Answer:
See the journal entries below.
Explanation:
Tr. General Journal Dr ($) Cr ($)
1. Cash 575,000
Common stock 575,000
(To record common stock issued for cash.)
2. Furniture and fixtures 95,000
Cash 38,000
Note payable 57,000
(To record purchase of furniture and fixtures.)
3. Merchandise inventory 230,000
Account payable 230,00
(To record inventory purchased on account.)
4a. Account receivable 391,000
Sales 391,00
(To record credit sales).
4b. Cost of goods sold 195,500
Merchandise inventory 195,000
(To record cost of inventory sold.)
5. Rent expenses 5,000
Cash 5,000
(To record interest paid for June.)
6. Prepaid insurance 2,640
Cash 2,640
(To record prepaid insurance.)
7. Account payable 166,175
Cash 166,175
(To record payment for merchandise inventory bought on account.)
8. Cash 78,200
Account receivable 78,200
(To record cash received from customer.)
9. Dividend paid 5,750
Cash 5,750
(To record cash dividend paid.)
10. Depreciation expenses 1,900
Accumulated Dep. - F $ F 1,900
(To record record depreciation expenses for Furniture & F.)
11. Insurance expenses (2,640 / 12) 220
Prepaid insurance 220
(To record insurance expenses for the month.)
Miguel works at LoftCo, Inc., and has been asked to help lead the development of the company's new balanced scorecard. He and his multifunctional team developed strategic objectives and performance metrics for each of the four perspectives. This work constitutes the complete set of steps in developing a BSC performance management system.
a. true
b. false
Answer:
The correct answer is A. True
Explanation:
Solution
Balanced scorecard performance management system: It is define as a management system and strategic planning that companies or firms use in communicating their set target and objectives.
Furthermore, a balanced scorecard is a measurement of management performance which can recognize and refine internal functions and external results.
Holly would like to plan for her daughter’s college education. She would like for her daughter, who was born today, to attend college for 4 years, beginning at age 18. Tuition is currently $10,000 per year and tuition inflation is 7%. Holly can earn an after-tax rate of return of 10%. How much must Holly save at the end of each year, if she wants to make the last payment at the beginning of her daughter's first year of college?
Answer:
Holly must save $2845.81 at the end of each year
Explanation:
first calculate the value of tuition fees at n = 18
Cash flow formula = Tuition × [tex](1+0.07)^{n}[/tex]
Discounted CF formula = Cash flow ÷ [tex](1+0.10)^{year}[/tex]
10.00% 0
Year Cash flows Discounted CF
0 33,799.32 33799.32
1 36,165.28 32877.52
2 38,696.84 31980.86
3 41,405.62 31108.66
FV = $129,766.37
PV = 0
N = 18
rate = 10%
using PMT function in Excel
Annual contribution = $2845.81
CarsonWentz Company uses a job-order costing system. The company applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labor-hours. Last year, manufacturing overhead and direct labor-hours were estimated at $88,000 and 16,000 hours respectively, for the year. In June, job #315 was completed. Materials costs on the job totaled $1,590 and labor costs totaled $2,340 at $6.50 per hour. At the end of the year, it was determined that the company worked 15,300 direct labor-hours for the year, and incurred $86,750 in actual manufacturing overhead cos
Answer:
Instructions are below.
Explanation:
Giving the following information:
Estimated manufacturing overhead= $88,000
Estimated direct labor-hours= 16,000
Job 315:
Materials costs on the job totaled $1,590 and labor costs totaled $2,340 at $6.50 per hour.
At the end of the year, it was determined that the company worked 15,300 direct labor-hours for the year, and incurred $86,750 in actual manufacturing overhead costs.
With the information provided, we can calculate the total cost of Job 315 and the amount of under/over allocated overhead.
First, we need to determine the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 88,000/16,000= $5.5 per direct labor hour
Job 315:
Direct labor hours= 2,340/6.5= 360 hours
Total cost= 1,590 + 2,340 + 5.5*360= $5,910
Now, to calculate the over/under allocation, first, we need to allocate overhead for the whole company.
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 5.5*15,300= $84,150
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 86,750 - 84,150= $2,600 underallocated
when ups invested in a foreign tech startup , ally commerce inc ., to give ups greater access to online sales,it was exemplifying
Answer:
Direct Investment is the correct answer to the given question .
Explanation:
The Direct investment is also known as direct foreign investment. In the Direct investment People invested the money into the company that operates in the some other country.
The main objective of direct investment to get the powerful presence in the business processes also the lengthy-term existence in the different nation.As the UPS participated in the Ally Commerce Inc i.e a global tech startup, to offer it better exposure to online purchasing it is example of direct investment .You have just been offered your dream job after graduating from Jacksonville University. In response to your negotiations concerning your compensation package, the company has offered you a couple of different stock options in addition to the agreed upon salary.
Under the first option, you would receive stocks with a value of $2,000,000 at the end of each year. This option also includes an additional $4,000,000 bonus that you would receive for staying at the company for 3 years.
Under the second option, you would receive stocks with a value of $1,000,000 at the end of each year. This option also includes an additional $8,000,000 bonus that you would receive for staying at the company for 3 years.
Assume that these stocks grow at a rate of 11% compounded monthly. Moreover, assume that you will leave the company at the end of your fourth year to start your own firm. Which option will you choose. (The more money you have to start your own firm, the better.)
Your formal solutions should include ...
⦁ The overall goal and/or purpose.
⦁ The given information
⦁ A time-line for each option
⦁ A future value for each individual stock payment provided you by the company
⦁ The total future value of each option at the time you plan to leave the company
⦁ Your conclusion
Answer:
Goal: maximize return at the end of the fourth year.
Future value of each option:
First choise: $ 11,730,289.64
Second choise: $ 12,559,457.84
Conclusion:
It is better to pick the second option as yields a better return
Explanation:
We solve for the future value of the cashflow of each option:
First choise:
End of the first year:
[tex]Principal \: (1+ r)^{time} = Amount[/tex]
Principal 2,000,000.00
time 36.00 (form end of the first to end of the fourth)
rate 0.00917 (11% / 12 months as it compounds monthly)
[tex]2000000 \: (1+ 0.00916666666666667)^{36} = Amount[/tex]
Amount $2,777,757.26
End of the second year:
Principal 2,000,000.00
time 24.00
rate 0.00917
[tex]2000000 \: (1+ 0.00916666666666667)^{24} = Amount[/tex]
Amount $2,489,657.04
End of the third year:
Principal 4,000,000.00
time 12.00
rate 0.00917
[tex]4000000 \: (1+ 0.00916666666666667)^{12} = Amount[/tex]
Amount $4,462,875.34
End of the fourth year: $2,000,000
Total:
$2,777,757.26
$2,489,657.04
$4,462,875.34
$2,000,000
$ 11,730,289.64
Second choise:
First year
Principal 1,000,000.00
time 36.00
rate 0.00917
[tex]1000000 \: (1+ 0.00916666666666667)^{36} = Amount[/tex]
Amount 1,388,878.63
Second year:
Principal 1,000,000.00
time 24.00
rate 0.00917
[tex]1000000 \: (1+ 0.00916666666666667)^{24} = Amount[/tex]
Amount 1,244,828.52
Third Year
Principal 8,000,000.00
time 12.00
rate 0.00917
[tex]8000000 \: (1+ 0.00916666666666667)^{12} = Amount[/tex]
Amount 8,925,750.69
Fourth year: 1,000,000
Total
1,388,878.63
1,244,828.52
8,925,750.69
1,000,000.00
12,559,457.84
A scrambled list of accounts from the income statement and balance sheet of Belmond, Inc. is found here:
a. How much is the firm's net working capital?
b. Complete an income statement and a balance sheet for Belmond.
c. If you were asked to respond to parts (a) and (b) as part of a training exercise, what could you tell your boss about the company's financial condition based on your answers?"
Answer:
a. How much is the firm's net working capital?
net working capital = current assets - current liabilities = (cash + accounts receivable + inventory) - (accounts payable + short term notes payable) = ($16,540 + $9,580 + $6,450) - ($4,770 + $600) = $27,200
b. Complete an income statement and a balance sheet for Belmond.
Belmond Inc.
Income Statement
For the Year Ended December 31, 202x
Sales $12,830
Cost of goods sold ($5,790)
Gross Profit $7,040
Operating Expenses ($1,330)
General and Administrative Expense ($870)
Interest Expense ($920)
Depreciation Expense ($540)
Operating Income $3,380
Taxes ($1,460)
Net Income $1,920
Belmond Inc.
Balance Sheet
For the Year Ended December 31, 202x
ASSETS
Cash $16,540
Accounts Receivable $9,580
Inventory $6,450
Building and Equipment $122,110
Accumulated Dep. ($34,370)
TOTAL ASSETS $120,310
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable $4,770
Short-Term Notes Payable $600
Long-Term Debt $55,230
Common Stock $44,900
Retained Earnings $14,810
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $120,310
c. If you were asked to respond to parts (a) and (b) as part of a training exercise, what could you tell your boss about the company's financial condition based on your answers?"
The financial condition of the company can be considered healthy, since its profit margin is almost 15%, although its debt to equity ratio is high = $60,600 / $59,710 = 101.5%. The company has too much debt, even though it makes enough money to pay its obligations.
A movie studio sells the latest movie on DVD to VideosRUs at $10 per DVD. The studio's cost of production is $1 per DVD. VideosRUs prices the videos at $19.99 to its customers. The studio offers to buy back unsold DVDs for $5. The studio must pay $.50 disposal fee for all returned DVDs. How many videos should VideosRUs order if the current sales forecast for the DVD is that demand will be normal with a mean of 10,000 and a standard deviation of 5,000
We want to find the number of DVDs that maximizes expected profit. To do this, we need to calculate the expected profit for different quantities of DVDs and choose the one that gives the highest profit. By selling 7,000 DVDs get a maximum profit.
What is the profit maximization method?To ensure the best output and price levels are realized in order to maximize returns, business firms engage in the process of profit maximization. In order to achieve its profit objectives, the company modifies important variables including sale price, production costs, and output levels.
To determine how many videos VideosRUs should order, we need to calculate the expected profit for each DVD sold.
The profit per DVD for VideosRUs can be calculated as follows:
Revenue per DVD = $19.99
Cost per DVD = $10
Profit per DVD = Revenue per DVD - Cost per DVD = $19.99 - $10 = $9.99
The studio's profit per DVD can be calculated as follows:
Revenue per DVD = $10 (the amount they sold the DVD to VideosRUs for)
Cost per DVD = $1
Profit per DVD = Revenue per DVD - Cost per DVD = $10 - $1 = $9
To calculate the probability of selling, we need to use the normal distribution with a mean of 10,000 and a standard deviation of 5,000. Since we don't know the actual demand, we can use a probability distribution to estimate the likelihood of selling different quantities of DVDs.
The required calculation is shown in the file given attached below.
Thus, selling 7000 DVDs get the highest profit.
Learn more about profit maximization here:
https://brainly.com/question/17233964
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At an output level of 12,200 units, you have calculated that the degree of operating leverage is 3.20. The operating cash flow is $67,100 in this case. Ignore the effect of taxes. What will be the new degree of operating leverage for output levels of 13,200 units and 11,200 units
Answer:
For 13,200, the Operating Leverage is 3.46.
For 11,200, the Operating Leverage is 2.94.
Explanation:
The first step is to calculate the Contribution Margin per unit:
Operating Leverage = (# of units * Contribution margin per unit) / Net Operating income
Here,
Number of Units are 12,200 Units
Net Operating income $67,100
Operating Leverage is 3.2
By putting values, we have:
3.2 = (12,200 Units * Contribution margin per unit) / $67,100
(3.2 * $67,100) / 12,200 Units = Contribution margin per unit
Contribution margin per unit = $17.6 per unit
For 13,200 units:
By putting value of units and keeping other variables constant, we have:
Operating Leverage = (13,200 units x $17.60 per unit) / $67,100
Operating Leverage = 3.46
For 11,200 units:
By putting value of units and keeping other variables constant, we have:
Operating Leverage = (11,200 units * $17.60 per unit) / $67,100
Operating Leverage = 2.94
North Star prepared the following unadjusted trial balance at the end of its second year of operations ending December 31. Account Titles Debit Credit Cash $ 12,800 Accounts Receivable 6,800 Prepaid Rent 2,560 Equipment 21,800 Accumulated Depreciation $ 1,080 Accounts Payable 1,080 Income Tax Payable 0 Common Stock 25,600 Retained Earnings 2,900 Sales Revenue 52,400 Salaries and Wages Expense 25,800 Utilities Expense 13,300 Rent Expense 0 Depreciation Expense 0 Income Tax Expense 0 Totals $ 83,060 $ 83,060 Other data not yet recorded at December 31: Rent expired during the year, $1,280. Depreciation expense for the year, $1,080. Utilities used and unpaid, $9,800. Income tax expense, $470. Prepare the adjusting journal entries required at December 31. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
North Star
Adjusting Journal Entries:
December 31:
Rent Expense $1,280
Prepaid Rent $1,280
To accrue rent for the period.
Depreciation Expense $1,080
Accumulated Depreciation $1,080
To accrue Depreciation charge for the year.
Utilities Expense $9,800
Utilities Payable $9,800
To accrue unpaid utilities.
Income Tax Expense $470
Income Tax Payable $470
To accrue income tax liability.
Explanation:
Adjusting entries are journal entries that are made at the end of an accounting period to ensure that all expenses and incomes pertaining to the period are recognized in accordance with the accrual concept and the matching principle. These accounting concepts require that all expenses incurred whether paid for or not and income whether received or not, which relate to the period, are matched respectively.
The following information is from the records of Pangolin Camera Shop: Bad expense is estimated by the aging-of-receivables method. Management estimates that $2,950 of accounts receivable will be uncollectible. Calculate the amount of net accounts receivable after the adjustment for bad debts. Supporting Materials / Group of answer choices $22,950 $22,050 $21,150 $20,800
Answer:
$22,050
Explanation:
The computation of the net account receivable after the adjustment of bad debt is shown below:
As we know that
Net account receivable = Account receivable - bad debt expense
= $25,000 - $2,950
= $22,050
By deducting the bad debt expense from the account receivable we can get the net account receivable and the same is to be considered
hence, the correct option is B.
Jessica Ulta works as an employee for City Service Credit Union and is responsible for consulting on loans, talking clients through the loan process, and providing loans to members. What type of processes does Jessica primarily work with?
A. Business-facing processes
B. Industry-specific customer-facing processes
C. Customer-facing processes
D. Industry-specific business-facing processes
The budgeted income statement presented below is for Burkett Corporation for the coming fiscal year. If Burkett Corporation achieves the budgeted level of sales, what will be its margin of safety in dollars?
Answer:
Margin Of Safety= $275,862
Explanation:
We can calculate the margin of safety easily by the formula given below
Formula: Margin of safety = Budgeted sales - Breakeven sales
As breakeven sales are not given in the data Firstly we need to find out break even sales in order to calculate margin of safety
Breakeven sales= [tex]\frac{Total fixed cost}{Contribution margin ratio}[/tex]
As you can see in the data fixed cost s given but contribution margin ratio is not
Contribution margin(Sales revenue - All variable cost)= $1,000,000 - ($270,000 + $240,000 + $150,000 + $50,000) = $1,000,000 - $710,000 = $290,000
Sales price per unit = Total sales/Number of units sold
Sales price per unit= $1,000,000/50,000 = $20
Budgeted contribution margin= $290,000/50,000 = $5.80
Contribution margin ratio = Budgeted contribution margin per unit/Sales price per unit
Contribution margin ratio = $5.80/$20 = 29%
Lets put values in breakeven formula to find breakeven sales
Breakeven sales= [tex]\frac{Total fixed cost}{Contribution margin ratio}[/tex]
Breakeven sales=[tex]\frac{210000}{0.29}[/tex]
Breakeven sales= $724,138
Now we have both budgeted sales and breakeven sales, we can easily calculate e of safety
Margin of safety = $1,000,000- $724,138
Margin of safety = $275,862
You are looking to buy a car. You can afford $700 in monthly payments for five years. In addition to the loan, you can make a $800 down payment. If interest rates are 9.25 percent APR, what price of car can you afford (loan plus down payment)
Answer:
$34,333
Explanation:
A fix periodic payment for a specific period of time is an annuity payment. Price of the car can be determined by the sum of the present value of all payments and down payment made.
First we need o calculate the present value of annuity using following formula
Present value of annuity = P x [ 1 - ( 1 + r )^-n / r ]
P = periodic payment = $700
r = APR = 9.25 /12% = 0.77%
n = numbers of periods = 5 years x 12 months per year = 60 months
Placing values in the formula
Present value of annuity = $700 x [ 1 - ( 1 + 0.77% )^-60 / 0.77% ]
Present value of annuity = $33,532.88
Price of the car = Present value of annuity + Down Payment
Price of the car = $33,532.88 + $800 = $34,332.88
Assume Time Warner shares have a market capitalization of $40 billion. The company is expected to pay a dividend of $0.25 per share and each share trades for $40. The growth rate in dividends is expected to be 7% per year. Also, Time Warner has $20 billion of debt that trades with a yield to maturity of 9%. If the firm's tax rate is 40%, what is the WACC
Answer:
6.88%
Explanation:
cost of equity = (next period dividend / by price) + growth rate in dividends.
cost of debt = yield to maturity x (1 - tax rate)
WACC = weight of debt x cost of debt + weight of equity x cost of equity.
cost of equity = ($0.25 / $40) + 0.07
= 0.07625
cost of debt = 0.09 x (1 - 0.4)
=0.054
WACC = ($40Billion x 0.07625) / 60billion + ($20 billion x 0.054) / $60billion
= 0.05083 + 0.018
= 0.0688 or 6.88%
g The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected, a. production is more profitable and employment rises. b. production is more profitable and employment falls. c. production is less profitable and employment rises. d. production is less profitable and employment falls.
Answer:
A. Production is more profitable and employment rises
Explanation:
Wages are sticky if market prices or wages don’t adjust quickly to changes in the economy. When prices are sticky, the Short Run Aggregate Supply curve slopes upward. It slopes upward because at least one price is fixed. The curve shows that a higher price level leads to more output
Therefore when the price level rises more than expected, production is more profitable and employment rises.
A year ago, Kim Altman purchased 200 shares of BLK, Inc. for $25.50 on margin. At that time the margin requirement was 40 percent. If the interest rate on borrowed funds was 9 percent and she sold the stock for $34, what is the percentage return on the funds she invested in the stock
Answer:
69.83%
Explanation:
Calculation for Kim Altman percentage return on the funds she invested in the stock
Calculation for Kim’s own money =
$5100 x .4 = $2040
Caluculation for total Long Position =
$34 x 200 = $6800
Calculation for Interest Borrowed =
$3060 x .09 = $275.4
Total gain/profit =
$6800 - $5100 - $275.4
= $1424.60
Percentage on Return
= $1424.60 / $2040 = .6983
.6893x 100 = 69.83%
Therefore the percentage return will be 69.83%
You want to have $1.5 million in real dollars in a retirement account when you retire in 40 years. The inflation rate is 2.7% and the nominal rate of return on your investment is 10%. What real amount must you deposit each year in the account to achieve your goal?
Answer:
Annual deposit= $6,952.82
Explanation:
Giving the following information:
You want to have $1.5 million in real dollars in a retirement account when you retire in 40 years.
Inflation rate= 2.7%
Interest rate= 10%
First, we need to deduct from the interest rate the inflation rate.
Real interest rate= 0.10 - 0.027= 0.073
Now, using the following formula, we can determine the annual deposit:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
A= (1,500,000*0.073) / [(1.073^40)-1]
A= $6,952.82
Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $6 million. The machinery can be sold to the Romulans today for $5.1 million. Klingon’s current balance sheet shows net fixed assets of $3.4 million, current liabilities of $895,000, and net working capital of $235,000. If the current assets and current liabilities were liquidated today, the company would receive a total of $1.15 million cash. a. What is the book value of Klingon’s total assets today? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) b. What is the sum of the market value of NWC and the market value of fixed assets? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
Answer:
a. What is the book value of Klingon’s total assets today?
total assets = net fixed assets + current assets
net fixed assets = $3,400,000current assets = net working capital + current liabilities = $235,000 + $895,000 = $1,130,000total assets = $3,400,000 + $1,130,000 = $4,530,000
b. What is the sum of the market value of NWC and the market value of fixed assets?
market value of NWC = $1,150,000market value of fixed assets = $5,100,000FMV of NWC + fixed assets = $1,150,000 + $5,100,000 = $6,250,000
At the beginning of the year, Quaker Company's liabilities equal $78,000. During the year, assets increase by $60,000, and at year-end assets equal $190,000. Liabilities decrease $14,000 during the year. What are the beginning and ending amounts of equity?
Answer:
$52,000 and $126,000
Explanation:
The computation of the beginning and ending amount of equity is as follows
Particulars Assets (A) Liabilities (L) Equity (A - L)
Beginning $130,000 $78,000 $52,000
Add: increase or less decreased
Change $60,000 -$14,000
Ending $190,000 $64,000 $126,000
We simply applied the accounting equation to find out the beginning and ending amounts of equity
Sparky Corporation uses the FIFO method of process costing. The following information is available for February in its Molding Department: Units: Beginning Inventory: 34,000 units, 100% complete as to materials and 55% complete as to conversion. Units started and completed: 119,000. Units completed and transferred out: 153,000. Ending Inventory: 34,500 units, 100% complete as to materials and 35% complete as to conversion. Costs: Costs in beginning Work in Process - Direct Materials: $52,000. Costs in beginning Work in Process - Conversion: $57,850. Costs incurred in February - Direct Materials: $349,625. Costs incurred in February - Conversion: $608,150. Calculate the cost per equivalent unit of materials.
Answer:
The cost per equivalent unit of materials is $2.28
Explanation:
The Concept of Equivalent units measures the number of units complete to the extent of the input elements added during production.
The FIFO method in Process costing Accounts for Costs only incurred during the Manufacturing Period. Also, The Opening Work In Process is Assumed to be completed first.
The First Step is to Calculate the Total Equivalent Units of Production for Raw Materials :
To finish Opening Work In Process (34,000 × 0%) = 0
Started and Completed ((153,000 - 34,000) × 100% ) = 119,000
Closing Work In Process (34,500 × 100%) = 34,500
Total Equivalent Units of Production = 153,500
The Next and Final Step is to calculate the cost per equivalent unit of materials.
Cost per equivalent unit = Total Cost During the Current Period / Total Equivalent Units of Production
= $349,625 / 153,500
= $2.2776872
= $2.28 (2 decimal places)
Conclusion :
The cost per equivalent unit of materials is $2.28
Fremont Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $89 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 60% of direct labor cost. The unit costs to produce comparable carrying cases are expected to be as follows:
Direct materials $16
Direct labor 20
Factory overhead (25% of direct labor) 5
Total cost per unit $41
If Fremont Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 5% of the direct labor costs.
Required:
a. Prepare a differential analysis dated September 30 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case.
b. Assuming there were no better alternative uses for the spare capacity, it would ______________ to manufacture the carrying cases. Fixed factory overhead is________to this decision.
Answer:
A.Total cost 41 93 (52)
B. It would be much better to manufacture the carrying cases .
While Fixed factory overhead is less important to this decision.
Explanation:
Fremont Computer Company Differential Analysis
Make Alternative 1: Buy Alternative 2:
Differential effect on net income
Alternative 1 : Alternative 2: Differential effect
Purchase Price - 89 (89)
Direct material 16 - 16
Direct labor 20 - 20
Variable 1 - 1
manufacture overhead (20×5%)
Fixed (5-1) 4 4 -
manufacture overhead
Total cost 41 93 (52)
The Company should choose Alternative 1
which is Make carrying case
B. It would be much better to manufacture the carrying cases.
While Fixed factory overhead is less important to this decision.
Therefore in make or buy decision the selling price of the product will be less important because the selling price was not provided which means it does not have effect on the decision of buy or make.
A company is investing in a solar panel system to reduce its electricity costs. The system requires a cash payment of $125,374.60 today. The system is expected to generate net cash flows of $13,000 per year for the next 35 years. The investment has zero salvage value. QS 24-15 Net present value LO P3 The company requires an 8% return on its investments. 1-a. Compute the net present value of this investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals.) 1-b. Should the project be accepted?
Answer:
NPV is positive,the project should be accepted
Explanation:
In determining whether or not the project should be accepted ,we need to ascertain the Net Present value of the project which is present value of cash inflows of $13,000 for 35 years minus the initial investment of $125,374.60 committed today.
The annuity factor for 8% for 35 year horizon is 11.6546 using annuity table.
Present of cash inflow=cash inflow*annuity factor=$13,000*11.6546=$151,509.80
Net present value=$ 151,509.80-$125,374.60=$ 26,135.20
The investment has a positive NPV,hence should be accepted
The City Transit Authority (CTA) is trying to decide between railcars manufactured by French Corp and Japan Rail Car. The French Corp cars cost more to buy initially, but they are expected to last for 10 years. The Japan Rail Car cars are cheaper initially, but they will wear out in 6 years. The cash flows related to each of the choices are presented below. If the CTA’s cost of capital is 8 percent, which type of car should the CTA buy? Support your answer.
Answer: The Japan Rail Car should be purchased
Explanation:
To find the answer we can use the Net Present Cost. By calculating the total net present value of the total costs involved in both projects, the cheaper alternative can then be chosen.
The cash-flows for both projects are constant so an annuity can be used to calculate them.
Please refer to the annuity table attached.
The French Corp Car
It will cost $275,000 originally and then $10,000 every year after that. The cost of capital is 8%. The goal is to find the present value of all the cost. That can be done by,
= (275,000) + PV of Annuity of $10,000 for 10 year and cost of capital 8% p.a. (look at the table for the intersection of 10 years and 8%)
= 275,000 + 10,000 (6.710)
= 275,000 + 67,100
= $342,100
The Japan Rail Car
It will cost $195,000 originally and then $15,000 every year after that. The cost of capital is 8%. Using the same method,
= (195,000) + PV of Annuity of $15,000 for 6 year and cost of capital 8% p.a. (look at the table for the intersection of 6 years and 8%)
= 195,000 + 15,000(4.623)
=195,000 + 69,345
= $264,345
The Japan Rail Car costs less in terms of total cost over its period of operation and so should be the one purchased by the CTA.
Plum Corporation (a C corporation and a computer manufacturer) donated 100 laptop computers to a local university (a qualified educational organization) this year. The computers were constructed by Plum earlier this year, and the university will use the computers for research and research training. Plum's basis in the computers is $35,000, and their fair market value is $120,000. What is Plum's deduction for the contribution of the computers (ignoring the taxable income limitation)?
Answer:
Plum’s deduction for the contribution of the computers is $70,000
Explanation:
According to the given data the contribution of the computers qualifies for the increased contribution amount available with respect to certain inventory.
Therefore, The contribution amount is equal to the lesser of :
1) $35,000 basis + 50 % * ( $120,000 FMV - $35,000 basis ) = $ 77,500 ( basis + 50 % of the appreciation on the property )
2) $35,000 * 2 = $ 70,000 ( twice the property's basis )
Therefore, Plum’s deduction for the contribution of the computers is $70,000.
Answer:
$70,000
Explanation:
Solution
Recall that:
Plum's basis in the computers is= $35,000
The fair market value is = $120,000.
Now,
We find the deduction for plum's corporation towards the contribution of computers.
Thus,
The donation of the computers allows for the increased amount contribution at hand with respect to certain inventory. The contribution amount is equal to the lesser of the following:
So,
35000 basis + 50 % * ( 120000 FMV - 35000 basis ) = $ 77500 ( basis + 50 % of the appreciation on the property )
Then
35000 * 2 = $ 70000 ( twice the property's basis )
Hence, Plum’s deduction for the contribution of the computers is 70000.
Crane Company sells its product for $60 per unit. During 2019, it produced 48000 units and sold 40000 units (there was no beginning inventory). Costs per unit are: direct materials $15, direct labor $9, and variable overhead $3. Fixed costs are: $576000 manufacturing overhead, and $72000 selling and administrative expenses. Under absorption costing, what amount of fixed overhead is deferred to a future period?
Answer:
$96,000
Explanation:
The computation of the amount of fixed overhead is deferred to a future period is shown below:
= Unsold units × fixed overhead cost per unit
= 8,000 units × ($576,000 ÷ 48,000 units)
= 8,000 units × $12
= $96,000
The unsold units is
= Produced units - sold units
= 48,000 units - 40,000 units
= 8,000 units
By multiplying the unsold units with the fixed overhead cost per unit we can get the amount of fixed overhead deferred for a future period and the same is to be considered
Betty is considering investing in a company's stock and is aware that the return on that investment is particularly sensitive to how the economy is performing. Her analysis suggests that four states of the economy can affect the return on the investment.
Probability Return
Boom 0.3 25.00%
Good 0.4 15.00%
Level 0.1 10.00%
Slump 0.2 -5.00%
a) What is hte expected return on Barbara's investment? (Round answer to 3 decimal places, e.g. 0.076)b) What is the standard deviation of the return on Barbara's investment? (Round answer to 5 decimal places, e.g. 0.07680)
Answer:
a) What is the expected return on Barbara's investment?
0.135 or 13.5%b) What is the standard deviation of the return on Barbara's investment?
0.04029 or 4.029%Explanation:
Economy Probability Return
Boom 0.3 25.00% = 7.5%
Good 0.4 15.00% = 6%
Level 0.1 10.00% = 1%
Slump 0.2 -5.00% = -1
total 0.135 or 13.5%
0.075
0.06
0.01
-0.01
.135 / 4 = 0.03375 mean
0.075 - 0.03375 = 0.04125² = 0.001701562
0.06 - 0.03375 = 0.02625² = 0.000689062
0.01 - 0.03375 = -0.02375² = 0.000564062
-0.01 - 0.03375 = -0.04375² = 0.00191406
0.00486875
0.00486875 / (4 - 1) = 0.00486875 / 3 = 0.001622916
√0.001622916 = 0.04029
Which of the following is TRUE regarding journal entries: a) There are always only two accounts affected b) The total amount debited must equal the total amount credited c) Journal entries show debits on the right and credits on the left d) Journal entries show credits first, then debits
Answer: b) The total amount debited must equal the total amount credited
Explanation:
Journal entries on the debit side must always equal entries on the credit side. This is to fulfil the Accounting requirement of Double Entry where every entry in the books must have an equal and corresponding entry as well.
There can be multiple accounts represented in the journal entry but the amount on the credit side needs to balance with the amount on the debit side.
For example, a good to sold to Hillary by Trump for $30. Trump gives Hillary a discount of 10%. Trump will record that entry as,
DR Cash $27
DR Sales Discount $3
CR Accounts Receivable $30
Notice that the Debit side has 2 accounts but they still add up to the $30 on the Credit side.
You would like to combine a risky stock with a beta of 1.87 with U.S. Treasury bills in such a way that the risk level of the portfolio is equivalent to the risk level of the overall market. What percentage of the portfolio should be invested in the risky stock
Answer:
46.5%
Explanation:
The treasury bills have zero beta as they have no systematic risk. Beta is used in the Capital asset pricing Model to demonstrate a relationship between systematic risk and rate of return.
Expected Return = Rf + Beta * Rp
The percentage that should be invested in the risky portfolio will be,
1 - 1 / Beta
1 - 1 / 1.87
= 46.5%
In Rooney Company, Treasury Stock increased $30,000 from a cash purchase, and Retained Earnings increased $80,000 as a result of net income of $124,000 and cash dividends paid of $44,000. Net cash used by financing activities is: Group of answer choices
Answer:
Net cash used by financing activities is -$74,000
Explanation:
Finance activities consist of items related to sourcing of capital and ownership in the business.
Prepare the Cash flow from Financing Activities Section of the Cash flow Statement as follows :
Cash flow from Financing Activities
Purchase of Treasury Stock - $30,000
Dividends Paid - $44,000
Net Cash from Financing Activities -$74,000
Conclusion :
Net cash used by financing activities is -$74,000
The Rehe Comany sells its razors at $3 per unit. The company uses a first-in, first-out actual costing system. A fixed manufacturing cost rate is computed at the end of each year by dividing the actual fixed manufacturing costs by the actual production units. The following data are related to its first two years of operation:
2011 2012
Sales 1000 units
1200 units
Costs:
Variable manufacturing
Fixed manufacturing
Variable operating (marketing)
Fixed operating (marketing)
$ 700
700
1000
400
$ 500
700
1200
400
1. Prepare income statements based on variable costing for each of the two years.
2. Prepare income statements based on absorption costing for each of the two years.
3. Prepare a numerical reconciliation and explanation of the difference between operating income for each year under absorption costing and variable costing.
4. Critics have claimed that a widely used accounting system has led to undesirable buildups of inventory levels. (a) Is variable costing or absorption costing more likely to lead to such buildups? Why? (b) What can be done to counteract undesirable inventory buildups?
Answer:
2011 2012
Sales 1000 units 1200 units
Production 1400 1000
Costs:
Variable manufacturing $700 $500
per unit $0.50
Fixed manufacturing $700 $700
Variable operating (marketing) $1000 $1200
Fixed operating (marketing) $400 $400
cogs under absorption costing 2011 = ($1,400 / 1,400) x 1,000 = $1,000
cogs under absorption costing 2012 = $400 + ($1,200 / 1,000) x 800 = $1,360
1. INCOME STATEMENTS
VARIABLE COSTING
2011 2012
Total sales revenue: $3,000 $3,600
Opening inventory: ($0) ($200)
Variable manufacturing: ($700) ($500)
Ending inventory: $200 $100
Gross contribution margin: $2,500 $3,000
Variable operating: ($1,000) ($1,200)
Contribution margin: $1,500 $1,800
Fixed manufacturing: ($700) ($700)
Fixed operating: ($400) ($400)
Net operating income: $400 $700
2. INCOME STATEMENTS
ABSORPTION COSTING
2011 2012
Total sales revenue: $3,000 $3,600
COGS: ($1,000) ($1,360)
Gross margin: $2,000 $2,240
Operating costs: ($1,400) ($1,600)
Net operating income: $600 $640
3. Under variable costing, closing inventory = 400 units x $0.50 (variable production costs per unit) = $200.
Under absorption costing, closing inventory = 400 units x $1 (production cost per unit) = $400
Since closing inventory is $200 higher under absorption costing, then net operating income during 2011 increases by $200.
4. a) Variable costing is more likely to result in inventory buildups. Since variable costing determines the value of closing inventory only using variable manufacturing costs, their value is much lower. E.g. in this case the value of closing inventory 2011 under variable costing is $200, while under absorption costing it is $400. This means that less costs are transferred from one year to another.
b) Cost of goods sold must include all production costs (both variable and fixed). This way COGS costs cannot be over estimated during one year and under estimated the next.
