Answer:
The stock price is 38.63
Explanation:
We use the gordon model to calculate the horizon value and with htat the value of the stock:
[tex]\frac{D_1}{r-g} = PV\\\frac{D_0(1+g)}{r-g} = PV\\[/tex]
D1 = 2.60 x 1.04 = 2.704
rate of return 11% = 0.11
grow rate = 4% = 0.04
[tex]\frac{2.704}{0.11-0.04} = PV\\[/tex]
P0 = 38.62857143
The taxes should be ignored as the gordon model do not include them in the calculations
Below are the account balances for Cowboy Law Firm at the end of December. Accounts Balances Cash $ 4,600 Salaries expense 1,800 Accounts payable 2,600 Retained earnings 4,100 Utilities expense 1,000 Supplies 13,000 Service revenue 8,500 Common stock 5,200 Required: Use only the appropriate accounts to prepare an income statement.
Answer:
Cowboy Law Firm
Income statement for the period ended December
Amount in $
Service revenue 8,500
Utilities (1,000)
Salaries expense (1,300)
Net income/(loss) 6,200
Explanation:
An income statement is a part of the financial statements that shows how profitable the activities of an entity was for a given period of time. It is usually stated as the income statement for a period end.
The elements of the income statement include the revenue otherwise called sales, expenses including cost of goods sold, operating expenses etc and the profit or loss as well as the other comprehensive income/loss.
Urban Bloom, Inc.'s books show an ending cash balance of $16,000 before preparing the bank reconciliation. Given the bank reconciliation shows outstanding checks of $4,200, deposits in transit of $3,200, NSF check of $220, and interest earned on the bank account of $130, the company's up-to-date ending cash balance equals:
Answer:
$15,910
Explanation:
Calculation for Urban Bloom, Inc.'s company's up-to-date ending cash balance
Using this formula
Up-to-date ending cash balance = Ending cash balance per books + Interest received from bank - NSF check
Hence:
=16,000+130-220
=15,910
Therefore the company's up-to-date ending cash balance equals: $15,910
Which of the following is an example of peakminusload pricing? A. charging less for vacations to Hawaii during December and January B. setting price equal to marginal cost when there is a capacity constraint C. selling excess capacity at lower prices D. charging more for electricity on hot days
Answer:
D. charging more for electricity on hot days.
Explanation:
This is a strategy that helps service providers in billing their customers when their in traffic on the usage of a particular service. This is charging higher of a certain service when their are a lot of users trying to be benefit or trying to use it at the same time. This can easily be seen in the case of utility usage amongst countries where this forms of billings are performed. That is why in the scenario above, the charging more for electricity on a hot day falls in place as the perfect option of peakminus loading price.
Answer:
D. charging more for electricity on hot days
Explanation:
Peak load pricing is charging more for a good or service when the demand for the good is higher.
During the hot weather, people would want to use fans and air conditioners, thus, the demand for electricity would be higher as people would need electricity to power these items. So increasing the price in the hurt weather is an example of peak load pricing.
I hope my answer helps you
NewTech Incorporated management plans on paying the company's first dividend of $2.00 three years from today (D3 = $2.00) on its' common stock. After year three the dividend is expected to grow at a constant rate of 5% thereafter. As an investor with a required rate of return of 15%, what would you pay for NewTech common stock today?
Answer:
Stock price today = $13.807
Explanation:
According to the dividend valuation model , the current price of a stock is the present value of the expected future dividends discounted at the required rate of return
This principle can be applied as follows:
The value of cash flow the stock today is the present value of the future cash flow discounted at the required rate of return
Step 1 : Compute the PV in year 3 of future dividend
PV = D× (1+g)/r-g
D- div in year 3, g- growth rate, r-required rate of return
PV in year 3 = 2× (1.05)/0.15-0.05
= 21
Step 2: PV in year in year 0
PV = PV in year 3 × (1+r)^(-n)
r-rate of return- 15%, n- number of years- 3
= 21 × 1.15^(-3)
=13.80784088
Stock price today = $13.807
All of the following are techniques being used to make data centers more "green" except:________.
a) use of hydropower.
b) air-cooling.
c) use of wind power.
d) use of backup generators.
e) virtualization.
Answer:
d) use of backup generators.
Explanation:
Going green is a term used for practices that protect the environment by reducing, reusing and recycling resources. It involves engaging in ecologically friendly decisions and lifestyles with a view of preserving natural resources for future generations.
The use of backup generator causes production of green house gases like carbon dioxide. Green house gases erode the ozone layer and increases global warming.
The other options like use of hydropower, air cooling, use of wind power, and virtualisation do not have adverse effect on the environment.
Q1 The following is a description of the conversion cycle of Central Production Limited: The conversion cycle of the company is triggered by a report from the warehouse. When the quantity of an inventory item falls below a pre-set minimum level, the warehouse manager sends an online inventory status report to production department advising them to schedule a production batch run for the item. Upon receipt of the report, the production clerk assesses the digital bill of materials and the route sheet files for the item to be produced and adds the production details to the online production schedule. The system automatically adds a record to the open work order file and sends an online work order to the work centre supervisor’s computer and to the accounting clerk’s computer. The work centre supervisor receives the work order from his computer and print hard-copy move tickets and materials requisitions for each production process. Production employees take the materials requisitions to store clerk and receives the materials and subassemblies needed to perform the production tasks. If additional materials beyond the standard amount is needed, the work centre supervisor prepares additional materials requisitions. Production employees complete job time tickets after completing a production process to record the time spent on the job. The job time tickets are then sent together with the move tickets to the accounting department. After releasing the materials into production, the store clerk updates the material inventory records and send the materials requisitions to accounting department. The clerk prepares a journal voucher and posts to the general ledger material control account at the end of each day. The accounting clerk assesses the work orders and set up a work-in-process account for a production batch. Throughout the production period, the clerk also receives move tickets, job tickets, and materials requisitions, which he uses to post to the work-in-process account. At the end of each day, the accounting clerk prepares a digital journal voucher and post it to the general ledger work-inprocess and finished goods control accounts. Q) Identify the risks exist in the conversion cycle of Central Production Limited. (10 marks 300 words) Q3 Elegant Limited sells restored classic cars. Most of its customers are private buyers who buy cars for themselves. However, some of them are investors who buy multiple cars and hold them for resale. All sales of Elegant Limited are for cash. Depict the association and cardinality for the sales of cars at Elegant Limited based on REA model. (10 marks, maximum 300 words) Q4 You are currently working in a mid-tier accounting firm. In an engagement meeting with a client, the management of your client is concerned that the audit tests that you perform will disrupt operations. Your client has recently implemented a data warehouse and the management suggests that you draw the data for analytical reviews and substantive testing from the data warehouse instead of the operational database. The management points out that operational data are copied weekly into the data warehouse and all data you need are contained there. Outline your response to the management’s proposal and mention any concerns you might have. (10 marks, maximum 300 words) Q5 The Chief Information Officer (CIO) and the Managing Director (MD) of Illustrious Limited recently had the following conversation regarding the development of a new information system for the company: CIO: The way to go about the analysis is to first examine the old system, such as reviewing key documents and observing the workers performing their tasks. Then we can determine which aspects are working well and which should be preserved. MD: We have been through these types of projects before, and what always ends up happening is that we do not get the new system we are promised. Instead we get a modified version of the old system. CIO: I can assure you that will not happen this time. My team just want a thorough understanding of what is working well and what is not. MD: I would feel much more comfortable if we first started with a list of our requirements. We should spend more time in determining what exactly we want the system to do upfront. Then your team can come in and determine what portions to salvage if you wish. Just don’t constrain us to the old system! Required: a) The CIO and MD have different views on how the system analysis should be performed. Comment on whose position you sympathise with the most. (6 marks, maximum 200 words) b) What method would you recommend to Illustrious Limited for system analysis? Explain. (4 marks, maximum 150 words)
Answer:
a)
To my view, the MD viewpoint is better. In companies the existing process is usually analyzed and the pain points identified whenever there is a need for change. The new system is simply a change to the existing system. The stakeholders' specific needs are not completely addressed. The MD calls for a collection of and analysis of demands from scratch to share its needs , requirements and inhibitions between the principal stakeholders. The CIO and their staff would be able to assess in the requirements review process what worked and what did not work well for the organization.
In assessing the current process, the CIO and his team will align their thinking process with the pain points and correct the existing system. They are not going to build the system in a fresh light. A new system that meets the needs of stakeholders can be developed. For everybody, this is a win-win situation. The point of view of MD is therefore more logical and related.
b)
In the particular case, the most logical and comprehensive system analysis method is:
Primary stakeholder requirements collection: Primary stakeholders using the system must be consulted on their specific requirements and needs. It is also necessary to consider the limitations identified by stakeholders.
Comprehension of existing system and pain points: the current system can be analysed based on requirements collection and pain points can be emphasized in the current system.
A new system that will win for everyone: the new system must primarily comply with the needs of the stakeholders.
Presentation and approval of the system blueprint to stakeholders
Development and implementation of the system: system development can be carried out by the agile method of sprinting.
Monitoring and control of the system: to check for performance deviations, the system implemented should be observed. In order to monitor deviations, specific intervention can be implemented.
Kela Corporation reports net income of $470,000 that includes depreciation expense of $83,000. Also, cash of $44,000 was borrowed on a 6-year note payable. Based on this data, total cash inflows from operating activities are: Multiple Choice $514,000. $553,000. $597,000. $387,000.
Answer:
The Total cash inflows from operating activities are $553,000
Explanation:
According to the given data, the Statement of Cash Flow from Operating Activities would be as follows:
Statement of Cash Flow from Operating Activities
Particulars Amount Total Amount
Income $470,000
Depreciation $83,000
Cash flow from operating activities $553,000
The cash of $44,000 was borrowed on a 6-year note payable. It is Financing Activity since note is long term
Therefore, total cash inflows from operating activities are $553,000
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.
Hardwig Inc. is considering whether to pursue a restricted or relaxed current asset investment policy. The firm's annual sales are expected to total $3,600,000, its fixed assets turnover ratio equals 4.0, and its debt and common equity are each 50% of total assets. EBIT is $150,000, the interest rate on the firm's debt is 10%, and the tax rate is 40%. If the company follows a restricted policy, its total assets turnover will be 2.5. Under a relaxed policy its total assets turnover will be 2.2. Refer to the data for Hardwig, Inc. Assume now that the company believes that if it adopts a restricted policy, its sales will fall by 15% and EBIT will fall by 10%, but its total assets turnover, debt ratio, interest rate, and tax rate will all remain the same. In this situation, what's the difference between the projected ROEs under the restricted and relaxed policies? a. 2.46% b. 2.98% c. 3.27% d. 2.24% e. 2.70%
Answer:
d. 2.24%
Explanation:
total annual sales = $3,600,000
fixed asset turnover = total sales / fixed assets = 4, that means that total fixed assets = $3,600,000 / 4 = $900,000
debt = 50% = $450,000
equity = 50% = $450,000
EBIT = $150,000
net income = $150,000 x (1 - 40%) = $90,000
restricted policy:
asset turnover = 2.5
sales = $3,600,000 x (1 - 15%) = $3,060,000
EBIT = $135,000
net income = $81,000
assets = $3,060,000 / 2.5 = $1,224,000
equity = $1,224,000 x 50% = $612,000
ROE = $81,000 / $612,000 = 13.24%
relaxed policy:
asset turnover = 2.2
EBIT = $150,000
net income = $90,000
assets = $3,600,000 / 2.2 = $1,636,364
equity = 50% x $1,636,364 = $818,182
ROE = $90,000 / $818,182 = 11%
difference between ROEs = 13.24% - 11% = 2.24%
Arbor Systems and Gencore stocks both have a volatility of 33%. Compute the volatility of a portfolio with 50% invested in each stock if the correlation between the stocks is (a) +1.00, (b) 0.50, (c) 0.00, (d) −0.50, and (e) −1.00.
In which of the cases is the volatility lower than that of the original stocks?
Answer:
In case of b, c, d ,e volatility is less than that of original stockExplanation:
The formula to compute the volatility of a portfolio
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
Here,
The standard deviation of the first stock is σ₁
The standard deviation of the second stock is σ₂
The weight of the first stock W₁
The weight of the second stock W₂
The correlation between the stock c
a) If the correlation between the stock is +1
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
[tex]=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times1} \\\\=0.33[/tex]
Hence, the volatility of the portfolio is 0.33 0r 33%
b) If the correlation between the stock is 0.50
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
[tex]=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times0.5} \\\\=0.29[/tex]
Hence, the volatility of the portfolio is 0.29 0r 29%
c) If the correlation between the stock is 0.00
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
[tex]=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times0.0} \\\\=0.23[/tex]
Hence, the volatility of the portfolio is 0.23 0r 23%
d) If the correlation between the stock is -0.50
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
[tex]=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times-0.5} \\\\=0.17[/tex]
Hence, the volatility of the portfolio is 0.17 or 17%
e) If the correlation between the stock is -1
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
[tex]=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times-1} \\\\=0[/tex]
Hence, the volatility of the portfolio is 0
In case of b, c, d ,e volatility is less than that of original stockSuppose 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.
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.
The table gives a number of daily sales of cars by a local dealership, from a 0 minimum to a 6 maximum, and the number of days each sale happened during a 100 - day survey. That is. 0 cars were sold 6 days, 1 car 8 days, etc.
Car sales per day, X 0 1 2 3 4 5 6
Number of days 6 8 22 20 15 16 13
A) Give the probability density function of X.
B) Compute the expected value of A". Explain its meaning.
C) Compute the variance and standard deviation of X.
D) Find the expected value and variance of a function Y = 5 + 12X.
Answer: The answer has been provided and attached.
Explanation:
Based on the attached diagram, there will be 3.3 sales per day.
The variance will be 2.95.
Since standard deviation is the square root of variance, the standard deviation will be:
= ✓2.95
= 1.72
The expected value and variance of a function Y = 5 + 12X will be:
Expected value = 44.6
Variance = 424.8
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 11 years because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $13.75 per share 12 years from today and will increase the dividend by 5.5 percent per year thereafter. If the required return on this stock is 13.5 percent, what is the current share price
Answer:
$42.69
Explanation:
From the question above Metallica Bearings Inc. is expected to pay a dividend of $13.75 pet share for a period of 12 years
The dividend will increase by 5.5 percent per year
= 5.5/100
= 0.055
The required rate of return is 13.5 percent
= 13.5/100
= 0.135
The first step is to calculate the price at 11 years
Price at 11 years= 13.75/ 0.135-0.055
= 13.75/0.08
= $171.87
The next step in to find the current price by applying the following formular
Current share price= Future value/ (1+r)^n
= $171.875/ (1+0.135)^11
= $171.87/ 1.135^11
= $171.87/ 4.026
= $42.69
Current share price= $42.69
Hence the current share price is $42.69
Tipton Processing maintains its internal inventory records using average cost under a perpetual inventory system. The following information relates to its inventory during the year: Jan. 1 Inventory on hand—80,000 units; cost $4.25 each. Feb. 14 Purchased 120,000 units for $4.50 each. Mar. 5 Sold 150,000 units for $14.00 each. Aug. 27 Purchased 50,000 units for $4.80 each. Sep. 12 Sold 60,000 units for $14.00 each. Dec. 31 Inventory on hand—40,000 units. Required: 1. Determine the amount Tipton would calculate internally for ending inventory and cost of goods sold using average cost under a perpetual inventory system. 2. Determine the amount Tipton would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO) under a periodic inventory system. 3. Determine the amount Tipton would report for its LIFO reserve at the end of the year. 4. Record the year-end adjusting entry for the LIFO reserve, assuming the balance at the beginning of the year was $8,000.
Answer:
1. Determine the amount Tipton would calculate internally for ending inventory and cost of goods sold using average cost under a perpetual inventory system.
COGS = $936,000Ending inventory = $184,0002. Determine the amount Tipton would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO) under a periodic inventory system.
COGS using LIFO = $950,000Ending inventory = $170,0003. Determine the amount Tipton would report for its LIFO reserve at the end of the year.
$22,0004. Record the year-end adjusting entry for the LIFO reserve, assuming the balance at the beginning of the year was $8,000.
Dr Cost of goods sold 14,000
Cr LIFO reserve 14,000
Explanation:
1)
Jan. 1 Inventory on hand—80,000 units; cost $4.25 each.
Feb. 14 Purchased 120,000 units for $4.50 each.
Mar. 5 Sold 150,000 units for $14.00 each.
COGS = {[(80,000 x $4.25) + (120,000 x $4.50)] / 200,000} x 150,000 = $660,000
remaining inventory 50,000 units at $4.40 = $220,000
Aug. 27 Purchased 50,000 units for $4.80 each.
Sep. 12 Sold 60,000 units for $14.00 each.
COGS = {[(50,000 x $4.40) + (50,000 x $4.80)] / 100,000} x 60,000 = $276,000
Dec. 31 Inventory on hand—40,000 units at $4.60 = $184,000
2)
Jan. 1 Inventory on hand—80,000 units; cost $4.25 each.
Feb. 14 Purchased 120,000 units for $4.50 each.
Mar. 5 Sold 150,000 units for $14.00 each.
Aug. 27 Purchased 50,000 units for $4.80 each.
Sep. 12 Sold 60,000 units for $14.00 each.
Dec. 31 Inventory on hand—40,000 units at $4.60 = $184,000
total units sold = 210,000
COGS using LIFO = (50,000 x $4.80) + (120,000 x $4.50) + (40,000 x $4.25) = $240,000 + $540,000 + $170,000 = $950,000
Ending inventory = 40,000 x $4.25 = $170,000
3) LIFO reserve = FIFO inventory - LIFO inventory
FIFO inventory = $192,000 - $170,000 = $22,000
4) $22,000 - $8,000 = $14,000
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.Canliss Mining Company borrowed money from a local bank. The note the company signed requires five annual installment payments of $10,500 beginning one year from today. The interest rate on the note is 5%.(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) What amount did Canliss borrow
Answer:
The amount that Canliss borrowed is $45,459.51
Explanation:
The amount borrowed is the present value of $10,500 for five years using the discount factor applicable to each to each year as shown below
The formula for discount factor=1/(1+r)^n
r is the rate of interest on the loan which is 5%
n is the year relating to each cash flow ,for instance 1 for year one
present value of the loan=$10,500/(1+5%)^1+$10,500/(1+5%)^2+$10,500/(1+5%)^3+$10,500/(1+5%)^4+$10,500/(1+5%)^5=$45,459.51
Assume that a parent company acquires a 70% interest in a subsidiary for a purchase price of $1,078,000. The excess of total fair value of controlling and noncontrolling interests over book value is assigned to; a building (PPE net) that is worth $100,000 more than book value, an unrecorded patent valued at $200,000 and goodwill valued at $300,000. Goodwill is assigned proportionately to the controlling and noncontrolling interests
Submission Requirements:
Using the ACT470_Mod03-Option01.xlsx Excel spreadsheet in the Module 3 folder:
Prepare the consolidated balance sheet at the date of acquisition by placing the appropriate entries in their respective debit/credit column cells.
Indicate, in the blank column cell to the left of the debit and credit column cells if the entry is an [E] or [A] entry.
Use Excel formulas to derive the Consolidated column amounts and totals.
Using the "Home" key in Excel, go to the "Styles" area and highlight the [E] and [A] entry cells in different shades.
Consolidation Entries
Parent Subsidia Dr Cr Consolidated
Cash 920,000 215,000 0
Accounts receivable 782,000 330,000 0
Inventory 1,100,000 425,000 0
Equity investment 1,078,000 0
Property, plant and equipment (PPE), net 5,400,000 800,000
Patent 0
Goodwill 0
Total assets 9,280,000 1,770,000 0
Current liabilities 810,000 330,000 0
Long-term liabilities 4,000,000 500,000
Common stock 920,000 90,000 0
Additional paid-in capital 700,000 120,000 0
Retained earnings 2,850,000 730,000 0
Noncontrolling interest 0
Total liabilities and equity 9,280,000 1,770,000 0
Answer:
Explanation:
The objective here is to prepare the consolidated balance sheet at the date of acquisition by placing the appropriate entries in their respective debit/credit column cells.
To do that; We need to find both Consolidation entries and Consolidation Spreadsheet on the acquisition date from the given data set from the question.
From the question:
A parent company acquires a 70% interest in a subsidiary for a purchase price of $1,078,000.
Consideration paid by the parent company for 70% share $10,78,000
Non Control Interest fair Value (30%) $ 4,62,000
Total fair value of subsidiary on the acquisition date $15,40,000
Less: Book value subsidiary on the acquisition date
Common Stock 90,000
APIC 1,20,000
Retained earnings 7,30,000 $9,40,000
Fair value in excess of book value $6,00,000
Excess fair value allocated to:
undervalued building $1,00,000
unrecorded patent $2,00,000
Goodwill $3,00,000
Balance $0
Consolidation entries and Consolidation Spreadsheet on the acquisition date are being embedded in the word document attached below due to vast columns of table sets that this answering box cannot contain.
Determining Cash Payments to Stockholders The board of directors declared cash dividends totaling $209,800 during the current year. The comparative balance sheet indicates dividends payable of $50,400 at the beginning of the year and $45,400 at the end of the year. What was the amount of cash payments to stockholders during the year?
Answer:
$214,800
Explanation:
The amount paid is the sum of the amount declared and the difference in amounts payable.
dividends paid = $209,800 +50,400 -45,400
dividends paid = $214,800
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)
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.
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
Jace is an executive at a large but decentralized corporation that uses the balanced scorecard. It would be reasonable for her to suggest using scorecard cascading to help her large company more effectively ensure that individuals throughout the company support its overriding strategy.A) TrueB) False
Answer:
The correct answer to the following question will be "True".
Explanation:
A structured scoring system is used to convert the organizational score sheet (alluded to this as Tier 1) through the first sector divisions, support groups, or agencies (Tier 2) and afterward groups or entities (Tier 3). The outcome ought to be compatible throughout all organizational levels.
Organizational cohesion will be easily evident across policy, policy diagram, success indicators as well as goals, or programs. Record books could have been used to highly organized through accurate as well as a performance measurement of property, and the required behavior of employees should be encouraged.The cascading strategy should be based on the entire department mostly on tactic and the creation of even a line-of-view here between work that individuals do and the top rate of outcomes they want. When the control system is cascaded through the enterprise, goals are more organizational and pragmatic, as do success metrics. Accountability is consistent with the objectives as well as indicators as possession is described through each stage.Focus on the outcomes and methods used to achieve outcomes is shared via most of the company. This adjustment process is critical towards becoming a strategy-focused organization.According to the above particular instance, therefore, the business owner becoming a decentralized corporation, Jace seems to be correct to embrace that scorecard methodology.
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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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
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!
Business process design (BPD) is also adequately named the following except:__________.
a. Reengineering
b. Business process innovation
c. Business process engineering
d. Downsizing or restructuring
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
The Baldwin company will continue to train their existing workforce at their current level to help reduce turnover and improve productivity next year. Employee training costs $20 per hour. How much would their training costs per employee be to the nearest dollar
Answer: $1,600
Explanation:
The training hours per employee can be calculated by multiplying the Employee Training hours by the cost of training per employee.
From the Attached document, the Baldwin company does 80 hours of training for employees.
The Training costs per Employee is;
= 80 * 20
= $1,600
If the Baldwin Company organizes 80 hours of training for each employer in a given year, and the training cost per hour for an employee is $20, it implies that the training costs per employee would be $1,600 ($20 x 80).
Data and Calculations:
Training costs per employee per hour = $20
Training hours per employee in a year 80 hours
Total training costs per employee in a year = $1,600 ($20 x 80)
Thus, the Baldwin Company spends $1,600 per employee in training them so that employee turnover would be reduced while productivity improves.
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completion. Item8 Part 5 of 5 10 points Return to questionItem 8Item 8 Part 5 of 5 10 points Required information [The following information applies to the questions displayed below.] In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $ 2,542,000 $ 3,772,000 $ 2,074,600 Estimated costs to complete as of year-end 5,658,000 1,886,000 0 Billings during the year 2,020,000 4,294,000 3,686,000 Cash collections during the year 1,810,000 3,800,000 4,390,000 Westgate recognizes revenue over time according to percentage of completion. 5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)
Answer and Explanation:
The computation of amount of revenue and gross profit (loss) to be recognized in each of the three years is shown below:-
Sales revenue for the present period for 2021 = $31,00,000.00
Sales revenue for the present period for 2022 = $46,00,000.00
Sales revenue for the present period for 2023 = $23,00,000.00
Gross Profit for year 2021 = $5,58,000.00
Gross profit for year 2022 = $8,28,000.00
Gross profit for year 2023 = $2,25,400.00
To reach the sales revenue we simply deduct the Sales revenue recognized in previous period from Sales revenue recognized till date for 3 years on the other hand to compute the gross profit we simply deduct the Cost incurred during the year from Sales revenue for the present period for 3 years.
For clarification we attached the spreadsheet to reach the sales revenue and gross profit for 3 years.
