Answer:
$1.86
Explanation:
Preference shares get first preference when dividends are being paid. So, out of the dividend declared, we first payoff Preference dividends then the remainder goes to Common Stock holders.
Cash Dividend = $900,000
Preference Dividends
Preference Stockholders receive a fixed dividend calculated as :
Dividend = 40,000 shares x $320 x 5 % = $640,000
Dividend per share = $640,000 / 40,000 = $16.00
Common Stockholders Dividends
Remainder = $900,000 - $640,000 = $260,000
Dividend per share = $260,000 / 140,000 = $1.86
Conclusion :
Dividends per share paid to the common stockholders is $1.86
The Baldwin Company has just purchased $40,900,000 of plant and equipment that has an estimated useful life of 15 years. Suppose at the end of 15 years this plant and equipment can be salvaged for $4,090,000 (1/10th of its original cost). What will be the book value of this purchase (excluding all other Plant and Equipment) after its first year of use
Answer:
$38,446,000
Explanation:
Straight line method charges a fixed amount of depreciation for the period the asset is in used in the business
Depreciation expense = (Cost - Residual Value) ÷ Estimated useful life
therefore,
Depreciation expense = $2,454,000
Book Value = Cost - Accumulated Depreciation
therefore for first year,
Book Value = $40,900,000 - $2,454,000 = $38,446,000
Conclusion
The book value of this purchase (excluding all other Plant and Equipment) after its first year of use is $38,446,000
¿Por que muchas culturas tuvieron la necesidad de construir muebles? explique
Answer:
Los muebles tenían muchos adornos de flores y árboles. Las piezas solían ser asimétricas y tenían líneas curvas. La mayoría de los fabricantes usaban caoba y nogal, con un acabado pulido. La mayoría de las piezas eran muy caras porque se producían a mano
Explanation:
que lo que pienso espero sea de ayuda
Venture capital required rate of return. Blue Angel Investors has a success ratio of with its venture funding. Blue Angel requires a rate of return of for its portfolio of lending, and the average length on its loans is years. If you were to apply to Blue Angel for a $ loan, what is the annual percentage rate you would have to pay for this loan?
Complete Question:
Venture capital required rate of return. Blue Angel Investors has a success ratio of 10% with its venture funding. Blue Angel requires a rate of return of 20% for its portfolio of lending, and the average length on its loans is 5 years. If you were to apply to Blue Angel for a $100,000 loan, what is the annual percentage rate you would have to pay for this loan?
Answer:
Blue Angel Venture Capital
The annual percentage rate to be paid for this loan is:
= 38%
Explanation:
a) Data and Calculations:
Blue Angel Loan = $100,000
Required rate of interest = 20%
Average length of Blue Angel loan = 5 years
Success ratio of venture funding = 10%
Annual loss sustained from loan = 20% * (100% - 10%)
= 20% * 90%
= 18%
Therefore the annual percentage rate to be paid for this loan is:
38% (20 + 18%)
b) The implication is that the required rate of return expected by Blue Angel will be weighed by its failure rate of 90%. This indicates additional cost of loan. Therefore, the total annual percentage rate is the addition of the required rate of return and the rate of loss sustained.
Identify which of the following are primary activities and which are support activities in a value chain. Review Later A Inbound movement of materials Sales and promotion of products/services Management of cash inflows and outflows Movement of final products to customers Acquisition of materials from external source Quality assurance, control systems and work culture Maintenance of products Research and development Primary activities Support activities
Answer:
According to Michael Porter's value chain, Primary Activities are meant to create more value than they cost so that the company makes a profit while the support activities are meant to support the primary activities.
Primary Activities include:
Inbound movement of materials Sales and promotion of products/services Movement of final products to customers Maintenance of productsSupport Activities
Management of cash inflows and outflowsAcquisition of materials from external sourceQuality assurance, control systems and work culture Research and developmentProblem 10-18 Return on Investment (ROI) and Residual Income [LO10-1, LO10-2] "I know headquarters wants us to add that new product line," said Dell Havasi, manager of Billings Company’s Office Products Division. "But I want to see the numbers before I make any move. Our division’s return on investment (ROI) has led the company for three years, and I don’t want any letdown." Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to the divisional managers who have the highest ROIs. Operating results for the company’s Office Products Division for this year are given below: Sales $ 10,000,000 Variable expenses 6,000,000 Contribution margin 4,000,000 Fixed expenses 3,200,000 Net operating income $ 800,000 Divisional average operating assets $ 4,000,000 The company had an overall return on investment (ROI) of 15% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $1,000,000. The cost and revenue characteristics of the new product line per year would be: Sales $2,000,000 Variable expenses 60% of sales Fixed expenses $640,000
Solution :
Income on new line
Contribution (2,000,00 x40%) 800,000
Less fixed expense - 640,000
Net operating income 160,000
Particulars Present New line Total
Sales 10,000,000 2,000,000 12,000,000
Net operating income 800,000 160,000 960,000
Operating assets 4,000,000 1,000,000 5,000,000
Margin 8% 8% 8%
ROI 20.00% 16.00% 19.20%
Residual income = net operating income - (average assets x minimum rate or return)
Particulars Present New line Total
Operating assets 4,000,000 1,000,000 5,000,000
Minimum required return 12 % 12 % 12 %
Min net operating income 480,000 120,000 600,000
Actual net operating income 800,000 160,000 960,000
Residual income 320,000 40,000 360,000
Return on investment is the profitability or the performance measurement tool that determines the percentage of returns being gained from total investments. It determines the efficiency of the investment and its project to generate higher returns from its operations.
The residual income is the net income in the hands of the business after the payment of all operating and nonoperating expenses and other payments.
The total return on investment inclusive of the present and the new line is 19.20%.
The total residual income is $360,000.
The computation of the return on investment is computed in the table attached below.
The formula for determining the residual income is:
[tex]\begin{aligned}\text{Residual Income}&=\text{Net Operating Income}-\left(\text{Average assets}\times\text{Minimum Rate of Return} \right ) \end{aligned}[/tex]
The entire computation of the residual income is attached in the image below.
To know more about return on investment, refer to the link:
https://brainly.com/question/13575981
Factory Overhead Volume Variance Dvorak Company produced 5,100 units of product that required 3.5 standard hours per unit. The standard fixed overhead cost per unit is $2.50 per hour at 18,750 hours, which is 100% of normal capacity. Determine the fixed factory overhead volume variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Answer:
$2,250 Favourable
Explanation:
Calculation to determine the fixed factory overhead volume variance
Fixed factory overhead volume variance=$2.50 × [18,750 hrs. – (5,100 units × 3.5 hrs.)]
Fixed factory overhead volume variance=$2.50×[18,750 hrs. – 17,850 hrs]
Fixed factory overhead volume variance=$2.50×900
Fixed factory overhead volume variance=$2,250 Favourable
Therefore the fixed factory overhead volume variance will be $2,250 Favourable
The following statements provide some analysis of policy regarding the global financial crisis of the late 2000s. Categorize each statement as positive or normative. Statement Positive or Normative?
a. The financial crisis was caused by faulty mathematical models that encouraged excessive risk taking.
b. The lack of effective regulation contributed to a risk-seeking culture in the financial services industry.
c. Central banks should have imposed tighter regulations on banks to prevent the financial crisis.
d. Executives of banks that received financial assistance from the government should not have received bonuses.
Answer:
Positive statement
Positive statement
normative statement
normative statement
Explanation:
Positive Economics is objective and statements are usually based on facts and economic theory. They can be tested.
For example, the statement - the lack of effective regulation contributed to a risk-seeking culture in the financial services industry- can be test empirically
Normative economics is based value judgements, opinions and perspectives. For example, the statement - Central banks should have imposed tighter regulations on banks to prevent the financial crisis- is based on opinion. Everyone would have an opinion on what the Central bank should have done
Rockwood Industries has 100 million shares outstanding, a current share price of $25, and no debt. Rockwood's management believes that the shares are under-priced, and that the true value is $30 per share. Rockwood plans to pay $250 million in cash to its shareholders by repurchasing shares. Management expects that very soon new information will come out that will cause investors to revise their opinion of the firm and agree with Rockwood's assessment of the firm's true value. Assume that Rockwood is not able to repurchase shares prior to the market becoming aware of the new information regarding Rockwood's true value. If Rockwood repurchases the shares following the release of the new information, then the number of shares outstanding following the repurchase is closest to:_______
A. $30.00
B. $31.50
C. 28.75
D. $30.60
Answer:
D. $30.60
Explanation:
A step by step approach is provided below to determine the shares value after repurchase.
Number of Shares Repurchased = $250 million / $25 per share
Number of Shares Repurchased = 10 million shares
The total number of shares outstanding after repurchase are 90 Million (100 million - 10 million).
Value of the firm before repurchase = $30 x 100 million shares = $3,000 million
Value of the firm after repurchase = $3,000 million - $250 million = $2,750 million
Price per share after repurchase = $2,750 million / 90 million shares = $30.56 per share
Thomson Co. produces and distributes semiconductors for use by computer manufacturers. Thomson Co. issued $900,000 of 10-year, 7% bonds on May 1 of the current year at face value, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year.
May 1. Issued the bonds for cash at their face amount.
Nov. 1. Paid the interest on the bonds.
Dec. 31. Recorded accrued interest for two months.
Required:
Journalize the entries to record the above selected transactions for the current year.
Answer:
May 1
Cash $900000 Dr
Bonds Payable $900000 Cr
November 1
Interest Expense $31500 Dr
Cash $31500 Cr
Dec 31
Interest Expense $10500 Dr
Interest Payable $10500 Cr
Explanation:
May 1
The bonds are issued at face value which means the company has received full amount of face value which is $900000. So, we debit cash by $900000 and credit bonds payable by the same amount.
Nov 1
The bonds pay interest semi annually and the amount of semi annual interest is,
Semi annual interest = 900000 * 0.07 * 6/12 = $31500
So, when this interest is paid, interest expense is recorded by $31500 as debit and cash is credited by same amount.
Dec 31
Following the accrual basis of accounting, the interest on bond that relates to November and December of the current year will be recorded as a liability and as an expense for this year. Thus, the amount of the interest will be,
Interest accrued - two months = 900000 * 0.07 * 2/12 = 10500
On January 1, 2020, Jet Air Inc. contracted with Systems Plus Inc. to manufacture heavy equipment. Jet Air Inc. issued a $135,000 note to Systems Plus Inc. in exchange for the equipment that required 5% interest payments annually over 3 years on December 31 of each year. Although the fair value of the customized heavy equipment was not reasonably determinable, it was determined that 10% was a reasonable rate of interest for such a transaction. Provide journal entries to be made by Jet Air Inc. at each of the following dates. a. January 1, 2020 ---Date of note issuance. b. December 31, 2020 ---Date of interest payment. c. December 31, 2021 ---Date of interest payment. d. December 31, 2022 ---Date of interest payment. e. December 31, 2022 ---Date of note payment at maturity. Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round your answer to the nearest whole dollar. Note: Adjust interest expense in 2022 for any net rounding differences.
Answer:
Jet Air Inc.
Journal Entries:
a. January 1, 2020 ---Date of note issuance:
Debit Equipment $135,000
Credit Note Payable $135,000
To record the cost of the heavy equipment exchanged with a note.
b. December 31, 2020 ---Date of interest payment:
Debit Interest Expense $6,750
Credit Cash $6,750
To record the interest expense for the first year.
c. December 31, 2021 ---Date of interest payment.
Debit Interest Expense $6,750
Credit Cash $6,750
To record the interest expense for the second year.
d. December 31, 2022 ---Date of interest payment.
Debit Interest Expense $6,750
Credit Cash $6,750
To record the interest expense for the third year.
e. December 31, 2022 ---Date of note payment at maturity.
Debit Note Payable $135,000
Credit Cash $135,000
To record the payment of the note at maturity.
Explanation:
Note Payable for the heavy equipment = $135,000
Reasonable rate of interest for the heavy equipment = 10%
Fair value of the heavy equipment = $148,500 ($135,00 * 1.10)
Discount obtained = $13,500 ($148,500 - $135,000)
Required interest = 5% annually = $6,750 ($135,000 * 5%)
Suppose a Geographic Information Systems (GIS) research firm is approached by the state legislature and asked to provide data about vehicle movement within the state for all cars that can be tracked with direct GPS or through the owner's smartphone. Based on the movement of the cars (and phones) over a certain time, the police can decide when a car was speeding. They intend on using this data to send speeding tickets to those who moved too far, too fast. Also, if an underage driver spends too long parked by an adult only establishment, police will be notified to investigate. If you are the research firm, would you supply the data?
Answer:
No. I would not supply the data.
Explanation:
Was the GIS research firm commissioned by the state legislature? The state lacks the authority to demand the GIS information. Moreover, the data subjects did not give their consent for the information to be used for this purpose. It will be a violation of data privacy rules to provide the data when the consents of the data subjects were not obtained.
Evan phoned his representative when he received his most recent statement on his deferred annuity. Evan is 65 and purchased the fixed annuity seven years ago to be a conservative part of his portfolio. Evan has read and heard a lot about how the market is beginning to take off and that variable annuities have considerable growth potential. He wants to get out of the fixed annuity and purchase a variable annuity to earn a higher return. The representative should:
Answer: Review Evan's investor profile factors and other facts to determine a suitable course of action to address his concerns and needs
Explanation:
The options include:
A. Recommend that Evan consider an exchange into a variable life insurance policy because it has growth potential with a death benefit.
B. Recommend that Evan surrender the annuity and invest in bond mutual funds because they work similar and cost less.
C. Review Evan’s investor profile factors and other facts to determine a suitable course of action to address his concerns and needs.
D. Update his investor profile factors and risk tolerance, and discuss with Evan the long term focus of a variable annuity and how it will outperform the fixed annuity within the first couple of years.
Based on the information given in the question, the best thing that the representative should do will be to review Evan's investor profile factors and other facts to determine a suitable course of action to address his concerns and needs.
When Evan's investor profile factors is checked, then the representative can then inform Evans about the appropriate thing to do and if it's appropriate for him to purchase a variable annuity to earn a higher return.
Going ahead by getting out of the fixed annuity and purchasing a variable annuity without reviewing Evan's investor's profile isn't appropriate.
Which of the following show negative cash flow?
Answer:
where are the answer choices
Lens Junction sells lenses for $44 each and is estimating sales of 16,000 units in January and 17,000 in February. Each lens consists of 2 pounds of silicon costing $2.50 per pound, 3 oz of solution costing $3 per ounce, and 15 minutes of direct labor at a labor rate of $18 per hour. Desired inventory levels are: Jan. 31 Feb. 28 Mar. 31 Beginning inventory Finished goods 4,300 4,800 4,900 Direct materials: silicon 8,300 9,200 9,000 Direct materials: solution 11,000 12,200 12,900
Complete Question:
1. Prepare a sales budget. Lens Junction Sales Budget For the Two Months Ending February 28, 20XX January February Expected Sales (Units) Sales Price per Unit Total Sales Revenue Total
2. Prepare a production budget. Lens Junction Production Budget For the Two Months Ending February 28, 20XX January February Expected Sales Total Required Units Required Production Total
3. Prepare direct materials budget for silicon. Lens Junction For the Two Months Ending Fabrant Materials, Purinat for Silinn February Expected Sales Total Required Units Required Production Total
4.Prepare direct materials budget for silicon.
Answer:
Lens Junction
1. Lens Junction Sales Budget For the Two Months Ending February 28, 20XX
January February
Expected Sales (Units) 16,000 17,000
Sales Price per Unit $44 $44
Total Sales Revenue $704,000 $748,000
2. Lens Junction Production Budget For the Two Months Ending February 28, 20XX
January February
Expected Sales Total 16,000 17,000
Ending Inventory 4,800 4,900
Required Units 20,800 21,900
Beginning Inventory 4,300 4,800
Required Production Total 16,500 17,100
3 & 4. Lens Junction Direct Materials Budget For the Two Months Ending February
January February
Silicon Solution Silicon Solution
Expected Sales 32,000 48,000 34,000 51,000
Ending inventory 9,200 9,000 12,200 12,900
Total Required 41,200 57,000 46,200 63,900
Beginning inventory 8,300 11,000 9,200 12,200
Units Required 32,900 46,000 37,000 51,700
Explanation:
a) Data and Calculations:
Sales price of lenses per unit = $44
Estimated sales of lenses in January and February respectively = 16,000 and 17,000
Direct materials for each lense:
2 pounds of silicon at $2.50 per pound = $5.00
3 oz of solution at $3.00 per ounce = $9.00
Total cost of direct materials per unit = $14
15 minutes direct labor at $18 per hour = $4.50
Desired inventory levels:
Beginning inventory of finished goods:
January 4,300
February 4,800
March 4,900
Beginning inventory of direct materials:
Silicon Solution
January 8,300 11,000
February 9,200 12,200
March 9,000 12,900
The owner of land owes which of the following duties to a trespasser? *
to refrain from doing the trespasser intentional harm
to warn them of known dangers
to conduct reasonable searches for dangers
all of the above
Answer:
All of the above
hope it helped you
April is studying finance in college. She wants to enter a career that will analyze the risk of for a company. Which career pathway would be best suited for this ?
Brokerage Clerk
Risk Management Specialist
Tax Preparer
Insurance Sales Agent
Answer:
Risk Management Specialist
Explanation:
this is because this person wants to be in a career that analyzie risk for the company which is a fit for Risk Management Specialist
Answer:
Risk Management Specialist
Explanation:
Risk management specialists specialize in manage and assess financial risks in a company.
All good marketers
Create robust social media conversations
Put themselves in the shoes of their target market
Balance push and pull marketing
Minimize negative buzz
Answer:
All good marketers
Put themselves in the shoes of their target market
Explanation:
This creates a personal experience of the marketing efforts and makes marketing a more targeted and conscious activity that is aimed at rendering the best service to the customer instead of just exploiting them. The awareness that marketing creates about goods and services is essential in the supply chain and value creation as a whole. To achieve improved success, a good marketing must be able to put herself in the shoes of their target market or customers.
Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Division Osaka Yokohama Sales $ 3,000,000 $ 9,000,000 Net operating income $ 210,000 $ 720,000 Average operating assets $ 1,000,000 $ 4,000,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 15%. Compute the residual income for each division.
Answer:
Return on Investment (ROI)
In terms of margin :
Division Osaka (ROI) = 21.00 %
Division Yokohama (ROI) = 18.75%
In terms of turnover :
Division Osaka (ROI) = 300%
Division Yokohama (ROI) = 225%
Residual Income
Division Osaka = $60,000
Division Yokohama = $120,000
Explanation:
Return on Investment = Divisional Profit Contribution / Assets Employed in the Division x 100
In terms of margin :
Division Osaka (ROI) = $ 210,000 / $ 1,000,000 x 100 = 21.00 %
Division Yokohama (ROI) = $ 720,000 / $ 4,000,000 x 100 = 18.75%
In terms of turnover :
Division Osaka (ROI) = $ 3,000,000 / $ 1,000,000 x 100 = 300%
Division Yokohama (ROI) = $ 9,000,000 / $ 4,000,000 x 100 = 225%
Residual Income = Controllable Profit - Cost of Capital Charge on Investment Controllable by Divisional Manager
Division Osaka = $ 210,000 - $ 1,000,000 x 15% = $60,000
Division Yokohama = $ 720,000 - $ 4,000,000 x 15% = $120,000
You are 25 years old and are considering full-time study for an MBA degree. Tuition and other direct costs will be $60,000 per year for two years. In addition, you will have to give up your current job that has a salary of $50,000 per year. Assume tuition is paid and salary received at the end of each year. By how much does your salary have to increase (in real terms) as a result of getting your MBA degree to justify the investment? Assume a real interest rate of 2% per year, ignore taxes, assume that the salaries for both jobs increase at the rate of inflation (i.e. they stay constant in real terms), and that you retire at 65. Note: the $1 for T periods annuity formula is (1/r)*[1-1/(1+r)^T]. g
Answer:
$8,403.73
Explanation:
The job will be started at the age of 27 ( 25 years + 2 years ) and retirement will be at the age of 65.
Hence the employment years are 38 years ( 65- 27 ).
Cost of MBA program = Direct cost + Opportunity cost = $60,000 + $50,000 = $110,000
At the age of 27, the total cost of the program will be
Total Cost of MBA program = Cost of program in first year + Cost of program in last year = $110,000 + ( $110,000 x ( 1 + 2% ) ) = $110,000 + $112,200 = $222,200
Use the following formula to calculate teh required salary
Calculate the annuity factor
Annuity factor = (1/r)*[1-1/(1+r)^T] = (1/2%)*[1-1/(1+2%)^38] = 26.440640602064
Now use the following formula to calculate the required salary
Required salary = Total cost of MBA program / Annuity factor for 38 years at 2% = $222,200 / 26.440640602064 = $8,403.73
On January 1, 2010, Desert Company purchased a machine for $820,000. At the time, management estimated the useful life to be 20 years with a salvage value of $80,000 and will use straight-line depreciation. On January 1, 2020, the company reviewed the asset for impairment and determined that its future net cash flows totaled $420,000 and its fair value was $360,000. Desert has decided to continue to use the machine. What is the amount of depreciation expense Desert will record for this machine in 2020 after accounting for any potential impairment?
Answer:
$42,000
Explanation:
Straight line depreciation charges a fixed amount of depreciation for the period the asset is used in the business.
Depreciation Expense = Cost - Salvage Value ÷ Estimated Useful Life
January 1, 2020
Carrying Amount
Cost - Accumulated depreciation = $450,000
Recoverable Amount :
Higher of Fair Value and Future Cash Flows
Recoverable Amount = $420,000
Impairment loss incurs when Carrying Amount > Recoverable Amount
therefore,
Impairment loss = $30,000
December 31 , 2020
Depreciation expense = New Depreciable Amount ÷ Remaining useful life
= $420,000 ÷ 10
= $42,000
Latasha's Performance Pizza is a small restaurant in San Francisco that sells gluten-free pizzas. Latasha's very tiny kitchen has barely enough room for the two ovens in which her workers bake the pizzas. Latasha signed a lease obligating her to pay the rent for the two ovens for the next year. Because of this, and because Latasha's kitchen cannot fit more than two ovens, Latasha cannot change the number of ovens she uses in her production of pizzas in the short run.
However, Latasha's decision regarding how many workers to use can vary from week to week because her workers tend to be students. Each Monday, Latasha lets them know how many workers she needs for each day Of the week, In the short run, these workers are __________inputs, and the ovens are ___________ Inputs.
Answer: variable; fixed
Explanation:
In the short run, these workers are variable inputs, and the ovens are fixed Inputs.
In the short run, variable inputs in production can be changed to adapt to the changing economic conditions while fixed inputs cannot. In the long run however, all inputs are variable and so can be changed.
As this is the short run and the workers can be changed, they are the variable inputs.
The ovens however, cannot be changed so the ovens are the fixed inputs.
Andrew is deciding whether to remain in the home he has lived in for the past ten years, which is located very near his work, or to move into a newer home that is located in the suburbs farther from his job. The old house was purchased for $160,000 and has a market value of $220,000. The new home can be purchased for $285,000. Which of the following is not relevant to Andrew's decision?
a. Driving distance to work
b. Cost of the old house
c. Market value of the old house
d. Cost of the new house
Answer:
The decision that is not relevant to Andrew is:
b. Cost of the old house.
Explanation:
a) The cost of the old house ($160,000) is not relevant to Andrew decision challenges. It is a sunk or past cost. Past costs are not relevant because they do not make a difference in the decision or the alternative to choose. Since Andrew will be impacted by the driving distance to work from his new house, the market value of the old house, and the cost of the new house, these are relevant in Andrew's decision.
4561515
31561
561561253
1253
Cullumber Company incurred the following costs while manufacturing its product.
Materials used in product $121,000 Advertising expense $46,000
Depreciation on plant 61,000 Property taxes on plant 15,000
Property taxes on store 7,600 Delivery expense 22,000
Labor costs of assembly-line workers 111,000 Sales commissions 36,000
Factory supplies used 24,000 Salaries paid to sales clerks 51,000
Work in process inventory was $13,000 at January 1 and $16,600 at December 31. Finished goods inventory was $61,000 at January 1 and $45,700 at December 31.
Required:
Compute cost of goods manufactured.
Answer:
$328,400
Explanation:
Cost of Goods Manufactured is calculated in Manufacturing Account as follows :
Cost of Goods Manufactured = Beginning Work In Process Inventory + Total Manufacturing Costs - Ending Work In Process Inventory
therefore,
Cost of Goods Manufactured = $13,000 + ($121,000 + $61,000 + $15,000 + $111,000 + $24,000) - $16,600
= $328,400
The following data are available relating to the performance of Seminole Fund and the market portfolio: Seminole Market Portfolio Average return 18 % 14 % Standard deviations of returns 30 % 22 % Beta 1.4 1.0 Residual standard deviation 4.0 % 0.0 % The risk-free return during the sample period was 6%. If you wanted to evaluate the Seminole Fund using the M2 measure, what percent of the adjusted portfolio would need to be invested in T-Bills
Answer:
0.8%
Explanation:
Calculation to determine what percent of the adjusted portfolio would need to be invested in T-Bills
Using this formula
M2 =(Rp - Rf) * σ m / σ p - (Rm - Rf)
Whrere,
Rp represent Return on Seminole Fund (14%)
Rf represent Risk free rate of return(6%)
Rm represent Return on Market Portfolio(18%),
σ m represent Standard Deviation of return on market portfolio (22%)
σ p represent Standard Deviation of return on fund (30%)
Let plug in the formula
M2= (18 - 6) * 22 / 30 - (14 - 6)
M2= (12 * 0.73 ) - 8
M2= 8.8 - 8
M2= 0.8%
Therefore the percent of the adjusted portfolio that would need to be invested in T-Bills is 0.8%
Suppose that Expresso and Beantown are the only two firms that sell coffee. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises:
Beantown
Advertise Doesn't Advertise
Expresso Advertise 8, 8 15, 2
Doesn't Advertise 2, 15 9, 9
For example, the upper right cell shows that if Expresso advertises and Beantown doesn't advertise, Expresso will make a profit of $15 million, and Beantown will make a profit of $2 million. Assume this is a simultaneous game and that Expresso and Beantown are both profit-maximizing firms.
If Expresso decides to advertise, it will earn a profit of $ ____________ million if Beantown advertises and a profit of $ _________ million if Beantown does not advertise. If Expresso decides not to advertise, it will earn a profit of $ ____________ million if Beantown advertises and a profit of $_________ million if Beantown does not advertise.
Answer:
$15 Million
$8 Million
Explanation:
Payoff Matrix is as follows: Beantown
Expresso Advertise = Advertise Doesn't Advertise
(8,8) (15,2)
Doesn't Advertise (2,15) (9,9)
If Expresso decides to advertise, it will earn a profit of $2 million if Beantown
advertises, it follows the strategy (Advertise, Advertise)
He earns a profit of $15 million if Beantown does not Advertise, here it follows the strategy (Advertise, Doesn't Advertise).
In its first year, Barsky Corporation made charitable contributions totaling $30,000. The corporation's taxable income before any charitable contribution deduction was $250,000. In its second year, Barsky made charitable contributions of $15,000 and earned taxable income before the contribution deduction of $300,000. Assume neither year is 2020. Required: Compute Barsky's allowable charitable contribution deduction and its final taxable income for its first year. Compute Barsky's allowable charitable contribution deduction and its final taxable income for its second year
Answer:
Year 1:
total income before charitable contributions = $250,000
limit on charitable contributions = $250,000 x 10% = $25,000
taxable income after charitable contributions = $250,000 - $25,000 = $225,000
charitable contributions carried forward = $30,000 - $25,000 = $5,000
Year 2:
total income before charitable contributions = $300,000
limit on charitable contributions = $300,000 x 10% = $30,000
taxable income after charitable contributions = $300,000 - $15,000 - $5,000 = $280,000
We have the following information for the Valverde company. The stock pays a $1 dividend and it will grow by 12% the first year, 9% the second year and 3% forever after that. The unlevered bheta is 1, D/E is 75/25 and the tax rate is .3. Additionally, we know the treasury bond rate is 0.04 and the ROR of the S&P has been 10%.
Required:
Derive the stock price of Valverde.
Answer:
P0 = $5.99394080634 rounded off to $5.99
Explanation:
The dividend discount model (DDM) can be used to calculate the price of the stock today. DDM calculates the price of a stock based on the present value of the expected future dividends from the stock. The formula for price today under DDM is,
P0 = D1 / (1+r) + D2 / (1+r)^2 + ... + Dn / (1+r)^n + [(Dn * (1+g) / (r - g)) / (1+r)^n]
Where,
D1, D2, ... , Dn is the dividend expected in Year 1,2 and so on g is the constant growth rate in dividends r is the discount rate or required rate of return
We first need to calculate the levered beta of Valverde.
Levered Beta = Unlevered Beta * [1+ (1-tax rate) * (Debt/Equity)]
Levered Beta = 1 * [(1 + (1 - 0.3) * (75/25)]
Levered Beta = 3.1
We first need to calculate the cost of equity (r) using the CAPM equation. The equation is,
r = risk free rate + Levered Beta * (Expected return on Market - risk free rate)
We know that the risk free rate is 0.04 or 4%, the beta is 3.1 and the expected return on market is 0.1 or 10%.
r = 0.04 + 3.1 * (0.1 - 0.04)
r = 0.226 or 22.6%
Now, using the DDM equation, the price of stock will be,
P0 = 1 * (1+0.12) / (1+0.226) + 1 * (1+0.12) * (1+0.09) / (1+0.226)^2 +
[(1 * (1+0.12) * (1+0.09) * (1+0.03) / (0.226 - 0.03)) / (1+0.226)^2]
P0 = $5.99394080634 rounded off to $5.99
P0 = $99.2830 rounded off to $99.28
Saddleback Company makes camping lanterns using a single production process. All direct materials are added at the beginning of the manufacturing process. Information for the month of March follows:
Units Costs
Beginning work in process (30% complete) 118,300
Direct materials $193,000
Conversion cost 345,000
Total cost of beginning work in process $538,000
Number of units started 244,000
Number of units completed and transferred to finished goods 334,900
Ending work in process (65% complete) ________
Direct materials $249,700
Conversion cost 332 000
Total current period costs $581,700
Required:
Using the weighted-average method of process costing, complete each of the following steps:
a. Reconcile the number of physical units worked on during the period.
b. Calculate the number of equivalent units.
c. Calculate the cost per equivalent unit.
d. Reconcile the Total cost of work in process.
Answer:
Part a
Reconciliation of the number of Physical units worked
INPUTS :
Beginning Inventory units 118,300
Add Started during the period 244,000
Total 362,300
OUTPUTS :
Completed and Transferred 334,900
Ending Work In Process 24,400
Total 362,300
Part b
Materials = 359,300 units
Conversion Costs = 350,760 units
Part c
Materials = $1.23
Conversion Costs = $1.93
Part d
Reconcile the Total cost of work in process.
Cost in Beginning Inventory $538,000
Add Costs During the Period $581,700
Total $1,119,700
Cost of Units Still in Process $60,622
Units Completed and Transferred $1,058,284
Total $1,118,506
Explanation:
Step 1 : Equivalent units
These are physical units outputs (completed and transferred and units in process) expressed in terms of percentage of work completed in terms of materials and conversion costs
Materials = 334,900 + 24,400 x 100% = 359,300
Conversion Costs = 334,900 + 24,400 x 65% = 350,760
Step 2 : Cost per Equivalent unit
Cost per Equivalent unit = Total Cost ÷ Total Equivalent Units
therefore,
Materials = ($193,000 + $249,700) ÷ 359,300 = $1.23
Conversion Costs = ($345,000 + $332 000) ÷ 350,760 = $1.93
Total Unit Cost = $1.23 + $1.93 = $3.16
Step 3 : Cost of Units Still in Process and Units Completed and Transferred
Cost of Units Still in Process = 24,400 x $1.23 + 15,860 x $1.93 = $60,622
Units Completed and Transferred = 334,900 x $3.16 = $1,058,284
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales $ 5,100,000 $ 9,100,000 $ 8,200,000 Average operating assets $ 1,020,000 $ 2,275,000 $ 1,640,000 Net operating income $ 214,200 $ 746,200 $ 118,900 Minimum required rate of return 17.00 % 32.80 % 14.00 % Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 19% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity
Answer:
1. Return on Investment = Net operating income (NOI)/Average operating assets (AOA) * 100
Division A = 21%
Division B = 32.8%
Division C = 7.25%
2. Residual income (loss) = Operating Income - (Operating Assets x Target Rate of Return)
Division A = $40,800
Division B = $0
Division C = ($110,700)
3-a. If performance is being measured by ROI, Divisions A and C will accept the opportunity, while Division B will reject it because the actual rate of return of 19% is less than the minimum required rate of return of 32.8%.
3-b. Divisions A and C will accept the opportunity, while Division B will reject it.
Explanation:
a) Data and Calculations:
Selected sales and operating data for three divisions of different structural engineering firms are given as follows:
Division A Division B Division C
Sales $ 5,100,000 $ 9,100,000 $ 8,200,000
Average operating assets $ 1,020,000 $ 2,275,000 $ 1,640,000
Net operating income $ 214,200 $ 746,200 $ 118,900
Minimum required rate of return 17.00 % 32.80 % 14.00 %
1. Return on Investment = Net operating income (NOI)/Average operating assets (AOA) * 100
= 21% 32.8% 7.25%
Division A = 21% ($214,200/$1,020,000 * 100)
Division B = 32.8% ($746,200/$2,275,000 * 100)
Division C = 7.25% ( $118,900/$1,640,000 * 100)
2. Residual income (loss) = Operating Income - (Operating Assets x Target Rate of Return)
Division A = $40,800 ($214,200 - ($1,020,000 * 17%) )
Division B = $0 ($746,200 - ($2,275,000 * 32.8%))
Division C =($110,700) ( $118,900 - ($1,640,000 * 14%))
Investment opportunity that would yield a 19% rate of return:
Division A Division B Division C
Sales $ 5,100,000 $ 9,100,000 $ 8,200,000
Average operating assets $ 1,020,000 $ 2,275,000 $ 1,640,000
Net operating income (19%) $ 193,800 $ 432,250 $ 311,600
Minimum required rate of return 17.00 % 32.80 % 14.00 %
3-a. If performance is being measured by ROI, Divisions A and C will accept the opportunity, while Division B will reject it because the actual rate of return of 19% is less than the minimum required rate of return of 32.8%.
3-b. Divisions A and C will accept the opportunity, while Division B will reject it.
Residual income (loss) = Operating Income - (Operating Assets x Target Rate of Return)
Division A = $20,400 ($193,800 - ($1,020,000 * 17%))
Division B = ($313,950) ($432,250 - ($2,275,000 * 32.8%))
Division C = $82,600 ($311,600 - ($1,640,000 * 14%))