P4-5ALaura Eddy opened Eddy’s Carpet Cleaners on March 1

P4-5A
Laura Eddy opened Eddy’s Carpet Cleaners on March 1. During
March, the following transactions were completed.ÿ March 1
Invested $10,000 cash in the business.
1 Purchased used truck for $6,000, paying $3,000 cash and the
balance on account.
3 Purchased cleaning supplies for $1,200 on account.
5 Paid $1,200 cash on one-year insurance policy effective March
1.
14 Billed customers $4,800 for cleaning services.
18 Paid $1,500 cash on amount owed on truck and $500 on amount
owed on cleaning supplies.
20 Paid $1,800 cash for employee salaries.
21 Collected $1,400 cash from customers billed on March 14.
28 Billed customers $2,500 for cleaning services.
31 Paid gas and oil for month on truck $200.
31 Withdrew $700 cash for personal use.

Industrial Supply Corporation uses the weighted-average method in its process costing system

Industrial Supply Corporation uses the weighted-average method
in its process costing system. Data concerning the first processing
department for the most recent month are listed below.

Work in process, beginning:
Units in beginning work in process inventory 400
Materials costs $6,900
Conversion costs $2,500
Percentage complete for materials 80%
Percentage complete for conversion 15%
Units started into production during the month 6,000
Units transferred to the next department during the month 5,200
Materials costs added during the month $112,500
Conversion costs added during the month $210,300

Ending work in process:
Units in ending work-in-process inventory 1,200
Percentage complete for materials 75%
Percentage complete for conversion 30%

Required: Calculate the equivalent units for materials for the
month in the first processing department.

ECO 550 Week 7 Chapter 10 Quiz 5

Top of Form 1
Question 16

A travel agency enters into a contract with a hotel chain which
gives it priority access to 25 percent of its rooms in major
tourist destinations throughout the year. The contract encourages
the hotel chain to increase the number of rooms in each of these
hotels. The investment made by the hotel chain corresponds to which
of the following aspects of specificity?

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Task specificity

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Locational specificity

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Dedicated specificity

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Human specificity

Question 17

If parties to a contract can anticipate the court_s decision in
the event of a dispute with some degree of certainty:

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opportunistic behavior will never be detected.

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opportunistic behavior will be partially detected.

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there will be less room for opportunism.

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only one of the parties will be able to act
opportunistically.

Question 18

Refer to Table 10-1. What would be the combined gain of the two
if both breach the unitization contract?

The matrix given below represents the payoffs to oil well owners
Mike and Frasel if they enter into a unitization contract. Each of
the owners know the exact amount of oil in the pool and the market
price of oil.
Table 10-1

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$22

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$20

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$28

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$32

Question 19

Fixing a payment schedule in an agreement:

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allows the seller to easily access loanable funds.

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increases the uncertainty associated with the cost of
production.

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allows the seller to charge a high price for his product.

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ensures the delivery of goods at a high price.

Question 20

Which of the following can be classified as a highly specific
asset?

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A country_s soldiers

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A wind turbine in an installation that produces “renewable”
electricity

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A cattle farm

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A cruise ship

Question 21

Suppose Jonah and Carlos have a contract, which Carlos chooses
to breach. Jonah sues, and a court orders Carlos to pay him the
amount he expected to gain at the time they made the contract, net
of any amount he actually did receive after the breach. The form of
payment which the court specifies in this example is called:

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a contingent fee.

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a specific performance.

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a capitation.

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expectation damages.

Question 22

Which of the following is a legal remedy for a breach of the
contract between parties?

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Liquidated damages

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Imprisonment

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Unitization

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Specificity

Question 23

Refer to Table 10-1. Under expectation damages, Frasel_s breach
of the contract would lower his net payoff to:

The matrix given below represents the payoffs to oil well owners
Mike and Frasel if they enter into a unitization contract. Each of
the owners know the exact amount of oil in the pool and the market
price of oil.
Table 10-1

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$6.

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$8.

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$16.

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$10.

Question 24

_____ is an example of human specificity which raises the risks
associated with opportunism.

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Car insurance purchased by an individual for his/her favorite
car.

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Investment of an employer in company-specific skills.

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Purchasing immovable machines for a particular facility.

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Investment in research and development

Question 25

Escalators present in a contract must state:

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at what interval the contract price should automatically change
at a fixed rate.

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when the price will change and by what formula the new price
will be calculated.

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when the contract should be terminated and how the cost of
termination should be shared.

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when the contract should be renewed and the terms governing the
renewal.

Question 26

Which of the following will be an efficient payment scheme for
a defendant_s attorney, who is experienced in handling similar
cases in the past?

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Contingency fees

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Capitation fees

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Hourly billing

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Quality based billing

Question 27

A payment arrangement between an attorney and a plaintiff, in
which the plaintiff agrees to pay a certain lump-sum amount at the
outset and no more in the future, regardless of how the case
develops is called:

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contingency fees.

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capitation fees.

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liquidation.

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one-time settlement.

Question 28

Which of the following examples can be associated with the task
specificity aspect of an asset?

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An employer_s investment in employee skill building.

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Purchasing machines which can be used to produce only a
particular product.

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Building a facility in a low cost locality.

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An employer_s investment in office renovation.

Question 29

_____ is a contract that specifies actions to be taken if
various situations come to prevail.

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An insurance policy

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Contingency

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Unitization

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An escalator

Question 30

Which of the following may require the parties to renegotiate
certain parts of a contract if market conditions change
drastically?Answer

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Termination clause

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Omnibus clause

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Adjustment clause

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Reopener clause

Bottom of Form 1

ECO 365 week 5 DQs

DQ 1
What are the impacts of innovation and technology on the cost of
production? How does technology affect market structure and
real-world competition? Which market structure is best suited for
technological innovation? Explain your answer. How has
technological innovations affected your organization?
DQ 2
What factors influence a firm_s competitive strategies? How does
global economic competition impact the price elasticity in the
domestic market and decisions related to the strategy a firm uses
to compete? Why do most economists oppose trade restrictions? Who
have been the winners and losers as a result of NAFTA? Explain your
answer.
DQ 3
How do you define social diversity and business ethics? How has
a more diversified labor force affected the corporate structure and
the economy? What are some potential roadblocks, ethical or
otherwise, in promoting a diverse workplace? Explain your
answer.