Answer:
1. Calculate the payback period for each product.
A = 2.71 years, A is preferredB = 2.8 years2. Calculate the net present value for each product.
A = $60,349B = $83,001, B is preferred3. Calculate the internal rate of return for each product.
A = 25%, A is preferredB = 23%4. Calculate the project profitability index for each product.
A = 121%, A is preferredB = 117%5. Calculate the simple rate of return for each product.
A = 184%, A is ´preferred B = 179%6B. Based on the simple rate of return, Lou Barlow would likely:
1. Accept Product A, since its IRR is 25% which exceeds the company's minimum ROI (23%)Explanation:
Product A Product B
Initial investment:
Cost of equipment $290,000 $490,000
Annual revenues and costs:
Sales revenues $340,000 $440,000
Variable expenses $154,000 $206,000
Depreciation expense $58,000 $98,000
Fixed out-of-pocket
operating costs $79,000 $59,000
net cash flow $107,000 $175,000
The company's discount rate is 16%.
payback period
A = $290,000 / $107,000 = 2.71 years, A is preferred
B = $490,000 / $175,000 = 2.8 years
using an excel spreadsheet I calculated the NPV and IRR
NPV
A = $60,349
B = $83,001, B is preferred
IRR
A = 25%, A is preferred
B = 23%
Project profitability
A = $350,349 / $290,000 = 1.21
B = $573,001 / $490,000 = 1.17
Simple rate of return
A = $535,000 / $290,000 = 184%, A is ´preferred
B = $875,000 / $490,000 = 179%
Lansing, Inc., provided the following data for its two producing departments: Molding Polishing Total Estimated overhead $400,000 $80,000 $480,000 Direct labor hours (expected and actual): Form A 1,000 5,000 6,000 Form B 4,000 15,000 19,000 Total 5,000 20,000 25,000 Machine hours: Form A 3,500 3,000 6,500 Form B 1,500 2,000 3,500 Total 5,000 5,000 10,000 Machine hours are used to assign the overhead of the Molding Department, and direct labor hours are used to assign the overhead of the Polishing Department. There are 30,000 units of Form A produced and sold and 50,000 of Form B. Required:
1. Calculate the overhead rates for each department.
2. Using departmental rates, assign overhead to the two products and calculate the overhead cost per unit. How does this compare with the plantwide rate unit cost, using direct labor hours?
3. What if the machine hours in Molding were 1,200 for Form A and 3,800 for Form B and the direct labor hours used in Polishing were 5,000 and 15,000, respectively? Calculate the overhead cost per unit for each product using departmental rates, and compare with the plantwide rate unit costs calculated in Requirement 2. What can you conclude from this outcome?
Answer:
1. Form A$80 per machine hour
Form B $4 per direct labor hour
2.Form A from $3.84 to $10.00
Form B from $7.30 to $3.60
3. Form A Unit overhead cost $ 3.87
Form B Unit overhead cost $ 7.28
Explanation:
Lansing, Inc
1. Overhead rates for each department will be;
Molding
$400,000/5,000
= $80 per machine hour
Polishing
$80,000/20,000
= $4 per direct labor hour
2. The overhead assignment:
Form A
($80 ×3,500) + ($4 ×5,000)
$280,000+$20,000
=$300,000
Form B
($80 ×1,500) + ($4 ×15,000)
$120,000+$20,000
=$180,000
Total applied overhead $300,000 and $180,000
Units of production Form A :
300,000÷30,000
=Unit overhead cost $10.00
Units of production Form B
180,000÷50,000
= Unit overhead cost $3.60
Plantwide rate Will be :
$480,000/25,000
= $19.20 per direct labor hour
Form A overhead cost in units will be:
$19.20 ×6,000/30,000
$19.20×0.2
$3.84
Form B overhead cost in unit will be :
$19.20 ×19,000/50,000
$19.20×0.38
$7.296 approximately $7.30
The plantwide rate for Form A
$3.84 to $10.00
The plantwide rate for Form B
$7.30 to $3.60
3. Overhead assignment:
Form A
($80 ×1,200) + ($4 ×5,000)
=$96,000+$20,000
=$116,000
Form B
($80 ×3,800) + ($4 ×15,000)
=$304,000 +$60,000
=$364,000
Total applied overhead
Form A $116,000
Form B $364,000
Units of production
Form A
$116,000 ÷ 30,000
=Unit overhead cost $ 3.87
Form B
$364,000÷ 50,000
Unit overhead cost $ 7.28
When compared to the plantwide unit overhead costs the cost will be $0.03 more higher for Form A and $0.02 less for Form B.
Which means that departmental rates may not cause a change in the assignments because It will depends on the complexity of each product and the way in which the resource demands are been made in each of the department.
Jasper and Crewella Dahvill were married in year 0. They filed joint tax returns in years 1 and 2. In year 3, their relationship was strained and Jasper insisted on filing a separate tax return. In year 4, the couple divorced. Both Jasper and Crewella filed single tax returns in year 4. In year 5, the IRS audited the couple’s joint year 2 tax return and each spouse’s separate year 3 tax returns. The IRS determined that the year 2 joint return and Crewella’s separate year 3 tax return understated Crewella’s self-employment income, causing the joint return year 2 tax liability to be understated by $12,700 and Crewella’s year 3 separate return tax liability to be understated by $7,350. The IRS also assessed penalties and interest on both of these tax returns. Try as it might, the IRS has not been able to locate Crewella, but they have been able to find Jasper. (Leave no cells blank - be certain to enter "0" wherever required.)
a. What amount of tax can the IRS require Jasper to pay for the Dahvill’s year 2 joint return?
Amount of Tax:__________________
b. What amount of tax can the IRS require Jasper to pay for Crewella’s year 3 separate tax return?
Amount of Tax:__________________
Answer: a. $12,700
b. $0
Explanation:
a. As Jasper and Crewella Dahvill filed joint tax returns in Year 2, both of them are joint and severally liable for any errors that may arise in the filing. The IRS could not find Crewella but they could find Jasper and as he is liable as well, he will have to pay the full amount that Crewella understated their tax liability by.
b. In year 3, Jasper and Crewella Dahvill had a strained relationship and filed their returns separately. As a result Jasper is not liable for any errors that will arise from Crewella's tax returns filing including the understatement of tax liability.
As a manager your organization is constantly confronted with a variety of changes in the market or a wide range of situations. You have to recruit and select a manager for a group of employees responsible for several related products. You have just read about Fiedler’s Contingency model and decided to use the LPC score to aid you in selecting a leader for the management group. You have interviewed four candidates for the job (Erin, Josh, Michael, Tabitha) and the scores for each of the candidates were Erin=high LPC, Josh=moderately high LPC, Michael=middle LPC, Tabitha=low LPC. Which of the candidates would you hire?A. ErinB. JoshC. MichaelD. TabithaE. None of these.
Answer:
C. Michael
Explanation:
The least preferred coworker scale is a method used to determine the leadership style of individuals. It was developed by Fred Fiedler and American scholar.
When a person gives positive feedback on coworkers they are more relationship oriented and get a high LPC score.
For those that give negative feedback on coworkers, they are task oriented and will get low LPC scores.
Relationship oriented style is used when employees are experienced and know what to do, while task oriented leadership is needed when the team is less experienced or results need to be delivered in a short time.
The organization is constantly confronted with a variety of changes in the market or a wide range of situations. So this requires a mix of both relationship and task oriented leadership to adapt to changing organisational needs.
Michael is the best option with middle LPC score.
A firm has fixed assets of $28,000, long-term debt of $12,000, current liabilities of $4,000, current assets of $5,000 and equity of $17,000. What is the total of the assets side of the balance sheet of the firm
Answer:
$33,000
Explanation:
assets = liabilities + stockholders' equity
assets include current assets + non current or fixed assets = $5,000 + $28,000 = $33,000
liabilities and stockholders' equity include current liabilities + long term liabilities + equity = $4,000 + $12,000 + $17,000 = $33,000
both sides of the accounting equation must always be equal, that is meant by balance.
Kerbow Corporation uses part B76 in one of its products. The company's Accounting Department reports the following costs of producing the 12,000 units of the part that are needed every year. An outside supplier has offered to make the part and sell it to the company for $27.40 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $6,000 of these allocated general overhead costs would be avoided. In addition, the space used to produce part B76 could be used to make more of one of the company's other products, generating an additional segment margin of $29,000 per year for that product.A. Prepare a report that shows the effect on the company's total net operating income of buying part B76 from the supplier rather than continuing to make it inside the company.B. Identify which alternative the company should choose and explain why.C. Determine what errors managers may make when considering make or buy decisions and basing the decision solely on the data?
Answer:
12,000 units
outside supplier offers at $27.40 each = $328,800
current relevant costs:
direct materials $7.20 x 12,000 = $86,400direct labor $7.10 x 12,000 = $85,200variable overhead $3.50 x 12,000 = $42,000 supervisor's salary $4.70 x 12,000 = $56,400total = $270,000only $6,000 of allocated fixed costs can be avoided
additional revenue from using the freed space $29,000
A. Prepare a report that shows the effect on the company's total net operating income of buying part B76 from the supplier rather than continuing to make it inside the company.
Keep Buy Differential
producing from vendor amount
production cost $270,000 $0 $270,000
purchase cost $0 $328,800 ($328,800)
avoidable costs $0 ($6,000) $6,000
additional revenue $0 ($29,000) $29,000
total $270,000 $293,800 ($23,800)
B. Identify which alternative the company should choose and explain why.
The company should keep producing the part because production costs are lower than buying it from an outside vendor.
C. Determine what errors managers may make when considering make or buy decisions and basing the decision solely on the data?
If we had made this decision based on total production costs, then management would have erroneously chosen to purchase the part from an outside vendor. Total production costs are $28.30 per unit, but almost $5.80 per unit are not avoidable (mostly fixed and general overhead), so the company will incur them no matter what. You have to compare only relevant costs or revenues.
Sterile Feral, Inc. is a nonprofit organization that catches wild or stray cats, and then neuters, vaccinates, and releases them back into the wild. In recent years, nonprofit organizations such as Sterile Feral have turned to marketing to help:__________.
a. receive additional government funding.
b. expand its business to stray dogs.
c. maintain its nonprofit status.
d. achieve organizational goals.
e. compete with other similar organizations.
Answer:
d. achieve organizational goals.
Explanation:
Sterile Feral, Inc. being a non-profit organization that catches wild or stray cats, and then neuters, vaccinates, and releases them back into the wild.
If Sterile Feral Inc. then turns to marketing, this simply means that they're more interested in achieving organizational goals of saving endangered cats.
Also, as a non-profit organization, Sterile Feral Inc. isn't operating solely to make money or profits, it is rather literally trying to impact positively the cat world.
The current sections of Birmingham Inc.’s balance sheets at December 31, 2019 and 2020, are presented here. Birmingham’s net income for 2020 was $193,000. The income statement included depreciation expense, $25,000, amortization expense, $10,000, and a gain on disposal of equipment, $7,000. The equipment was sold for $47,000. Birmingham also issued bonds for $60,000. 2020 2019Current assets Cash $417,000 $ 99,000 Accounts receivable 120,000 93,000Inventory 159,000 176,000Prepaid expenses 29,000 24,000Total current assets $725,000 $392,000 Current liabilities Accrued expenses payable $ 17,000 $ 6,000 Accounts payable 88,000 94,000Total current liabilities $105,000 $100,000 InstructionsPrepare the net cash provided by operating activities section of the company’s statement of cash flows for the year ended December 31, 2020 using the indirect method.
Answer:
Net Income 193,000
Non-monetary terms:
Depreciation expense 25,000
amortization expense 10,000
gain on disposal (7,000)
Adjusted Income 221,000
Change in Working Capital:
Increase in A/R (27,000)
Decreasein Inv 17,000
Increase in Prepaid (5,000)
Increase Accrued /P 11,000
Decreasein A/P (6,000)
Change In Working Capital (10,000)
From Operating Activities 211,000
Investing
Sale of Equipment 47,000
Financing
Bonds Issued 60,000
Cash Flow 318,000
Beginning Cash 99,000
Cash Flow 318,000
Ending Cash 417,000
Explanation:
We first remove the non.monetary concetps from the net income.
Then we adjust for the change in working capital which are the incrase and decrease in the current assets and liabilities account
Increase in asset and decrease in liabilities represent cash outflow
while the opposite is true when an asset decrease(convert to cash) or a liablity increase (delay of the payment)
Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $254,800, and the sales mix is 40% bats and 60% gloves. The unit selling price and the unit variable cost for each product are as follows: Products Unit Selling Price Unit Variable Cost Bats $40 $30 Gloves 100 60 a. Compute the break-even sales (units) for the overall enterprise product, E. units b. How many units of each product, baseball bats and baseball gloves, would be sold at the break-even point
Answer:
a)Break-even sales in units= 9,100 units
b)The number of units of each products:
Bat= 3,640 units
Gloves= 5,460 units
Explanation:
The break-even sales in unit = total general fixed cost/Average contribution per unit
Average contribution per unit = (40%× (40-30) )+ (60%×(100-60) )=28
Break-even Sales = $254,800/$28=9100 units
Break-even sales in units= 9,100 units
The number of units of each products:
Bat = 40%×9100 =3,640 units
Gloves = 60%× 9,100 =5,460 units
Bat= 3,640 units
Gloves= 5,460 units
=
Break-Even Sales Currently, the unit selling price of a product is $370, the unit variable cost is $300, and the total fixed costs are $1,001,000. A proposal is being evaluated to increase the unit selling price to $410. a. Compute the current break-even sales (units). units b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant. units
Answer:
a. 14,300 units
b. 9,100 units
Explanation:
a. For computation of current break-even sales (units) first we will find out the contribution margin per unit which is shown below:-
Contribution margin per unit = Selling price per unit - Variable cost
= $370 - $300
= $70
Current break-even sales (units) = Fixed cost ÷ Contribution margin per unit
= $1,001,000 ÷ $70
= 14,300 units
b. For computation of anticipated break-even sales (units) first we will find out the contribution margin per unit which is shown below:-
Contribution margin per unit = Selling price per unit - Variable cost
= $410 - $300
= $110
Anticipated break-even sales (units) = Fixed cost ÷ Contribution margin per unit
= $1,001,000 ÷ $110
= 9,100 units
So, we have applied the above formula.
ak Creek Furniture Factory (OCFF), a custom furniture manufacturer, uses job order costing to track the cost of each customer order. On March 1, OCFF had two jobs in process with the following costs: Work in Process Balance on 3/1 Job 33 $ 7,500 Job 34 6,000 $ 13,500 Source documents revealed the following during March: Materials Requisitions Forms Labor Time Tickets Status of Job at Month-End Job 33 $ 3,500 $ 6,500 Completed and sold Job 34 6,000 7,800 Completed, but not sold Job 35 4,200 3,250 In process Indirect 1,300 2,140 $ 15,000 $ 19,690 The company applies overhead to products at a rate of 150 percent of direct labor cost. Required: 1. Compute the cost of Jobs 33, 34, and 35 at the end of the month. 2. Calculate the balance in the Work in Process Inventory, Finished Goods Inventory, and Cost of Goods Sold accounts at month-end.
Answer:
Job 33 $ 27250
Job 34 $ 31500
Job 35 $ 12325
Cost of Goods Sold Job 33 $ 27250
Finished Goods Inventory Job 34 $ 31500
Work in Process Inventory Job 35 $ 12325
Explanation:
Work in Process Balance on 3/1
Job 33 $ 7,500
Job 34 6,000
Total $ 13,500
Job 33
Direct Materials $3500
Direct Labor 6500
Overheads (150%) 9750
Add Opening WIP 7500
Total Cost $ 27250
We add the Direct Material Direct Labor and Mfg overheads with the opening balance of WIP to get the total cost of given jobs.
Job 34
Direct Materials $6000
Direct Labor 7800
Overheads (150%) 11700
Add Opening WIP 6000
Total Cost $ 31500
Job 35
Direct Materials $4200
Direct Labor 3250
Overheads (150%) 4875
Add Opening WIP ------
Total Cost $ 12325
Cost of Goods Sold Job 33 (given) $ 27250
Finished Goods Inventory Job 34 (given) $ 31500
Work in Process Inventory Job 35 (given)$ 12325
It is given in the question that Job 34 is transferred to Finished Goods , Job 35 is still in process and Job 33 is cost of goods sold.
Hoosier Corporation declared a 2-for-1 stock split to all shareholders of record on March 25 of this year. Hoosier reported current E&P of $600,000 and accumulated E&P of $3,000,000. The total fair market value of the stock distributed was $1,500,000. Barbara Bloomington owned 1,000 shares of Hoosier stock with a tax basis of $100 per share.a) What amount of taxable dividend income, if any, does Barbara recognize this year? Assume the fair market value of the stock was $150 per share on March 25 of this year.b) What is Barbara's income tax basis in the new and existing stock she owns in Hoosier Corporation, assuming the distribution is tax-free?c) How does the stock dividend affect Hoosier's accumulated E&P at the beginning of next year?
Answer:
(a) The stock dividend is not taxable because it affects all shareholders pro rata
(b) Babara will transfer half of the old stock base to the new stock and make her new and old stock tax base $50
(c) Hoosier does not change his E&P for the stock dividend since the shareholders are not taxable.
Explanation:
g Lydia, a citizen of Italy, produces scarves and purses that she sells to department stores in the United States. Other things the same, these sales a. increase U.S. net exports and have no effect on Italian net exports. b. decrease U.S. net exports and have no effect on Italian net exports. c. increase U.S. net exports and decrease Italian net exports. d. decrease U.S. net exports and increase Italian net exports.
Answer:
d. decrease U.S. net exports and increase Italian net exports.
Explanation:
As it is given that
Lydia, who is a citizen of Italy produced scarves and purses in order to sell to the department stores in the united states keeping other things constant. So the sales would reflect an increased in the net exports of Italian as she is a producer and sell its products to the united states and at the same time it decreased or decline the net exports of united states
The net exports is
= Exports - imports
Hence, the correct option is d.
An inexperienced accountant for Grouper Corp. showed the following in the income statement: income before income taxes $448,000 and unrealized gain on available-for-sale securities (before taxes) $89,000. The unrealized gain on available-for-sale securities and income before income taxes are both subject to a 29% tax rate. Prepare a correct statement of comprehensive income.
MONTY CORP.Partial Statement of Comprehensive IncomeSelect a comprehensive income itemDividendsExpensesNet Income / (Loss)Retained EarningsRevenueTotal ExpensesTotal RevenuesIncome Tax ExpenseOther Comprehensive IncomeUnrealized Holding Gain on Available-for-Sale SecuritiesIncome Before Income TaxesComprehensive Income$Enter a dollar amountSelect a comprehensive income itemDividendsExpensesNet Income / (Loss)Retained EarningsRevenueTotal ExpensesTotal RevenuesIncome Tax ExpenseOther Comprehensive IncomeUnrealized Holding Gain on Available-for-Sale SecuritiesIncome Before Income TaxesComprehensive IncomeEnter a dollar amount
Select a summarizing line for the first partDividendsExpensesNet Income / (Loss)Retained EarningsRevenueTotal ExpensesTotal RevenuesIncome Tax ExpenseOther Comprehensive IncomeUnrealized Holding Gain on Available-for-Sale SecuritiesIncome Before Income TaxesComprehensive IncomeEnter a total of the two previous amountsSelect an opening section nameDividendsExpensesNet Income / (Loss)Retained EarningsRevenueTotal ExpensesTotal RevenuesIncome Tax ExpenseOther Comprehensive IncomeUnrealized Holding Gain on Available-for-Sale SecuritiesIncome Before Income TaxesComprehensive IncomeSelect a comprehensive income itemDividends Expenses Net Income / (Loss) Retained Earnings Revenue Total Expenses Total Revenues Income Tax Expense Other Comprehensive Income Unrealized Holding Gain on Available-for-Sale Securities Income Before Income Taxes Comprehensive Income Enter a dollar amountSelect a closing name for this statementDividendsExpensesNet Income / (Loss)Retained EarningsRevenueTotal ExpensesTotal RevenuesIncome Tax ExpenseOther Comprehensive IncomeUnrealized Holding Gain on Available-for-Sale SecuritiesIncome Before Income TaxesComprehensive Income$Enter a total amount for this statement
Answer: The answer is provided below
Explanation:
The explanation has been attached.
It should be noted that:
Income tax expense = $448,000 × 29%
= $448,000 × 29/100
= $448,000 × 0.29
= $129,920
Other comprehensive income will be the unrealized holding gain on the security which will be:
= $89,000 × (100% - 29%)
= $89,000 × 71%
= $89,000 × 0.71
= $63,190
Further explanation has been attached.
Cinnamon Buns Co. (CBC) started 2018 with $52,600 of merchandise on hand. During 2018, $297,000 in merchandise was purchased on account with credit terms of 3/10 n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,400. Merchandise with an invoice amount of $2,100 was returned for credit. Cost of goods sold for the year was $309,000. CBC uses a perpetual inventory system. Assuming CBC uses the gross method to record purchases, ending inventory would be:
Answer:
$39,053
Explanation:
The computation of the ending inventory is shown below:
Beginning inventory $52,600
Add: Inventory purchased $297,000
Add: Freight in $9,400
Less: Merchandise returned -$2,100
Less: Discounts -$8,847 ($297,000 - $2,100) × 3%
Less: Cost of goods sold -$309,000
Ending inventory $39,053
Hence, the ending inventory using the gross method is $39,053
Marigold Corp. budgeted costs for 70000 linear feet of block are: Fixed manufacturing costs$24000 per month Variable manufacturing costs$16 per linear foot Marigold installed 40000 linear feet of block during March. How much is budgeted total manufacturing costs in March
Answer:
$664,000
Explanation:
The computation of the total budgeted manufacturing cost is shown below:
Total manufacturing costs = Variable manufacturing cost + Fixed manufacturing cost
= ($16 × 40,000 units ) + $24,000
= $664,000
We simply added the variable manufacturing cost and the Fixed manufacturing cost so that the total budgeted manufacturing cost could come and the same is to be considered
Problem 11-1A Short-term notes payable transactions and entries LO P1 [The following information applies to the questions displayed below.] Tyrell Co. entered into the following transactions involving short-term liabilities in 2016 and 2017. 2016 Apr. 20 Purchased $37,500 of merchandise on credit from Locust, terms n/30. Tyrell uses the perpetual inventory system. May 19 Replaced the April 20 account payable to Locust with a 90-day, $35,000 note bearing 8% annual interest along with paying $2,500 in cash. July 8 Borrowed $54,000 cash from NBR Bank by signing a 120-day, 10% interest-bearing note with a face value of $54,000. __
Missing information:
__?__ Paid the amount due on the note to Locust at the maturity date.
__?__ Paid the amount due on the note to NBR Bank at the maturity date.
Nov. 28 Borrowed $24,000 cash from Fargo Bank by signing a 60-day, 6% interest-bearing note with a face value of $24,000.
Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank.
2017
__?__ Paid the amount due on the note to Fargo Bank at the maturity date.
Required: prepare journal entries
Answer:
2016 Apr. 20 Purchased $37,500 of merchandise on credit from Locust, terms n/30.
April 20, 2016, merchandise purchased on account
Dr Merchandise inventory 37,500
Cr Accounts payable 37,500
May 19 Replaced the April 20 account payable to Locust with a 90-day, $35,000 note bearing 8% annual interest along with paying $2,500 in cash.
May 19, 2016, replaced account payable with note payable
Dr Accounts payable 37,500
Cr Cash 2,500
Cr Notes payable 35,000
July 8 Borrowed $54,000 cash from NBR Bank by signing a 120-day, 10% interest-bearing note with a face value of $54,000.
July 8, 2016, borrowed $54,000 from bank
Dr Cash 54,000
Cr Notes payable 54,000
__?__ Paid the amount due on the note to Locust at the maturity date.
August 17, 2016, paid note payable to Locust
Dr Note payable 35,000
Dr Interest expense 690.41 ($35,000 x 8% x 90/365)
Cr Cash 35,690.41
__?__ Paid the amount due on the note to NBR Bank at the maturity date.
November 5, 2016, paid bank's debt.
Dr Notes payable 54,000
Dr Interest expense 1,775.34 ($54,000 x 10% x 1220/365)
Cr Cash 55,775.34
Nov. 28 Borrowed $24,000 cash from Fargo Bank by signing a 60-day, 6% interest-bearing note with a face value of $24,000.
November 28, 2016, borrowed $24,000 from bank
Dr Cash 24,000
Cr Notes payable 24,000
Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank.
December 31, 2016, accrued interests on bank debt
Dr interest expense 130.19 (= $24,000 x 6% x 33/365)
Cr Interest payable 130.19
2017
__?__ Paid the amount due on the note to Fargo Bank at the maturity date.
January 27, 2017, paid bank's debt.
Dr Note payable 24,000
Dr Interest payable 130.19
Dr Interest expense 106.52 (= $24,000 x 6% x 27/365)
Cr Cash 24,236.71
Which of the following statements is correct?a. The cost of new equity (re) could possibly be lower than the cost of retained earnings (rs) if the market risk premium, risk-free rate, and the company's beta all decline by a sufficiently large amount.b. The component cost of preferred stock is expressed as rp(1 - T), because preferred stock dividends are treated as fixed charges, similar to the treatment of interest on debt.c. Its cost of retained earnings is the rate of return shareholders require on a firm's common stock.d. We should use historical measures of the component costs from prior financing when estimating a company's WACC for capital budgeting purposes.
Answer:
c. Its cost of retained earnings is the rate of return shareholders require on a firm's common stock.
Explanation:
The formula to compute the cost of retained earning is as follows
Cost of retained earning = (Expected annual dividend ÷ Price of the stock) + growth rate
It is the rate of return that equates with the cost of equity plus it also earns on the investment done in the company i.e equity
In a mathematical expression,
Cost of retained earnings = Cost of equity
hence, the correct option is c.
A firm's bonds have a maturity of 14 years with a $1,000 face value, have an 8% semiannual coupon, are callable in 7 years at $1,073.00, and currently sell at a price of $1,135.93. What are their nominal yield to maturity and their nominal yield to call? Do not round intermediate calculations. Round your answers to two decimal places.
Answer:
YTM = 6.51%
YTC = 6.40%
Explanation:
We need to solve using excel goal seek or bond formulas to generate the yield (interest rate) which matches the future couponb and maturity payment with the current selling price of the bond:
Present value of the coupon
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 40.000 (1,000 x 8% / 2 payment per year)
time 28 (14 years x 2 payment per year)
rate 0.032529972 (generate using goal seek tool)
[tex]40 \times \frac{1-(1+0.0325299719911398)^{-28} }{0.0325299719911398} = PV\\[/tex]
PV $727.8688
Pv of the maturity (lump sum)
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 1,000.00
time 28.00
rate 0.032529972
[tex]\frac{1000}{(1 + 0.0325299719911398)^{28} } = PV[/tex]
PV 408.06
PV c $727.8688
PV m $408.0612
Total $1,135.9300
As this is a semiannual rate we multiply it by 2
0.032529972 x 2 = 0.065059944 = 6.51%
We repeat the procedure with changing the time and end-value to adjust for the callabe conditions:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 40.000
time 14 (7 years x 2 payment per year)
rate 0.032015131
[tex]40 \times \frac{1-(1+0.0320151313225188)^{-14} }{0.0320151313225188} = PV\\[/tex]
PV $445.6984
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 1,073.00 (call price)
time 14.00
rate 0.032015131
[tex]\frac{1073}{(1 + 0.0320151313225188)^{14} } = PV[/tex]
PV 690.23
PV c $445.6984
PV m $690.2316
Total $1,135.9300
Againg his will be a semiannual rate so we multiply by two:
0.032015131 x 2 = 0.064030263 = 6.40%
Playful Pens, Inc., makes a single model of a pen. The cartridge for the pen (which contains the ink) is manufactured on one machine. The cartridge holder (which you hold when you use the pen)is manufactured on another machine. Monthly capacities and production levels are as follows:
Machine 1 (Cartridge) Machine 2 (Holders)
Monthly capacity 1,000,000 800,000
Monthly production 800,000 800,000
The company could sell 1,000,000 pens per month. The units (cartridge inside of holder) sell for $10.40 each and have a variable cost of $4.10 each. Fixed costs are $4,200,000 per month.
Required:
a. Is there a bottleneck at Playful Pens on Machine 1 or Machine 2?
A. Machine 1
B. Machine 2
b. Playful Pens's production supervisors state they could increase machine 2's capacity by 200,000 per month by producing holders on the weekend. Producing on the weekend would not affect the sales price. Variable cost per unit would increase by $1.10 for those produced on the weekend because of the premium paid to labor. Fixed costs would also increase by $820,000 per month.
b-1. Calculate the differential operating profit (loss). (Losses and amounts to be deducted should be indicated with a minus sign.)
Differential Revenues
Differntial costs:
Variable
Fixed
b-2. Should Playful Pens produce holders on the weekend?
Yes
No
c. Independent of the situation in requirement (b), Playful Pens could expand the capability of machine 2 by adding additional workers to perform ongoing maintenance. This would increase its capacity by 100,000 holders per month. This would not affect sales price or fixed costs, but would increase variable cost to $4.62 per unit for all units produced.
c-1. Calculate the differential operating profit (loss). (Losses and amounts to be deducted should be indicated with a minus sign.)
Differential revenues
Differential costs:
Variable cost increase on current production:
Variable cost on new production:
c-2. Should Playful Pens expand Machine 2's capability by adding these additional workers?
Yes
No
Answer:
a) B. Machine 2
b) $220,000
b-2) Yes , positive differential profit.
c-1) $162,000
c-2) Yes , positive differential profit.
Explanation:
B) Differential revenues = $10.40 x 200,000 = $2,080,000
Differential costs:
Variable cost on new production = $5.20 x 200,000 = $1,040,000
Fixed costs = $820,000
differential profit = $2,080,000 - $1,040,000 - $820,000 = $220,000
c) Differential revenues = $10.40 x 100,000 = $1,040,000
Differential costs:
Variable cost increase on current production = ($4.62 - $4.10) x 800,000 = $416,000
Variable cost on new production = $4.62 x 100,000 = $462,000
differential profit = $1,040,000 - $878,000 = $162,000
A store sells 20 ice cream bars per hour for $4 each, but on discount days, it sells 35 ice cream bars per hour for $3. Based on these two data points, what would be the slope for the relationship between the price and the quantity of ice cream sold?
Answer:
The slope for the relationship between the price and the quantity of ice cream sold would be of -1/15
Explanation:
In order to calculate the slope for the relationship between the price and the quantity of ice cream sold we would have to calculate the following formula:
Slope= change in yaxis( vertical)/change in xaxis(horizontal)
Slope= change in price/change in quantity demand
Slope=P2-P1/Q2-Q1
Slope=3-4/35-20
Slope=-1/15
The slope for the relationship between the price and the quantity of ice cream sold would be of -1/15
Way Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow.Process Activity Overhead Cost Driver Quantity Components Changeover $ 500,000 Number of batches 800 Machining 279,000 Machine hours 6,000 Setups 225,000 Number of setups 120 $ 1,004,000 Finishing Welding $ 180,300 Welding hours 3,000 Inspecting 210,000 Number of inspections 700 Rework 75,000 Rework orders 300 $ 465,300 Support Purchasing $ 135,000 Purchase orders 450 Providing space 32,000 Number of units 5,000 Providing utilities 65,000 Number of units 5,000 $ 232,000 Additional production information concerning its two product lines follows.Model 145 Model 212 Units produced 1,500 3,500 Welding hours 800 2,200 Batches 400 400 Number of inspections 400 300 Machine hours 1,800 4,200 Setups 60 60 Rework orders 160 140 Purchase orders 300 150 1. Using ABC, compute the overhead cost per unit for each product line. (Round your final answers to 2 decimals places.)2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $250 for Model 145 and $180 for Model 212. (Round your final answers to 2 decimals places.)3. Assume if the market price for Model 145 is $820 and the market price for Model 212 is $480, determine the profit or loss per unit for each model. (Round your final answers to 2 decimals places.)
Answer:
1. Overhead cost per unit for Model 145 is $515.59, and overhead cost per unit for Model 212 is $265.12.
2.Total cost per unit for Model 145 is $765.59, and total cost per unit for Model 212 is $445.12.
3. Profit per unit for Model 145 is $54.41, while profit per unit for Model 212 is $34.88.
Explanation:
1. Using ABC, compute the overhead cost per unit for each product line. (Round your final answers to 2 decimals places.)
Note: See the attached excel file for the computation.
2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $250 for Model 145 and $180 for Model 212. (Round your final answers to 2 decimals places.)
Total cost per unit for each model = Overhead cost per unit + direct labor and direct materials costs per unit.
Therefore, we have:
Total cost per unit for Model 145 = $515.59 + $250 = $765.59
Total cost per unit for Model 212 = $265.12 + $180 = $445.12
3. Assume if the market price for Model 145 is $820 and the market price for Model 212 is $480, determine the profit or loss per unit for each model. (Round your final answers to 2 decimals places.)
Profit or loss per unit for each model = Market price per unit - Total cost per unit.
Therefore, we have:
Profit or loss per unit for Model 145 = $820 - $765.59 = $54.41 profit
Profit or loss per unit for Model 212 = $480 - 445.12 = $34.88 profit
Flynn Industries has three activity cost pools and two products. It estimates production 3,000 units of Product BC113 and 1,500 of Product AD908. Having identified its activity cost pools and the cost drivers for each pool, Flynn accumulated the following data relative to those activity cost pools and cost drivers.
Annual Overhead Data Estimated Use of Cost Drivers per Product
Activity Cost Pools Cost Drivers Estimated Overhead Estimated Use of Cost Drivers per Activity Product BC113 Product AD908
Machine setup Setups $16,000 40 25 15
Machining Machine hours 110,000 5,000 1,000 4,000
Packing Orders 30,000 500 150 350
Required:
Prepare a schedule showing the computations Of the activity-based Overhead rates per cost driver.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Machine setup Setups $16,000 40 25 15
Machining Machine hours $110,000 5,000 1,000 4,000
Packing Orders $30,000 500 150 350
To calculate the estimated manufacturing overhead rate we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Machine setup= 16,000/(40+25+15)= $200 per setup
Machining= 110,000/ (5,000 + 1,000 + 4,000= $11 per machine hour
Packing= 30,000/ (500 + 150 + 350)= $30 per order
Suppose your employer offers you a choice between a $ 4 comma 600 bonus and 200 shares of the company stock. Whichever one you choose will be awarded today. The stock is currently trading for $ 64 per share. Ignore transaction costs. a. Suppose that if you receive the stock bonus, you are free to trade it. Which form of the bonus should you choose? What is its value? b. Suppose that if you receive the stock bonus, you are required to hold it for at least one year. What can you say about the value of the stock bonus now? What will your decision depend on?
Answer:
a. Suppose that if you receive the stock bonus, you are free to trade it. Which form of the bonus should you choose? What is its value?
I would choose the stock bonus because the current market price = 200 x $64 = $12,800 which is much higher than $4,600 (cash bonus)
b. Suppose that if you receive the stock bonus, you are required to hold it for at least one year. What can you say about the value of the stock bonus now? What will your decision depend on?
Even if you are required to hold the stock for one year, the price difference with the cash bonus is too great = ($12,800 - $4,600) / $4,600 = 178% higher. Since you are employed by the company, you should know if the company is doing well or not, and the probable future stock price.
Only if something catastrophic happened to the company would make the cash bonus more attractive.
"Isidore Crocker, CEO of Gotham Engines, is strongly in favor of acquiring Carolina Textiles, a firm in an unrelated industry. Some members of the board of directors are questioning Crocker's motives for the acquisition. They argue that it is not uncommon for CEOs to push for acquisitions because: Group of answer choices"
Answer:
higher CEO pay is related to larger organization size
Explanation:
Since in the given situation, Isidore Crocker, who is the CEO of Gotham Engines want to acquire the Carolina Textiles who deal in an unrelated industry. But the board of directors questioning that what is the motive for this. At the same time it is also not uncommon for CEO as the larger part of the company profit is paid to CEO that is related to the size of the organization
In other words, the higher the CEO salary, the larger is the size of the organization
For each of the following scenarios, identify the number of firms present, the type of product, and the appropriate market model. Select the matching entry for each dropdown box in the following table.
Scenario Number of Firms Type of Product Market Model
1. A large city has lots of small shops
where people can buy sweaters.
Each store's sweaters reflect the
style of that particular store.
Additionally, some stores use higher
-quality yarn than others, which is
reflected in their price.
2. There are dozens of pasta producers
that sell pasta to hundreds of Italian
restaurants nationwide. The restaurant
owners buy from the cheapest pasta
producer they can. While pasta manuf-
acturers must pay licensing fees to their
local government and undergo regular
food-safety inspections, anyone who
has passed inspections can acquire and
maintain their license.
3. Only three airlines fly from San Francisco
to Medford, Oregon. No new airline will enter
this market, because there are not enough
customers to share among four or more
airlines without each one experiencing
substantially higher average costs. Consumers
view all airlines as providing basically the same
service and will shop around for the lowest price.
4. The government has granted a patent to a drug
company for an experimental AIDS drug. That
company is the only firm permitted to sell the drug.
Answer and Explanation:
The Perfect competition is a market condition in which there are very large number of buyers and sellers that sell the same or identical products having perfect knowledge with respect to products and services. Moreover, there is free entry and exit in this market
Monopolistic competition is a market condition that deals with many firms that are closely related to each other but sell differentiated products. Moreover, there is free entry and exit in this market
In the monopoly market, there is only one seller who controls the overall market. Due to this, the seller charged the high price as there is no competition. There is no free entry and exit in this market
In the oligopoly market, there are few sellers who deal in a single market. There is no free entry and exit in this market
Based on the above explanation, the categorization is shown below:
Scenario Number of Firms Type of Model
Product Market
1. Many Differentiated product Monopolistic
2. Many Standardised products Perfect
Competition
3. Few Differentiated products Oligopoly
4. One Unique Monopoly
The scenarios and their various market characteristics are as follows:
Scenario Number of firms Type of Product Market Model
1 Many Differentiated Monopolistic
2 Many Standardized Perfect competition
3 Few Standardized Oligopoly
4 Single Unique Monopoly
Scenario 1 is a monopolistically competitive market where there are several firms who sell similar but differentiated products to gain market share.
Scenario 2 is a perfectly competitive market that has many firms. These firms all sell the same goods which means that they are standardized.
Scenario 3 is an oligopoly as it has very few players in the market and these players control the market and offer the same product.
Scenario 4 is a monopoly that has one firm in the market thanks to the government patent. The product is therefore unique because it is made by one firm.
In conclusion, there are several market types available.
Find out more at https://brainly.com/question/24288109.
Trademark dilution laws: Select one: a. protect "distinctive" or "famous" marks from unauthorized uses even when confusion is not likely to occur. b. are intended at protecting consumers rather than focusing on protecting the investment of trademark owners. c. permit a company to quickly penetrate a foreign market without incurring the substantial financial and legal risks associated with direct investment. d. require the licensee to transfer any inventions it derives from the licensed technology to the licensor.
Answer:
a. protect "distinctive" or "famous" marks from unauthorized uses even when confusion is not likely to occur.
Explanation:
Trademark dilution laws are rules and regulations that seek to protect the trademarks of well known brands from unauthorized use by other brands, in such a way that the distinctive attribute of the trademark is minimized. Trademark dilution laws are meant to ensure that the main purpose for which a product's trademark is known is meant to stand out significantly in the mind of consumers.
Smaller companies might want to copy the trademark of famous brands for their products which might be different. These laws seek to prevent this act even if it may not cause confusion in the minds of consumers as to which brand owns a product.
A company purchased 10 units for $5 on January 3. It purchased 10 units for $7 each on February 28. It sold 10 units on March 1. If the company uses the last in, first out (LIFO) inventory costing method, what is the dollar amount for ending inventory on the December 31 balance sheet, assuming that the company uses a perpetual inventory system
Answer:
The dollar amount for ending inventory using the last-in-first-out method of inventory valuation is $50
Explanation:
Using LIFO,last-in-first-out method of inventory valuation,items received last into the store are deemed to be sold first, hence the sales of 10 units on March 1 was the inventory purchased on February 28, leaving the items of inventory purchased on January 3 as closing inventory
value of closing inventory using LIFO=10*$5=$50
Your boss stops by to see how the research is progressing. She's concerned about your research plan. "I don't think we are ready to run causal research on the effects of advertising. I think we should re-evaluate the descriptive research options." Which option should you choose now?Select an option from the choices below and click Submit.1- Research the attitudes that men under 35 have towards eSports.2- Research the attitudes that U.S. women and consumers over 35 have towards the eSports industry.
Answer: Research the attitudes that U.S. women and consumers over 35 have towards the eSports industry.
Explanation:
From the question, the boss is concerned about the research plan and says that he does not believe that we are ready to run causal research on the effects of advertising and further said we should re-evaluate the descriptive research options.
Based on the scenario above, I'll choose to research the attitudes that U.S. women and consumers over 35 have towards the eSports industry. By choosing this option, I'll have a large sample size to carry out the descriptive research.
It should also be noted that the descriptive method consist of qualitative natural survey and also the cross sectional research. By researching the attitude of women and consumers, this will give us the opportunity to utilize the cross sectional research. Therefore, the second option is the correct answer.
Scora, Inc., is preparing its master budget for the quarter ending March 31. It sells a single product for $50 per unit. Budgeted sales for the next three months follow. January February March Sales in units 1,000 2,600 1,200 Prepare a sales budget for the months of January, February, and March.
Answer:
Sale budget January= $50,000
Sales budget February= $130,000
Sales budget March= $60,000
Explanation:
Giving the following information:
It sells a single product for $50 per unit. Budgeted sales for the next three months follow. January February March Sales in units 1,000 2,600 1,200
The sales budget is a simple multiplication between the selling price per unit and the number of units sold.
Sale budget January= 1,000*50= $50,000
Sales budget February= 2,600*50= $130,000
Sales budget March= 1,200*50= $60,000
XtraTorque Inc. is a leading engine oil manufacturer in the United States. The company manufactures oil that can withstand a broader range of temperature than any other engine oil brands available in the market. The company plans to expand its business into the Russian market because its product can maintain fluidity even at low temperatures. Which of the following organizational strategies should XtraTorque Inc. adopt?
A) Diversification strategy
B) Market differentiation strategy
C) Market development strategy
D) Market penetration strategy
Answer:
C) Market development strategy
Explanation:
Market development strategy defines that it is a marketing technique in which an company tries to promote an existing product to a new customer segment.
According to the given situation the company who is the head producer of engine oil in the U.S. Here the company produces oil which can resist a wider temperature range other than any brands of engine oil which is available in the marketplace. Now, the company wants to extend their business into the new market place that is Russian market, as its product can maintain fluidity even at low temperature so this indicates that the company adopting the market development strategy.
