Answer:
they should buy the sub assemblies
Explanation:
The costs per unit are as follows:
Direct materials $1 Direct labor $10 Variable overhead $5 Fixed overhead $8 Total $24offer from an outside vendor = $17 per unit
non-avoidable fixed costs = $8 - $2 = $6
alternative 1 alternative 2 differential
keep producing purchase amount
purchase cost $0 $17 $17
avoidable costs $18 $0 ($18)
total $18 $17 ($1)
if the company decides to purchase the parts from an outside vendor it will save $1 per unit.
Donuld Trump thinks leadership is a position oriented activity where Justin Trudeau thinks leadership is a virtue that comes from inside.Do you think leadership is determined by position or it is a human nature that transcends position and authority? Explain your thoughts.
Explanation:
It is correct to say that there are people who are born with a more developed sense of leadership than others, but in return there are essential skills for leadership that can be developed with training and practice.
Therefore, the two situations are correct and depend mainly on the positioning of a person as the leader of a company, a country, etc.
A person who already has leadership characteristics such as strong communication and social appeal may find it easier to lead people, however, leadership can be determined by position and can be learned, if there is determination and an ethical basis.
What is essential in any leadership style is to act in accordance with ethics, legality and morality, to know how to exercise non-authoritarian communication, to be willing to listen, to teach and to share positive values in order to engage, motivate and encourage people.
Tax rates other than the current tax rate may be used to calculate the deferred income tax amount on the balance sheet if
Answer:
(A.) the future tax rates have been enacted into law.
Explanation:
In case when the rate of tax instead of the current tax rate used to compute the deferred amount related to income tax for the balance sheet if the rate of future tax is enacted in law i.e means when the future tax rate imposed under the taxation rules and regulations
Therefore option A is correct and the other options are incorrect
Which value rolls up the hierarchy to the manager for both customizable and collaborative forecasts?
A. Expected revenue
B. Product quantity
C. Opportunity amount
D. Quota amount
Answer:
A. Expected revenue
Explanation:
The expected revenue determines the production quantity. Thus, making the expected revenue the most important figure for making forecasts. This is why the production budget is not prepared until the sales forecast had been obtained. It is the sales forecast that will determine how much to produce or purchase. It also allies with that customer service mantra that "customer is king." Without sales, an organization cannot survive. Sales bring in the needed funds for improving financial performance and position. Even though, a company incurs costs first before making the sales, but in the order of hierarchy, sales determines everything, including every cost. All costs should be tied to sales.
The following data were reported by a corporation: Authorized shares 34,000 Issued shares 29,000 Treasury shares 10,500 The number of outstanding shares is:
Answer:
Number of outstanding shares is $18,500
Explanation:
Simply put, Number of outstanding shares is difference between number of shares issued and number of shares in treasury stock.
Hence, Outstanding shares = Shares issued - Treasury shares
= $29,000 - 10,500
= $18,500
The following data were reported by a corporation: Authorized shares 34,000 Issued shares 29,000 Treasury shares 10,500 The number of outstanding shares is Number of outstanding shares is $18,500. Simply put, Number of outstanding shares is difference between number of shares issued and number of shares in treasury stock Hence, Outstanding shares Shares issued - Treasury shares -$29,000-10,500 = $18,500.
Treasury shares are the shares that a corporation keeps in its own treasury. They could have come from a portion of the float and outstanding shares before being repurchased by the company, or they wouldn't have been possible issued to the public at all.
When a company buys back its own stock, the shares are designated as "treasury stock" and are decommissioned. Treasury stock isn't particularly valuable in and of itself. These stocks have no voting rights as well as do not pay dividends.
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When countries sell off state-owned enterprises and privatize them, it usually results in a(n) Multiple Choice increase in modernization by new investors. decline in productivity throughout the private sector. lack of accommodation of outside investors. continuing drain on future natural resources. instant change in political leadership.
Answer:
increase in modernization by new investors.
Explanation:
When countries sell off state-owned enterprises and privatize them, it usually results in an increase in modernization by new investors. This is because, new but private investors will want to earn quickly their Investment back, and in so doing, will pump adequate capital into the business, so as to attract customers and enhance iamge of the company.
Note also that:
1. Decline in productivity throughout the private sector can not be caused by sales of geovenrment assets to private investors.
2. Acquisition of government ownend assets can not leads to lack of accommodation of outside investors.
3. Sales of government assets can not continuing to drain on future natural resources. As this will even lead to money being spent somewhere else or wisely saved for future and cogent use.
4. Change in political leadership can not be caused by sales of government assets to probate imvestor(s).
For each of the following situations, select the best answer that applies to consolidating financial information subsequent to the acquisition date:
(A) Initial value method.
(B) Partial equity method.
(C) Equity method.
(D) Initial value method and partial equity method but not equity method.
(E) Partial equity method and equity method but not initial value method.
(F) Initial value method, partial equity method, and equity method.
_____1. Method(s) available to the parent for internal record-keeping.
_____2. Easiest internal record-keeping method to apply.
_____3. Income of the subsidiary is recorded by the parent when earned.
_____4. Designed to create a parallel between the parent's investment accounts and changes in the underlying equity of the acquired company.
_____5. For years subsequent to acquisition, requires the *C entry.
_____6. Uses the cash basis for income recognition.
_____7. Investment account remains at initially recorded amount.
_____8. Dividends received by the parent from the subsidiary reduce the parent's investment account.
_____9. Often referred to in accounting as a single-line consolidation.
_____10. Increases the investment account for subsidiary earnings, but does not decrease the subsidiary account for equity adjustments such as amortizations.
Answer:
1. Method(s) available to the parent for internal record-keeping - (A) Initial value method
2. Easiest internal record-keeping method to apply. - (F) Initial value method, partial equity method, and equity method.
3. Income of the subsidiary is recorded by the parent when earned. - (E) Partial equity method and equity method but not initial value method.
4. Designed to create a parallel between the parent's investment accounts and changes in the underlying equity of the acquired company. - (C) Equity method.
5. For years subsequent to acquisition, requires the *C entry. - (B) Partial equity method.
6. Uses the cash basis for income recognition. - (D) Initial value method and partial equity method but not equity method
7. Investment account remains at initially recorded amount. - (C) Equity method.
8. Dividends received by the parent from the subsidiary reduce the parent's investment account. - (E) Partial equity method and equity method but not initial value method.
9. Often referred to in accounting as a single-line consolidation. - (A) Initial value method
10. Increases the investment account for subsidiary earnings, but does not decrease the subsidiary account for equity adjustments such as amortizations - (A) Initial value method
Country Kitchen's cost of equity is 19.8 percent and its pretax cost of debt is 8.9 percent. What is the firm's weighted average cost of capital if its debt-equity ratio is 0.66 and the tax rate is 46 percent
Answer:
33.17%
Explanation:
WACC = (D/E) rd (1 - tax rate) + (E/D) re
(D/E) = Debt to equity ratio
rd = pretax cost of debt
(E/D) = equity to debt ratio
re = cost of equity
0.66 x 8.9 x 0.54 + 19.8 x 1.52 = 3.17 + 30 = 33.17%
When advertising a test product, should test locations in particular markets be isolated from media with a far reach, such as television?
Answer:
Yes
Explanation:
In a test scenario such as this one, the test locations should be isolated from media with a far reach, such as television. This is mainly due to the fact that if media advertising reaches areas outside the market being tested, it will eventually attract customers from outside the test population which will in term contaminate the data. This can lead to false results, such as a product selling more than it really will.
Which of the following accounting concepts states that an accounting transaction should be supported by sufficient evidence to allow two or more qualified individuals to arrive at similar measures
a. Matching
b. Stable monetary unit
c. Verifiability
d. Periodicty
Answer:
The correct answer is the option C: Verifiability.
Explanation:
To begin with, the accounting concept of "Verifiability" indicates that the accounts of a company are verifiable in the cases when those accounts are reproducible so that indicates that given the same data and assumpitions it is understandable that an independent accountant can produce the same result the company actually did. Therefore that the verifiability is the concept that states that an accounting transaction should be supported by sufficient evidence to allow two or more qualified accountants to arrive at similar measures as it said before.
The accounting concepts states that an accounting transaction should be option c. Verifiability
What is Verifiability?It represents that the accounts of a company are verifiable at the time when those accounts are produced again in order to provide the same data and assumption. So, that verifiability is the concept that states that an accounting transaction should be supported by enough evidence to permit two or more qualified accountants.
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Denmark Corporation's variance report for the purchasing department reports 1,000 units of material A purchased and 2,400 units of material B purchased. It also reports standard prices of $2 for Material A and $3 for Material B. Actual prices reported are $2.10 for Material A and $2.80 for Material B. Denmark should report a total price variance of
Answer:
Total material price variance= $380 favorable
Explanation:
Giving the following information:
Material A:
Purchase= 1,000 units
Purchase price= $2.1
Standard price= $2
Material B:
Purchase= 2,400 units
Purchase price= $2.8
Standard price= $3
To calculate the total material price variance, we need to use the following formula on each material:
Direct material price variance= (standard price - actual price)*actual quantity
Material A:
Direct material price variance= (2 -2.1)*1,000
Direct material price variance= $100 unfavorable
Material B:
Direct material price variance= (3 - 2.8)*2,400
Direct material price variance= $480 favorable
Total material price variance= -100 + 480
Total material price variance= $380 favorable
Angie Baden is studying for her accounting midterm examination. Identify for Angie the advantages and disadvantages of the corporate form of business organization.
Answer:
Find them and explanation below.
Explanation:
A corporation is a type of business that is collectively owned by shareholders. There are two types of corporations, namely; the C and S corporations.
The general advantages of the corporate form of business organization are;
1. Ease in sourcing capital: Capital can be easily gotten from shareholders who pool resources into the business.
2. Limited liability: The shareholders can only be affected up to the amount they contributed to the business. They would not be held accountable for the general loss in the business.
3. Continuous existence: Since the business is not owned by just one person, the death or exit of a shareholder would not affect the continued existence of the business.
4. Ease in transferring ownership: Stocks and bonds can be easily sold by a shareholder to another investor.
5. Absence of double taxation (for S corporation): Taxes are only charged at personal rates.
The disadvantages of a corporate form of business include:
1. Secluded management: The investors in the business may not be actively involved in decision making, thus leaving the business to just the managers.
2. Double taxation (for C corporation): Both the federal and state governments tax the income made the corporation. The shareholders are also taxed on the profit which they made from the business.
3. Expensive startup: It is quite expensive to start up a corporation.
4. Rigorous tax fillings: A lot of paperwork on tax filing is required by the state government.
5. The S corporation has a limited number of shareholders (just 100).
Toll booths on the New York State thruway are often congested because of the large number of cars waiting to pay. A consultant working for the state concluded that if service times are measured from the time a car stops in line until it leaves, service times are exponentially distributed with a mean of 2.7 minutes. What proportion of cars can get through the toll booth in less than 3 minutes?
Answer:
[tex]P(X < 3) = 67.14\%[/tex]
Therefore, 67.14% of the cars can get through the toll booth in less than 3 minutes.
Explanation:
A consultant working for the state concluded that if service times are measured from the time a car stops in line until it leaves, service times are exponentially distributed with a mean of 2.7 minutes.
Let X be a random variable. The service time has an exponential distribution with a mean of 2.7 minutes.
Mean = μ = 2.7 minutes
Decay rate = m = 1 /μ
Decay rate = m = 1/2.7
Decay rate = m = 0.371
The cumulative probability distribution function is given by
[tex]P(X < x) = 1 - e^{-mx}[/tex]
Where m is the decay rate and x < 3
So the proportion of cars that can get through the toll booth in less than 3 minutes is
[tex]P(X < 3) = 1 - e^{-0.371(3)}[/tex]
[tex]P(X < 3) = 1 - 0.3286[/tex]
[tex]P(X < 3) = 0.6714[/tex]
[tex]P(X < 3) = 67.14\%[/tex]
Therefore, 67.14% of the cars can get through the toll booth in less than 3 minutes.
Ionic Charge, is a newly organized manufacturing business that plans to manufacture and sell 60,000 units per year of a new product. The following estimates have been made of the company’s costs and expenses (other than income taxes).
Fixed Variable per Unit
Manufacturing costs:
Direct materials $25
Direct labor $15
Manufacturing overhead $500,000 $8
Period costs:
Selling expenses $2
Administrative expenses $300,000
Totals $800,000 $50
Required:
a. What should the company establish as the sales price per unit if it sets a target of earning an operating income of $700,000 by producing and selling 60,000 units during the first year of operations? (Hint: First compute the required contribution margin per unit.)
b. At the unit sales price computed in part a, how many units must the company produce and sell to break even? (Assume all units produced are sold.)
c. What will be the margin of safety (in dollars) if the company produces and sells 60,000 units at the sales price computed in part a?
Answer:
a. What should the company establish as the sales price per unit if it sets a target of earning an operating income of $700,000 by producing and selling 60,000 units during the first year of operations?
$64.50b. At the unit sales price computed in part a, how many units must the company produce and sell to break even?
55,173 unitsc. What will be the margin of safety (in dollars) if the company produces and sells 60,000 units at the sales price computed in part a?
$311,341.50Explanation:
variable costs per unit:
direct materials $25
direct labor $15
manufacturing overhead $8
selling expenses $2
total $50
fixed costs per unit:
manufacturing overhead $500,000
administrative expenses $300,000
total $800,000
assuming the company actually produces and sells the 60,000 units
units sold = (fixed costs + expected profits) / contribution margin
60,000 = $870,000 / contribution margin
contribution margin = $870,000 / 60,000 = $14.50
contribution margin = sales price - variable costs
$14.50 = sales price - $50
sales price = $50 + $14.50 = $64.50
break even point = fixed costs / contribution margin = $800,000 / $14.50 = 55,172.41 ≈ 55,173 units
margin of safety = current sales - break even point = (60,000 x $64.50) - (55,173 x $64.50) = $311,341.50
What are the portfolio weights for a portfolio that has 148 shares of Stock A that sell for $35 per share and 110 shares of Stock B that sell for $24 per share
Answer:
Weight A= 0.6624
Weight B= 0.3376
Explanation:
From the question above,
Stock A has 148 shares at $35
Stock B has 110 shares at $24
The first step is to calculate the total amount of value
= 148($35)+110($24)
= $5,180+$2,640
= $7,820
Therefore the weight of each stock can be calculated as follows
Weight A= 148($35)/$7,820
= $5,180/$7,820
= 0.6624
Weight B= 110($24)/$7,820
= $2,640/$7,820
= 0.3376
Hence the portfolio weights are 0.6624 and 0.3376 respectively.
A customer wishes to place a buy order for a security that has not been registered with the SEC. The security may be purchased if the security:
Complete Question:
A customer wishes to place a buy order for a security that has not been registered with the SEC. The purchase order can be filled if the security:
A. is exempt from SEC registration
B. is traded by at least 2 market makers
C. has been trading in the market for at least 1 year
D. is sold to professional investors
Answer:
Is exempt from SEC registration
Explanation:
The Securities and Exchange Commission (SEC) is a regulatory agency that is saddled with the responsibility of regulating the capital market and ensuring investors are well protected by making sure standard rules are followed.
If a customer wishes to place a buy order for a security that has not been registered with the Securities and Exchange Commission (SEC). The security may be purchased if the security is exempt from SEC registration.
By standard, the SEC states and implore investors to purchase only securities that are registered with the securities and exchange commission (SEC) or only when an exemption is made available. If securities have been trading for about a year or is being traded by a minimum of two companies, no exemption would be given by the SEC.
Also, there isn't any exemption for securities that is sold only to professional investors.
However, investors can purchase municipal and government securities even without it being registered with the securities and exchange commission.
In a nutshell, the customer can only purchase a security that has not been registered only if it is exempted from SEC registration.
When any two firms have both a high degree of market commonality and highly similar resources, a ______________ threat is present.
Answer: stronger, competitive
Explanation:
When there is a high identical resources base and and a high degree of market commonality between two firms ,this show that there is a stronger and competitive threat. It should be noted that despite this threat, there may be no competitive action.
A rival in the market may not want to attack a company that shares identical resources base because it can result into an intense battle. Also, attacking them can lead to more motivation and thereby produce a better quality product.
Identify which of the following lists of accounts would belong on the statement of retained earnings.
A. Dividends and Account Payable
B. Retained earnings and Dividends
C. Retained earnings and Cash
D. Service Revenue and Wages Expense
Answer:
B. Retained earnings and Dividends
Explanation:
Retained earnings can be defined as the amount of a business’s profits or net income which isn't distributed to shareholders as dividends but are rather reserved so that it can be reinvested subsequently into the business.
Simply stated, retained earnings of an organization is the profit or net income remaining after paying the shareholders their dividends, which can then be reinvested into the business again. These earnings can be used for fixed or capital expenditures such as buying a new equipment, servicing debt profile, researching and development of the company's products.
A statement of retained earnings is a financial document which is usually prepared by an organization for use by the public such as investors, lenders and creditors. Hence, the statement of retained earnings are typically recorded under the shareholder's equity in order to represent the relationship between the balance sheet and income statement. Also, it is important and required that the statement of retained earnings is prepared in accordance with the Generally Accepted Accounting Principles (GAAP).
The following lists of accounts would belong on the statement of retained earnings;
1. Retained earnings: an amount of money left as profits or accumulated net income.
2. Dividends: an amount of money being paid to shareholders from an organization's net income or profit.
The correct option is : B Retained earnings and Dividends
What is retained earnings?Retained earnings refers to the amount of net income left over for the business after it has paid out dividends to its shareholders. ·
It also refers to the portion of a company's profit that is held or retained from net income at the end of a reporting period and saved for future use.
These earnings can be used for fixed or capital expenditures such as buying a new equipment, servicing debt profile, researching and development of the company's products.
Therefore, Retained earnings and Dividends will belong on the statement of retained earnings.
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The Molding Department of Sheffield Company has the following production data: beginning work in process 25100 units (70% complete), started into production 475500 units, completed and transferred out 449400 units, and ending work in process 51200 units (30% complete). Assuming conversion costs are incurred uniformly during the process, the equivalent units for conversion costs are:
Answer:
Equivalent units= 464,760
Explanation:
Giving the following information:
beginning work in process 25100 units (70% complete)
completed and transferred out 449400 units
ending work in process 51200 units (30% complete).
To calculate the equivalent units for conversion costs, we need to use the following structure:
Beginning work in process = beginning inventory* %incompleted
Units started and completed = units completed - beginning WIP
Ending work in process completed= Ending WIP* %completed
=Number of equivalent units
Beginning work in process = 25,100*0.3= 7,530
Units started and completed = 449,400 - 7,530= 441,870
Ending work in process completed= 51,200*0.3= 15,360
= 464,760
Assume for a perfectly competitive firm, the market price of one box of tissues is $2. What is the marginal revenue when sales increase from 100 boxes to 200 boxes?
Answer:
The marginal revenue = $2
Explanation:
Firstly we calculate the value in dollars for the number of boxes sold
For 100 boxes, we have 100 * 2 = $200
For 200 boxes, we have 200 * 2 = $400
Mathematically, the marginal revenue = (cost of 200 boxes- cost of 100 boxes)/difference in quantity
= (400-200)/(200-100) = 200/100 = $2
Thus affirms the fact that for a perfectly competitive firm, marginal revenue MR = P (price)
" When marketing research came back with the observation that customers were staying away from his bookstore because of a lack of services like gift cards, return policies and doing special orders, David was shocked. "We have the most generous policies of any store in the region. What more do they want
When marketing research came back with the observation that customers were staying away from his bookstore because of a lack of services like gift cards, return policies and doing special orders, David was shocked. "We have the most generous policies of any store in the region. What more do they want? Nobody asks about them or uses them." David and his bookstore are likely suffering from a:
A. knowledge gap.
B. standards gap.
C. retail policy gap.
D. delivery gap.
E. communications gap.
Answer:
A. knowledge gap.
Explanation:
Knowledge gap is term in business or marketing which describes the difference between the customers' expectations of the service and the company's perception of those expectations.
Hence, knowledge gap arises when a management fails to understand exactly the expectations of customers.
Knowledge gap could occur due to various reasons, some of which are:
1. Lack or inadequate market research.
2. Lack of management and customer interaction.
3. Inability to heed customer complaints.
Hence, in this case, David and his bookstore are likely suffering from a KNOWLEDGE GAP.
The American chocolate wafer and cream cookie most of us know (and love?) is made by Nabisco and sold under the name
Oreo. But an earlier brand of chocolate wafer cream-filled cookie called HydroxTM was sold from 1908 until around 1999.
In 2008 a company called Leaf Brands that specializes in reviving disappeared food items decided to try to bring Hydrox
cookies back. The trademark by that time was owned by the cereal maker Kellogg. Someone from Leaf contacted Kellogg's
consumer affairs office and explained that he was a big fan of Hydrox cookies. He asked if the company had any plans to
bring it back. Kellogg's consumer affairs representative said "Sorry- no plans to ever revive the Hydrox brand." Does this
mean that Leaf Brands is free to use the Hydrox name? Please explain whether trademark law protects (or doesn't) a
trademark that is owned but no longer being used by a company.
Answer:
Leaf Brands is free to use the Hydrox name.
Explanation:
Trademark law protects the trademark that is registered and in use. However, it is not enough to use the trademark, it must be renewed every 10 years if it is in use. Whereas the trademark law allows the trademark to last in perpetuity, unlike copyrights and patents, Kellogg can only enjoy the protection of its trademark if it is renewed every 10 years as long as it continues to be in use.
By practice and in utterance, Kellogg had abandoned its Hydrox trademark. As such Leaf Brands is free to take it up and re-register and use it.
Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $86,670. The equlpment was expected to have a useful life of three years, or 6,480 operating hours, and a residual value of $2,430. The equipment was used for 1,200 hours during Year 1, 2,300 hours in Year 2, 1,900 hours in Year 3, and 1,080 hours in Year 4 Required:Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) units-of-output method, and (c) the double-declining-balance method. r A. Straight-line method Year AmountYear 1 21,060 Year 2 28,080Year 3 28,080Year 4 7,020 B. Units-of-output method Year Amount Year 1 15,600Year 2 29,900Year 3 24,700
Answer:
purchase cost $86,670
useful life 3 years, 6,480 operating hours
residual value $2,430
a. the straight-line method
depreciation expense per year = ($86,670 - $2,430) / 3 = $28,080
depreciation year 1 = $28,080 x 9/12 = $21,060 depreciation year 2 = $28,080 depreciation year 3 = $28,080 depreciation year 4 = $28,080 x 3/12 = $7,020b. units-of-output method.
depreciation per hour = ($86,670 - $2,430) / 6,480 = $13
depreciation year 1 = 1,200 x $13 = $15,600 depreciation year 2 = 2,300 x $13 = $29,900 depreciation year 3 = 1,900 x $13 = $24,700 depreciation year 4 = 1,080 x $13 = $14,040c. the double-declining-balance method.
depreciation year 1 = 2 x 1/3 x $86,670 x 9/12 = $43,335 depreciation year 2 = $14,445 + (2 x 1/3 x $28,890 x 9/12) = $28,090 depreciation year 3 = $4,815 + (2 x 1/3 x $9,630 x 9/12) = $9,630 depreciation year 4 = $1,605 + ($3,210 - $2,430) = $2,385Assume that the U.S. one-year interest rate is 3 percent and the one-year interest rate on Australian dollars is 6 percent. The U.S. expected annual inflation is 5 percent, while the Australian inflation is expected to be 7 percent. You have $100,000 to invest for one year and you believe that PPP holds. The spot exchange rate of an Australian dollar is $0.689. What will be the yield on your investment if you invest in the Australian market
Answer:
4%
Explanation:
you invest $100,000 today and purchase A$145,137.88
in one year, you will have A$152,394.78
since the PPP stands, the spot rate in one year should be:
0.703 US$ per A$ (since Australia's inflation rate is 2% higher than the US inflation rate, the Australian dollar will depreciate by 2%)
with your A$152,394.78, you can purchase $107,133.53
if you invested in the US instead, you would have $103,000
this means that your Australian investment yielded ($107,133.53 / $103,000) - 1 = 0.04 or 4%
On September 1, a company established a petty cash fund of $230. On September 10, the petty cash fund was replenished when there was $81 remaining and there were petty cash receipts for supplies, $53, and postage, $80. On September 15, the petty cash fund was increased to $320.
Required:
Prepare the journal entries, if any, required on September 1, September 10, and September 15. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
September 1, petty cash fund is established
Dr Petty cash fund 230
Cr Cash 230
September 10, petty cash expenses
Dr Supplies expense 53
Dr Postage expense 80
Dr Cash short and over 16
Cr Petty cash fund 149
September 10, petty cash is replenished
Dr Petty cash fund 149
Cr Cash 149
September 15, petty cash fund in increased
Dr Petty cash fund 90
Cr Cash 90
Suppose the economy had been producing at potential output but is now experiencing a recession. Which of the following are discretionary fiscal policies that could bring the economy closer to potential output?
a. .Raising interest rates
b. A tax increase
c. Additional spending on national park facilities
d. A tax cut
Answer: c. Additional spending on national park facilities
d. A tax cut
Explanation:
Recession is a contraction in the business cycle. During recession, there is a decline in the economic activity as aggregate demand will be reduced and spending by households also reduces.
The discretionary fiscal policies that could bring the economy closer to potential output is tax cut and an additional spending on national park facilities
At May 31, 2017, the accounts of Lopez Company show the following.
1. May 1 inventories - finished goods $12,600, work in process $14,700, and raw materials $8,200.
2. May 31 inventories - finished goods $9,500, work in process $15,900, and raw materials $7,100.
3. Debit postings to work in process were direct materials $62,400, direct labor $50,000, and manufacturing overhead applied $40,000.
4. Sales revenue totaled $215,000.
a. Prepare a condensed cost of goods manufactured schedule.
b. Prepare an income statement for May through gross profit
c. Indicate the balance sheet presentation of the manufacturing inventories on May 31, 2017
Answer:
a. cost of goods manufactured schedule.
Direct materials $62,400
Direct labor $50,000
Manufacturing overhead applied $40,000
Add Opening work in process Inventory $14,700
Less Closing work in process Inventory ($15,900)
Cost of goods manufactured $151,200
b. income statement for May
Sales Revenue $215,000
Less Cost of Goods Sold :
Opening finished goods Inventory $12,600
Add Cost of goods manufactured $151,200
Less Closing finished goods Inventory ($12,600) ($176,400)
Gross Profit $38,600
c.presentation of the manufacturing inventories
raw materials $7,100
work in process $15,900
finished goods $9,500
Total Inventory $32,500
Explanation:
a.Cost of Goods Manufactured schedule included all the manufacturing costs incurred during production.
b.The Income statement is used to calculate gross profit as Sale less Cost of Sales.
c.The manufacturing inventories are presented in the balance sheet in their older of liquidity starting with the least liquid category.
A store has 5 years remaining on its lease in a mall. Rent is $1,900 per month, 60 payments remain, and the next payment is due in 1 month. The mall's owner plans to sell the property in a year and wants rent at that time to be high so that the property will appear more valuable. Therefore, the store has been offered a "great deal" (owner's words) on a new 5-year lease. The new lease calls for no rent for 9 months, then payments of $2,600 per month for the next 51 months. The lease cannot be broken, and the store's WACC is 12% (or 1% per month).
A. Should the new lease be accepted? (Hint: Be sure to use 1% per month.)
B. If the store owner decided to bargain with the mall's owner over the new lease payment, what new lease payment would make the store owner indifferent between the new and the old leases?
C. The store owner is not sure of the 12% WACC. It could be higher or lower. At what nominal WACC would the store owner be indifferent between the two leases?
Answer:
A. Should the new lease be accepted?
No, since the PV of the new deal is much higher than the PV of the current deal.
current deal's PV = $1,900 x annuity factor (1%, 60 periods) = $1,900 x 44.40459 = $84,368.72
new deal's PV:
$2,600 x annuity factor (1%, 51 periods) = $2,600 x 39.79814 = $104,475.16
$104,475.16 / 1.01⁹ = $95,525.80
B. If the store owner decided to bargain with the mall's owner over the new lease payment, what new lease payment would make the store owner indifferent between the new and the old leases?
To determine which lease value would make the store owner indifferent between the two options, we have to determine the future value of the first 9 payments that are not paid. Then that value should be equal to the present value of the increase in rent for the next 51 months:
step 1, calculate future value of 9 payments:
F V = payment x [(1 + r)ⁿ - 1] / r
payment = $1,900 r = 1% n = 9F V = $1,900 x [(1 + 0.01)⁹ - 1] / 0.01 = $17,800
step 2, calculate the present value of the increase in rent:
PV = payment / {1 - [1 / (1 + r)ⁿ] / r}
payment = $17,800r = 1% n = 51PV = $19,674 / ({1 - [1 / (1 + 0.01)⁵¹]} / 0.01) = $17,800 / 39.8 = $447.24
the new lease payment for which the store owner would be indifferent = $1,900 + $447.24 = $2,347.24
C. The store owner is not sure of the 12% WACC. It could be higher or lower. At what nominal WACC would the store owner be indifferent between the two leases?
in order to determine at what WACC would the store owner be indifferent between both alternatives, I used an excel spreadsheet to determine the IRR of the differential amount between both lease amounts:
periods 1 - 9 = -$1,900
periods 10 - 50 = $700
this results in a monthly IRR = 2.74%
WACC = 2.74% x 12 = 32.88%
You decide to use your department store charge card .. a lot! After seven weeks you have racked up $1,400 of debt. Your minimum monthly payment is $45, and is paid at the end of each month. If the APR is 16.80%, how long will it take you to pay the loan off? (Assume that you make the minimum payment until the debt is entirely paid off.)
Answer:
41 months
Explanation:
For computing the time period we have to use the NPER formula i.e shown in the attachment
Given that,
Present value = $0
Future value = $1,400
Rate of interest = 16.80% ÷ 12 months = 1.4%
PMT = $45
The formula is shown below:
= NPER(Rate;PMT;PV;-FV;type)
The future value come in negative
So, after applying the above formula, the time period is 41 months
Bach Instruments Inc. makes three musical instruments: flutes, clarinets, and oboes. The budgeted factory overhead cost is $2,948,125. Overhead is allocated to the three products on the basis of direct labor hours. The products have the following budgeted production volume and direct labor hours per unit: Budgeted Production Volume Direct Labor Hours Per Unit Flutes 2,000 units 2.0 Clarinets 1,500 3.0 Oboes 1,750 1.5 a. Determine the single plantwide overhead rate.
Answer:
Predetermined manufacturing overhead rate= $391.78 per direct labor hour
Explanation:
Giving the following information:
Budgeted factory overhead= $2,948,125.
Direct labor hours:
Flutes= 2,000*2= 4,000
Clarinets= 1,500*3= 4,500
Oboes= 1,750*1.5= 2,625
Total direct labor hours= 7,525
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 2,948,125/7,525
Predetermined manufacturing overhead rate= $391.78 per direct labor hour
A structural engineering consulting company is examining its cash flow requirements for the next 6 years. The company expects to spend $18,000 two years from now, $22,000 three years from now, and $8,000 five years from now. What is the present worth of the planned expenditures at an interest rate of 10% per year, compounded semiannually
Answer:
The total present value of the expenditures= $36,136.7
Explanation:
Giving the following information:
Cash flows:
Cf2= $18,000
Cf3= $22,000
Cf5= $8,000
We need to calculate the present value of the planned expenditures at an interest rate of 10% per year, compounded semiannually.
i= 0.10/2= 0.05
We will use the following formula on each cash flow:
PV= FV/(1+i)^n
Cf2= 18,000/(1.05^4)= $14,808.65
Cf3= 22,000/(1.05^6)= $16,416.74
Cf5= 8,000/(1.05^10)= $4,911.31
The total present value of the expenditures= $36,136.7