Assume a Cobb-Douglas production function of the form: q equals 10 Upper L Superscript 0.97 Baseline Upper K Superscript 0.18. What type of returns to scaleLOADING... does this production function exhibit? In this instance, returns to scale equal nothing. (Enter a numeric response using a real number rounded to two decimal places.) This production function exhibits A. decreasing returns to scale. B. constant returns to scale. C. initially increasing but then constant returns to scale. D. initially constant but then increasing returns to scale. E. increasing returns to scale.
Answers
Answer:
Returns to scale = 1.15
Increasing returns to scale.
Explanation:
Cobb-Douglas production function of the form:
Here, we are using a simple rule of factors to find the returns to scale:
Hence,
By adding up the powers of L and K, we can get the returns to scale.
Returns to scale = 1.15
Suppose, the power of L be 'a' and the power of K is 'b',
if a + b = 1, then it exhibits constant returns to scale
if a + b > 1, then it exhibits increasing returns to scale
if a + b < 1, then it exhibits decreasing returns to scale.
In our case,
a + b = 1.15 which is greater than 1, so this production function exhibits increasing returns to scale.
Related Questions
The difference between total factory overhead cost incurred during a period and the total standard factory overhead cost assigned to production of the period is the:______________.A) Flexible-budget variance.B) Production-volume variance.C) Total factory overhead variance.D) Overhead efficiency variance.E) Total overhead spending variance.
"Jefferson Sports Medicine, Inc., offers two types of physical exams for students : the basic physical and the extended physical. The charge for the basic physical is $60, while the charge for the extended physical is $135 . Jefferson expects to perform 220 basic physicals and 190 extended physicals in July, 235 basic and 200 extended in August, and 105 basic and 110 extended in September . Prepa re the sales budget for the service revenue expected from the physical exams performed for the second quarter (July through September}, with a column for each month and for the quarter in total."
The office product division in Hyacinth Company reported $11,250 net operating income with $75,000 average operating assets this year. The office product division has a new investment opportunity that would increase net operating income by $4,375 with $35,000 additional investment. 1. Which of the following statements is TRUE given that the company's minimum required rate of return is 10%? Multiple Choice: O Regardless of whether the division is evaluated on the basis of ROI or Residual income, the manager will not accept the new investment because it is bad for the company. O If the division is evaluated on the basis of Residual income, the manager of the office product division would not accept the new investment because it is bad for the company. O If the division is evaluated on the basis of Residual income, the manager of the office product division would accept the new investment because it is good for the division. O If the division is evaluated on the basis of ROI, the manager of the office product division would accept the new investment because it is good for the division. O If the division is evaluated on the basis of ROI, the manager of the office product division would not accept the new investment because it is bad for the company.
On May 1, 2016, Varga Tech Services signed a $6,000 consulting contract with Shaffer Holdings. The contract requires Varga to provide computer technology support services whenever requested over the period from May 1, 2016, to April 30, 2017, with Shaffer paying the entire $6,000 on May 1, 2016.How much revenue should Varga recognize in 2016? (Do not round intermediate calculation.)
ended December 31, 2024, Aloof Company earned income of
$180,000 and paid dividends of $10,000. On January 31 2045,
Whitworth Company sold all of its investment in Aloof Company
stock for $405,000.
Answers
Answer:
Journal entries needed for:
a. Purchase of stock
b. Share of Aloof income
c. Dividend
d. Sale of Aloof company stock
a. Purchase of stock
Date Account Title Debit Credit
Jan 2, 20Y4 Investment in Aloof company $340,000
stock
Cash $340,000
b. Share of Aloof income
Date Account Title Debit Credit
Dec 31, 2024 Investment in Aloof company $72,000
stock
Income of Aloof Company $72,000
Working:
= 40% * 180,000 income
= $72,000
c. Dividend
Date Account Title Debit Credit
Dec 31, 2024 Cash $4,000
Investment in Aloof company $4,000
stock
Working:
= 40% * 10,000 dividend
= $4,000
d. Sale of stock
Date Account Title Debit Credit
Dec 31, 2024 Cash $405,000
Loss on sales of Aloof $3,000
company stock
Investment in Aloof company $408,000
stock
Working:
Value of stock = Purchase price + share of Aloof income - Share of dividend
= 340,000 + 72,000 - 4,000
= $408,000
Final answer:
The question from the field of business involves interpretation of financial accounting situation where Whitworth Company acquired stock in Aloof Company and later sold it. The income and dividends of Aloof Company have implications on Whitworth Company's accounting statements. The sale of investments will be accounted for as a gain or loss.
Explanation:
The subject of this question is in the field of Business, specifically financial accounting and it appears to be of College grade level. The question requires an understanding of how to account for investments in another company's stock.
When Whitworth Company acquired 40% of Aloof Company's outstanding stock, it made an investment of $340,000.
For the year ended December 31, 2024, Aloof Company's earned income of $180,000 will proportionally impact Whitworth's net income due the equity method of accounting. Whitworth will then account for 40% of the $180,000, which is $72,000, in its income statement.
Also, the dividends paid by Aloof company are not income to the investor but return of investment. So, Whitworth will decrease its investment account by 40% of $10,000 ($4,000).
Finally, in 2045, when Whitworth sold its investment in Aloof Company's stock for $405,000, the difference between the selling price and the initial price will be accounted as gain or loss. In this case, it will be a gain of $65,000 ($405,000 - $340,000).
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Inventory $35,750 $10,100
Building 153,000 106,500
Land 291,750 375,000
Total $480,500 $491,600
The corporation also assumed a mortage of $153,750 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $320,750.
Required:
a. What amount of gain or loss does Carla realize on the transfer of the property to the corporation?
b. What amount of gain or loss does Carla recognize on the transfer of the property to the corporation?
c. What is Carla's basis in the stock she receives in her corporation?
Answers
Answer:
a. The amount of loss does Carla realize on the transfer of the property to the corporation is -$17,100
b. Carla does not recognized any gain or loss on the transfer of the property to the corporation
c. The amount of Carla's basis in the stock she receives in her corporation is $337,850
Explanation:
a. In order to calculate the amount of gain or loss does Carla realize on the transfer of the property to the corporation we would have to use the following formula:
amount of gain or loss=Fair market value of stock received+morgage assume by corporation-Adjusted tax basis of the property transferred
amount of gain or loss=$320,750+$153,750-$491,600
amount of gain or loss=-$17,100
The amount of loss does Carla realize on the transfer of the property to the corporation is -$17,100
b. Carla does not recognized any gain or loss on the transfer of the property to the corporation because the requirements are met and no boot is received in exchange.
c. In order to calculate the amount of Carla's basis in the stock she receives in her corporation we would have to use the following formula:
amount of Carla's basis in the stock=Adjusted tax basis of the property transferred-morgage assume by corporation
amount of Carla's basis in the stock=$491,600-$153,750
amount of Carla's basis in the stock=$337,850
The amount of Carla's basis in the stock she receives in her corporation is $337,850
b. No, the NPV calculation will take into account not only the project's cash inflows but also the timing of cash inflows and outflows. Consequently, Project B could have a larger NPV than Project A, even though Project A has larger cash inflows.
c. No, the NPV calculation is based on percentage returns. So, the size of the project's cash flows does not affect a project's NPV.
Answers
Answer:
b. No, the NPV calculation will take into account not only the project's cash inflows but also the timing of cash inflows and outflows. Consequently, Project B could have a larger NPV than Project A, even though Project A has larger cash inflows.
Explanation:
The net present value is the present value of after tax cash flows from an investment less the amount invested.
An example:
Suppose there are two projects with a cash outlay of $500.
The cash flow for project A :
Cash flow from year 1 to 3 =$0
Cash flow from year 4 to 7 =$ 500
WACC = 10%
Using a financial calculator, the NPV =$690.78
The cash flow for project B
Cash flow for year one and two =$300
Cash flow for year three = $100
Cash flow for year four and five =$500
WACC = 10%
using a financial calculator, the NPV = $747.76
From this example, even though the cash flow from project A is higher than the cash flow from project B, project B's NPV is higher.
I hope my answer helps you.
Answers
Answer:
Alpha for A is 1.40%; Alpha for B is -0.2%.
Explanation:
First, we use the CAPM to calculate the required returns of the two portfolios A and B given the risks of the two portfolios( beta), the risk-free return rate ( T-bill rate) and the Market return rate (S&P 500) are given.
Required Return for A: Risk-free return rate + Beta for A x ( Market return rate - Risk-free return rate) = 5% + 0.7 x (13% - 5%) = 10.6%;
Required Return for A: Risk-free return rate + Beta for B x ( Market return rate - Risk-free return rate) = 5% + 1.4 x (13% - 5%) = 16.2%;
Second, we compute the alphas for the two portfolios:
Portfolio A: Expected return of A - Required return of A = 12% - 10.6% = 1.4%;
Portfolio B: Expected return of B - Required return of B = 16% - 16.2% = -0.2%.
Hedges of foreign currency firm commitments are speculative in nature.
Hedges of foreign currency firm commitments are used for future sales or purchases.
Hedges of foreign currency firm commitments are used for future purchases only.
Hedges of foreign currency firm commitments are used for future sales only.
Answers
Hedges of foreign currency firm commitments are used for future sales or purchases.
hedge accounting
Hedge accounting is a form of accounting in which inputs to change a security's fair value and its opposing hedge are regarded as one. Hedge accounting seeks to mitigate the volatility caused by the frequent adjustment to the value of a financial instrument, also known as fair value accounting or mark-to-market. This volatility is decreased by merging the instrument and the hedge into a single entry, which offsets the movements of the opposite. Hedge accounting adjusts the fair value of a securities and its opposing hedge with a single entry.
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Answers
Answer:
A staff managerial accountant is part of the mid-level accounting management.
The top position in the chain of command is the Chief Financial Officer, who is in charge of all financial matters within the firm, especially of presenting accurate financial information at the end of the accounting year to management, stockholders, and potential investors.
Directly below him is the controller, an important position in charge of reporting financial statements during the year, and helping gather information for auditors during external audtis.
Below a staff managerial accountant would be lower level accounting who are in charge of bookeeping on a daily basis.