Answer:
a. Amount funded with equity is $4,800,000
b. Dividend is $3,200,000
c. Dividend Payout ratio is 40.00%
Explanation:
Note: This question is incomplete, and the complete one is as follows:
As a financial manager for WillPower, Inc, you have the following information: a) The company follows a residual dividend policy; b) The total capital budget for next year is likely to be $8,000,000; c) The forecasted level of earnings next year is $8,000,000; d) The target or optimal capital structure is a debt ratio of 40%;
Please answer the following questions:
a. What will be the amount funded with equity for the project ? (Keep the answer to a whole number. Example of answer format: $1,000,000)
b. Compute the amount of the dividend . (Keep the answer to a whole number. Example of answer format: $1,000,000)
c. Compute the dividend pay-out ratio . (Keep the answer to two decimals. Example of the answer format: 55.55%)
The following are therefore the explanation of the answers to the question:
a. What will be the amount funded with equity for the project ? (Keep the answer to a whole number. Example of answer format: $1,000,000)
Given that the target or optimal capital structure is a debt ratio of 40%, this implies that there will be 40% debt finance and 60% (100% - 40%) equity finance. Therefore, we have:
Amount funded with equity = Total capital budget for next year * Percentage of equity finance = 8,000,000 * 60% = $4,800,000
b. Compute the amount of the dividend. (Keep the answer to a whole number. Example of answer format: $1,000,000)
Since the company follows a residual dividend policy, it implies that the earnings available are employed to finance capital expenditure budget first before dividends are paid to the shareholders.
Since amount funded with equity is $4,800,000 as obtained in part a, it implies that this must be deducted first from the forecasted level of earnings next year to obtain the residual that will be paid as dividend as follows:
Dividend = Forecasted level of earnings next year - Amount funded with equity = $8,000,000 - $4,800,000 = $3,200,000
c. Compute the dividend pay-out ratio . (Keep the answer to two decimals. Example of the answer format: 55.55%)
Dividend payout ratio refers to the percentage of the earnings or net income of a company that is paid by the company to its shareholders as dividend. This can therefore be calculated
Dividend Payout ratio = Dividend / Earnings = $3,200,000 / $8,000,000 = 0.40, or 40.00%
Therefore, WillPower, Inc is expected to pay 40% of its earnings as dividend to its shareholders.
Determine the missing 2022 change percentages for (a) Intangible assets and (b) Total assets in the horizontal analysis for Mort Company
Answer:
The information that the question is referring to is this:
Assets 2017 2016 Amount Percent
Current Assets $900,000 $800,000 $100,000 12.50%
Plant Assets $475,000 $550,000 ($75,000) (13.6%)
Intangible Assets $300,000 $225,000 $75,000
Total Assets $1,675,000 $1,575,000 $100,000
Explanation:
Change in intangible assets
75,000 x 100 / 225,000 = 33.3%
Change in total assets
100,000 x 100 / 1,575,000 = 6.3%
If he wanted the cash award of each of the five prizes to be $45,000 and his estate could earn 7% per year, how much would he need to fund his prizes
Answer:
The answer is $3,214,285.71
Explanation:
Price of each award is $45,000
And there are 5
Therefore, we have 5 x $45,000
=$225,000.
So, $225,000 is the future value.
Rate of return(r) in 7% and it is being assumed that it is forever.
So, so how much will be needed to fund his prizes(present value)?:
PV = FV/r
= $225,000/0.07
=$3,214,285.71
During March, Zea Inc. transferred $67,000 from Work in Process to Finished Goods and recorded a Cost of Goods Sold of $73,000. The journal entries to record these transactions would include a:
Answer:
Credit to Work in process of $67,000
Explanation:
Preparation of the ournal entries to record the transactions
Since we were told Zea Inc. transferred the amount of $67,000 from Work in Process to Finished Goods this means the transaction will be recorded as:
Dr Finished Goods 67,000
Cr Work in Process 67,000
Since we were told that Zea Inc. transferred recorded a Cost of Goods Sold for the amount of $73,000 this means that the transaction will be recorded as:
Dr Cost of Goods Sold 73,000
Cr Finished Goods 73,000
Gold standard required countries to A. keep the supply of foreign exchange less than their domestic money supply. B. restrict the demand for foreign goods. C. keep the supply of their domestic money constant. D. keep the supply of their domestic money fixed in proportion to their gold holdings.
Answer:
D.) Keep the supply of there domestic money fixed in proportion to their gold holdings.
Explanation:
The Gold Standard was a monetary system under which countries fixed the value of their money in terms of a specified amount of gold. With the gold standard, countries agreed to convert the paper money into a fixed amount of gold.
Hope this helps you out! : )
Assume that you are 30 years old today, and that you are planning on retirement at age 65. You expect your salary to be $42,000 one year from now and you also expect your salary to increase at a rate of 5% per year as long as you work. To save for your retirement, you plan on making annual contributions to a retirement account. Your first contribution will be made on your 31st birthday and will be 8% of this year's salary. Likewise, you expect to deposit 8% of your salary each year until you reach age 65. Assume that the rate of interest is 9%. The present value (PV) (at age 30) of your retirement savings is closest to
Answer:
$50,855.62
Explanation:
I prepared an excel spreadsheet to determine the yearly contributions to the plan and their future value.
once you reach 65 years, your retirement account should have $1,038,165. Now we need to determine the present value = $1,038,165 / (1 + 9%)³⁵ = $50,855.62
Whenever currency is deposited into a commercial bank, cash goes out of circulation and, as a result, the supply of money is reduced.
1. True
2. False
Answer:
The answer is false
Explanation:
The money supply is the total value of money available in an economy at a given point in time.
M1 is the money supply that is composed of physical currency and coin, demand deposits etc. Therefore, money deposited into a commercial
bank adds and does not reduce the money in circulation.
The answer to the question is false.
OJ's Orange Juice produces orange juice to sell in a competitive market.Given uncertainty in weather patterns, OJ has to determine how much juice to produce before knowing the competitive price. It is estimated that there is a 10 percent chance the competitive price will be $5 and a 90 percent chance the price will be $2. If the marginal cost of producing orange juice is MC(Q) = 2Q, then to maximize expected profits, OJ should produce:__________.a- 0.25 units. b- 2.5 units. c- 1.15 units. d- 0.9 units.
Answer:
c- 1.15 units.
Explanation:
This can be calculated as follows:
Expected price at 10 percent = $5 * 10% = $0.5
Expected price at 90 percent = $2 * 90% = $1.80
Total expected price (EP) = $0.5 + $1.80 = $2.3
Since profit is maximized when EP = MC, we have:
2.3 = 2Q
Q = 2.3 / 2 = 1.15
Therefore, OJ should produce 1.15 units to maximize expected profit. The correction is therefore c- 1.15 units.
3. Problems and Applications Q3 This chapter discusses companies that are oligopolists in the market for the goods they sell. Many of the same ideas apply to companies that are oligopolists in the market for the inputs they buy. If sellers who are oligopolists try to increase the price of goods they sell, the goal of buyers who are oligopolists is to try to decrease the prices of goods they buy. Major league baseball team owners have an oligopoly in the market for baseball players. The owners' goal is to keep players' salaries . True or False: This goal is difficult to achieve because teams can attract better players with higher salaries. True False Baseball players went on strike in 1994 because they would not accept the salary cap that the owners wanted to impose. True or False: The owners felt the need for a salary cap to dissolve collusive behavior over salaries. True False
Answer:
Oligopolistic Companies:
a) The owners' goal is to keep players' salaries capped. TRUE
b) Goal is difficult to achieve: TRUE
c) 1994 Baseball players' strike: TRUE
d) Owners needed salary cap to dissolve collusive behavior over salaries: TRUE.
Explanation:
a) According to the Economist, Oligopoly is "a market situation in which each of a few producers affects but does not control the market. Each producer must consider the effect of a price change on the actions of the other producers." There is little competition among the players as each tries to control the market with price cuts and quantity reductions. For example, a cut in price by one may lead to an equal reduction by the others, with the result that each firm will retain approximately the same share of the market as before but at a lowered profit level.
b) According to wikipedia.com, "The 1994–95 Major League Baseball strike was the eighth work stoppage in baseball history, as well as the fourth in-season work stoppage in 22 years. Due to the strike, both the 1994 and 1995 seasons were not played to a complete 162 games; the strike was called after most teams had played at least 113 games in 1994." The strike ended the next April, after 232 days, when the players had successfully resisted the salary cap.
Although labor is typically viewed as a variable cost in the very short run, some labor costs may be fixed. Which of the following items represents an example of a fixed labor cost?A) An hourly employee.B) A temporary worker who is paid by the hour.C) A grad student in a NSF project.D) A salaried manager who has a three-year employment contract.
Answer:
D.
Explanation:
If he already has a fixed salary and a three-year employment then the variable is fixed
An example of a fixed labor cost is a salaried manager who has a three-year employment contract.
A VARIABLE cost is a cost that varies with the production. This is quite different from the FIXED COST that is fixed regardless of production.
In this case, since the worker has a three-year employment contract, his salary is fixed for the three years.
In conclusion, the answer is salaried manager who has a three-year employment contract.
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Adair Valley issued $20,000,000 of general obligation bonds to construct a multipurpose arena. These bonds will be serviced by a tax on the revenue from events held in the arena and will mature in 2024. During 2018, Adair Valley budgeted $2,500,000 of tax revenues and $2,000,000 for interest on the bonds in its Debt Service Fund. Prepare the journal entries necessary to record (a) the budget and (b) the expenditure when the interest comes due for payment.
Answer: Please see explanation column for answer.
Explanation:
a) Journal entry to record the budget
Account Debit Credit
Estimated Revenues $2,500,000
Appropriation $2,000,000
Budget fund $500,000
Calculation
Budget fund= Estimated Revenues-Appropriation = $2,500,000- $2,000,000= $500,000
b) Journal entry to record the the expenditure when the interest comes due for payment.
Account Debit Credit
Expenditure Interest $2,000,000
Matured Interest payable $2,000,000
Firm L has debt with a market value of $200,000 and a yield of 9%. The firm's equity has a market value of $300,000, its earnings are growing at a rate of 5%, and its tax rate is 40%. A similar firm with no debt has a cost of equity of 12%. Under the MM extension with growth, what is Firm L's cost of equity?
Answer:
Firm L's cost of equity is 13.2%
Explanation:
In order to calculate Firm L's cost of equity we would have to calculate the following formula:
Firm L's cost of equity=Unlevered cost of equity+D/E*( Unlevered cost of equity-cost of debt)*(1-tax rate)
D/E = debt/equity
D/E = $200,000/$300,000
D/E=0.6666
Therefore, Firm L's cost of equity= 12%+0.6666*(12%-9%)*(1-0.4)
Firm L's cost of equity=13.2%
Firm L's cost of equity is 13.2%
Assume that Clampett, Inc., has $390,000 of sales, $340,000 of cost of goods sold, $250,000 of interest income, and $230,000 of dividends. What is Clampett, Inc.'s excess net passive income
Answer:
Clampett, Inc.'s excess net passive income is $262,500.
Explanation:
First we need to calculate the Gross Receipt
Gross Receipt
Sales $390,000
Interest Income $250,000
Dividend $230,000
Gross receipts $870,000
25% of Gross receipt = $870,000 x 25% = $217,500
Now Calculate the passive income
Interest Income $250,000
Dividend $230,000
Passive Income $480,000
Now calculate the excess passive income
Excess passive income = Passive income - 25% of gross receipt
Excess passive income = $480,000 - $217,500 = $262,500
On January 1, the Matthews Band pays $66,600 for sound equipment. The band estimates it will use this equipment for five years and perform 200 concerts. It estimates that after five years it can sell the equipment for $2,000. During the first year, the band performs 55 concerts. Compute the first-year depreciation using the units-of-production method.
Answer:
Annual depreciation= $17,765
Explanation:
Giving the following information:
Original cost= $66,600
Number of units= 200
Salvage value= $2,000
During the first year, the band performs 55 concerts.
To calculate the annual depreciation under the units-of- production method, we need to use the following formula:
Annual depreciation= [(original cost - salvage value)/useful life of production in units]*units operated
Annual depreciation= [(66,600 - 2,000)/200]*55
Annual depreciation= $17,765
Due to use, wear and tear, the monetary worth of an object decreases with time. Depreciation is the term used to describe this reduction.
Annual depreciation= $17,765
Giving the following data:
Original cost= $66,600Number of units= 200Salvage value= $2,000During the first year, the band performs 55 concerts.
To calculate the annual depreciation under the units-of- production method, we need to use the following formula:-Annual depreciation= [(original cost - salvage value)/useful life of production in units]*units operated
Annual depreciation= [(66,600 - 2,000)/200]*55
Annual depreciation= $17,765
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Beartowne Enterprises uses an activityminusbased costing system to assign costs in its autominusparts division.
Activity Est. Indirect Activity Costs Allocation base Cost allocation rate
Materials $55,000 Material moves $3.00/move
Assembling $195,000 Machine hours $6.00/machine hour
Packaging $70,000 # of finished units $3.50/finished unit
The following units were produced in December with the following information. The company incurs no direct labor costs.
Part # # Produced Materials Costs # Moves Machine Hrs.
Part 001 1,450 $1,500 300 500
Part 002 5,500 $4,000 500 300
Part 003 3,950 $8,000 2,300 1,650
Total manufacturing costs for Part 003 is:_________
Answer:
Total manufacturing costs for Part 003 is:_________ $ 38625
Explanation:
Beartowne Enterprises
Activity Based Costing
We multiply the rate of of each activity with allocation base to get the indirect activity costs.
Total manufacturing costs for Part 003 is:_________
Materials Costs $ 8,000
Materials handling = 2,300 moves *$3.00/move= $ 6900
Assembling = 1,650 machine hours * $ 6.0= $ 9900
Packaging = 3,950 units * $3.50/finished unit = $ 13825
Total Manufacturing Costs $ 38625
Given Data
Part # # Produced Materials Costs # Moves Machine Hrs.
Part 001 1,450 $1,500 300 500
Part 002 5,500 $4,000 500 300
Part 003 3,950 $8,000 2,300 1,650
Activity . Indirect Activity Allocation Cost allocation rate
Est Costs base
Materials $55,000 Material moves $3.00/move
Assembling $195,000 Machine hours $6.00/machine hour
Packaging $70,000 # of finished units $3.50/finished unit
Consider 2 scenarios: Boom Economy and Normal Economy. The Boom economy has 30% chance of happening, while Normal economy has 70% chance of happening. For each scenario (Boom and Normal), stock ABC has a return of 25%, and 4%, respectively; stock XYZ has a return of 10% and 6.5%, respectively; the market portfolio has a return of 12% and 5% respectively.
Requried:
a. Calculate Expected return, Variance and Standard deviation for stock ABC and XYZ.
b. Based on your results in part (1), can you decide which stock to invest?
c. Calculate Beta for stock ABC and XYZ.
Answer:
A) Expected Return of Stock ABC = Probability of Boom * Return of ABC in boom+Probability of Normal * Return of ABC in norma
ER = 30% * 25% + 70% * 4% = 10.30%
Expected Return of Stock XYZ = Probability of Boom * Return of XYZ in boom+Probability of Normal*Return of XYZ in norma
ER = 30% * 10% + 70% * 6.5% = 7.55%
Variance of Stock ABC = 30% * (25%-10.30%)^2 + 70% * (4%-10.30%)^2 = 0.9261%
Variance of Stock XYZ = 30% * (10%-7.55%)^2 + 70% * (6.5%-7.55%)^2 = 0.02573%
Standard Deviation of ABC =0.9261%^0.5 = 9.62%
Standard Deviation of XYZ =0.02573%^0.5 = 1.60%
B) Coefficient of Variation of ABC=Standard Deviation of ABC/Expected Return of ABC =9.62%/10.30%=0.93
Coefficient of Variation of XYZ=Standard Deviation of XYZ/Expected Return of XYZ =1.60%/7.55%=0.21
Stock with less Coefficient of variation to be chosen as lower Coefficient of variation show lower risk in relation to the return.
Hence stock XYZ is best for investment.
C) Expected Return of Market =30% *12% + 70% * 5% = 7.1%
Variance of Market =30% * (12% - 7.1%)^2 + 70% * (5%-7.1%)^2 = 0.1029%
Covariance of Stock ABC and Market = 30% * (12% - 7.1%) * (25% - 10.30%) + 70%*(5% - 7.1%) * (4% - 10.30% )= 0.0030870
Beta of ABC = Covariance of Stock ABC and Market / Variance of Market
Beta ABC = (0.0030870 / 0.1029%) = 3.00
Covariance of Stock XYZ and Market =30% * ( 12% - 7.1%) * (10% - 7.55%) + 70% * (5% - 7.1%) * (6.50% - 7.55%) = 0.000515
Beta of Stock XYZ = Covariance of Stock XYZ and Market /
Variance of MarkeT
Beta XYZ = (0.000515 / 0.1029%) = 0.5
"A city project to build a soccer complex with six fields Is in the planning phase of the project life cycle. One of the project team members shares details from a project he worked on to build two soccer fields completed a year ago." Which estimation method should the project team use for the new project?
a. Template
b. Ratio
c. Top-down
d. Bottom-up
Answer:
a. Template
Explanation:
A template of the previous soccer fields that have been previously constructed should be used in the planning of the soceer fields that are about to be built.
Certain adjustments should be made to the template to account for differences.
I hope my answer helps you
Reporting Net Sales with Credit Sales, Sales Discounts, and Credit Card Sales
The following transactions were selected from the records of Ocean View Company:
July 12 Sold merchandise to Customer R, who charge d the $3,000 purchase on his
Visa creditCard. Visa charges OceanView a 2 percent credit card fee.
15. Sold merchandise to Customer S at an invoice price of $9,000; terms 3/10, n/30.
20. Sold merchandise to Customer T at an invoice price of $4,000; terms 3/10, n/30.
23 Collected payment from Customer S from July 15sale.
Aug. 25 Collected payment from Customer T from July 20 sale.
Required:
Assuming that Sales Discounts und Credit Card Discount s arc treated as contra-
revenues. compute net sales for the two months ended August 31.
Answer:
Net sales $15,670
Explanation:
Computation of thenet sales for the two months ended August 31.
Sales revenue:
Sales Revenue
July 12 Merchandise Sold to Customer R $3,000
July 20 Merchandise Sold to Customer S $4,000
July 15 Merchandise Sold to Customer T $9,000
Total ($3,000+$4,000+$9,000) $16,000
Less:Sales discounts (270)
($9,000 collected from S x 3%)
Credit card fee ($60)
($3,000 from R x 2%)
Net sales $15,670
Therefore the net sales for the two months ended August 31 will be $15,670
As an economist working at the International Monetary Fund, you are given the following data for Burundi: observed per capita GDP, relative to the United States, is 0.01; predicted per capita GDP, given by , is 0.18. What is total factor productivity
Answer: 0.056
Explanation:
Total factor productivity is the ratio of the aggregate that is, the total output to the aggregate inputs. Total factor productivity is used to measure economic efficiency of a country.
From the question, we are informed that Burundi's observed per capita GDP, relative to the United States, is 0.01 and the predicted per capita GDP is 0.18. Then, the total factor productivity will be:
= 0.01/0.18
= 0.056
On August 31, 2012, merchandise inventory was $32,684. Supplementary records of merchandising activities for the year ended August 31, 2013, reveal the following itemized costs. Invoice cost of merchandise purchases $ 119,070 Purchase discounts received 2,500 Purchase returns and allowances 5,715 Costs of transportation-in 3,900 3. Prepare a multiple-step income statement that includes separate categories for selling expenses and for general and administrative expenses.
Answer:
Hi, the question you provided is missing the sales amounts.
However, the important principles for this questions are explained below :
A multiple-step income statement shows separately income derived from Primary Activity of the entity (Operating Income / Loss) and income that includes Secondary Activities of the Company (Net Income / Loss).
Operating Expenses used in determination of Operating Income can be further categorized into Selling, General and Administrative Expenses.
Here is what the multiple-step income statement would look like using the data and information available.
Multiple-step income statement for month ended August 31, 2012
Sales Revenue (information missing) $ ? ? ?
Less Cost of Sales :
Opening Merchandise $0
Add purchases $ 119,070
Add transport expenses $3,900
Less Purchase returns and allowances ($5,715) $117,255
Net Purchases $117,255
Less Closing Merchandise ($32,684) ($84,571)
Gross Profit $ ? ? ?
Operating Income
Discount Received $2,500
Net Income / Loss $ ? ? ?
Rascal Corp. borrows $500,000 by signing on a 1-year, 12% promissory note from General Finance Company and assigns $600,000 of its accounts receivable as collateral for the loan. General Finance charges a financing fee of 1% of the receivables assigned. The journal entry for Rascal to record the borrowing will include a
Answer:
Dr Cash 494,000
Dr Finance Charge expense6,000
Cr Liability - Financing arrangement 500,000
Explanation:
The journal entry for Rascal to record the borrowing
Since Rascal Corp was said to borrow $500,000 from the General Finance Company in which $600,000 of its accounts receivable as collateral for the loan was been assigned and the General Finance charges a financing fee of 1% of the receivables assigned which mean the transaction will be recorded as:
DrCash 494,000
(500,000-6,000)
Dr Finance Charge expense6,000
Cr Liability - Financing arrangement 500,000
Calculation for Cash (difference)
Account receivable $600,000 ×General Finance charges of 1% =Finance Charge expense 6,000
Suppose a company will issue new 20-year debt with a par value of $1,000 and a coupon rate of 9%, paid annually. The issue price will be $1,000. The tax rate is 25%. If the flotation cost is 2% of the issue proceeds, then what is the after-tax cost of debt
Answer:
After cost of debt for a floatation cost of 2% is 6.62%
Explanation:
After tax cost of debt = Market interest × (1- tax rate)
We will get the cost of debt using the time value of money principle.
PV = -$1,000
Pmt = $1,000 × 9%
=$90
P/yr = 1
N = 20
FV =1,000
Tax rate = 25%
YTM
The market interest rate is 9% using financial calculator hence;
After-tax cost of debt = Market interest × (1-tax rate)
= 0.09 × (1 - 0.25)
= 0.0675 or 6.75%
If floatation cost is 2%, then
Net receipts after floatation cost = Cost × (1 - floatation rate)
= 0.0675 × (1- 0.02)
= 0.06615 or 6.62%
The asset, liabilities, and equities of Drought Design Studio have the following balances at December 31, 2018. The retained earnings was $35,000 at the beginning of the year. At year end, common stock was $17,000 and dividends were $61,000.
Notes Payable $14,000
Rent Expense 23,000
Cash 3,200
Office Supplies 5,100
Salaries Expense 65,000
Property Tax Expense 2,200
Office Furniture $48,400
Utilities Expense 7,200
Accounts Payable 3,600
Service Revenue 154,600
Accounts Receivable 9,300
Miscellaneous Expense 3,800
Required:
Prepare the income statement for Drought Design Studio for the year ending December 31, 2018.
Answer:
Drought Design Studio
Income statement for the year ending December 31, 2018.
Revenue
Service Revenue $154,600
Expenses
Rent Expense $23,000
Salary Expense $65,000
Property Tax Expense $2,200
Utilities Expenses $7,200
Miscellaneous Expenses $3,800
Less: Total Expenses $101,200
Net Income $53,400
Trade Mart has recently had lackluster sales. The rate of inventory turnover has? dropped, and the merchandise is gathering dust. At the same time, competition has forced AquariumAquarium's suppliers to lower the prices that Aquarium will pay when it replaces its inventory. It is now December 31, 2016, and the current replacement cost Aquarium's ending inventory is $75,000 below what Aquarium actually paid for the goods, which was $200,000.
Before any adjustments at the end of the? period, the Cost of Goods Sold account has a balance of $$820,000.
Requirements:
a. What accounting action should Aquarium take in this situation?
b. Give any journal entry required.
c. At what amount should Aquarium report Inventory on the balance? sheet?
d. At what amount should the company report Cost of Goods Sold on the income? statement?
e. Discuss the accounting principle or concept that is most relevant to this situation.
Answer:
a. What accounting action should Aquarium take in this situation?
the balance of inventory account should decrease to match the replacement cost.
b. Give any journal entry required.
Dr Cost of goods sold 75,000
Cr Inventory 75,000
c. At what amount should Aquarium report Inventory on the balance? sheet?
Inventory = $200,000 - $75,000 = $125,000
d. At what amount should the company report Cost of Goods Sold on the income statement?
Cost of goods sold = $820,000 + $75,000 = $895,000
e. Discuss the accounting principle or concept that is most relevant to this situation.
US GAAP states that companies must use the lower of cost or market rule, which means that inventory must be recognized at the lowest cost either original purchase cost or market value.
Big Wheel, Inc. collects 25% of its sales on account in the month of the sale and 75% in the month following the sale. Sales on account are budgeted to be $16,300 for March and $32,600 for April. What are the budgeted cash receipts from sales on account for April
Answer:
Total cash collection= $20,375
Explanation:
Giving the following information:
Big Wheel, Inc. collects 25% of its sales on account in the month of the sale and 75% in the month following the sale.
Sales:
March= $16,300
April= $32,600
Cash collection April:
Sales on account from April= 32,600*0.25= 8,150
Sales on account from March= 16,300*0.75= 12,225
Total cash collection= $20,375
Altoona Corporation has two divisions, Hinges and Doors, which are both organized as profit centers; the Hinge Division produces and sells hinges to the Door Division and to outside customers. The Hinge Division has total costs of $43, $26 of which are variable. The Hinge Division is operating significantly below capacity and sells the hinges for $58.The Door Division has received an offer from an outsider vendor to supply all the hinges it needs (32,000 hinges) at a cost of $53. The manager of the Door Division is considering the offer but wants to approach the Hinge Division first.What would be the profit impact to Altoona Corporation as a whole if the Door Division purchased the 32,000 hinges it needs from the outside vendor for $53?a. No change in profit to Altoona.b. $160,000 increase in profits.c. $160,000 decrease in profits.d. $864,000 decrease in profits.
Answer:
d. $864,000 decrease in profits.
Explanation:
Hinge Division's total cost per unit:
variable $26
fixed $17
total $43
sales price $58
contribution margin $32
profit margin $15
Alternative A Alternative B Differential
intercompany outside amount
money paid to $0 $1,696,000 ($1,696,000)
outside vendor
variable costs $832,000 $0 $832,000
fixed costs $544,000 $544,000 $0
total costs $1,376,000 $2,240,000 ($864,000)
If the hinges are purchased form an outside vendor, the corporation's total profits will decrease by $864,000.
Formaggio Vecchio announced its regular quarterly cash dividend of $0.20 per share. Currently there are one million shares outstanding.
Declaration date: October 24, 2006
Ex-dividend date: November 20, 2006
Record date: November 22, 2006
Payment date: December 15, 2006
On ____ will the stock price change to reflect the value of the dividend;
Formaggioâs stock price at the end of November is expected to be $20. The dividend yield is ____;
Suppose that the marginal tax rate on dividend is 15% and the marginal tax rate on capital gain is 10%, the stock price will fall by _____ after the ex-dividend date;
Suppose that the company decides to use the same amount of cash to buy back shares rather than to issue cash dividends. The company will buy back shares at the market price at the end of November. You currently hold 10000 shares, and you decide to sell 1000 shares during the repurchase. The percentage ownership after the repurchase is ____ ;
Suppose that the company decides to issue a 10% stock dividend instead of a cash dividend. The stock price will fall by ___ due to the dilution
Answer:
A.On Ex-dividend date: November 20, 2006
B.1%
C.$0.19
D. $1.82
Explanation:
1.On Ex-dividend date: November 20, 2006
will the stock price change to reflect the value of the dividend
b. Calculation for Formaggio’s dividend yield
Using this formula
Dividend yield = dividend/share price
Let plug in the formula
= .20/20 = 1%
c. Calculation of how much the stock price is likely to fall
0.20*(1 – 15%) = P*(1 – 10%)
Solve for P = $0.19
d. Calculation of How much is the stock price likely to fall Suppose that the company decides to issue a 10% stock dividend instead of a cash dividend.
$1,000,000 + (1,000,000 * 10%)
$1,000,00+$100,000
= 1,100,000 total shares
Hence,
$20,000,000 / 1,100,000 = $18.18 per share
$20 – 18.18 = $1.82 fall
If the factory overhead is underapplied, then the adjusting journal entry to close the factory overhead account includes a: (Check all that apply.)\
Answer:
Debit to cost of goods sold and credit to factory overhead
Explanation:
Here we are interested in knowing the appropriate journal entry when the factory overhead is under applied.
What happens to the factory overhead journal in this case is that the we should have an adjusting journal entry.
The adjusting journal entry here is that we debit cost of goods sold and credit factory overhead
Year 1 $ 28,000 $ 112,000 $ 196,000 Year 2 124,000 112,000 76,000 Year 3 184,000 112,000 64,000 Totals $ 336,000 $ 336,000 $ 336,000 1. Assume that the company requires a 9% return from its investments. Using net present value, determine which projects, if any, should be acquired. 2. Using the answer from part 1, is the internal rate of return higher or lower than 9% for Project C2?
Answer:
Project c3 should be acquired
The IRR of c2 is greater than 9%
Explanation:
Here is the beginning part of the question:
Phoenix Company can invest in each of three cheese-making projects: C1, C2, and C3. Each project requires an initial investment of $276,000 and would yield the following annual cash flows. (PV of $1, FV of $1, PVA of $1 and FVA of $1) (Use appropriate factor(s) from the tables provided.)
The net present value is the present value of after tax cash flows from an investment less the amount invested.
The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.
IRR and NPV can be calculated using a financial calculator:
NPV
For project C 1
Cash flow in year 0 = $-276,000
Cash flow in year 1 = $ 28,000
Cash flow in year 2 = $124,000
Cash flow in year 3 = 184,000
I = 9%
NPV = $-3861.85
For project C2
Cash flow in year 0 = $-276,000
Cash flow in year 1 = $ 112,000
Cash flow in year 2 = $ 112,000
Cash flow in year 3 = $ 112,000
I = 9%
NPV = $7,505
IRR = 10.52 %
For project C 3
Cash flow in year 0 = $-276,000
Cash flow in year 1 = $ 196,000
Cash flow in year 2 = 76,000
Cash flow in year 3 = 64,000
I = 9%
NPV = 17,203.94
Project c3 should be acquired because it has the highest NPV.
To find the NPV 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 NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
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
Rick prepared financial statements for MegaCorp knowing that it was going to use his statements to apply for a loan with Big Bank. When Big Bank turned MegaCorp down, it applied to Fourth Bank for a loan. MegaCorp presented the statements prepared by Rick to Fourth Bank which gave the company a loan. It was discovered that Rick was negligent in preparing the statements, and Fourth Bank sued Rick. Under which of the following tests is Rick liable?
a. Ultramares doctrine
b. Foreseeable doctrine
c. Restatement doctrine
d. Both the foreseeable doctrine and the Restatement doctrine
Answer:
The correct answer is the option D: Both the foreseeable doctrine and the restatement doctrine.
Explanation:
On the one hand, the foreseeable doctrine dictates that there is a limit in the liability of party for those acts that he has done and that carry a risk of foreseeable harm. Therefore that this point of view establishes that a reasonable person would be able to understand and so to know when a certain action would bring certain damages to another party.
On the oher hand, the restatement doctrine establishes that there are a set of treatises on legal subjects that primarily are looking for to inform judges and lawyers about general principles of common law. And therefore that those treatises will help both the judge and the lawyers at the time of the trial when the person has to go to court.
Max, an employee at HiFi LLC, is responsible for performing the job analysis process in her organization. She is currently planning the job analysis. Which of the following should typically be Max's next step?
a. Preparing for and introducing job analysis
b. Developing job descriptions and job specifications
c. Conducting the job analysis
d. Maintaining and updating job descriptions
Answer:
The correct answer is the option C: Conducting the job analysis.
Explanation:
To begin with, the term of "Job Analysis" refers to a method used in the organizations with the purpose of generating job descriptions and specifications in order to establish a better communication inside the organization and also to know better who the best candidates will be for future jobs. Therefore that this analysis focus on the correct comprehension from the analyst regarding the job that is being under analysis. When the analysis has began the person in charge of it will have to planned carafully the way that she will get the information for later transform it into the job description and that is why that once that the planning has been done the person needs to conduct the job analysis in order to obtain the results expect that are the proper description of the job and all of its specifications for future employees.