Answer:
b. Producer.
Explanation:
Organizational buying deals with the process of purchasing products and services after duly identifying, evaluating and choosing which company to buy from.
Organizational buying is mainly classified into four categories, these are;
1. Producer.
2. Intermediary or Retailers.
3. Wholesaler.
4. Institution.
In this scenario, Dell Computer buys computer chips from Intel for the purpose of making computers to be sold to consumers and other organizations. Dell is an example of a producer organizational buyer because it bought computer chips, so it can be used to manufacture a computer.
Hence, the producers usually buy raw materials, components or other parts, from other manufacturers to use in producing goods for their consumers or end users.
Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine. The machine has a monthly capacity of 500 hours. Total market demand for the two products is limited to 150 units (each) monthly. Slavin is currently producing 110 Alphas and 110 Deltas each month. Cost and machine-usage data for the two products is shown in the following spreadsheet, which Slavin managers use for planning purposes:
Alpha Delta Total
Price $120 $150
Less variable costs per unit
Material 20 35
Labor 26 37
Overhead 14 14
Contribution margin per unit $60 $64
Fixed costs
Manufacturing $8,000
Marketing and administrative 5,000
$13,000
Machine hours per unit 2.0 2.5
Machine hours used 495
Machine hours available 500
Quantity produced 110 110
Maximum demand 150 150
Profit $640
Required:
a. How many Alphas and Deltas should the company produce each month to maximize monthly profit?
b. If the company produces at the level found in requirement (a), how much will monthly profit increase over the current production schedule?
Answer:
a. How many Alphas and Deltas should the company produce each month to maximize monthly profit?
150 Alphas80 Deltasb. If the company produces at the level found in requirement (a), how much will monthly profit increase over the current production schedule?
$480 increase (or 75% increase)Explanation:
Alpha Delta
Price $120 $150
Variable costs per unit :
Material $20 $35 Labor $26 $37 Overhead $14 $14Contribution margin per unit $60 $64
Fixed costs :
Manufacturing $8,000 Marketing and administrative $5,000 total $13,000Machine hours per unit 2.0 2.5
Machine hours used 495
Machine hours available 500
Quantity produced 110 110
Maximum demand 150 150
Profit $640
Contribution margin per machine hour:
$30 $25.60
this means you should produce as many Alphas as possible = 150. Production of 150 Alphas will consume 300 machine hours and the remaining 200 hours can be used to produce 80 Deltas.
Monthly profit:
[(150 x $60) + (80 x $64)] - 13,000 = $9,000 + $5,120 - $13,000 = $1,120, which represents a $480 increase (or 75% increase)
Angara Corporation uses activity-based costing to determine product costs for external financial reports. The company has provided the following data concerning its activity-based costing system: Activities (and Activity Measures) Estimated Overhead Cost Machine related (machine-hours) $256,520 Batch setup (setups) $261,360 General factory (direct labour-hours) $178,560 Expected Activity Activities Product X Product Y Total Machine related 4,300 6,300 10,600 Batch setup 8,600 1,300 9,900 General factory 3,300 6,300 9,600 Assuming that actual activity turns out to be the same as expected activity, the total amount of overhead cost allocated to Product X would be closest to:
Answer:
The total amount of overhead cost allocated to Product X would be closest to $ 392,480
Explanation:
Activities (and Activity Measures) Estimated Overhead Cost
Machine related (machine-hours) $256,520
Batch setup (setups) $261,360
General factory (direct labour-hours) $178,560
Expected Activity
Activities Product X Product Y Total
Machine related 4,300 6,300 10,600
Batch setup 8,600 1,300 9,900
General factory 3,300 6,300 9,600
The total amount of overhead cost allocated to Product X would be closest to:
Machine related = (4,300 × $256,520) ÷ 10,600 = $104,060
Batch setup = (8,600 × $261,360) ÷ 9,900 = $227,040
General factory = (3,300 × $178,560) ÷ 9,600 = $61,380
Total = $104,060 + $227,040 + $61,380 = $ 392,480
Suppose Rebecca needs a dog sitter so that she can travel to her sister’s wedding. Rebecca values dog sitting for the weekend at $200. Susan is willing to dog sit for Rebecca so long as she receives at least $175. Rebecca and Susan agree on a price of $185. Suppose the government imposes a tax of $30 on dog sitting. What is the deadweight loss of the tax?
Answer:
The deadweight loss of the tax is $25
Explanation:
In order to calculate the deadweight loss of the tax we would have to make the following calculation:
deadweight loss of the tax=maximum willingness to pay - minimum willingness to accept
maximum willingness to pay=$200
minimum willingness to accept =$175
deadweight loss of the tax=$200-$175
deadweight loss of the tax=$25
The deadweight loss of the tax is $25
Answer: $25
Explanation:
Given Data:
Rebecca value for dog sitting = $200
Susan’s minimum agreed price = $175
Rebecca and Susan agreed price = $185
Government tax on dog sitting = $30
Dead weight loss = Rebecca value - Susan list price
= $200 - $175
= $25
The dead weight loss of tax is $25
Valley Technology Balance Sheet As of March 11, 2020 (amounts in thousands) Cash 9,700 Accounts Payable 1,500 Accounts Receivable 4,500 Debt 2,900 Inventory 3,800 Other Liabilities 800 Property Plant & Equipment 16,400 Total Liabilities 5,200 Other Assets 1,700 Paid-In Capital 7,300 Retained Earnings 23,600 Total Equity 30,900 Total Assets 36,100 Total Liabilities & Equity 36,100 Use T-accounts to record the transactions below, which occur on March 12, 2020, close the T-accounts, and construct a balance sheet to answer the question. 1. Buy $15,000 worth of manufacturing supplies on credit 2. Issue $85,000 in stock 3. Borrow $63,000 from a bank 4. Pay $5,000 owed to a supplier 5. Receive payment of $12,000 owed by a customer What is the final amount in Total Liabilities?
Answer:
total liabilities = accounts payable $11,500 + unearned revenue $7,500 + debt $65,900 + other liabilities $800 = $85,700
Explanation:
Cash 9,700 Accounts Payable 1,500 Accounts Receivable 4,500 Debt 2,900 Inventory 3,800 Other Liabilities 800 Property Plant & Equipment 16,400 Total Liabilities 5,200 Other Assets 1,700 Paid-In Capital 7,300 Retained Earnings 23,600 Total Equity 30,900 Total Assets 36,100 Total Liabilities & Equity 36,100
1. Buy $15,000 worth of manufacturing supplies on credit
Supplies Accounts payable
debit credit debit credit
15,000 1,500
15,000
16,500
2. Issue $85,000 in stock
Cash Paid-In Capital
debit credit debit credit
9,700 7,300
85,000 85,000
94,700 92,300
3. Borrow $63,000 from a bank
Cash Debt
debit credit debit credit
94,700 2,900
63,000 63,000
157,700 65,900
4. Pay $5,000 owed to a supplier
Cash Accounts payable
debit credit debit credit
157,700 16,500
5,000 5,000
152,700 11,500
5. Receive payment of $12,000 owed by a customer
Cash Accounts receivable
debit credit debit credit
152,700 4,500
12,000 12,000
164,700 7,500
Due to some strange reason, accounts receivable has a debit balance (= $4,500 - $12,000). Since that is not possible, the remaining part $7,500 must be included under unearned revenue:
Accounts receivable Unearned revenue
debit credit debit credit
7,500 0
7,500 7,500
0 0 7,500
Marshall Grocery Delivery Service reports the following information: Rate per hour of direct labor is: Labor rate per hour $ 20 Rate per hour of direct labor $ 25.80 Materials markup 23 % Target profit margin 20 % The materials markup for a job that will use 100 labor hours and $2,000 of materials is:
Answer:
$460
Explanation:
The following information was reported from Marshall Grocery delivery service report
Labor rate per hour= $20
Rate per hour= $25.80
Materials markup= 23%
Target profit margin= 20%
The material markup for a job that will use 100 labor hours and $2,000 of materials is calculated as follows
Materials markup= Materials × percentage
= $2,000×23/100
= $2,000×0.23
= $460
Hence the materials markup is $460
Gangsta Industries,INC produces a variety of anti-crime and safety products such as burglar alarms, smoke detectors, surveillance cameras, and specialty locks. Gangsta sells to households, businesses, and government agencies. They have found that each market group requires a different marketing strategy. Gangsta would probably benefit from departmentalization by:
Answer:
Customer type.
Explanation:
From the scenario described in the question above, Gangsta Industries would benefit from departmentalization by type of consumer.
In this type of departmentalization, the company groups its activities according to its common customer base, or the types of customers that the organization serves.
This is a strategy that enables the company to better serve a group of specific customers based on their problems, needs and preferences, which results in a more targeted and effective service.
Non-verbal communication influences the way a message is received and functions in at least five different ways. Read the following scenario, and identify the most appropriate form of non-verbal communication to use.
You are meeting with a new customer for the first time in person. This customer had a negative experience with one of your company’s competitors, and you want to communicate to the customer that you are honest and trustworthy.What form of non-verbal communication will serve you best?
A. Smiling
B.Standing far away
C. Sustained eye contact
Non-verbal communication sends powerful messages through body language and facial expressions. Our work space arrangement also sends nonverbal messages to others. In the following situation, consider what the intern is conveying non-verbally.
After preparing a project development agenda, the office manager prepares a conference room for the meeting. She places a circular table in the center of the room and surrounds it with comfortable chairs. What message is the office manager expressing non-verbally?
A. She wishes to promote open communication.
B. She wishes to discourage communication.
C. She wishes to set up a clear hierarchy.
Document appearance can have either positive or negative effects on how an audience receives a message.
In the following situation, consider what message is being conveyed non-verbally through document appearance.
Nathan is hiring a summer intern to assist him in launching a new marketing campaign. He opens a letter of introduction from one applicant and notices three misspellings in the first sentence. Additionally, Nathan notes that while the applicant seems to have the necessary experience, he has not formatted his letter of introduction in a professional manner. What message is the internship applicant expressing non-verbally?
A. He is very interested in the summer internship.
B. He is well qualified but too busy to be bothered with formatting.
C. He is not very professional and is not interested in the job.
Answer:
A. Smiling
A. She wishes to promote open communication.
C. He is not very professional and is not interested in the job.
Your answer
Explanation:
Non verbal communication is the transmission of information without the use of words.
Non verbal communication can be carried out through eye contact, facial expressions, physical appearance or settings, tone of voice and distance.
Smiling is an example of non verbal communication using facial expressions. It communicates friendliness and honesty.
By arranging the chairs in a certain manner, physical settings is the mode of non verbal communication used.
I hope my answer helps you
g invested $800,000 in a new CNC hot wire cutting machine. They intend to sell foam products fabricated using this machine. At an interest rate of 12% per year compounded quarterly, the quarterly income required to recover the investment in 3 years is (choose closet answer):
Answer:
Quarterly income = $ 36,643.03
Explanation:
The quarterly income ca be determined using the present value of the annuity technique.
The Present Value of the annuity technique
PV = A × ((1- (1+r)^(-n)/r
A- quarterly payment, n- number of quarters, quarterly rate, PV - Present of investment
A- ? n -3× 12= 36, r-12%/4= 3%
800,000 = A× (1- (1.03)^(-36)
800,000 = A× (1- (1.03)^(-36)
800,000 = A × 21.8322525
A = 800,000/21.8322525
A= 36,643.03
Quarterly income = $ 36,643.03
Mark Welsch deposits $7,200 in an account that earns interest at an annual rate of 4%, compounded quarterly. The $7,200 plus earned interest must remain in the account 3 years before it can be withdrawn. How much money will be in the account at the end of 3 years
Answer:
$8,113.14
Explanation:
The computation of the amount will be in the account at the end of 3 years i.e future value is shown below:
As we know that
Future value = Present value × (1 + interest rate)^number of years
= $7,200 × (1 + 0.04 ÷ 4)^ 3 × 4 quarters
= $7,200 × (1.01)^12
= $7,200 × 1.12682503
= $8,113.14
Since it is compounded quarterly so we divided the rate by 4 quarters and multiplied the number of years with the 4 quarters as there are 4 quarters in a year
Salaries for professions (such as architect or medical doctor) that require a long period of study are typically higher than those for other jobs. The reasons for this are all of the following EXCEPT __________.a. students sacrifice a good deal of present incomeb. status deserves more reward in the form of wagesc. long periods of schooling incur greater current costsd. future income is worth less than present income
Answer:
d. future income is worth less than present income
Explanation:
Remember, since we want an exception to all the possible reasons for higher salaries of those in medical and architectural profession, we carefully examine the reasons given.
However, in no way is it because those of this profession (architect, medical doctors) would earn future income worth less than their present income a basis for their higher salaries than other jobs, since most often they earn more as they the years goes by in their profession.
Piper's Pizza sold baking equipment for $25,000. The equipment was originally purchased for $72,000, and depreciation through the date of sale totaled $51,000. What was the gain or loss on the sale of the equipment
Answer:
The gain on disposal is of $4000
Explanation:
To calculate the gain or loss on disposal, we first need to calculate the Carrying value, also known as the Net Book Value, of the asset at the time of sale. The Carrying value is calculated using the following formula,
Carrying Value or NBV = Cost - Accumulated depreciation
Carrying Value or NBV = 72000 - 51000
Carrying Value or NBV = $21000
If the asset is sold for more than its carrying value, there is a gain on disposal. If it is sold for less than its carrying value, there is a loss on disposal.
As the asset was sold for $25000 which is more than its carrying value of $21000, there is a gain on disposal.
Gain on disposal = 25000 - 21000 = $4000 Gain
Howard Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Department S1 costs are allocated on the basis of number of employees, and Department S2 costs are allocated on the basis of space occupied expressed in square feet.
Data on direct department costs, number of employees, and space occupied are as follows:
S1
S2
P1
P2
Direct dept. costs
$7,500
$11,000
$27,500
$30,000
Number of employees
10
5
20
25
Space occupied (sq. ft.)
1,000
500
1,500
2,500
If Howard used the reciprocal method, the algebraic equation expressing the total costs allocated from S1 is
Select one:
a. S1 = $7,500 + 0.10S2.
b. S1 = $7,500 + 0.20S2.
c. S1 = $10,000 + 0.20S2.
d. S1 = $10,000 + 0.10S2.
Answer: S1 = $ 7500 + 0.20 S2
Explanation:
From the question, Howard Company has two support departments which are (S1 and S2) and two producing departments which are (P1 and P2). The department S1 costs are allocated on the basis of number of employees, and the department S2 costs are allocated on basis of space occupied expressed in square feet.
The algebraic equation expressing the total costs allocated from S1 is calculated as follow:
S1 Direct Cost = $ 7500
The cost of S2 will be allocated to S1 based on the space occupied and the total space that is occupied is:
= 1000 + 1500 + 2500
= 5000 sq ft
Space occupied by S1 = 1000
S2’s cost allocated to S1 will be:
= (1000 / 5000) of S2 cost
= 0.20 S2
Therefore the correct option is:
S1 = $ 7500 + 0.20 S2
"A long time customer has purchased securities in a margin account and is experiencing a temporary cash shortfall. The customer tells the registered representative that he cannot pay on settlement; and the registered representative offers to lend the customer the necessary funds. This action is:"
Answer: Prohibited.
Explanation:
The Financial Industry Regulatory Authority (FINRA) frowns upon the action described above.
FINRA strongly prohibits the personal borrowing of money by the representative to a customer or vice versa. The only time this prohibition can be waved is if the parties are married or family.
Seeing as there was no mention of the parties being family, this action is prohibited.
Statement of Cash Flows A summary of cash flows for Paradise Travel Service for the year ended May 31, 2018, follows: Cash receipts: Cash received from customers $880,000 Cash received from issuing common stock 40,000 Cash payments: Cash paid for operating expenses 758,000 Cash paid for land 150,000 Cash paid as dividends 10,000 The cash balance as of June 1, 2017, was $50,000. Prepare a statement of cash flows for Paradise Travel Service for the year ended May 31, 2018. Use the minus sign to indicate cash outflows, cash payments and decreases in cash. Paradise Travel Service Statement of Cash Flows For the Year Ended May 31, 2018 Cash flows from operating activities: Cash received from customers $ 880,000 Cash payments for operating expenses 758,000 $ Cash flows used for investing activities: Cash flows from financing activities: $ $ Cash as of June 1, 2017 Cash as of May 31, 2018 $
Answer:
Paradise Travel Service
Cash Flow Statement
For the Year Ended May 31, 2018
Cash flows from operating activities:
Cash received from customers $880,000
Cash paid for operating expenses -$758,000
Net cash provided by operating activities $122,000
Cash flows from investing activities:
Cash paid for land -$150,000
Net cash provided by investing activities -$150,000
Cash flows from financing activities:
Cash received from issuing common stock $40,000
Cash paid as dividends -$10,000
Net cash provided by financing activities $30,000
Net increase in cash $2,000
Cash balance June 1, 2017 $50,000
Cash balance May 31, 2017 $52,000
Management of Mittel Rhein AG of Köln, Germany, would like to reduce the amount of time between when a customer places an order and when the order is shipped. For the first quarter of operations during the current year the following data were reported: Inspection time 0.3 days Wait time (from order to start of production) 14.0 days Process time 2.7 days Move time 1.0 days Queue time 5.0 days
1.Compute the throughput time.
2. Compute the manufacturing cycle efficiency (MCE) for the quarter. (Round your answer to 2 decimal places.)
3. What percentage of the throughput time was spent in non–value-added activities? (Enter your answer as a percentage (i.e., 0.12 should be entered as 12).)
4.Compute the delivery cycle time.
5. If by using Lean Production all queue time during production is eliminated, what will be the new MCE? (Round your percentage answer to 1 decimal place (i.e., 0.123 should be entered as 12.3).)
Answer:
1. The throughput time is 9 days
2. The MCE is 0.30
3. 70% of the throughput time was spent on non-value added activities.
4. The delivery cycle time is 23 days
5. The New MCE is 67.5%
Explanation:
1. To calculate the throughput time we would have to use to make the following calculation:
throughput time=process time+inspection time+movie time+queue time
throughput time=2.7+0.3+1+5
throughput time=9 days
2. To calculate the MCE we would have to use to make the following calculation:
MCE=value added time/throughput time
MCE=2.7/9=0.30
3. MCE is 30% which means that out of the total throughput time, time spent on value added activities was 30%. Thus it means that 70% of the throughput time was spent on non-value added activities.
4. To calculate the delivery cycle time we would have to use to make the following calculation:
delivery cycle time=wait time+throughput time
delivery cycle time=14+9=23 days
5. To calculate the new MCE we would have to use to make the following calculation:
New MCE=value added time/throughput time
New MCE=2.7/4
New MCE=67.5%
1. Based on the information given the throughput time is 9 days.
2. The manufacturing cycle efficiency (MCE) for the quarter is 30%.
3. The percentage of the throughput time is 70%.
4. The delivery cycle time is 23 days.
5. The New MCE is 68%.
1. Throughput time
Throughput time = Process time + Inspection time + Move time + Queue time
Throughput time= 2.7 +0.3+ 1.0 + 5.0
Throughput time=9 days
2. Manufacturing cycle efficiency (MCE)
Manufacturing cycle efficiency (MCE) = Value-added time / Throughput time
Manufacturing cycle efficiency (MCE) = 2.7 /9
Manufacturing cycle efficiency (MCE)=30%
3. Non-value-added activities
Non-value-added activities = 100% - 30%
Non-value-added activities = 70%
4. Delivery cycle time
Delivery cycle time = Wait time + throughput time
Delivery cycle time = 14.0 + 9.0
Delivery cycle time = 23 days
5. New MCE
New MCE = Value-added time / Throughput time
New MCE=2.7/(0.3+2.7+1.0)
New MCE 2.7 / 4
New MCE =67.5%
New MCE =68% (Approximately)
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On March 4 of 1999, XYZ Corporation takes out a $1 million loan. The company pays the interest semiannually. The six-month interest rate is six-month LIBOR 80 basis points, with a cap at 9.25%. Assume that LIBOR is at 8.5% on March 4, 1999, and 7.75% on September 4, 1999. What is the second interest payments on the loan
Answer: $85,500
Explanation:
From the question, we are told XYZ Corporation takes out a $1 million loan and the interest on the loan is paid semiannually.
We are also told that the six-month interest rate is six-month LIBOR 80 basis points, with a cap at 9.25%. Assume that LIBOR is at 8.5% on March 4, 1999, and 7.75% on September 4, 1999.
The second interest payments on the loan will be:
The interest rate will be:
Interest rate = LIBOR + 80bps
= 7.75 + 0.8
= 8.55%
Interest paid in the second period
= $1,000,000 × 8.55%
= $1,000,000 × 0.0855
= $85,500
Note that there is no need for using the cap since the interest didn't exceed 9.25%
Which of the following is NOT a pitfall an organization should avoid in strategic planning? Involving all managers rather than delegating planning to a "planner" Failing to communicate the plan to employees Failing to create a collaborative climate supportive of change Top managers not actively supporting the strategic-planning process Doing strategic planning only to satisfy accreditation or regulatory requirements
Answer:
Involving all managers rather than delegating planning to a "planner"
Explanation:
Strategic planning is a process of establishing the direction of a business. It assesses where the business is and where it is going. And the action plan needed to get to it's goal.
Delegating planning to a planner rather than involving all managers is an identified pitfall in strategic planning.
This is why Involving all managers rather than delegating planning to a "planner" is the correct answer since we are required to identify a non pitfall by the question.
The assumptions of the production order quantity (EPQ) model are met in a situation where annual demand is 3650 units, setup cost is $50, holding cost is $12 per unit per year, the daily demand rate is 20 and the daily production rate is 100. What is the optimal order and setup cost?
A) 139.B) 174.C) 184.D) 365.E) 548.
Answer:
C) 184
Explanation:
Options are inconsistent with data given.
Optimal Order is the level of order that is made to keep the setup cost to a minimum level.
It can be calculated by using following formula.
EPQ = [tex]\sqrt{\frac{2 X K X D}{h X ( 1 - x )}}[/tex]
K = Setup Cost = $50
D = Annual demand = 3,650 units
h = Holding cost = $12
x = daily demand rate/ daily production rate = 20 / 100 = 0.2
Placing values in the formula
EPQ = [tex]\sqrt{\frac{2 X 50 X 3650}{12 X ( 1 - 0.2 )}}[/tex]
EPQ = 194.99 units = 195 units
Answer according to correct data
Question
The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units, setup cost is $50, holding cost is $12 per unit per year, the daily demand rate is 10 and the daily production rate is 100. The production order quantity for this problem is approximately
Answer
Options are inconsistent with data given.
Optimal Order is the level of order that is made to keep the setup cost to a minimum level.
It can be calculated by using following formula.
EPQ = [tex]\sqrt{\frac{2 X K X D}{h X ( 1 - x )}}[/tex]
K = Setup Cost = $50
D = Annual demand = 3,650 units
h = Holding cost = $12
x = daily demand rate/ daily production rate = 10 / 100 = 0.1
Placing values in the formula
EPQ = [tex]\sqrt{\frac{2 X 50 X 3650}{12 X ( 1 - 0.1 )}}[/tex]
EPQ = 183.84 units = 184 units
The following transactions occurred during the month of June 2021 for the Stridewell Corporation. The company owns and operates a retail shoe store. Issued 75,000 shares of common stock in exchange for $375,000 cash. Purchased office equipment at a cost of $68,750. $27,500 was paid in cash and a note payable was signed for the balance owed. Purchased inventory on account at a cost of $150,000. The company uses the perpetual inventory system. Credit sales for the month totaled $255,000. The cost of the goods sold was $127,500. Paid $3,250 in rent on the store building for the month of June. Paid $1,800 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2021. Paid $108,375 on account for the merchandise purchased in 3. Collected $51,000 from customers on account. Paid shareholders a cash dividend of $3,750. Recorded depreciation expense of $1,375 for the month on the office equipment. Recorded the amount of prepaid insurance that expired for the month. Required: Prepare journal entries to record each of the transactions and events listed above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
Stridewell Corporation
Journal Entries:
Debit Cash $375,000
Credit Common Stock $375,000
To record issue of 75,000 shares of common stock.
Debit Office Equipment $68,750
Credit Cash Account $27,500
Credit Notes Payable $41,250
To record purchase of office equipment.
Debit Inventory $150,000
Credit Accounts Payable $150,000
To record purchase of inventory on account
Debit Accounts Receivable $255,000
Credit Sales Revenue $255,000
To record sales on account.
Debit Cost of Goods Sold $127,500
Credit Inventory $127,500
To record cost of goods under the perpetual inventory system.
Debit Rent Expense $3,250
Credit Cash Account $3,250
To record payment of rent for June.
Debit Prepaid Insurance $1,800
Credit Cash Account $1,800
To record payment for insurance.
Debit Accounts Payable $108,375
Credit Cash Account $108,375
To record payment on account.
Debit Cash Account $51,000
Credit Accounts Receivable $51,000
To record cash collection from customers.
Debit Dividends $3,750
Credit Cash Account $3,750
To record payment of cash dividend.
Debit Depreciation Expense $1,375
Credit Accumulated Depreciation $1,375
To record depreciation charge for the month.
Debit Insurance Expense $150
Credit Prepaid Insurance $150
To record expired insurance for the month.
Explanation:
a) Journal Entries show the accounts to be debited and credited in the general ledger. They are the first accounting records of business transactions and events.
b) Insurance Expense for June is equal to $1,800/12 = $150 per month. This amount is deducted from the Prepaid Insurance to reduce the balance.
The acid-test ratio Group of answer choices is a quick calculation of an approximation of the current ratio. does not include all current liabilities in the calculation. does not include inventory as part of the numerator. does include prepaid expenses as part of the numerator.
Answer:
does not include inventory as part of the numerator
Explanation:
The acid test ratio is somewhat similar to the current ratio. Both ratios are called liquidity ratio in which the short term assets are converted into cash to pay its short term liabilities. But the only difference in these two is
Current ratio includes current assets and current liabilities
While on the other hand, the acid test ratio or quick ratio include quick asset and current liabilities
Quick asset = Total Current assets - inventory - all other current assets
As inventory takes more time to convert into cash
Bob, proprietor of Bob's Burgers, would like to retire in 20 years. He plans to deposit $6500 at the end of each year for the next 20 years into an account expected to earn 7.5% compounded annually. How much will Bob have in his retirement account in 20 years immediately after making his last deposit
Answer:
$281,480
Explanation:
we need to find the future value of the annuity payments, we can use the future value of annuity formula (I couldn't find an annuity table for 7.5%):
future value = annual payment x [(1 + r)ⁿ - 1] / r
annual payment = $6,500r = 7.5%n = 20 yearsfuture value = $6,500 x [(1 + 0.075)²⁰ - 1] / 0.075 = $6,500 x 43.30468 = $281,480
The amount that Bob have in his retirement account in 20 years immediately after making his last deposit is $281,480.
Future value:Using this formula
Future value =Annual payment x [(1 + Interest rate)^Number of years - 1] / Interest rate
Where:
Annual payment = $6,500
Interest rate = 7.5% or 0.075
Number of years= 20 years
Let plug in the formula
Future value = $6,500 x [(1 + 0.075)²⁰ - 1] / 0.075
Future value=$6,500 x [(1 .075)²⁰ - 1] / 0.075
Future value=$6,500 x [(4.24785) - 1] / 0.075
Future value=$6,500 x [3.24785]/ 0.075
Future value = $6,500 x 43.30467
Future value= $281,480
Inconclusion the amount that Bob have in his retirement account in 20 years immediately after making his last deposit is $281,480.
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On July 1, Year 1, Danzer Industries Inc. issued $40,000,000 of 10-year, 7% bonds at a market (effective) interest rate of 8%, receiving cash of $37,282,062. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.2. Journalize the entries to record the following:*A. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method.
B. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method.
3. Determine the total interest expense for Year 1.4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?5. Compute the price of $37,282,062 received for the bonds by using the present value tables
Answer:
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.
Dr Cash 37,282,062
Dr Discount on bonds payable 2,717,938
Cr Bonds payable 40,000,000
2. Journalize the entries to record the following:*A. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method.
Dr Interest expense 1,535,897
Cr Cash 1,400,000
Cr Discount on bonds payable 135,897
B. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method.
Dr Interest expense 1,535,897
Cr Cash 1,400,000
Cr Discount on bonds payable 135,897
3. Determine the total interest expense for Year 1.
Interest expense 1,535,897
4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?
Yes, when the bond's interest rate is lower than the market rate, the bonds will be sold at a discount (less than face value). The market rate applicable to this bond issuance is the one used for similar bonds, so the market rate can change depending on the bond.
5. Compute the price of $37,282,062 received for the bonds by using the present value tables
the value of the bonds = PV of face value + PV of coupons
PV of face value = $40,000,000 / (1 + 4%)²⁰ = $18,255,478PV of annuity = $1,400,000 x PV annuity 4% for 20 periods = $1,400,000 x 13.59033 = $19,026,462total value = $18,255,478 + $19,026,462 = $37,281,940
There is a small difference, $122, due to rounding errors from the annuity table. But the error is not significant, it represents only 0.0003% of the bonds' price.
Explanation:
issued $40,000,000 of 10-year, 7% bonds at a market (effective) interest rate of 8%, receiving cash of $37,282,062
coupon payment = $40,000,000 x 7% x 1/2 = $1,400,000
semiannual coupon paid December 31 and June 30
Discount on bonds payable $2,717,938 / 20 coupons = $135,896.90 ≈ $135,897 per coupon payment
Trucks R' Us has a market capitalization of $142 million, $78 billion in BB rated debt, and $10 billion in cash. If Trucks R' Us' equity beta is 1.68, then their underlying asset beta is closest to:
Answer:
Their underlying asset beta is closest to is 1.08
Explanation:
According to the given data we have the following:
Debt is given as $78 billion
Equity is given as $142 billion
equity beta given as 1.68
Therefore, in order to calculate the underlying asset beta we would have to use the formula of the the equity beta for a levered firm as follows:
betaE =beta A [1 + (Debt / Equity)]
1.68 = \beta A [1 + ($78 B/ $142 B)]
1.68 = \beta A [1 + 0.5493]
betaA = 1.68 / 1.5493
betaA = 1.08
Their underlying asset beta is closest to is 1.08
Can't Hold Me Back, Inc. is preparing to pay its first dividends. It is going to pay $1.00, $2.50, and $5.00 a share over the next three years, respectively. After that, the company has stated that the annual dividend will be $1.25 per share indefinitely. What is this stock worth to you per share if you demand a 7% rate of return
Answer:
The stock worth to you per share if you demand a 7% rate of return is $21.78
Explanation:
In order to calculate the stock worth per share if you demand a 7% rate of return we would have to make the following calculation:
stock worth per share=PV of the first three years' returns+PV of the constant dividend stream from the fourth year
PV of the first three years' returns = 1/1.07+2.5/1.07^2+5/1.07^3 =$7.20
PV of the constant dividend stream from the fourth year,= (1.25/0.07)/1.07^3 =$14.58
Therefore, stock worth per share=$7.20 +$14.58
stock worth per share=$21.78
The stock worth to you per share if you demand a 7% rate of return is $21.78
17. A global strategy for a company would include a. Products tailored to local tastes and needs, with local sourcing. b. A standardized product available without any local responsiveness. c. Patents and copyrights that are designed to promote maximum innovation. d. All of the above.
Answer: b. A standardized product available without any local responsiveness.
Explanation:
A global strategy refers to when a company aims to expand across the globe. One of the strategies is known as Standardisation.
This is a policy where the company that hopes to expand decides that it wants to make a standard product that is the same the world over. By not making it available without local responsiveness ( differentiating it by adding local features to it), the company signals that they want their product to be the same around the world.
It is very useful to some companies such as Apple which has the iPhone around the world with no local customisation and Dominoes Pizza which aims to have their pizza taste the same the world over.
If your risk-aversion coefficient is A = 4.4 and you believe that the entire 1926–2015 period is representative of future expected performance, what fraction of your portfolio should be allocated to T-bills and what fraction to equity? Assume your utility function is U = E(r) – 0.5 × Aσ2
Answer:
=> fraction of the portfolio that should be allocated to T-bills = 0.4482 = 44.82%.
=> fraction to equity = 0.5518 = 55.18%.
Explanation:
So, in this question or problem we are given the following parameters or data or information which are; that the utility function is U = E(r) – 0.5 × Aσ2 and the risk-aversion coefficient is A = 4.4.
The fraction of the portfolio that should be allocated to T-bills and its equivalent fraction to equity can be calculated by using the formula below;
The first step is to determine or Calculate the value of fraction to equity.
Hence, the fraction to equity = risk premium/(market standard deviation)^2 - risk aversion.
= 8.10% ÷ [(20.48%)^2 × 3.5 = 0.5518.
Therefore, the value for fraction of the portfolio that should be allocated to T-bills = 1 - fraction to equity = 1 - 0.5518 =0.4482 .
Boren Company reported the following information for the current year: Sales (625 units) $37,800, direct materials and direct labor $14,600, other variable costs $13,200, and fixed costs $6,000. "What is the company's break-even point in units?"
Answer:
Break-even point in units= 375 units
Explanation:
Giving the following information:
Sales (625 units) $37,800
direct materials and direct labor $14,600
other variable costs $13,200
fixed costs $6,000.
To calculate the break-even points in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Unitary selling price= 37,800/625= $60.48
Unitary varaible cost= (13,200 + 14,600)/625= $44.48
Break-even point in units= 6,000/ (60.48 - 44.48)
Break-even point in units= 375 units
Sally makes deposits into a retirement account every year from the age of 30 until she retires at age 65. a) If Sally deposits $ 1100$1100 per year and the account earns interest at a rate of 9 %9% per year, compounded annually, how much does she have in the account when she retires? b) How much of that total amount is from Sally's deposits? How much is interest?
Answer:
a)
Balance of account at retirement = $237,281.83
b)
Total Deposited amount = $38,500
Interest Amount = $198,781.83
Explanation:
A fix periodic payments for the specific period of time is the annuity payment. Deposit of $1,100 per year in retirement account is annuity payment.
a)
We can calculate the balance of account on retirement by using following formula
Future Value of Annuity = P x ( 1 + r )^n - 1 / r
Where
P = Periodic payments = $1,100
r = 9%
n = 65 years - 30 years = 35 years
Placing values in the formula
Balance of account at retirement = $1,100 X ( 1 + 9% )^35 - 1 / 9%
Balance of account at retirement = $237,281.83
b)
Total Deposited amount = $1,100 x 35 = $38,500
Interest Amount = Balance of account at retirement - Total Deposited amount = $237,281.83 - $38,500 = $198,781.83
A firm wishes to issue new shares of its stock, which already trades in the market. The current stock price is $24, the most recent dividend was $3 per share, and the dividend is expected to grow at a rate of 4% forever. Flotation costs for this issue are expected to be 6%. What is the required rate of return (or financing cost) in this new issue?
Answer:
17.83%
Explanation:
The computation of required rate of return is shown below:-
Required rate of return = ((Expected dividend ÷ (Current Stock price × (1 - Flotation cost as a percentage of issue price)) + Growth rate)) × 100
= ((Dividend × (1 + Growth rate)) ÷ Current Price of stock × (1 - Flotation cost as a percentage of issue price)) + Growth rate))) × 100
= ($3 × (1.04) ÷ $24 × (1 - 0.06) + 0.04) × 100
= ($3.12 ÷ $22.56 + 0.04) × 100
= (0.138297872 + 0.04) × 100
= 17.82978723
or
= 17.83%
Therefore we have applied the above formula.
Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $201,000 of raw materials on credit; issued materials to production of $198,000 of which $27,000 were indirect. Minstrel incurred a factory payroll of $153,000, of which $37,000 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. If Minstrel incurred total overhead costs of $180,000 during the month, compute the amount of under- or overapplied overhead:
Answer:
Underapplied overhead= $6,000
Explanation:
Giving the following information:
Direct labor= $153,000 - $37,000= $116,000
The predetermined overhead application rate= 150% of direct labor cost.
Actual overhead= $180,000
First, we need to allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 116,000*1.5= $174,000
Now, we can calculate the over/under allocation:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 180,000 - 174,000
Under/over applied overhead= $6,000 underallocated
