Answer and Explanation:
For computing the cost of goods sold under two method first we have to determine the cost per unit which is shown below:
The average cost per unit is
= $108,750 ÷ 25,000 units
= $4.35
Now the cost per unit is
Total cost (11,000 units + 35,000 units) × $4.35 $200,100
Beginning units (11,000 units × $4) $44,000
The Remaining cost for 35000 units ($200,100 - $44,000) $156,100
Divide by Purchase cost per unit of 35000 units $4.46
Now the cost of goods sold are as follows
1. Under the FIFO method
Beginning 11,000 × $4.00 $44,000
Purchased 14,000 × $4.46 $62,440
Total 25,000 $1,06,440
2. Under the LIFO method
Purchased 25,000 × $4.46 $1,11,500
Suppose that the Federal Reserve decides to increase the money supply with a $300 purchases of Treasury bills. Complete the tables that represent the financial position of the Federal Reserve and commercial banks after this open-market operation. Be sure to use a negative sign for reduced values.For the Federal Reserve, what are assets? What are liabilities?
Answer:
The correct answer to the following question will be "Treasury bills, Monetary Base ". The further explanation is given below.
Explanation:
(A)...
Assets: $300 (tax bills)
If it's bought by Federal Reserve, it's going to be the asset portion.
(B)...
Reserves: $300 (Commercial Banking liabilities)
Based mostly on reserve requirements, banks would then deposit funds to Federal Reserve. All of the lenders will carry through.
(C)...
Treasury Deposits or bills = -$300
Certain bills would go down by $300 as either a result of Federal Reserve purchases.
(D)...
Bookings or Reserves: + $300
This would be growing by $300 because of the sale of treasury bills. It won't bring any changes to the aspect of liability.
If researchers add financial treasury obligations with reserves as well as circulating documents, so it becomes a financial basis. Such that the answer given is indeed the appropriate one.
Leonard Technologies invests $ 62,000 to acquire $ 62,000 face value, 8%, fiveminusyear corporate bonds on December 31, 2014. The bonds will mature on December 31, 2019. The bonds pay interest semiannually on December 31 and June 30 every year until maturity. Assume Leonard Technologies uses a calendar year. Based on the information provided, which of the following will be included in the journal entry for the transaction on December 31, 2018?
a. a debit to Interest Revenue for $5,400
b. a credit to Interest Revenue for $2,700
c. a debit to Interest Revenue for $2,700
d. a credit to Interest Revenue for $5,400
Answer:
Find attached correct question that matches the options provided in this question:
The correct option is B, a credit to Interest Revenue for $2,700
Explanation:
The semiannual coupon interest receivable from the bond investment is the face value of $54,000 multiplied by 10% adjusted to reflect a six month revenue rather than a year a shown below:
semiannual interest receipt=$54,000*10%*6/12=$2,700
The $2,700 would be debited to cash as an income while also being credited to interest revenue ,hence option B is correct
Assuming that Tim is 75 years old at the end of 2019 and his marginal tax rate is 32 percent, what amount of his distribution will he have remaining after taxes if he receives only a distribution of $50,000 for 2019?
Answer:
$15,300
Explanation:
Solution
Recall that:
Suppose that Tim is 75 years old at the end of 2018
The marginal tax rate here is = 32%
The distribution = $50,000
Now,
What amount of distribution he get after taxes
At 75 years of age that is the age of the participant
Distribution period = 22.9
The Applicable percentage = 4.37%; this is gotten from the table attached below
Thus,
He implies that 2,000,000 * 4.37 %
=$87,400
The less amount received = $50,000
The balance is = $87,400 = $50,000
= $37,400
Tim needs to pay tax at 32%
= 50,000 * 32%
=$16,000
The pay penalty become s =37,400 * 50% = $18,700
The total amount for tax to be paid and the penalty is = $16000 + $18700= $34,700
The amount received by Tim after tax is = $50,000 - $34700 =$15,300
The amount Tim will receive after tax is $15,300
Note: Kindly find the complete question and table as part of the solution solved below
Sarah's Soothing Diapers, Inc. and Orville's Odorless Diapers, Inc. are duopolists, who have agreed to collude. Orville has decided that he will comply with the collusive agreement as long as Sarah cooperated in the previous period. But if Sarah cheated in the previous period, Orville will punish Sarah by cheating in the current period. Orville's strategy is referred to as a
Answer:
Find the answer in the attached as the system rejected the word
Explanation:
The strategy is a strategy adopted to get back at the other firm that had committed a wrong in the first place.
This is more like reciprocating the actions of the other firm by cheating in the current period in response to the other firm that cheated in the previous period.
The origin of the strategy means that this one that I done now is to repay you for that which you did earlier.
find attached as well.
Granger Company had January 1 inventory of $150,000 when it adopted dollar-value LIFO. During the year, purchases were $900,000 and sales were $1,500,000. December 31 inventory at year-end prices was $189,750, and the price index was 110. What is Granger Company’s gross profit?
Answer:
$624, 750
Explanation:
Purchases = 900,000
Sales = 1500000
Price index = 110%
Inventory= 189750
1,500,000 - [{($150,000 x 110%) + $900,000} - $189,750]
=1,500,000 - [($150,000 x 1.1) + $900,000] - $189,750
= 1,500,000 - (1065000 - 189750)
= 1,500,000 - 875250
=$624,750
Gross profit. = $624750
Tiptop Flight School offers flying lessons at a small municipal airport. The school's owner and the manager have been attempting to evaluate performance and control costs using a variance report that compares the planning budget to actual results. A recent variance report appears below:
Tiptop Flight School
Variance Report
For the Month Ended July 31
Actual Results Planning Budget Variances
Lessons 155 150
Revenue $33,900 $33,000 $900 F
Expenses:
Instructor wages 9,870 9,750 120 U
Aircraft depreciation 5,890 5,700 190 U
Fuel 2,750 2,250 500 U
Maintenance 2,450 2,330 120 U
Ground facility expenses 1,540 1,550 (10) F
Administration 3,320 3,390 (70) F
Total expense 25,820 24,970 850 U
Net operating income $8,080 $8,030 $50 F
After several months of using such variance reports, the owner has become frustrated. For example. she is quite confident that instructor wages were very tightly controlled in July. but the report shows an unfavorable variance. The planning budget was developed using the following formulas, where q is the number of lessons sold:
Cost Formulas
Revenue $220 q
Instructor wages $65 q
Aircraft depreciation $38 q
Fuel $15 q
Maintenance $530 + $12 q
Ground facility expenses $1,250 + $2 q
Administration $3,240 + $1 q
Required:
1. Should the owner feel frustrated with the variance reports? Explain.
2. Prepare a flexible budget performance report for the school for July.
3. Evaluate the school's performance for July.
Answer:
1. Should the owner feel frustrated with the variance reports?
Yes, because they were incomplete. Since the quantity of lessons is larger than the budgeted, you must prepare a flexible budget. The flexible budget shows that there exists a total unfavorable variance of $385. E.g. , regarding the pilots' salaries, there is a favorable variance in the flexible budget.
2. Prepare a flexible budget performance report for the school for July.
I used an excel spreadsheet to prepare a flexible budget and I attached it.
3. Evaluate the school's performance for July.
The school's performance is neither good or bad because it has higher revenues than estimated (even though it lowered its sales price), but their costs are also higher than budgeted. They are doing a good job at selling their lessons, but a bad job of keeping costs under control. The overall variance is not that significant, but it is still unfavorable. Their fuel expenses should be controlled since the largest unfavorable variance results from spending too much fuel.
Explanation:
Actual Planning Variances
Results Budget
Lessons 155 150 5 F
Revenue $33,900 $33,000 $900 F
Expenses:
Instructor wages $9,870 $9,750 $120 U Aircraft depreciation $5,890 $5,700 $190 U Fuel $2,750 $2,250 $500 U Maintenance $2,450 $2,330 $120 U Ground facility expenses $1,540 $1,550 ($10) F Administration $3,320 $3,390 ($70) F Total expense $25,820 $24,970 $850 UNet operating income $8,080 $8,030 $50 F
1. The school proprietor should not feel frustrated with the variance reports as they are meant to provide guidance and not a feeder for frustration. A careful review of the variance reports will help the owner to understand the cost dynamics for improvements.
2. The flexible budget performance report for the school in the month of July is as follows:
Tiptop Flight School
Flexible Budget Performance Report
For the Month Ended July 31
Actual Results Flexible Budget Variances
Lessons 155 155
Revenue $33,900 $34,100 $200 U
Expenses:
Instructor wages 9,870 10,075 205 F
Aircraft depreciation 5,890 5,890 0 None
Fuel 2,750 2,325 (425) U
Maintenance 2,450 2,390 (60) U
Ground facility expenses 1,540 1,560 20 F
Administration 3,320 3,395 75 F
Total expense 25,820 25,635 185 U
Net operating income $8,080 $8,465 $385 U
3. The school's performance in July is not encouraging based on the flexible budget. There may be the need for the owner to review the price per lesson upward, keeping customers' effective demand in mind.
Data and Calculations:
The actual number of lessons for July, q = 155
Flexing the Budget:
Revenue $220 q = $34,100
Instructor wages $65 q = $10,075
Aircraft depreciation $38 q = $5,890
Fuel $15 q = $2,325
Maintenance $530 + $12 q = $2,390
Ground facility expenses $1,250 + $2 q = $1,560
Administration $3,240 + $1 q = $3,395
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Among the best-known companies that use customer satisfaction surveys to evaluate service quality in various industries is:___________
a) J.D. Power and Associates
b) McDonald’s
c) American Express
d) Alaska Airlines
e) None of the above"
Answer: a) J.D. Power and Associates
Explanation: As there is an undue emphasis on measuring objective output performance by companies and organizations, data is collected and analysed. This data helps measure customer satisfaction which is a major predictor of repurchase of products or services. However, customer satisfaction is to a greater extent, largely influenced by performance evaluations of product, of quality, and of value. J.D. Power and Associates, a marketing firm is well known among the best-known companies as one that uses customer satisfaction surveys to evaluate service quality in various industries. Through its automotive research, it collects consumer responses for a variety of surveys which it uses to award car models rankings.
You run a school in Florida. Fixed monthly cost is $5,435.00 for rent and utilities, $6,171.00 is spent in salaries and $1,545.00 in insurance. Also every student adds up to $91.00 per month in stationary, food etc. You charge $734.00 per month from every student now. You are considering moving the school to another neighborhood where the rent and utilities will increase to $11,679.00, salaries to $6,974.00 and insurance to $2,408.00 per month. Variable cost per student will increase up to $158.00 per month. However you can charge $1,054.00 per student. At what point will you be indifferent between your current mode of operation and the new option?
Answer:
31
Explanation:
The calculation of indifferent between your current mode of operation and the new option is shown below:-
Current Operation
Contribution Margin = Monthly Fees - Variable Cost
= $734.00 - $91.00
= $643.00
Total Fixed Cost = Rent and Utilities + Salaries + Insurance
= $5,435.00 + $6,171.00 + $1,545.00
= $13,151.00
New Operation
Contribution Margin = Monthly Fees - Variable Cost
= $1,054.00 - $158.00
= $896.00
Total Fixed Cost = Rent and Utilities + Salaries + Insurance
= $11,679.00 + $6,974.00 + $2,408.00
= $21,061.00
Here we will assume the indifferent number of students will be X
So,
Income under current option = Income under new option
$643.00 × X - $13,151.00 = $896.00 × X - $21,061.00
$253X = $7,910
X = $7,910 ÷ $253
= 31.26
or
= 31
Sort the items below into two main categories: whether demand for each type of good is relatively elastic or relatively inelastic.
A. Goods that are narrowly defined.
B. Goods on which consumers spend a small share of their budget.
C. Consumers have a long time to adjust to a change in price.
D. Goods that have a large number of available substitutes.
E. Goods that are necessities.
Answer:
A. Relatively elastic
B. Relatively inelastic
C. Relatively elastic
D. Relatively elastic
E. Relatively inelastic
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes
Demand is inelastic if there's little or no change in quantity demanded when the price of the good changes.
If Consumers have a long time to adjust to a change in price, demand is usually elastic because consumers would have enough time to adjust to price changes. For example, if the price of the good has increased and the consumer has enough time to adjust to the price change, the consumer would have enough time to find cheaper suitable substitutes.
The elasticity of demand for necessities is usually inelastic because consumers have no choice but to buy the product. For example, water is considered a necessity. If the price of a bottle of water increases, consumers have no choice but to consume water so they would keep buying the bottle of water despite the increase in price.
Goods that have many substitutes usually have an elastic demand because the good can be easily replaced with the numerous substitutes available.
Goods on which consumers spend a small share of their budget usually have an inelastic demand. For example, if you earn $500,000 and you usually buy a product for 10 cents and the price increases to 15 cents, you would probably not stop purchasing the product as a result of the price increase since it constitutes a negligible part of your budget.
Goods that are narrowly defined have an elastic demand. For example, there are many substitutes for bread but there are no subsituites for food.
I hope my answer helps you
A couple owns a life insurance policy with a Children’s Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?
1. Medical exam and parental medical history
2. Medical exam
3. Proof of insurability is not required
4. Her parent's federal income tax receipts
Answer:
3. Proof of insurability is not required
Explanation:
Proof of insurability is not required because if a children's term rider is attached to a life insurance policy, then children are protected or covered by this insurance till they reach a particular age, which happens to be the maximum age stated in the policy. From that age they can convert their insurance coverage to a permanent
life insurance policy without having to issue proof of insurability as it would not be required because a child rider locks in future insurability. The can child rider can be purchased with an individual life insurance policy.
What is fixed and variable cost?
Answer:
Okay, so fixed costs are costs that are consistant in their price (buildings, rent, machinery, etc.). Variable costs are costs that change based on production (wages, materials, utilities, etc.).
Hope this helps :)
Explanation:
Explained above.
g "At the end of the current year, the owners' equity in Barclay Bakery is $260,000. During the year, the assets of the business had increased by $134,000 and the liabilities had increased by $79,000. Owners' equity at the beginning of the year must have been:"
Answer:
$205,000
Explanation:
Let us assume Owners' equity at the beginning be X
So, the Increase in Owners' equity is $260,000 - X
As we know that
Accounting equation is
Total assets = Total liabilities + total stockholder equity
So,
Total Increase in Assets = Total Increase in Liabilities + Increase in Owners' equity
$134,000 = $79,000 + $260,000 - X
$134,000 = $339,000 - X
So, the X =
= $339,000 - $134,000
= $205,000
15) A market is defined as A) a physical place where people buy only goods. B) a physical place where people buy both goods and services. C) a store where people buy physical goods. D) any arrangement that brings buyers and sellers together. E) a place where one good is bartered for another.
Answer:
D) any arrangement that brings buyers and sellers together.
Explanation:
In earlier times before now a market has a specific way of defining it. But due to recent advancement in technology, it can be described or defined to be any arrangement that brings buyers and sellers together.
The power of online presence totally altered the initial marker definitions the world know as any physical place where these buyers and sellers meet to do their tradings or businesses or a place where goods are bartered for another. Therefore any arrangement, be it via mail, sms, codes, online stores, video meetings etc are all forms of market places.
A notice is published stating that RMO 5% convertible preferred stock will be called at $60 per share. The preferred is convertible into 1/2 share of common and is selling in the market at $56 per share. RMO common stock is selling in the market at $110 per share. After the notice appears, the price of the preferred stock will most likely trade in the market at: _________.
Answer: d. A price near $60
Explanation:
The Preferred Stock was selling at $56 then a notice was circulated that RMO would be calling the stock at a price of $60.
This $60 is more than the current $56 and so this will need to reflect in the price of the stock. The adjustment will cause the Preferred stock to start trading near $60 as traders will seek to take advantage of the impending call by buying at a lower price and thus making a bit of profit when the stock is called at $60. The market will adjust to this because the Preferred stock will be perceived as undervalued. A price closer to the Call price will therefore become the new price to properly value the stock.
Suppose the government is considering an increase in the toll on a certain stretch of highway from $.40 to $.50. At present, 50,000 cars per week use that highway stretch; after the toll is imposed, it is projected that only 45,000 cars per week will use the highway stretch. Assuming that the marginal cost of highway use is constant (i.e., the supply schedule is horizontal) and equal to $.40 per car, what is the change in social surplus attributable to the increase in the toll
Answer:
$250 is the change in social surplus attributable to the increase in the toll
Explanation:
Suppose the government increase in toll on a certain stretch of highways by this caused a dead-weight loss occur and then resulting full in the number of cars using the highway.
Dead-weight loss = (0.5) (0.50-0.40) (50,000-45,000)
Dead-weight loss = 0.5 * 0.10 * 5000
Dead-weight loss = $250
The increase paid by other remaining drivers (0.50-0.40)(40,000) can be viewed as transfer from drivers to the government.
Speed, size, and strength are thought to be important factors in football performance. The article "Physical and Performance Characteristics of NCAA Division I Football Players" (Research Quarterly for Exercise and Sport [1990]: 395–401) reported on physical characteristics of Division I starting football players in the 1988 football season. Information for teams ranked in the top 20 was easily obtained, and it was reported that the mean weight of starters on top-20 teams was 105 kg. A random sample of 33 starting players (various positions were represented) from Division I teams that were not ranked in the top 20 resulted in a sample mean weight of 103.3 kg and a sample standard deviation of 16.3 kg. Is there sufficient evidence to conclude that the mean weight for non-top-20 starters is less than 105, the known value for top-20 teams?
Answer:
no
Explanation:
H0: mean of sample=105
Ha: mean of sampe≠ 105
t-statistic= (population mean-sample mean)/(standard deviation/√sample size)
t-statistic= (105-103.3)/(16.3/√33)
t-statistic= 0.5991
degress of freedom= 32
for alpha 0.05, p-value from t-distributino table is 1.697
since t-statistic is less than the p-value, null hypothesis is accepted.
There is no sufficient evidence to conclude that the mean weight for non-top-20 starters is less than 105 the known value for top-20 teams
Consider a hypothetical closed economy in which households spend $0.60 of each additional dollar they earn and save the remaining $0.40. The marginal propensity to consume (MPC) for this economy is0.6 , and the spending multiplier for this economy is . Suppose the government in this economy decides to increase government purchases by $400 billion. The increase in government purchases will lead to an increase in income, generating an initial change in consumption equal to . This increases income yet again, causing a second change in consumption equal to . The total change in demand resulting from the initial change in government spending is .
Answer:
The total change in demand resulting from the initial change in government spending is $1,000 billion
Explanation:
Marginal propensity to consume (MPC) = As with every additional increase in income, consumption increases by 0.60.
MPC = change in Consumption / Change in Income = [tex]\Delta C/\Delta Y[/tex]
[tex]\Delta C/\Delta Y[/tex] = 0.60 / 1
MPC = 0.60.
Spending or Expenditure Multiplier = 1 ÷ (1 - MPC)
Spending Multiplier = 1 ÷ (1 - 0.6) = 1 ÷ 0.4 = 2.5.
The consumption will increase by MPC, with 1 dollar increased, consumption increased by 0.60
Therefore, with $400 billion increase, Consumption will increase by 0.60 × 400 billion = $240 billion.
This increases income, causing a change in consumption at second times equal $240 billion × 0.6 = $144 billion.
The total change in income by this increment in government spending equals as:
Change in Demand = Multiplier × change in G
Change in Demand= $400 billion × 2.5 = $1,000 billion.
The total change in demand resulting from the initial change in government spending is $1,000 billion
Marginal propensity to consume = change in Consumption / Change in Income
Marginal propensity to consume = 0.60 / 1
Marginal propensity to consume = 0.60
Spending Multiplier = 1 / (1 - MPC)
Spending Multiplier = 1 / (1 - 0.6)
Spending Multiplier = 1 / 0.4
Spending Multiplier = 2.5.
Consumption will increase = 0.60 × 400 billion
Consumption will increase = $240 billion.
Consumption will increase second time = $240 billion × 0.6
Consumption will increase second time = $144 billion.
Change in Demand = Multiplier × Spending Multiplier
Change in Demand = $400 billion × 2.5
Change in Demand = $1,000 billion
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Linguini Inc. adopted dollar-value LIFO (DVL) as of January 1, 2018, when it had an inventory of $841,000. Its inventory as of December 31, 2018, was $874,000 at year-end costs and the cost index was 1.15. What was DVL inventory on December 31, 2018
Answer:
760,000
Explanation:
First find ending inventory at base pricing:
$874,000/1.15 = 760,000
Calculate real dollar increase/decrease in quantity
760,000-841,000 = -81,000
Since it is a decrease in quantity, you use prior period cost index. Prior period is the base year so you just use 1.0 which means that -81,000 stays the same
so now it is 841,000-81,000=760,000
The dollar-value LIFO (DVL) inventory on December 31, 2018 will be 760,000.
What is dollar-value LIFO (DVL) inventory?The latest in, first out cost layering principle is a version on which the dollar-value LIFO method is based. In essence, the technology aggregates cost data for huge quantities of inventory, eliminating the need to create unique cost layers for each inventory item. Instead, pools of inventory goods are organized into layers.
Find ending stock at base prices first:
$874,000/1.15 = 760,000
Determine the actual dollar gain or decrease in the amount.
760,000-841,000 = -81,000
Using the preceding period cost index is appropriate because the quantity has decreased. Since the prior period is the base year, you only need to utilize 1.0, so that -81,000 remains the same.
Consequently, it is now 841,000-81,000=760,000.
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An advertising expenditure approach that initially formulates the advertising goals and defines the tasks to accomplish these goals is known as a(n) _____. Group of answer choices objective approach functional approach task approach percentage sale approach
Answer:
Option C. Task Approach
Explanation:
Task approach is the approach that is based on the goals that expenditure must achieve and helps in defining what the advertising goals must be and what must be the tasks for goals accomplishment.
The advertising expenditure that is based on the sales that the expenditure must generate is percentage sale approach and it is not the case here.
Objective Approach is based on the set objectives and hence helps in designing the marketing expenditure from each aspects which is again not the case here because only advertising expenses are considered here.
The Functional Approach is the dealing of the tasks of the company by separate independent functions which performs the task which is also not the case here.
Home Corporation will open a new store on January 1. Based on experience from its other retail outlets, Home Corporation is making the following sales projections: Cash Sales Credit Sales January $60,000 $40,000 February $30,000 $50,000 March $40,000 $60,000 April $40,000 $80,000 Home Corporation estimates that 70% of the credit sales will be collected in the month following the month of sale, with the balance collected in the second month following the month of sale. In a cash budget for April, the total cash receipts will be:
Answer:
$97,000
Explanation:
The computation of the total cash receipts for the month of April is shown below:
= Cash sales in April + (Credit sales in February × following second month percentage) + (Credit sales in March x following month percentage)
= $40,000 + ($50,000 x 30%) + ($60,000 x 70%)
= $40,000 + $15,000 + $42,000
= $97,000
We simply added the cash sales for one month and the credit sales for two months so that the total cash receipts could come
Lexigraphic Printing Company is considering replacing a machine that has been used in its factory for four years. Relevant data associated with the operations of the old machine and the new machine, neither of which has any estimated residual value, are as follows:
Old Machine
Cost of machine, 10-year life $89,000
Annual depreciation (straight-line) 8,900
Annual manufacturing costs, excluding depreciation 23,600
Annual non-manufacturing operating expenses 6,100
Annual revenue 74,200
Current estimated selling price of machine 29,700
New Machine
Purchase price of machine, six-year life $119,700
Annual depreciation (straight-line) 19,950
Estimated annual manufacturing costs,
excluding depreciation 6,900
Annual non-manufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine.
Required:
1. Prepare a differential analysis as of April 30 comparing operations using the present machine (Alternative 1) with operations using the new machine (Alternative 2). The analysis should indicate the total differential income that would result over the six-year period if the new machine is acquired. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.
Differential Analysis
Continue with Old Machine (Alternative 1) or Replace Old Machine (Alternative 2)
April 30
1 Continue with Old Machine Replace Old Machine Differential Effect on Income
2 (Alternative 1) (Alternative 2) (Alternative 2)
3
4
5
6
7
8
2. Choices of what other factors should be considered.
Was the purchase price of the old machine too high?
What effect does the federal income tax have on the decision?
What opportunities are available for the use of the $90,000 of funds ($119,700 less $29,700 proceeds from the old machine) that are required to purchase the new machine?
Should management have purchased a different model of the old machine?
Are there any improvements in the quality of work turned out by the new machine?
Answer:
old machine:
depreciation costs $8,900
other manufacturing costs $23,600
other non-manufacturing expenses $6,100
annual revenue $74,000
new machine:
purchase price $119,700 - 29,700 (sales price of old machine) = $90,000
depreciation costs $19,950
other manufacturing costs $6,900
other non-manufacturing expenses $6,100
annual revenue $74,000
1)
DIFFERENTIAL ANALYSIS
Alternative 1 Alternative 2 Differential
old machine new machine amount
Purchase cost $0 ($119,700) ($119,700)
Proceeds from sale $0 $29,700 $29,700
Total revenues $444,000 $444,000 $0
Manufacturing costs ($141,600) ($41,400) $100,200
(excluding dep.)
Other non- ($36,600) ($36,600) $0
manufacturing costs
Total $265,800 $276,000 $10,200
If the company purchases the new machine, its differential revenue will be higher considering the 6 years of useful life. But we are missing two important aspects: required rate of return and tax rate, which could affect our decision.
2) Choices of what other factors should be considered.
What effect does the federal income tax have on the decision?
Net cash flows are affected by deprecation expense and how they are taxed. Alternative 2 would benefit from higher tax rates.What opportunities are available for the use of the $90,000 of funds ($119,700 less $29,700 proceeds from the old machine) that are required to purchase the new machine?
We should discount the future cash flows using the company's WACC.Are there any improvements in the quality of work turned out by the new machine?
If the new machine improves the quality of our products or reduces production time, then that is something that should be considered.Timm Inc., a calendar year, accrual basis taxpayer, is being sued by a customer who was injured when she tripped over a loose carpet in Timm's retail store. Timm's auditors required the corporation to accrue a $500,000 contingent liability and current year expense. Which of the following statements is true?
a. Timm can deduct the $500,000 accrued expense.
b. Timm can never deduct the $500,000 expense.
c. Timm can deduct the expense in the year in which the liability becomes fixed and determinable.
d. Timm can deduct the expense in the year of payment.
Answer: d. Timm can deduct the expense in the year of payment.
Explanation:
A Contingent Liability refers to a liability that a company MIGHT incur if a future event happens. It is mostly often used for law suits in case a company has to pay damages. They will thus accrue the expense in readiness to pay it off should the need ever arise.
While Timm will record it in the books, there is no need to deduct it from the income yet. Timm should wait until the year they will have to pay to deduct it. That way the expense will be correctly apportioned to it's corresponding period.
A company has a fiscal year-end of December 31:_______.
(1) on October 1, $18,000 was paid for a one-year fire insurance policy; (2) on June 30 the company advanced its chief financial officer $16,000; principal and interest at 6% on the note are due in one year; and (3) equipment costing $66,000 was purchased at the beginning of the year for cash. Depreciation on the equipment is $13,200 per year. If the adjusting entries were not recorded, would net income be higher or lower and by how much?
Answer:
Net income would be higher by $17,220 if the adjusting entries were left unrecorded
Explanation:
The adjusting entries for insurance prepaid would be to recognize three months of insurance cost as insurance expense i.e $18,000*3/12=$4,500
The adjusting entries for the advance of $16,000 is to recognize interest revenue for six months (from July to December) in the books i.e$16,000*6%*6/12=$480
The depreciation charge would increase expenses by $13,200
The impact of profit is shown below:
insurance expense ($4,500)
interest revenue $480
depreciation ( $13,200)
total impact (17220)
True or False : When you are thinking of something you want to predict, measure, or change in your business, you are probably thinking of a dependent variable.
Answer:
True
Explanation:
Dependent variables are variables which are altered by the changes to the independent factors or variables.
The following are instances of dependent and independent variables:
Dependent Variable (DV): Profit, Product Quality, Staff Attrition during a recession.
Profit (DV) depends on sales, expenses, the economy, the proficiency of the sales staff, the quality of the product.
The Quality of the Product (DV) depends on the production process, product design, quality of raw materials etc
So, many of the factors highlighted above, which affect the dependent variables are called Independent variable.
Profit, for instance, can be forecasted or changed IF changes are made to sales.
It is possible to measure the quality of a product or service. It can also be altered by increasing or decreasing the quality of raw material input.
Cheers!
The payback period provides information to managers that can be used to help a.control the risks associated with the uncertainty of future cash flows. b.minimize the impact of an investment on a firm's liquidity problems. c.control the effect of the investment on performance measures. d.control the risk of obsolescence. e.All of these choices are correct.
Answer:
e. All of these choices are correct.
Explanation:
The payback period is the time that takes an investment to reach the break-even point. In other words, it is the amount of time that it takes an investor to pay back for the investment, hence the name.
The payback period results from dividing the amount of investment by the estimated cash flow from the investment.
During this period, the manager of an investment can carry out all of the activities listed in the question.
Fontaine and Monroe are forming a partnership. Fontaine invests a building that has a market value of $334,000; the partnership assumes responsibility for a $117,000 note secured by a mortgage on the property. Monroe invests $92,000 in cash and equipment that has a market value of $67,000. For the partnership, the amounts recorded for the building and for Fontaine's Capital account are:
Answer:
Building= $334,000
Fontaine's capital account= $217,000
Explanation:
From the question above
Fountain company and Monroe company come together to form a partnership.
Fontaine invests a building that has a market value of $334,000
The partnership takes charge for a $117,000 note secured by a mortgage on the building
Monroe invests $92,000 on cash and equipments
The cash and equipments has a market value of $67,000
Therefore the amount recorded for the building is $334,000
The amount recorded for Fontaine's capital account is
= $334,000-$117,000
= $217,000
Hence for the partnership the amounts recorded for the building and fontaine's capital account is $334,000 and $217,000 respectively.
Nash's Trading Post, LLC issued a five-year interest-bearing note payable for $222000 on January 1, 2019. Each January the company is required to pay $44000 on the note. How will this note be reported on the December 31, 2020, balance sheet
Answer:
balance sheet
liabilities
note payables (current portion) 44,000
non-current liabilities
long-term note payable 178,000
Explanation:
On December 31,2020 there will be a portion of the note that will be declared as current liability while another non-current as within 12-months there is payment due (to be more precise next day after the balance close)
Thus 222,000 - 44,000 = 178,000 long-term
while the 44,000 are declared short-term
Hochberg Corporation uses an activity-based costing system with the following threeactivity cost pools:Activity Cost Pool Total ActivityFabrication ............................ 30,000 machine-hoursOrder processing ................... 300 ordersOther ..................................... Not applicableThe Other activity cost pool is used to accumulate costs of idle capacity andorganization-sustaining costs.The company has provided the following data concerning its costs:Wages and salaries ................. $340,000Depreciation ........................... 160,000Occupancy .............................. 220,000Total ........................................ $720,000The distribution of resource consumption across activity cost pools is given below:Activity Cost PoolsFabricationOrderProcessing Other TotalWages and salaries .................. 30% 60% 10% 100%Depreciation ............................ 15% 50% 35% 100%Occupancy ............................... 15% 55% 30% 100%The activity rate for the Fabrication activity cost pool is closest to:__________A) $5.30 per machine-hourB) $3.60 per machine-hourC) $7.20 per machine-hourD) $4.80 per machine-hour
Answer:
The answer is option A
Explanation:
Amount($) Activity cost pools Allocated amount($)
Wages and salaries 340,000 30% 102,000
Depreciation 160,000 15 % 24,000
Occupancy 220,000 15 % 33,000
Total 720,000 159,000
Cost driver (hours) 30,000 machine hours
Rate per machine hr 159,000 ÷ 30,000
=$ 5.30
Graham Petroleum produces oil. On May 1, it had no work-in-process inventory. It started production of 244 million barrels of oil in May and shipped 216 million barrels in the pipeline. The costs of the resources used by Graham in May consist of the following:
Materials $6,000 Million
Conversion Cost (Labor and overhead) $7,968 Million
Required:
The production supervisor estimates that the ending work-in-process is 60 percent complete on May 31.
Compute the cost of oil shipped in the pipeline and the amount in work-in-process ending inventory as of May 31. (Do not round intermediate calculations. Enter your answers in millions. For example, enter "1" instead of "1,000,000".)
Answer:
The cost of 216 million barrels of oil shipped is $ 12,960 million
Cost of ending work in process is $1,008 million
Explanation:
The total costs of oil production is computed thus:
$million
materials 6,000
conversion cost 7,968
total cost 13,968
Production started 244 million
Oil shipped 216 million
ending work in process 28 million
total equivalent units=216 million+28 million*60%=216 million+16.8 million=232.8 million
cost of oil shipped=$13,968/232.8*216=$ 12,960 million
amount of ending inventory=$13,968-$12,960=$1,008.00
Which of the following are a type of overhead allocation method?
a. division overhead rate method.
b. activity-based costing method
c. departmental overhead rate method
d. plantwide overhead rate method
Answer:
b. activity-based costing method
c. departmental overhead rate method
d. plantwide overhead rate method
Explanation:
B. Activity based costing method allocates different cost pools or drivers to each overhead based on its level of activity or usage etc. For example if we want to find the cost of telephone calls we would find the number of total calls not number of days. Similarly if we want to calculate the wages we will find the number of hours not days etc.
C. Department overhead rate method allocates different rates to each department. For example the rates of the lubricating department may be different from the finishing department or polishing department etc.
D. Platwide Overhead rate method allocates a single rate to all the products. It is based on direct labor hours . And number of hours are used to allocate it to different products. For example the rate may be $1.5 per hour and it can be calculated for different products as product A requires 6 hours and product B requires 9 hours so the rate for Product A would be $ 9.0 and $ 12 for product B.
A.division overhead rate method. Theres no such overhead rate as division overhead rate method.
The plantwide overhead rate method. Thus the option D is correct.
What is the overhead allocations ?The overhead allocation refers to the rate of the cost allocations . The core components of the cost allocations is track the organization products and services. The business can identify the services that helps in managing the company's financial resources. It helps to allocate the cost to the business units.
Find out more information about the allocation method.
brainly.com/question/17112052.
