why does fractional reserve banking leave banks vulnerable to failure if too many consumers demand their money at the same time
Answers
Fractional reserve banking is a system in which banks keep only a fraction of the money deposited by customers in reserve and lend out the rest.
For example, if a bank has $1,000 in deposits, it may keep $100 in reserve and lend out the remaining $900 to borrowers.
The problem with this system is that it creates a situation in which banks are relying on the fact that not all customers will demand their money at the same time.
Banks assume that only a small percentage of customers will withdraw their money on any given day, and they lend out the rest of the funds.
This means that if too many customers demand their money at the same time, the bank may not have enough cash on hand to meet those demands.
In this scenario, the bank may be forced to sell assets, borrow money from other banks, or even go bankrupt if it cannot meet the demands of its customers.
This is why fractional reserve banking leaves banks vulnerable to failure if too many consumers demand their money at the same time.
To mitigate this risk, governments often require banks to hold a certain percentage of their deposits in reserve, and central banks can provide emergency funding to banks that are experiencing a run on their deposits.
However, even with these measures in place, fractional reserve banking remains a system that is vulnerable to bank runs and financial instability.
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Related Questions
select the relationship represented by the balance sheet. multiple choice assets liabilities stockholders' equity
Answers
The relationship represented by the balance sheet is as follows:
Assets = Liabilities + Stockholders' Equity
The balance sheet provides a snapshot of a company's financial position at a specific point in time.
It reports the company's assets, liabilities, and stockholders' equity. The assets are resources owned by the company, such as cash, investments, property, and inventory. Liabilities are obligations owed by the company to others, such as loans, accounts payable, and salaries payable. Stockholders' equity is the residual interest in the assets of the company after deducting liabilities. It includes capital contributed by the owners, such as common stock and retained earnings.The balance sheet equation is always in balance, meaning that the total value of assets equals the sum of liabilities and stockholders' equity. This reflects the basic accounting principle that every transaction has two sides, and that the total value of one side must equal the total value of the other side.
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a) The price per kilolitre of water consumed is fixed in regional territories and states like Darwin and Hobart. In Darwin of Northern Territory, the price per kilolitre in 2020/21 was $1.96 while in Hobart of Tasmania, the price per kilolitre was $1.06. Does this pricing scheme encourage an efficient consumption of water? Explain.
(5 marks)
b) Other Australia and cities like Adelaide, Canberra, Melbourne and Perth implement "tiered pricing" or increasing block rates tariffs. Why? Explain.
(5 marks)
c) I have noticed that my water bill consists of two-part charges consisting of a fixed-fee service use charge and a variable water use charge. Why? Explain.
(5 marks)
Answers
a) The pricing scheme of fixed prices per kilolitre of water consumption in Darwin and Hobart does not necessarily encourage efficient water consumption. The fixed pricing does not take into account the scarcity or demand for water in different regions, which means that consumers are not directly incentivized to use water efficiently. Regardless of the actual costs associated with water supply and scarcity, consumers pay the same price per kilolitre, which may not reflect the true value of water.
b) Other Australian cities like Adelaide, Canberra, Melbourne, and Perth implement "tiered pricing" or increasing block rate tariffs to encourage efficient water consumption. Tiered pricing involves dividing water consumption into different usage tiers or blocks, where the price per kilolitre increases as the consumption levels increase. This pricing structure encourages consumers to be more mindful of their water usage and promotes conservation.
The reasons for implementing tiered pricing include:
1. Encouraging conservation: By increasing the price as consumption levels rise, tiered pricing incentivizes consumers to use water efficiently and reduce wasteful practices. It encourages individuals to be mindful of their consumption patterns and adopt water-saving behaviors.
2. Reflecting the true cost of water: Tiered pricing recognizes that the cost of supplying water increases as consumption levels rise. Higher usage may require additional infrastructure, treatment, and maintenance, which can be reflected in the higher prices of subsequent tiers. This ensures that consumers who use more water pay a proportionate amount that covers the additional costs.
3. Promoting equity: Tiered pricing can be designed to be progressive, meaning that lower levels of water consumption are charged at lower rates, benefiting low-income households. This helps ensure that water remains affordable for essential needs while discouraging excessive consumption by higher-income households.
c) The inclusion of two-part charges in a water bill, consisting of a fixed-fee service use charge and a variable water use charge, serves different purposes:
1. Fixed-fee service use charge: The fixed-fee service use charge is a set fee that consumers pay regardless of their actual water consumption. It covers the fixed costs associated with maintaining the water supply infrastructure, such as maintaining pipes, meters, and administrative expenses. This charge ensures that the costs of providing water services are recovered, even if water consumption is low.
2. Variable water use charge: The variable water use charge is based on the actual amount of water consumed by the customer. It is calculated by multiplying the volume of water used by the price per kilolitre. This charge reflects the variable costs associated with supplying water, such as treatment, pumping, and distribution costs.
The inclusion of both fixed and variable charges allows water utilities to recover the fixed costs of maintaining the infrastructure while also ensuring that customers pay for the amount of water they consume. This two-part charging system promotes fairness and cost recovery, as it considers both the fixed costs of providing the service and the variable costs associated with consumption.
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Place the Elements of a Sales Process in the correct order
>
>
Handling Objections
Approach
Follow-up
Presentation
Closing
Preparation
Prospecting
Answers
The correct order of sales process is-
ProspectingPreparationApproachPresentationHandling ObjectionsClosing Follow-upWhat is Sales Process?A series of reiterable steps that a salesperson follows to get a potential customer from the initial level of understanding to a closed sale is known as a sales process.
This road map which is categorized into various steps helps the salesperson to successfully convert a prospect into a customer and helps them to provide better service.
The key to successful selling is research. The strongest salesmen are aware that completing comprehensive research work shows your customer that you will provide excellent customer service.
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Explain the difference between buffet and fast food restaurants.
Answers
Answer:
The difference is that buffets don't actually have to prepare the food quickly.
Explanation:
Buffet can be considered a form of fast food: you walk in and pay, and can then immediately grab whatever you like and eat it.
What is the premium added to the real risk-free rate to compensate for a decrease in purchasing power over time?
Answers
The premium added to the real risk-free rate to compensate for a decrease in purchasing power over time is called the inflation premium.
The real risk-free rate is the rate of return on an investment that is considered to be risk-free, meaning that it carries no default or credit risk. However, even risk-free investments are subject to inflation risk, which is the risk that the purchasing power of the investment will decrease over time due to inflation.
The inflation premium is the additional return that investors demand to compensate for the expected decrease in purchasing power caused by inflation. This premium is added to the real risk-free rate to calculate the nominal risk-free rate, which is the rate of return on an investment that includes both the real risk-free rate and the expected rate of inflation.
Therefore, the nominal risk-free rate is calculated as:
Nominal Risk-Free Rate = Real Risk-Free Rate + Inflation Premium
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Colour Life Berhad requires RM10,000,000 to fund their new plant in Johore and is considering three financing options. The corporate tax rate is currently 35 percent. Alternative A To issue a 10 percent, RM100 preferred share at a 5 percent discount. The cost of issuance is estimated to be 4 percent of the selling price. Alternative B To issue a 15-year, RM1,000 straight bond at a 5 percent discount. The bond will pay a 10 percent coupon annually. The floatation cost is set at 4 percent of the selling price. Alternative C To issue a common share at RM25 per share. The dividend paid was RM1.50 and it is expected to grow at a constant rate of 7 percent. The floatation cost is set at 10 percent of the selling price. 24. Determine the annual coupon that Colour Life Berhad will pay for a unit of its bond each year. A. RM50 B. RM100 C. RM150 D. RM1,000
Answers
The correct answer is B. RM100.
To determine the annual coupon that Colour Life Berhad will pay for a unit of its bond each year, we need to consider the details provided for Alternative B.
Alternative B states that Colour Life Berhad will issue a 15-year, RM1,000 straight bond at a 5 percent discount. The bond will pay a 10 percent coupon annually.
The annual coupon payment can be calculated as a percentage of the bond's face value. In this case, the face value is RM1,000, and the coupon rate is 10 percent.
Annual coupon payment = Coupon rate * Face value
Annual coupon payment = 10% * RM1,000
Annual coupon payment = RM100
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On September 1, Big Fan of Toledo prepaid six months of rent, $3,300 Read the requirements Date Accounts and Explanation Debit Credit Sep. 1 Prepaid Rent 3,300 Cash 3,300 To record rent paid in advance Requirement 2. Record the adjusting entry required at September 30. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Accounts and Explanation Debit Credit Sep. 30 Rent Expense Requirements To record rent expense 1. Record the journal entry for the September 1 payment. 2. Record the adjusting entry required at September 30 3. Using T-accounts, post the journal entry and adjusting entry to the accounts Choose from any list or enter any number in the input fields and then cli part remaining involved and show their balances at September 30.
Answers
On September 1, Big Fan of Toledo prepaid six months of rent, $3,300. To record this transaction, a journal entry should be made with a debit to Cash for $3,300 and a credit to Prepaid Rent for $3,300.
At September 30, an adjusting entry is required to account for the portion of the rent that has been used.
To do this, a journal entry should be made with a debit to Rent Expense for $3,300 and a credit to Prepaid Rent for $3,300. This will bring the Prepaid Rent account to a zero balance, reflecting that the rent has been used for the month.
To illustrate this with T-accounts, the journal entry and adjusting entry can be posted as follows:
Cash:
Debit: $3,300
Credit: $3,300
Prepaid Rent:
Debit: $3,300
Credit: $3,300
Rent Expense:
Debit: $3,300
Credit: $3,300
At September 30, the Cash and Rent Expense accounts will have a balance of $3,300, while the Prepaid Rent account will have a balance of zero, reflecting that the rent has been used for the month.
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who is the faunder of spec
Answers
Doug and Mary Peckins in 1984
Pls follow me thanks!!!
Answer:
Salvino D Armente invented eyeglasses in 1285
In order for a company to market the same product or service to different markets, what step is critical for the company to take?.
Answers
There are a lot of firms today. For them to do the above, the company should try and generate a lot of positioning strategies to target the different kinds of audiences.
How is a positioning strategy statement used?The positioning strategy/statement is one that is often used to inform a company's of its marketing mix. A lot of Marketers often uses a positioning strategy so as to direct the marketing mix for a specific product, service, or brand.
When a marketer is said to target her product message at a particular target market, she does a lot of things with the general value proposition.
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what is criminal justice
Answers
Answer:
Criminal justice is the delivery of justice to those who have committed crimes.
Blue Sky Laws require registration of all of the following EXCEPT: A exempt issues B non-exempt issues C broker-dealers D sales representatives
Answers
According to the state laws, all the above except issues that are exempt must be registered. Hence, option A is the correct answer.
What are Blue Sky Laws?Blue Sky State Laws refers to laws that are enacted to combat fraud, and which require that issuers of securities must be registered.
Blue Sky Laws also required issuers of securities to disclose details of their offerings.
Hence the correction option is A.
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Abdul spends all of his income on food (F) and shelter (S). His budget line is given by the equation 5F + 20S = 100. Which of the following consumption bundles is part of his consumption possibilities?
ï‚· 8 units of F and 3 units of S
ï‚· 14 units of F and 2 units of S
ï‚· 0 units of F and 6 units of S
ï‚· 20 units of F and 15 units of S
Answers
Abdul's budget line is given by the equation 5F + 20S = 100. This means that he has a fixed income of 100 units and he can spend it on either food or shelter or a combination of both. The budget line shows all the possible consumption bundles that Abdul can afford given his fixed income and the prices of food and shelter.
To determine which of the given consumption bundles is part of Abdul's consumption possibilities, we need to plug in the values of F and S in each option and see if it satisfies his budget constraint.
Let's take the first option of 8 units of F and 3 units of S. Plugging in the values, we get 5(8) + 20(3) = 100. This option satisfies Abdul's budget constraint and is therefore part of his consumption possibilities.
Similarly, we can check the other options. The second option of 14 units of F and 2 units of S gives us 5(14) + 20(2) = 100, which also satisfies the budget constraint. The third option of 0 units of F and 6 units of S gives us 5(0) + 20(6) = 120, which is greater than Abdul's income and hence not feasible. The fourth option of 20 units of F and 15 units of S gives us 5(20) + 20(15) = 500, which is also greater than Abdul's income and hence not feasible.
Therefore, the consumption bundles that are part of Abdul's consumption possibilities are the first and second options, which are 8 units of F and 3 units of S, and 14 units of F and 2 units of S, respectively.
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Lucky Laundry reported assets of $950 and equity of $580. What is Lucky's debt ratio?
Answers
Answer:
0.3894
Explanation:
Debt Ratio = Total Debts/Total Assets
We will find the amount of Debt since amount of total assets is given
Assets = Liabilities + Equity
$950 = L + $580
L = $950 - $580
L = $370
Now lets find the Debt ratio
Debt Ratio = Total Debts/Total Assets
= $370/$950
= 0.3894
Suppose the rate of return on a 10-year T-bond is 5.50%, the expected average rate of inflation over the next 10 years is 2.30%, the MRP on a 10-year T-bond is 1.64%, no MRP is required on a Treasury Inflation Protected Security (TIPS), and no liquidity premium is required on any Treasury security. Given this information, what should the yield be on a 10-year TIPS? Disregard cross-product terms, i.e., if averaging is required, use the arithmetic average.
Answers
Answer:
the yield be on a 10-year TIPS is 1.56%
Explanation:
The computation of the yield to be on 10 year TIPS is as follows:
Yield on 10 year TIPS is
= rate of return on 10 year T bond - Average inflation - MRP
= 5.50% - 2.30% - 1.64%
= 1.56%
Hence, the yield be on a 10-year TIPS is 1.56%
The same should be considered and relevant too
low p/e ratios tend to indicate that a company will , ceteris paribus. a. grow quickly b. grow at the same speed as the average company c. grow slowly d. p/e ratios are unrelated to growth. e. none of the options
Answers
The correct OPTION A Low p/e ratios tend to indicate that a company will grow quickly, ceteris paribus. Low Prices and Profits Value stocks are a common term used to describe ratio firms. Their stock prices trade below their fundamentals, which indicates that they are undervalued.
Investors will purchase the stock as a result of this mispricing in order to take advantage of the fantastic deal before the market corrects it. The P/E ratio, or price to earnings ratio, demonstrates what the market is ready to pay now for a stock based on its current or projected earnings. A high P/E ratio could indicate that a stock is overvalued and its price is excessive in relation to its earnings.
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Travis has an athletic shoe store and is currently preparing a market summary. To be most effective, the competition section of his market summary should
Answers
Based on the provided information For Travis to be most effective, the competition section of his market summary that he should do is to list both direct and indirect competitors.
What is market summary all about?The concept about market summary lets to know about stock market and how buyers and sellers negotiate prices.
Therefore, Travis list both direct and indirect competitors when making summary.
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creative ads should seek to (1) attract attention and retain attention, (2) achieve the objective of the advertising strategy, and (3) avoid having any errors, especially legal ones.
Answers
As stated, innovative advertisements should strive to be as succinct as feasible.
What term describes retention?Retain has a number of popular synonyms, including hold, maintain, reserve, and withhold. All of these verbs refer to "keeping in one's control and under one's control," but maintain means keeping something even after being threatened with seizure or forced to give it up. even in poverty they were able to maintain their dignity.
What does a sentence retain mean?to continue to own something: She has failed in her attempt to keep control of the business. He kept his composure throughout the performance. In the latter stages of the race, she was successful in holding onto her lead.
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If an american-based firm opens and operates a new clothing factory in honduras, then it is engaging in:.
Answers
List 3 responsibilities that a consumer has when making a purchase.
Answers
Answer:
check receipt, know the return policy, read the fine print
Explanation:
Welcome
Jackson is preparing for his hearing before the Federal Communications Commission (FCC) involving a complaint that was filed against him by the FCC regarding the interruption of radio frequency. The order to "cease and desist" using the radio frequency has had a detrimental impact on his business.
The Federal court, through stare decisis, will look to precedent in ruling on Jackson's case.
Yes, the court will look to cases that have already been decided in deciding Jackson's case.
No, the court will start with a clean slate in reaching a decision regarding Jackson's case.
Answers
Answer:
Yes, the court will look to cases that have already been decided in deciding Jackson's case.
Explanation:
The court has scheduled hearing which Jackson has to attend. In this case the court will look into details of the matter and then find out the decision. If there are some difficulties in concluding the case then references will be taken from previous cases whose decisions has been decided.
Answer:
Yes, the court will look to cases that have already been decided in deciding Jackson's case.
Explanation:
I did the assignment in edge 2021.
As an advertising manager of a company, you have been asked to write a proposal stating why the company should advertise and it's benefits to the company
Answers
Answer: Advertising helps expand the market of the company to have more people to know about the product
Explanation:
Proposal for advertising; My firm, xyz cooperation would love to handle the publicizing aspect of your product while you go ahead your business. We have been into these business for about 20years, so we understand the challenges that comes with the business and how they are tackled. We are creative and emerging with our services, as we offer them with reasonable and affordable prices, do read through our profile as we look forward working with you
Benefits;
1) We expand your market when we advertise for you
2) We brand your firm with a new look and make consumers get attracted
3) We offer a discount of 15% for new firms and subsequently 5% for consistent customers.
RSI Gaming LTD. Make game consoles. One of their products, the AddictaBox,is in the decline phase of its lifecycle. The addictabox is quite old and doesn't work with some of the new games in the market.Explain why RSI Gaming LTD, may decide to lower the price of the AddictaBox
Answers
RSI Gaming LTD may decide to lower the price of the AddictaBox due to a decline in sales or to clear out its existing inventory. By doing so, the company may be able to attract a larger audience and increase its sales, as well as avoid the costs associated with storing and maintaining excess inventory.
RSI Gaming LTD may decide to lower the price of the Addict a Box for a number of reasons. One of these reasons may be because the product is in the decline phase of its lifecycle. The Addict a Box is quite old and doesn't work with some of the new games in the market. This means that there are fewer people who are interested in buying the product, which can lead to a decline in sales.
In order to try to stimulate sales and maintain their market share, RSI Gaming LTD may decide to lower the price of the Addicta Box. This would make it more affordable for consumers who are looking for a gaming console that is compatible with older games. By doing so, the company may be able to attract a larger audience and increase its sales.
Another reason why RSI Gaming LTD may decide to lower the price of the AddictaBox is to clear out its existing inventory. If the product is not selling well and there is a surplus of inventory, the company may decide to lower the price in order to encourage consumers to buy the product and clear out the inventory. This can help the company avoid the costs associated with storing and maintaining excess inventory.
In conclusion, RSI Gaming LTD may decide to lower the price of the AddictaBox due to a decline in sales or to clear out its existing inventory. By doing so, the company may be able to attract a larger audience and increase its sales, as well as avoid the costs associated with storing and maintaining excess inventory.
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The _____________________ model produces for maximum profits where mr = mc and charges a higher price and produces less than the lowest cost output per unit (atc).
Answers
The profit-maximizing firm model produces for maximum profits where mr = mc and charges a higher price and produces less than the lowest cost output per unit (atc). Profit maximization is the process by which businesses ensure that the best output and price levels are achieved in order to maximize their returns.
The firm adjusts influential factors such as sale price, production cost, and output levels to achieve its profit goals. The production quantity where marginal revenue equals marginal cost is where the monopoly can make the most money: MR = MC.
If the monopoly produces fewer units, MR > MC at those levels of output, and the firm can increase profits by increasing output. Find cheaper raw materials than those currently in use as an example of profit maximization. Find a supplier who provides better prices on inventory purchases.
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According to the video, what are some qualities needed by Advertising and Promotions Managers? Check all that apply.
creativity
college degree
leadership
high school degree
ability to express themselves clearly
ability to stand for long periods
Answers
A, B, C, E
_______________________________________
Malachi 1:2
Qualities needed by Advertising and Promotions Managers:
creativityCollege degreeleadershipability to express themselves clearlyWhat is advertising?Advertising refers to the methods used to draw attention to a good or service. In order to attract consumers' attention, advertising seeks to highlight a good or service. It is often used to market a particular product or service, although there are many other applications as well, with commercial advertising being the most popular. By "branding," which links a product name or image with particular traits in customers' minds, commercial advertising frequently aims to boost the consumption of their goods or services.
Direct-response advertising, on the other hand, is the term used to describe advertisements that aim to prompt a quick sale. Political parties, interest groups, religious institutions, and governmental bodies are examples of non-commercial organizations that promote goods and services more than consumer goods.
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5. You purchase your daily
coffee at the chemist’s coffeehouse and have a choice of two cups
with different specific heat capacity. Which cup will you choose,
the cup with a low specific or the cu
Answers
You would choose the cup with a low specific heat capacity.
Specific heat capacity refers to the amount of heat energy required to raise the temperature of a substance by a certain amount. In the context of coffee cups, a cup with a low specific heat capacity means that it heats up or cools down quickly in response to changes in temperature.
When you purchase your daily coffee, you likely want to enjoy it at an optimal temperature for a longer period. By choosing a cup with a low specific heat capacity, it will absorb less heat from the coffee, allowing it to stay hot for a longer time. The cup will also cool down faster when exposed to the surrounding environment, preventing your coffee from becoming lukewarm too quickly.
On the other hand, a cup with a high specific heat capacity would absorb more heat from the coffee, causing it to cool down rapidly. This would result in your coffee becoming cold faster, making it less enjoyable to drink.
Therefore, opting for a cup with a low specific heat capacity would be more advantageous as it helps maintain the desired temperature of your coffee for a longer duration.
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Imagine you are working in business analytics for a company that interests you. It could be a sports team, a movie studio, a video game maker, or a clothing designer, for example. Explain how you would use business analytics to improve the company’s goods or services. Make sure your answer shows your knowledge of what business analytics is.
Answers
Modern big data analytics and operations expect the styles of consumers. After that, they use the one's styles to inspire brand loyalty as they are able to acquire greater data to examine greater developments for customer satisfaction.
What do you mean by Business analytics?
Business analytics (BA) is a set of disciplines and technology for fixing commercial enterprise issues with the usage of records analysis, statistical models, and different quantitative methods.
Business analytics allows for handing over smarter offerings and products.
Thus, Business analytics allows organizations to provide better products and improve customer satisfaction.
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in addition to the technical score, the international judging system includes scores for five (a) , which are (b)
Answers
Addition to the technical score, the international judging system includes scores for five.The gymnast requires an artistic score of 9.2 to have a final score of at least 8. Let's discuss how to resolve the issue.
In a gymnastics competition, the athlete's final score is determined by adding 25% of the artistic score to 75% of the average technical score. The final score is equal to 75% of the technical average score plus 25% of the artistic SC. Scores are all out of 10.A gymnast's technical score on average is 7.6. The gymnast must receive a final score of at least 8.0 notwithstanding the average technical score of 7.6. The result is an 8.0.The final score is 8.0; change these values in the equation above. The average technical score is 7.6. 8 = 76% plus 25% of the creative score. 7.6 = 75/100, plus 25/100 for artistic score.8 = 0.75 (7.6) + 0.25 for the creative score. 8 = 5.7 plus 0.25 from the artistic score- Subtract 5.7 from both sides.Divide the two sides by 0.25 to get the artistic score, which is 2.3.
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Suppose a publisher faces the following costs of producing 10,000 newspapers each month: $5,500 cost of labor; $2,200 monthly mortgage payment; $250 cost of electricity to run the printing presses; $800 for ink and paper; and $200 in city property taxes (based on the value of the building and land). Its total variable costs are:
Answers
Answer:
Variable cost = $6,550
Explanation:
Variable cost is the cost incurred during the production process that changes with quantity of goods produced. For example labor, machine operating cost, and raw materials.
The other type of cost is variable cost that does not change with volume of production, but rather remains constant. For example rent, tax, and so on.
In the given instance the costs that are variable are cost of labor, cost of electricity to run printing presses, and cost of ink for paper.
Monthly mortgage and property tax are fixed cost that must be paid regardless of production volume.
variable cost = $5,500 + $800 + $250
Variable cost = $6,550
university members are required to submit financial disclosures using the university’s designated system.
Answers
University members are required to submit financial disclosures using the university's designated system.
In order to maintain transparency and ensure ethical practices, universities often require their members, such as faculty and staff, to submit financial disclosures. These disclosures involve providing information about their financial interests, such as investments, consulting arrangements, or outside sources of income, using the university's designated system. By doing so, universities can identify potential conflicts of interest and take appropriate measures to prevent any bias or unethical behavior in research, decision-making, or other activities. Financial disclosures play a crucial role in upholding the integrity and credibility of academic institutions, fostering trust among stakeholders and the wider community.
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In a traditional cost management system, cost behavior is assumed to be driven only by?
Answers
In a traditional cost management system, cost behavior is assumed to be driven only by volume or activity level. This means that the costs are expected to change in relation to the level of activity or production within a given range.
For example, let's say a company produces and sells bicycles. In a traditional cost management system, the cost of materials, such as steel and rubber, would be expected to increase as the number of bicycles produced and sold increases. Similarly, the cost of labor, such as wages for assembly line workers, would also be expected to increase with higher levels of production.
However, it's important to note that in reality, costs may be influenced by other factors as well, such as changes in technology, economies of scale, or changes in market conditions. Therefore, while a traditional cost management system assumes cost behavior to be driven only by volume or activity level, it is not always the case in practice.
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