how to calculate federal funds target rate with target inflation rate current inflation rate real equilibriujm federal funds rate and output gap
Answers
When inflation exceeds the Fed's inflation objective, the rule calls for a higher federal funds rate, and if inflation is below target, a lower one.
How are federal funding rates targeted determined?The Taylor Rule is a formula that central bankers can use to calculate what their overnight interbank lending rate goal should be based on variables including actual inflation, an inflation objective, actual output, potential production of the economy, and an estimate of the equilibrium real fed.Maintaining stable pricing is one of the Fed's primary objectives, along with low unemployment. Since 1996, Fed policymakers have often held the position that their goal was to achieve an inflation rate of about 2%.When inflation exceeds the Fed's inflation objective, the rule calls for a higher federal funds rate, and if inflation is below target, a lower one.To learn more about Federal funds rate refer to:
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Federal Funds Target Rate = Real Equilibrium Federal Funds Rate + Target Inflation Rate - Current Inflation Rate - Output Gap
Output Gap = The difference between actual Gross Domestic Product (GDP) and potential GDP
The federal funds rate is the rate at which banks lend their reserves to other banks overnight. The Federal Reserve sets the target federal funds rate, which is currently 150 points or 1.50 percent.
The federal funds rate is calculated using the real equilibrium funds rate, which is the federal funds rate that balances the economy in the long run.
The real equilibrium federal funds rate is determined by several factors, including the target inflation rate, the current inflation rate, and the output gap.
The formula for calculating the federal funds target rate is as follows:
Federal Funds Target Rate = Real Equilibrium Federal Funds Rate + Target Inflation Rate - Current Inflation Rate - Output Gap
where:
Real Equilibrium Federal Funds Rate = Federal Funds Rate that balances the economy in the long run
Target Inflation Rate = The inflation rate targeted by the Federal Reserve
Current Inflation Rate = The current rate of inflation
Output Gap = The difference between actual Gross Domestic Product (GDP) and potential GDP
The federal funds rate target can be adjusted by the Federal Reserve depending on the state of the economy and inflation levels.
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Related Questions
if you want a low monthly payment in a lot of time to repay your student loan you should select what
Answers
Answer:
what are the options?
Explanation:
I'm assuming the question is multiple choice, therefore it would help to know the options.
The ask yield on a 6 percent coupon treasury bond maturing in eight years is 5.488 percent. ifthe face value is $1,000, what should be the quoted cost of the bond today (use semiannualcompounding)?
Answers
The quoted cost of the bond today is 103:9.Coupon treasury bond maturing in eight years is 5.488 percent.
$60 x PVIFA (zero.05488/2, 16) + $1,000 x PVIF (zero.05488/2,16) = $1,032.79488;
To convert to a fraction quote do the following: round down ($1,032.79488/10) +
round {($1,032.79488/10) - round down ($1,032.79488/10)] x 32} = 103 9/32
A place in which stores of wealth are saved. the place of deposit and disbursement of amassed budget especially. the treasury in which public revenues are deposited, saved, and allotted. the budget kept in the sort of depository. Advising on home and international economic, economic, financial, alternate, and tax policy; enforcing Federal finance and tax legal guidelines; Investigating and prosecuting tax evaders, counterfeiters, and forgers.
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which responsibility centers generate both revenues and costs?
Answers
Answer:
A profit center is a responsibility center having both revenues and expenses.
Explanation:
I tired
A firm that chooses automate its production changes the break-even-analysis, though the ............. cost may rise immediately, they will hopefully be offset by reduced ........... costs in the longer run.
Answers
A firm that chooses to automate its production changes the break-even analysis. Though the initial cost may rise immediately, they will hopefully be offset by reduced labor costs in the longer run.
Automation can be expensive initially, but it can lead to significant savings in labor costs over time. By automating certain tasks, a company can reduce its reliance on human labor, which can help reduce costs associated with salaries, benefits, training, and turnover. While the initial cost of automation may be high, the long-term benefits can outweigh the initial investment. The break-even analysis is an important tool for companies to determine when they can expect to start seeing a return on their investment in automation.
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office administration.Prepare for filling in order.
Answers
This (office administration) simply means to arrange the above in alphabetical order like this;
An Apple SpotA1 TaxiDriveByFine Foods LtdFirst Caribbean BankMalcolm Stephens & SonsNorth Eastern Funeral AssociationPortsmouth Police StationSt. John's Primary School21 Century Printers.What is office administration?Within a company, office administration is a collection of day-to-day operations connected to the upkeep of an office building, financial planning, record keeping and billing, personal development, physical distribution, and logistics.
Finally, administrative abilities are connected to corporate operations and enhancing office productivity. Communication and organizational abilities, as well as project management, bookkeeping, and time management skills, are among them.
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the macro view of entrepreneurship can be broken down into which three areas? a. environmental, financial, and displacement b. financial/capital, strategic, and opportunity c. displacement, trait, and financial d. entrepreneurial trait, opportunity, and strategic
Answers
The macro view of entrepreneurship can be broken down into which three areas environmental, financial, and displacement.
Entrepreneurship is the creation or acquisition of economic value. Under this definition, entrepreneurship is generally seen as a change that involves more risk than would normally occur when starting a business and may involve value other than economic value.
An entrepreneur is a person who creates and/or invests in one or more businesses, bears the most risks, and reaps the most benefits. [citation needed] The process of starting a business is known as entrepreneurship. Entrepreneurs are generally seen as innovators, sources of new ideas, products, services, and businesses/processes. In the field of economics, the term entrepreneur is used for an entity that has the ability to turn inventions and technologies into products and services. In this sense, entrepreneurship describes the activities of both established and new companies.
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what factor(s), besides the npv of an investment, should managers consider in a capital budgeting decision? the effect of the investment on the manager's short-term incentives all three of the other answers tax shields related to depreciation that would result from the investment the effect of the investment on the company's reputation
Answers
When making a capital budgeting decision, managers should consider factors beyond just the Net Present Value (NPV) of the investment. Here are the other factors that managers should consider:
1. The effect of the investment on the manager's short-term incentives: Managers often have performance targets and incentives tied to short-term financial goals. They need to evaluate whether the investment aligns with these goals and if it will positively impact their incentives.
2. Tax shields related to depreciation resulting from the investment: Depreciation is a non-cash expense that reduces taxable income. An investment may generate tax shields through depreciation deductions, which can lower the company's tax liability and improve cash flows. Managers should assess the potential tax benefits associated with the investment.
3. The effect of the investment on the company's reputation: Investments can impact a company's reputation, both positively and negatively. Managers should consider whether the investment aligns with the company's values, brand image, and long-term strategic goals. A positive reputation can lead to increased customer loyalty and improved financial performance.
In summary, when making a capital budgeting decision, managers should consider factors such as short-term incentives, tax shields related to depreciation, and the impact on the company's reputation, in addition to the NPV of the investment. These factors help ensure a comprehensive evaluation of the investment's potential benefits and risks.
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why is training important
Answers
These reasons include:-
Increased job satisfaction and morale among employees.Increased employee motivation.Increased efficiencies in processes, resulting in financial gain.Increased capacity to adopt new technologies and methods.Increased innovation in strategies and products.Reduced employee turnover.what is one of the effects that the internet has had on bussiness?
Answers
jan petri is the owner and operator of go-for-it llc, a motivational consulting business. at the end of its accounting period, december 31, 2018, go-for-it has assets of $759,000 and liabilities of $182,000. using the accounting equation, determine the following amounts: a. owner's equity as of december 31, 2018.
Answers
Based on the accounting equation, the owner's equity as of December 31, 2018 is $577,000
What is the owner's equity?You can solve for the owner's equity by using the accounting equation which is:
Assets = Liabilities + Equity
Filling in assets and liabilities gives:
759,000 = 182,000 + Equity
Equity = 759,000 - 182,000
= $577,000
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if d varies directly as t and d = 20.5 when t=12 find:(a) the value of the constant (b) the relationship between d and t (c) the value of d when t =6.
Answers
Answer:
(a) \(k=\frac{41}{24}\)
(b) \(d=\frac{41}{24} t\)
(c) \(d=\frac{41}{4}\)
Explanation:
As d varies directly as t,
\(d=kt\)
Here, k is a constant.
(a)
Put \(d=20.5\,,\,t=12\)
\(20.5=12k\\\\k=\frac{41}{24}\\\\k= 1.71\)
(b)
Put \(k=\frac{41}{24}\) in \(d=kt\)
\(d=\frac{41}{24} t\)
(c)
Put \(t=6\) in \(d=\frac{41}{24} t\)
\(d=\frac{41}{24} (6)\\\\d=\frac{41}{4}\)
Describe an experience you have had as a consumer which illustrates supply and demand.
Answers
Answer:
The law of supply and demand is the market rule by means of which the supply of goods and the demand for them are interrelated, linked through price: the higher the price of the good, the lower the demand for it, since that it will be more inaccessible for consumers, with which there will be an excess supply; Whereas, if the price of the good falls, the demand for the good increases and its supply will not meet the consumption expectations of consumers.
A clear example of this situation occurred in the midst of the coronavirus pandemic, when as a result of restrictions on public transport and fear of crowding in closed places, many people decided to purchase bicycles as an alternative means of transport, which triggered the demand for said well by causing the prices of these to increase.
what are the trends in the global job market?
Answers
The trends in the global job market is that the following are on the rise and they include: Remote work, contract work, project work, one-off commissions and self-employment.
Meaning of TrendA trend can be defined as a recent happening in a sector. it can bee said to be the current news or the prevailing happenings in a particular sector.
A trend is a current happening that is gaining major attentions by individual in a particular field.
In conclusion, The trends in the global job market is that the following are on the rise and they include: Remote work, contract work, project work, one-off commissions and self-employment.
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What does the concept of scarcity explain?choose three answers
Answers
The concept of scarcity explains:
why consumers are willing to pay high prices for items.why decisions must be made on how to use resourceswhy a single resource has more value than another resource.Scarcity as an economic idea "refers back to the basic reality of lifestyles that there exists most effective a finite quantity of human and nonhuman resources which the first-rate technical expertise is capable of the usage of to provide most effective restricted most amounts of each economic appropriate. shortage in economics refers to whilst the call for for a resource is greater than the deliver of that aid, as assets are limited. shortage consequences in purchasers having to make selections on how high-quality to allocate assets a good way to satisfy all simple needs and as many desires as feasible. shortage refers back to the confined availability of a useful resource in contrast to the infinite desires. shortage may be with appreciate to any natural assets or with admire to any scarce commodity. scarcity can also be called paucity of sources.
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Answer:
why consumers are willing to pay high prices for items.
why decisions must be made on how to use resources
why a single resource has more value than another resource.
Explanation:
why a product could lose significant value over time.
why people continue to purchase different products.
why consumers are willing to pay high prices for items.
why decisions must be made on how to use resources
why resources can be both renewable and nonrenewable.
why a single resource has more value than another resource.
(i took the test)
a retailer sells widgets for $15.00 after marking up 50% on consumer purchase price. the wholesaler had sold the widgets to the retailer at a markup of 20% on manufacturer selling price. in this instance, what is the manufacturer selling price
Answers
The manufacturer selling price of the widgets in this instance can be calculated by working backwards from the retail price. we can determine that the manufacturer selling price is $8.00.
Let's start by calculating the consumer purchase price. Since the retailer marked up the widgets by 50% on this price to reach the retail price of $15.00, we can find the consumer purchase price by dividing the retail price by 1.5. So, the consumer purchase price is $10.00.
Next, we need to determine the manufacturer selling price, which is the price at which the widgets are sold to the retailer. The wholesaler applies a markup of 20% on the manufacturer selling price to arrive at the consumer purchase price. Therefore, we can set up the equation: manufacturer selling price + 20% of manufacturer selling price = consumer purchase price.
Let's denote the manufacturer selling price as "X." From the equation, we have X + 0.2X = $10.00. Simplifying this equation, we get 1.2X = $10.00. Dividing both sides by 1.2, we find X = $8.00.
Hence, in this instance, the manufacturer selling price of the widgets is $8.00.
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massive dynamics has an ebit of $2 million per year forecast in perpetuity. its cost of equity is 16% and its tax rate is 28%. if massive dynamics borrows $5 million, what will be the value of the firm?
Answers
If massive dynamics borrows $5 million, then the value of the firm is 10.40 million.
Value of all equity Firm =EBIT(1-Tax Rate)/Cost of Equity =2000000(1-28%)/16%=9000000
Value of the firm =Value of all equity firm +Debt ×Tax Rate =9000000+5000000 ×28% =10,400,000 or 10.40 million
An investment company that uses its own money or capital from other investors for its expansion and startup operations is referred to as an equity firm or private equity firm. Typically, equity firms do not have a public listing and their shares are not traded on the stock exchange. The market value of a company is determined by adding the market values of all outstanding debt, common shares, and preferred shares. Comparing the market value of capital (equity) to the adjusted value of capital yields this measurement (equity).
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with this type of externality, in the absence of government intervention, the market equilibrium quantity produced will be than the socially optimal quantity.
Answers
The type of externality where market equilibrium quantity produced will be more than socially optimal quantity in absence of governemtn intervention is Negative externality.
Let understand that whenever a production of good or service negatively affect the unrelated third party who is not directly involved in a market transaction, it is said that negative externality exists in the scenario.
A very good example of commonly cited Negative Externalities are air pollution and noise pollution which was caused during production an affects unrelated third party.
If there is presence of government intervention in the production, then, the production of goods or service will be halted.
Therefore, in conclusion, this type of externality is called the Negative Externality.
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Journal entry for paid telephone rent for the year by Cheque Rs. 500.
Answers
Answer:
telephone rent A/c. Dr. Rs.500
To bank A/c. Rs.500
(being telephone rent paid )
The journal entry of the payment of telephone expenses is that the telephone expenses account is debited to record the expense incurred. The bank account is credited to record the payment made by cheque.
Here is the journal entry for paid telephone rent for the year by Cheque:
The journal entry to record the payment of telephone expenses by cheque is as follows:
Date Account Titles and Explanation Debit Credit
--------------------------------------------------------------------------------
2023-07-18 Telephone expenses $500
Bank $500
(To record the payment of telephone expenses by cheque.)
The telephone expenses account is a nominal account, which means that it is used to record expenses. The bank account is a real account, which means that it is used to record assets. The debit and credit entries are equal in amount, which means that the accounting equation is balanced. The journal entry is dated July 18, 2023, which is the date on which the payment was made. The explanation for the entry provides a brief description of the transaction.
In summary, the journal entry records the payment of telephone expenses by cheque. The telephone expenses account is debited to record the expense incurred. The bank account is credited to record the payment made by cheque. The debit and credit entries are equal in amount, which means that the accounting equation is balanced.
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Jorge, the office manager of Metalblock Inc., believes that providing positive consequences for a job well done will increase the likelihood of good work performance in the future. Jorge personally sends e-mails to his employees to commend their efforts when they perform well. Karla, the CEO of Descriptive Designs Inc., takes her employees off probation early when they perform to her expectations. Barney, the sales manager of Queenstar Corp., often shouts at his employees when they perform poorly. He also fails to appreciate employees when they perform well, which often results in poor performances.
It can be inferred that Jorge believes in the law of
Answers
The Law of Reinforcement, which states that behavior that is positively reinforced is more likely to be repeated in the future.
What is Reinforcement?Reinforcement is a form of learning in which an individual's behavior is modified by either rewarding or punishing the behavior in response to its occurrence. The goal is to increase the likelihood that the behavior will be repeated in the future. Reinforcement can involve the use of positive reinforcement, such as providing a reward for a desired behavior, or negative reinforcement, such as providing a punishment for an undesired behavior.
By sending e-mails to employees to commend them for good work, Jorge is reinforcing the behavior he wants to see repeated and encouraging employees to continue to perform at a high level. Karla is also reinforcing good behavior by taking employees off probation when they meet expectations. On the other hand, Barney's approach of criticizing employees for poor performance and failing to recognize good work undermines the law of reinforcement.
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In a monopolistically competitive market, the demand for Zack's Rootbeer can be desribed as P-20-Q. The marginal revenue that Zack faces is MR-20-2Q. Also, the marginal cost for the firm is MC-2Q. Finally, ATC=(Q2+10)\Q. Find the level of profit.
O 40
O 75
O 35
O 50
Answers
To find the level of profit in a monopolistically competitive market, we need to determine the equilibrium quantity and price, and then calculate the total revenue and total cost.
Given:
Demand: P = 20 - Q
Marginal Revenue: MR = 20 - 2Q
Marginal Cost: MC = 2Q
Average Total Cost: ATC = (Q^2 + 10) / Q
To find the equilibrium quantity, we set MR equal to MC:
20 - 2Q = 2Q
4Q = 20
Q = 5
Substituting the equilibrium quantity into the demand equation, we can find the equilibrium price:
P = 20 - Q
P = 20 - 5
P = 15
Total Revenue (TR) is calculated by multiplying the price by the quantity:
TR = P * Q
TR = 15 * 5
TR = 75
Total Cost (TC) is calculated by multiplying the average total cost by the quantity:
TC = ATC * Q
TC = ((Q^2 + 10) / Q) * Q
TC = Q^2 + 10
TC = 5^2 + 10
TC = 25 + 10
TC = 35
Profit (π) is calculated by subtracting total cost from total revenue:
π = TR - TC
π = 75 - 35
π = 40
Therefore, the level of profit is 40.
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ive been stuck on this PLEASE help-- how do I find marginal cost?
this is my assignment:
What is the marginal cost of nitrogen in our example when nitrogen is priced at 25 cents a pound vs. if it was 35 cents a pound?
Answers
Answer:
Marginal cost is calculated by dividing the change in total cost by the change in quantity. Let us say that Business A is producing 100 units at a cost of $100. The business then produces at additional 100 units at a cost of $90. So the marginal cost would be the change in total cost, which is $90.
All of these describe contemporary methods of risk prioritization in project management EXCEPT:
a. Some organizations place a higher priority on risks that are likely to happen soon.
b. Results of quantitative risk analysis are used for clarification purposes and are typically not documented in the risk register.
c. Risk prioritization is generally based on the probability of occurrence and severity of impact of each identified risk.
d. Some organizations call attention to the risks that are difficult to detect.
Answers
The correct option is c) Risk prioritization is generally based on the probability of occurrence and severity of impact of each identified risk.In project management, contemporary methods of risk prioritization focus on identifying, assessing, and prioritizing potential risks to ensure project success.
Common techniques include the Probability-Impact Matrix, the Delphi Technique, and the Monte Carlo Simulation. These methods help project managers allocate resources effectively, anticipate potential problems, and make informed decisions.
The Probability-Impact Matrix plots risks on a grid based on their likelihood of occurrence and their potential impact on the project. The Delphi Technique involves gathering expert opinions anonymously to reach a consensus on risk prioritization, avoiding biases and groupthink. The Monte Carlo Simulation is a quantitative approach that uses computer algorithms to analyze multiple risk scenarios and predict possible outcomes.
However, calling attention to risks that are difficult to detect is not a contemporary method of risk prioritization in project management. While being aware of such risks is important, it does not provide a structured approach to assessing and prioritizing risks. Instead, the focus should be on applying established techniques to systematically manage and mitigate risks throughout the project.The correct option is c) Risk prioritization is generally based on the probability of occurrence and severity of impact of each identified risk.
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The buyer of an industrial complex wants the broker to place the earnest money in an interest bearing account. The broker does this, clearly identifying all parties who are to receive the interest and the date the earned interest is to be disbursed. With only the verbal consent of the buyer, he places the money in an insured account in a depository in Florida. When the time comes to disburse the account, the broker will write a check to the buyer for the interest as the buyer agreed. Which statement describing this situation applies?
Answers
Answer:
Explanation:
In this situation, the statement that would best apply would be that the broker does not have the right to ever use an interest-bearing account under Florida Real Estate laws. Since Florida Real Estate laws specifically prohibit a broker from placing a clients money in an interest account then the broker in this scenario is breaking the law and can have his real estate license taken away as well as being fined.
Course : Analyzing and Visualizing data
Please note what you’ve learned in the course and how you will
apply it to your work life. Also, note anything else of importance
regarding the course overall
Answers
Analyzing and Visualizing Data is a comprehensive course that aims to impart data analysis and data visualization skills to learners. It teaches you how to utilize tools such as R, Python, and Tableau to analyze data, extract insights, and visualize them. Below are some of the key concepts learned in this course that can be applied to the work-life:
1. Data Cleaning and PreprocessingIn data analysis, the data you're working with will most likely need to be cleaned and preprocessed to ensure the accuracy of the results. Data cleaning refers to the process of removing or correcting errors, incomplete data, or duplicate entries from your data set. The preprocessing involves the conversion of raw data into a form that is compatible with analysis tools.
2. Data VisualizationData visualization is a way of representing data in a graphical format to enhance its readability and make it easier to interpret. It is a critical tool for data scientists, business analysts, and researchers to communicate insights to stakeholders.
3. Data AnalysisThis course teaches you the basics of data analysis, which is the process of examining data sets to extract insights and find trends. The process involves several steps, including data cleaning, data wrangling, data exploration, and data visualization. It also covers techniques such as statistical analysis and machine learning algorithms. Overall, Analyzing and Visualizing Data is a valuable course that can be applied to many careers. The skills learned in the course are transferable to data-driven fields such as data analysis, business intelligence, machine learning, and more.
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QUESTION 13 of 20: You own a dance studio. You have assets of $512,667 and equity of $268,964. What is your liabilities total?
оооо
a) $243,703
b) $268,964
c) $512,667
d) $781,631
Answers
Answer:
243,703
Explanation:
Under what circumstance would a country have a comparative advantage in
the production of a certain good?
A. It has a lower opportunity cost for production of that good.
B. It has a more highly skilled work force.
C. It has well-developed industrial capacities.
D. It uses an assembly line to produce that good.
Ap3x
Answers
Answer: [A] It has a lower opportunity cost for production of that good.
Explanation: It has a lower opportunity cost for production of that good. Comparative advantage comes when a country gives up less than others to engage in a particular type of production.
Answer:
It has a lower opportunity cost for production of that good.
Explanation:
The skills section of the resume should include skills that you've gained both in
school and hobbies but should be skills that are
to what the
employer is looking for.
unrelated
opposite
different
related
Answers
The correct answer is D. Related
Explanation:
When reading the résumé of a candidate, the employer always expects the candidate has skills and knowledge directly related to the job offer, because in most cases, these show the candidate will be able to adapt and work efficiently in the new job. For example, if an employer is looking for an architect the employer is more likely to select a candidate with experience and knowledge in the area. Due to this, every time you apply to a job offer your résumé should include skills that are directly related to the job offer or what the employer is looking for as this gives you more possibilities of being hired.
orange, an online-gaming site, has millions of users. the site has many games which pit users against each other. the relative standing of each user is presented in the form of an elaborate ranking system for each game. users pride themselves on gaining the highest points and the highest rank possible. this rise in user participation has increased the value of orange significantly. this is an example of . guerilla marketing network effects monopolistic competition internal marketing
Answers
This is an example of network effects. Orange, an online-gaming site, has become valuable due to its large user base, and the ranking system adds to the network effect by encouraging users to compete against each other to improve their standing.
As more users join and compete, the value of the site increases further, creating a positive feedback loop. Network effects refer to the phenomenon where a product or service becomes more valuable as more people use it. This can be seen in Orange's online-gaming site, where the ranking system encourages users to compete with each other, and the large user base makes the competition more exciting. As more users join and compete, the value of the site increases, attracting even more users, and creating a positive feedback loop. Therefore, this is an excellent example of how network effects can drive the growth of a product or service.
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Demand is likely to be most elastic for which of the following: Ground beef O Footwear O Bread O Concert tickets
Answers
Answer:
O Concert tickets
Explanation:
Elastic demand is the demand that is highly responsive to changes in prices. A small change in price causes the demand to change by a big proposition. When the demand is elastic, the change in demand is not propositional to changes in price.
Non-essential goods tend to have elastic goods. These are the goods that consumers can survive without. Demand for non-essential tends to decrease or increase in a big proposition when prices rise or fall by a small margin. From the list provided, concert tickets are non essential goods.
Analyze Horsepower Hookup, Inc. Horsepower Hookup, Inc., is a large automobile company that specializes in the production of high-powered trucks. The company is determining cost allocations for purposes of performance evaluation. A portion of company bonuses depends on divisions achieving cost management goals. This necessitates highly accurate support department cost allocation. Management has also stated that it has the means to implement as complex a method as necessary. The general manager over the Mid-Size D wants to get a good idea of what factors are driving the costs of the support departments in order to make accurate cost allocations, so finding accurate support department cost drivers is important. Support department costs include Janitorial ($163,100) and Security ($285,400). The Janitorial costs vary depending on the number of vehicles produced, increasing with larger production volumes. Security costs are fixed based on the size of the lot, and do not change with respect to how many vehicles are in the lot or warehouse. Joint costs involved in producing the trucks before the split-off point where the various makes, models, and colors are produced are $946,000 for the period. All makes, models, and colors sell at relatively similar margins, but the sports models and metallic colors are normally more difficult to produce during the joint production process. a Identify the support department cost allocation method that matches the given situation d. If Janitorial costs were to be allocated based on square footage, and Security costs based on asset value, what percentage of each support department's costs would be allocated to each production department using the sequential method (allocating Security costs first)
Answers
Mid-Size D should receive a Janitorial cost allocation of $54,463.64 and Luxury D should receive a Janitorial cost allocation of $43,570.91.
The sequential method allocates the cost of one support department before allocating the cost of the other support department.
To allocate the Security cost based on asset value, the following steps should be followed;
Step 1: Total Asset Value = $120,000,000 + $190,000,000 + $50,000,000 + $240,000,000
= $600,000,000
Step 2: Allocate the Security Cost by Production Department: The Security cost is allocated to each production department based on the asset value. Mid-Size D, Luxury D, and SUV should receive 20%, 32%, and 8% of the Security cost respectively based on their asset value.
Mid-Size D should receive Security cost allocation of $45,080,000.
To allocate the Janitorial cost, we use the volume-based method.
Volume-based allocation method assigns the cost of a support department to the production department based on the volume of the production department.
The cost allocation of Janitorial based on the number of vehicles produced is as follows;
Step 1: Find the total number of vehicles produced:
Total number of vehicles produced = 10,000 + 8,000 + 5,000 + 7,000 = 30,000
Step 2: Allocate the Janitorial cost by Production Department:
The Janitorial cost is allocated to each production department based on the number of vehicles produced.
Mid-Size D, Luxury D, and SUV should receive 33.33%, 26.67%, and 16.67% of the Janitorial cost respectively based on the number of vehicles they produce.
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