. Increased responsiveness and adaptability: The multidivisional structure allows for greater flexibility and agility in responding to changes in the external environment. Each division operates as a semi-autonomous unit, capable of making decisions and implementing strategies that align with its specific market conditions or customer needs.

2. Enhanced focus on products or markets: By dividing the organization into different divisions based on products, services, or geographic markets, the multidivisional structure facilitates a sharper focus on specific areas of business. Each division can concentrate on its core competencies, tailor its strategies to target customer needs, and develop specialized expertise.

3. Improved performance accountability: With distinct divisions operating as profit centers, the multidivisional structure enhances performance accountability. Each division is responsible for its own financial results, including revenue generation, cost management, and profitability.

However, improved communication and coordination between divisions and departments is not one of the three main benefits. While the multidivisional structure can enhance coordination within divisions, communication and coordination between divisions can sometimes be challenging due to the increased autonomy and independence of each division.

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The projection of financial position at the end of the budget period is found on the budgeted balance sheet. So the answer is a.

The budgeted balance sheet is a statement that projects the company's assets, liabilities, and equity at the end of the budget period. It is an essential tool for a company's management as it helps them to plan, allocate resources, and make informed decisions about future financial strategies.

The budgeted balance sheet is based on the inputs from other budgets such as the sales budget, cash budget, and budgeted income statement. The sales budget provides the projected sales for the budget period, which is essential to determine the inventory and accounts receivable levels. The cash budget provides the projected cash inflows and outflows for the budget period, which is critical in determining the company's cash balance at the end of the period.

The budgeted income statement provides the projected revenues, expenses, and net income for the budget period, which helps in determining the retained earnings for the budgeted balance sheet. Overall, the budgeted balance sheet is a crucial tool that helps the management to plan and control the company's finances effectively. It allows them to determine the company's financial position, identify potential issues, and take corrective actions to achieve the desired financial goals. Therefore, the budgeted balance sheet is an essential part of any company's budgeting process, and its accuracy is critical for the success of the company.

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A union may negotiate limits on workload in order to increase the demand for labor and raise workers' salaries. This practice is known as restrictive labor practices.

Restrictive labor practices involve actions taken by unions to protect their members' interests by limiting the supply of labor or increasing the demand for it. This can include negotiating limits on work hours, workload, or the number of employees assigned to a task.

These practices can help ensure job security for union members, maintain a healthy work-life balance, and protect workers from being overworked or exploited. By controlling the supply of labor and promoting favorable working conditions, unions can create a higher demand for workers, leading to increased wages and better benefits.

However, critics argue that restrictive labor practices can reduce overall productivity, limit flexibility for employers, and create barriers to entry for non-union workers. While these practices can provide important protections for workers, it is essential to strike a balance between safeguarding employees' rights and fostering economic growth and efficiency.

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To perform a horizontal analysis of revenues, expenses, and net income for 2018 and 2017, we will need to compare the dollar amounts and percentages of these financial metrics for both years side by side.

1. Revenues: Start by comparing the revenues for 2018 and 2017. Calculate the difference between the revenue for each year and express it as a percentage of the 2017 revenue. This will give you the percentage change in revenue between the two years. For example, if the revenue in 2017 was $1 million and it increased to $1.2 million in 2018, the percentage change would be: ((1.2-1)/1)*100 = 20%.

2. Expenses: Next, perform the same analysis for expenses. Calculate the difference between the expenses for each year and express it as a percentage of the 2017 expenses. This will give you the percentage change in expenses between the two years. For example, if the expenses in 2017 were $500,000 and they increased to $600,000 in 2018, the percentage change would be: ((600,000-500,000)/500,000)*100 = 20%.

3. Net Income: Finally, compare the net income for both years. Calculate the difference between the net income for each year and express it as a percentage of the 2017 net income. This will give you the percentage change in net income between the two years. For example, if the net income in 2017 was $500,000 and it increased to $600,000 in 2018, the percentage change would be: ((600,000-500,000)/500,000)*100 = 20%.

In addition to the percentage changes, it is important to also analyze the dollar amounts for each year to get a better understanding of the financial performance. This will give you a more detailed view of the trends and changes that occurred between the two years.

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This is because they focus on their own specialization and production processes, and aim to maximize their profits through their pricing strategies.

They may also use capital-intensive means of production and division of labor to achieve their production goals, but the primary factor influencing their pricing decisions is their independence and focus on their own profits. Option A - "use capital-intensive means of production" - is not directly related to the question of setting prices independently, but rather relates to the production methods used by manufacturers. Some manufacturers may indeed use capital-intensive production methods, but others may use labor-intensive methods, or a combination of both.

Option B - "use division of labor and specialization in production" - is also not directly related to the question of price setting, but rather relates to how manufacturers organize their production processes. Many manufacturers do indeed use division of labor and specialization in production to improve efficiency and reduce costs.

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Manufacturers of printers and computers setting prices independently means that they do not consider the negative effect that the high prices have on each other's profit. Option D is the correct answer.

When manufacturers set prices independently, it implies that they are not engaging in price coordination or collusion. Each manufacturer determines its own pricing strategy without considering the impact it may have on the demand for the products or the pricing decisions of their competitors. This lack of coordination allows manufacturers to potentially set higher prices without concern for the competitive market dynamics or the negative effect it may have on their rivals' profitability.

Option D is the correct answer.

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To minimize cost, each batch of sub-assemblies should be 11,666.75 units.

The optimal batch size for the sub-assemblies in order to minimize cost is 11,666.75 units. This can be calculated using the economic order quantity (EOQ) formula, which takes into account the annual demand, setup cost, and carrying cost. EOQ = sqrt((2 * annual demand * setup cost) / carrying cost). Substituting the given values, we find EOQ = sqrt((2 * 75,000 * 85) / 0.16) ≈ 11,666.75 units.

The economic order quantity (EOQ) formula is commonly used in inventory management to determine the optimal batch size for minimizing costs. By considering factors such as demand, setup cost, and carrying cost, the EOQ formula provides a balance between the cost of holding inventory and the cost of ordering or setting up new batches. It helps companies make informed decisions about the quantity and frequency of their orders, ensuring efficient inventory management.

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To determine how many orders have been placed by each customer, you'll need to look at the order history for each customer. This information should be available in the customer database for justlee books.

You'll want to filter out any customers who haven't placed an order recently, as these customers won't be relevant to your analysis.
Once you have this information, you can create a report or spreadsheet that lists each customer's name and the number of orders they've placed. This will give you a clear picture of which customers are the most active and which ones might need some encouragement to make additional purchases.
It's important to keep in mind that while this data can be helpful in understanding customer behavior, it's only one piece of the puzzle. You'll also want to consider other factors such as customer satisfaction, demographics, and buying habits in order to develop a more comprehensive understanding of your customer base.

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The cost of equity is the return required by investors to hold the stock. We can use the dividend discount model to calculate the cost of equity. Dividend per share is $2.35 and the growth rate is 5%. Therefore, the expected dividend next year will be $2.47 ($2.35 x 1.05). The dividend discount model equation is (dividend next year/stock price) + growth rate. Substituting the values, we get ($2.47/$44) + 0.05 = 0.108 or 10.8%. Therefore, the company's cost of equity is 10.8%.To calculate the cost of equity for Pierce Co., which issued a dividend of $2.35 per share and has a constant 5 percent dividend growth rate, we can use the Dividend Discount Model (DDM). The formula for DDM is:

Cost of Equity = (Dividend per Share × (1 + Growth Rate)) / Stock Price
In this case:
Dividend per Share = $2.35
Growth Rate = 5% or 0.05
Stock Price = $44

Using the formula:
Cost of Equity = ($2.35 × (1 + 0.05)) / $44
Cost of Equity = $2.4675 / $44
Cost of Equity ≈ 0.0561 or 5.61%
So, the company's cost of equity is approximately 5.61%.

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The three transactions that would be recorded in the sales journal are: (1) recording sales taxes, (2) recording sales returns and allowances, and (3) recording purchase discounts.

The sales journal is used to record various transactions related to sales. (1) Recording sales taxes involves recording the amount of tax collected from customers and categorizing it separately.

(2) Recording sales returns and allowances entails documenting any goods returned by customers or allowances granted for damaged or defective products. (3) Recording purchase discounts involves recording any discounts received from suppliers for prompt payment of purchases.

These transactions are recorded in the sales journal to keep track of sales-related activities and facilitate accurate financial reporting.

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If we have a downward-sloping IS curve but a horizontal LM curve, then fiscal policy is not effective in reducing unemployment . So the right option is  (b).

This is because a horizontal LM curve means that changes in the money supply do not affect interest rates, and therefore do not stimulate investment or aggregate demand. Monetary policy is also not very effective in this situation because the downward-sloping IS curve suggests that changes in interest rates have little impact on investment or consumption.

Therefore, neither fiscal nor monetary policy is very effective at reducing unemployment. However, monetary policy can still aid fiscal policy in reducing unemployment (option e), by providing liquidity to the banking system and ensuring that interest rates remain low to support government spending.

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If we have a downward-sloping IS curve but a horizontal LM curve, it implies that changes in the money supply do not affect the interest rate and the economy is already at full employment. In such a scenario, neither fiscal nor monetary policy is effective in reducing unemployment.

Fiscal policy involves government spending and taxation, while monetary policy involves changes in the money supply and interest rates. However, since the LM curve is horizontal, changes in the money supply do not affect interest rates, and hence monetary policy cannot be used to reduce unemployment.

However, monetary policy can aid fiscal policy in reducing unemployment if the LM curve is not horizontal. In such a scenario, changes in the money supply would affect interest rates, and monetary policy can be used to stimulate the economy.

Fiscal policy can also be used to reduce unemployment, but it may have a crowding-out effect if interest rates increase as a result of increased government borrowing. Therefore, coordination between fiscal and monetary policy is necessary to effectively reduce unemployment.

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The entry to record the disposal of the equipment would include a loss of $40,000. This is because the equipment was sold for $33,000, which is less than its book value of $63,000 (cost of $93,000 - accumulated depreciation of $63,000).

The loss on disposal is calculated as the book value of the equipment minus the amount received from the sale ($63,000 - $33,000 = $40,000). Therefore, the journal entry would be a debit to Cash for $33,000, a debit to Loss on Disposal for $40,000, a credit to

Equipment for $93,000, and a credit to Accumulated Depreciation for $63,000. This entry reduces the equipment and accumulated depreciation accounts to zero, recognizing the disposal of the equipment, and records the loss on disposal as an expense in the income statement.

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There are three separate transactions that need to be recorded and adjusted for in ABC's accounting records. These include the rent revenue earned from XYZ, the wages payable to employees, and the accrued interest on the note payable to American National Bank.

1. Rent Revenue: On December 1, XYZ paid ABC $36,000 in advance for the first three months' rent at a rate of $12,000 per month. However, at the end of December, ABC had only earned one month's worth of rent revenue ($12,000). Therefore, ABC must adjust the unearned rent revenue account to reflect the amount earned as of 12/31/14. The journal entry for this adjustment would be:

Dr Unearned rent revenue $24,000
Cr Rent revenue $24,000

This entry recognizes the $12,000 in rent revenue earned in December and reduces the unearned rent revenue account by the same amount.

2. Wages Payable: From the last payroll date through December 31, 2014, ABC's employees worked a total of 250 hours at an average wage expense of $51 per hour. Therefore, the total wages payable at the end of December is $12,750 (250 hours x $51 per hour). The journal entry to record this liability would be:

Dr Wage expense $12,750
Cr Wages payable $12,750

This entry recognizes the amount owed to employees for work performed through December 31, 2014, and creates a liability for wages payable on the balance sheet.

3. Accrued Interest: On November 30, 2014, ABC borrowed $235,000 from American National Bank by issuing an interest-bearing note payable. This loan is to be repaid in three months on February 28, 2015, along with interest computed at an annual rate of 6%. Since the note was issued on November 30, 2014, ABC must accrue interest expense for the month of December. The interest expense for one month is calculated as:

Interest expense = Principal x Rate x Time
Time = 1/12 (since there are 12 months in a year)

Interest expense = $235,000 x 6% x 1/12 = $1,175

The journal entry to record this accrued interest would be:

Dr Interest expense $1,175
Cr Interest payable $1,175

This entry recognizes the interest expense for December and creates a liability for interest payable on the balance sheet.

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We specify the alternative hypothesis as Ha: ρ < 0 when we want to test if there is a negative correlation between two variables.

The alternative hypothesis, Ha: ρ < 0, is used in hypothesis testing when we want to determine if there is evidence of a negative correlation between two variables. Correlation measures the strength and direction of the cost relationship between two variables, ranging from -1 to 1. A negative correlation indicates that as one variable increases, the other variable tends to decrease.

By specifying Ha: ρ < 0, we are stating that we are interested in testing if the correlation coefficient (ρ) is significantly less than zero, indicating a negative correlation. This means that we expect the variables to move in opposite directions. For example, as one variable increases, the other variable is expected to decrease.

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From the above case study, two acts that the TUMI manufacturers comply with are:

As a result of the   corporate responsibility of this business group,they are known to respect environmental laws.

This law requires them to   avoid the use of chemicals and substances that are harmful to the environment.

Also the business has to comply with laws that concerns labor and employment.

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The nominal exchange rate between the SGD and USD that would reflect PPP cannot be determined without additional information, such as the cost of a basket of goods and services in each country. However, we can infer that the SGD is currently overvalued relative to the USD based on the cost of the e-book reader.

Purchasing-power parity holds when the exchange rate between two currencies is such that the same basket of goods and services would cost the same amount in each country. In other words, PPP suggests that the exchange rate should reflect the relative purchasing power of the two currencies. To apply PPP to our example, we need to compare the cost of an e-book reader in Singapore and the US.

We know that the reader costs 200 SGD in Singapore and 100 USD in the US. To make a fair comparison, we need to convert these prices to a common currency. Let's convert the SGD price to USD using the current exchange rate of 1 SGD = 0.73 USD (as of September 2021).
200 SGD * 0.73 USD/SGD = 146 USD

Now we can see that the e-book reader costs more in Singapore than in the US (146 USD vs. 100 USD). This suggests that the SGD is overvalued relative to the USD, meaning that it has a higher purchasing power than the USD. To bring the exchange rate in line with PPP, the SGD would need to depreciate against the USD until the cost of the e-book reader is the same in both countries.

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The statement that retained earnings that are restricted are unavailable for dividends is True. so correct option is true.

Retained earnings that are restricted are typically set aside for a specific purpose, such as for future investments or debt repayment, and cannot be used for general business operations or distribution as dividends. Restrictions on retained earnings may be imposed by lenders, shareholders, or by laws and regulations.

The amount of retained earnings that are restricted can be found on a company's balance sheet, under the equity section. Retained earnings that are restricted can be used for specific purposes, such as investing in new projects or paying off debt, but they cannot be distributed as dividends to shareholders.

This restriction may be imposed by legal or contractual obligations, or by the company's management as part of their financial strategy. Retained earnings that are not restricted are available for dividends, but the decision to pay dividends is at the discretion of the company's board of directors and may depend on various factors, including the company's financial performance, cash flow, and future growth prospects.

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Mutual funds must send financial statements to shareholders at least quarterly. Thus, option D is the correct option.

Mutual funds have up to 60 days after the quarter to declare their holdings, which they are required to do on a quarterly basis. Annual and semi-annual reports must be given to shareholders by mutual funds, ETFs, and registered closed-end funds.

Some variable contracts must typically also give contract holders access to the underlying mutual funds' yearly and semi-annual reports. The annual report covers the complete fiscal year of the fund, while the semiannual report only covers the first six months.

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Jim's Accessories bought 110 necklaces for $10 each on account. Payment terms are 5/10, n/30. In addition, 10 necklaces were returned prior to payment. The entry to record the return would include a debit to Accounts Payable for $95.

When Jim's Accessories bought the 110 necklaces for $10 each on account, it means that they made a purchase on credit. Payment terms of 5/10, n/30 means that Jim's Accessories can get a discount of 5% if they pay within 10 days, otherwise, they need to pay the full amount within 30 days.

However, before payment was made, 10 necklaces were returned. This means that Jim's Accessories now owes the supplier for 100 necklaces, not 110.

To record the return, the entry would include a debit to Accounts Payable, which is the account used to record purchases made on credit, and a credit to Merchandise Inventory, which is the account used to record inventory purchases. The amount of the debit would be the cost of the returned necklaces, which is $95 ($10 x 10 - 5% discount).

Therefore, the correct answer is D. a debit to Accounts Payable for $95.

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Portfolio risk diversification in investments in securities (stocks and bonds) refers to the practice of spreading out investments across a variety of different assets, industries, and geographic regions to minimize the overall risk of the portfolio.

This is done to ensure that if one particular investment performs poorly, the negative impact on the overall portfolio is minimized.

Portfolio risk diversification is important because it helps to reduce the potential downside risk of a portfolio. When an investor puts all their money into one or just a few investments, they are taking on a higher degree of risk. If those investments do not perform as expected, the entire portfolio could be negatively impacted.

However, by diversifying the portfolio, investors can reduce their exposure to any one particular asset class or sector. For example, if an investor holds stocks in multiple companies across different industries, they are less likely to be impacted by a downturn in one particular sector. Similarly, if an investor holds bonds from various issuers with different credit ratings, they can minimize the risk of default.

In summary, portfolio risk diversification is an essential strategy for investors looking to mitigate risk in their investments in securities. By spreading out their investments across different assets, industries, and geographic regions, investors can minimize the potential downside risk of their portfolio and increase the likelihood of achieving long-term investment goals.

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People who gain an understanding for the deep-level diversity among their coworkers do so after multiple and diverse interactions, often leading to an increased degree of empathy.

This is because as individuals interact more frequently and in different settings with people from diverse backgrounds, they are exposed to varying perspectives, values, beliefs, and experiences. Through this exposure, individuals are better able to understand and appreciate the differences and similarities that exist among their coworkers.

As a result, individuals can develop empathy, which is a critical component in understanding and respecting others' unique characteristics, needs, and viewpoints. This increased degree of empathy can lead to improved communication, collaboration, and teamwork among coworkers, ultimately benefiting the organization as a whole. Hence, deep-level diversity is developed among coworkers following diverse interactions which results in empathy.

Note: The question is incomplete. The complete question probably is: people who gain an understanding for the deep-level diversity among their coworkers do so after _______ interactions, often leading to an increased degree of _______.

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When inventory costs are increasing, the FIFO costing method will generally yield a cost of goods sold that is:

A. lower than cost of goods sold under the LIFO method.

FIFO (First In, First Out)  Is a method of inventory valuation where the first items purchased or produced are the first ones to be sold or used this means that the cost of the oldest inventory is assigned to the cost of goods sold while the cost of the newest inventory is assigned to ending inventory

In a period of rising inventory costs the earliest costs assigned to inventory by FIFO  are lower and the later costs assigned to cost of goods sold are higher resulting in a lower cost of goods sold and a higher ending inventory value compared to LIFO

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That statement is true.

In the event of a bank failure and liquidation, capital notes, debentures, and subordinated debt instruments rank lower in priority of claim than bank deposits. Depositors would get paid out first before holders of those subordinate debt instruments.

So the correct choice is:

True

The given statement, "In the event of bank failure, capital notes and debentures are subordinate to bank deposits" is true because this means that bank depositors have a higher priority in the repayment hierarchy and will be paid before capital notes and debenture holders.

In the event of bank failure, capital notes and debentures are considered to be subordinate to bank deposits, which means that they are lower in priority for repayment than bank deposits. Bank deposits are usually insured by deposit insurance programs, which provide protection to depositors in the event of bank failure.

Capital notes and debentures are forms of debt securities that are issued by banks to raise capital. While they may provide a higher yield than bank deposits, they are also riskier, as they are not guaranteed or insured in the same way that bank deposits are.

In the event of bank failure, the proceeds from the liquidation of the bank's assets would first be used to repay depositors, and any remaining funds would then be used to repay other creditors, including holders of capital notes and debentures.

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It is true that the majority of DVD titles shipped by Netflix are from back-catalog titles rather than new releases.

Netflix's DVD rental service, known as DVD.com, has been in operation since 1998 and continues to serve a portion of its customer base who prefer physical media over streaming. While the company has shifted its primary focus to streaming content, it still maintains the DVD rental service as an option for subscribers.

The reason behind the prevalence of back-catalog titles in DVD shipments is mainly due to the nature of the service. The availability of new releases on DVD is generally limited during the initial release period, as studios often prioritize digital distribution and streaming deals. This means that new DVD releases may have delayed availability or limited stock.To meet the demand for a wide selection of titles, Netflix heavily relies on its extensive library of back-catalog titles for DVD shipments. These titles encompass a range of movies and TV shows from various genres and time periods, providing subscribers with a diverse selection to choose from.

It's important to note that the DVD rental market and Netflix's strategies may evolve over time, and the balance between back-catalog titles and new releases could change. For the most accurate and up-to-date information, it is recommended to refer to official statements from Netflix or industry reports.

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Daily business communication at Orange Photography involves various forms of messaging, including good-news announcements and goodwill messages.

In the course of their daily business communication, Orange Photography engages in a range of messaging activities. These activities encompass different types of communication, such as good-news announcements and goodwill messages. Good-news announcements are used to share positive developments, achievements, or milestones within the company or with external stakeholders. They serve as a means to celebrate successes, boost morale, and foster a sense of unity and pride among employees. Goodwill messages, on the other hand, are expressions of kindness, gratitude, or support towards others. They can be sent to clients, partners, or colleagues to acknowledge their contributions, express appreciation, or extend best wishes. Goodwill messages help strengthen relationships, build rapport, and enhance the overall reputation and goodwill of the company. Both good-news announcements and goodwill messages are vital components of effective business communication, as they contribute to a positive work environment, encourage collaboration, and foster strong connections with stakeholders.

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True. A lessee's minimum lease payments include the present value of a residual value guarantee. A residual value guarantee is a commitment by the lessor to pay the lessee a certain amount of money at the end of the lease term if the leased asset's residual value falls below a predetermined amount.

The lessee's minimum lease payments include the present value of this guarantee because it represents an additional cost to the lessor that must be factored into the lease payments. The present value of the residual value guarantee is calculated using the same discount rate used to calculate the present value of the lease payments. Therefore, the lessee must include the present value of the residual value guarantee in their minimum lease payments to accurately reflect the total cost of the lease over its term. This ensures that the lessee is aware of all costs associated with the lease and can make an informed decision about whether to enter into the lease agreement.


Minimum lease payments are the lowest amount that a lessee is required to pay over the lease term, considering factors such as rent, interest, and any other associated costs. A residual value guarantee is an agreement made by the lessee to the lessor, ensuring that the leased asset will have a specified value at the end of the lease term.

In accordance with the accounting standards, the present value of the residual value guarantee must be included in the calculation of minimum lease payments. This is because the guarantee represents a potential future payment obligation for the lessee. By including the present value of the residual value guarantee in the minimum lease payments, both the lessee and the lessor can accurately account for the lease's financial impact on their respective financial statements.

To summarize, it is true that a lessee's minimum lease payments include the present value of a residual value guarantee, as it represents a potential financial obligation and must be accounted for when determining the overall lease cost.

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TRUE. Asset turnover is a financial ratio that is used to measure a company's efficiency in utilizing its assets to generate revenue. It is computed by dividing the company's net sales by its average total assets. The higher the asset turnover ratio, the more efficiently the company is utilizing its assets to generate revenue.

Net sales refer to the total amount of sales revenue that a company generates after deducting any returns, discounts, and allowances. Average total assets, on the other hand, refer to the average value of a company's total assets over a specific period of time. This is usually computed by adding the beginning and ending values of the total assets and dividing the sum by two.

Asset turnover is an important ratio that is used by investors, creditors, and analysts to evaluate a company's performance and efficiency. A high asset turnover ratio indicates that the company is able to generate a significant amount of revenue using a relatively small amount of assets. This can be an indication of good management and operational efficiency.

In conclusion, it is true that asset turnover is computed by dividing net sales by average total assets. This ratio is an important indicator of a company's efficiency in utilizing its assets to generate revenue, and can be used by investors and analysts to evaluate its performance. True is the correct answer.

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a.) the unit product cost under super-variable costing is $34 per unit,b.)the net income for the year is $1,998,650.

Super-variable costing, also known as throughput costing, is a method of costing that only considers the variable costs of production in determining the cost of a unit of product.

In this case, the variable cost per unit for direct materials is $34. Since there are no variable manufacturing overhead costs or variable selling and administrative expenses, the unit product cost under super-variable costing would be $34 per unit.

To prepare the income statement, we need to calculate the total fixed costs for the year. The fixed costs for direct labor, manufacturing overhead, and selling and administrative expenses total $1,026,750 ($495,000 + $453,750 + $78,000).

Next, we can calculate the total cost of goods sold by multiplying the unit product cost by the number of units sold. The cost of goods sold is therefore $854,100 ($34 x 25,100).

Using the selling price of $75 per unit, the total sales revenue for the year is $1,882,500 ($75 x 25,100).

To calculate the gross profit, we subtract the cost of goods sold from the total sales revenue, which gives us $1,028,400 ($1,882,500 - $854,100).

Finally, we deduct the fixed costs from the gross profit to arrive at the net income for the year. The net income under super-variable costing is $1,998,650 ($1,028,400 - $1,026,750).

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Using super-variable costing, the unit product cost for the year is computed as follows:Direct materials per unit $ 34

Direct labor per unit ($495,000 ÷ 27,500) $ 18

Variable overhead per unit $ 0

Total variable cost per unit $ 52

Fixed overhead per unit ($453,750 ÷ 27,500) $ 16.50

Total unit product cost $ 68.50

Bracey Company Income Statement using super-variable costing:

Sales (25,100 units x $75 per unit) $1,882,500

Cost of goods sold:

Beginning inventory $ 0

Cost of goods manufactured (27,500 units x $52) $1,430,000

Goods available for sale $1,430,000

Ending inventory (2,400 units x $68.50) $ 164,400

Cost of goods sold $1,265,600

Gross margin $ 616,900

Selling and administrative expenses:

Fixed selling and administrative expenses $ 78,000

Operating income $ 538,900

Since super-variable costing does not include any fixed costs in the unit product cost, fixed selling and administrative expenses are deducted separately in the income statement to arrive at the operating income.

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To be more persuasive, Alicia should consider option b) put her supervisor in a good mood.

Creating a positive mood in her supervisor can increase receptiveness and openness to her ideas. When individuals are in a positive emotional state, they tend to be more open-minded, cooperative, and receptive to different perspectives. By putting her supervisor in a good mood, Alicia can create a favorable environment for presenting her case.

However, it's important for Alicia to also focus on the substance of her argument and present strong evidence to support her case. A combination of a positive mood and well-reasoned arguments will increase her chances of persuading her supervisor effectively.

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