The difference in costs between two alternatives is referred to as:
a. relevant costs.
b. irrelevant costs.
c. differential costs.
d. opportunity costs.
e. None of the answers are correct.
c
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Fashion Trends, Inc., a regional fashion apparel retailer, wants to prepare a 2018 Pro Forma Income Statement and a 2018 Balance Sheet using the following 2017 and 2016 data:
The firm has forecasted sales of $7,100,000 and a tax rate of 40% for 2018. Cost of goods sold and S,G&A expense in 2018 are expected to be the average of their two-year proportion of sales. On the balance sheet, accounts receivable, inventory, accounts payable, and accrued expenses are expected to be at the two-year average of the proportion of these items in relation to sales. The firm has planned an investment of $500,000 in fixed assets in 2018, with an estimated life of 10 years and no salvage value. These fixed assets will be depreciated using the straight line depreciation method. All other financial statement items are expected to remain constant in 2018. Assume the firm pays 4% interest on short-term debt and 7% on long term debt. Assume that the dividends in 2018 will be the same as those paid in 2017.
a) What is the Discretionary Financing Needed (DFN) in 2018? Is this a surplus or deficit?
b) DFN will be absorbed by long-term debt. Set up an iterative worksheet to eliminate it.
c) Turn off iteration, and use the Scenario Manager to set up three scenarios:
1. Best Case — Sales are 15% higher than expected.
2. Base Case — Sales are exactly as expected.
3. Worst Case — Sales are 15% less than expected.
What is the DFN under each scenario?
Under the model stock approach, the retailer determines space needs by _____
a. calculating the amount of floor space necessary to carry and display a proper assortment of merchandise b. assigning space on the basis of sales or profits per foot c. dividing merchandise into impulse and specific intent categories d. assigning goods into complementary and substitute categories
Sarah, an employee of Amex Corporation, committed a serious criminal act in an attempt to obtain a large sales order for her employer. A court found her guilty of the felony and also found the corporation guilty of criminal conduct. The company was fined $1 million. The court
a. erred in fining the company since finding both Sarah and the corporation guilty violates the Double Jeopardy Clause of the Constitution. b. acted properly if this were a federal proceeding; however, it did not act properly if this were a state proceeding. c. acted properly in finding Sarah guilty; however it erred in finding the corporation guilty because of the exclusionary rule. d. acted properly in this case.
What is the impact on system reliability of adding parts or components in parallel?
What will be an ideal response?