Thompson Aeronautics repairs aircraft engines. The company’s Purchasing Department supports its two departments, Defense and Commercial. The Defense division has contracts with the Department of Defense and the Commercial division works primarily with domestic airlines and air freight companies. The cost of the Purchasing Department is $7.70 million annually. Information on the activity of the Purchasing Department for the last year follows. Number of Purchase Orders Dollar Amount of Purchases Defense 9,200 $ 148,000,000 Commercial 36,800 222,000,000 Required: a. What is the cost charged to each division if Thompson allocates Purchasing Department costs based on the number of purchase orders? b. What is the cost charged to each division if Thompson allocates Purchasing Department costs based on the dollar amount of the purchases? c. Contracts with the Defense Department are on a cost-plus fixed fee basis, meaning the price is based on the cost of repairing an engine, including any overhead assigned to the division. Contracts with commercial airlines and air freight companies are almost all fixed price, meaning the price does not depend directly on the cost. Will this affect Thompson’s choice of an allocation base?

The impact fiscal multiplier is a. usually estimated to have an average value of 2. b. usually estimated to have an average value of 0. c. the actual immediate multiplier effect of a fiscal policy action after taking into consideration direct fiscal offsets and other short-term crowding out of private spending. d. the multiplier effect of a fiscal policy action that applies to a long-run period after all influences on equilibrium real gdp have been taken into account.

Exercise 18-15 sheffield appliance center is an experienced home appliance dealer. sheffield appliance center also offers a number of services for the home appliances that it sells. assume that sheffield appliance center sells ovens on a standalone basis. sheffield appliance center also sells installation services and maintenance services for ovens. however, sheffield appliance center does not offer installation or maintenance services to customers who buy ovens from other vendors. pricing for ovens is as follows. oven only $790 oven with installation service 850 oven with maintenance services 970 oven with installation and maintenance services 990 in each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at $180. additionally, the incremental amount charged by sheffield appliance center for installation approximates the amount charged by independent third parties. ovens are sold subject to a general right of return. if a customer purchases an oven with installation and/or maintenance services, in the event sheffield appliance center does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $790. assume that a customer purchases an oven with both installation and maintenance services for $990. (b) indicate the amount of revenue that should be allocated to the oven, the installation, and to the maintenance contract.

Bdj co. wants to issue new 22-year bonds for some much-needed expansion projects. the company currently has 9.2 percent coupon bonds on the market that sell for $1,132, make semiannual payments, have a $1,000 par value, and mature in 22 years. what coupon rate should the company set on its new bonds if it wants them to sell at par?