The classical dichotomy is the separation of real and nominal variables. the following questions test your understanding of this distinction.

rina spends all of her money on paperback novels and donuts. in 2009 she earned $14.00 per hour, the price of a paperback novel was $7.00, and the price of a donut was $2.00.

1: which of the following give the nominal value of a variable? check all that apply.
a) the price of a donut is $2.00 in 2009.
b) rina's wage is $14.00 per hour in 2009.
c) rina's wage is 2 paperback novels per hour in 2009.
2: which of the following give the real value of a variable? check all that apply.
a)the price of a paperback novel is 3.5 donuts in 2009.
b)rina's wage is 7 donuts per hour in 2009.
c)rina's wage is $14.00 per hour in 2009.

3: suppose that the fed sharply increases the money supply between 2009 and 2014. in 2014, rina's wage has risen to $28.00 per hour. the price of a paperback novel is $14.00 and the price of a donut is $4.00.
in 2014, the relative price of a paperback novel is(.29 donuts/ 3.5 donuts/ $4.00/ $14.00) .
between 2009 and 2014, the nominal value of rina's wage(increases/ decreases/ stay the same) and the real value of her wage (increases/ decreases/ stay the same) .
monetary neutrality is the proposition that a change in the money supply (affects/ doesnt affect) nominal variables and (affect/ doesn't affect) real variable

Pennewell publishing inc. (pp) is a zero growth company. it currently has zero debt and its earnings before interest and taxes (ebit) are $80,000. pp's current cost of equity is 10%, and its tax rate is 40%. the firm has 10,000 shares of common stock outstanding selling at a price per share of $48.00. refer to the data for pennewell publishing inc. (pp). pp is considering changing its capital structure to one with 30% debt and 70% equity, based on market values. the debt would have an interest rate of 8%. the new funds would be used to repurchase stock. it is estimated that the increase in risk resulting from the added leverage would cause the required rate of return on equity to rise to 12%. if this plan were carried out, what would be pp's new value of operations? a. $484,359 b. $521,173 c. $584,653 d. $560,748 e. $487,805

How are interest rates calculated by financial institutions? financial institutions generally calculate interest as (1) interest or (.

Zachary company produces commercial gardening equipment. since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. the costs and cost drivers associated with the four overhead activity cost pools follow: activities unit level batch level product level facility level cost $ 64,800 $ 27,730 $ 15,000 $ 154,000 cost driver 2,400 labor hrs. 47 setups percentage of use 11,000 units production of 780 sets of cutting shears, one of the company’s 20 products, took 240 labor hours and 7 setups and consumed 15 percent of the product-sustaining activities. required: (a) had the company used labor hours as a company wide allocation base, how much overhead would it have allocated to the cutting shears? (b) how much overhead is allocated to the cutting shears using activity-based costing? (c) compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 780 units are produced. if direct product costs are $150 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system? (d) assuming that activity-based costing provides a more accurate estimate of cost, indicate whether the cutting shears would be over- or underpriced if direct labor hours are used as an allocation base. explain how over-or undercosting can affect vaulker's profitability. (e) comment on the validity of using the allocated facility-level cost in the pricing decision. should other costs be considered in a cost- plus pricing decision? if so, which ones? what costs would you include if you were trying to decide whether to accept a special order?