Answer:
Anderson Crossing Investments, Inc.
a. The land in this case was originally owned by:______
Kortney Branson.
b. At the time of sale to the mall, the land in this case was owned by:________
Anderson Crossing Investments, Inc.
c. Richard Anderson was a__limited liability______ owner of Anderson Crossing Investment Inc.
Explanation:
Anderson Cross Investment Inc. is a corporation in which stockholders enjoy limited liability. Moreover, Anderson Cross Investment Inc. is separate from the owner, Richard Anderson under the Entity concept and separation of ownerships. Hill is not an agent of Richard Anderson but Anderson Crossing Investments, Inc.
But specifically, limited liability describes the condition that prevails when an entity suffers loss in business. The implication is that the loss that an owner or shareholder of an entity may suffer is limited to the capital invested in the business. A stockholder's liability arising from his shareholding in the entity does not extend to his personal assets. So, the concept considers the extent to which a company shareholder or director is financially responsible for the company's debts. The owners cannot be sued for the debts of the entity unless they have given their personal guarantees or a competent court of law lifts the corporate veil under specific circumstances.
The corporate veil, according to businessdictionary.com, is "a legal concept that separates the personality of a corporation from the personalities of its shareholders, and protects them from being personally liable for the company's debts and other obligations."
If Kortney Branson is serious in making a legal issue of the matter, she should sue the company that bought the land from her. She can then join Hill and Richard Anderson if she wishes, though the two can submit "no case submissions."
A customer has an individual cash account, an individual margin account, a joint cash account with his wife, and a custodial account for each of his 2 children. If the firm liquidates, Securities Investor Protection Corporation covers::________
Answer and Explanation:
The Securities Investor Protection Corporation enhance security for the registered broker and distributor customers and national securities exchanges members
In the given situation, it is mentioned that a customer has 4 accounts i.e person cash account, person margin account, cash account jointly with his wife and custodial account for two children
Now if the firm liquidates, the (Securities Investor Protection Corporation) SIPC covers all accounts but separately i.e both person accounts are count as one by adding them, the joint account as an individual and the custodial account as an individual
Suppose you are trying to decide whether to invest in a company that generates a high expected ROE, and you want to conduct further analysis on the company’s performance. If you wanted to conduct a comparative analysis for the current year, you would: Compare the firm’s financial ratios for the current year with its ratios in previous years Compare the firm’s financial ratios with other firms in the industry for the current year
Answer:
Compare the firm’s financial ratios with other firms in the industry for the current year
Explanation:
return on equity (ROE) = net income / stockholders' equity
it measures how profitable the company is according the amount of money that stockholders' invested in it.
Since you are trying to conduct a comparative analysis for the current year, it doesn't make sense to compare the current financial ratios with the financial ratios of previous years. If you want to compare the current year, you must compare the current financial ratios to the ratios of other companies in the same industry or the industry as a whole.
Sumner sold equipment that it uses in its business for $31,800. Sumner bought the equipment a few years ago for $79,100 and has claimed $39,550 of depreciation expense. Assuming that this is Sumner's only disposition during the year, what is the amount and character of Sumner's gain or loss
Answer:
Sumner's has a loss of $-7750 from the sale of the equipment
Explanation:
Solution
Given that:
We compute the amount of profit and loss, few steps will be taken which is given below:
Step 1: we compute the book value of the equipment which is shown below:
Book value = purchase price - depreciation claimed
= $79,100 -$39,550
= $39550
Therefore then book value is $39,550
Step 2: we calculate the amount of Sumner's gain or loss which is shown below:
The gain (loss) is = the value (sale) - book value
= $31,800 - 39550
= -7750
Therefore the loss from the sale of the equipment is -$7750
Which implies that Sumner's has a loss of $-7750
Finch Company began its operations on March 31 of the current year. Finch has the following projected costs: May June April $159,700 890 Manufacturing costs (1) Insurance expense (2) Depreciation expense Property tax expense (3) $192,500 890 1,920 $214,400 890 1,920 1,920 440 440 440
(1) Of the manufacturing costs, three-fourths are paid for in the month they are incurred; one fourth is paid in the following month
(2) Insurance expense is $890 a month; however, the insurance is paid four times yearly in the first month of the quarter, (i.e., January, April, July, and October).
(3) Property tax is paid once a year in November The cash payments expected for Finch Company in the month of May are
a. $224 225
b. $144,375
c. $184,300
d. $39,925
Answer:
$184,300
Explanation:
1 There will be no cash payment for insurance expense because it has been already paid.
2 Depreciation is not a cash expense
3 Property tax will be paid in November
4 Only the manufacturing cost is to be paid in May
Manufacturing cost = May(75%) + April(25%)
Manufacturing cost = ($192,500 x 75%) + ($159,700 x 25%)
Manufacturing cost = $184,300
Listed below are accounts to use for transactions (a) through (1), each identified by a number. Following this list are the transactions. You are to indicate for each transaction the accounts that should be debited and credited by placing the account number(s) in the appropriate box.
1. Accounts Payable
2. Accounts Receivable
3. Accumulated Depreciation - Office Equipment
4. Building
5. Common Stock
6. Cash
7. Depreciation Expense-Office Equipment
8. Dividends
9. Fees Earned
10. Insurance Expense
11. Insurance Payable
12. Interest Expense
13. Interest Payable
14. Interest Receivable
15. Land
16. Notes Payable
17. Office Supplies
18. Office Supplies Expense
19. Prepaid Insurance
20. Unearned Fees
21. Utilities Expense
22. Utilities Payable Transactions Account(s) Debited Account(s) Credited
a. Utility bill is received; payment will be made in 10 days.
b. Paid the utility bill previously recorded in transaction (a).
c. Bought a three-year insurance policy and paid in full.
d. Made an entry to adjust for the expired portion of the insurance premium.
e. Received $7,000 from a contract to perform accounting services over the next two years.
f. Made an entry to adjust for half of the services performed in (e).
g. Purchased office supplies, paying part cash and charging the balance on account.
h. Borrowed money from a bank and signed a note payable due in six months.
i. Recorded one month's accrued interest on the note payable
j. Depreciation is recorded on office equipment.
Answer:
The accounts to use for transactions is shown below. it also indicates which transaction is placed either in the debit or credit side.
Explanation:
Solution
Accounts Debited Accounts Credited
a. Utilities Expense Utilities Payable
b. Utilities Payable Cash
c. Prepared insurance Cash
d. Insurance Expense Prepared insurance
e. Cash Unearned Cash
f Unearned Fees Fees Earned
g. Office supplies Cash, Accounts Payable
h Cash Notes Payable
i Interest Expense Interest Payable
j Depreciation Expense-Office
(Office Equipment) Accumulated Depreciation
(Office Equipment)
On January 1, 2019, Upward Company purchased a copy machine. The machine costs $320,000, its estimated useful life is 8 years, and its expected salvage value is $20,000. What is the depreciation expense for 2020 using double-declining-balance method
Answer:
$60,000
Explanation:
Depreciation expense using the double declining method = Depreciation factor x cost of the asset
Depreciation factor = 2 x (1/useful life) = 2 / 8 = 0.25
Depreciation expense in 2019 = 0.25 x $320,000 = $80,000
Book value at the beginning of 2020 = $320,000 - $80,000 = $240,000
Depreciation expense in 2020 = 0.25 x $240,000 = $60,000
I hope my answer helps you
On January 1, 2021, Pharoah, Inc. signed a 10-year noncancelable lease for a heavy duty drill press. the lease stipulated annual payments of $340,000 starting at the beginning of the first year, with title passing to Pharoah at the expiration of the lease. Pharoah treated this transaction as a finance lease. The drill press has an estimated useful life of 15 years, with no salvage value. Pharoah uses straight-line depreciation for all of its plant assets. Aggregate lease payments were determined to have a present value of $2,002,339, based on implicit interest of 11%.In its 2021 income statement, what amount of interest expense should Pharoah report from this lease transaction
Answer:
$182,857.29
Explanation:
Here, Pharoah, Inc. average lease payments have a present value of $2,002,339
First lease payment = $340,000
Interest rate = 11%
To find the interest rate, first deduct the first lease payment.
$2,002,339 - $340,000
= $1,662,339
This is deducted so as to reduce total lease liability.
Find the amount of interest expense:
$1,662,339 × interest rate
= $1,662,339 × 11%
= $182,857.29
In its 2021 income statement, the amount of interest expense Pharoah should report from this lease transaction is $182,857.29
Lease A does not contain a bargain purchase option, but the lease term is equal to 90% of the estimated economic life of the leased property. Lease B does not transfer ownership of the property to the lessee by the end of the lease term, but the lease term is equal to 75% of the estimated economic life of the leased property. Based on this information alone, how should the lessee classify these leases
Answer: Lease A Capital lease
Lease B Capital lease
Explanation:
A Capital lease is known as a lease agreement in which the lessor ( someone giving out the property) agrees to transfer the ownership rights to the lessee ( someone acquiring or needing the services of the property). After completion of the agreed lease period.
In a capital lease, the lessor is usually mandated to transfer the ownership rights of the asset to the lessee upon the end of the agreed lease term between both parties.
Roses, Incorporated made a batch of flower arrangements that were sold to grocery stores for Valentine's Day. The standard and actual costs of the roses used in each arrangement are as follows:
Standard Actual
No of roses per arrangement 6 6.1
Price per rose .60 .58
A. The company made and sold 1,000 of the Valentine's Day arrangement. Based on this informaton the materials price variance was:________.
a. $122 favorable.
b. $122 unfavorable.
c. $60 favorable.
d. $60 unfavorable.
B Based on this informaton the materials usage variance was:_______.
a. $122 favorable.
b. $122 unfavorable.
c. $ 60 favorable.
d. $60 unfavorable.
Answer:
b. $122 unfavorable.
d. $60 unfavorable.
Explanation:
The computation is shown below:
As we know that
Material Price Variance = (Standard price - Actual price ) × Actual quantity of Roses
where,
Actual quanity is
= 6.1 × 1,000 arrangements
= 6,100 roses
And,
Standard price = 0.6 and Actual price = 0.58
So, the material price variance is
= ($0.6 - $0.58 ) × 6,100 roses
= $122 Favorable
2, Now the material usage variance is
Material usage variance = (Standard Quantity - Actual Quantity) Standard price per rose
= ($6 × 1,000 - 6,100) × 0.6
= $60 Unfavorable
Suppose the following selected condensed data are taken from a recent balance sheet of Bob Evans Farms (in millions of dollars).
Cash $ 31.9
Accounts receivable 21.0
Inventory 28.1
Other current assets 23.0
Total current assets $104.0
Total current liabilities $200.0
Answer:
The answer is
1. -$96 million
2. 0.52:1
Explanation:
1. Working capital = total current assets - total current liabilities
Current assets:
Cash. $ 31.9 million
Accounts receivable $21.0 million
Inventory $28.1 million
Other current assets. $23.0 milllion
Total current assets $104.0 million
And current liabilities is$200.0 million
Therefore, working capital is:
$104 - $200
= -$96 million
2. Current ratio = current assets/current liabilities
$104 million / 200 miliion
=0.52:1
On March 1, Bartholomew Company purchased a new stamping machine with a list price of $70,000. The company paid cash for the machine; therefore, it was allowed a 5% discount. Other costs associated with the machine were: transportation costs, $1,300; sales tax paid, $3,120; installation costs, $1,000; routine maintenance during the first month of operation, $1,200. What is the cost of the machine
Answer:
$73,120
Explanation:
Bartholomew company purchased a new stamping machine with a list price of $70,000
They were given a discount of 5%
Other costs that are associated with the machine include
Transportation costs= $1,300
Sales tax= $3,120
Installation costs= $1,000
Routine maintenance during the first month= $1,200
Then, the cost of the machine can be calculated as follows
(70,000-5/100×70,000) + $1,300+$3,120+$1,000+$1,200
$66,500+$1,300+$3,120+$1,000+$1,200
= $73,120
Hence the cost of the machine is $73,120
Horgen Corporation manufactures two products: Product M68B and Product H27T. The company is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products M68B and H27T.
Activity Cost Pool Activity Measure Total Cost Total Activity
Machining Machine-hours $299,000 13,000 MHs
Machine setups Number of setups $240,000 400 setups
Product design Number of products $80,000 2 products
Order size Direct labor-hours $290,000 10,000 DLHs
Activity Measure Product Product
Machine-hours M68B H27T
Number of setups 6,000 7,000
Number of products 250 150
Direct labor-hours 4,000 6,000
Using the ABC system, how much total manufacturing overhead cost would be assigned to Product H27T?
a. $291,000
b. $174,000
c. S465,000
d. $454,500
Answer: $465,000
Explanation:
The activity-based costing (ABC) is used to know the total cost of activities that is vital to make a product. In ABC system, for every activity which goes into production, a cost will be assigned.
Based on the figures in the question, the following can be deduced:
Machining:
= 299,000/13,000 × 7,000
= 23 × 7,000
= $161,000
Machine set up:
= 240,000/400 × 150
= 600 × 150
= $90000
Product design:
= 80,000/2
= $40,000
Order size:
= 290,000/10,000 × 6,000
= 29 × 6,000
= $174,000
Total = $161,000 + $90,000 + $40,000 + $174,000
= $465,000
The total manufacturing overhead cost that would be assigned to Product H27T is $465,000.
The total manufacturing overhead cost that would be assigned to Product H27T is $465,000.
Product H27T Machining = $299,000/13,000 × 7,000
Product H27T Machining = $23 × 7,000
Product H27T Machining = $161,000
Product H27T Machine set up = $240,000/400 × 150
Product H27T Machine set up = $600 × 150
Product H27T Machine set up = $90000
Product H27T Product design = $80,000/2
Product H27T Product design = $40,000
Product H27T Order size = $290,000/10,000 × 6,000
Product H27T Order size = $29 × 6,000
Product H27T Order size = $174,000
Total manufacturing overhead cost = $161,000 + $90,000 + $40,000 + $174,000
Total manufacturing overhead cost = $465,000
In conclusion, the total manufacturing overhead cost that would be assigned to Product H27T is $465,000.
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Hamilton company uses a periodic inventory system, at the end of the annuanl accounting period, December 31,2015, the accounting records provided the following information for product 1:
Unit Unit Cost
Inventory, December 31, 2014 2000 $5
For the year 2015:
Purchase, March 21 6000 4
Purchase, August 1 4000 2
Inventory, December 31, 2015 3000
Required:
Compute ending inventory and cost of goods sold under FIFO, LIFO, and average cost inventory costing methods.
Answer:
FIFO : Ending Inventory = $6,000, Cost of Goods Sold = $36,000
LIFO : Ending Inventory = $36,000, Cost of Goods Sold = $28,000
Weighted Average Cost Method : Ending Inventory = $10,500, Cost of Goods Sold = $31,500
Explanation:
FIFO
Assumes that the first goods received by business will be the first ones to be delivered to the final customer.
Ending Inventory
Ending Inventory = Units left × Earliest Price
= 3000 units × $2
= $6,000
Cost of goods sold
Cost of goods sold : 2000 units × $5 = $10,000
6000 units × $4 = $24,000
1000 units × $2 = $2,000
Total = $36,000
LIFO
Assumes that the last goods purchased are the first ones to be issued to the final customer.
Ending Inventory
Ending Inventory 2000 units × $5 = $10,000
6000 units × $4 = $24,000
1000 units × $2 = $2,000
Total = $36,000
Cost of goods sold
Cost of goods sold : 4000 units × $2 = $8,000
5000 units × $4 = $20,000
Total = $28,000
Weighted Average Cost Method
The average cost of goods held is recalculated each time a new delivery of goods is received Issues are then priced out at this weighted average cost.
First Calculate the Average Cost
Average Cost = Total Cost / Total Units
= (2000 × $5 + 6000 × $4 + 4000 × $2) / 12,000
= $42,000 / 12,000
= $3.50
Ending Inventory
Ending Inventory = Units left × Average Price
= 3000 units × $3.50
= $10,500
Cost of goods sold
Ending Inventory = Units Sold × Average Price
= 9,000 units × $3.50
= $31,500
Morrow City Inc. manufactures small flash drives and is considering raising the price by 75 cents a unit for the coming year. With a 75-cent price increase, demand is expected to fall by 7,000 units. Current Projected Demand 79,000 units 72,000 units Selling price $8.50 $9.25 Incremental cost per unit $5.80 $5.80 If the price increase is implemented, operating profit is projected to ________.
Answer:
Operating profit is projected to be $35,100
Explanation:
Morrow City International
Analysis of the Current and Projected demand to determine the Operating Profit
Particulars Current Projected Changes in
Demand Demand Demand
Selling price $8.50 $9.25 0.75
Less: Cost Price $5.80 $5.80 0
Contribution $2.7 $3.45 0.75
Margin
Unit Sold 79,000 72,000 -7000
Total $213,300 $248,400 $35,100
Contribution
Note: Total contribution = Unit sold * Contribution margin
An insurance policy sells for $1200. Based on past data, an average of 1 in 100 policyholders will file a $10 comma 000 claim, an average of 1 in 250 policyholders will file a $40 comma 000 claim, and an average of 1 in 400 policyholders will file an $80 comma 000 claim. Find the expected value (to the company) per policy sold. If the company sells 30 comma 000 policies, what is the expected profit or loss?
Answer:
Expected Value = $740
Expected profit = $22.2m
Explanation:
We can easily calculate the expected value and expected profit/loss in this situation by some minor working
Expected values = Expected Claim - per policy cost
Expected profit/loss = (Expected claim - per policy cost) x number of policies
As you can see per policy cost and no of policies are given in the question data we just need to find expected claim for calculation of expected profit or loss and expected value
Expected Claim = (1/100x$10,000)+(1/250x$40,000)+(1/400x$80,000)
Expected Claim = 100 + 160 + 200
Expected Claim = 460
Now we have a value of expected claim lets put it into Expected profit/loss formula and expected value formula
Expected value = 460-1200
Expected value = -740
-$740 is the value per policy
Expected profit/loss = (460 - $1200 per policy) x 30,000
Expected profit or loss = -22,200,000
Expected loss to the customer = -$22.2 m
Expected profit for the company = $22.2m
On December 31, 2018, a company had assets of $29 billion and stockholders' equity of $22 billion. That same company had assets of $55 billion and stockholders' equity of $17 billion as of December 31, 2019. During 2019, the company reported total sales revenue of $22 billion and total expenses of $20 billion. What is the company's debt-to-assets ratio on December 31, 2019
Answer:
0.69
Explanation:
From the question above on December 31, 2018 a company has an assets of $29 billion and stockholders equity of $22 billion.
On December 31, 2019 the same company recorded an assets of $55billion and stockholders equity of $17billion
Inorder to calculate the debt-to-assess ratio the first step is to find the amount of liabilities
Liabilities= Assets-Stockholders equity
Assets= $55 billion
Stockholders equity= $17 billion
= $55billion-$17billion
= $38 billion
Therefore, the debt-to-assets ratio can be calculated as follows
Debt-to-assets ratio= Total liabilities/Total Assets
= $38 billion/ $55 billion
= 0.69
Hence on December 31, 3019 the debt-to-assets ratio is 0.69
One-year Treasury securities yield 4%. The market anticipates that 1-year from now 1-year Treasury securities will yield 2.1%. If the pure expectations theory is correct, what should be the yield today for 2-year Treasury securities? Write your answer as a percentage, i.e. for example write 8% as 8.
Answer:
3.05%
Explanation:
According to Pure Expectation Theory, the future short term interest rates are actually the forward rates.
Mathematically,
(1 + r2,0)^2 = (1 + r1,0)^1 * (1 + r1,1)^1
Here,
r2,0 is the rate of interest for 2 year treasury security from today
r1,0 is the rate of the interest for 1 year treasury security from today
r1,1 is the rate of the interest for 2 year treasury security from Year 1
By Putting Values, we have:
(1 + r2,0)^2 = (1 + 0.04)^1 * (1 + 0.021)^1
(1 + r2,0)^2 = 1.06184
By taking square-root on both sides, we have:
(1 + r2,0) = 1.0305
r2,0 = 3.05%
If annual demand is 12,000 units, the ordering cost is $6 per order, and the holding cost is $2.50 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model?
A. 421
B. 234
C. 78
D. 26
E. 312
Answer:
240 units
Explanation:
We can find Optimal order quantity easily by Optimal order quantity formula using the fixed order quantity formula
Formula:: Optimal order quantity = [tex]\sqrt[2]{\frac{2CoD}{Ch} }[/tex]
Where
Co = Ordering cost per order
D = Annual demand
Ch = Holding cost per unit
Calculations
Lets put in the values
Optimal order quantity = [tex]\sqrt[2]{\frac{2CoD}{Ch} }[/tex]
Optimal order quantity = [tex]\sqrt[2]{\frac{2*6*12000}{2.5} }[/tex]
Optimal order quantity = 240 units
Note: There must have been a mistake in question options the answer is 240 and closest to 240 is option B
Present Value of an Annuity of 1 Periods 8% 9% 10% 1 .926 .917 .909 2 1.783 1.759 1.736 3 2.577 2.531 2.487 A company has a minimum required rate of return of 8%. It is considering investing in a project that costs $97116 and is expected to generate cash inflows of $39000 each year for three years. The approximate internal rate of return on this project is
Answer:
9.92%
Explanation:
Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested
IRR can be calculated using a financial calculator:
Cash flow in year 0 = $-97116
Cash flow each year from year 1 to 3 = $39000
IRR = 9.92%
To find the IRR using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
I hope my answer helps you
you want to buy a new ski boat 2 years from now, and you plan to save $7,000 per year, beginning one year from today. you will deposit your savings in an account that pays 6.2% interest. how much will you have just after you make your second deposit, 2 years from now
Answer:
$14,434
Explanation:
The question is asking to find the future value of making a payment of $7,000 every year for two years
The formula for finding future value =
FV = A x annuity factor
Annuity factor = {[(1+r) ^N ] - 1} / r
A = amount = $7,000
R = interest rate = 6.2%
N = 2
[(1.062) ^2 - 1 ] / 0.062 = 2.062
2.062 x $7,000 = $14,434
I hope my answer helps you
Answer: $14429
Explanation:
For this question, we will use the annuity formula to solve. The future value of an annuity is given as:
= C × ([(1+i)^n - 1] / i)
where,
C = The Cash flow per period
= $7000
i = the interest rate
= 6.2%
n = number of years
= 2
Future value of annuity will now be:
= 7000 × ([(1+0.062)²- 1]/0.062)
= 7000 × ([1.062)² - 1]/0.062)
= 7000 × [(1.1278 - 1)/0.062)]
= 7000 × (0.1278/ 0.062)
= 7000 × 2.0613
= $14429
The answer is $14429
A corporation has $7,000,000 in income after paying preferred dividends of $500,000. The company has 1,000,000 shares of common stock outstanding. The market price of the stock is $56. What is the price-earnings ratio
Answer:
Price earning ratio= 8 times
Explanation:
Price earning ratio = Price per share /Earnings per share
Price per share = 56, EPS =?
Price per share =56, EPS = Total earnings available to ordinary shareholders/Number of shares
7,000,000/1,000,000= $7 per share
Price earning ratio = 56/7= 8 times
Price earning ratio= 8 times
A large international company has two business units. Invested assets and condensed income statement data for each business unit for the past year are as follows: Compute the following for Business Unit 1: a) Operating Income Using the Dupont Formula: b) Profit Margin % (round % to 1 decimal) c) Investment Turnover (round to 2 decimals) d) Return on Investment (round 1 decimal) Compute the following for Business Unit 2: 2A) Operating Income Using the Dupont Formula: 2B) Profit Margin (round % to 1 decimal) 2C) Investment Turnover (round to 2 decimals) 2D) Return on Investment (round 1 decimal)
Answer:
1. Compute the following for Business Unit 1:
a) Operating Income = $117,500
b) Profit Margin = 20.7%
c) Investment Turnover = 0.86
d) Return on Investment = 0.2
2. Compute the following for Business Unit 2:
a) Operating Income = $69,750
b) Profit Margin = 12.2%
c) Investment Turnover = 1.18
d) Return on Investment = 0.1
Explanation:
1. Compute the following for Business Unit 1:
a) Operating Income
Operating Income = Revenue – Operating expenses = $280,000 – $162,500 = $117,500
Using the Dupont Formula:
b) Profit Margin % (round % to 1 decimal)
Net income = Operating income – Services department charges = $117,500 - $59,500 = $58,000
Profit Margin = Net income / Revenue = ($58,000 / $280,000) * 100 = 20.7%
c) Investment Turnover (round to 2 decimals)
Investment Turnover = Revenue / Invested Assets = $280,000 / $325,000 = 0.86
d) Return on Investment (round 1 decimal)
Return on Investment = Net income / Invested Assets = $58,000 / $325,000 = 0.1785 = 0.2
2. Compute the following for Business Unit 2:
a) Operating Income
Operating Income = Revenue – Operating expenses = $222,500 – $152,750 = $69,750
Using the Dupont Formula:
b) Profit Margin % (round % to 1 decimal)
Net income = Operating income – Services department charges = $69,750 - $42,625 = $27,125
Profit Margin = Net income / Revenue = ($27,125 / $222,500) * 100 = 12.2%
c) Investment Turnover (round to 2 decimals)
Investment Turnover = Revenue / Invested Assets = $222,500 / $189,000 = 1.18
d) Return on Investment (round 1 decimal)
Return on Investment = Net income / Invested Assets = $27,125 / $189,000 = 0.1435 = 0.1
Standard Product Cost, Direct Materials Variance Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (2,300 pounds) has the following standards: Standard Quantity Standard Price Whole tomatoes 3,800 lbs. $0.46 per lb. Vinegar 210 gal. 2.80 per gal. Corn syrup 18 gal. 10.20 per gal. Salt 84 lbs. 2.60 per lb. The actual materials in a batch may vary from the standard due to tomato characteristics. Assume that the actual quantities of materials for batch 08-99 were as follows: 4,000 lbs. of tomatoes 202 gal. of vinegar 19 gal. of corn syrup 83 lbs. of salt a. Determine the standard unit materials cost per pound for a standard batch. If required, round amounts to the nearest cent.
Answer:
Standard unit materials cost per pound=$1.11 per pound
Explanation:
The standard material cost for a standard batch = Total material cost / standard qty (in pounds)
Total material cost = (3,800× $0.46) + (210× 2.80) (84×2.60)=$2554.4
Total standard quantity = 2,300 pounds
Standard unit materials cost per pound =$2554.4/ 2,300 pounds=$1.11 per pounds
standard unit materials cost per pound=$1.11 per pound
Au Sable Corporation reported taxable income of $760,000 in year 2 and paid federal income taxes of $176,500. Not included in the computation was a disallowed penalty of $42,000, and life insurance proceeds of $185,000. Included in the computation of taxable income is a deduction for the bargain element of exercised nonqualified stock options of $67,000. The corporation's current earnings and profits for year 2 would be:
Answer:
$726,500
Explanation:
The computation of current earnings and profits for year 2 is shown below:-
current earnings and profits for year 2 = Profit as per Income Tax - Penalty disallowed + Life insurance proceed - Tax Expenses
= $760,000 - $42,000 + $185,000 - $176,500
= $945,000 - $42,000 - $176,500
= $726,500
Therefore we have applied the above formula to reach out the current earnings and profits for year 2.
The point factor method may appear to be a very objective approach to valuing jobs, but like other job evaluation methods, it relies heavily on _____________.
a. Projective values
b. Historical events
c. Standardized scoring
d. Subjective judgments
e. Compensable expert
Answer: Subjective judgments
Explanation:
Point factor method is an important method used during job evaluation. The responsibilities, requirements, and every other aspects of the job will be evaluated by using some set of standardised factors whereby points will be given to every job description.
It I based on subjective judgements because it is based on the personal judgement of the individual rating as no formal calculations will be made but just the opinion of the subject and also his or her past experience.
At Nice Price for the Ice, an ice cream parlor, customers routinely buy a scoop of ice cream for $2.75. If consumers purchase one scoop of ice cream at $2.75, then why don't they keep buying more and more scoops for $2.75 until the store sells out?
Answer:
Consumers would not keep buying ice cream at $2.75 because after purchasing a certain amount of ice cream, utility would be maximised and consumers would not value ice cream at $2.75 anymore. Consumers would not purchase a product it the marginal utility that would be derived from consuming the product is less than the price.
According to the law of diminishing marginal utility, as more units of a product is increased, total utility increases but at a decreasing rate.
Explanation:
Marginal utitiy is the increase in utility that is derived from consuming one more unit of a product.
For 2018, Rest-Well Bedding uses machine-hours as the only overhead cost-allocation base. The direct cost rate is $6.00 per unit. The selling price of the product is $21.00. The estimated manufacturing overhead costs are $275,000 and estimated 40,000 machine hours. The actual manufacturing overhead costs are $350,000 and actual machine hours are 50,000. Using job costing, the 2018 actual indirect-cost rate is ________.
Answer:
Predetermined manufacturing overhead rate= $6.875 per machine-hour
Explanation:
Giving the following information:
The estimated manufacturing overhead costs are $275,000 and an estimated 40,000 machine hours.
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= 275,000/40,000
Predetermined manufacturing overhead rate= $6.875 per machine-hour
he following balance sheet contains errors. Mark Brock Services Co. Balance Sheet For the Year Ended December 31 Assets Liabilities Current assets: Current liabilities: Cash $7,170 Accounts receivable $10,000 Accounts payable 7,500 Accum. depr.-building 12,525 Supplies 2,590 Accum. depr.-equipment 7,340 Prepaid insurance 800 Net income 11,500 Land 24,000 Total current assets $42,060 Total liabilities $41,365 Owner’s Equity Property, plant, and equipment: Wages payable $1,500 Building $43,700 Mark Brock, capital 88,645 Equipment 29,250 Total owner’s equity 90,145 Total property, plant, and equipment 72,950 Total assets $131,510 Total liabilities and owner’s equity $131,510 Required: Prepare a corrected balance sheet. Be sure to complete the statement heading. Refer to the lists of Accounts, Labels, and Amount Descriptions for the exact wording and order of text entries. You will not need to enter colons (:) on the Balance Sheet. "Less" or "Plus" will automatically appear if it is required.
Answer:
$97,645
Explanation:
Preparation of Mark Brock Services Co corrected balance sheet :
Mark Brock Services Co. Balance Sheet December 31
Assets
Current assets:
Cash$ 7,170
Accounts receivable10,000
Supplies2,590
Prepaid insurance800
Total current assets $20,560
Property, plant, and equipment:
Land$24,000
Building$43,700
Less accumulated depreciation( 12,525)
Equipment$29,250
Less accumumulated depreciation (7,340)
Total property, plant,and equipment 77,085
Total assets (77,085+20,560) $97,645
Liabilities
Current liabilities:
Accounts payable$ 7,500
Wages payable1,500
Total liabilities$ 9,000
Owner's Equity
Capital 88,645
Total liabilities and owner's equity (88,645+9,000) $97,645
Using a time line The financial manager at Starbuck Industries is considering an investment that requires an initial outlay of $27 comma 000 and is expected to produce cash inflows of $2 comma 000 at the end of year 1, $6 comma 000 at the end of years 2 and 3, $ 10 comma 000 at the end of year 4, $7 comma 000 at the end of year 5, and $6 comma 000 at the end of year 6. a. Select the time line option that represents the cash flows associated with Starbuck Industries' proposed investment. b. Which of the approacheslong dashfuture value or present valuelong dashdo financial managers rely on most often for decision making? Why?
Answer:
Please check the attached image for a picture of the timeline
Present value
This is because financial managers are making decisions at the beginning of the projects. So, it is important to know if the project is successful in the present.
Explanation:
A timeline is shows events in a chronological order. The cash flows have to be arranged in accordance to the years they occurred and according to the timing of the cash flows.
I hope my answer helps you
An investment will pay $200 at the end the year, $250 at the end of the next year, $400 at the end of the third year, and $500 at the end of the 4th year. Other investments of equal risk earn 6%. How much is this investment worth today
Answer:
PV= $1,143.03
Explanation:
Giving the following information:
An investment will pay $200 at the end of the year, $250 at the end of the next year, $400 at the end of the third year, and $500 at the end of the 4th year. Other investments of equal risk earn 6%.
To calculate the present value, we need to use the following formula on each cash flow:
PV= FV/(1+i)^n
Cf1= 200/1.06= 188.68
Cf2= 250/1.06^2= 222.50
Cf3= 400/1.06^3= 335.85
Cf4= 500/1.06^4= 396
PV= $1,143.03