Answer:
B. less than the fixed costs saved.
Explanation:
A product line should NOT be discontinued if the contribution margin lost is "more than the fixed costs saved."
According to the economic rule, the product line should only be discontinued when the contribution margin lost is less than the fixed cost saved.
Also, this implies that the cost of production should be reduced or the production line discontinued.
However, when the contribution lost is more than the fixed cost saved, that shows profits.
Hence, in this case, it is concluded that the correct answer is option C. "more than the fixed costs saved."
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A company has net working capital of $2,204, current assets of $6,475, equity of $22,215, and long-term debt of $10,535. What is the company's net fixed assets?
Answer:
Net fixed assets is $30546.
Explanation:
Given the net working capital = $2204
The current assets of the company = $6475
The equity of the company = $22215
Long term debt of the company = $10535
Net Working Capital = Current Assets – Current Liabilities
2204 = 6475 – current liabilities
Current liabilities = 6475 – 2204 = 4271
Total assets = Current Liabilities + Long term Debt + Total Equity
= 4271 + 10535 + 22215
= $37021
Total Liabilities and Stockholders Equity = Total Assets
Total assets = $37021
Total Assets = Current Assets + Net Fixed Assets
37021 = 6475 + net fixed assets
Net fixed assets = 37021 – 6475 = $30546
Veronica Mars, a recent graduate of Bell’s accounting program, evaluated the operating performance of Dunn Company’s six divisions. Veronica made the following presentation to Dunn’s board of directors and suggested the Percy Division be eliminated. "If the Percy Division is eliminated," she said, "our total profits would increase by $26,500." The Other Five Divisions Percy Division Total Sales $1,663,000 $100,000 $1,763,000 Cost of goods sold 978,100 76,800 1,054,900 Gross profit 684,900 23,200 708,100 Operating expenses 529,000 49,700 578,700 Net income $155,900 $ (26,500 ) $129,400 In the Percy Division, cost of goods sold is $60,500 variable and $16,300 fixed, and operating expenses are $29,100 variable and $20,600 fixed. None of the Percy Division’s fixed costs will be eliminated if the division is discontinued. Is Veronica right about eliminating the Percy Division? Prepare a schedule to support your answer.
Wells Fargo & Company, headquartered in San Francisco, is one of the nation’s largest financial institutions. Suppose it reported the following selected accounts (in millions) as of December 31, 2017.
Retained earnings $41,563
Preferred stock 8,485
Common stock—$12/3 par value, authorized 6,000,000,000 shares; issued 5,245,971,422 shares 8,743
Treasury stock—67,346,829 common shares (2,450)
Paid-in capital in excess of par value—common stock 52,878
Required:
Prepare the stockholders’ equity section of the balance sheet for Wells Fargo as of December 31, 2017
Answer:
EQUITY AND LIABILITIES
EQUITY
Retained earnings $ 41,563
Preferred stock $ 8,485
Common stock - Issued $ 8,743
Treasury stock $ 2,450
Share Premium $ 52,878
Total Equity $114,119
Explanation:
The the stockholders’ equity section of the balance sheet shows the amount of capital invested by the shareholders in the business as well as the reserves that have been allocated to them.
Pendleton Company, a merchandising company, is developing its master budget for 2015. The income statement for 2014 is as follows:________.
Pendleton Company
Income Statement
For Year Ending December 31, 2014
Gross sales $2,000,000
Less: Estimated uncollectible accounts (40,000)
Net sales 1,960,000
Cost of goods sold (1,100,000)
Gross profit 860,000
Operating expenses (including $25,000
depreciation) (500,000)
Net income $360,000
The following are management's goals and forecasts for 2015:________.
1. Selling prices will increase by 6 percent, and sales volume will increase by 4 percent.
2. The cost of merchandise will increase by 3 percent.
3. All operating expenses are fixed and are paid in the month incurred. Price increases for operating expenses will be 10 percent. The company uses straight-line depreciation.
4. The estimated uncollectibles are 2 percent of budgeted sales.
Answer and Explanation:
The Preparation of budgeted functional income statement for 2015 is shown below:-
Pendleton Company
Budgeted functional income statement
For the year ended 2015
Particulars Amount
Sales revenue $2,204,800
($2,000,000 × 106% × 104%)
Less:
Estimated uncollectible accounts at 2% $44,096
Net sales revenue $2,160,704
Less: Cost of goods sold $1,178,320
($1,100,000 × 103% × 104%)
Gross Profit $982,384
Less: Operating expense $575,000
($500,000 + 10%) + $25,000
Net income $407,384
We simply deduct all expenses from the sales revenue so that the net income could come
On September 1, 2021, Middleton Corp. lends cash and accepts a $1,700 note receivable that offers 7% interest and is due in six months. How much interest revenue will Middleton Corp. report during 2021
Answer:
The interest revenue in 2021 is $39.44.
Explanation:
The amount of lending cash and accepting = $1700
Interest rate = 7% per annum
Therefore the interest rate per month = 7% / 12 = 0.58%
Now find the interest revenue by multiplying 1700 with per month interest rate and the number of months. Since the lending and accepting date is 1st September. So only 4 months remain in 2021.
The interest revenue in 2021 = 1700 × 0.58 ×4 = $39.44
Bryant Co. has $2.7 million of debt, $1 million of preferred stock, and $2.1 million of common equity. What would be its weight on preferred stock
Answer:
0.172
Explanation:
The computation of the weight on the preferred stock is shown below:
Weight on preferred stock is
= Preferred stock ÷(Debt + preferred stock + common equity)
= $1 million ÷ ($2.7 million + $1 million + $2.1 million)
= $1 million ÷ $5.8 million
= 0.172
By applying the above formula we can easily determine the weight on preferred stock
On January 1, 2020, Hi and Lois Company purchased 12% bonds having a maturity value of $300,000 for $322,744.44. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Hi and Lois Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.
Instructions
a. Prepare the journal entry at the date of the bond purchase.
b. Prepare a bond amortization schedule.
c. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020.
d. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2021.
Answer:
a. Prepare the journal entry at the date of the bond purchase.
January 1, 2020, bonds purchased at a premium
Dr Bonds receivable 300,000
Dr Premium on bonds receivable 22,744.44
Cr Cash 322,744.44
b. Prepare a bond amortization schedule.
Date Interest Cash Premium Unamortized Carrying
revenue received amortization premium value
1/1/20 - -322,744.44 - 22,744.44 277,255.56
1/1/21 32,274.44 36,000 3,725.56 19,018.88 280,981.12
1/1/22 31,901.89 36,000 4,098.11 14,920.77 285,079.23
1/1/23 31,492.08 36,000 4,507.92 10,412.85 289,587.15
1/1/24 31,041.23 36,000 4,958.77 5,454.08 294,545.92
1/1/25 30,545.92 336,000 5,454.08 0 0
c. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020.
Dr Interest receivable 36,000
Cr Interest revenue 32,274.44
Cr Premium on bonds receivable 3,725.56
(322,744.44 x 10%) - (300,000 x 12%) = 32,274.44 - 36,000 = 3,725.56
d. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2021.
Dr Interest receivable 36,000
Cr Interest revenue 31,901.89
Cr Premium on bonds receivable 4,098.11
(319,018.88 x 10%) - (300,000 x 12%) = 31,901.89 - 36,000 = 4,098.11
amortization year 3:
(314,920.77 x 10%) - (300,000 x 12%) = 31,492.08 - 36,000 = 4,507.92
amortization year 4:
(310,412.85 x 10%) - (300,000 x 12%) = 31,041.23 - 36,000 = 4,958.77
amortization year 5:
5,454.08
Sudoku Company issues 7,000 shares of $7 par value common stock in exchange for land and a building. The land is valued at $45,000 and the building at $85,000. Prepare the journal entry to record issuance of the stock in exchange for the land and building.
Answer:
The journal entry to record this exchange is :
Land $45,000 (debit)
Buildings $85,000 (debit)
Common Stocks $49,000 (credit)
Share Premium $81,000 (credit)
Explanation:
The price of Common Stock is equivalent to the price required to settle the Market Cost of Land and Buildings.
Also note that the Common Stocks have a par vale of $7, this means that any amount paid in excess of the par value is accounted in the Share Premium Reserve.
The journal entry to record this exchange is :
Land $45,000 (debit)
Buildings $85,000 (debit)
Common Stocks $49,000 (credit)
Share Premium $81,000 (credit)
Land $45,000
Building $85,000
To Common stock $49,000 (7,000 shares × $7)
To Premium on issue of common stock 81,000
(Being recording of the issuance of the stock in exchange for the land and building)
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Logan and Johnathan exchange land, and the exchange qualifies as like kind under § 1031. Because Logan's land (adjusted basis of $193,000) is worth $231,600 and Johnathan's land has a fair market value of $183,350, Johnathan also gives Logan cash of $48,250. a. Logan's recognized gain is $ . b. Assume that Johnathan's land is worth $208,440 and he gives Logan $23,160 cash. Logan's recognized gain is $ .
Answer:
a. Logan's recognized gain is $38,600
b. Logan's recognized gain is $23,160
Explanation:
a. If the worth of the land for Jonathan is $183,350, then the gain recognized by Logan would be;
the lower of the realized gain between the amount realized of $231,600 - adjusted basis of $193,000 = $38,600
or the fair market worth of the received boot i.e $48,250.
Therefore, Logan's recognized gain is $38,600
b. Suppose Jonathan's land is worth, $208,440, then we can calculate Logan's recognized gain to be ;
the lower of the realized gain I.e amount realized of $231,600 - adjusted basis $193,00 = $38,600
or the fair market value of the received boot I.e $23,160 .
Therefore, Logan's recognized gain is $23,160
On January 1, 2018, Dunbar Echo Co. sells a machine for $23,600. The machine was originally purchased on January 1, 2016 for $41,200. The machine was estimated to have a useful life of 5 years and a residual value of $0. Dunbar Echo uses straight-line depreciation. In recording this transaction:
Answer:
The answer is
Dunbar Echo Co will report a loss of $1,120
Explanation:
Straight-line depreciation = (cost of asset - salvage/residual value) ÷ number of useful life
Cost of asset - $41,200
Salvage/residual value - $0
Number of useful life - 5 years
$41,200/5
= $8,240
January 1, 2016 through January 1, 2018 is two years. So accumulated depreciation = $16,480($8,240 x 2)
Carrying value of the asset as at January 1, 2018 is
$41,200 - $16,480
=$24,720.
On this date, the asset was sold for $23,600.
Therefore, Dunbar Echo Co made a loss of $1,120($23,600 - $24,720)
In recording the transaction by Dunbar Echo Co. on January 1, 2018, the following journal entries will be made:
Journal Entries:
Debit Sale of Equipment $41,200
Credit Equipment $41,200
To transfer the Equipment to Sale of Equipment account.
Debit Accumulated Depreciation $16,480
Credit Sale of Equipment $16,480
To transfer the Accumulated Deprciation to Sale of Equipment.
Debit Cash $23,600
Credit Sale of Equipment $23,600
To record the cash receipts from the sale of equipment.
Debit Loss on Sale of Equipment $1,120
Credit Sale of Equipment $1,120
To record the loss on the sale of equipment.
Data and Calculations:
Selling price = $23,600
Cost of machine = $41,200
Estimated useful life = 5 years
Estimated residual value = $0
Accumulated depreciation = $16,480 ($8,240 x 2)
Sale of Equipment $41,200 Equipment $41,200
Accumulated Depreciation $16,480 Sale of Equipment $16,480
Cash $23,600 Sale of Equipment $23,600
Loss on Sale of Equipment $1,120 Sale of Equipment $1,120
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A citizen group raised funds to establish an endowment for the Eastville City Library. Under the terms of the trust agreement, the principal must be maintained, but the earnings of the fund are to be used to purchase database and periodical subscriptions for the library. A preclosing trial balance of the library permanent fund follows:
Trial Balance-December 31, 2017 Debits Credits
Cash $8,500
Investments 18,000
Additions to permanent endowments $510,000
Investment income 48,000
Expenditures-subscriptions 39,500
Intergovernmental grant 8,000
Net increase in fair value of investments 2,000
Accrued interest receivable 2,000
Accounts payable $568,000 $568,000
Required:
A. Prepare any closing entries necessary at year-end.
B. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the library permanent fund.
C. Prepare a balance sheet for the Library Permanent Fund (Use Assigned to Library for any spendable fund balance).
Answer:
a. Journal entries
Particulars Debit Credit
Revenue: Addition to permanent $510,000
endowment
Revenue investment income $48,000
Revenue : increase in fair value $8,000
of investment
Expenditure - subscription $39,500
Fund balance $526,500
b. Statement of revenue , expenditure , and changes in fund balance
Particulars Amount
Revenue
Addition to permanent endowment $510,000
Investment income $48,000
Increase in fair value of investment $8,000
Total revenue $566,000
Expenditure
Library subscription $-39,500
Net change in fund balance $526,500
Beginning fund balance 0
Ending fund balance $526,500
c. Balance sheet
Assets
Cash $8,500
Investments $5,18,000
Accrued interest receivable $2,000
Total assets $528,500
Liabilities and fund balance
Liabilities
Accounts payable $2,000.00
Fund balance
Non spendable permanent $510,000
fund principal
Assigned to library $16,500
($526,500 - $510,000)
Total fund balance $526,500
Total liabilities and fund balance $528,500
A pharmaceutical research firm prohibits the employees who leave the firm from soliciting business from former customers or clients for a period of two years. This best exemplifies the _____ clause.
Answer:
Non-piracy.
Explanation:
If a pharmaceutical research firm prohibits the employees who leave the firm from soliciting business from former customers or clients for a period of two years. This best exemplifies the non-piracy clause.
A non-piracy clause is a legal framework which provides protection for companies from an ex employee who has left. This clause states that ex employees are prohibited from soliciting business from former customers or clients either directly or indirectly for a period of two years.
For instance, if Joyce works for XYZ pharmaceutical company that uses a non-piracy clause and later dropped a resignation letter or was laid off for a disciplinary action, she's prohibited from taking contracts from XYZ' customers for a period of two (2) years.
Suppose that borrowing is restricted so that the zero-beta version of the CAPM holds. The expected return on the market portfolio is 17%, and on the zero-beta portfolio it is 8%. What is the expected return on a portfolio with a beta of .6?
Answer:
10.4%
Explanation:
The computation of expected return on a portfolio is shown below:-
Expected return = Risk Free return + 5%Beta ( Market Return - Risk Free return)
= 5% + 0.60 × (17% - 8%)
= 5% + 5.4%
= 10.4%
Therefore for computing the expected return on a portfolio with a beta of .6 we simply applied the above formula.
The market return less risk free return is known as market risk premium
The owner of a small business borrowed $70,000 with an agreement to repay the loan with quarterly payments over a five year time period. If the interest rate is 12% per year compounded quarterly, his loan payment each quarter is nearest to
Answer:
His loan payment each quarter is nearest to $4,705.10.
Explanation:
Using a Financial Calculator enter the following data and find PMT, the loan payment each quarter
Pv = $70,000
n = 4 × 5 = 20
r = 12%
P/yr = 4
Fv = $0
Pmt = ? - $4,705.10
Thus PMT, the loan payment each quarter will be $4,705.10.
The overhead costs for a company are presently $X per month. The management team of the company in cooperation with the employees is ready to implement a comprehensive improvement program to reduce these costs. If you (a) consider an observation of actual overhead costs for one month analogous to an output unit, (b) estimate the overhead costs for the first month of program implementation to be 1.15X due to extra front-end effort, and (c) consider a 90% improvement curve applicable to the situation, what is your estimate of the percentage reduction in present overhead costs per month after 30 months of program implementation
Answer:
31.42%
Explanation:
The computation of the estimate of the percentage reduction in present overhead costs per month is shown below:-
n = log s ÷ log2
= log 0.90 ÷ log 2
= -0.152
Now we will use the learning curve equation which is here below:
Z30 = 1.15X × 30^(-0.152)
= 0.685765148
So, the cost is reduced by
= 1 - 0.685765148
= 0.314234852
or
= 31.42%
Requirement 2. How will Bargain Central Furniture, Inc. report treasury stock on its balance sheet as of December 31, 2016? Bargain Central Furniture, Inc. will report treasury stock ▼ on the balance sheet as ▼ to total stockholders' equity.
Answer:
Treasury stock is a contra equity account that decreases stockholders' equity. It is generally reported at the end of the stockholders' equity section on the balance sheet with a negative amount (treasury stock has a debit balance and it is reported in the credit side). In this case, the balance of treasury stock = ($3,600)
Explanation:
Some information was missing and I decided to look it up. Hopefully it will be the same exact question, but if not, you can use it as an example and just adjust the numbers.
Bargain Central Furniture, Inc., completed the following treasury stock transactions:
a. purchased 1,300 shares of the company's $1 par common stock as treasury stock, paying cash or $6 per share.
b. sold 700 shares of the treasury stock for cash of $9 per share.
The journal entries should be:
Dr Treasury stock 7,800
Cr Cash 7,800
Dr Cash 6,300
Cr Treasury stock 4,200
Cr Additional paid in capital 2,100
Treasury stock balance $3,600
The following is information for Palmer Co.:
2017 2016 2015
Cost of goods sold $643,825 $426,650 $391,300
Ending inventory 97,400 87,750 92,500
Required:
(a) Use the above information to compute inventory turnover for 2016, and its days' sales in inventory at December 31, 2016.
Numerator / Denominator = Ratio
Inventory turnover $426,650 / $90,125 = 4.7 times
Days' sales in inventory ?
(b) Use the above information to compute inventory turnover for 2017, and its days' sales in inventory at December 31, 2017.
Numerator / Denominator = Ratio
Inventory turnover $643,825 / $92,575 = 7.0times
Days' sales in inventory ?
Answer:
a.
i. 4.7 times
ii. 77.1 days
b
i. 7 times
ii. 52.1 days
Explanation:
Inventory turnover = cost of goods sold / average inventory
average inventory for 2016 = ( 87,750 + 92,500 ) / 2 = $90,125
Inventory turnover $426,650 / $90,125 = 4.7 times
Days' sales in inventory = 365 / inventory turnover = 77.1 days
for 2017
inventory turnover = cost of goods sold / average inventory
average inventory for 2017 = ( 97,400 + 87,750 ) / 2 = $92,575
Inventory turnover $643,825 / $92,575 = 7.0 times
Days' sales in inventory = 365 / inventory turnover = 52.1 days
In the short run, what would indicate that a perfectly competitive firm is producing an output for which it is receiving a normal profit?
Answer: Price = Average Cost
Explanation:
I'm unsure if this question has options but this is the most probable reasons a firm in a Perfectly Competitive market would be receiving a normal profit in the Short run.
Normal Profit means that the company is making an Economic Profit of $0. For this to happen, the firm must need to be making the same.amount as it is spending on the goods that it is producing.
The amount it is spending is the Average Cost. When Price equals this Average Cost, the company is at Break-Even Point and so is making a $0 Economic profit which means it is only making Normal Profit.
For a company to make Economic Profit, the Price needs to be equal to the Marginal Cost.
Assume that on December 31, 2019, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage Company. The following information pertains to this lease agreement.
1. The agreement requires equal rental payments of $67,299 beginning on December 31, 2019.
2. The fair value of the building on December 31, 2019 is $492,571.
3. The building has an estimated economic life of 12 years, a guaranteed residual value of $10,500, and an expected residual value of $7,300. Kimberly-Clark depreciates similar buildings on the straight-line method.
4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor.
5. Kimberly-Clark’s incremental borrowing rate is 8% per year. The lessor’s implicit rate is not known by Kimberly-Clark.
a. Prepare the journal entries on the lessee’s books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019, 2020, and 2021. Kimberly-Clark’s fiscal year-end is December 31.
b. Suppose the same facts as above, except that Kimberly-Clark incurred legal fees resulting from the execution of the lease of $5,000, and received a lease incentive from Sheffield to enter the lease of $1,000. How would the initial measurement of the lease liability and right-of-use asset be affected under this situation?
Right-of-use asset
$:
c. Suppose that in addition to the $67,299 annual rental payments, Kimberly-Clark is also required to pay $5,000 for insurance costs each year on the building directly to the lessor, Sheffield Storage. How would this executory cost affect the initial measurement of the lease liability and right-of-use asset? (Round answer to 0 decimal places, e.g. 5,275.)
Lease liability $
d. Now suppose that, at the end of the lease term, Kimberly-Clark took good care of the asset and Sheffield agrees that the fair value of the asset is actually $10,500. Record the entry for Kimberly-Clark at the end of the lease to return control of the storage building to Sheffield (assuming the accrual of interest on the lease liability has already been made).
Answer:
a. Journal Entries:
1.Right to Use Asset (Dr.) $449,478
Lease Liability (Cr.) $449,478
(To record the lease)
2. Lease Liability (Dr.) 67,299
Cash (Cr.) 67,299
(To record the lease payment)
3. Amortization Expense (Dr.) 36,185
Right to Use Asset (Cr.) 36,185
(To record amortization of asset)
4. Lease Liability (Dr.) 36,085
Interest Expense (Dr.) 30,614
Cash (Cr.) 66,699
(To record Interest Expense)
Explanation:
Amortization expense is the annual lease payment less the PV of use of Asset.
The accounts receivable turnover measures a. the fair market value of accounts receivable b. how frequently during the year the accounts receivables are converted to cash c. the efficiency of the accounts payable function d. the number of days of accounts receivable outstanding
Answer:
b. how frequently during the year the accounts receivables are converted to cash
Explanation:
Accounts receivable turnover is an example of activity ratios.
Accounts receivable turnover = revenue / average receivables
it calculates how frequently receivables are converted into revenues.
a. Using the midpoint method, what is the price elasticity of demand from a price of $5.00 to a price of $4.00 per pack of 100 screws
Answer:
-9.09
Explanation:
Calculation for the price elasticity of demand
Using the midpoint method.
First step is to find the Demand
Demand = (120 - 0)/((120 + 0)/2) = 2
Demand =120/60
Demand =2
Second step is to find the Price
Price = (4 - 5)/((4 + 5)/2)
Price=- 1/4.5
= -0.22
Now let calculate for the price elasticity of demand
Using this formula
Price elasticity of demand =Demand/Price
Let plug in the formula
Price elasticity of demand=2/-0.22
Price elasticity of demand = -9.09
Therefore Using the midpoint method, the price elasticity of demand will be -9.09
Use the following information for Jett Co. to answer the following question: 2015 2014 Sales 1,200 1,000 COGS 850 700 Operating Expenses 200 200 Income Taxes 30 35 Jett Co.'s average tax rates for 2015 and 2014 are: A. 15.5% and 10.0% B. 20.0% and 35.0% C. 25.8% and 35.4%. D. 31.4% and 36.8%.
Answer:
B. 20.0% and 35.0%
Explanation:
Jett Co.'s Average tax rates for 2015 = Income taxes paid / Taxable income
When, Taxable Income = Sales - Cost of goods sold - Operating expenses
= $1,200 - $850 - $200
= $150
Hence, Jett Co.'s Average tax rates for 2015 = $30 / $150
= 20%
Jett Co.'s Average tax rates for 2014 = Income taxes paid / Taxable income
When Taxable Income = Sales - Cost of goods sold - Operating expenses
= $1,000 - $700 - $200
= $100
Hence, Jett Co.'s Average tax rates for 2014 = $35 / $100
= 35%
Because Toyota's investment eventually increases the level of R&D spending for his given level of sales revenue what would the effect on Toyota's return on invested capital (ROIC)?
Available Options Are:
a. Increasing ROIC by increasing return on sales
b. Decreasing ROIC by increasing return on sales
c. Decreasing ROIC by decreasing return on sales
d. Increasing ROIC by decreasing return on sales
Answer:
Option C. Decreasing ROIC by decreasing return on sales
Explanation:
The return on sales would be reduced as the research expenses have increased substantially. The implications of increased research expenses on the ROIC can be understood by analyzing the ROIC formula which is given as under:
ROCI = Operating Income (1 - Tax Rate) / Book Value of Invested Capital
As revenue expenditure (Research and Development expenses) of the company has increased, this would decrease the operating income of the company which means that the numenator would be decreased and as a result the ROCI would decrease.
A dentist shares an office building with a radio station. The electrical current from the dentist's drill causes static in the radio broadcast, causing the radio station to lose $10,000 in profits. The radio station could put up a shield at a cost of $30,000; the dentist could buy a new drill that causes less interference for $6,000. Either would restore the radio station's lost profits. What is the economically efficient outcome
Answer:
The dentist should get a new drill and it does not matter who pays for the new drill
Explanation:
Based on the information given the economically efficient outcome is that The dentist should get a new drill and it does not matter who pays for the new drill reason been that the building is been share by both the dentist and the radio station in which the electrical current from the dentist's drill was the one who causes static in the radio broadcast making them to lose some amount of money which means the dentist should go ahead and buy a new drill in which it does not matter who pays for the drill because they both shared the building .
Fischer Company identified the following activities, costs, and activity drivers.
Activity Expected Costs Expected Activity
Handling parts $425,000 25,000 parts in stock
Inspecting product $390,000 940 batches
Processing purchase orders $220,000 440 orders
Designing packaging $230,000 5 models
1. Compute a plantwide overhead rate assuming the company assigns overhead based on 70,000 budgeted direct labor hours.
B. Compute separate rates for each of the four activities using the activity-based costing.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Activity Expected Costs Expected Activity
Handling parts $425,000 25,000 parts in stock
Inspecting product $390,000 940 batches
Processing purchase orders $220,000 440 orders
Designing packaging $230,000 5 models
Total overhead= $1,265,000
First, we need to calculate a plantwide predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 1,265,000/70,000
Predetermined manufacturing overhead rate= $18.07 per direct labor hour
Now, we can determine the overhead rate for each activity:
Handling parts= 425,000/25,000= $17 per part
Inspecting product= 390,000/940= $414.89 per batch
Processing purchase orders= 220,000/440= $500 per order
Designing packaging= 230,000/5= $46,000 per model
The balanced scorecard approach relies not only on financial performance measures, but includes customers, internal business processes, and organizational learning and growth.
a. True
b. False
The Terrafugia Transition is a 19-foot, two-seater road-drivable, light-sport aircraft with an anticipated price of $279,000. The most likely prospective customers for this flying car would include:__________
Answer: executives for whom time is very essential and important
Explanation:
From the question, we are told that the Terrafugia Transition is a 19-foot, two-seater road-drivable, light-sport aircraft with an anticipated price of $279,000.
The most likely prospective customers for this flying car would be the executives as the price could only be afforded by the rich or those at the helm of affairs in their companies.
The flying car is noted for its speed therefore the executives will consider time as a very important factor when purchasing it.
Two equal-sized newspapers have an overlap circulation of 10% (10% of the subscribers subscribe to both newspapers). Advertisers are willing to pay $24 to advertise in one newspaper but only $45 to advertise in both, because they're unwilling to pay twice to reach the same subscriber. Suppose the advertisers bargain by teling each newspaper that they're going to reach agreement with the other newspaper, whereby they pay the other newspaper $21 to advertise. According to the nonstrategic view of bargaining, each newspaper would earn ____________ with the advertisers. The total gain for the two newspapers from reaching an agreement is $ of the $21 in value added by reaching an agreement _____________.
Suppose the two newspapers merge. As such, the advertisers can no longer bargain by telling each newspaper that they're going to reach agreement with the other newspaper. Thus the total gains for the two parties (the advertisers and the merged newspapers) from reaching an agreement with the advertisers are $21.
According to the nonstrategi argaining, each merged newspaper will earn ___________in an agreement with the advertisers. This gain to the merged newspaper is_____________than the total gains to the individual newspapers pre-meger.
Answer:
Each newspaper would earn $10.50 with the advertisers. The total gain for the two newspapers from reaching an agreement is $ of the $21 in value added by reaching an agreement $21
Each merged newspaper will earn $22.50 in an agreement with the advertisers.
The merged newspapes is GREATER
Explanation:
Each newspaper would earn $10.50 with the advertisers. The total gain for the two newspapers from reaching an agreement is $ of the $21 in value added by reaching an agreement $21
Each merged newspaper will earn $22.50 in an agreement with the advertisers.
The merged newspaper is GREATER
Below is the calculation:
1.$21/2=$10.50
2.$10.50+$10.50=$21
3.$45/2=$22.50
4. GREATER because $22.50 is greater than the total gains to the individual newspapers pre-meger of $21
Which term is defined as the most appealing trade-off or item given up as the result of an
economic decision?
Increasing cost
Opportunity cost
Recycled trade off
Economic trade off
Answer:
it could be the increase in cost due to economical well-being either the increase in debt or credit
You experiment by offering free warranties for your product in market A but not in market B. Sales in A rise from 240 to 360 units per week while sales in B rise from 410 to 430. The Difference-in-difference estimate of the effect of the free warranty is:
Answer:
Difference in difference estimate = 50 - 5% = 45 %
Explanation:
a) Data and Calculations:
Market A Market B
Sales 240 410
Sales rise 360 430
Rise difference 120 20
Percentage of rise 50% 5%
120/240 x 100 = 50%
20/41 x 100 = 4.878% or 5%
Therefore, the Difference in difference estimate = 50 - 5% = 45 %
One can then say that the free warranties in market A brought about a difference in difference of 45% in Market A when compared to the no warranties in Market B. This can be seen from the presented data. Sales in A rose from 240 units to 360 units, an increase of 120 units or 50%. Sales in market B only rose from 410 to 430, an increase of 20 units or 5%. This difference in difference estimator shows the effect of the free warranty on market A and market B. This means that the firm could do better by introducing the free warranties for its product in market B, all things being equal.