Answer:
Results are below.
Explanation:
Giving the following information:
Fixed costs= $192,000
Unitary variable cost= $320 per week
Selling price per unit= $480 per week
To calculate the total cost, we need to use the following formula:
Total cost= fixed costs + unitary variable cost*number of units
Total cost= 192,000 + 320*number of weeks
Now, the total revenue:
Total revenue= selling price per week*Number of weeks
Total revenue= 480*x
Finally, the break-even point in units:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 192,000 / (480 - 320)
Break-even point in units= 1,200 campers
Manson Industries incurs unit costs of $6 ($4 variable and $2 fixed) in making an assembly part for its finished product. A supplier offers to make 15,000 of the assembly part at $5 per unit. If the offer is accepted, Manson will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving, if any, Manson will realize by buying the part.
Answer:
The decision should be to make the part
Explanation:
Variable cost of manufacturing = 15000x4 = 60000
Fixed cost of manufacturing = 15000 x 2 = 30000
Purchase cost = 15000x5 = 75000
Total annual cost of making = 60000 + 30000 = $90000
Total annual cost of buying is 30000 + 75000 = $105000
90000 - 105,000 = -15000
This shows that manson's cost savings would decrease by -15000
So instead of buying, it is better to make.
Gilligan Co.'s bonds currently sell for $1,230. They have a 6.75% annual coupon rate and a 15-year maturity, and are callable in 6 years at $1,067.50. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future. Under these conditions, what rate of return should an investor expect to earn if he or she purchases these bonds, the YTC or the YTM? Select the correct answer. a. 3.20% b. 3.47% c. 4.01% d. 2.93% e. 3.74%
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Stock Options
On December 30, 2014, Yang Corporation granted compensatory stock options for 5,000 shares of its $1 par value common stock to certain of its key employees. The options may be exercised after 2 years of employment. Market price of the common stock on that date was $30 per share and the option price was $30 per share. Using a fair value option pricing model, total compensation expense is determined to be $80,000. The options are exercisable beginning January 1, 2017, providing those key employees are still in the employ of the company at the time the options are exercised. The options expire on January 1, 2018.
Instructions:
Prepare the following selected journal entries for the company on the answer sheet (if no entry required, state "no entry").
(1) December 30, 2014.
(2) December 31, 2015.
(3) January 1, 2017, assuming 90% of the options were exercised at that date.
(4) January 1, 2018, for the 10% of the options that expired.
Answer:
Date Account Titles Debit Credit
Dec 30, 14 No entry on Grant Date
Dec 30, 15 Compensation expense $40000
Paid in capital- stock options $40000
Dec 30, 16 Compensation expenses $40000
Paid in capital- stock options $40000
Jan 1, 17 Cash (30*5000*90%) $135000
Paid in capital- stock options $72000
(80000*90%)
Common stock (5000*90%*1) $4500
Paid in capital $202500
Jan 1, 18 Paid in capital- stock options $8000
Paid in capital- expired stock options $8000