Answer:
e. exists when a single seller experiences lower average total costs than any potential competitor.
Explanation:
A monopoly is a market structure which is typically characterized by a single-seller who sells a unique product in the market by dominance. This ultimately implies that, it is a market structure wherein the seller has no competitor because he is solely responsible for the sale of unique products without close substitutes. Any individual that deals with the sales of unique products in a monopolistic market is generally referred to as a monopolist.
For example, a public water supply company is an example of a monopoly because they serve as the only source of water provider to the general public in a society.
A natural monopoly exists when a single seller experiences lower average total costs than any potential competitor because of the very high start-up or initial cost and economy of scale.
Calculate the annual cash dividends required to be paid for each of the following preferred stock issues:
Required:
a. $3.30 cumulative preferred, no par value; 210,000 shares authorized, 146,000 shares issued. (The treasury stock caption of the stockholders' equity section of the balance sheet indicates that 40,653 shares of this preferred stock issue are owned by the company.) (Round your answer to 2 decimal places.)
b. 5%, $40 par value preferred, 293,000 shares authorized, 165,000 shares issued, and 72,725 shares outstanding. (Round your answer to 2 decimal places.)
c. 12.2% cumulative preferred, $100 stated value, $108 liquidating value; 81,000 shares authorized, 42,000 shares issued, 26,000 shares outstanding.
Answer:
Annual Cash Dividends
a. = $347,645.10
b. = $145,450
c. = $317,200
Explanation:
a) Data and Calculations:
1. $3.30 Cumulative Preferred Stock:
Authorized shares = 210,000
Issued shares = 146,000
Treasury shares = 40,653
Outstanding shares 105,347
Cash dividend = $347,645.10 ($3.30 * 105,347)
2. 5% Preferred Stock, $40 par value:
Authorized shares = 293,000
Issued shares = 165,000
Outstanding shares 72,725 * $40 = $2,909,000
Cash dividend = $145,450 ($2,909,000 * 5%)
3. 12.2% cumulative preferred, $100 stated value, $108 liquidating value:
Authorized shares = 81,000
Issued shares = 42,000
Outstanding shares 26,000 * $100 = $2,600,000
Cash dividend = $317,200 ($2,600,000 * 12.2%)
Define four functions of managenet
Answer:
The answer is below
Explanation:
The Four functions of management are:
1. Planning: this is the process of setting out a plan by the management team that involves the goals and the template or means to achieve those goals.
2. Organizing: this is a process of organizing the resources; both human and material resources, that are deemed essential to the realization of the set out plans or goals.
3. Leading: this is a process of ensuring all the team members work together to achieve the main goals or set out plans.
4. Controlling: this is a process that involves constant checking, evaluation, and monitoring activities to ensure the ongoing performance meets the actual plans and will eventually yield to the goal.
Lakeview Company completed the following two transactions. The annual accounting period ends December 31.
On December 31, calculated the payroll, which indicates gross earnings for wages ($64,000), payroll deductions for income tax ($6,400), payroll deductions for FICA ($4,800), payroll deductions for American Cancer Society ($2,400), employer contributions for FICA (matching), and state and federal unemployment taxes ($560). Employees were paid in cash, but payments for the corresponding payroll deductions have not yet been made and employer taxes have not yet been recorded.
Collected rent revenue of $5,700 on December 10 for office space that Lakeview rented to another business. The rent collected was for 30 days from December 12 to January 10 and was credited in full to Deferred Revenue.
Required:
1. & 2. Prepare the journal entries to record payroll on December 31, the collection of rent on December 10 and adjusting journal entry on December 31.
3. Show how any of the liabilities related to these items should be reported on the company’s balance sheet at December 31.
Answer: Check attachment and explanation.
Explanation:
a. The question has been solved. Check the attachment.
b. LAKEVIEW COMPANY
Balance sheet (Partial)
December 31
Current liabilities
FICA Payable=$4800 + $4800= $9600
Charitable contribution payable = $2400
Withheld income tax payable = $6400
State and Federal unemployment tax payable = $560
Unearned rent revenue = $5700 - $3800 = $1900
Total current liabilities = $20860
Joyce works hard and puts in many extra hours. For this, she can anticipate a pay raise, a promotion, or an expanded sales territory. However, getting a promotion is most important to Joyce. According to the useful guidelines of the ____ theory, Jim, her manager, must recognize that (1) she is putting in hard work and long hours to obtain a promotion, (2) what motivates Joyce will change over time, and (3) he must clearly show Joyce how to attain the desirable reward.
Answer:
Expectancy theory
Explanation:
Expectancy theory states that when an individual is faced with different choices they will be motivated in a certain way in choosing a particular option based on what they expect to be the result of the choice.
So behaviour is affected by perceived result or consequence of a particular choice.
In the given scenario Joyce works hard and puts in many extra hours, and getting a promotion is most important to Joyce.
So because of her expectations that manager must recognise that:
(1) she is putting in hard work and long hours to obtain a promotion,
(2) what motivates Joyce will change over time (if she does not get the promotion), and
(3) he must clearly show Joyce how to attain the desirable reward.
On March 31, 2021, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $17,000,000 in cash. The book values and fair values of Barney’s assets and liabilities were as follows:
Book Value FairValue
Current assets $ 6,000,000 $7,500,000
Property, plant, and equipment 11,000,000 14,000,000
Other assets 1,000,000 1,500,000
Current liabilities 4,000,000 4,000,000
Long-term liabilities 6,000,000 5,500,000
Required:
Calculate the amount paid for goodwill.
Answer:
the amount paid for goodwill is $3,500,000
Explanation:
The computation of the amount paid for goodwill is given below
But before that the net fair value of assets would be determined
Net fair value of assets purchased is
= ($7,500,000 + $14,000,000 + $1,500,000) - ($4,000,000 + $5,500,000)
= $13,500,000
Now Amount paid for goodwill is
= $17,000,000 - $13,500,000
= $3,500,000
Hence the amount paid for goodwill is $3,500,000
The following data relate to Ramesh Company’s defined benefit pension plan: ($ in millions) Plan assets at fair value, January 1 $ 780 Expected return on plan assets 78 Actual return on plan assets 62 Contributions to the pension fund (end of year) 136 Amortization of net loss 16 Pension benefits paid (end of year) 23 Pension expense 108 Required: Determine the amount of pension plan assets at fair value on December 31. (Enter your answers in millions. Amounts to be deducted should be indicated with a minus sign.
Answer:
$955 million
Explanation:
Calculation to Determine the amount of pension plan assets at fair value on December 31
(millions)
Plan Assets Beginning of the year $780
Actual return $62
Cash contributions $136
Less: Retiree benefits($23)
End of the year pension plan assets $955
Therefore the amount of pension plan assets at fair value on December 31 is $955 million
Carol and Dave each purchase 100 shares of stock of Burgundy, Inc., a publicly owned corporation, in July for $10,000 each. Carol sells her stock on December 31 for $8,000. Because Burgundy’s stock is listed on a national exchange, Dave can ascertain that his shares are worth $8,000 on December 31. Does the Federal income tax law treat the decline in value of the stock differently for Carol and Dave? Explain.
Answer:
See below
Explanation:
From the above information, we can deduce that the stock owned by Carol and Dave falls in value by $2,000 I.e ($10,000 - $8,000) ; it is to be noted that Carol solely has realised and recognized loss of $2,000.
Here, one of the cogent factors that determines whether a sale has taken place is if realization has been effected. Here, stock sold by Carol qualifies as a disposition while the decline in the value of stock sold by Dave does not qualify as disposition.
With regards to the foregoing, we can conclude that the federal income tax law treat the decline in the value of the stock differently for Carol and Dave.
C Corporation is investigating automating a process by purchasing a machine for $808,200 that would have a 9 year useful life and no salvage value. By automating the process, the company would save $141,000 per year in cash operating costs. The new machine would replace some old equipment that would be sold for scrap now, yielding $22,800. The annual depreciation on the new machine would be $89,800. The simple rate of return on the investment is closest to (Ignore income taxes.): Multiple Choice 11.28% 5.28% 6.52% 16.88%
Answer:
6.52%
Explanation:
According to the scenario, computation of the given data are as follows,
New machine cost = $808,200
Scrap sold = $22,800
Cost of investment = $808,200 - $22,800 = $785,400
Saving from new machine = $141,000
Annual depreciation of machine = $89,800
Net operating income = $141,000 - $89,800 = $51,200
Now we can calculate the rate of return by using following formula,
Simple rate of return = Net operating income ÷ Cost of Investment
= $51,200 ÷ $785,400
= 6.52%
Russell Retail Group begins the year with inventory of $50,000 and ends the year with inventory of $40,000. During the year, the company has four purchases for the following amounts.
Purchase on February 17 $ 205,000
Purchase on May 6 125,000
Purchase on September 8 155,000
Purchase on December 4 405,000
Required:
Calculate cost of goods sold for the year.
Answer:
COGS= $900,000
Explanation:
Giving the following formula:
Beginning inventory= $50,000
Ending inventory= $40,000
Purchase on February 17 $ 205,000
Purchase on May 6 125,000
Purchase on September 8 155,000
Purchase on December 4 405,000
Total= $890,000
To calculate the cost of goods sold, we need to use the following formula:
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 50,000 + 890,000 - 40,000
COGS= $900,000
Cala Manufacturing purchases land for $357,000 as part of its plans to build a new plant. The company pays $44,900 to tear down an old building on the lot and $66,374 to fill and level the lot. It also pays construction costs $1,616,200 for the new building and $102,019 for lighting and paving a parking area. Prepare a single journal entry to record these costs incurred by Cala, all of which are paid in cash.
Answer and Explanation:
The journal entry to record the given cost is shown below:
Land Dr ($357,000 + $44,900 + $66,374) $468,274
Building Dr $1,616,200
Land improvement Dr $102,019
To Cash $2,186,493
(being the cash paid is recorded)
Here land, building & land improvement is debited as it increased the assets and credited the cash as it decreased the assets
The Duerr Company manufactures a single product. All raw materials used are traceable to specific units of product. Current information for the Duerr Company follows:
Beginning raw materials inventory $27,000
Ending raw materials inventory 30,000
Raw material purchases 104,000
Beginning work in process inventory 39,000
Ending work in process inventory 49,000
Direct labor 129,000
Total factory overhead 104,000
Beginning finished goods inventory 79,000
Ending finished goods inventory 59,000
The company's cost of raw materials used, cost of goods manufactured and cost of goods sold is:________
Answer:
Results are below.
Explanation:
First, we need to calculate the direct material used:
Direct material used= beginning inventory + purchases - ending inventory
Direct material used= 27,000 + 104,000 - 30,000
Direct material used= $101,000
Now, the cost of goods manufactured:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 39,000 + 101,000 + 129,000 + 104,000 - 49,000
cost of goods manufactured= $324,000
Finally, the cost of goods sold:
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 79,000 + 324,000 - 59,000
COGS= $344,000
what is the role of the prosecutor in a civil case
A prosecutor is a legal representative of the prosecution in countries with either the civil case inquisitorial system, they represents the government in the case brought against the accused person
Answer:
same as the answer of her/him
Explanation:
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What is the most common workplace for people in the Finance cluster?
a school
at home
an office
a store
Answer:
An office
Explanation:
an office is the best option on this list.
Resources do not limit the number of needs and wants people
can
satisfy.
True or False
Answer:
False
Explanation:
Resources absolutely limit what can be accomplished and done. Just think of the timber industry. They want to cut down all trees they can to make a profit, but society needs to preserve natural forests so their cutting is limited.
Answer:
false
Explanation:
resources is a source that is generate form nature. the resources satisfy the wants because is the will no resource like - chair , table, food( that we cook) etc. we can't survive in this world. some examples for reading in school tables, chair are made form wood, which is a source .
Tex's Manufacturing Company can make 200 units of a necessary component part with the following costs: Direct Materials $240,000 Direct Labor 35,000 Variable Overhead 75,000 Fixed Overhead 40,000 If Tex's Manufacturing Company can purchase the component externally for $330,000 and only $15,000 of the fixed costs can be avoided, what is the correct make-or-buy decision
Answer:
Buy and save $35,000
Explanation:
The computation is shown below:
Particulars Make Buy
Direct Materials $240,000
Direct Labor $35,000
Variable Overhead $75,000
Fixed Overhead $15,000
Purchase cost $330,000
Total cost $365,000 $330,000
As we can see that the buying total cost is less than the total making cost so here we can buy the product as it saves the company by $35,000 ($365,000 - $330,000)
Prepare journal entries to record the following transactions for Sherman Systems. Purchased 6,000 shares of its own common stock at $35 per share on October 11. Sold 1,250 treasury shares on November 1 for $41 cash per share. Sold all remaining treasury shares on November 25 for $30 cash per share. 2. Prepare the stockholders' equity section after the October 11 treasury stock purchase.
Answer:
Revised Equity Section of Balance Sheet After October 11
Common Stock at par $820,000
Paid-in capital in excess of Par $266,000
Total Contributed Capital $1,086,000
Retained earnings $ 944,000
Total $2,030,000
Less: Treasury Stock ($ 210,000)
Total Stockholder's Equity $1,820,000
Treasury stock = 6,000 * 35
= $210,000
Which of the following statements regarding SPT and WSPT is INCORRECT?
a. SPT always assigns the highest priority to the job to lowest processing time.
b. SPT does not consider the weight differences among different jobs.
c. WSPT may not assign the highest priority to the job with the highest weight because it also considers the processing time information.
d. WSPT assigns the highest priority to the job with the LOWEST weight/processing time ratio.
Answer:
D
Explanation:
WSPT assigns the highest priority to the job with the LOWEST weight/processing time ratio.
Cook Company processes and packages frozen seafood. The year just ended was Cook's first year of business and they are preparing financial statements. The immediate issue facing Cook is the treatment of the direct labor costs. Cook set a standard at the beginning of the year that allowed two hours of direct labor for each unit of output. The standard rate for direct labor is $27 per hour. During the year, Cook processed 60,000 units of seafood for the year, of which 4,800 units are in ending finished goods. (There are no work-in-process inventories). Cook used 123,500 hours of labor. Total direct labor costs paid by Cook for the year amounted to $3,087,500.
Required:
a. What was the direct labor price variance and the direct labor efficiency variance for the year?
b. Assume Cook writes off all variances to Cost of Goods Sold. Prepare the entries Cook would make to record and close out the variances.
c. Assume Cook prorates all variances to the appropriate accounts. Prepare the entries Cook would make to record and close out the variances.
Answer:
Cook Company
a. The direct labor price variance and the direct labor efficiency variance for the year:
Direct labor price variance = (Actual rate - Standard rate) * Actual hours
= $247,000 Favorable
Efficiency variance = (Actual hours - Standard hours) * Standard rate
= $94,500 Unfavorable
b. If all variances are written off to the Cost of Goods Sold:
Journal Entries:
Debit Work in Process $247,000
Credit Direct labor variance $247,000
To record the favorable direct labor price variance.
Debit Direct labor variance $94,500
Credit Work in Process $94,500
To record the unfavorable direct labor efficiency variance.
Debit Direct labor variance $152,500
Credit Cost of Goods Sold $152,500
To close the direct labor price variance.
c. The appropriate accounts are not indicated, though they should be Raw materials, Work in Process, and Cost of Goods Sold. However, the ratios are not given for prorating.
Explanation:
a) Data and Calculations:
Standard direct labor hours per unit = 2
Standard rate per direct labor hour = $27
Production units = 60,000
Ending Finished goods = 4,800
Cost of goods sold units = 55,200
Actual direct labor hours used = 123,500
Standard hours = 120,000 (2 * 60,000)
Actual direct labor costs = $3,087,500
Actual direct labor price = $25 ($3,087,500/123,500)
Standard direct labor costs = $3,240,000 (120,000 * $27)
a. The direct labor price variance and the direct labor efficiency variance for the year:
Direct labor price variance = (Actual rate - Standard rate) * Actual hours
= ($25 - $27) * 123,500
= $247,000 Favorable
Efficiency variance = (Actual hours - Standard hours) * Standard rate
= (123,500 - 120,000) * $27
= $94,500 Unfavorable
b. If all variances are written off to the Cost of Goods Sold:
Analysis of Journal Entries:
Work in Process $247,000 Direct labor variance $247,000
Direct labor variance $94,500 Work in Process $94,500
Direct labor variance $152,500 Cost of Goods Sold $152,500
($247,000 - $94,500)
Two companies, A and B, both have $1 million in assets, earnings before interest and taxes (EBIT) of $160,000, and the same tax rate. Company A is all equity financed, and Company B is 50% debt financed and 50% equity financed. If Company B's pretax cost of debt is 8%, then Company A will have a ROA that is _____ and a ROE that is _____ than Company B's. a. Option D b. Option B c. Option A d. Option C
Question Completion with Options:
A) lower, higher
B) higher, higher
C) lower, lower
D) higher, lower
Answer:
Companies A and B
If Company B's pretax cost of debt is 8%, then Company A will have a ROA that is __higher___ and a ROE that is __lower___ than Company B's.
a. Option D
Explanation:
a) Data and Calculations:
Company A Company B
Assets $1,000,000 $1,000,000
EBIT 160,000 160,000
Tax rate = same
Equity 100% 50%
Debts 0% 50%
Equity $1,000,000 $500,000
Debts $0 $500,000
Pretax cost of debt 0% 8%
Interest expense $0 $40,000
Pretax income $160,000 $120,000
ROA (Return on assets) = Pretax income/Assets * 100
= 16% 12%
ROE (Return on equity) = Pretax income/Equity * 100
= 16% 24%
Water Source Inc. manufactures badminton rackets. The company estimates the following costs for the next year: Indirect factory wages $151,000 Supervisor salaries 56,000 Direct materials 221,000 Direct labor 149,000 Power and light 113,000 Depreciation of plant and equipment 74,000 Indirect materials 20,000 Insurance and property taxes 32,000 Determine the total factory overhead cost of the company.
Answer:
$446,000
Explanation:
Factory overhead are indirect costs incurred by a company during production which can not be easily be traced to units produced.
factory overhead cost calculation :
Indirect factory wages $151,000
Supervisor salaries $56,000
Power and light $113,000
Depreciation of plant and equipment $74,000
Indirect materials $20,000
Insurance and property taxes $32,000
Total $446,000
A new firm is developing its business plan. It will require $565,000 of assets, and it projects $452,800 of sales and $354,300 of operating costs for the first year. Management is quite sure of these numbers because of contracts with its customers and suppliers. It can borrow at a rate of 7.5%, but the bank requires it to have a TIE of at least 4.0, and if the TIE falls below this level the bank will call in the loan and the firm will go bankrupt. What is the maximum debt-to-assets ratio the firm can use
Answer:
58.11%
Explanation:
Sales = $452,800
Operating costs= 354,300
Operating Income (EBIT) = $98,500
TIE= 4.00
Maximum interest expense= EBIT/TIE= $24,625
Interest rate= 7.50%
Max. debt =Max interest/Interest rate = $328,333
Maximum debt ratio=Debt/ Assets= 58.11%
Calculate the opportunity cost of capital for a firm with the following capital structure: 30% preferred stock, 50% common stock and 20% debt.The firms has a cost of debt of 7.87%, a cost of preferred stock equal to 10.76% and a 13.91% cost of common stock. The firm has a 35% tax rate. You answer should be entered as a %, for example 15.48%
Answer:
11.21%
Explanation:
the opportunity cost of capital can be determined by calculating the weighted average cost of capital
WACC = [weight of equity x cost of equity[ + [weight of debt x cost of debt x (1 - tax rate)] + [weight of preferred stock x cost of preferred stock]
0.3 x 10.76 + (0.5 x 13.91) + (0.2 x 0.65 x 7,87)
3.228 + 6.955 + 1.231
11.21%
On January 1, 2019, Sunland Company purchased the following two machines for use in its production process.
Machine A: The cash price of this machine was $50,000. Related expenditures included: sales tax $3,700, shipping costs $100, insurance during shipping $60, installation and testing costs $70, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Sunland estimates that the useful life of the machine is 5 years with a $5,050 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.
Machine B: The recorded cost of this machine was $180,000. Sunland estimates that the useful life of the machine is 4 years with a $20,880 salvage value remaining at the end of that time period.
Prepare the following for Machine A. (Round answers to 0 decimal places, e.g. 2,125. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
1. The journal entry to record its purchase on January 1, 2019.
2. The journal entry to record annual depreciation at December 31, 2019.
No. Account Titles and Explanation Debit Credit 1.
Answer:
1. Purchase of Machine A (Dr.) $54,030
Cash (Cr.) $54,030
2. Depreciation Machine A (Dr.) $9,796
Accumulated depreciation (Cr.) $9,796
3. Depreciation Machine B (Dr.) $39,780
Accumulated depreciation (Cr.) $39,780
Explanation:
Machine A :
Cash price $50,000
Sales Tax $3,700
Shipping cost $100
Insurance $60
Installation and Testing $70
Oil and lubricants $100
Total cost of machine = $54,030
Depreciation = ( Cost - Salvage Value ) / Useful Life
Depreciation = ( $54,030 - 5,050 ) / 5 years = $9,796
Machine B :
Depreciation = ( 180,000 - 20,880 ) / 4 = $39,780
Lauer Corporation uses the periodic inventory system and has provided the following information about one of its laptop computers: Date Transaction Number of Units Cost per Unit 1/1 Beginning Inventory 220 $ 920 5/5 Purchase 320 $ 1,020 8/10 Purchase 420 $ 1,120 10/15 Purchase 260 $ 1,170 During the year, Lauer sold 1,050 laptop computers. What was ending inventory using the FIFO cost flow assumption
Answer:
$198,900
Explanation:
Ending inventory units = Available units for sale - Units sold
Ending inventory units = 220 + 320 + 420 + 260
Ending inventory units = 1,220.
Units sold = 1,050.
Ending inventory units = 1,220 - 1,050
Ending inventory units = 170
As per the FIFO cost flow assumption, sales comprise of units from beginning inventory and earlier purchases. Hence, ending inventory comprises units from latest purchases.
So, ending inventory of 170 units would be valued at the price from 10/15 purchases.
10/15 purchase price per unit = $1,170
Ending inventory value = 170 units x $1,170
Ending inventory value = $198,900
Assume a division of Hewlett-Packard currently makes 12,000 circuit boards per year used in producing diagnostic electronic instruments at a cost of $34 per board, consisting of variable costs per unit of $24 and fixed costs per unit of $10.
Further assume Sanmina-SCI offers to sell Hewlett-Packard the 12,000 circuit boards for $34 each.
If Hewlett-Packard accepts this offer, the facilities currently used to make the boards could be rented to one of Hewlett-Packard's suppliers for $46,000 per year.
In addition, $6 per unit of the fixed overhead applied to the circuit boards would be totally eliminated.
Calculate the net benefit (cost) to HP of outsourcing the component from Samina-SCI.
(Use a negative sign with your answer, if appropriate.)
Answer:
The net benefit is -$26,000
Explanation:
Given the above information,
The total cost of manufacturing 12,000 circuit boards
= 12,000 × $34
= $408,000
Total purchase price
= 12,000 × $34
= $408,000
Fixed overhead cost applied
= 12,000 × $6
= $72,000
The rental income = $46,000
Outsourcing cost
= Total purchase price + Fixed overhead cost applied - Rental income
= $408,000 + $72,000 - $46,000
= $434,000
Therefore, Net benefit
= Total cost of manufacturing - Outsourcing cost
=$408,000 - $434,000
= -$26,000
Gull Corp. is considering selling its old popcorn machine and replacing it with a newer one. The old machine has a book value of $5,000, and its remaining useful life is five years. Annual costs are $4,000. A high school is willing to buy it for $2,000. New equipment would cost $18,000 with annual operating costs of $1,500. The new machine has an estimated useful life of five years.
Should the machine be replaced?
Proposal to Replace Equipment
Annual Variable Costs - Present Equipment $
Annual Variable Costs - New Equipment
Annual Differential Decrease in Cost $
Number of Years Applicable
Total Differential Decrease in Cost $
Proceeds from Sales of Present Equipment $
Cost of New Equipment
Annual Net Differential Increase in Cost - New Equipment $
Answer: No. The machine shouldn't be replaced.
Explanation:
Proposal to Replace Equipment
Annual Variable Costs - Present Equipment = $4000
Less: Annual Variable Costs - New Equipment = $1500
Annual Differential Decrease in Cost = $2500
Number of Years Applicable = 5
Total Differential Decrease in Cost = $2500 × 5 = $12500
Proceeds from Sales of Present Equipment = $2000
Cost of New Equipment = $8000
Annual Net Differential Increase in Cost - New Equipment = $18000 - $2000 = $16000
The machine shouldn't be replaced as the total differential decrease in cost is less than the annual net differential increase in cost of the new equipment.
Waterway Corp. purchased machinery for $315,600 on May 1, 2020. It is estimated that it will have a useful life of 10 years, salvage value of $18,600, production of 237,600 units, and working hours of 25,000. During 2021, Waterway Corp. uses the machinery for 2,650 hours, and the machinery produces 30,300 units. From the information given, compute the depreciation charge for 2021 under each of the following methods.
a. straight line $_____:
b. Units-of-output $________:
c. Working Hours $______:
d. Sum-of-the-years-digits $_________:
e. Declining balance (use 20% as the annual rate).
Answer:
Waterway Corp.
a. straight line $__29,700___:
b. Units-of-output $__37,875___:
c. Working Hours $___31,482___:
d. Sum-of-the-years-digits $____48,600_____:
e. Declining balance (use 20% as the annual rate) = $54,704
Explanation:
Cost of machinery purchased on May 1, 2020 = $315,600
Estimated useful life = 10 years
Salvage value = $18,600
Depreciable amount = $297,000
Production units = 237,600
Working hours = 25,000
Straight-line method:
Annual Depreciation Expense = $29,700 ($297,000/10)
Production units:
Depreciation per unit = $1.25 ($297,000/237,600)
Working hours:
Depreciation per hour = $11.88 ($297,000/25,000)
Sum-of-the-years-digits = 55 years;
Depreciation per year = $5,400 ($297,000/55)
Declining balance rate = 20% (100/10 * 2)
During 2021:
Straight-line:
Depreciation expense = $29,700
Machine hours used = 2,650
Depreciation expense = 2,650 * $11.88
= $31,482
Production units = 30,300
Depreciation expense = 30,300 * $1.25
= $37,875
Sum-of-the-years-digits:
Depreciation expense = 9 * $5,400 = $48,600
Declining balance:
2020 = $315,600 * 20% * 8/12 = $63,120 * 8/12 = $42,080
2021 balance = $273,520
2021 Depreciation expense = $273,520 * 20% = $54,704
An investor deposits 50 in an investment account on January 1. The following summarizes the activity in the account during the year: DateValue Immediately Before DepositDeposit March 154020 June 18080 October 117575 On June 30, the value of the account is 157.50. On December 31, the value of the account is X. Using the time-weighted method, the equivalent annual effective yield during the first 6 months is equal to the (time-weighted) annual effective yield during the entire 1-year period. Calculate X.
Answer:
236.25
Explanation:
Calculation to determine X
First step is to calculate the 6 months Yield
6 month Yield=(40/40+20) (80/40+20) (157.60/80+80)+1)
6 month Yield=(40/60) (80/60) (157.60/160)-1
6 month Yield=5%
Second step is to calculate the Annual equivalent
Annual equivalent=(1.05)^2-1
Annual equivalent=10.25%
Third step is to calculate the 1 year yield
1 year yield=(40/50) (80/40+20) (175/80+80) (x/175+75)
1 year yield=(40/50) (80/60) (175/160) (x/250)-1
1 year yield=0.1025
Now Let calculate X
x(0.004667)=1+.1025
x(0.004667)=1.1025
x=1.1025/0.004667
x=236.25
Therefore X is 236.25
The chapter explained why exporters cheer when their home currency depreciates. At the same time, domestic consumers find that they pay higher prices, so they should be disappointed when the currency becomes weaker. Why do the exporters usually win out, so that governments often seem to welcome depreciations while trying to avoid appreciations? (Hint: Think about the analogy with protective tariffs.)
Answer:
Exporters usually win out when their home currency depreciates because it increases demand for the exported products.
Explanation:
The foreign consumers find that the prices of the imports are now reduced because of the depreciation of the exporting nation's currency. The impact is reduced cost of importation for the importing consumers. When prices fall, demand tends to increase relative to supply. For any government that wants to encourage exports for earning foreign exchange, it will always work hard to avoid currency appreciation so that consumers from the importing nation are not discouraged or made to develop alternatives.
Exporters usually win out when their home currency depreciates because the depreciation increases the demand of the exported products.
When the prices fall, demand of the products and goods tend to increase. When the home currency depreciates, this will leads to higher demand of goods from other countries so the exporters produce and exports more goods and earn more money.
The government also wants to encourage exports in order to earn foreign exchange so that's why the exporters as well as the government cheers when their home currency depreciates.
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Ingraham Inc. currently has $820,000 in accounts receivable, and its days sales outstanding (DSO) is 54 days. It wants to reduce its DSO to 35 days by pressuring more of its customers to pay their bills on time. If this policy is adopted, the company's average sales will fall by 15%. What will be the level of accounts receivable following the change? Assume a 365-day year.
Answer: 451759.29
Explanation:
To solve the question, we need to calculate the current sales. This will be calculated by using the formula:
DSO = (Account receivable × 365) / Sales
54 = 820000 × 365 / Sales
Sales = 820000 × 365 / 54
Sales = 5542593
After the new policy, the expected sales will be:
= 5542593 × (1 - 15%)
= 5542593 × (1 - 0.15)
= 5542593 × 0.85
= 4711204.5
The level of accounts receivable following the change will be:
DSO = (Account receivable × 365) / Sales
35 = Account receivable × 365 / 4711204.5
Account receivable = 35 × 4711204.5 / 365
Account receivable = 451759.29