Answer:
24,000 units
Explanation:
Demand per period, = 8,000 units
Lead time, LT (in periods) = 3 weeks
Average demand during lead time = Lead Time * Demand per period
Average demand during lead time = 8,000 units * 3 weeks
Average demand during lead time = 24,000 units
Thus, our average requirements during the lead time of 3 weeks is 24,000 units
Issued common stock to owners in exchange for $26,000 cash. Purchased $6,500 of equipment, paying $1,950 cash and signing a promissory note for $4,550. Received $11,700 in cash for consulting services performed in January. Purchased $1,950 of supplies on account; all of the supplies were used in January. Provided consulting services on account in the amount of $20,800. Paid $975 on account. Paid $3,900 to employees for work performed during January. Received a bill for utilities for January of $4,400; the bill remains unpaid. What is the amount of total revenue to be reported on the income statement for the month of January
Answer:
Explanation:
2333
Blankenship Company operates a factory with two departments, X and Y. The utilities to heat and light the manufacturing facility would most likely be allocated to departments X and Y on the basis of:a. Square Footage occupiedb. Machine Hoursc. Direct labor hoursd. Units sold
Answer:
a. Square Footage occupied
Explanation:
Machine hours is the cost drive of utilities (cost object); it is not the basis of allocation. Direct labor hours is the cost drive of utilities (cost object); it is not the basis of allocation. Unit sold is the basis of allocation of advertising; it is not the allocation bases of utilities.
Utilities expenses such as heat, water, and lighting are generally allocated based area occupied by the department. Hence, the option “square footage occupied” is the correct answer.
A company’s marketing executives should assess the __________ in terms of a general analysis of a business problem or opportunity the company is facing.a. business situationb. 5Cs
c. STP
d. ARA
Answer:
a is your answer
Explanation:
Which company is most easily able to outsource its operations and have its good or service produced in another country
Answer:
d. Queen’s Quilts
Explanation:
Options are "Hannah’s Hair Salons, Busker Baseball Team , Darling Dentistry , Penelope’s Fresh Pretzels , Queen’s Quilts"
a. Salons, Dentistry : these are services which cannot be outsourced partly or fully.
b. Baseball team: It is a sports team which cannot operate partly in another country.
c. Pretzels: These are freshly baked pastries or food items which needs to be made fresh , so cannot be outsourced.
d. Quilts: These are textile which can be produced in countries having cheap labor .
Stephen is a day trader who constantly buys and sells only medical-related stocks. Stephen has _____ asset allocation strategy and a(n) _____ security selection strategy.
Answer: a passive; active
Explanation:
When a person or institution is said to have a passive asset allocation strategy it means that they either trade the same assets over and over or apply the same weighting to the asset class every time. Stephen only trades medical-related stocks so is using passive allocation.
An active security selection strategy means that the person or institution constantly changes and trades the stocks in their portfolio much like Stephen does when he constantly trades stock. Stephen is therefore using an active security selection strategy.
Suppose that the average P/E multiple oil industry stocks are 18. is an integrated oil company and analysts at expected the company to earn $5.25 in the coming year. What is the intrinsic value of stock?
Answer:
$94.50
Explanation:
Calculation for the intrinsic value of stock
Using this formula
Intrinsic value of stock=Average P/E multiple oil stock*Amount to earn
Let plug in the formula
Intrinsic value of stock=18*$5.25
Intrinsic value of stock=$94.50
Therefore the Intrinsic value of stock will be $94.50
Calculate current assets Sales Revenue $25,000 Accounts Payable $1,200 Accounts Receivable $2,600 Inventory $3,200 Supplies $300 Cost of Goods Sold $16,000 Notes Payable (due in 2 years) $24,000 Equipment $40,000 Accumulated Depreciation $12,000 Land $30,000 Unearned Revenue $1,100 Taxes Payable $1,400 Prepaid Rent (3 months) $2,100 Cash $5,200
Answer: $13,400
Explanation:
Current Assets are those that will be used up in a year and in this question are;
= Accounts Receivable + Inventory + Supplies + Prepaid rent + Cash
= 2,600 + 3,200 + 300 + 2,100 + 5,200
= $13,400
Equipment costing $17,500 with an estimated salvage value of $1,180 and an estimated life of 4 years was purchased on October 31, 2019. Using the straight-line depreciation method, what is the amount of depreciation expense to be recorded at December 31, 2019?
Answer:
the depreciation expense recorded is $680
Explanation:
The computation of the depreciation expense under the straight-line method is shown below:
= (Purchase cost - residual value) ÷ (estimated life)
= ($17,500 - $1,180) ÷ ( 4 years)
= $4,080
Now the 2 months depreciation is i.e. from November to December
= $4,080 × 2 months ÷ 12 months
= $680
Hence, the depreciation expense recorded is $680
One of your team members is struggling with preparation of balance sheet and he needs your assistance in completing it. He has come up with following missing information. You are required to complete this Balance sheet.
Assets Liabilities & Equity
Cash $ 100,000 Current Liabilities
Receivables Long Term Debt
Inventory Total Debt
Plant Common Equity $ 600,000
Total Assets Total Claims
Additional Information:
Current Ratio is 2.5 ; Average Collection Period is 54 days ; Total Debt to Total Assets 40 percent ; Total Asset Turnover is 2 ; Inventory Turnover 5.
Answer:
Balance sheet
Cash $100,000 Current Liabilities $320,000
Receivables $300,000 Long Term Debt $80,000
Inventory $400,000 Total Debt $400,000
Plant $200,000 Common Equity $600,000
Total Assets $1,000,000 Total Claims $1,000,000
Explanation:
a) Total Debt to Total Assets 40 percent:
This means that Equity = 60% (100 - 40%)
If Equity is 60% = $600,000, total claims or assets will be equal to $600,000/60% = $1,000,000
Therefore, total debt = $400,000 (40% of $1,000,000)
b) Total Asset Turnover is 2:
If total assets = $1,000,000 and the total asset turnover is 2 or Turnover/Assets = 2, where total assets = $1,000,000,
Therefore, Turnover = $2,000,000 ($1,000,000 * 2)
c) Inventory Turnover is 5:
Inventory Turnover = Turnover/Inventory = 5
= $2,000,000/Inventory = 5
Inventory = $2,000,000/5 = $400,000
d) Average Collection Period is 54 days:
= Accounts Receivable/Sales x 365 = 54
Accounts Receivable = $2,000,000/365 * 54 = $296,000 or approximately $300,000
Current assets:
Cash = $100,000
Receivables $300,000
Inventory = $400,000
Total = $800,000
e) Current liabilities = Current assets/2.5
= $800,000/2.5
= $320,000
f) Plant = Total assets - current assets
= $1,000,000 - $800,000
= $200,000
g) Long term debt = Total debt - Current liabilities
= $400,000 - $320,000
= $80,000
For the first week of the month, the Flour Shop Bakery budgeted to sell 100 cakes at $35 each. They actually sold 105 cakes at $40 each. The selling-price variance is:_________.a) $525 favorable.b) $525 unfavorable.c) $700 favorable.d) $700 unfavorable.
Answer:
a) $525 favorable
Explanation:
The computation of the selling price variance is shown below:
The Selling price variance is
= Actual quantity sold × (actual selling price - expected selling price)
= 105 cakes × ($40 - $35)
= 105 cakes × $5
= $525 favorable
Hence, the selling price variance is $525 favorable
Therefore the correct option is a.
We simply applied the above formula so that the correct value could come
And, the same is to be considered
Last month the balance on your credit account was $785. Your new balance is $540. What percent of your total balance did you pay?
Answer:
31.21%
Explanation:
The balance last month was $785
The new balance is $540
It means a payment of $785- $540 was made
=$785 - $540
=$245
As a percentage
=$245/$785 x 100
=0.3121 x 100
=31.21%
Answer: 31%
Explanation: I just got it right
Why is it important now for HR management to transform from being primarily administrative and operational to becoming more of an overall strategic contributor to the organization?
How have you seen this implemented in your workplace/former workplace?
Explanation:
Human resource management is increasingly relevant for a company to be successful, competitive and well positioned in the market. It is correct to affirm that it is important that HR ceases to be basically administrative and operational to become a general strategic contributor in a company due to the fact that management is going through a phase in which organizations have well-defined social and environmental responsibilities most demanded in a competitive and globalized world.
Therefore, the valorization of human capital in an organization is increasingly essential and strategic, because through professionals satisfied with their working conditions, well trained and motivated, the objectives are achieved more effectively, there is a greater attraction of quality professionals, greater innovation, greater productivity, continuous improvement of processes and the creation and maintenance of an organizational culture focused on ethical and collaborative practices in order to achieve organizational objectives.
Assume you have a 1-year investment horizon and are trying to choose among three bonds. All have the same degree of default risk and mature in 10 years. The first is a zero-coupon bond that pays $1,000 at maturity. The second has an 6.2% coupon rate and pays the $62 coupon once per year. The third has a 7.2% coupon rate and pays the $72 coupon once per year.
a. If all three bonds are now priced to yield 7% to maturity, what are their prices?
b. If you expect their yields to maturity to be 7% at the beginning of next year, what will their prices be then? What is your before-tax holding-period return on each bond? If your tax bracket is 30% on ordinary income and 20% on capital gains income, what will your aftertax rate of return be on each?
c. If you expect their yields to maturity to be 6% at the beginning of next year, what will their prices be then? What is your before-tax holding-period return on each bond? If your tax bracket is 30% on ordinary income and 20% on capital gains income, what will your aftertax rate of return be on each?
Answer:
a. If all three bonds are now priced to yield 7% to maturity, what are their prices?
zero coupon bond = $1,000 / (1 + 7%)¹⁰ = $508.35
6.2% coupon bond:
PV of face value = $1,000 / (1 + 7%)¹⁰ = $508.35
PV of coupon payments = $62 x 7.0236 (PV annuity factor, 7%, 10 periods) = $435.46
market price = $943.81
7.2% coupon bond:
PV of face value = $1,000 / (1 + 7%)¹⁰ = $508.35
PV of coupon payments = $72 x 7.0236 (PV annuity factor, 7%, 10 periods) = $505.70
market price = $1,014.05
b. If you expect their yields to maturity to be 7% at the beginning of next year, what will their prices be then? What is your before-tax holding-period return on each bond? If your tax bracket is 30% on ordinary income and 20% on capital gains income, what will your aftertax rate of return be on each?
zero coupon bond = $1,000 / (1 + 7%)⁹ = $543.93
before tax holding period return = ($543.93 - $508.35) / $508.35 = 7%
after tax HPR = 7% x 0.8 = 5.6%
6.2% coupon bond:
PV of face value = $1,000 / (1 + 7%)⁹ = $543.93
PV of coupon payments = $62 x 6.5152 (PV annuity factor, 7%, 10 periods) = $403.94
market price = $947.87
before tax holding period return = ($947.87 - $943.81 + $62) / $943.81 = 7%
after tax HPR:
($4.06 x 0.8) / $943.81 = 0.34%
($62 x 0.7) / $943.81 = 4.60%
total = 4.94%
7.2% coupon bond:
PV of face value = $1,000 / (1 + 7%)⁹ = $543.93
PV of coupon payments = $72 x 6.5152 (PV annuity factor, 7%, 10 periods) = $469.09
market price = $1,013.02
before tax holding period return = ($1,013.02 - $1,014.05 + $72) / $1,014.05 = 7%
after tax HPR:
(-$1.03 x 0.8) / $1,014.05 = -0.08%
($72 x 0.7) / $1,014.05 = 4.97%
total = 4.89%
c. If you expect their yields to maturity to be 6% at the beginning of next year, what will their prices be then? What is your before-tax holding-period return on each bond? If your tax bracket is 30% on ordinary income and 20% on capital gains income, what will your aftertax rate of return be on each?
zero coupon bond = $1,000 / (1 + 6%)⁹ = $591.90
before tax holding period return = ($591.90 - $508.35) / $508.35 = 16.44%
after tax HPR = 16.44% x 0.8 = 13.15%
6.2% coupon bond:
PV of face value = $1,000 / (1 + 6%)⁹ = $591.90
PV of coupon payments = $62 x 6.8017 (PV annuity factor, 6%, 10 periods) = $421.71
market price = $1,013.61
before tax holding period return = ($1,013.61 - $943.81 + $62) / $943.81 = 13.96%
after tax HPR:
($69.80 x 0.8) / $943.81 = 5.92%
($62 x 0.7) / $943.81 = 4.60%
total = 10.52%
7.2% coupon bond:
PV of face value = $1,000 / (1 + 6%)⁹ = $591.90
PV of coupon payments = $72 x 6.8017 (PV annuity factor, 6%, 10 periods) = $489.72
market price = $1,081.62
before tax holding period return = ($1,081.62 - $1,014.05 + $72) / $1,014.05 = 13.76%
after tax HPR:
($67.57 x 0.8) / $1,014.05 = 5.33%
($72 x 0.7) / $1,014.05 = 4.97%
total = 10.30%
The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a perfectly competitive firm that produces novelty ear buds in a competitive market. The market price of ear buds is $6.00 per pair. Buddies Production CostsQuantity of Ear Buds MC ATC ($) ($)5 - 80 2 515 2.45 4.1520 3.55 425 4 430 5.5 4.2535 6 4.540 8.5 5A. If Buddies wants to maximize its profits, how many pairs of ear buds should it produce?B. At the profit-maximizing quantity, what is the total cost of producing ear buds?C. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what is Buddies weekly profit?D. If the market price is $5.50 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what is Buddies weekly profit?E. Buddies earns a normal profit whena. marginal cost equals average cost at the minimum of average cost.b. marginal cost equals average cost.c. marginal cost equals marginal revenue at the minimum of marginal cost.d. average cost equals average revenue at the minimum of average cost.
Answer and Explanation:
The computation is shown below:
a. The number of pairs of ear buds that should be produced for maximizing the profits is
As we know that
MR = MC
Q = 35
And also the price is equal to the MC
Hence, the quantity that should be produced would be 35
b). The total cost of producing ear buds for maximizing the profit is
As we know that
TC = ATC × Q
= 4.5 × 35
= $157.5
c. The weekly profit is
As we know that
Profit = TR - TC
= (P - ATC) × Q
= (6 - 4.5) × 35
= $52.5
d) The weekly profit is
Profit= (5.5 - 4.25) × 30
= $37.5
e. The normal profit could be earned at the time when the marginal cost is equivalent to the average cost that contains the minimum
Hence, the option a is correct
The next dividend payment by Skippy, Inc., will be $2.95 per share. The dividends are anticipated to maintain a growth rate of 4.8 percent, forever. If the stock currently sells for $53.10 per share, what is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
10.35%
Explanation:
The next dividend payment for skippy incorporation is $2.95
The growth rate is 4.8%
The stock currently sells for $53.10
Therefore the required return can be calculated as follows
R= 2.95 /53.10 + 4.8/100
= 0.0555 + 0.048
= 0.1035 × 100
= 10.35%
Answer:
Explanation:
Dividend Yield =$0.50$2.95×100=16.9%.
A company's income before interest expense and income taxes is $350,000 and its interest expense is $100,000.Its times interest earned ratio is:_________.A) 0.29B) 3.50C) 2.50D) 1.75E) 0.50
Answer:
B) 3.50
Explanation:
The computation of the times interest earned ratio is shown below:
As we know that
Times interest earned ratio is
= Income before interest expense and income taxes ÷ interest expenses
= $350,000 ÷ $100,000
= 3.50
Hence, the times interest earned ratio is 3.50
Therefore the correct option is b.
We simply applied the above formula so that the correct value could come
And, the same is to be considered
The demand curve for a monopolist differs from the demand curve faced by a competitive firm because the demand curve for: A. a monopolist lies below its marginal revenue curve. B. a monopolist is the market demand curve. C. a competitive firm is inelastic. D. a competitive firm lies above its marginal revenue curve.
Answer:
B. a monopolist is the market demand curve
Explanation:
As we know that the under monopoly market the firm and the industry are similar to each other also the monopolist determined the price due to this he is a price taker and price maker and the curve of the demand would be downward that shifted from left to right
Therefore in the given situation, the option B is correct
And the rest of the options are wrong
The following is a list of prices for zero-coupon bonds of various maturities. a. Calculate the yield to maturity for a bond with a maturity of (i) one year; (ii) two years; (iii) three years; (iv) four years. (Do not round intermediate calculations. Round your answers to two decimal places.) YTM Maturity (Years) Price of Bond 920.90 $ 912.97 $ 826.62 $ 785.62 b. Calculate the forward rate for (i) the second year; (ii) the third year; (iii) the fourth year. (Do not round intermediate calculations. Round your answers to two decimal places.) Maturity (years) Price of Bond $ 920.90 912.97 826.62 785.62 Forward Rate Maturity (Years) Price of Bond $ 912.97 $ 826.62 $ 785.62
Answer:
a. Calculation of the yield to maturity for a bond with a maturity years
Yield to Maturity = [(Face value/Bond price)^(1/Time period)] - 1
i. One year = (1000/920.90) - 1 = 0.0858942339 = 8.59%
ii. Two year = (1000/912.97)^(1/2) - 1 = 0.04657835011 = 4.66%
iii. Three year = (1000/826.62)^(1/3) - 1 = 0.06552758403 = 6.55%
iv. Four year = (1000/785.62)^(1/4) - 1 = 0.06217693669 = 6.22%
b. Calculation of the forward rate
Forward rate = [(1 + Next year YTM)^Period / (1+Previous year YTM)^Period} - 1
i. Second year = (1+4.66%)^2/(1+8.59%) - 1 = 0.00872231328 = 0.87%
ii. Third year = (1+6.55%)^2/(1+4.66%) - 1 = 0.08474130517 = 8.47%
iii. Fourth year = (1+6.22%)^2/(1+6.55%) - 1 = 0.05891022055 = 5.89%
Production possibilities frontiers usually curve out and away from the origin. The implication of this curvature is that:_________
a. the opportunity cost of producing a good stays the same regardless of how much of that good is produced.
b. the opportunity cost of producing a good goes down as more of that good is produced.
c. some resources are better at producing one good while other resources are better at producing alternative goods.
d. technological change is present.
e. as resources are used to produce one good, fewer resources are available to produce another good.
Answer:
The right response is Option C (Some resources..............goods).
Explanation:
It should be remembered whether PPF seems to be concave to something like the root, representing growing opportunity costs, in other words whenever one starts going down upon this PPF, the inventory cost between one item which requires to be substituted improves throughout addition maximize enhance the production of both of these commodities. The program is given when continuous and along output prospect boundary.Some other options offered are not relevant to the case described. So the solution here was the right one.
Escalation bias refers to the situation in which:_______. a. investors put more money into a failure rather than into a success. b. investors tend to follow the herd. c. investors have a propensity to sell winners too soon and hang on to losers too long. d. investors ignore bad news and overemphasize good news. e. investors are all noise traders.
Answer:
a. investors put more money into a failure rather than into a success.
Explanation:
The escalation bias is a part of behavioral finance. In this the investor is not accepting their mistake if they had done any kind of mistake. Rather accepting it they put more money in the asset that performed poorly also at the same time the bad news is ignored by them, they only focused to invest more and more in the stocks
hence, the correct option is a
On June 8, Williams Company issued an $87,600, 9%, 120-day note payable to Brown Industries. Assuming a 360-day year, what is the maturity value of the note?
Customer groups represent different segments if: ___________.a. Their needs require different products/services or different prices. b. Other elements of the canvas need to change in order to reach them. c. They can be categorized into different groups. d. Distinctions only matter if tailoring parts of the business to reach some customers makes it more difficult to reach other customers.
Answer:
a. Their needs require different products/services or different prices
Explanation:
A customer segment is a term in business that is used to describe a group of consumers with identical or related needs, behaviors, or other characteristics. For example Mass Market, Niche Market, etc.
However, customer groups represent separate segments based on the following:
1. their needs mandate and justify a distinct offer
2. they are sold through various distribution means.
3. they need different types of connection or arrangement.
4. they are ready to pay for various items of the offer
Hollister Company amended its defined benefit pension plan at the beginning of 2020 and recognized prior service cost of $1,700,000.
The company has collected the following additional information for the year 2020:
Service cost $400,000
Interest on the PBO 190,000
Amortization of prior service cost 170,000
Actual and expected return on plan assets 110,000
Plan funding was $700,000
Benefit payments to retirees totaled $390,000
The net increase to the PBO for 2020 is:_________.
a. $ 770,000.
b. $ 1,900,000.
c. $ 1,730,000.
d. $ 650,000.
Answer: b. $ 1,900,000
Explanation:
The Net Increase in PBO can be calculated by the formula;
= Prior service cost + Service cost + Interest on the PBO - Benefits paid
= 1,700,000 + 400,000 + 190,000 - 390,000
= $1,900,000
Why should the people on the RA team be different from the people responsible for correcting deficiencies?a. to avoid potential losses.
b. to increase profitability.
c. to avoid conflicts of interest.
d. to increase survivability.
Answer:
The correct answer is the option C: To avoid conflicts of interest.
Explanation:
To begin with, the term of risk assesstment refers to the process of identifying and analyzing possible future threats that may cause harm to the individuals or the assets of the company and from there on to evalute possible solutions to those situation that the company does not want to. Moreover, the risk manager is the one who should take care of those aspects and therefore that an RA team is the one that is being under his commands and should focus on the fact of identifying and analyzing the problems as well as evaluating instead of correcting some of those deficiencies and therefore that they need to have a different mind in the theme because they need to avoid conflicts of interest with the other team that is responsible from correcting.
The EU regulates taxes on Internet sales and the amount of pollution differently than the U.S. government. U.S. companies doing business in the EU:A. Are required to comply with EU regulations only if their main headquarters are located within the European Union B. Must pay taxes to the EU when conducting all business globally if they wish to do any business in the EU. C. Must comply with EU regulations when doing business in the European Union only D. Are never required to comply with EU regulations as long as they are headquartered in the United States E. Have the option to conduct business under either EU or U.S. regulations
Answer: C. Must comply with EU regulations when doing business in the European Union only.
Explanation:
European Union tax and pollution laws are meant to bind only the area in the EU and not other areas. For instance, a Nebraska state law that is not law in other parts of the country only covers Nebraska and so can only be enforced there.
The same logic goes for the EU. Their laws are only applicable if you are in their area of control. This means that U.S. companies doing business in the EU must comply with EU regulations when doing business in the EU only.
Consider the following probability distribution of returns for Alpha Corporation:________. Current Stock Price ($) Stock Price in One Year ($) Return R Probability PR $25 $35 40% 25% $25 0% 50% $20 -20% 25% The standard deviation of the return on Alpha Corporation is closest to:_______. a. 22.4% b. 19.0% c. 21.8% d. 19.4%
Answer:
c. 21.8%
Explanation:
Note: B = Year beginning stock, C = Year end stock price, D = Dividend, E = Holding Period return, F= Holding Period return*Probability, G = (Holding Period return - Expected return)^2, H= Probability * (Holding Period return - Expected return)^2
Probability B C D E F G H
25% $25 $35 - 40% 10% 0.12250 0.03063
50% $25 $25 - 0% 0% 0.00250 0.00125
25% $25 $20 - -20% -5% 0.06250 0.01563
Expected return = 5% 4.75%
Holding period return = (Price at year end +dividend -Price at year beginning)/Price at year beginning
Variance = 4.75%
Standard deviation = √(variance)
Standard deviation = √4.75%
Standard deviation = 21.8%
A partially amortizing mortgage is made for $180,000 for a term of 30 years. The borrower and lender agree that a balance of $40,000 will remain and be repaid as a lump sum at that time. If the interest rate is 6.50%, what must the monthly payment be over the 30 year period?
a. $1,101.56
b. $1,137.72
c. $5,285.36
d. $11,700.00
Answer:
Monthly payment= $1,137.8
Explanation:
Giving the following information:
PV= 180,000
n= 30*12= 360
i= 0.065/12= 0.005417
To calculate the monthly payment, we need to use the following formula:
Monthly payment= (PV*i) / [1 - (1+i)^(-n)]
Monthly payment= (180,000*0.005417) / [1 - (1.005417^-360)]
Monthly payment= $1,137.8
Why is it important to know the cost of inspection in a particular areas of business organization?
Explanation:
Every regulated organization understands the need to implement a quality system. In fact, it’s a “shall” clause for all life sciences companies to ensure they are in compliance with industry regulations. The focus of any effective quality system is, and rightly so, all about ensuring patient safety. From there, as the organization matures, its people, processes and technology evolve from a compliance, to a correction, to a prevention mindset, eventually resulting in increased quality brand recognition and shareholder value.
In the real world, companies need to engage quality system processes, such corrective and preventive action (CAPA), as the lifeline to feed improvements through the change management processes into the product lifecycle, from design inputs to manufacturer and supplier outputs.
Defining the cost of quality
As we look at process and product improvements, quantifying the “quality” costs to the organization is defined as the Cost of Quality (COQ). Why quantify the quality data? The COQ categorizes these costs so the organization can see how moving from a quality assurance (control and correction) focus to a focus on prevention helps to reduce the cost of nonconformances.
The American Society of Quality (ASQ) uses the following formula to calculate the COQ:
Cost of Quality (COQ) = Cost or Poor Quality (COPQ) + Cost of Good Quality (COGQ)
The COPQ contains all the costs of nonconformances that are both internal and external to the organization; whereas, the COGQ contains the cost of quality conformance, including any costs associated with both appraisal and prevention.
Some examples would be:
COPQ – Internal Costs (defects occurring and managed within the organization)
Scrap, Rework, Re-inspection
COPQ – External Costs (defects that reach the consumer)
Adverse Event Reporting, Warranty, Corrections and Removals, Product Liability, loss of brand reputation
COGQ – Appraisal Costs (controls put in place by the organization)
Inspection (purchased, manufactured), Testing (acceptance, field), Quality Audits, Calibration
COGQ – Prevention Costs (activities to eliminate defects from ever occurring)
SPC (statistical process control), Quality Planning, Quality Training, investment in quality-related information systems
What is the cost to your organization?
In the life sciences industry, analysts have stated that less than 50 percent of companies really know what the COQ is for their organization. However, ASQ, Crosby, and FDA Case for Quality show that the COQ for an organization can range from 3 – 25% of a company’s revenue. The good news is that there are known strategies that can be put in place to drive down the COQ which will have a direct positive impact on the profitability of your organization, and it’s all within your control.
Strategies for cost improvements
Every company is at a different point in the evolution of its people, processes and technology implementations, and even its understanding of its key metrics/performance indicators or COQ. Management could consider leveraging the following strategies to reduce their company’s COPQ and positively impact its quality and profitability performance.
Improve supplier relationships for both product and process improvements
Collaborate during design process, engage suppliers in the corrective action process (from incoming, manufacturing or customer-reported problems), develop supplier scorecards, audit suppliers based on their product/process risk levels
Which of the following summarizes the AIDA steps in the persuasive process? A. Get attention, insinuate action, create desire, initiate acceptance B. Get acceptance, invite questions, designate action, encourage attention C. Get attention, arouse interest, create desire, encourage action D. Get attention, initiate action, discuss benefits, create acceptance
Answer:
C. Get attention, arouse interest, create desire, encourage action
Explanation:
Remember, AIDA which stands for Awareness, Interest, Desire, Action refers to a step process that explains the main thought process an individual passes through before they finally decide to buy a product or service.
The persuasive process begins:
First with getting attention or awareness for the product or service. Next, arouse interest in the minds of potential customers, this, in turn, creates desire, which leads to the final step; encourage action to buy the product or service.
Burnett Corp. pays a constant $8.90 dividend on its stock. The company will maintain this dividend for the next 12 years and will then cease paying dividends forever. If the required return on this stock is 11 percent, what is the current share price?
Answer:
Price today = $57.78196973 rounded off to $57.78
Explanation:
The dividends paid by the stock can be said to be in the form of an annuity as the dividend payment is constant, it occurs after equal interval of time and it is expected for a finite or limited period of time. These satisfy the conditions of being an annuity. We assume that the dividend are paid at the end of the year and this is in form of an ordinary annuity.
To calculate the present value of the stock today, we will use the formula for present value of ordinary annuity. The formula for present value of annuity is attached.
Price today = 8.9 * [ (1 - (1+0.11)^-12) / 0.11 ]
Price today = $57.78196973 rounded off to $57.78