Answer:
d. II and IV.
Explanation:
Since the investor has been making payments into a variable annuity for the last 20 years and decides to annuitize and selects a straight-life payout. The following statements would be true;
a. the investment risk is assumed by the customer.
b. the amount of the payment to the customer is not guaranteed.
An annuity is an agreement between an investor (contract owner) and an insurance company, where he or she gives a lump-sum of money to the insurer and in return receives regular disbursements, either immediately or some time in the future. It offers the following covers, legacy planning, primary protection, healthcare costs, lifetime income etc.
Annuities are generally classified into two (2) categories mainly; Fixed and Variable annuities.
Under the variable annuity, the investment risk is assumed by the customer (investor) unlike what is obtainable in the fixed annuity.
Ultimately, the performance of the separate account impacts the amount of the payment. Thus, the payment might decrease, increase, or even remain the same since the amount of the payment to the customer (investor) isn't guaranteed.
Debbie and Alan open a web-based bookstore together. They have been friends for so long that they start their business on a handshake after discussing how they will share both work and profits or losses from the business. Have Debbie and Alan formed a real partnership given that they have signed no written partnership agreement?
Answer:
Yes
Explanation:
Debbie and Alan have formed a real partnership even though they have signed no written partnership agreement because partnership does not require legal Documentation.
Many partnerships are formed naturally because the people who are involved in the business share similar goals, so their partnerships don't need formation documents to exist.
Torque Manufacturing forecasts that its production will require 600,000 tons of bauxite over its planning period. Demand for Torque's products is stable over time. Ordering costs amount to an average of $15.00 per order. Holding costs are estimated at $1.25 per ton of bauxite. If Torque uses an inventory quantity of 3,000 tons, what will be the total annual cost of inventory
Answer:
Total annual cost of inventory is 4875.
Explanation:
The demand for bauxite by Torque manufacturing (A) = 600000 tons.
It is given that the demand is stable.
The average ordering cost of bauxite (O) = $15 per order.
The cost of holding to bauxite (CP) = $1.25 per ton.
The economics order quantity (EOQ) = 3000
The total annual cost of inventory = ordering cost + inventory cost
[tex]\text{Total annual cost} = \frac{A}{EOQ} \times O + \frac{EOQ}{2} \times CP \\[/tex]
[tex]\text{Total annual cost} = \frac{600000}{3000} \times 15 + \frac{3000}{2} \times 1.25 = 4875[/tex]
Grouper Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis. Item Quantity Cost Cost to Estimated Cost Of Normal NO. Per Replace Selling Completion Profit Unit Price and Disposal 1,320 1,500 $3.87 $3.63 $5.45 $0.421333 1,200 3.27 2.78 4.24 0.61 1426 1,100 5.45 4.48 6.05 0.48 1437 1,300 4.36 3.75 3.87 0.30 1510 1,000 2.72 2.42 3.93 0.97 1522 1,200 3.63 3.27 4.60 0.48 1573 3,300 2.18 1.94 3.03 0.91 1626 1,300 5.69 6.29 7.26 0.61 From the information above, determine the amount of Grouper Company inventory.
Answer:
Normal profit was missing, so I looked for it:
Item Q Cost Cost to Estimated Cost Normal*
No. p/ unit replace selling price of Completion profit
and Disposal
1320 1,500 $3.87 $3.63 $5.45 $0.42 $1.38
1333 1,200 $3.27 $2.78 $4.24 $0.61 $0.67
1426 1,100 $5.45 $4.48 $6.05 $0.48 $0.47
1437 1,300 $4.36 $3.75 $3.87 $0.30 $0.25
1510 1,000 $2.72 $2.42 $3.93 $0.97 $1.18
1522 1,200 $3.63 $3.27 $4.60 $0.48 $0.84
1573 3,300 $2.18 $1.94 $3.03 $0.91 $0.93
1626 1,300 $5.69 $6.29 $7.26 $0.61 $1.56
we have to first determine the ceiling NRV and floor NRV
Item Cost to Estimated Cost NRV NRV
No. replace selling price of Completion ceiling floor
and Disposal
1320 $3.63 $5.45 $0.42 $5.03 $3.65
1333 $2.78 $4.24 $0.61 $3.63 $2.96
1426 $4.48 $6.05 $0.48 $5.57 $5.10
1437 $3.75 $3.87 $0.30 $3.57 $3.32
1510 $2.42 $3.93 $0.97 $2.96 $1.78
1522 $3.27 $4.60 $0.48 $4.12 $3.28
1573 $1.94 $3.03 $0.91 $2.12 $1.19
1626 $6.29 $7.26 $0.61 $6.65 $5.09
we have to determine the market value:
Item Cost to NRV NRV Market value
No. replace ceiling floor (middle of the 3)
1320 $3.63 $5.03 $3.65 $3.63
1333 $2.78 $3.63 $2.96 $2.96
1426 $4.48 $5.57 $5.10 $5.10
1437 $3.75 $3.57 $3.32 $3.57
1510 $2.42 $2.96 $1.78 $2.42
1522 $3.27 $4.12 $3.28 $3.28
1573 $1.94 $2.12 $1.19 $1.94
1626 $6.29 $6.65 $5.09 $6.29
Item Market value Cost Quantity Inventory
No. per unit value
1320 $3.63 $3.87 1,500 $5,445
1333 $2.96 $3.27 1,200 $3,552
1426 $5.10 $5.45 1,100 $5,610
1437 $3.57 $4.36 1,300 $4,641
1510 $2.42 $2.72 1,000 $2,420
1522 $3.28 $3.63 1,200 $3,939
1573 $1.94 $2.18 3,300 $6,402
1626 $6.29 $5.69 1,300 $7,397
total $39,406
AllCity, Inc., is financed 36 % with debt, 14 % with preferred stock, and 50 % with common stock. Its cost of debt is 5.7 %, its preferred stock pays an annual dividend of $ 2.45 and is priced at $ 29. It has an equity beta of 1.13. Assume the risk-free rate is 2.4 %, the market risk premium is 7.3 % and AllCity's tax rate is 35 %. What is its after-tax WACC? g
Answer:
WACC is 7.84%
Explanation:
First we need to calculate the after-tax cost of debt
Cost of Debt (after Tax) = Pre-tax cost of debt ( 1 - Tax rate )
Cost of Debt (after Tax) = 5.7% x ( 1 - 35% ) = 3.705%
Now calculate the cost of preferred share
Cost of preferred share = Dividend on Preferred share / Market value of preferred share
Cost of preferred share = $2.45 / $29 = 0.0845 = 8.45%
Now calculate the cost f equity
Cost of equity = Rf + Beta x Market risk premium
Cost of equity = 2.4% + 1.13 x 7.3%
Cost of equity = 2.4% + 8.249%
Cost of equity = 10.649%
Now use following formula to calclulate the WACC
WACC = ( Cost of Equity x Weight of common stock ) + ( Cost of Debt x Weight of Debt ) + ( Cost of preferred share x weight of preferred share )
WACC = ( 10.649% x 50% ) + ( 3.705% x 36% ) + ( 8.45% x 14% )
WACC = 5.3245% + 1.3338% + 1.183%
WACC = 7.8413%
GroundCover Pools, Inc., agrees to build a swimming pool for Franci, but fails to complete the job. Franci hires EquiAqua, Inc., to finish the project. Candy may recover from GroundCover:___________.
a. the contract price less costs of materials and labor.
b. the contract price.
c. the costs needed to complete construction.
d. profits plus the costs incurred up to the time of the breach.
A monetarist would argue that a. prices are inflexible. b. wages are inflexible. c. changes in M in the short run can cause Real GDP to fall. d. large changes in M could be offset by changes in V and not cause changes in P.
Answer:
The correct answer is the option C: changes in M in the short run can cause Real GDP to fall.
Explanation:
To begin with, the monetarist economists are the one that support the idea of not having any intervention from the government regarding the economy and moreover they are the ones whose ideology focus mainly in the money, as it name indicates. Therefore that when the government decides in the short run to increase the amount of the money supply then the monetarists argue that the action done by them will cause the Real GDP to fall because of the high inflation that it will cause the increase of the money supply and consequently low demand, etc.
A project analysis using the net present value method indicates that the present value of cash inflows is $120,000, and the total amount of investment required at the start of the project is $100,000. Which of the following statements best describes the results of the project analysis?
a. The project should be rejected because the actual rate of return expected from the project is less than the minimum desired rate of return.
b. The project should be accepted because the actual rate of return expected from the project is more than the minimum desired rate of return.
c. The project should be rejected because the actual rate of return expected from the project is more than the minimum desired rate of return.
d. The project should be accepted because the actual rate of return expected from the project is less than the minimum desired rate of return.
Answer:
The answer is B.
Explanation:
Cost of investment was $100,000
Present value of all the cash inflows = $120,000
Profit = $20,000 ($120,000 - $100,000)
Since the present value of all the cash inflows is greater than the initial cost of investment, the capital project should be accepted because the firm will be better off and shareholders' wealth will be increased.
The expected rate of return for the project is $20,000/$100,000
0.2 or 20%
When a grocery store makes sure they always have 10 extra dozen eggs in the back storage area "just in case" they are needed, this type of inventory is typically called: A. Cycle Stock B. Safety Stock C. Anticipation Inventory D. Transportation Inventory E. Smoothing Inventory
Answer: Safety Stock
Explanation:
Safety stock is the additional quantity of a product that is kept by a company on its inventory so to reduce the risk of running out of the item in stock. The safety stock can be used when the sales of the product is more than the planned sales.
Regarding the question, when a grocery store makes sure they always have 10 extra dozen eggs in the back storage area "just in case" they are needed, this type of inventory is typically called the safety stock.
An access control strategy that gives a user or group of users only those powers which are absolutely essential to do the job required is called the: a. principle of least privilege. b. principle of user control. c. principle of essential power. d. group level rule.
Answer:
A. principle of least privilege
Explanation:
According to The Principle of Least Privilege, a subject should be given only those privileges that are essential for it to complete its task. The principle works by giving just enough access to perform the required job. It dictates that users be assigned the least set of privileges they need to do their jobs, according to their roles. The principle aids in the creation of protective systems.
Cobe Company has already manufactured 25,000 units of Product A at a cost of $15 per unit. The 25,000 units can be sold at this stage for $480,000. Alternatively, the units can be further processed at a $240,000 total additional cost and be converted into 5,400 units of Product B and 11,100 units of Product C. Per unit selling price for Product B is $104 and for Product C is $53
Prepare an analysis that shows whether the 21,000 units of Product A should be processed further or not.
Sell as in Process further
Sales
Relevant costs:
Total relevant costs
Income (loss)
Incremental net income (or loss) if processed further
The company should _______________________
Answer:
Incremental income from further processing $534,900
The company should process further
Explanation:
A company should process further a product if the additional revenue from the split-off point is greater than than the further processing cost.
Also note that all cost incurred up to the split-off point are irrelevant to the decision to process further .
$
Revenue after split-off point
(104×5400) + (53× 11,100) 1,149,900
Revenue at the slit of point
(25,000× $15) (375,000 )
Additional income from further processing 774,900
Further processing cost (240,000)
Incremental income from further processing 534,900
Incremental income from further processing $534,900
The company should process further
Hannah and Ellen rely on consistent messages received via word of mouth and are older and more conservative than other customers of Product X. Hannah and Ellen most likely fall into which of the following categories?a. late majority
b. early majority
c. laggards
d. innovators
Answer:
they fall into early majority
Record adjusting journal entries 100 of the following for year ended December 31
Assume no other adjusting entries are made during the year
Salaries Payable.: At year-end, salaries expense of $24,000 has been incurred by the company, but is not yet paid to employees.
Interest Payable: At its December 31 year-end, the company owes $675 of interest on a line-of-credit loan. That interest will not be paid until sometime in January of the next year.
Interest Payable: At its December 31 year-end, the company holds a mortgage payable that has incurred $1,300 in annual interest that is neither recorded nor paid. The company intends to pay the interest on January 7 of the next year.
Answer:
Salaries Payable :
Salaries Expense $24,000 (debit)
Salaries Payable $24,000 (credit)
Interest Payable:
Interest Expense $675 (debit)
Interest Payable $675 (credit)
Interest Payable:
Interest Expense $1,300 (debit)
Interest Payable $1,300 (credit)
Explanation:
When an amount is incurred but is deferred to another period for payment, a liability is recognized.
A liability is a present legal obligation arising from a past event, the settlement of which will result in outflow of economic benefits (Cash) from the entity.
QS 9-8 Percent of sales method LO P3 Warner Company’s year-end unadjusted trial balance shows accounts receivable of $105,000, allowance for doubtful accounts of $660 (credit), and sales of $340,000. Uncollectibles are estimated to be 1% of sales. Prepare the December 31 year-end adjusting entry for uncollectibles.
Answer:
Bad Debts Expense $ 2740 Debit
Allowance for doubtful accounts $ 2740 Credit
Explanation:
Warner Company
Accounts receivable $105,000,
Allowance for doubtful accounts $660 (credit),
Sales $340,000
Uncollectibles are estimated to be 1% of sales.
Uncollectibles of 1% of sales means that after adjusting entry is passed the uncollectible amount must be $3400 ( 1% of $340,000) .
We have a credit balance of $ 660
The debit balance in the Allowance for doubtful accounts must be $ 3400.
The adjustment will be = $3400- $660= $ 2740
The Adjusting Entry will be
Bad Debts Expense $ 2740 Debit
Allowance for doubtful accounts $ 2740 Credit
A well-known industrial firm has issued $1,000 bonds that carry a 4% coupon interest rate paid semiannually. The bonds mature 20 years from now, at which time the industrial firm will redeem them from $1,000 plus the terminal semiannual interest payment. From the financial pages of your newspaper you learn that the bonds may be purchased for $715 each ($710 for the bond plus a $5 sales commission). What nominal annual rate of return would you receive if you purchased the bond now and held it to maturity 20 years from now
Answer:
5.59%
Explanation:
$1,000 bonds carrying a 4% coupon rate, semiannual coupon $20, matures in 20 years
if you purchase the bonds at $715, the nominal annual rate of return = coupon payments / bond price = ($20 + $20) / $715 = $40 / $715 = 5.59%
The nominal annual rate of return is calculated by dividing the revenue generated by an investment by the cost of the investment.
Suppose a consumer has the following utility function defined over the 2 goods X and Y: a. If this consumer originally consumed 10 units of X and 24 units of Y, and if the consumption of X were increased to 12 units, how much Y would be would the consumer be willing to give up and maintain the initial level of satisfaction
Answer:
Y = 22 units (Approx)
Explanation:
Note:
The utility function is not given, the utility function is as follows.
U(X ,Y) = 2X + [tex]16Y^{1/2}[/tex]
So,
U(X ,Y) = 2X + [tex]16Y^{1/2}[/tex]
When X = 10 and Y = 24 units
U(10 ,24) = 2(10) + [tex]16(24)^{1/2}[/tex]
U(10 ,24) = 98.4
U(10 ,24) = 99 Units (Approx)
So,
U(X ,Y) = 2X + [tex]16Y^{1/2}[/tex]
When X = 12 Find Y
99 units = 2(12) + [tex]16Y^{1/2}[/tex]
75 = [tex]16Y^{1/2}[/tex]
Y = 21.97
Y = 22 units (Approx)
A Project Engineer at the Michigan office is excited about an engineering software change to improve the reliability of the central processing unit. Unfortunately, the change involves some conflicting proprietary rights due to the Chief Designer's past work ties to Bridgeway's major competitor. Even though the Project Engineer was warned of this issue, she really wants to be the first to market with this change. There may be future financial rewards for her and the company that may be too good to pass up. As the Chief Liaison Officer, should you suggest the Project Engineer go forward with this engineering change
Answer:
9 76
Explanation:
9
From the dropdown box beside each numbered balance sheet item, select of its balance sheet classification.
Account Title Classification
1. Prepaid rent (2 months of Rent) 11. Mortgages payable (due in 6 years)
2. Equipment 12. Automobiles
3. Repairs expense 13. Notes payable (due in 3 years)
4. Land (used in operations) 14. Land held for future expansion
5. Depreciation expense -Building 15. Notes payable (due in 2 months)
6. Office equipment 16. Notes receivable (due in 2 years)
7. Common stock 17. Interest paya ble (due in 1 week)
8. Buildings 18. Long-term investment in stock
9 Bonds payable (due in 10 years) 19. Wages payable
10. Accumulated depreciation-Trucks 20. Office supplies
A. Current assets
B. Long-term investments
C. Plant assets
D. Intangible assets
E. Current liabilities
F. Long-term liabilities
G. Equity
Answer:
Balance Sheet Classifications:
Account Title Classification
1. Prepaid Rent Prepaid Rent Current Assets
2. Equipment Property, Plant, & Equipment Plant Assets
4. Land Land Long-term assets
5. Land Land Long-term assets
6. Office Equipment Property, Plant & Equipment Plant Assets
7. Common Stock Common Stock Equity
8. Buildings Property, Plant & Equipment Plant Assets
9. Bonds Payable 10-year Bonds Payable Long-term Liabilities
10. Accumulated Depreciation -Truck Contra account to Long-term assets
11. Mortgages Payable 6-year Mortgages Long-term liabilities
12. Automobiles Automobiles Long-term assets
13. Notes payable 3-year Notes Payable Long-term liabilities
14. Land Land Long-term assets
15. Notes payable 2-month Notes Payable Current liabilities
16. Notes Receivable 2-year Notes Receivable Long-term assets
17. Interest Payable Interest Payable Current liabilities
18. Long-term investment in stock Long-term investments
19. Wages Payable Wages Payable Current liabilities
20. Office Supplies Office Supplies Current assets
Explanation:
a) Current assets are short-term financial resources owned by the entity from which economic benefits will accrue. They are mainly used as working capital to generate more revenue.
b) Long-term investments are investments in securities like bonds and stock held by the entity to generate interests and dividends.
c) Plant assets are property, plants, and equipment which are non current assets being used for the long-term in the running of the business, e.g. building.
d) Intangible assets are assets which are not physical in nature. Examples of intangible assets are patents and copyrights, mining rights, and intellectual property.
e) Current liabilities are financial obligations of the entity which must be settled with financial resources within a calendar year or less. Examples: Wages Payable, Accounts Payable, and Unearned Revenue.
f) Long-term liabilities are liabilities (financial obligations) which an entity settles with financial resources that can last for more than a calendar year. Examples included Bonds, Notes, and other payables which are not current.
g) Equity refers to the ownership interest in an entity. This is what the owners of the business are entitled when other creditors have been settled. It is made of contributed capital and retained earnings.
On March 31. 2019, Home Decorating Pavilion received a bank statement showing a balance of $9,810. The balance in the firm's checkbook and Cash account on the same date was $10,276. The difference between the two balances is caused by the items listed below.
a. A $2,935 deposit made on March 30 does not appear on the bank statement.
b. Check 358 for $515 issued on March 29 and Check 359 for $1,710 published on March 30 have not yet been paid by the bank.
c. A credit memorandum shows that the bank has collected a $1,200 note receivable and interest of $120 for the firm.
d. A service charge of $31 appears on the bank statement.
e. A debit memorandum shows an NSF check for $555. The check was Issued by Dane Jarls, a credit customer.)
f. The firm's records indicate that Check 341 of March 1 was issued for $900 to pay the month's rent. However, the canceled check and the listing on the bank statement show that the actual amount of the check was $800.
g. The bank made an error by deducting a check for $590 issued by another business from the balance of Home Decorating Pavilion's account.
Required:
1. Prepare a bank reconciliation statement for the firm as of March 31, 2019.
2. Prepare a bank reconciliation statement for the firm as of March 31, 2019. (Enter all amounts as positive values.)
Answer:
Both requirements 1 and 2 are the same, but I guess one refers to a bank reconciliation statement and the other one to a cash account reconciliation.
Bank account reconciliation:
bank balance $9,810
+ deposits in transit $2,935
- outstanding checks 358 and 359 ($2,225)
+ check deducted by mistake $590
reconciled bank account $11,110
Cash account reconciliation:
Cash account balance $10,276
+ note and interest collected $1,320
- bank fees ($31)
- NSF check Dane Jarls ($555)
+ error on check 341 $100
reconciled cash account $11,110
Consider the simple leisure model in which the individual chooses between leisure (L) and money income (M). The marginal utility of leisure (MUL) is 15 and the marginal utility of money (MUM) is 3. At the optimum, the wage rate:_______
a. $45
b. $0.20
c. $5
d. $15
Answer:
Wage rate is $5
Explanation:
The marginal utility of money=marginal utility of leisure/wage rate
When the formula is rearranged,wage rate is given thus:
wage rate=marginal utility of leisure/marginal utility of money
wage rate=15/3
wage rate =$5
In other words, the correct option is C,wage rate is $5
Option D would have been correct if the requirement was to calculate marinal utility of leisure
Sherry and John Enterprises are using the kaizen approach to budgeting for 2018. The budgeted income statement for January 2018 is as follows: Sales (168,000 units) $1,010,000 Less: Cost of goods sold 690,000 Gross margin 320,000 Operating expenses 400,000 (includes $55,000 of fixed costs) Operating income -$80,000 Under the kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month. What is the budgeted operating income for March 2018
Answer:
February Kaizen Budgeted Operating income -$ 69,650
March Kaizen Budgeted Operating income-$ 59,405.5
Explanation:
The Kaizen costing primarily focuses on production processes and in it the cost reductions are obtained through increasing efficiency.
Sales (168,000 units) $1,010,000
Less: Cost of goods sold 690,000
Gross margin 320,000
Operating expenses 400,000 (includes $55,000 of fixed costs)
Operating income -$80,000
Calculations For February
Decrease by 1% of COGS $ 690,000= $ 690,000-$6900=$ 683,100
Decrease by 1% of Variable Expenses $ 345000= $ 345000-3450= $ 341550
Budgeted Operating Income Under Kaizen Costing For February
Sales (168,000 units) $1,010,000
Less: Cost of goods sold 683,100
Gross margin 326,900
Operating expenses
Variable Expenses $ 341550
Fixed Costs $55,000
Operating income -$ 69,650
Calculations For March
Decrease by 1% of COGS $ 683,100= $ 683,100-$6831=$ 676,269
Decrease by 1% of Variable Expenses $ 341 550= $ 341550-3415.5= $ 338134.5
Budgeted Operating Income Under Kaizen Costing For March
Sales (168,000 units) $1,010,000
Less: Cost of goods sold $ 676,269
Gross margin 333,731
Operating expenses
Variable Expenses $ 338134.5
Fixed Costs $55,000
Operating income -$ 59,405.5
The expected average rate of return for a proposed investment of $636,800 in a fixed asset with a useful life of 4 years, straight-line depreciation, no residual value, and an expected total net income of $191,560 for the 4 years is (round to two decimal points)
Answer: 15.96
Explanation:
The expected rate of return will be the Average income divided by the average cost.
It is stated that the asset has a useful life of 4 years with no residual value so at the end of 4 years it will be worth $0.
The Average Cost/ Value of the Asset is calculated as;
= (Beginning Asset value - Ending Asset Value) / 2
= (600,000 - 0) /2
= 300,000
Total Income of $191,560 for the 4 years so Average income will be,
= 191,560/4
= $47,890
Expected Average Rate of Return = 47,890/300,000
= 15.96%
On January 1, 2014 (the date of grant), Lutz Corporation issues 2,780 shares of restricted stock to its executives. The fair value of these shares is $78,300, and their par value is $11,400. The stock is forfeited if the executives do not complete 3 years of employment with the company.Prepare journal entries for January 1, 2014, and on December 31, 2014, assuming the service period is 3 years.
Answer:
Lutz Corporation Journal entry
1/1/14
Dr Unearned Compensation 78,300
Paid-in Capital in Excess of Par 66,900
($78,300-11,400)
Cr Common Stock 11,400
12/31/14
Dr Compensation Expense 26,100
(78,300/3years)
Cr Unearned Compensation 26,100
Explanation:
On January 1 2014 fair value of shares was $78,300, and their par value is $11,400 we have to Debit Unearned Compensation with 78,300 and credit Paid-in Capital in Excess of Par with 66,900 ($78,300-11,400) and Common Stock with 11,400.
On 12 December 2014 the stock will be forfeited if the executives do not complete 3 years of employment with the company which means we have to Debit Compensation Expense with 26,100(78,300/3years) and Credit Unearned Compensation with 26,100.
The cost of production of completed and transferred goods during the period amounted to $540,000, and the finished products shipped to customers had total production costs of $375,000. The journal entry to record the transfer of costs from work in process to finished goods is
Answer:
Finished Goods $540,000 Debit
Work In Process $540,000 Credit
Explanation:
The journal entry to record the transfer of costs from work in process to finished goods is
Finished Goods $540,000 Debit
Work In Process $540,000 Credit
This means that finished goods have been debited with the amount $ 540,000 and work in process has credited an amount $ 540,000. In other words work in process has been transferred to the finished goods account.
The amount which was sold and shipped to customers was $ 375,000. It is related to sales .It means sales of goods costing $375,000 had been shipped.
Cane Company manufactures two products called Alpha and Beta that sell for $195 and $150, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 123,000 units of each product. Its unit costs for each product at this level of activity are given below
Alpha Beta
Direct materials $40 $15
Direct labor 34 28
Variable manufacturing overhead 22 20
Traceable fixed manufacturing overhead 30 33
Variable selling expenses 27 23
Common fixed expenses 30 25
Total cost per unit $183 $144
The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars.
1) What contribution margin per pound of raw material is earned by Alpha and Beta?
2) Assume that Cane's customers would buy a maximum of 95,000 units of Alpha and 75,000 units of Beta. Also, assume that the company's raw material available for production is limited to 245,000 pounds. How many units of each product should Cane produce to maximize its profits?
3) Assume that Cane's customers would buy a maximum of 95,000 units of Alpha and 75,000 units of Beta. Also, assume that the company's raw material available for production is limited to 245,000 pounds. What is the maximum contribution margin Cane Company can earn given the limited quantity of raw materials?
4) Assume that Cane's customers would buy a maximum of 95,000 units of Alpha and 75,000 units of Beta. Also, assume that the company's raw material available for production is limited to 245,000 pounds. Up to how much should it be willing to pay per pound for additional raw materials?
Answer:
Explanation:
Alpha = $195
Beta = $150
total production capacity = 123,000 pounds
raw materials = $5 per pound
Production costs per unit Alpha Beta
direct materials $40 $15
direct labor $34 $28
variable manufacturing overhead $22 $20
fixed manufacturing overhead $30 $33
variable selling expenses $27 $23
common fixed expenses $30 $25
total cost per unit $183 $144
1) What contribution margin per pound of raw material is earned by Alpha and Beta?
Alpha Beta
contribution margin $72 $64
contribution margin per pound $9 $21.33
2) Assume that Cane's customers would buy a maximum of 95,000 units of Alpha and 75,000 units of Beta. Also, assume that the company's raw material available for production is limited to 245,000 pounds. How many units of each product should Cane produce to maximize its profits?
Alpha Beta
contribution margin $72 $64
contribution margin per pound $9 $21.33
production (in units) 2,500 75,000
profits $30,000 $450,000
total profits $480,000
3) Assume that Cane's customers would buy a maximum of 95,000 units of Alpha and 75,000 units of Beta. Also, assume that the company's raw material available for production is limited to 245,000 pounds. What is the maximum contribution margin Cane Company can earn given the limited quantity of raw materials?
Alpha Beta
contribution margin $72 $64
contribution margin per pound $9 $21.33
production (in units) 2,500 75,000
contribution margin $180,000 $4,800,000
total contribution margin $4,980,000
4) Assume that Cane's customers would buy a maximum of 95,000 units of Alpha and 75,000 units of Beta. Also, assume that the company's raw material available for production is limited to 245,000 pounds. Up to how much should it be willing to pay per pound for additional raw materials?
If it wants to increase the production of Alpha, it could pay as much as ($195 - $183) / 8 = $1.50 extra per pound if it wants to maximize profits. Maximum price = $6.50 per pound. At this point, marginal revenue = price.
A dairy produces and sells organic milk. Last year it sold 500,000 gallons of milk at a price of $7 per gallon. For last year, the firm's a. explicit costs were $3.5 million. b. economic profit was $3.5 million. c. total revenue was $3.5 million. d. accounting profit was $3.5 million.
Answer:
. total revenue was $3.5 million.
Explanation:
Total revenue = price x units sold = 500,000 x $7 = $3,500,000
Total explicit cost is the actual cost incurred in production. Total explicit cost includes fixed cost and variable cost.
Accounting profit is total revenue less total explicit cost.
Economic profit is accounting profit less implicit cost or opportunity cost.
Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.
I hope my answer helps you
A portfolio consists of $13,600 in Stock M and $19,400 invested in Stock N. The expected return on these stocks is 8.10 percent and 11.70 percent, respectively. What is the expected return on the portfolio
Answer:
Portfolio return is 10.22%
Explanation:
The expected return of a portfolio is the function of the weighted average of the individual stock returns that form up the portfolio. The formula to calculate the expected return of the portfolio is as follows,
Portfolio Return = wA * rA + wB * rB + ... + wN * rN
Where,
w is the weightage of each asset/stock in the portfolior is the return of each stockThe weightage of each stock can be calculated by dividing the investment in the stock by the total investment in the portfolio.
Total investment - portfolio = 13600 + 19400 = $33000
Portfolio Return = 13600/33000 * 0.0810 + 19400/33000 * 0.1170
Portfolio Return = 0.10216 or 10.216% rounded off to 10.22%
In the business gift-giving world, if a company gives a gift to a potential client for the purpose of influencing their behavior in their favor, it is unethical. What are the three criteria and dimensions of evaluating a business gift? Multiple Choice Question
Answer:
Context, culture and content
Explanation:
Gift giving in business is common and also contentious. Business gifts are often for advertising, sales promotion, and marketing communication medium.
These kind of gifts are for the following reasons:
1. In appreciation.
2. In the hopes of creating a positive first impression.
3. Returning a favor or expecting a favor in return for something.
When it comes to considering appropriate business gifts it is helpful for one to think about the content of the gift, the context of the gift, and the culture in which it will be received.
Giving a gift to a potential client for the purpose of influencing their behavior is a form of Bribery.
Sunshine LLC sold furniture for $75,650. Sunshine bought the furniture for $89,870 several years ago and has claimed $24,935 of depreciation expense on the machine. What is the amount and character of Sunshine's gain or loss
Answer:
The gain is $10,715
Explanation:
Solution
Given that:
The cost of furniture =$89,870
Accumulation of depreciation = $24,935
Thus
The book value of furniture= $89,870 - $24,935
=$64,935
The sale value of the furniture = $75,650
Now,'
The gain on sale of the furniture is given below:
Gain on sale of furniture = sale price - book value
= $75,650 - $64,935
=$10,715
The gain is The long term capital gain on sale of furniture is $10,715
Taco Hut purchased equipment on May 1, 2021, for $12,000. Residual value at the end of an estimated eight-year service life is expected to be $3,000. Calculate depreciation expense using the straight-line method for 2021 and 2022, assuming a December 31 year-end. (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar.)
Answer:
Depreciation expense in 2021 = $750
Depreciation expense in 2021 = $1125
Explanation:
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
($12,000 - $3,000) / 8 = $1125
Depreciation expense each year would be $1125.
Depreciation expense in 2021
There are 12 months in a year, so the depreciation expense each month would be $1125 / 12 = $93.75
Number of months in 2021 for which asset is used ( May to December) = 8 months
$93.75 x 8 = $750
Depreciation expense in 2022 would be $1125 since the machine was used for a full year.
I hope my answer helps you
Computing unit and inventory costs under absorption costing LO P1
Trio Company reports the following information for the current year, which is its first year of operations.
Direct materials $ 13 per unit
Direct labor $ 17 per unit
Overhead costs for the year $100,000 per year
Variable overhead 200,000 per year
Fixed overhead Units produced this year 25,000 units
Units sold this year 19,000 units
Ending finished goods inventory in units 6,000 units
Compute the cost per unit using absorption costing Cost per unit of finished goods using: Absorption costing Cost per unit of finished goods
Determine the cost of ending finished goods inventory using absorption costing
Answer:
Unitary production cost= $42
Ending inventory= $252,000
Explanation:
Giving the following information:
Direct materials $ 13 per unit
Direct labor $ 17 per unit
Fixed overhead costs for the year= $100,000 per year
Variable overhead= 200,000 per year
Units produced this year 25,000 units
Ending finished goods inventory in units 6,000 units
The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.
First, we need to calculate the unitary fixed and variable cost:
Unitary overhead= (100,000 + 200,000)/25,000= $12
Unitary production cost= 13 + 17 + 12= $42
COGS= 19,000*42= $798,000
Ending inventory= 6,000*42= $252,000