Answer:
Safety Stock = 932
Explanation:
The safety stock is determinate as follows:
f the desired service level is 99% When inventory reaches ROP, during the lead time 99% of the customers will receive the good while 1% of them will face stock-out.
Formula:
[tex]Pz \times \sqrt{lead-time} \times \sigma =\\P(99) \times \sqrt{2} \times 200 =[/tex]
We have 2 weeks lead-time the standard deviation is 200 while we want a service level of 99% (z= 0.99)
2.33 x √2 x 200 = 932
Safety Stock = 932
A company wants to determine its reorder point (R). Demand is variable and they want to build a safety stock into R. The company wants to have a service level of 95 percent. If average daily demand is 8, lead time is 3 days and the standard deviation of demand during lead time is 2, what is the desired value of R
Answer: 27.28 units
Explanation:
From the question, we are told that a company wants to determine its reorder point (R) and that demand is variable and they want to build a safety stock into R. We have also been given the information that the company wants to have a service level of 95 percent and that average daily demand is 8, lead time is 3 days and the standard deviation of demand during lead time is 2.
It should be noted that a service level of 95% will have a desired z score of 1.64. To get the desired value of R, we multiply the average daily demand by the number of the days in lead time and then add to the multiplication between the standard deviation during the lead time and the desired z score. Mathematically, this will be expressed as:
= (8 × 3) + (2 × 1.64)
= 24 + 3.28
= 27.28
Therefore, the desired value of R = 27.28 units
Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 26, it paid the full amount due. The amount of the cash paid on August 26 equals:
Answer:
The journal entries to record the purchase and payment of the merchandise should be:
August 7, merchandise purchased, terms 1/10, n/30
Dr Merchandise inventory 9,750
Cr Accounts payable 9,750
August 11, $1,500 worth of merchandise is returned
Dr Accounts payable 1,500
Cr Merchandise inventory 1,500
August 26, invoice is paid at full amount since discount period expired
Dr Accounts payable 8,250
Cr Cash 8,250
The management of Truelove Corporation is considering a project that would require an initial investment of $321,000 and would last for 7 years. The annual net operating income from the project would be $82,000, including depreciation of $42,000. At the end of the project, the scrap value of the project's assets would be $27,000. (Ignore income taxes.)
Required:
1. Determine the payback period of the project.2. What will be an ideal response?
Answer:
2.6 years
The appropriate response to carry out the project if the payback period is within the acceptable payback period of the company
Explanation:
Payback period calculates the amount of the time it takes to recover the amount invested in a project from its cumulative cash flows.
Payback period = amount invested / cash flow
Cash flows is used in calculating the payback period.
To derive the payback period from net income, add depreciation to net income
$82,000 + $42,000 = $124,000
$321,000 / $124,000 = 2.6 years
I hope my answer helps you
In each of the following examples, identify whether the individual is experiencing cyclical unemployment, frictional unemployment, structural unemployment, or no unemployment.
a. Eduardo has recently moved to a new city with his wife who was offered a great job there. He is trying to find a position in the same industry he worked in before relocating.
b. Derek worked for a large telecommunications firm that went bankrupt last year due to a recent recession. He has since tried to find work with one of the firm's competitors, but good jobs are currently hard to come by.
c. Drew lost his job at a car manufacturer last year. He spent 6 months applying for every job possible before giving up 2 months ago. He now spends his day playing Xbox.
d. Paula has 20 years of experience in manufacturing. Her employer, and many other manufacturing firms, recently closed their U.S. plants. She would like to find a similar job but is unable to find anything that utilizes her skills.
e. Katherine works part-time at a small retail store. She would like to work full-time, but her employer is currently unable to extend her hours.
f. Tyrell just graduated from college with a business degree. He is currently looking for a job in banking in the major city he just moved to.
g. Mike is a contractor who has been unable to find work, since most businesses are delaying or canceling their construction plans due to economic uncertainty in the coming year.
h. Meg used to own and run her own bookstore. Her sales declined due to competition from online retailers. She has not been able to find any work related to her skills in the diminishing retail industry for books.
Answer:
a. Eduardo has recently moved to a new city with his wife who was offered a great job there. He is trying to find a position in the same industry he worked in before relocating. Voluntary Unemployment
b. Derek worked for a large telecommunications firm that went bankrupt last year due to a recent recession. He has since tried to find work with one of the firm's competitors, but good jobs are currently hard to come by.
Cyclical Unemployment.
c. Drew lost his job at a car manufacturer last year. He spent 6 months applying for every job possible before giving up 2 months ago. He now spends his day playing Xbox.
Voluntary Unemployment
d. Paula has 20 years of experience in manufacturing. Her employer, and many other manufacturing firms, recently closed their U.S. plants. She would like to find a similar job but is unable to find anything that utilizes her skills.
Structural Unemployment
e.Katherine works part-time at a small retail store. She would like to work full-time, but her employer is currently unable to extend her hours.
No Unemployment.
f. Tyrell just graduated from college with a business degree. He is currently looking for a job in banking in the major city he just moved to.
No Unemployment
g. Mike is a contractor who has been unable to find work, since most businesses are delaying or canceling their construction plans due to economic uncertainty in the coming year.
Structural Unemployment
h. Meg used to own and run her own bookstore. Her sales declined due to competition from online retailers. She has not been able to find any work related to her skills in the diminishing retail industry for books.
Structural Unemployment
Cheers!
You are cautiously bullish on the common stock of EXTREME INC over the next several months. The current price of the stock is $59 per share. You want to establish a bullish money spread to help limit the cost of your option position. You find the following option quotes: EXTREME INC Underlying Stock price: $59.00 Expiration Strike Call Put June 54.00 9.40 2.45 June59.00 4.95 3.90 June64.00 2.45 8.40 Suppose you establish a bullish money spread with the puts. In June the stock's price turns out to be $62. Ignoring commissions, the net profit on your position is
Answer: $395
Explanation:
A bull put spread is a strategy that is utilized by investors when a moderate rise is being expected in the price of an asset. Investors will purchase put at a lower price and then sells the put option at a strike price that is higher.
In this scenario, the $54 put option will have to be bought and the $64 put option will then be sold.
Profit = Premium received – Premium Paid + Settlement gain/Loss
Since we have been given that the stock's price turns out to be $62 in June, $64 put will be exercised which will lead to ($64 - $62) = $2 loss per option.
The net profit will now be:
= (8.40 - 2.45 - 2) × 100
= 3.95 × 100
= $395
Therefore, the net profit is $395
Assume you are selling a product in which at a price of $10, you can sell 90 units. When the price increases to $11, you can only sell 63 units. Given this change in price and sales, answer the following:________.
A. What is the price elasticity of demand for your product?
B. Is demand elastic, unit-elastic or inelastic?
C. What is the change in revenue for this product from the price increase?
Fortune, Inc., is preparing its master budget for the first quarter. The company sells a single product at a price of $25 per unit. Sales (in units) are forecasted at 39,000 for January, 59,000 for February, and 49,000 for March. Cost of goods sold is $12 per unit. Other expense information for the first quarter follows. Commissions 11 % of sales dollars Rent $ 20,000 per month Advertising 12 % of sales dollars Office salaries $ 74,000 per month Depreciation $ 49,000 per month Interest 11 % annually on a $270,000 note payable Tax rate 40 % Prepare a budgeted income statement for this first quarter. (Round your final answers to the nearest whole dollar.)
Answer:
Budgeted Income Statement For Quarter Ended March 31
Sales $3,675,000
Cost of goods sold $1,764,000
Gross profit $1,911,000
Operating expenses
Commissions expense $404,250
Rent expense $60,000
Advertising expense $441,000
Office salaries expense $222,000
Depreciation expense $147,000
Interest expense $ 7,425
Total operating expenses $1,281,675
Income before taxes $629,325
Income tax expense $251,730
Net income $ 377,595
Explanation:
Commissions 11 % of sales dollars
Rent $ 20,000 per month
Advertising 12 % of sales dollars
Office salaries $ 74,000 per month
Depreciation $ 49,000 per month
Interest 11 % annually on a $270,000 note payable
Tax rate 40%
Sales = Number of units for first quarter × price per unit
= (39,000 + 59,000 + 49,000) × $25
= $3,675,000
Cost of goods = (39,000 + 59,000 + 49,000) × $12
= $1,764,000
Commissions expense = 11 % of sales = 11% × $3,675,000 = $404,250
Advertising expense = 12 % of sales = 12% × $3,675,000 = $441,000
Interest expense = 11 % annually on a $270,000
= 11% × 270,000 × 3/12
= $ 7,425
Income = Gross profit - total operating expenses
= $1,911,000 - $1,281,675
= $629,325
Income tax expenses = 40% × $629,325 = $251,730
Questions about the tax multiplier:
1. Suppose the marginal propensity to consume (MPC) for a nation is 0.7. What is the tax multiplier for this nation?
2. What is the tax multiplier for this nation if a $150 increase in taxes reduces real GDP by $450?
3. How much will real GDP change if the tax multiplier is-9 and taxes are reduced by $200?
Answer:
1. The tax multiplier for this nation is -2.33
2. The tax multiplier for this nation if a $150 increase in taxes reduces real GDP by $450 would be -3
3. Real GDP change will be of -$1,800 if the tax multiplier is-9 and taxes are reduced by $200
Explanation:
1. In order to calculate the tax multiplier for this nation according to the given data we would have to calculate the following formula:
tax multiplier for this nation=-MPC/1-MPC
tax multiplier for this nation=-0.7/1-0.7
tax multiplier for this nation=-2.33
The tax multiplier for this nation is -2.33
2. To calculate the tax multiplier for this nation if a $150 increase in taxes reduces real GDP by $450 we would have to make the following calculation:
tax multiplier for this nation=real GDP/increase in taxes
tax multiplier for this nation=-$450/$150
tax multiplier for this nation=-3
The tax multiplier for this nation if a $150 increase in taxes reduces real GDP by $450 would be -3
3. To calculate the amount of change will real GDP be if the tax multiplier is-9 and taxes are reduced by $200 we would have to make the following calculation:
tax multiplier=real GDP/increase in taxes
-9=real GDP/$200
real GDP=-9*$200
real GDP=-$1800
Real GDP change will be of -$1,800 if the tax multiplier is-9 and taxes are reduced by $200
Your company is upgrading the breakroom and kitchen. It is going to include an expresso machine, a fridge with compartments for each employee, a sink, microwave, toaster oven, tables chairs, a rock wall, snacks for everyone, and maybe some other bells and whistles. Your managers think that by updating this area employees will not take as long of lunches. They understand this purchase will be at a cost. You are tasked with considering two different options and presenting them to management. Use a 5% interest rate. Walmart Kit Target First Cost $40,000 $65,000Annual Maintenance Cost $10,000 $12,000Salvage Value $12,000 $25,000Life Years 3 6 a. Using NPW (Net Present Worth Analysis) analysis determine which kitchen kit you should chooseb. Using EUAW (Equivalent Uniform Annual Worth) analysis determine which kitchen kit you should choose. C. You really want the Target kit because it looks nicer and has more bells and whistles. You are willing to keep these products around for longer and therefore extend the lives of these products. Perform the analysis to show that the Target option is the better choice. d. Now from your analysis in part b think about how ethical presenting this information to management would be. Write 2-3 sentences about how you would present this information in a way that showed your bias. You will be graded on your ability to consider two options in an ethical comparison and how you perceive your bias.
Answer:
1. In a Year 20,367 20,017
2. In a Year 21,333 21,917
3. In the case of NPW analysis Selected Target is best option because it is the better and cheaper investment while EUAM analysis states Walmart kit is better option,
4.Target is the best option because the cost difference is only around $600 which will last for 6 Years while in walmart case we will need to replace all the furniture in 3 Years .
Explanation:
1. Using NPW Analysis
Walmart Kit Target
Intial Cost 40000 65000
AMC 10000 12000
Salvage Value 12000 25000
Life Years 3 6
Total Cost
Intial Cost 40000 65000
Less Salvage 12000 25000
Balance 28000 40000
5% Interest 6000 19500
AMC PV 2.71 5.05
Amc 27100 60600
Total Cost 61100 120100
In a Year 20,367 20,017
2. Using EUAW Analysis
Walmart Kit
Target
Intial Cost 40000 65000
AMC 10000 12000
Salvage Value 12000 25000
Life Years 3 6
Total Cost
Intial Cost 40000 65000
Less Salvage 12000 25000
Balance 28000 40000
5% Interest 6000 19500
AMC 30000 72000
Total 64000 131500
In a Year 21,333 21,917
In the case of NPW analysis Selected Target is best option because it is the better and cheaper investment while EUAM analysis states Walmart kit is better option,
Target is the best option because the cost difference is only around $600 which will last for 6 Years while in walmart case we will need to replace all the furniture in 3 Years .
Hence Target product will be the best option we would advice the management to go for.
The following refers to units processed by a breakfast cereal maker in August. Compute the total equivalent units of production with respect to conversion for August using the weighted-average inventory method. Units of Product Percent of Conversion Added Beginning Work in Process 230,000 60 % Units started 570,000 100 % Units completed 620,000 100 % Ending Work in Process 180,000 70 %
Answer:
Total Equivalent Units Conversion 746,000
Explanation:
Breakfast Cereal Maker
Weighted-Average Inventory Method
Total Equivalent Units
Units Conversion Equivalent Units
Particulars %
Units completed 620,000 100 % 620,000
Add Ending WIP 180,000 70 % 126,000
Total Equivalent Units 746,000
The total Equivalent units are obtained by adding the percent of the units in the ending work in process inventory to the units completed and transferred out. This is the average weighted method of finding the equivalent units.
As only conversion is required we found out the conversion units only.
On February 22, Brett Corporation acquired 250 shares of its $3 par value common stock for $26 each. On March 15, the company resold 66 shares for $29 each. What is true of the entry for reselling the shares
Answer: Credit Additional Paid in Capital $198
Explanation:
Brett Corporation reissued the Treasury Stock at $29 which was $3 higher than the amount they had repurchased it for.
When stock is sold for a price higher or lower than they are worth, the balance goes to the Additional Paid-in Capital account. If it is sold higher, the balance is Credited to the Additional Paid-in Capital account and if it is sold for lower than it is worth, it is debited.
The Balance here is,
= $3 * 66 resold shares
= $198
This $198 will therefore be credited to the Additional Paid-in Capital account.
Which of the following would not be considered internal users of accounting data for a company? The controller of a company. Salesmen of the company. Creditors of a company. The president of a company.
Answer:
Creditors of a company.
Explanation:
Internal users of accounting information are those people who use the accounting information of the company, and that work at the company, in this case, the internal users are: the controller, the salesmen and the president.
External users of accounting information are those who do not work at the company, but may be involved with it in some way, for example, the creditors, or the tax authorities.
g Other things the same, a decrease in the price level causes real wealth to a. fall, interest rates to fall, and the dollar to appreciate. b. fall, interest rates to rise, and the dollar to depreciate. c. rise, interest rates to rise, and the dollar to appreciate. d. rise, interest rates to fall, and the dollar to depreciate.
Answer: d. rise, interest rates to fall, and the dollar to depreciate
Explanation:
The price level drops which would make goods and services easier to afford in the country. The proportion of income spent on goods and services will therefore decrease which means more money is available to invest. These investments will increase the Real Wealth of individuals.
However, because there are now a lot of people investing, the sources of capital increases which will reduce the interest rate because the higher the supply, the lower the price.
As a result of the reduced interest rates and assuming this is the United States, people will seek to invest in other countries to get higher interest rates so the dollar will depreciate in value as it is less sought after.
An investor has examined Home Depot stock and makes the following predictions for the future: YEAR 1 2 3 4 DIVIDEND $1.31 $1.58 $1.54 $1.56 The investor believes the selling price in four years will be $76.25. If the investor wants a 18.00% return to hold the stock, what intrinsic value does the investor put on Home Depot today
Answer: $43.32
Explanation:
The Intrinsic value of Home Depot Stock will be the present value of all the future cashflows from the stock.
Discounting with a rate of 18%, the intrinsic value is;
= 1.31/ ( 1 + 18%) + 1.58 / ( 1 + 18%)² + 1.54/ ( 1 + 18%)³ + 1.56 ( 1 + 18%) ⁴ + 76.25 / ( 1 + 18%) ⁴
= 1.11 + 1.1347 + 0.937 + 0.8046 + 39.3289
= 43.3152
= $43.32
The government establishes an effective price ceiling for a gallon of milk. What will be the result of this ceiling? a) It will create a surplus b) It will create a shortage c) It will have no effect d) It will cause an increase in demand e) it will cause an increase in supply
Answer:
D
Explanation:
Because price ceiling is put by the government so that certain commodities could still be available at a reasonable price for many
Answer: D
Explanation:
If a firm’s business activities do not result in profit maximization, whilst alternatives exist, then such activities amount to irresponsible actions. Discuss any five sets of economic responsibilities firms must embrace to ensure the protection and enhancement of the business.
Answer:
The five steps of economic responsibilities firms should embrace includes the following: (1) By using resources efficiently (2) Organizational structure (3) Outsource (4) Continuous Improvement (5) Bench-Marking
Explanation:
Solution
The 5 sets of economic responsibilities firms should embrace include the following:
1)Use resources efficiently: Existing resources such as funds, infrastructure, man power,transport must be effective by the companies. Companies must have genuine policies and companies must guarantee that people are following the laid down standards and policies in making sure that operational costs are as low as feasible.
2)Organizational structure: Must guarantee that organizational structure and payoffs are right.
Organizational structure is necessary so as the manpower is not changed and all departments have the needed manpower only. Also, the payment gaps between different must be sufficient instead of excessive. There must not exist a large gap increase rate of average salaries of top executives and average salaries of lower level employees.
3)Outsource: Companies must outsource processes if the cost of outsourcing operations is lower than the cost of internal operations. for this it save a lots of costs.
4)Continuous Improvement: The welcoming of continuous improvement projects in the organizations to minimize the costs of operations shows that costs are saved.
5)Bench marking: Benchmark all the costs against industry leaders and aspire to become the most low cost operator to earn more profits.
Section 16 of the 1934 Act prohibits short-swing trading on the part of officers, directors, and controlling shareholders who a. trade their shares in order to invest in another company. b. own more than 10% of the company. c. are also on the board of directors of the company. d. own more than 25% of the company.
Answer:
Option B
Explanation:
In simple word, Section 16 refers to th provision in the Stock Exchange Act of 1934 (SEA) that sets out the report published obligations under which directors, officers and key shareholders are legally obliged under adhere.
As per Section 16, anybody who is a sole beneficiary of even more of some 10 percent of a corporation, explicitly or implicitly, or any chairman or manager of the lender of such a safety, is required to submit the declarations based on section 16.
The 1934 Securities and Exchange act is a federal law governing secondary securities trading across the Us. The wide-ranging law was developed in 1934 as part of an attempt to ensure greater transparency in the financial transactions and less corruption.
An agency coupled with an interest means: Select one: a. either party may terminate the agency at any time. b. the agency may not be able to recover the debt in the event of the principal's death. c. the agency is irrevocable without the consent of the agent. d. each party has the power to terminate without breach of contract if done so within 18 months.
Answer:
c. the agency is irrevocable without the consent of the agent.
Explanation:
An agency is a fiduciary relationship in which an individual is appointed as the agent to act for a specific purpose or reason on behalf of another, who is the principal. Basically, in agency the agent is typically acting under the influence or control of his or her principal and as such can be a notable representative of the principal in any capacity deemed fit legally.
Also, the principal could be a corporation, an organization or a limited liability company (LLC) and not necessarily a single individual.
An agency coupled with an interest means the agency is irrevocable without the consent of the agent because the relationship that exists between them is a contractual one.
Hence, the agency is irrevocable before its expiration or without the consent of the agent.
Additionally, death, bankruptcy, and mismanagement by the principal cannot end or terminate an agency coupled with an interest until the agent is able to realize his or her legal interest.
The information related to interest expense of Classic Music, Inc. is given belowNet income $264,000Income tax expense $107,000Interest expense $66,000Based on the above data, which of the following is the times-interest-earned ratio?A. 5.00 timesB. 4.08 timesC. 6 62 timesD. 4.00 times
Answer:
Classic Music, Inc.
C. 6.62 times
Explanation:
a) The times-interest-earned (TIE) ratio measures a company's ability to meet its debt obligations based on its current income. It is calculated as earnings before interest and taxes (EBIT) divided by the total interest payable on bonds and other debts.
b) The EBIT is $437,000 (Net Income + Income Tax and Interest Expenses).
c) Therefore, the TIE is equal to 6.62 times ($437,000/$66,000).
A business owner applies for a bank loan to launch a fairly low-risk project. After receiving the loan, she cancels the low-risk project and instead uses the borrowed funds for a high-risk venture. This is an example of
Answer:
Moral hazard
Explanation:
The moral hazard refers to the situation in which the person has the benefit to increase the risk as it does not bear or suffered the whole risk
According to the given situation, it is mentioned that the business owner canceled the low risk project and used the borrowed funds for taking high risk in the venture after loan receiving
This situation represents the moral hazard scenario
You are in talks to settle a potential lawsuit. The defendant has offered to make annual payments of $35,000, $39,000, $80,000, and $120,000 to you each year over the next four years, respectively. All payments will be made at the end of the year. If the appropriate interest rate is 5.7 percent, what is the value of the settlement offer today
Answer:
The value of the settlement today = $231,897.79
Explanation:
The value of the settlement today is the sum of the present value (PV) of cash inflows discounted at the discount rate of 5.7 %.
Year PV
1 35,000 × 1.057^(-1) = 33112.58
2 39,000× 1.057^(-2) = 34907.16
3. 80,000× 1.057^(-3) = 67743.09
4 120,000 × 1.057^(-4) =96134.94
The Pv of the total cash in flow =33,112.58 + 34,907.17 + 67,743.09 + 96,134.95 = 231,897.79
The value of the settlement today = $231,897.79
Spontaneously generated funds are generally defined as follows: a. Funds that a firm must raise externally through borrowing or by selling new common or preferred stock. b. Assets required per dollar of sales. c. A forecasting approach in which the forecasted percentage of sales for each item is held constant. d. The amount of cash raised in a given year minus the amount of cash needed to finance the additional capital expenditures and working capital needed to support the firm's growth. e. Funds that arise out of normal business operations from its suppliers, employees, and the government, and they include spontaneous increases in accounts payable and accruals.
Answer: e. Funds that arise out of normal business operations from its suppliers, employees, and the government, and they include spontaneous increases in accounts payable and accruals.
Explanation:
Spontaneously Generated Funds are a result of an increase in sales. This then in turn leads to an increase in Accounts Payables, wages to employees and taxes to the Government. For example, if sales rise then the company will buy more from.its suppliers leading to a higher Payables balance.
It is used in the calculation of Additional Funds Needed where it along with an increase in Retained earnings is subtracted from the required increase in sales.
Consider two projects with the following cash flows: Project S is a 4 year project with initial (time 0) cash outflow of 3000 and time 1 through 4 cash inflows of 1500, 1200, 800 and 300 respectively. Project L is a 4 year project with initial (time 0) cash outflow of 3000 and time 1 through 4 cash inflows of 400, 900, 1300, and 1500 respectively. Assuming a 5% cost of capital, determine which project should be chosen if the projects are mutually exclusive.
Answer:
Project L has higher NPV than Project S, therefore Project L should be selected
Explanation:
Project S:
Year 0 : (3000)
Year 1 : 1500 * 0.952 = 1,428
Year 2 : 1200 * 0.907= 1,088.4
Year 3 : 800 * 0.864= 691.2
Year 4 : 300 * 0.823= 246.9
Total of Cash inflows after discounting: 3,454.5
Net Present Value : 454.5
Project L:
Year 0 : (3000)
Year 1 : 400 * 0.952 =380.8
Year 2 : 900 * 0.907 = 816.3
Year 3 : 1300 * 0.864 = 1,123.2
Year 4 : 1500 * 0.823 = 1,234.5
Total of Cash inflows after discounting: 3,554.8
Net Present Value : 554.8
To calculate the market demand curve from individual demand curves, we: Group of answer choices vertically sum the individual demand curves. horizontally sum the individual demand curves. exponentiate the individual demand curves. add up the prices of the individual demand curves, holding the quantities constant.
Answer:
horizontally sum the individual demand curves.
Explanation:
Develop an Excel worksheet simulation for the following problem. The management of Paragon Household Products is considering the introduction of a new product. The fixed cost to begin the production of the product is $25,388. The variable cost for the product is uniformly distributed between $15 and $20 per unit. The product will sell for $42 per unit. Demand for the product is best described by a normal probability distribution with a mean of 1200 units and a standard deviation of 300 units. Develop a spreadsheet simulation that uses 500 simulation trials:A. What is the mean profit for the simulation?B. What is the probability that the project will result in a loss?C. What is your recommendation concerning the introduction of the product?
As it ask to run simulations the values calculates will difer even if you follow the same step as I did.
Answer:
Mean Profit: $ 4,295
Probability of loss: 29.80%
As the product has a mean profit it will on average generate gains
but:
as the standard deviation of the simulation was $ 7,778.40
we should not invest on the product as it is to variable
Explanation:
We are going to use the =RAND() function of excel
which, generates a random number between 0 and 1
This will be done 1,000 times 500 for the variable cost
and 500 for the demand.
Then we copy and paste this numbers to get them fixed.
Then, we convert them into actual cost and demand in units considering their distribution
using excel dist.norm.inv
Now, with this values we solve for profit on each one.
FOr the complexity I attached the excel file as the plataform interface cannot handle large tables.
Exhibit 22-8 Units of Labor Units of Output 0 0 1 50 2 110 3 155 4 185 5 205 Exhibit 22-8 shows how output varies with the only variable input used in its production. Marginal physical product of the fifth unit of labor is
Answer:
20
Explanation:
Marginal physical product can be defined as a change in the physical product as a result of an extra unit of labor input , assuming the quantities of other input remain constant.
This is calculated by dividing the change in physical product by the change in the unit of labor.
Workings
Units of labor Units of physical products
0 0
1 50
2 110
3 155
4 185
5 205
4 units of labor = 185
5 units of labor = 205
Marginal physical product = 205-185/1
=20
Selected accounts with some amounts omitted are as follows Work in Process Oct. 1 Balance 23,900 Oct. 31 Finished goods X 31 Direct materials 91,000 31 Direct labor 151,900 31 Factory overhead X Finished Goods Oct. 1 Balance 14,700 31 Goods finished 340,600 If the balance of Work in Process on October 31 is $215,100, what was the amount of factory overhead applied in October
Answer:
the amount of factory overhead applied in October is $274,200
Explanation:
First calculate the amount transferred to Finished Goods Account from the Work in Process Account.
Finished Goods T - Account
Debit
Opening Balance $14,700
Transferred from Work In Process Account $325,900
Totals $340,600
Credit
Closing Balance $340,600
Totals $340,600
Prepare the Work in Process T - Account to determine the balance that is Overhead Applied.
Work in Process T - Account
Debits
Opening Balance $23,900
Direct materials $91,000
Direct labor $151,900
Overheads (balancing figure) $274,200
Totals $541,000
Credits
Closing Balance $215,100
Transfer to Finished Goods $325,900
Totals $541,000
Conclusion :
the amount of factory overhead applied in October is $274,200
On January 1, 2018, Splash City issues $500,000 of 9% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year.
Required:
Assuming the market interest rate on the issue date is 10%, the bonds will issue at $457,102.
1. Complete the first three rows of an amortization table.
2. Record the bond issue on January 1, 2018, and the first two semiannual interest payments on June 30, 2018, and December 31, 2018.
Answer:
Date Interest Interest Amortization Bond's
payment expense bond discount book value
Jan. 1, 2018 457,102
June 30, 2018 22,500 23,572.45 1,072.45 458,174.45
Dec. 31, 2018 22,500 23,572.45 1,072.45 459,246.90
Assuming you are using a straight line amortization of bond discount, then the amortization per coupon payment = $42,898 / 40 = $1,072.45
January 1, 2018, bonds are issued
Dr Cash 457,102
Dr Discount on bonds payable 42,898
Cr Bonds payable 500,000
June 30, 2021, first coupon payment
Dr Interest expense 23,572.45
Cr Cash 22,500
Cr Discount on bonds payable 1,072.45
December 31, 2021, second coupon payment
Dr Interest expense 23,572.45
Cr Cash 22,500
Cr Discount on bonds payable 1,072.45
If the company uses the effective interest method, the numbers vary a little:
amortization of bond discount on first coupon payment:
($457,102 x 5%) - ($500,000 x 4.5%) = $22,855.10 - $22,500 = $355.10
Journal entry to record first coupon payment:
Dr Interest expense 22,855.10
Cr Cash 22,500
Cr Discount on bonds payable 355.10
amortization of bond discount on second coupon payment:
($458,174.45 x 5%) - ($400,000 x 4.5%) = $22,908.72 - $22,500 = $408.72
Journal entry to record second coupon payment:
Dr Interest expense 22,908.72
Cr Cash 22,500
Cr Discount on bonds payable 408.72
1. The completion of Amortization Table (first three rows) is as follows:
Date Interest Interest Amortization Bond Payable
Payment Expense Bond Discount Balance
Jan. 1, 2018 $457,102.00
June 30, 2018 $22,500 $22,855.10 $355.10 457,457.10
Dec. 31, 2018 22,500 22,872.86 372.86 $457,829.96
2. Journal Entries:
Bonds Issuance on January 1, 2018:
Jan. 1, 2018 Debit Cash $457,102
Debit Bonds Discount $42,898
Credit Bonds Payable $500,000
To record bonds issuance.
June 30, 2018 Debit Interest Expense $22,855.10
Credit Bonds Discount $355.10
Credit Cash $22,500
To record the first semiannual interest payment.
Dec. 31, 2018 Debit Interest Expense $22,872.86
Credit Bonds Discount $372.86
Credit Cash $22,500
To record the second semiannual interest payment.
Data and Calculations:
Bonds Payable = $500,000
Cash Proceeds = $457,102
Bonds Discount = $42,898
Coupon interest rate = 9% annually
Maturity Period = 20 years
Effective (market) interest rate = 10%
June 30, 2018:
Interest Expense = $22,855.10 ($457,102 x 10% x 6/12)
Cash Payment = $22,500.00 ($500,000 x 9% x 6/12)
Amortization = $355.10
Bonds Payable balance = $457,457.10 ($457,102 + $355.10)
December 31, 2018:
Interest Expense = $22,872.86 ($457,457.10 x 10% x 6/12)
Cash Payment = $22,500.00 ($500,000 x 9% x 6/12)
Amortization = $372.86
Bonds Payable balance = $457,829.96 ($457,457.10 + $372.86)
Analysis of Entries:
Jan. 1, 2018 Cash $457,102 Bonds Discount $42,898 Bonds Payable $500,000
June 30, 2018 Interest Expense $22,855.10 Bonds Discount $355.10 Cash $22,500
Dec. 31, 2018 Interest Expense $22,872.86 Bonds Discount $372.86 Cash $22,500
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Suppose we hold a forward contract on a stock with expiration 66 months from now. We entered into this contract 66 months ago so that when we entered into the contract, the expiration was T = 1T=1 year. The stock price$ 66 months ago was S_0 = 100S 0 =100, the current stock price is 125125 and the current interest rate is r = 10\%r=10% compounded semi-annually. (This is the same rate that prevailed 66 months ago.) What is the current value of our forward contract? Please submit your answer in dollars rounded to one decimal place so if your answer is 42.67842.678 then you should submit an answer of 42.742.7.
Answer:
The current value of our forward contract is $105.1
Explanation:
According to the given data we have the following:
Spot - 6 months ago=$ 100
Spot - Current=125
Interest rate= 10%
Time=12 months
Therefore, to calculate the current value of our forward contract we would have to make the following calculation:
Forward Price=Spot price*e^(rt)
=$100*e^(0.1*0.5)
Forward Price=$105.1
The current value of our forward contract is $105.1
Andyco, Inc., has the following balance sheet and an equity market-to-book ratio of 1.4. Assuming the market value of debt equals its book value, what weights should it use for its WACC calculation? g
Answer:
29.80%
70.20%
Explanation:
The computation of weights should it use for its WACC is shown below:-
FMV of Andyco's Equity = Equity × Equity market-to-book ratio
= $690 × 1.4
= $966
Weight for Debt = Debt ÷ (FMV Equity + Debt)
= $410 ÷ ($966 + $410)
= $410 ÷ $1,376
= 29.80%
Weight for Equity = FMV Equity ÷ (Debt + FMV Equity)
= $966 ÷ ($410 + $966)
= $966 ÷ $1,376
= 70.20%
Therefore we have applied the above formula