Answer:
the effective interest rate is different
Explanation:
the nominal rate for both annuities is the same, 12% annual, but the compounding periods differ. One annuity is compounded semiannually while the other is compounded quarterly.
effective interest rate semiannual payments = (1 + 12%/2)² - 1 = 12.36%
effective interest rate quarter payments = (1 + 12%/4)⁴ - 1 = 12.55%
A-Rod Manufacturing Company is trying to calculate its cost of capital for use in making a capital budgeting decision. Mr. Jeter, the vice-president of finance, has given you the following information and has asked you to compute the weighted average cost of capital.
The company currently has outstanding a bond with a 10.6 percent coupon rate and another bond with an 8.2 percent rate. The firm has been informed by its investment banker that bonds of equal risk and credit rating are now selling to yield 11.5 percent. The common stock has a price of $60 and an expected dividend (D1) of $1.80 per share. The historical growth pattern (g) for dividends is as follows:
1.35
1.49
1.64
1.80
The preferred stock is selling at $80 per share and pays a dividend of $7.60 per share. The corporate tax rate is 30 percent. The flotation cost is 2.5 percent of the selling price for preferred stock. The optimum capital structure for the firm is 25 percent debt, 10 percent preferred stock, and 65 percent common equity in the form of retained earnings.
(a) Compute the historical growth rate. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole percent. Omit the "%" sign in your response.)
Growth rate %
(b) Compute the cost of capital for the individual components in the capital structure. (Round growth rate to nearest whole percent. Round your answers to 2 decimal places. Omit the "%" sign in your response.)
Cost of capital
Debt (Kd) %
Preferred stock (Kp)
Common equity (Ke)
(c) Calculate the weighted cost of each source of capital and the weighted average cost of capital. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "%" sign in your response.)
Weighted cost
Debt (Kd) %
Preferred stock (Kp)
Common equity (Ke)
Weighted average cost of capital (Ka) %
Answer:
PV = 1.35
FV = 1.8
n = 3
a. Growth rate = Rate(N, -PV, FV)
Growth rate = Rate(3, -1.35, 1.8)
Growth rate = 0.10
Growth rate = 10%
B. Cost of debt Kd (After tax) = 11.5%*(1-0.30) = 8.05%
Cost of preference share Kp = Dividend/Price = 7.6 /[80*(1 - 0.025)] = 9.74%
Cost of equity Ke = D1/P0+g = 1.8/60 + 0.1 = 0.03+0.1 = 0.13 = 13%
c. Source Weight A COC(%)(B) Weight cost of capital(A*B)
Debt 25% 8.05% 2.01%
Preferred stock 10% 9.74% 0.97%
Common stock 65% 13.00% 8.45%
Weighted average cost of capital 11.44%
The following materials standards have been established for a particular product: Standard quantity per unit of output 6.0 meters Standard price $ 19.00 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased 10,200 meters Actual cost of materials purchased $ 201,500 Actual materials used in production 9600 meters Actual output 1580 units What is the materials price variance for the month
Answer:
See below
Explanation:
First, we have to compute the actual price
Actual price = Actual cost of material purchased × Actual material purchased
= $201,500 ÷ 10,200 metres
= $19.75
Therefore,
Material price variance
= Actual quantity × (Actual price - Standard price)
= 10,200 × ($19.75 - $19)
= 10,200 × $0.75
= $7,650 favourable
Rusty has been experiencing serious financial problems. His annual salary was $100,000, but a creditor garnished his salary for $20,000; so the employer paid the creditor (rather than Rusty) the $20,000. To prevent creditors from attaching his investments, Rusty gave his investments to his 21-year-old daughter, Rebecca. Rebecca received $5,000 in dividends and interest from the investments during the year. Rusty transferred some cash to a Swiss bank account that paid him $6,000 interest during the year. Rusty did not withdraw the interest from the Swiss bank account. Rusty also hid some of his assets in his wholly owned corporation that received $150,000 rent income but had $160,000 in related expenses, including a $20,000 salary paid to Rusty. Rusty reasons that his gross income should be computed as follows:
Salary received $80,000
Loss from rental property ($150,000-$160,000) (10,000)
Gross income $70,000
Compute rustys correct gross income for the year, and explain any differences between your calculation and rusty
Answer:
Rusty annual salary was $100,000.
Rusty will not be taxed on the interest and dividend amount of $5,000 as Rebecca is the owner of the assets that is producing this income.
Secondly, Rusty will also need to report the $6,000 interest income. This has to be reported even though it has not been withdrawn.
Thirdly, he received $20,000 as salary from his wholly owned corporation.
Salary from employer $100,000
Salary from wholly owned corporation $20,000
Dividends and interest from the investments $0
Interest from Swiss bank account $6,000
Rental loss incurred $0
Gross income $126,000
Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $265,000, variable expenses of $141,600, and traceable fixed expenses of $66,800. The Alpha Division has sales of $575,000, variable expenses of $321,800, and traceable fixed expenses of $126,300. The total amount of common fixed expenses not traceable to the individual divisions is $126,200. What is the company's net operating income
Answer:
$57,300
Explanation:
Calculation to determine the company's net operating income
Sales $840,000
($265,000+$575,000)
Less Variable expenses $463,400
($141,600+$321,800)
Contribution margin $376,600
($840,000-$463,400)
Less Traceable fixed expenses $193,100
($66,800+$126,300)
Divisional segment margin $183,500
Less Common fixed expenses $126,200
Net Operating Income $57,300
Therefore the company's net operating income will be $57,300
Enterprise Solutions Inc. licenses its productivity software to Blackmon Company for $100,000, payable at contract inception. Enterprise agrees to provide semiannual software upgrades over the 5-year length of the contract to enable Blackmon to benefit from any technological advancement. Enterprise concludes that the software license is not distinct from the promised upgrades. Required: What journal entries are necessary for Enterprise to account for this transaction
Answer:
Date Account Titles & Explanation Debit Credit
Jan 1 Cash $100,000
Unearned Revenue $100,000
(To record the contract consideration in advance)
Dec 31 Unearned Revenue $20,000
Sales Revenue $20,000
($100,000/5 years)
(To record the annual expired transaction revenue)
Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 130 shares of its common stock on May 1 for $6,500. On July 1, it reissued 65 of these shares at $53 per share. On August 1, it reissued the remaining treasury shares at $48 per share. What is the balance in the Paid-in Capital, Treasury Stock account on August 2
Answer:
Fortune Company
There is a balance of ($65) in the Paid-in Capital, Treasury Stock account on August 2.
However, this balance will be transferred to the Additional Paid-in Capital account at year-end, since there are no outstanding shares for the Treasury Stock account.
Explanation:
a) Data and Calculations:
May 1 Repurchase of 130 shares (Treasury Stock) = $6,500
July 1 Reissue of 65 shares at $53 per share = (3,445)
August 1 Reissue of 65 shares at $48 per share = (3,120)
August 2, Balance in the Paid-in Capital = ($65)
b) The Treasury Stock account is a contra Paid-in Capital account which records transactions involving the repurchase and reissue of treasury shares. Treasury shares represent the company's own shares which are repurchased from its investors.
Carpet Woes. Beau went shopping at ABC Carpet. He saw some carpet he liked but could not make up his mind. The manager at ABC Carpet wrote down the proposed purchase price for him along with a statement that the price would be good for three months. Two months later Beau went back to ABC Carpet to purchase the carpet. Unfortunately, the price had gone up. Beau showed the manager his writing and guaranteed price, but the manager said that the offer was no longer good. Although he had to pay more than the ABC manager had initially promised, Beau proceeded to purchase his carpet from ABC Carpet, and he also contracted with ABC to do the installation. Unfortunately, Beau almost immediately started to have problems with the carpet. Beau told the sales manager of ABC Carpet that he was planning on bringing suit for breach of warranty. The sales manager, however, told him that the breach of warranty provisions only applied to sales of goods and that the carpet purchase was for installation, a service. Which of the following is true regarding the enforceability of the offer made by the manager at ABC Carpet?
a. Common law will be applied, not the UCC, because the contract was mixed.
b. The UCC will be applied, not common law because the contract was mixed.
c. The court will apply the predominant-purpose test to determine whether the predominant purpose of the contract was the sale of goods in which case the UCC would apply.
d. The court will apply the service-warranty test to determine whether the predominant purpose of the contract was the provision of a service in which case the UCC would apply.
Answer: The court will apply the predominant-purpose test to determine whether the predominant purpose of the contract was the sale of goods in which case the UCC would apply.
Explanation:
Based on the information given in the question, we should note that the court will apply the predominant-purpose test to determine whether the predominant purpose of the contract was the sale of goods in which case the UCC would apply.
We should note that under a predominant purpose test, it will apply when the transaction involved is Mena for goods sales and not for the service sales.
Letterheads _____.
should have a design that is different from the business card
contain the same information as a business card
convey information about an organization
and business cards should be of similar design
are rarely used by small businesses
(Multiple Answers)
I think it's "should have a design that is different from the business card"
Answer:
Convey information about an organization.
Contain the same information as a business card.
And business cards should be of similar design.
Explanation:
Those are the correct answers on Edge. Hope this helps!
Assume that the marginal propensity to consume is 0.75, net exports decline by $10 billion, and government spending increases by $20 billion. Given that there is no crowding out, the equilibrium gross domestic product can increase by a maximum of:_______
Answer: $40 billion
Explanation:
The change will be determined by the value of the Multiplier.
The Multiplier shows how much a change in government spending and exports will impart GDP.
Multiplier = 1 / ( 1 - MPC)
= 1 / ( 1 - 0.75)
= 4
Change in GDP = Multiplier * (Government spending + exports)
= 4 * (20 billion -10 billion)
= 4 * 10
= $40 billion
Selected information from Peridot Corporation's accounting records and financial statements for 2021 is as follows ($ in millions): Cash paid to acquire machinery $ 35 Reacquired Peridot common stock 56 Proceeds from sale of land 97 Gain from the sale of land 55 Investment revenue received 72 Cash paid to acquire office equipment 84 In its statement of cash flows, Peridot should report net cash outflows from investing activities of:
Answer:
Peridot should report net cash outflows from investing activities of $22 million.
Explanation:
Peridot corporation
Statement of cash flows
$ in millions
Purchase of machinery
($35)
Proceeds from sale of land
$97
Cash paid to acquire office
($84)
Net cash outflows from investing activities
($22)
• We ignored required common stock because it belongs to financing activities section of cash outflows. Gain from sale of land and investment revenue is for operating activities section of the cash flow
Netty is trying to decide what her niche product should be for her business, Handknit by Netty. She is considering two products, socks and sweaters. A pair of socks take on average 5 hours to knit. Sweaters take on average 15 hours to knit. The socks sell for $25 each and have a variable cost of $5. The sweaters sell for $95 and have a variable cost of $35. Netty has 1,000 hours available to knit. Which product should she produce and why
Solution :
The contribution margin per hour :
Particulars Socks Sweaters
Selling price 25 95
Variable cost 5 35
Contribution margin 20 60
Hours per unit 5 15
CM per hour 4 4
From here, we see that the contribution margin per unit of the resources are same for the two products. So Netty can produce either one of the product, i.e. either sweater or socks.
Either one because the two productsAnswer:
Explanation:
Plant-wide, department, and activity-cost rates. Acclaim Inc. makes two styles of trophies, basic and deluxe, and operates at capacity. Acclaim does large custom orders. Acclaim budgets to produce 10,000 basic trophies and 5,000 deluxe trophies. Manufacturing takes place in two production departments: forming and assembly. In the forming department, indirect manufacturing costs are accumulated in two cost pools, setup and general overhead. In the assembly department, all indirect manufacturing costs are accumulated in one general overhead cost pool. The basic trophies are formed in batches of 200 but be-cause of the more intricate detail of the deluxe trophies, they are formed in batches of 50.
The controller has asked you to compare plant-wide, department, and activity-based cost allocation.
Forming Department Basic Delux Total
$60,000 $35,000 $95,000
Direct manufacturing labor $30,000 $20,000 $50,000
Overhead costs Setup $48,000
General overhead $32,000
Assembly Department Basic Delux Total
Direct materials $50,000 $10,000 $15,000
Direct manufacturing labor 15,000 25,000 40,000
Overhead costs Setup
General overhead 40,000
Required:
a. Calculate the budgeted unit cost of basic and deluxe trophies based on a single plant-wide overhead rate, if total overhead is allocated based on total direct (Don't forget to include direct material and direct manufacturing labor cost in your unit cost calculation.)
b. Calculate the budgeted unit cost of basic and deluxe trophies based on departmental overhead rates, where forming department overhead costs are allocated based on direct manufacturing labor costs of the forming department and assembly department overhead costs are allocated based on total direct manufacturing labor costs of the assembly department
c. Calculate the budgeted unit cost of basic and deluxe trophies if Acclaim allocates overhead costs in each department using activity-based costing, where setup costs are allocated based on number of batches and general overhead costs for each department are allocated based on direct manufacturing labor costs of each department.
d. Explain briefly why plant-wide, department, and activity-based costing systems show different costs for the basic and deluxe trophies. Which system would you recommend and why?
Answer:
Acclaim Inc.
Basic Trophies Deluxe Trophies
Budgeted unit cost:
a. using single-plant o/h rate $17.60 $28.80
b. using departmental rates $17.42 $29.16
c. using ABC $18.26 $27.48
d. They show different costs because the overhead rates are based on different parameters.
I recommend ABC system. It is more fair because the overhead rates are based on product line's activity usage instead of an arbitrary figure.
Explanation:
a) Data and Calculations:
Basic Trophies Deluxe Trophies Total
Budgeted production 10,000 5,000 15,000
Batches 200 50 250
Basic Trophies Deluxe Trophies Total
Forming Department $60,000 $35,000 $95,000
Direct manufacturing labor $30,000 $20,000 $50,000
Assembly
Direct materials $5,000 $10,000 $15,000
Direct manufacturing labor 15,000 25,000 40,000
Total direct costs $110,000 $90,000 $200,000
Overhead costs 66,000 54,000 120,000
Total production costs $176,000 $144,000 $320,000
Budgeted production 10,000 5,000
Budget unit costs $17.60 $28.80
Overhead rate
Total overhead/total direct costs = $120,000/$200,000 = $0.60
Basic Deluxe Total
Trophies Trophies
Forming department:
Overhead costs Setup $48,000
General overhead $32,000
Total overhead costs $80,000
Overhead rate = $80,000/$145,000 = $552
Assembly department
General overhead $40,000/$55,000 = $0.727
Basic Trophies Deluxe Trophies Total
Forming Department $60,000 $35,000 $95,000
Direct manufacturing labor $30,000 $20,000 $50,000
Total direct costs $90,000 $55,000 $145,000
Overhead costs 49,680 30,360 80,040
Total departmental costs $139,680 $85,360 $225,040
Assembly
Direct materials $5,000 $10,000 $15,000
Direct manufacturing labor 15,000 25,000 40,000
Total direct costs $20,000 $35,000 $55,000
Overhead costs 14,540 25,445 39,985
Total departmental costs $34,540 $60,445 $94,985
Total production costs $174,220 $145,805 $320,025
Budgeted production 10,000 5,000
Budget unit costs $17.42 $29.16
Basic Trophies Deluxe Trophies Total
Forming Department $60,000 $35,000 $95,000
Direct manufacturing labor $30,000 $20,000 $50,000
Assembly
Direct materials $5,000 $10,000 $15,000
Direct manufacturing labor 15,000 25,000 40,000
Total overhead allocated $72,600 $47,400 $120,000
Total production costs $182,600 $137,400 $320,000
Budgeted production 10,000 5,000
Budget unit costs $18.26 $27.48
Overhead costs allocation:
Basic Deluxe Total
Trophies Trophies
Forming department:
Overhead costs Setup $48,000/250 $38,400 $9,600 $48,000
General overhead $32,000/$50,000 19,200 12,800 32,000
Assembly department
General overhead $40,000/$40,000 15,000 25,000 40,000
Total overhead allocated $72,600 $47,400 $120,000
makes a product with the following standards for direct labor and variable overhead: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct labor 0.20 hours $ 26.00 per hour $ 5.20 Variable overhead 0.20 hours $ 6.20 per hour $ 1.24 In November the company's budgeted production was 6500 units, but the actual production was 6300 units. The company used 1550 direct labor-hours to produce this output. The actual variable overhead cost was $8990. The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for November is:
Answer:
See
Explanation:
Given that;
Direct labor hours used to produce this output = 1,550
Actual variable overhead cost = $8,990
Variable overhead per hour = $6.2
The variable overhead rate variance for July is;
= Direct labor hours used to produce this out put × (Actual variable overhead rate per hour - Variable overhead per hour)
= 1,550 × ($8,990/1,550 - $6.2)
= 1,550 × ($5.8 - $6.2)
= 1,550 × (-$0.4)
= $620 favorable
Hughes Co. is growing quickly. Dividends are expected to grow at a rate of 22 percent for the next three years, with the growth rate falling off to a constant 5 percent thereafter. If the required return is 12 percent and the company just paid a $2.35 dividend, what is the current share price? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Answer: $53.94
Explanation:
Current share price is the present value of the dividends for the next 3 years and the terminal value in year 3.
Terminal value = D₄ / ( required return - growth rate)
= (2.35 * 1.22³ * 1.05) / (12 % - 5%)
= $64
D₁ = 2.35 * 1.22 = $2.867
D₂ = 2.867 * 1.22 = $3.49774
D₃ = 3.49774 * 1.22 = $4.2672428
Share price = (2.867 / (1 + 12%)) + (3.49774 / 1.12²) + (4.2672428 / 1.12³) + (64/1.12³)
= $53.94
You are the manager of a Midwestern tractor factory planning to produce one of two new products, a zero-turn riding lawn mower or a compact tractor. You learned in college that setting the right price for your new product will assist you in maximizing profits while maintaining a good relationship with your customers. You expect the demand for the mower to be 100,000 units and the demand for the tractor to be 2,000 units. The annual cost of carrying these products in inventory is $50 for a mower and $100 for a tractor.
1. What are the total revenues for the mowers for each order?
a. $12,110,000
b. $11,055,000
c. $12,400,000
d. $13,065,000
2. What are the total revenues for the tractors for each order?
a. $2,410,000
b. $2,529,000
c. $2,493,000
d. $2,730,000
Question Completion:
You estimate that the average variable cost (AVC) will be $100 for the mower and $1,000 for the tractor. The total fixed cost (TFC) will be $50,000 for the mower and $100,000 for the tractor. What is the total cost of the mowers for each order?
$17,000,000
$2,100,000
$10,050,000
$1,900,000
What is the total cost of the tractors for each order?
$600,000
$5,200,000
$2,100,000
$4,100,00
2. What is the average total cost of the mowers?
$190.28
$210.75
$100.50
$140.10
What is the average total cost of the tractors?
$1,800
$1,200
$2,000
$1,050
3. You consult with your colleagues, and you all agree that effective pricing can assist you in avoiding the serious financial problems that may occur if prices are too high or too low. If the price is high, you may price yourselves out of the market. If the price is low, you may be underpaid for your work. Consequently, you decide to employ a 30 percent markup. What is the new price of the mower?
$195.50
$230.20
$95.15
$130.65
What is the new price of the tractor?
$1,365
$2,050
$2,300
$1,000
4. What are the profits for the mower under this scenario?
$30.15
$50.20
$60.10
$25.50
What are the profits for the tractor?
$255
$520
$610
$315
5. What are the total revenues for the mowers for each order?
$13,065,000
$11,055,000
$12,400,000
$12,110,000
What are the total revenues for the tractors for each order?
$2,410,000
$2,529,000
$2,493,000
$2,730,000
Answer:
Mower Tractor
1. The total cost $10,050,000 $2,100,000
2. Average cost $100.50 $1,050
3. Selling price $130.65 $1,365
4. Profit $30.15 $315
5. Total Revenue $13,065,000 $2,730,000
Explanation:
a) Data and Calculations:
Mower Tractor
Average variable cost (AVC) $100 $1,000
The total fixed cost (TFC) $50,000 $100,000
Annual Demand 100,000 2,000
Annual carrying cost/unit $50 $100
Total costs: Mower Tractor
Variable cost $10,000,000 $2,000,000
(100,000*$100) (2,000*$1,000)
Fixed cost 50,000 100,000
Total cost $10,050,000 $2,100,000
Average cost $100.50 $1,050
Markup (30%)
Selling price $130.65 $1,365
Profit $30.15 $315
Total revenue $130.65 * 100,000 $1,365 * 2,000
= $13,065,000 $2,730,000
The Thomlin Company forecasts that total overhead for the current year will be $11,415,000 with 180,000 total machine hours. Year to date, the actual overhead is $7,948,000 and the actual machine hours are 88,000 hours. If the Thomlin Company uses a predetermined overhead rate based on machine hours for applying overhead, as of this point in time (year to date), the overhead is Round the factory overhead rate to the nearest dollar before multiplying by the number of hours.
a. $1,000,000 over
b. $1,000,000 under
c. $500,000 over
d. $500,000
Answer:
Underapplied overhead = $2,367,040
Explanation:
Predetermined overhead rate = Estimated overhead / Estimated activity
Predetermined overhead rate = $11,415,000 / 180,000
Predetermined overhead rate = $63.42 per MH
Applied overhead = Actual activity * Overhead rate
Applied overhead = 88,000 * $63.42 per MH
Applied overhead = $5,580,960
Overapplied/ (underapplied) = Actual overhead - Applied overhead
Underapplied overhead = $7,948,000 - $5,580,960
Underapplied overhead = $2,367,040
The market for apples is in equilibrium at a price of $0.50 per pound. If the government imposes a price ceiling in the market at $0.40 per pound: a. the price ceiling will not affect the market price or output. b. quantity supplied will increase. c. there will be a shortage of the good. d. quantity demanded will decrease.
Answer:
c. there will be a shortage of the good.
Explanation:
The market for apples is in equilibrium at a price of $0.50 per pound. If the government imposes a price ceiling in the market at a price of $0.40 per pound: c. there will be a shortage of the good.
The correct answer is - c. there will be a shortage of the good.
Reason -
At the equilibrium price, the demand = supply
If the price is increased by the equilibrium price then, there are more customers(i.e. quantity demanded is increase ) and there is shortage of goods (i.e quantity supplied will decrease)
So, the correct option is - c. there will be a shortage of the good.
Lance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are trading at well below par value. He has his eye on a bond issued by the Leisure Time Corporation. The $1,000 par value bond pays 6 percent annual interest and has 15 years remaining to maturity. The current yield to maturity on similar bonds is 11 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.
a. What is the current price of the bonds?
b. By what percent will the price of the bonds increase between now and maturity? (Round "PV Factor" to 3 decimal places, intermediate and final answers to 2 decimal places. Omit the "%" sign in your response.) Price increases by %
Answer:
Future value = FV = 1000
Annual interest = i = 0.06
Yield to maturity = y = 0.15
Number of years = N = 15
Annuity Value = A = 60
PV_IFA = 5.847
PV_IF = 0.1229
1. PV of interest = A*PV_IFA = 350.82
PV of principal = FV * PV_IF = 122.9
Bond Price = $473.72
2. Percent increase at maturity
Maturity Value $1,000.00
Current price $473.72
Dollar increase $526.28
What is the most likely reason a user would export data with the formatting in place
The fields will not have any errors.
The file will be much easier to read.
The file is automatically spellchecked.
O The columns are automatically alphabetized.
Answer:
B
Explanation:
I got it right
Answer: the file will be much easier to read
Explanation:
Henrietta, the owner of a very successful hotel chain in the Southeast, is exploring the possibility of expanding the chain into a city in the Northeast. She incurs $35,000 of expenses associated with this investigation. Based on the regulatory environment for hotels in the city, she decides not to expand. During the year, she also investigates opening a restaurant that will be part of a national restaurant chain. Her expenses for this are $53,000. She proceeds with opening the restaurant, and it begins operations on September 1. Determine the amount Henrietta can deduct in the current year for investigating these two businesses.
Answer:
Henrietta can deduct $35,000 for the expenses which she has incurred for the investigation.
Explanation:
Henrietta has incurred expenses for investigating the expenses about opening a new restaurant. She has incurred $35,000 of expense for the investigation about the expansion of its business. She can deduct this expense from her current business.
VI. Here we consider the paradox of saving one last time in the context of the AS-AD model. Suppose the economy begins with output equal to its natural level. Then there is a decrease in consumer confidence, as households attempt to increase their saving, for a given level of disposable income. a. In AS-AD and IS-LM diagrams, show the effects of the decline in consumer confidence in the short run and the medium run. Explain why curves shift in your diagrams. b. What happens to output, the interest rate, and the price level in the short run
Answer:
The solution to this question can be defined as follows:
Explanation:
In point a:
When consumer interest decreases, => consumers begin and save less and more, => MPC decreases; => the "IS" curve becomes flatter; => "IS" turns inside. Currently, 'AD' shows together all the goods and financial sector, => as the 'IS' curve adjusts inside the industry, => the 'AD' would also change to the left.
In point b:
Take into account the SR models of "IS-LM" and "AD-AS."
Therefore there is the case of a full job only at the beginning; => its optimum between "IS1" and "LM" in the "IS-LM" model; as well as the main equilibrium among "AD1" and "AS" in the "AD-AS" model "E1'," => the original equilibrium among "Y=Yf," "r=r1" and "P=P1." That now the consumer is reducing the confidence, => the 'IS' curve becomes shifting IMEI 'IS2,' => provided the 'LM' curve, that new balance is 'E2.' That's why the price in the SR is calculated, the AS will change =>, however, the AD also will shift the "AD2" side and "E2'" will become the equilibrium point in the "AD-AS" system, "r=r2 <r1" and "P=P1" throughout the new "Y=Y2 <Yf" balance.
Please find the graph file in the attachment.
A company received 500 applications for a specific position.30 were given an assignment test. Only 15 were invited to an interview. The yield ratio of passing the interview is
a.
75%
b.
20%
c.
50%
d.
25%
On the basis of the following production possibilities tables for two countries, North Cantina and South Cantina.
North Cantina Production Possibilities
A B C D E F
Capital Goods 5 4 3 2 1 0
Consumer Goods 0 10 18 24 28 30
South Cantina Production Possibilities
A B C D E F
Capital Goods 5 4 3 2 1 0
Consumer Goods 0 8 15 21 25 27
Refer to the tables. Suppose that resources in North Cantina and South Cantina are identical in quantity and quality. We can conclude that:_____.
A. North Cantina has better technology than South Cantina in producing consumer goods but not capital goods.
B. South Cantina has better technology than North Cantina in producing both capital and consumer goods.
C. North Cantina has better technology than South Cantina in producing both capital and consumer goods.
D. North Cantina is growing more rapidly than South Cantina.
Answer:
A
Explanation:
The Production possibilities frontiers is a curve that shows the various combination of two goods a company can produce when all its resources are fully utilised.
The PPC is concave to the origin. This means that as more quantities of a product is produced, the fewer resources it has available to produce another good. As a result, less of the other product would be produced. So, the opportunity cost of producing a good increase as more and more of that good is produced.
To determine which country has a better technology in production, the opportunity cost has to be calculated. The country with the lower opportunity cost has the better technology
At point B for North Cantina:
The opportunity cost of producing one 4 units of capital good = 10/4 = 2.5 units of consumer goods
The opportunity cost of producing 10 units of consumer good = 4/10 = 0.4 units of capital goods
At point B for South Cantina
The opportunity cost of producing one 4 units of capital good = 8/4 = 2units of consumer goods
The opportunity cost of producing 8 units of consumer good = 4/8 = 0.5 units of capital goods
South Cantina has a lower opportunity cost in the production of capital goods while North Cantina has a lower opportunity cost in the production of consumer goods
Nerrod Company sells its products at $720 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs:
Activity Cost Driver and Rate
Sales calls $510 per visit
Order processing $155 per order
Deliveries $50 per order + $0.50 per mile
Sales returns $65 per return and $3.00 restocking per unit returned
Nerrod Company has gathered the following data pertaining to activities it performed for two of its customers:
XBT NINTO
Number of orders 21 2
Number of parts per order 610 2,110
Sales returns:
Number of returns 4 10
Number of units returned 40 50
Number of sales calls 8 15
Miles per delivery 10 20
Shipping terms FOB, Factory FOB, Destination
What is Nerrod's total customer batch-level cost applicable to Ninto?
Answer:
Total allocated costs= $11,470
Explanation:
To allocate costs to product NINTO, we need to use the following formula:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Sales call= 510*15= 7,650
Order processing= 155*2= 310
Deliveries= 50*2 + 0.50*20= 110
Sales returns= 65*50 + 3*50= 3,400
Total allocated costs= $11,470
Adams Company manufactures two products. The budgeted per-unit contribution margin for each product follows: Super Supreme Sales price $ 95 $ 124 Variable cost per unit (58 ) (74 ) Contribution margin per unit $ 37 $ 50 Adams expects to incur annual fixed costs of $227,880. The relative sales mix of the products is 60 percent for Super and 40 percent for Supreme. Required Determine the total number of products (units of Super and Supreme combined) Adams must sell to break even. How many units each of Super and Supreme must Adams sell to break even
Answer:
Expected contribution as per sales mix = $37*0.60 + $50*0.40
= $22.20 + $20
= $42.20 per unit
Total number of products in total at break even point = Total fixed cost / Contribution per unit
= $227,880 / $42.20 per unit
= 5,400 units
How many units each of Super and Supreme must Adams sell to break even?
According to sales mix:
Super = 5,400 * 60% = 3,240 units
Supreme = 5,400 * 40% = 2,160 units.
Which one of the following statements is correct concerning the relationship between a levered and an unlevered capital structure? Assume there are no taxes.
a. At the break-even point, there is no advantage to debt.
b. The earnings per share will equal zero when EBIT is zero for a levered firm.
c. The advantages of leverage are inversely related to the level of EBIT.
d. The use of leverage at any level of EBIT increases the EPS.
e. EPS are more sensitive to changes in EBIT when a firm is unlevered
Answer:
a. At the break-even point, there is no advantage to debt.
Explanation:
In the case when we concerned about the relationship between the levered and an unlevered capital structure also there is no taxes so the statement i.e. correct is at the break even point we dont have an advantage with respect to the debt
Therefore the first option is correct
The statement about the relationship between a levered and an unlevered capital structure is valid in that debt has no advantage at the break-even point.
What is a break-even point?Break-even point is the market condition where there is no profit and no loss to the company.
Here, the total revenue and the total cost of the firm equals.
When it comes to the relationship between a levered and an unlevered capital structure, there are no taxes, hence the statement, i.e., correct, is that at the break-even point, we don't have a debt advantage.
Therefore, option A is correct.
Learn more about the break-even point, refer to:
https://brainly.com/question/15356272
Cordova, Inc., reported the following receivables in its December 31, 2020, year-end balance sheet: Current assets: Accounts receivable, net of $48,000 in allowance for uncollectible accounts $ 380,000 Interest receivable 21,100 Notes receivable 380,000 Additional information: The notes receivable account consists of two notes, a $120,000 note and a $260,000 note. The $120,000 note is dated October 31, 2020, with principal and interest payable on October 31, 2021. The $260,000 note is dated March 31, 2020, with principal and 10% interest payable on March 31, 2021. During 2021, sales revenue totaled $2,080,000, $1,940,000 cash was collected from customers, and $37,000 in accounts receivable were written off. All sales are made on a credit basis. Bad debt expense is recorded at year-end by adjusting the allowance account to an amount equal to 10% of year-end gross accounts receivable.
Required:
1. In addition to sales revenue, what revenue and expense amounts related to receivables will appear in Cordova’s 2021 income statement?
2. Calculate the receivables turnover ratio for 2021. (Round your answer to 2 decimal places.)?
Answer:
1) interest on $110,000 note = $21,000 - ($260,000 x 10% x 9/12) = $1,500
interest per month = $1,500 / 2 = $750
interest revenue = ($260,000 x 10% x 3/12) + ($750 x 10) = $14,000
ending gross accounts receivable = $380,000 + $2,080,000 - $1,940,000 = $520,000
bad debt expense = $520,000 x 10% = $52,000
interest revenue = $14,000
bad debt expense = $52,000
2) receivables turnover = sales / average accounts receivables = $2,080,000 / [($380,000 + $468,000)/2] = $2,080,000 / $424,000 = 4.91
Explanation:
g Financial statements are linked within and across periods in that a) The income statement and the balance sheet are linked via retained earnings b) The statement of cash flows is linked to the income statement as net income is a component of operating cash flows c) The statement of cash flows is linked to the balance sheet as the change in the balance sheet cash account reflects the net cash inflows and outflows for the period d) All of the above e) None of the above
Answer:
Financial statements are linked within and across periods in that
d) All of the above.
Explanation:
The linkage of all the financial statements can be traced to how they share interconnected information about the financial position and performance of an entity. The three more prominent financial statements include the income statement for the period, the statement of cash flows, and the balance sheet. While the income statement shows the financial performance by determining the profitability, the statement of cash flows concentrates on the inflow and outflow of cash, and the balance sheet shows the financial position, disclosing the assets, liabilities, and equity balances.
The Field Detergent Company sold merchandise to the Abel Company on June 30, 2016. Payment was made in the form of a noninterest-bearing note requiring Abel to pay $85,000 on June 30, 2018. Assume that a 10% interest rate properly reflects the time value of money in this situation.
Required: Calculate the amount at which Field should record the note receivable and corresponding sales revenue on June 30, 2016.
Answer:
$70,248
Explanation:
Calculation for the amount at which Field should record the note receivable and corresponding sales revenue on June 30, 2016
Using financial calculator to determine the PV of Note
Using this formula
PV of Note = Future value x PVF (i%, n)
Where,
Future value=85,000
n=2 year(2016-2018)
i= 10%
Let plug in the formula
PV Note= 85,000 x PVF (10%, 2)
PV Note= 85,000 x 0.82645
PV Note= $70,248
Therefore the amount at which Field should record the note receivable and corresponding sales revenue on June 30, 2016 is $70,248
On February 1, 2020, Bonita Industries factored receivables with a carrying amount of $645000 to Sandhill Co.. Sandhill Co. assesses a finance charge of 3% of the receivables and retains 5% of the receivables. Relative to this transaction, you are to determine the amount of loss on sale to be reported in the income statement of Bonita Industries for February. Assume that Bonita factors the receivables on a without recourse basis. The loss to be reported is
Answer:
$19,350
Explanation:
The finance charge is 3%. If the 5% retention is a non-refundable security, then the total loss would be 8% (3%+5%).
The nature of the retention is not given, so it is considered that it is refundable, then the total loss would be $19,350 ($645,000*3%).
Thus, the total loss to be reported is $19,350