Answer:
1. The sale of engines and service warranty on account during 2016 (one entry).
Dr Cash 8,820,000
Cr Sales revenue 8,190,000 (= 9,000 x $910)
Cr Unearned warranty revenue 630,000 (= 9,000 x $70)
2. The warranty costs paid during 2016.3. The warranty revenue earned in 2016.
to record warranty expenses during the year
Dr Warranty expense 93,400
Cr Cash 93,400
to record warranty revenue
Dr Unearned warranty revenue 126,000 (= $630,000 / 5 = $126,000)
Cr Extended warranty revenue 126,000
Explanation:
Service-type warranties sold are a liability for the company (unearned revenue) and they will be accrued as time goes on. In this case, accrued warranty revenue is adjusted annually but it could also be adjusted monthly.
What are the advantages and disadvantages to Qantas’s international cooperative alliances?
Answer:
Qantas's International cooperative alliance is a strategic move by Quanta with respect to acquiring the best business opportunities and growth.
The advantages and disadvantages are listed below:
Advantages:1) It will develop a strong base for Quanta in international market.
2) It will help Qantas to reach more costumers and expand their business, providing huge profit and growth to Qantas.
3) It will help Quanta in enhancing their cost base, aircraft utilization and redesigning Quanta's network to high growth in international market.
Disadvantages:1) Qantas i highly focused on Asia, putting their 50% efforts towards Asian market. If their prediction goes wrong, they'll suffer a huge loss.
2) Qantas has multiple partners, and making them agree on the same thing can be a difficult task. Huge conflicts among them can result in huge losses.
3) As each partner has equal importance, they may have different views. This can effect Qantas's decision making policies.
Pearson Motors has a target capital structure of 45% debt and 55% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 10%, and its tax rate is 40%. Pearson's CFO estimates that the company's WACC is 14.50%. What is Pearson's cost of common equity
Answer:
21.45%
Explanation:
Pearson motors has a target capital structure of 45% debt and 55% common equity
The yield to maturity is 10%
Tax rate is 40%
WACC is 14.50%
First of all we have to find the tax cost of debt
Tax cost of debt= Yield to maturity×(1-tax rate)
= 8×(1-25/100)
= 8×(1-0.25)
= 8×0.75
= 6%
The next step is to calculate the common equity
Therefore, the common equity can be calculated as follows
WACC= Respective cost×Respective weight
14.50= (6×0.45)+(0.55×common equity)
14.50= 2.7+(0.55×common equity)
14.50-2.7= (0.55×common equity)
11.8= (0.55×common equity)
Common equity= 11.8/0.55
Common equity= 21.45%
Hence Pearson's cost of common equity is 21.45%
When a project has a "hard gate," like being ready on time, how does that affect normal success criteria? Is it fair to judge a project with a critical completion date by normal project success standards? Why or why not?
Explanation:
The issue that determines the success of a project is usually attributed to managing the scope of the project. Therefore, in some projects, the deadline for completion is not necessarily the most fundamental criterion that will incur your success.
Every project has a defined deadline for the beginning and the end, so the project management must be planned so that the time is sufficient for the execution of its tasks that will lead to the achievement of the objectives and goals.
Therefore, it is not fair to judge a project with a critical completion date, due to the fact that the project was developed and controlled so that success was related to other more important variables for such a project, not only time, but also its effectiveness , cost-benefit, quality, costs, etc.
When the government sets an effective price floor suppliers are helped and consumers are helped. suppliers are hurt and consumers are helped. suppliers are helped and consumers are hurt. This is an incorrect answer. Have a nice day! supply increases due to the increase in price.
Answer:
suppliers are helped and consumers are hurt.
Explanation:
A price floor is when the government or an agency of the government sets the least price a good or service can be purchased.
A price floor is usually set above equilibrium price. As a result, the profit earned by sellers increase while the good becomes more expensive for consumers.
I hope my answer helps you
Prepare three income statements for the year assuming that revenue is to be recognized when:_________.
1. Crocodiles have been caught (i.e. production complete).
2. Crocodiles have been sold and delivered
3. Cash collections are complete
Answer:
3
Explanation:
The right answer is "cash collections are complete"
Revenue can only be recognized when the amount of earning of whole year completes basically it's the total amount of money which is earned by the customer and income is the profit which can be calculated by subtracting the revenue and what remains after the expenses.
Suppose a stock had an initial price of $92 per share, paid a dividend of $2.30 per share during the year, and had an ending share price of $75.50. a. Compute the percentage total return. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What was the dividend yield
Answer:
(a) Percentage return = -$14.20 ÷ $92 = -15.43%
(b) Dividend Yield = $2.30 ÷ $92 = 2.50%
Explanation:
Initial price per share= $92.00
Ending share price = $75.50
Capital loss = $75.50 - $92.00 = -$16.50
Dividend = $2.30
Net return = -$16.50 + $2.30 = -$14.20
(a) Percentage return = (-$14.20 ÷ $92) × 100% = -15.43%
(b) Dividend Yield = ($2.30 ÷ $92) × 100% = 2.50%
Helix Company has been approached by a new customer to provide 2,000 units of its regular product at a special price of $6 per unit. The regular selling price of the product is $8 per unit. Helix is operating at 75% of its capacity of 10,000 units. Identify whether the following costs are relevant to Helix's decision as to whether to accept the order at the special selling price. No additional fixed manufacturing overhead will be incurred because of this order. The only additional selling expense on this order will be a $0.50 per unit shipping cost. There will be no additional administrative expenses because of this order. Calculate the operating income from the order.
Answer:
Helix decision would be to accept this order at the special price because from the calculations they will still have a net income of $2,000 at this special price of $6 per unit
Explanation:
Selling price: at $6 per unit; This is a relevant cost ; Revenue = ($6*2000) units) $12,000
_________________________
Direct material cost: at $1 per unit; This is a relevant cost; Revenue = (1 * 2000) $2000
____________________________
Direct labor cost: at $2 per unit; This is a relevant cost ; Revenue = (2 * 2000) $4000
____________________________
Variable manufacturing overhead: at $1.50 per unit; This is a relevant cost; Revenue = (1.50 * 2000) $3,000
____________________________
Fixed manufacturing overhead: at $0.75 per unif; This is not a relevant cost; Revenue = $0 (not relevant)
_____________________________
Regular selling expenses: at $1.25 per unit; This is not a relevant cost; Revenue = $0(not relevant)
______________________________
Additional selling expenses(shipping cost) : at $0.50 per unit; This is a relevant cost; Revenue = (0.50 * 2000) $1,000
______________________________
Administrative expenses: at $0.75 per unit; This is not a relevant cost; Revenue = $0
__________________________
Total operating expenses: Sum of all relevant cost = (Direct material cost + Direct labor cost + Variable manufacturing overhead + Additional selling expenses) = ($2,000 + $4,000 + $3,000 + $1,000) = $10,000
__________________________
Net income : (Selling price - Total operating expenses)= ($12,000 - $10,000) = $2,000
________________________
Yes, Helix should accept the order at the special price
______________
Helix decision would be to accept this order at the special price because from the calculations they will still have a net income of $2,000 at this special price of $6 per unit
2. The Fourth of July Company agreed to ship a quantity of fireworks to Behan. After Behan pays in full, he learns that state law prohibits this type of sale. Before the fireworks are sent, Behan calls to cancel this contract and to demand his money back. May he recover his money in court
Answer:
Behan will recover his amount.
Explanation:
The contract has not been formed as the contract is only enforceable if the contract is legally allowed which means that the selling of fireworks in this case scenario is not allowed and hence Behan and Fourth of July Company are both equally responsible for not committing to such type of agreements. So the company must payback the money as the contract is not enforceable in the jurisdiction.
The company has just hired a new marketing manager who insists that unit sales can be dramatically increased by dropping the selling price from $8 to $7. The marketing manager would like to use the following projections in the budget:
Data Year 2 Quarter Year 3 Quarter
1 2 3 4 1 2
Budgeted unit sales 45,000 70,000 105,000 70,000 90,000 100,000
Selling price per unit $7 per unit
a. What are the total expected cash collections for the year under this revised budget?
b. What is the total required the production for the year under this revised budget?
c. What is the total cost of raw materials to be purchased for the year under this revised budget?
d. What are the total expected cash disbursements for raw materials for the year under this revised budget?
e. After seeing this revised budget, the production manager cautioned that due to the current production constraint, a complex milling machine, the plant can produce no more than 80,000 units in any one quarter. Is this a potential problem?
Answer:
a. What are the total expected cash collections for the year under this revised budget?
65 + 236.25 + 78.75 + 367.5 + 122.5 + 551.25 + 183.75 + 367.5 = 1,972.5 x $1,000 = $1,972,500
b. What is the total required production for the year under this revised budget?
52.5 + 80.5 + 94.5 + 76 = 303.5 x 1,000 = 303,500 units
c. What is the total cost of raw materials to be purchased for the year under this revised budget?
237 + 367.5 + 507.5 + 360 = 1,472 x 1,000 = 1,472,000 pounds x $0.80 = $1,177,600
d. What are the total expected cash disbursements for raw materials for the year under this revised budget?
195.26 + 252.24 + 361.2 + 330.4 = 1,139.1 x $1,000 = $1,139,100
e. After seeing this revised budget, the production manager cautioned that due to the current production constraint, a complex milling machine, the plant can produce no more than 80,000 units in any one quarter. Is this a potential problem?
No, since total budgeted sales for the year are 303,500 units, which divided by 4 quarters = 75,875 units per quarter. All you need to do is increase quarter 1 production by 15,000 units, and that would satisfy quarters 2 and 3 needs.
Explanation:
Year 2 Quarter Year 3 Quarter
1 2 3 4 1 2
unit sales 45 70 105 70 90 100
(in thousands)
total sales 315 490 735 490 630 700
(in thousands)
cash collected 65 78.75 122.5 183.75 122.5 157.5
(in thousands) 236.25 367.5 551.25 367.5 472.5 525
75% of sales are collected during this quarter and 25% are collected the next quarter
beginning $65,000
ending finished inventory 30% of budgeted sales for next quarter
Year 2 Quarter Year 3 Quarter
1 2 3 4 1 2
beginning 13.5 21 31.5 21 27 30
ending 21 31.5 21 27 30 ?
quarter sales 45 70 105 70 90 100
production 52.5 80.5 94.5 76 93 ?
cost of raw materials = $0.80, 5 pounds per unit produced
beginning inventory of raw materials = 23,000 pounds
desired ending inventory of raw materials = 10% of next quarter's needs
Year 2 Quarter Year 3 Quarter
1 2 3 4 1 2
beginning 23 35 52.5 35 45 50
ending 35 52.5 35 45 50 ?
quarter needs 225 350 525 350 450 500
raw materials 237 367.5 507.5 360 455 ?
60% of raw materials cost paid during the quarter, 405 paid the next quarter
beginning accounts payable 81.5
Year 2 Quarter Year 3 Quarter
1 2 3 4 1 2
past q $ 81.5 75.84 117.6 162.4 112 114
next q $ 75.84 117.6 162.4 112 114 ?
quarter needs 189.6 294 406 280 360 ?
payments 195.26 252.24 361.2 330.4 358 ?
Overapplied factory overhead would result if: Group of answer choices a. Factory overhead costs incurred were greater than costs charged to production. b. The plant was operated at less than normal capacity. c. Factory overhead costs incurred were less than costs charged to production. d. Factory overhead costs incurred were unreasonably large in relation to units produced.
Answer:
c. Factory overhead costs incurred were less than costs charged to production.
Explanation:
An overapplied factory overhead represents the excess amount of overhead used during a manufacturing period compared to the actual overhead incurred during the production or manufacturing period.
Simply stated, an overapplied factory overhead is the amount by which the estimated overhead is above the actual overhead incurred by a factor in the course of production.
Hence, an overapplied factory overhead would result if factory overhead costs incurred were less than costs charged to production.
This simply means that, if the factory overhead cost actually incurred in a production period is less than the estimated factory overhead cost applied, this is an overapplied factory overhead. If reverse of the above is the case, then it is referred to as underapplied factory overhead.
Additionally, if the difference between the two overhead cost is negative, then it is an overapplied factory overhead.
A metal-cutting operation has a target value of 20 and consistently averages 19.8 with a standard deviation of 0.5. The design engineers have established an upper specification limit of 22 and a lower specification limit of 18. What is the process capability index? A) 1.20 B) 1.33 C) 1.46 D) 1.66 12. Following Q11, what is the process capability ratio? A) 1.33 B) 1.50 C) 1.66 D) 2.00
Answer:
process capability index = Cpl ( lower ) = 1.20 ( A )
The process capability ratio = 1.33
Explanation:
Target value = 20
mean = 19.8
standard deviation = 0.5
upper specification limit = 22
lower specification limit = 18
The process capability index =
Cpu = [tex]\frac{22- 18}{6(0.5)}[/tex] = 4 / 3 = 1.33
Cpk ( upper ) = (22 - mean ) / 3 * std
= ( 22 - 19.8 ) / ( 3 * 0.5 ) = 2.2 / 1.5 = 1.47
Cpl ( lower ) = ( mean - 18 ) / ( 3 * 0.5 ) = ( 19.8 - 18 ) / 1.5
= 1.8 / 1.5 = 1.2
hence the process capability index is Capability index with the minimum value which is Cpl ( lower ) = 1.20 ( A )
The process capability ratio = 1.33 refer to Cpu equation
TOMS is a shoe company that, since its inception, has given away one pair of shoes to someone in need for every pair purchased by a customer. They have expanded their philanthropy and now support programs designed to provide eye exams and glasses, clean drinking water, and safe birthing services to people in need in various parts of the world. Customers loyal to the TOMS brand believe the company is _____________, fill in the blank, through their participation in these charitable efforts.
Answer:
Socially responsible
Explanation:
A socially responsible company is one that seeks to identify as well as relieve the social needs in its business environment.
A major social problem or need around the world is the lack of clean drinking water and birthing services. Thus, by proffering solutions to this problem loyal customer of TOMS shoe company could notice that the company takes seriously its responsibility to the society.
Ronald, Inc. had the following balances and transactions during 2017: What is the amount of the company's Merchandise Inventory, as disclosed in the December 31, 2017 balance sheet, using the periodic weighted-average inventory costing method
Answer: $707
Explanation:
Using the Periodic System means that inventory is updated per period. This means that using the Weighted Average method, Ending Inventory prices will be calculated on the basis of all inventory in the period.
Weighted Average Method aims to ascribe a single price to all the inventory units sold by a company and so divides the entire cost by the number of units.
Number of Units bought in 2017,
Opening Balance = 12 units
June 10 = 24 units.
= 12 + 24
= 36 units.
Cost of the the 36 units
= (12 * 91) + (24 * 87)
= $3,180
Weighted Average Cost,
= 3,180/36
= $88.33
During the year they sold 28 units (10 + 18) meaning that 8 units (36 - 28) were left.
The closing Inventory on the 12/31/2020 therefore is,
= 8 * 88.33
= $706.66
= $707
In the context of the competitive environment of business, unlike leading-edge firms, bleeding-edge firms offer products just as the market becomes ready to embrace them. a. True b. False
Answer:
False
Explanation:
Bleeding edge firms provide products that are untested and carry a high risk. Products are unreliable and lead adopters stand the risk of making big losses in event that the product is not well received in the market
Leading edge firms on the other hand deal in products that are well tested and accepted by the market.
So the statement that - unlike leading-edge firms, bleeding-edge firms offer products just as the market becomes ready to embrace them. Is not true
Products offered by bleeding edge firms are not embraced by the market as they are untested and risky
Suppose you are an analyst in the oil refinery industry and are responsible for estimating the equilibrium price and quantity of home heating oil. To do so, you must consider factors that can affect the supply of and demand for heating oil.
Determinants of the demand for heating oil include household income, the price of an oil furnace (a complement to heating oil) and the price of natural gas (a substitute for heating oil). Determinants of the supply of heating oil include the cost of crude oil and the cost of refining crude oil into home heating oil.
1. Suppose that all of the determinants of the supply and demand for heating oil are equal to their initital values. The equilibrium quantity in this market is ___ barrels of heating oil per day,
A. 60,000
B. 50,000
C. 70,000
D. 80,000
E. 40,000
2. and the equilibrium price is ____ per barrel.
A. $40
B. $70
C. $60
D. $50
E. $80
Answer:
1. 80,000
2. $40 per barrel
Explanation:
1. As we can see from the table provided The equilibrium quantity in this market is 80,000 barrels of heating oil per day, as quantity demanded match quantity supplied
2. As we can see from the table provided The equilibrium price is $40 per barrel as in this cost there is an intersection of quantity demanded and quantity supplied. In other words the equilibrium price and quantity could be find out when the quantity demanded equal to quantity supplied
In October, Pine Company reports 21,000 actual direct labor hours, and it incurs $118,000 of manufacturing overhead costs. Standard hours allowed for the work done is 20,600 hours. The predetermined overhead rate is $6.00 per direct labor hour. Compute the total overhead variance.
Answer: $5,600 Favorable
Explanation:
Total Overhead Variance is a method of measuring if the company is spending more than it is supposed to on overhead. It checks this by computing the difference between the Actual Overhead spent and the Budgeted/ Standard Overhead that it was supposed to spend.
If the Actual Overhead is more than the Standard Overhead the Variance is Negative, if the reverse is true then the Variance is Positive.
The formula for the Variance given the details in the question is,
Total Overhead Variance = Standard total Overhead - Actual Overhead
= (Standard hours * Pre-determined Overhead rate) - Actual Hours
= ( 20,600 * 6) - 118,000
= 123,600 - 118,000
= $5,600
The Standard Total Overhead is more than the Actual Total Overhead so the Variance is Positive as Pine Company spent less than it thought it would.
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)
Answer:
Elegant Limited
Depiction of the Association and Cardinality for the sales of cars:
1. Association: At Elegant Limited, for a car to be sold, a relationship must be established between Elegant Limited and some of its customers (private buyers and investors). A sale of car involve the exchange of economic resources. While Elegant Limited exchanges the cars for cash receipts, the customers exchange their cash for cars. Two economic resources are involved in the sale of cars, which are exchanged between two economic agents (Elegant Limited and customers) in a business event.
2. Cardinality: In each of the economic events involving the sale of cars to customers and the receipt of cash from customers, two elements are involved, which are the exchanges of resources. Cars and Cash are the elements that show their cardinality in the economic event. These elements are known as economic resources.
Explanation:
a) The REA Model is a tool for modelling business processes. In the sales process, one event would be the “sales of cars,” occasioning the giving of cars for “cash receipt,” the other event. These two events are linked as a cash receipt occurs in exchange for a sale, and vice versa. The REA Model was originally proposed in 1982 by William E. McCarthy as a generalized accounting model, and contained the concepts of resources, events and agents, according to wikipedia.com.
b) Association refers to the relationship existing when an event takes place. At least, two persons are impacted by any event, the giver and the receiver. For an economic event involving the exchange of resources to happen, two economic agents are involved. Otherwise, no transaction can take place. The seller of cars (Elegant Limited) and the buyers (Customers both private and investors).
c) Cardinality refers to the elements that make up an economic event, for example. The sale of cars and receipt of cash are economic events happening in a business relationship between Elegant Limited and Customers. The elements that make up the events are the resources (cars and cash), which are exchanged.
44,000 shares of common stock outstanding at a market price of $32 a share. The common stock will pay a $1.50 annual dividend and has a dividend growth rate of 3.5 percent. There are 7,500 shares of 9% preferred stock outstanding at a market price of $92 a share. The outstanding bonds mature in 11 years, have a total face value of $825,000, a coupon rate of 6.5 percent, a face value per bond of $1,000, and a market price of $989 each. The tax rate is 35 percent. What is the weight of equity in to be use to calculate the firm's WACC?
Answer:
The weight of equity in to be use to calculate the firm's WACC is 0.48 or 48%
Explanation:
The weight of equity to be used in firm's WACC computation is market value of equity divided by the sum of market value of equity ,preferred stock and bonds.
Market value of equity=44,000*$32 =$1,408,000.00
Market value of preferred stock=7,500*$92 =$690,000
Market value of bonds=$825,000*$989/$1000=$815,925.00
Sum of market values =$ 2,913,925.00
Weight of equity=market value of equity/ Sum of market values=$1,408,000.00/$2,913,925.00= 0.48 =48%
The Blaine Development Corporation (BDC) is reconsidering the Lummi Resort Hotel project. It would be located on the picturesque banks of Birch Bay and have its own championship-level golf course. The cost to purchase the land would be $1 million, payable immediately. Construction costs would be approximately $2 million, due at the end of year 1. However, the construction costs are uncertain. These costs could be up to 20 percent higher or lower than the estimate of $2 million with an equal chance (uniform distribution). BDC’s best estimate for the annual operating profit to be generated in years 2, 3, 4, and 5 is $700,000. Due to the great uncertainty, the estimate of the standard deviation of the annual operating profit in each year also is $700,000. Assume that the yearly profits are statistically independent and follow the normal distribution. After year 5, BDC plans to sell the hotel. The selling price is likely to be somewhere between $4 and $8 million (assume a uniform distribution), and revenue will be received in year 5. Interest has been r = 5% (and you can ignore inflation), so you can simplify your net present value (NPV) calculation to be
NPV = summation of [ (pi(t)-c(t)) / ( (1-r)^t )] where t varies from 0 to 5
where pi(t) is operating profit and ct is cost of land and construction, both in period t. Simulate the NPV 1000 times. What is the mean and standard deviation of the NPV of the project?
Answer:
I can't help you sorry
Explanation:
I don't know what any of this means
Stellar Corporation began operations on January 1, 2014. During its first 3 years of operations, Stellar reported net income and declared dividends as follows.Net incomeDividends declared2014 $49,500 $ –0– 2015 128,600 59,600 2016 161,000 58,800 The following information relates to 2017.Income before income tax $231,000 Prior period adjustment: understatement of 2015 depreciation expense (before taxes) $32,000 Cumulative decrease in income from change in inventory methods (before taxes) $44,800 Dividends declared (of this amount, $32,000 will be paid on January 15, 2018) $118,400 Effective tax rate 40 %Prepare a 2017 retained earnings statement for Stellar Corporation. (List items that increase adjusted retained earnings first.)
Answer:
$194,820
Explanation:
Retained earnings at the end of 2017 is computed thus:
2014 net income $49,500
2014 dividends ($0)
2014 retained earnings $49,500
2015 net income $128,600
2015 dividends ($59,600)
2015 retained earnings $118,500
2016 net income $161,000
2016 dividends ($58,800)
2016 retained earnings $220,700
understatement of depreciation expense
after tax impact $32,000-(40%*$32,000) ($19,200)
After tax impact of decrease in net income due
to inventory method $44,800-($44,800*40%) ($26,880)
Adjusted retained earnings for 2016 $174,620
net income for 2017 $231,000-($231,000*40%) $138,600
dividends declared for 2017 ($118,400)
Retained earnings for 2017 year end $194,820
Retained earnings in the adjustment in each is the retained earnings brought forward plus the net income for the current year minus dividends declared for the year
The following information applies to the questions displayed below.] Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. 2018 2019 Sales ($46 per unit) Cost of goods sold ($31 per unit) Gross margin Selling and administrative expenses $920,000 620,000 300,000 290,000 $1,840,000 1,240,000 600,000 340,000 Net income 10,000 260,000 Additional Information a. Sales and production data for these first two years follow. 2019 30,000 40,000 2018 Units produced Units sold 30,000 20,000 b. Variable cost per unit and total fixed costs are unchanged during 2018 and 2019. The company's $31 per unit product cost consists of the following. Direct materials b. Variable cost per unit and total fixed costs are unchanged during 2018 and 2019. The company's $31 per unit product cost consists of the following. Direct materials Direct labor Variable overhead Fixed overhead ($300,000/30,000 units) S 5 10 Total product cost per unit $31 . Selling and administrative expenses consist of the following 2018 2019 Variable selling and aeministrative expenses ($2.50 per unit) Fixed selling and administrative expenses 50,000 $100,000 240,000 240,000 Total selling and administrative expenses $290,000 $340,000 neck my Work Required:Prepare income statements for the company for each of its first two years under variable costing. (Loss amounts should be entered with a minus sign.) DOWELL Company Variable Costing Income Statements 2018 2019 Sales 920,000 1,840,000 Less: Variable costs Variable overhead Variable selling and administrative expenses 50,000 100,000 Direct labor Direct materials 50,000 100,000 Total variable costs 900,000 Contribution margin 450,000 Less: Fixed expenses 300,000 240,000 300,000 Fixed overhead 240,000 Fixed selling and administrative costs 540,000 540,000 Total foxed expenses (90,000) 360,000 Net income (loss)
Answer:
DOWELL Company Variable Costing Income Statements for 2018 and 2019:
2018 2019
Sales 920,000 1,840,000
Less: Variable costs
Total variable costs 470,000 940,000
Contribution margin 450,000 900,000
Less: Fixed expenses:
Fixed selling costs 300,000 300,000
Fixed administrative costs 240,000 240,000
Total fixed expenses 540,000 540,000
Net income (loss) (90,000) 360,000
Explanation:
a) Dowell Company Income Statements under absorption costing:
2018 2019
Sales $920,000 $1,840,000
Cost of goods sold 620,000 1,240,000
Gross margin 300,000 600,000
Selling & Admin. Expenses 290,000 340,000
Net Income 10,000 260,000
b) Production & Sales Data:
Units Sold Units Produced
2018 20,000 30,000
2019 30,000 40,000
c) Variable costing and absorption costing produce different net income results. Variable costing takes into consideration the variable costs of production to produce a contribution while absorption costing considers the cost of goods sold to produce the gross profit. Variable costing is more of a management accounting technique for decision making while absorption costing follows the financial accounting procedures.
Chobani's equipment runs for 10 hours and must be idle for 4 hours while being cleaned. Its plants operate day and night all week long. What are the implications for the company's purchasing, inventory control, scheduling and quality control functions. Your answer should be detailed and well thought out.
Answer:
For the company's purchasing ;leasing the machine for the active period i.e 10 hours a day would be cheaper because the cost of cleaning and maintenance would be eliminated
For the company's inventory control; if the company leases the equipment that would reduce it's setup cost keeping its inventory low
For the company's scheduling; scheduling deals with completing a job within a given time and it is very essential to utilize the productive time
For the company's quality control functions; the company has to ensure that in as much as it has to meet its production schedule the quality of the products should be paramount
Explanation:
Running time = 10 hours. Idle time = 4 hours
The implications of the machine:
For the company's purchasing ; since the equipment has to be used everyday and after the 10 hours it will run, it has to be ideal for 4 hours for it to be cleaned and maintained every day. therefore the purchasing department of the company will have to sort for an alternative equipment which would be less expensive and would have less idle time during cleaning and maintenance. but if this alternative is more expensive, then leasing the machine for the active period i.e 10 hours a day would be cheaper because the cost of cleaning and maintenance would be eliminated
For the company's inventory control : inventory for every company is the stock of the company that remains unsold and every company should aim to keep this as low as possible and one way is by reducing setup costs and safety cost. if the company leases the equipment that would reduce it's setup cost keeping its inventory low
For the company's scheduling : scheduling deals with completing a job within a given time and it is very essential to utilize the productive time i.e 10 hours of the equipment in order to avoid unwanted direct and indirect cost.
For the company's quality control functions: As the equipment runs for 10 hours day and night in other to meet up with the production and scheduling the quality of the products might be adversely affected hence the company has to ensure that in as much as it has to meet its production schedule the quality of the products should be paramount
Several studies indicate that the use of collaborative research agreement (between several firms, research centers, suppliers, competitors, universities, etc.) is increasing around the world. What are some reasons collaborative research is becoming more prevalent?
Answer & Explanation: Collaborative research refers to a research or study done by different independent bodies. Take for instance a scientist intends to undertake a study, he sorts the collaboration of a university.
Several benefits exist in collaborative research some of which includes;
1). It creates opportunity for an individual to develop as a scholarly author. This is because in working together the work gets more attention and recognition.
2). It makes the work to be done reduced. Considering the fact that people will handle different aspects of the research, the work per person will be less.
3). There will be variety of techniques. Having people work on same research enhances the research as different techniques are bound to be used to achieve result.
4). It gives room for more creativity. Because of the increased number of people working on the same tasks, diverse ideas will be brought forward, there will be knowledge sharing and this in turn will improve the creativity.
Casper and Cecile divorced in 2018. As part of the divorce settlement, Casper transferred stock to Cecile. Casper purchased the stock for $25,000, and it had a market value of $43,000 on the date of the transfer. Cecile sold the stock for $40,000 a month after receiving it. In addition, Casper is required to pay Cecile $1,500 a month in alimony. He made five payments to her during the year.What are the tax consequences for Casper and Cecile regarding these transactions?
Answer:
According to IRS, the party making the payments is entitled to cancel the alimony & separate maintenance fees in a divorce situation while the party accepting the payment is obliged to include the amounts received in their gross revenue. Any transfer of property in respect of a divorce other than cash, however, is not taxable.The party receiving the property also does not recognize income and include the item on cost basis equal to basis of the party making transfer.
Explanation:
You are attempting to value a call option with an exercise price of $100 and one year to expiration. The underlying stock pays no dividends, its current price is $100, and you believe it has a 50% chance of increasing to $120 and a 50% chance of decreasing to $80. The risk-free rate of interest is 10%.Based upon your assumptions, calculate your estimate of the the call option's value using the two-state stock price model.
Answer:
$13.64
Explanation:
Given:
Exercise price,X = $100
Current price = $100
Value when price is up, uS = $120
Value when price is down, dS= $80
Risk free interest rate = 10%
First calculate hedge ratio, H:
[tex] H = \frac{C_u - C_d}{uS - dS} [/tex]
Where,
Cu = uS - X
= 120 - 100
= $20
[tex] H = \frac{20 - 0}{120 - 80} = \ftac{1}{2}[/tex]
A risk free portfolio involves one share and two call options.
Find cost of portfolio:
Cost of portfolio = Cost of stock - Cost of the two cells.
= $100 - 2C
This portfolio is risk free. The table below shows that
_______________
Portforlio 1:
Buy 1 share $80; Write 2 calls: $0; Total: ($80 + 0) $80
____________________
Portforlio 2:
Buy 1 share: $120; Write 2 calls: -$40; Total: ($120 - $40) $80
Check for oresent value of the portfolio:
Present value [tex] = \frac{80}{1 + 0.10} = 72.73 [/tex]
Value = exercise price - value of option
$72.73 = $100 - 2C
Find call option, C
[tex] C = \frac{100 - 72.73}{2} = 13.64 [/tex]
Call option's value = $13.64
Why Do Organizations not change in response to environmental pressures?
Answer:
It often proves difficult to actually realize the change that you have come up with. Especially when it comes to cultural or behavioral change. We want to show that change is not so much something that you have to get others to join. You have to make your change part of it
Luis and Amy are programmers employed by X Corp. They work in cubicles next to each other. Both have M.Sc. degrees in computer science (Luis also has a Ph.D. in philosophy). They are about the same age, and have been with the company since its birth. Luis codes games, while Amy codes a variety of projects. Although their work is different, both jobs require the same skill level. Luis makes $100,000 a year, while Amy makes $80,000. If Amy sues X Corp. because of the pay differential, what must she show? What might the company argue in defense? Who should win?
Answer:
If Amy sues X Corp. because of the pay differential, what must she show?
The Equal Pay Act of 1963 prohibits discrimination in payment on the basis of gender (and race and origin also). In this case, Amy must prove that her work requires the same skills as Luis's and that it provides the same value to the company. They both have a master's degree in computer science, but she must also show that Luis's Ph.D. is not important to their work.
What might the company argue in defense?
The company might argue two things:
That Luis has a higher education degree, since he has a Ph.D. That Luis's work is more specialized since he codes games, while Amy codes different projects. They would have to prove that the games that Luis codes are much more profitable and valuable to the company than the work Amy does.Who should win?
If their work is similar, then Amy should win. If they are basically both doing the same job and require the same skills, therefore, the salary should be the same.
But if Luis's work is much more relevant and profitable for the company, then Amy would lose. If this is true, they might have to change Luis's compensation and reduce his salary but increase bonus compensation. This is true in all companies (or the vast majority of), e.g. the quarterback receives the highest salary since his job is more important for the team.
Carmen Camry operates a consulting firm called Help Today, which began operations on August 1. On August 31, the company's records show the following accounts and amounts for the month of August Cash Accounts receivable office supplies Land office equipment Accounts payable Dividends $25,370 Consulting fees earned 27,010 9,570 5, 620 880 530 102,100 22,370 Rent expense 5,260 Salaries expense 44,010 Telephone expense 20,020 Miscellaneous expenses 10,540 Common stock 6,020 Exercise 2-17 Preparing a statement of retained earnings LO P3 Use the above information to prepare an August statement of retained earnings for Help Today,(
Answer:
Help Today
Statement of Retained Earnings
For the Month Ended on August 31, 202X
Retained earnings at the beginning of the period: $0
Net Income: $10,410
Dividends: ($6,020)
Retained earnings at the end of the period $4,390
Explanation:
First we must organize the numbers and prepare an income statement:
Consulting fees earned $27,010
Rent expense ($9,570)
Salaries expense ($5,620)
Telephone expense ($880)
Miscellaneous expenses ($530)
Net income: $10,410
then a balance sheet:
Balance Sheet
Assets:
Cash $25,370
Accounts receivable $22,370
Office supplies $5,260
Land $44,010
Office equipment $20,020
Total assets: $117,030
Liabilities and Equity:
Accounts payable $10,540
Common stock $102,100
Total liabilities and equity: $112,640
+ Retained earnings $4,390
Total: $117,030
Dividends 6,020
two ways to determine retained earnings:
Retained earnings ⇒ assets - (liabilities + equity) = $117,030 - $112,640 = $4,390Another way to calculate retained earnings = net income - dividends = $10,410 - $6,020 = $4,390Dusan is a member of the Tonda LLC, and all members have equal interests in capital and profits. The LLC has made an optional adjustment-to-basis election. Dusan's interest is sold to Adele for $35,000. The balance sheet of the LLC immediately before the sale shows the following:
Basis FMV
Cash $40,000 $40,000
Depreciable assets 80,000 100,000
$120,000 $140,000
Dusan, capital $30,000 $35,000
Randal, capital 30,000 35,000
Thom, capital 30,000 35,000
Erin, capital 30,000 35,000
$120,000 $140,000
a. How much is the 754 adjustment?
b. What is the amount of Adele's basis in the acquired interest?
c. Which partner receives deductions related to the step-up?
Answer: a. $5000 b. $35000 c. Adele
Explanation:
The balance sheet is a report which summarizes all of an entity's assets, the liabilities, and the equity at a given point in time.
Based on the balance sheet in the question, the following can be calculated:
a. The 754 adjustment will be the difference in the sale of interest and Susan's capital balance. This will be:
= Sale of interest - Dusan's capital balance
= $35,000 - $30,000
= $5000
b. Adele's basis in the acquired interest will be the value at which she acquired the interest. This will be = $35,000
c. Adele is the partner who receives deductions related to the step-up
You buy a share of The Ludwig Corporation stock for $21.40. You expect it to pay dividends of $1.07, $1.1449, and $1.2250 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $26.22 at the end of 3 years.
A. Calculate the growth rate in dividends.
B. Calculate the expected dividend yield .
C. Assuming the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to get the expected total rate of return. What is the stock
Answer:
A. the growth rate in dividends = 7.00%
B. Expected dividend yield = 4.67%
C. Stock's xpected total rate of return = 11.67%
Explanation:
A. Calculate the growth rate in dividends
Current dividend growth rate = (Current year dividend - Previous year dividend) / Previous year dividend
Therefore,
Year 2 dividend growth rate = ($1.1449 - $1.07) / $1.07 = 0.0700, or 7.00%
Year 3 dividend growth rate = ($1.2250 - $1.1449) / $1.1449 = 0.0700, or 7.00%
This shows that;
Year 2 dividend growth rate = Year 3 dividend growth rate = 7.00%
B. Calculate the expected dividend yield
Dividend yield = Dividend per share / Market price per share
Therefore,
Expected dividend yield = Expected dividend per share in year 3 / Expected market price per share in year 3 = $1.2250 / $26.22 = 0.0467, or 4.67%
C. Assuming the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to get the expected total rate of return. What is the stock
Note: The complete statement is "What is this stock’s expected total rate of return?"
Stock's xpected total rate of return = Growth rate + Expected dividend yield in 3 = 7.00% + 4.67% = 11.67%.
