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Economics
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Money Management - Leaving Cert Home Economics
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Gravity
Terms in this set (20)
Budget
A plan for spending money.
Income
Money received.
Expenditure
Money paid out.
Gross Income
Total amount earned before deductions.
PAYE
Pay As You Earn. Income Tax. Paid to State.
PRSI
Pay Related Social Insurance. Pays for benefits if and when needed.
Net Income
Total amount earned after deductions. Take home pay.
Statutory Deductions
PAYE and PRSI
Voluntary Deductions
Optional, e.g. health insurance.
Household Expenses
Accommodation (rent/mortgage). Food. Clothing. Medical expenses. Travel. Electricity. Heating (gas/oil/etc.). Entertainment. Savings.
Tax Credit
System used to calculate the amount of tax a worker will pay.
Net Tax
= Gross Tax - Tax Credits
Advantages of Budgeting
1. Security.
2. Highlights overspending.
3. Minimises waste.
4. Good example.
Considerations when choosing where to SAVE
1. Interest Rate.
2. Security.
3. Ease of withdrawal.
Places to Save
1. Credit Union.
2. Post Office.
3. Bank.
4. Building Soceity.
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Verified questions
ACCOUNTING
Nandita Summers works at Modus, a store that caters to fashion for young adults. Nandita is responsible for the store’s online advertising and promotion budget. For the past year, she has studied search engine optimization and has been purchasing keywords and display advertising on Google, Facebook, and Twitter. In order to analyze the effectiveness of her efforts and to decide whether to continue online advertising or move her advertising dollars back to traditional print media, Nandita collects the following data: $$ \begin{matrix} \text{Month} & \text{Online Advertising Expense} & \text{Sales Revenue}\\ \text{September} & \text{\$ 5.125} & \text{\$ 44.875}\\ \text{October} & \text{5.472} & \text{42.480}\\ \text{November} & \text{3.942} & \text{53.106}\\ \text{December} & \text{1.440} & \text{64.560}\\ \text{January} & \text{4.919} & \text{34.517}\\ \text{February} & \text{4.142} & \text{59.438}\\ \text{March} & \text{1.290} & \text{51.840}\\ \text{April} & \text{5.722} & \text{36.720}\\ \text{May} & \text{5.730} & \text{62.564}\\ \text{June} & \text{2.214} & \text{59.568}\\ \text{July} & \text{1.716} & \text{35.450}\\ \text{August} & \text{1.875} & \text{36.211}\\ \end{matrix} $$ 1. Nandita performs a regression analysis, comparing each month's online advertising expense with that month's revenue. Verify that she obtains the following results: Revenue=$\$ 51,999.64-10.98 \times$Online advertising expense)$ $$ \begin{matrix} Variable & Coefficient & Standard Error & t-Value Constant & $$ $\text{\$ 51.999.64}$$ & 7.988.68 & 6.51 Independent variable: Online advertising expense & -0.98 & 1.99 & -0.49 \text{}{ r^{2}=0.02 ; Durbin-Watson statistic=2.14 $$ \end{matrix} $$ $$ 2. Plot the preceding data on a graph and draw the regression line. What does the cost formula indicate about the relationship between monthly online advertising expense and monthly revenues? Is the relationship economically plausible? 3, After further thought, Nandita realizes there may have been a flaw in her approach. In particular, there may be a lag between the time customers click through to the Modus website and peruse its social media content(which is when the online ad expense is incurred) and the time they actually shop in the physical store. Nandita modifies her analysis by comparing each month's sales revenue to the advertising expense in the prior month. After discarding September revenue and August advertising expense, show that the modified regression yields the following: Revenue [math]=\$ 28,361.37+(5.38 \times[/math]Online advertising expense) $$ \begin{matrix} Variable & Coefficient & Standard Error & t-Value Constant & $\text{\$ 28.361.37}$ & 5.428.69 & 5.22 Independent variable: Previous month's online advertising & 5.38 & 1.31 & 4.12 \text{expense }{ r^{2}=0.65 ; Durbin-Watson statistic=1.71 $\end{matrix}$$$ 4. What does the revised formula indicate? Plot the revised data on a graph. Is this relationship economically plausible? 5. Can Nandita conclude that there is a cause-and-effect relationship between online advertising expenses and sales revenue? Why or why not?
ACCOUNTING
Logan Products computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 40,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $466,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of$3.00 per direct labor-hour. Logan's actual manufacturing overhead for the year was $713,400 and its actual total direct labor was 41,000 hours. Compute the company's predetermined overhead rate for the year.
ACCOUNTING
Horizon Corporation manufactures personal computers. The company began operations in 2009 and reported profits for the years 2009 through 2016. Due primarily to increased competition and price slashing in the industry, 2017's income statement reported a loss of $20 million. Just before the end of the 2018 fiscal year, a memo from the company's chief financial officer to Jim Fielding, the company controller, included the following comments: If we don't do something about the large amount of unsold computers already manufactured, our auditors will require us to record a write down. The resulting loss for 2018 will cause a violation of our debt covenants and force the company into bankruptcy. I suggest that you ship half of our inventory to J.B. Sales, Inc., in Oklahoma City. I know the company's president, and he will accept the inventory and acknowledge the shipment as a purchase. We can record the sale in 2018 which will boost our loss to a profit. Then J.B. Sales will simply return the inventory in 2019 after the financial statements have been issued. Discuss the ethical dilemma faced by Jim Fielding. What is the issue? Who are the parties involved? What factors should Jim consider in making his decision?
ACCOUNTING
You are in your third year as internal auditor with VXI International, manufacturer of parts and supplies for jet aircraft. VXI began a defined contribution pension plan three years ago. The plan is a so-called 401(k) plan (named after the Tax Code section that specifies the conditions for the favorable tax treatment of these plans) that permits voluntary contributions by employees. Employees’ contributions are matched with one dollar of employer contribution for every two dollars of employee contribution. Approximately $500,000 of contributions is deducted from employee paychecks each month for investment in one of three employer-sponsored mutual funds. While performing some preliminary audit tests, you happen to notice that employee contributions to these plans usually do not show up on mutual fund statements for up to two months following the end of pay periods from which the deductions are drawn. On further investigation, you discover that when the plan was first begun, contributions were invested within one week of receipt of the funds. When you question the firm’s investment manager about the apparent change in the timing of investments, you are told, “Last year Mr. Maxwell (the CFO) directed me to initially deposit the contributions in the corporate investment account. At the close of each quarter, we add the employer matching contribution and deposit the combined amount in specific employee mutual funds.” Required: 1. What is Mr. Maxwell’s apparent motivation for the change in the way contributions are handled? 2. Do you perceive an ethical dilemma?
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