Answer:
a) 7% or 0.07
b) 42% or 0.42
Explanation:
Let's begin by listing out the given information:
Population = 902,
Probability distribution
Strongly support = 0.16 or 16%,
Somewhat support = 0.26 or 26%,
Mixed feelings = ?,
Somewhat oppose = 0.14 or 14%,
Strongly oppose = 0.36 or 36%
Don't know = 0.01 or 1%
a) The summation of every probability of an event (survey) is 100% ⇒ Pr (survey) = 100%
Pr (survey) = Pr [strongly support + somewhat support + mixed feelings + somewhat oppose + strongly oppose + don't know]
100 = 16 + 26 + x + 14 + 36 + 1
To obtain the probability of the 'Mixed feelings' populace, we subtract the summation of all other probabilities from 1 or 100%
x = 100 - (16 + 26 + 14 +36 + 1) = 100 - 93
x = 7% or 0.07
∴ the probability of the 'Mixed feelings' populace is 7% or 0.07
b) Probability of a random adult supporting is given by the summation of the probabilities of the adults who strongly support & those who somewhat support
Pr (support) = Pr (strongly support) + Pr (somewhat support)
Pr (support) = 0.16 + 0.26
Pr (support) = 0.42 or 42%
∴ the probability that a randomly chosen adult supports the casino in Toronto is 42%
Enviro Company issues 10%, 10-year bonds with a par value of $330,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 12%, which implies a selling price of 88 1/2. Prepare the journal entry for the issuance of the bonds for cash on January 1.
Answer:
cash 292,050 debit
discount on BP 37,950 debit
bonds payable 330,000 credit
Explanation:
par value $330,000
issuance selling price 88 1/2 = 88.5% of face value
$330,000 x 88.5% = $292,050
As it is being issued below par value we have a discount for $ 37,950
Overtime the company will adjust the carrying value of the bonds until it matches the face value at maturity.
Northern purchased the entire business of Southern including all its assets and liabilities for $682,500. Below is information related to the two companies: Northern Southern Fair value of assets $ 1,048,000 $ 797,000 Fair value of liabilities 580,000 320,000 Reported assets 811,000 647,000 Reported liabilities 496,000 257,000 Net Income for the year 56,000 51,000 How much goodwill did Northern pay for acquiring Southern
Answer:
Explanation:
Good will is the excess of the purchase consideration over the fair value of the net identifiable assets of an acquired business as a result of the intangible assets acquired along.
Purchase consideration is the amount paid in exchange an assets which can be in the foe of cash , shares or the fair value of other agreed means of exchange.
Fair value is the amount that an asset or a liability can be exchanged for at an arms length transaction
Workings
Northern Southern
fair value of asset 1,048,000 797,000
Fair value of liabilities 580,000 320,000
Reported Assets 811,000 647,000
Reported liabilities 496,000 257,000
Net Income 56,000 51,000
Fair value of net asset
1,048,000-580,000 468,000 477,000
797,000- 320,000
Purchase consideration = 682,500
Good will = Purchase consideration - fair value of the net asset acquired
682,500 - 477,000 =205,500
According to the Phillips curve, policymakers could reduce both the inflation rate and the unemployment rate by Group of answer choices increasing the money supply. raising taxes. increasing government expenditures None of the other answers is correct
Answer:
None of the other answers is correct.
Explanation:
Williams A. Phillips was a notable economist born in New Zealand. Phillips wrote a famous article titled "The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957" published in 1958 by Economica. In the article, he used data for the United Kingdom (U.K) to illustrate on a graph, a negative or inverse relationship between the rate of change of employee wages in the U.K and the unemployment rate in the United Kingdom (U.K).
Consequently, using the Phillips curve it is practically impossible for policymakers to reduce both the inflation rate and the unemployment rate because as the inflation rate decreases; the unemployment rate increases and vice-versa.
However, according to the Phillips curve, policymakers can reduce inflation and increase unemployment if aggregate demand is contracted.
A store has 5 years remaining on its lease in a mall. Rent is $2,000 per month, 60 payments remain, and the next payment is due in 1 month. The mall's owner plans to sell the property in a year and wants rent at that time to be high so that the property will appear more valuable. Therefore, the store has been offered a "great deal" (owner's words) on a new 5-year lease. The new lease calls for no rent for 9 months, then payments of $2,750 per month for the next 51 months. The lease cannot be broken, and the store's WACC is 12% (or 1% per month).
Required:
a. Should the new lease be accepted ?(Hint: Make sure you use 1% per month)
b. If the store owner decided to bargain with the mall's owner over the new lease payment, what new lease payment would make the store owner indifferent between the new and old lease ? ( Hint: Find FV of the old lease's original cost at t=9 months; then treat this as the PV of a 51- period annuity whose payments represent the rent during months 10 to 60.)
c. The store owner is not sure of the 12% WACC- it could be higher or lower. At what nominal WACC would the store owner be indifferent between the two lease ?
Answer:
Explanation:
Uhh
Answer:
This mad absolutly no sense
Explanation:
clarify and i can help more
The shape of a production possibility curve is downward-sloping because ____________________. Select the correct answer below: you can get more of one good only by giving up some of another good quantities produced are always negative you cannot get any more of good, even by giving up some of another good none of the above
Answer:
you can get more of one good only by giving up some of another good
Explanation:
A production possibilities frontier shows the opportunity cost of producing one good instead of another. This way, as you follow the curve, the combination of goods will vary, increasing the production of one good but deceasing the production of the other.
Opportunity costs are the benefits lost or extra costs associated to choosing one activity or investment over another alternative. Since resources are scarce, you must always give something up in order to obtain another thing, e.g. you give up your leisure time in order to study.
Identify the statements below that are correct regarding the closing entries for a merchandiser using the perpetual inventory system. (Check all that apply.) The Dividends account is closed to Retained Earnings Sales Returns and Allowances is closed with the expense accounts. Sales Discounts is closed with the revenue accounts. Merchandise Inventory is closed with the expense accounts. Sales Discounts is closed with the expense accounts. The Dividends account is closed to Income Summary. Cost of goods sold is closed with the revenue accounts. Sales is closed as a revenue account. Cost of goods sold is closed with the expense accounts.
Answer:
The dividends account is closed to retained earnings
Sales Discount is closed with the revenue accounts.
Cost of goods sold is closed with the expense accounts.
Sales is closed as a revenue account.
Sales returns and allowances is closed with the expense accounts.
Explanation:
The dividends account is closed to retained earnings. Dividends are returns paid to shareholders either annually, semi-annually as a result of their investment in a company. They are revenue accounts hence closed to retained earnings.
Cost of goods sold refers to the opening stock plus purchases , less closing stock. It is an expense hence closed with the expense account.
Sales refers to total inventories sold hence recognised as revenue and closed as a revenue account.
Sales return and allowance are also charged as expenses . Sales return is when goods are returned by the buyers either due to defects hence reduces charged with the expense account.
Answer:
Sales is closed as a revenue account
Cost of goods in closed with the expense accounts
Sales discounts is closed with the expense accounts
Sales Returns and allowances is closed with the expense account
The dividends account is closed to retained earnings
Explanation:
Answer key
Mr. Thano, age 47, withdrew $22,000 from his employer-sponsored qualified retirement plan to pay for his daughter's wedding. Compute the tax cost of the withdrawal if Mr. Thano has a 24% marginal tax rate on ordinary income. Tax Cost is_____
Answer:
$7,480
Explanation:
Mr Thano withdrew $22,000 at the age of 47
Marginal Tax rate= 24%
At the age of 47 means that the withdraw was made prematurely. Immature withdrawal of retirement plans means withdrawal made before the age of 60-65 years depending on the Country Policy
Hence, Tax Cost = 24% * 22,000
Tax cost = 5,280.
In addition, Mr Thano will be charge premature withdrawal cost of 10% as well
10% * 22000 = 2,200.
In total, the tax cost on the withdrawal of $22,000 is = $5,280 + $2,200 = $7,480
You just won $90,000 on a scratch-off lottery ticket. You plan to save the money in a retirement account expected to return 6% per year. If you intend to retire in 45 years, how much are these lottery winnings expected to be worth when you retire
Answer:
about 1.24 million dollars
Explanation:
Account value is multiplied by 1.06 each year, so after 45 years, it has been multiplied by 1.06^45. The value is ...
$90,000 × 1.06^45 = $1,238,814.97
Commercial paper A. Ordinarily does not have an active secondary market. B. Is usually sold only through investment banking dealers. C. Has an interest rate lower than Treasury bills. D. Has a maturity date greater than 1 year.
Answer: A. Ordinarily does not have an active secondary market
Explanation:
Commercial paper is a promissory note that is unsecured and pays a fixed interest rate. Commercial paper can be sold by big banks and also by corporations in order for them to cover their short-term receivables and also for them to be abke to meet their short-term financial obligations.
Commercial paper is for short-term basis and rarely lasts for more than 9 months. It should be noted that commercial paper is not as liquid as the treasury bills, dur to the fact that it does not ordinarily have a secondary market that is active.
Mann, Inc., which owes Doran Co. $1,200,000 in notes payable with accrued interest of $108,000, is in financial difficulty. To settle the debt, Doran agrees to accept from Mann equipment with a fair value of $1,140,000, an original cost of $1,680,000, and accumulated depreciation of $390,000.
Instructions
(a) Compute the gain or loss to Mann on the settlement of the debt.
(b) Compute the gain or loss to Mann on the transfer of the equipment.
(c) Prepare the journal entry on Mann’s book to record the settlement of this debt.
(d) Prepare the journal entry on Doran’s books to record the settlement of the receivable.
Answer:
A. $168,000
B.$150,000
C.Dr Notes Payable1,200,000
Dr Interest Payable 108,000
Dr Accumulated Depreciation 390,000
Dr Loss on Disposal of Equipment 150,000
Cr Equipment 1,680,000
D.Dr Equipment 1,140,000
Dr Allowance for Doubtful Accounts 168,000
Cr Notes Receivable1,200,000
Cr Interest Receivable 108 ,000
Explanation:
Mann, Inc.,
(a)Computation of the gain or loss to Mann on the settlement of the debt will be:
Note payable$1,200,000
Add Interest payable108,000
Carrying amount of debt 1,308,000
Less Fair value of equipment (1,140,000)
Gain on restructuring of debt$ 168,000
(b)Computation of the gain or loss to Mann on the transfer of the equipment will be:
Cost$1,680,000
Less Accumulated depreciation (390,000)
Book value1,290,000
Less Fair value of plant assets (1,140,000)
Loss on disposal of equipment$ 150,000
(c) The Journal urnal entry on Mann’s book to record the settlement of this debt will be:
Dr Notes Payable1,200,000
Dr Interest Payable 108,000
Dr Accumulated Depreciation 390,000
Dr Loss on Disposal of Equipment 150,000
Cr Equipment 1,680,000
Cr Gain on Restructuring of Debt 168,000
(d) The journal entry on Doran’s books to record the settlement of the receivable will be:
Dr Equipment 1,140,000
Dr Allowance for Doubtful Accounts 168,000
Cr Notes Receivable1,200,000
Cr Interest Receivable 108 ,000
Determine what the project’s ROE will be if its EBIT is –$55,000. When calculating the tax effects, assume that Flowers by Irene Inc. as a whole will have a large, positive income this year.
a. -8.62%
b. -7.5%
c. -7.87%
d. -6.75%
Answer:
-5.96%
Explanation:
The adjusted EBIT for tax purposes=-$55,000*(1-t)
t is the is the tax rate applicable which is 35% as contained in the attached
adjusted EBIT=-$55,000(1-35%)=-$35750
ROE =return on equity/initial outlay
return on equity is -35750
initial capital outlay is $600,000
ROE= -$35750 /$600,000=
The correct answer is -5,96% which is not available as of one of the options listed in question
Eleanor often borrows her roommate’s car without permission because she does not have one of her own. One day, Eleanor goes on a joy ride on rocky terrain and gets a flat tire. Eleanor refuses to replace the tire because she does not own the car. Which of the following is true?
A. Because Eleanor had permission to use the car, she has not committed a tort.B. Eleanor may be held liable under a tort because roommates have a legal expectation of compensation for damaged possessions. C. Because Eleanor does not own the car, she has not committed a tort.D. Eleanor may be held liable under a tort because the owner can no longer use the car.
Answer: D. Eleanor may be held liable under a tort because the owner can no longer use the car.
Explanation:
A tort can be defined as the wrong in terms of civil, which causes the claimant or owner to suffer from loss or harm. This can lead to legal liability for the person responsible for committing the tort.
According to doctrine of tort Eleanor had burrowed the car without owners permission. This is unlawful because nobody can take any object or entity in possession of other person without permission. The car was in good condition but while riding on rocky terrain the tire got flat. Thus Eleanor is responsible for this tort and is liable to replace the tire. As the owner is not able to reuse the car in this condition.
Chen Company’s Small Motor Division manufactures a number of small motors used in household and office appliances. The Household Division of Chen then assembles and packages such items as blenders and juicers. Both divisions are free to buy and sell any of their components internally or externally. The following costs relate to small motor LN233 on a per unit basis.
Fixed cost per unit $ 5
Variable cost per unit $11
Selling price per unit $35 Instructions
(a) Assuming that the Small Motor Division has excess capacity, compute the minimum acceptable price for the transfer of small motor LN233 to the Household Division.
(b) Assuming that the Small Motor Division does not have excess capacity, compute the min-imum acceptable price for the transfer of the small motor to the Household Division.
(c) Explain why the level of capacity in the Small Motor Division has an effect on the transfer price.
Answer:
a. $11
b. $35
c. If the transferring division does not have excess capacity,this would mean that some units that could have been sold externally would be transferred internally and this creates an opportunity cost. Opportunity costs increase the transfer price.However no opportunity cost exist if transferring division has excess capacity and hence a lower transfer price.
Explanation:
The minimum acceptable price is the price that is acceptable to the transferring division and out of a range of acceptable prices, it is that which would be the best for the company.
When there is excess capacity.
Note : No opportunity costs would exist.
Minimum acceptable price = Variable Cost - Internal Savings + Opportunity Cost
= $11
When there is excess capacity.
Note : Opportunity costs would exist.
Minimum acceptable price = Variable Cost - Internal Savings + Opportunity Cost
= $11 + ($35 - $11 )
= $35
Why Capacity of transferring division (Small Motor Division) has an effect on the transfer price.
If the transferring division does not have excess capacity,this would mean that some units that could have been sold externally would be transferred internally and this creates an opportunity cost. Opportunity costs increase the transfer price.However no opportunity cost exist if transferring division has excess capacity and hence a lower transfer price.
Stuart tells his student government representative at his college to propose rent controls on local rental housing as a way to help students afford rental housing. Maria disagrees with Stuart, saying rent controls will make students worse off. Who is correct and why
Answer:
Both are correct in part. Rent controls will be better for the students who are able to find housing at the reduced price but worse for students as a whole because there will be a shortage of rental housing, a lower future supply, and the quality will deteriorate.
Explanation:
Rent control involves use of price regimes such as price floor and price ceiling to control the cost of rent by the government.
Price ceiling is the maximum price allowed for rent while price floor is the minimum amount a property is allowed to be rented out.
The aim of rent control is to make housing cost cheap for everyone.
So both Stuart and Maria are correct. Rent control will make housing affordable for the students.
However when unfavourable rent ceiling is imposed by government, suppliers always aim to make profit and will refuse to give property out for rent. Resulting in shortage of rental housing, a lower future supply, and the quality will deteriorate.
A firm's average total cost is minimized when it produces 10 units. When it produces 10 units, the average total cost is $5/unit. What is the marginal cost when the firm produces 10 units
Answer:
$5/unit
Explanation:
In the theory of production cost, the relationships between average total cost and marginal cost are as follows:
1. When the average cost is increasing, the marginal cost will be greater than the average cost.
2. When the average cost is decreasing, the marginal cost will be less than the average cost.
3. When the average cost at the minimum, the marginal cost equals the average cost.
Based on number 3 above, the marginal cost when the firm produces 10 units is $5/unit since the firm's average total cost is minimized when it produces 10 units.
Your uncle lends you $2,000 less $100 (interest at 5 percent), and you receive $1,900. Use the APR formula to find the true annual percentage rate. Assume you repay the entire loan in one year
Answer:
APR =5.263%
Explanation:
Computation of the true annual percentage rate
Using the APR formula to find the true annual percentage rate
APR=(2 × n × I) / [P × (N + 1)]
Hence;
APR= (2 × 1 × $100) / [$1,900 × (1 + 1)]
APR=$200/($1,900×2)
APR=$200/$3,800
APR= 0.05263 ×100
APR =5.263%
Therefore the true annual percentage rate using the APR formula will be 5.263%
Tonto Company purchased property for $125,000. The property included a building, equipment and land. The building was appraised at $72,000, the land at $50,000, and the equipment at $23,000. What is the amount of cost to be allocated to the building in the accounting records
Answer:
The cost allocated to the building is $ 62,068.97
Explanation:
The total appraised cost for the components of the property purchased=$72,000+$50,000+$23,000=$ 145,000.00
The cost allocated to the building in the accounting records is the cost of the property multiplied by the building appraised value of $72,000 while dividing by the total of the appraised value of $145,000
cost allocated to building=$125,000*$72,000/$145,000=$ 62,068.97
1) Using the average cost method, compute the equivalent units of production in each of the following cases:
A) Units started in production during the month, 72,000; units completed and transferred, 52,800; and units in process at the end of the month (100% complete as to materials; 60% complete as to conversion), 19,200. (There was no beginning inventory.
B) Units in process at the beginning of the month (100% complete as to materials; 30% complete as to conversion), 12,000; units started during the month, 48,000; and units in process at the end of the month (100% complete as to materials; 40% complete as to conversion), 24,000.
2) In Department D, materials are added uniformly throughout processing. The beginning inventory was considered 80% complete, as was the ending inventory. Assume that there were 6,000 units in the beginning inventory and 20,000 in the ending inventory, and that 80,000 units were completed and transferred out of Department D. What are the equivalent units for the period using the average cost method?
3) If in question 2 the total costs charged to the department amounted to $960,000, including the $48,000 cost of the beginning inventory, what is the cost of the units completed and transferred out?
Answer:
1. the equivalent units of production
A. Materials = 72,000 units Conversion = 64,320 units
B. Materials = 60,000 units Conversion = 45,600 units
2. Materials = 45,600 units
3. $ 1,684,000
Explanation:
1. the equivalent units of production
The Concept of Equivalent Units of Production Measures the number of units completed to the extend of inputs introduced in the process
A.
Materials
units completed and transferred (52,800×100%) = 52,800
units in Ending Work In Process (19,200 × 100%) = 19,200
Total equivalent units of production = 72,000
Conversion
units completed and transferred (52,800×100%) = 52,800
units in Ending Work In Process (19,200 × 60%) = 11,520
Total equivalent units of production = 64,320
B.
First Determine the number of units completed and transferred.
units completed and transferred = 12,000 + 48,000 - 24,000
= 36,000
Materials
units completed and transferred (36,000×100%) = 36,000
units in Ending Work In Process (24,000 × 100%) = 24,000
Total equivalent units of production = 60,000
Conversion
units completed and transferred (36,000×100%) = 36,000
units in Ending Work In Process (24,000 × 40%) = 9,600
Total equivalent units of production = 45,600
2. the equivalent units of production
Materials
units completed and transferred (80,000×100%) = 80,000
units in Ending Work In Process (20,000 × 80%) = 16,000
Total equivalent units of production = 45,600
3. the cost of the units completed
First Calculate the cost per equivalent of production
cost per equivalent = Total Cost / Total Equivalent units
= $960,000 / 45,600
= $21.05
Then , calculate the cost of the units completed and transferred out
cost of the units completed and transferred = $21.05 × 80,000
= $ 1,684,000
Cash flows of two mutually exclusive projects are as follows. Project A costs $80,000 initially and will have a $15,000 salvage value after 3 years. The operating cost with this method will be $30,000 per year. Project B has initial cost of $120,000, an operating cost of $8,000 per year, and a $40,000 salvage value after its 3-year life. Assume the interest rate is 10% per year. Which of the following statements is true?
A. Two projects have different life cycle
B. Project A should be selected.
C. The present worth of project A is -$143,252.17.
D. The present worth of project B is -$109,842.22.
Answer:
The correct answer is B.
Explanation:
Giving the following information:
Project A:
Costs $80,000 initially and will have a $15,000 salvage value after 3 years. The operating cost with this method will be $30,000 per year.
Project B:
The initial cost of $120,000, an operating cost of $8,000 per year, and a $40,000 salvage value after its 3-year life.
Assume the interest rate is 10% per year.
Both projects present a 3-year life cycle.
To determine which option is correct, we need to calculate the net present value using the following formula:
NPV= -Io + ∑[Cf/(1+i)^n]
Cf= cash flow
Project A:
Cf1= 30,000/1.10= 27,272.73
Cf2= 30,000/1.10^2= 24,793.39
Cf3= 45,000/1.10^3= 33,809.17
Total= 85,875.29
NPV= -80,000 + 85,875.29= 5,875.29
Because the net present value is positive, Project A should be accepted.
Project B doesn't provide income, therefore it shouldn't be accepted.
M Corporation has provided the following data concerning an investment project that it is considering: Initial investment $ 380,000 Annual cash flow $ 133,000 per year Expected life of the project 4 years Discount rate 13 % Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the project is closest to:
Answer:
NPV = $262,604.7
Explanation:
The NPV is the difference between the PV of cash inflows and the PV of cash outflows. A positive NPV implies a good investment decision and a negative figure implies the opposite.
NPV of an investment:
NPV = PV of Cash inflows - PV of cash outflow
PV of annuity= 1 -(1+r)^(-n)/r × Annual cash flow
r- discount rate, n- number of years
PV of cashinflow = 133,000 × (1- 1.13^(-4))/0.13 =395,604.6863
NPV = 395,604.6863 - 133,000= 262,604.7
NPV = $262,604.7
Mapleleaf Industries declared a $0.85 per share cash dividend. The company has 130,000 shares authorized, 51,000 shares issued, and 48,000 shares of common stock outstanding. What is the journal entry to record the dividend declaration
Answer:
Mapleleaf Industries
Journal Entry
Debit Cash Dividend $40,800
Credit Dividends Payable $40,800
To record the declaration of $0.85 per share cash dividend.
Explanation:
This journal entry shows the two accounts involved and how they are recorded when a cash dividend is declared (declaration date).
Calculation of cash dividends is based on 48,000 shares of common stock outstanding and not on the issued shares nor the authorized. Usually, dividends are only payable to shareholders of record, who appear on the register of the company as holders of the shares on the specified date (date of records).
So, the divided equals $40,800 (48,000 x $0.85).
Answer:
Debit Dividends and credit Dividends Payable for $40,800 was recorded in the journal entry as dividend declaration
Explanation:
Dividends are distribution (share or proportion) of profits paid to shareholders of a company from a company earnings. Dividends are not represented in the companies income statement. Dividends are only paid to outstanding shares.
Dividends = outstanding shares × cash dividend
Dividends = $0.85 per share cash dividend × 48,000 shares of common stock outstanding. = $40800
Therefore a Debit Dividends and credit Dividends Payable for $40,800 was recorded in the journal entry as dividend declaration
You have calculated the pro forma net income for a new project to be $46,050. The incremental taxes are $22,540 and incremental depreciation is $16,600. What is the operating cash flow
Answer:
The multiple choices are:
A) $46,050 B) $68,590 C) $85,190 D) $29,450 E) $62,650
Option E is the correct option,$62,650
Explanation:
The operating cash flow=net income+incremental depreciation
the operating cash flow=$46050+$16,600=$62650
The incremental taxes have already been factored into the computation of the net income, hence it is,it is expected that the depreciation would just be added to the net income in a bid to ascertain operating cash flow of the business
Based on the following data, determine the amount of total assets, total liabilities, and net worth. Liquid assets$3,870Investment assets$8,340Current liabilities$2,670Household assets$87,890Long-term liabilities$76,230
Answer:
Total Assets = $100,100
Total Liabilities = $78,900
Net Worth = $21,200
Explanation:
Use the Accounting Equation : Equity = Assets - Liabilities to determine the Equity or Net Worth of the Company.
Here is what the Balance Sheet would look like:
Non Current Assets
Investment assets $8,340
Household assets $87,890
Current Assets
Liquid assets $3,870
Total Assets $100,100
Equity and Liabilities
Equity
Equity (Balancing figure) $21,200
Total Equity $21,200
Non Current Liabilities
Long-term liabilities $76,230
Current Liabilities
Current liabilities $2,670
Total Liabilities $78,900
Ginny currently earns a (real or nominal) wage of $12.00 per hour; in other words, the amount of her paycheck each week is $12.00 per hour times the number of hours she works. Suppose the price of sparkling water is $2.50 per gallon; in this case, Ginny (real or nominal) wage, in terms of the amount of sparkling water she can buy with her paycheck, is gallons of sparkling water per hour. When workers and firms negotiate compensation packages, they have expectations about the price level (and changes in the price level) and agree on a (real or nominal) wage with those expectations in mind. If the price level turns out to be higher than expected, a worker's (real or nominal) wage is than both the worker and employer expected when they agreed to the wage.
Ginny and her employer both expected inflation to be 4% between 2012 and 2013, so they agreed, in a two-year contract, that she would earn $12.00 per hour in 2012 and $12.48 per hour in 2013. However, suppose inflation between 2012 and 2013 actually turned out to be 5%, not 4%. For example, suppose the price of apple juice rose from $2.00 per gallon to $2.10 per gallon. This means that between 2012 and 2013, Ginny's nominal wage by___________ % , and her real wage by approximately____________ .
Answer:
since we are using this year as our base year, Ginny's real and nominal wage is $12 per hour
price of sparkling water $2.50 per gallon
Ginny can buy 4.8 gallons of sparkling water per hour of work
If the price level turns out to be higher than expected, a worker's real wage is LOWER than both the worker and employer expected when they agreed to the wage.
Ginny and her employer both expected inflation to be 4% between 2012 and 2013, so they agreed, in a two-year contract, that she would earn $12.00 per hour in 2012 and $12.48 per hour in 2013. However, suppose inflation between 2012 and 2013 actually turned out to be 5%, not 4%. This means that between 2012 and 2013, Ginny's nominal wage INCREASED by 4%, and her real wage by DECREASED BY approximately 0.92%.
Ginny's real wage in 2013 = $12.48 / 1.05 = $11.89
it decreased by ($11.89 - $12) / $12 = -0.92%
Yosko Company expects to sell 2 comma 000 units of finished product in January and 2 comma 150 units in February. The company has 260 units on hand on January 1 and desires to have an ending inventory equal to 40% of the next month's sales. March sales are expected to be 2 comma 270 units. Prepare Yosko's production budget for January and February.
Answer:
Production budget
January 2,600 units
February 2,198 units
Explanation:
The sales budget is adjusted for the projected opening and closing inventories unit to arrive at the production budget:
The production budget can be determined using the formula below
Production budget = Sales budget + closing inventory- opening inventory
January production budget
Sales budget = 2,000 units
Closing inventory = 40% × February sales = 40% × 2,150
Opening inventory = 260 units
Production budget for January = 2000 + (40% × 2,150) - 260= 2,600 units
February production budget
Sales budget = 2,150
Opening inventory = January closing inventory = 860 units
Closing inventory = 40% × March sales= 40% × 2,270
Production budget fro February = 2,150 + (40% × 2,270) - 860= 2,198 units
Production budget
January 2,600 units
February 2,198 units
Assume the firm has a constant dividend payout ratio and a projected sales increase of 12 percent. All costs, assets, and current liabilities vary directly with sales. The firm is currently at full production. What is the external financing need? Currently, the firm’s sales =$4,700, net income is $420, total assets=7890, dividends=125, A/P =790, LTD= 3130, and common stock=2780, and retained earnings =1190
Answer:
$521.45
Explanation:
the formula used to calculate EFN is:
EFN = (Assets/Sales) x ($ Δ Sales) - (Liabilities/Sales) x ($Δ Sales) - [Profit margin x forecasted sales x (1 - dividend payout)]
sales = $4,700
net income is $420
total assets = $7,890
dividends = $125, dividend payout = $125 / $420 = 29.76%
liabilities $790
profit margin = $420 / $4,700 = 8.94%
forecasted sales = $5,264
change in sales = $564
EFN = (7,890/4,700) x (564) - (790/4,700) x (564) - [0.0894 x 5,264 x (1 - 0.2976)] = $946.80 - $94.80 - $330.55 = $521.45
A company has two products: A and B. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools: 95,000 70,000 109,000.
Budgeted Activity
Activity Cost Budgeted Product A Product B
Pool Cost
Activity 1 $95,000 3,800 3,600
Activity 2 $70,000 5,300 6,300
Activity 3 $109,000 3,300 6,050
Annual production and sales level of Product A is 35,100 units, and the annual production and sales level of Product B is 70,350 units. What is the approximate overhead cost per unit of Product B under activity-based costing?
a. $3.40
b. $2.20
c. $10.28
d. $12.84
e. $1.87
Answer:
Unitary overhead cost= $2.2
Explanation:
Giving the following information:
Activity Cost Budgeted Product A Product B
Activity 1 $95,000 3,800 3,600
Activity 2 $70,000 5,300 6,300
Activity 3 $109,000 3,300 6,050
The annual production and sales level of Product B is 70,350 units.
First, we need to calculate the predetermined overhead rate for each activity cost pool. We will use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Activity 1= 95,000/ (3,800 + 3,600)= $12.84
Activity 2= 70,000/ (5,300 + 6,300)= $6.03
Activity 3= 109,000/ (3,300 + 6,050)= $11.66
Now, we need to calculate the total allocated overhead for product B:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Product B= 12.84*3,600 + 6.03*6,300 + 11.66*6,050= $154,756
Unitary overhead cost= 154,756/70,350= $2.2
If the tax elasticity of labor supply is 0.16, by what percentage will the quantity of labor supplied increase in response to Instructions: In part b, enter your response as a percentage rounded to one decimal place. a. A $500 per person income tax rebate check? A 4.5% increase A 2% increase A 1.5% increase No increase b. A reduction of 5 percent in marginal tax rates?
Answer:
If every work receives a tax rebate of $500 per person income tax the quantity of labor supplied will not increase because the rebate is a temporary
A 4.5% increase in marginal tax = 0.16 * 4.5 = 0.72 = 0.7 ( decrease in quantity of labor )
A 2% increase in marginal tax
= 0.16 * 2 = 0.32 = 0.3 ( decrease in quantity of labor )
A 15% increase
= 0.16 * 15 = 2.4 ( decrease in quantity of labor )
No increase = 0.16 = 0.16 ( quantity of labor supplied remains unchanged )
A reduction of 5%
= 0.16 * 5 = 0.8 ( increase in quantity of labor )
Explanation:
Tax elasticity of labor supply = 0.16
What percentage will the quantity of labor supplied increase in response to
A) $500 per person income tax rebate
percentage change in quantity supplied = (tax elasticity of supply) * (percentage change in tax rate ) If every work receives a tax rebate of $500 per person income tax the quantity of labor supplied will not increase because the rebate is a temporary measure and does not have an effect the tax rate in the long run.
B) A 4.5% increase in marginal tax
change in the quantity of labor = tax elasticity * increase marginal tax
0.16 * 4.5 = 0.72 = 0.7 ( decrease in quantity of labor )
A 2% increase in marginal tax
= 0.16 * 2 = 0.32 = 0.3 ( decrease in quantity of labor )
A 15% increase
= 0.16 * 15 = 2.4 ( decrease in quantity of labor )
No increase = 0.16 = 0.16 ( quantity of labor supplied remains unchanged )
A reduction of 5%
= 0.16 * 5 = 0.8 ( increase in quantity of labor )
Item 1 5 units Cost $50 Market $45 Item 2 7 units Cost $60 Market $65 Item 3 9 units Cost $30 Market $25 Applying the lower of cost or market method, the reported value of this company's ending inventory if LCM is applied to individual items is _____.
Answer:
Ending Inventory $870
Explanation:
Item #1 5 units Cost $50 Market $45 = 5 units x $45 = $225
Item #2 7 units Cost $60 Market $65 = 7 units x $60 = $420
Item #3 9 units Cost $30 Market $25 = 9 units x $25 = $225
Total inventory $225 + $420 + $225 = $870
For Items #3 and #1 As the market price ofthe items is lower than the historic cost (acquisition cost) of the good we shoudl decrease the valuation and use market price.
Each of the following situations occurred during 2011 for one of your audit clients:1. The write-off of inventory due to obsolescence.2. Discovery that depreciation expenses were omitted by accident from 2010's income statement.3. The useful lives of all machinery were changed from eight to five years.4. The depreciation method used for all equipment was changed from the declining-balance to the straight-line method.5. Ten million dollars face value of bonds payable were repurchased (paid off) prior to maturity resulting in a material loss of $500,000. The company considers the event unusual and infrequent.6. Restructuring costs were incurred.7. The Stridewell Company, a manufacturer of shoes, sold all of its retail outlets. It will continue to manufacture and sell its shoes to other retailers. A loss was incurred in the disposition of the retail stores. The retail stores are considered components of the entity.8. The inventory costing method was changed from FIFO to average cost.Required:1. For each situation, identify the appropriate reporting treatment from the list below (consider each event to be material):a. As an extraordinary item.b. As an unusual or infrequent gain or loss.c. As a prior period adjustment.d. As a change in accounting principle.e. As a discontinued operation.f. As a change in accounting estimate.g. As a change in accounting estimate achieved by a change in accounting principle.2. Indicate whether each situation would be included in the income statement in continuing operations (CO) or below continuing operations (BC), or if it would appear as an adjustment to retained earnings (RE). Use the format shown below to answer requirements 1 and 2
Answer:
Situations during 2011 at an Audit Client
A. Appropriate Reporting Treatments:
1. Write-off of inventory due to obsolescence.
a. As an extraordinary item.
2. Discovery that depreciation expenses were omitted by accident from 2010's income statement.
c. As a prior period adjustment.
3. The useful lives of all machinery were changed from eight to five years.
f. As a change in accounting estimate.
4. The depreciation method used for all equipment was changed from the declining-balance to the straight-line method.
g. As a change in accounting estimate achieved by a change in accounting principle.
5. Ten million dollars face value of bonds payable were repurchased (paid off) prior to maturity resulting in a material loss of $500,000. The company considers the event unusual and infrequent.
b. As an unusual or infrequent gain or loss.
6. Restructuring costs were incurred.
b. As an unusual or infrequent gain or loss.
7. The Stridewell Company, a manufacturer of shoes, sold all of its retail outlets. It will continue to manufacture and sell its shoes to other retailers. A loss was incurred in the disposition of the retail stores. The retail stores are considered components of the entity.
e. As a discontinued operation.
8. The inventory costing method was changed from FIFO to average cost.
d. As a change in accounting principle.
B. Inclusion in the Income Statement:
1. CO
2. RE
3. CO
4. RE
5. BC
6. BC
7. BC
8. CO
Explanation:
1. Investopedia.com defined "Unusual or infrequent items" as "gains or losses from a lawsuit; losses or slowdown of operations due to natural disasters; restructuring costs; gains or losses from the sale of assets; costs associated with acquiring another business; losses from the early retirement of debt; and plant shutdown costs."
2. Extraordinary gains or losses are economic events which originate from continuing infrequent and unusual operations. These gains and losses stem from the normal business activities of the company, but, they do not happen regularly, and are abnormal in nature.
3. A prior period adjustment is the correction of a past accounting error that occurred in the past financial statements.
4. According to investopedia.com, "A change in accounting principle is a change in how financial information is calculated, while a change in accounting estimate is a change in the actual financial information. Changes in accounting principles are done retroactively, where financial statements have to be re-stated. But, changes in estimates are not applied retroactively.