Answer:
Total overhead= $1,290,000
Explanation:
Giving the following information:
Overhead:
Machining= $3,000,000
Assembling= $1,500,000.
Regular Supreme
Machine hours 10,000 30,000
Number of parts 90,000 160,000
First, we need to calculate the predetermined overhead rate per activity:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Machining= 3,000,000/ (10,000 + 30,000)= $75 per machine hour
Assembling= 1,500,000/(90,000 + 160,000)= $6 per part
Now, we can allocate overhead to Regular:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Machining= 75*10,000= $750,000
Assembling= 6*90,000= $540,000
Total overhead= $1,290,000
The following are selected 2017 transactions of Sean Astin Corporation.
Sept. 1 Purchased inventory from Encrino Company on account for $50,000. Astin records purchases gross and uses a periodic inventory system.
Oct. 1 Issued a $50,000 12-month, 8% note to Encino in payment of account
Oct. 1 Borrowed $50,000 from the Shore Bank by signing a 12-month, zero-interest-bearing $54,000 note.
Instructions:
(A) Prepare journal entries for the selected transactions above
(B) Prepare adjusting entries at December 31
(C) Compute the total net liability to be reported on the December 31 balance sheet for: The interest-bearing note & the zero-interest-bearing note.
Answer and Explanation:
The Journal entries are shown below:-
A. a. Purchase Dr, $50,000
To Accounts payable $50,000
(Being purchase of inventory is recorded)
b.Accounts payable Dr, $50,000
To Notes payable $50,000
(Being issuance of notes is recorded)
c.Cash Dr, $50,000
Discount on notes payable Dr, $4,000
To Notes payable $54,000
(Being amount borrowed from bank and issued notes is recorded)
B. a. Interest expenses Dr, $1,000 ($50,000 × 8% × 3 ÷ 12)
To Interest payable $1,000
(Being interest expenses is recorded)
b. Interest expenses Dr, $1,000 ($4,000 × 3 ÷ 12)
To Discount on notes payable $1,000
(Being interest expenses is recorded)
C. The Computation of interest-bearing note and the zero-interest-bearing note is shown below:-
Interest-bearing note = Note payable + Interest payable
= $50,000 + $1,000
= $51,000
Zero-interest-bearing note = Note payable - Discount
= $54,000 - ($4,000 - $1,000)
= $54,000 - $3,000
= $51,000
A. The journal entries is the 1st stage of the accounting process, it records the business transactions of monetary nature in a the order of its occurrence.
B. The adjusting entries are the type of journal entries prepared at the end of the financial period to record the amount of expenses and incomes not incurred in the current period.
C. Total net liabilities is $102,000.
Computation:
The journal entries of A and B are shown in the image attached below.
C.
[tex]\begin{aligned}\text{Interest Bearing Note}&=\text{Notes Payable+Interest Payable}\\&=\$50,000+\$1,000\\&=\$51,000\end{aligned}[/tex]
[tex]\begin{aligned}\text{Zero-Interest Bearing Note}&=\text{Notes Payable-Discount}\\&=\$54,000-(\$4,000-\$1,000)\\&=\$51,000\end{aligned}[/tex]
The sum of interest bearing note and zero interest bearing note will be the total amount of net liabilities.
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Accounting software for small businesses has become so sophisticated that most small business owners will never need to consult with an actual accountant or understand accounting information themselves.
a. True
b. False
A manager invests $400,000 in a technology that should reduce the overall costs of production. The company managed to reduce their cost per unit from $2 to $1.85. After the investment has been made, the $400,000 investment is
Answer:
a. Considered sunk costs, not relevant in further decision making
Explanation:
the missing options are:
a. Considered sunk costs, not relevant in further decision making b. Considered sunk costs, but still relevant in further decision making c. Considered a loss d. Considered a profitAfter the investment in new technology has been made, it will be considered a sunk cost, because they are no longer relevant or important when considering or evaluating future investments and projects. Sunk costs are expenses that have already been made and incurred, and cannot be recouped.
There are 3 blanks for this homework problem I do not know how to do. The quesetions are bolded with blanks and question marks.
Weighted Average Method, Unit Costs, Valuing Inventories
Byford Inc. produces a product that passes through two processes. During November, equivalent units were calculated using the weighted average method:
Units completed 196,000
Add: Units in EWIP X Fraction complete (60,000 X 40%) 24,000
Equivalent units of output (weighted average) 220,000
Less: Units in BWIP X Fraction complete (50,000 X 70%) 35,000
Equivalent units of output (FIFO) 185,000
The costs that Byford had to account for during the month of November were as follows:
BWIP $107,000
Costs added 993,000
Total $1,100,000
Required:
1. Using the weighted average method, determine unit cost.
per unit ___________??
2. Under the weighted average method, what is the total cost of units transferred out? What is the cost assigned to units in ending inventory?
Cost of units transferred out _____________??
Cost of ending inventory______________??
Answer and Explanation:
1. The computation of unit cots is shown below:-
Unit cost = Total cost ÷ Equivalent units of output
Cost of per unit = $1,100,000 ÷ 220,000
= $5
2. The computation of the total cost of units transferred out and cost assigned to units in ending inventory is shown below:-
Transfer Out EWIP Total
Cost accounted for:
Goods transfer Out
(196,000 x $5) $980,000 $980,000
Goods EWIP
(24,000 x $5) 0 $120,000 $120,000
Total Cost $980,000 $120,000 $1,100,000
EWIP = Ending work in process
company earnings per share market value per share 1 $ 12.00 $ 176.40 2 10.00 96.00 3 7.50 93.75 4 50.00 250.00 a. compute the price-earnings ratio for each of these four separate companies. b. for which of these four companies does the market have the lowest expectation of future performance
Answer:
a) compute the price-earnings ratio for each of these four separate companies.
To find the price-earnings ratio fir each company, use the formula:
P.E ratio = Market value per share/ Earnings per share
Company 1:
Price-earnings ratio = [tex] \frac{176.40} {12.00} = 14.70 [/tex]
Company 2:
Price-earnings ratio = [tex] \frac{96.00}{10.00} = 9.6 [/tex]
Company 3:
Price-earnings ratio = [tex] \frac{93.75}{7.50} = 12.50[/tex]
Company 4:
Price-earnings ratio = [tex] \frac{250.00}{50.00} = 5.0 [/tex]
b) The market will have the lowest expectation of future performance from company 4 because
the price-earnings ratio of company 4 is the lowest.
In 1947, the largest brewer in the U.S., Schlitz, had a 4.57 percent share of the domestic market. (Anheuser-Busch was number four in those days). The top ten brewers, including the number one brewer, had 29.29 percent of the domestic market. Over 70 percent of the domestic market was controlled by "all other" brewers. By the year 2001 the largest brewer was Anheuser-Busch, with a 54.76 share of the domestic market. The top ten brewers held 97.04 percent share of the domestic market in 2001. Thus, the brewing industry in the U.S. became a(n) _____ market structure.
Answer:
oligopoly
Explanation:
In an oligopoly market structure, a small number of companies control all or most of the market. In this case, the top 10 brewers in the US control 97.04% of the total beer market. In an oligopoly, no single company controls the market. in this case, even though Anheuser-Busch has a 54.76% share of the market, competition still exists with the other companies.
If 10,000 units that were 40% completed are in process at November 1, 80,000 units were completed during November, and 12,000 were 20% completed at November 30, the number of equivalent units of production for November was 75,600. (Assume no loss of units in production and that inventories are costed by the first-in, first-out method.)
a. True
b. False
Answer:
Number of equivalents units= 78,400
Explanation:
Giving the following information:
Beginning inventory= 10,000 units that were 40%
Units completed= 80,000
Ending inventory= 12,000 were 20% completed
We will determine the number of equivalents units using the following structure:
COST PER EQUIVALENT UNITS:
Beginning work in process = beginning inventory* %incompleted
Units started and completed = units completed - beginning WIP
Ending work in process completed= Ending WIP* %completed
=Number of equivalent units
Beginning work in process = 10,000*0.6= 6,000
Units started and completed = 80,000 - 10,000= 70,000
Ending work in process completed= 12,000*0.2= 2,400
= 78,400
Donald invests the $10,000 today. Donald’s interest rate is 10% and interest is compounded and paid at the end of each year. At the end of two years, Donald’s investment is worth $12,100. What is the present value of Donald’s investment?
Answer:
The present value of Donald's investment is $10,000.
When the investment's worth of $12,100 is discounted by the discount factor of 10% in two years, the resulting figure is $10,000 ($12,100)/1.21.
Explanation:
Present value (PV) is the current value of a future sum of money or stream of cash flows given a specified rate of return. To calculate the present value of an investment, the future cash flows are discounted at the discount rate. The calculation of the present value is a consideration of the time value of money. This means that money received today is worth more than the same amount received in the future. So, to compensate for inflation, which alters the value of money due to time, it is expected that some interest be paid. Any interest received above the inflation rate can be regarded as profit.
The Present Value Formula is given as C/(1 + i)ⁿ, where
C = Future sum
i = Interest rate (with '1' equal to 100%)
n = number of periods.
Since 2003, Walmart has been a proponent of RFID technology, and the company wanted all of its suppliers to make use of RFID technology.The most likely reason that Walmart is supporting this technology is to help them:
Answer:
Explanation:
The most likely reason for Walmart to support this technology is that it will allow them to track and process items from their suppliers at a much more efficient rate. Since RFID technology uses radio waves to read and capture information stored on a tag attached to an object, providing a unique identifier for an object. These unique tags allow each individual item to be tracked throughout the whole process from supplier to warehouse to client. Thus preventing losses and reducing costs.
Mason Company manufactures and sells shoelaces for $2.00 per pair. Its variable cost per unit is $1.70. Mason's total fixed costs are $10,500. How many pairs must Mason Company sell to break even
Answer:
35,000
Explanation:
The contribution margin of each pair sold is ...
$2.00 -1.70 = $0.30
In order to cover the fixed costs, ...
$10500/$0.30 = 35,000
pairs must be sold.
Mason Co. must sell 35,000 pairs of shoelaces to break even.
Jorgensen High Tech Inc. is a calendar-year, accrual-method taxpayer. At the end of year 1, Jorgensen accrued and deducted the following bonuses for certain employees for financial accounting purposes.
$40,000 for Ken.
$30,000 for Jayne.
$20,000 for Jill.
$10,000 for Justin.
How much of the accrued bonuses can Jorgensen deduct in year 1 under the following alternative scenarios?
(Leave no answer blank. Enter zero if applicable.)
Jorgensen paid the bonuses to employees on March 1 of year 2, and there is a requirement that the employee remain employed with Jorgensen on the payment date to receive the bonus.
Answer:
May deduct 100,000 in year 2 because the amount weren’t fixed at end of year 1 reason been that the employees are tend to be eligible to receive the bonuses only in a situation where they are employed on date that bonuses were been paid.
Explanation:
Calculation of How much of the accrued bonuses can Jorgensen deduct in year 1
March 1 of Year 2
Ken 40,000
Jayne30,000
Jill20,000
Justin 10,000
Total 100,000
In March 1 of year 2 the amount of $ 100,000 may
likely be deducted reason been that it was paid within 2 and a half months of year end.
Since we were told that Jorgensen paid the bonuses to employees on March 1 of year 2 and was as well told that the employee remain employed with Jorgensen on the date of the payment in order to receive the bonus this means that May deduct 100,000 in year 2 because the amount weren’t fixed at end of year 1 reason been that the employees are tend to be eligible to receive the bonuses only in a situation where they are employed on date that bonuses were been paid.
The economic situation of Rutenia is characterized by the following facts: GDP. Strong economic growth, of about 4%. Unemployment. Moderate unemployment of around 5% Inflation is very high, around 10% High public deficit.
Answer:
See below
Explanation:
Although a great GDP of 4% gives the impression of a strong economy, as is the case here, the inflation rate is much higher than desired. So, economic policies need to be reviewed in order to determine where the problem lies and what steps can be taken to remedy this situation.
Q2) The next dividend payment by Savitz, Inc., will be $3.21 per share. The dividends are anticipated to maintain a growth rate of 4 percent forever. If the stock currently sells for $42 per share, what is the required return
Answer:
11.64%
Explanation:
The next dividend payment for Savitz Inc. is $3.21 per share
The growth rate is 4%
= 4/100
= 0.04
The current stock price is $42 per share
Therefore, the required rate of return can be calculated as follows
R= Next dividend payment/Current stock price + growth rate
= $3.21/$42 + 0.04
= 0.0764+0.04
= 0.1164×100
= 11.64%
Hence the required rate of return is 11.64%
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.
The following selected transactions were completed by Amsterdam Supply Co., which sells office supplies primarily to wholesalers and occasionally to retail customers. Also note that the company uses a clearing house to take care of all bank as well as non-bank credit cards used by its customers.Record on page 10 of the journalMar. 2 Sold merchandise on account to Equinox Co., $20,000, terms FOB destination, 1/10, n/30. The cost of the merchandise sold was $13,150. 3 Sold merchandise for $10,950 plus 6% sales tax to retail cash customers. The cost of merchandise sold was $7,100. 4 Sold merchandise on account to Empire Co., $51,450, terms FOB shipping point, n/eom. The cost of merchandise sold was $35,420. 5 Sold merchandise for $27,900 plus 6% sales tax to retail customers who used MasterCard. The cost of merchandise sold was $18,470. 12 Received check for amount due from Equinox Co. for sale on March 2. 14 Sold merchandise to customers who used American Express cards, $12,380. The cost of merchandise sold was $9,120. 16 Sold merchandise on account to Targhee Co., $28,500, terms FOB shipping point, 1/10, n/30. The cost of merchandise sold was $14,690. 18 Issued credit memo for $4,400 to Targhee Co. for merchandise returned from sale on March 16. The cost of the merchandise returned was $2,910. 19 Sold merchandise on account to Vista Co., $7,400, terms FOB shipping point, 2/10, n/30. The cost of merchandise sold was $4,630. In addition, Amsterdam Supply Co. immediately paid $55 in freight charges and added this to the invoice sent. 26 Received check for amount due from Targhee Co. for sale on March 16 less credit memo of March 18. 28 Received check for amount due from Vista Co. for sale of March 19. 31 Received check for amount due from Empire Co. for sale of March 4. 31 Paid Fleetwood Delivery Service $5,100 for merchandise delivered during March to customers under shipping terms of FOB destination.Apr. 3 Paid City Bank $850 for service fees for handling MasterCard and American Express sales during March. 15 Paid $6,212 to state sales tax division for taxes owed on sales.Journalize the entries to record the transactions of Amsterdam Supply Co. Refer to the Chart of Accounts for exact wording of account titles.
Answer: Please see answer in the expalantion column
Explanation:
To record merchandise sold on account
Date Account Titles and Explanation Debit Credit
Mar 2 Accounts Receivable-Equinox Co $20,000
Sales $20,000.
To record cost of merchandise sold on account
Date Account Titles and Explanation Debit Credit
Mar 2 Cost of Merchandise Sold $13 150.00
Merchandise Inventory $13,150.00
To record merchandise sold for cash
Date Account Titles and Explanation Debit Credit
Mar 3 Cash(10,950 + 657) $11,607.00
Sales $10,669.00
Sales Tax Payable(10,950 x 6%) $657.00
To record cost of merchandise sold on account
Cost of Merchandise Sold $7,100.00
Merchandise Inventory $7,100.00
To record cost of merchandise sold on account
Date Account Titles and Explanation Debit Credit
Mar 4 Accounts Receivable-Empire Co $51,450.00
Sales $51,450.00
To record cost of merchandise sold on account
Cost of Merchandise Sold $35,420.00
Merchandise Inventory $35,420.00
To record merchandise sold using Master card
Mar 5 Cash(27900 +1,674) $29,574
Sales $27,900
Sales Tax Payable(27,900 x6%) $1,674
To record cost of merchandise sold using Mastercard
Cost of Merchandise Sold $18, 470.00
Merchandise Inventory $18,470.00
To record receipt of check from Equinox Co
Date Account Titles and Explanation Debit Credit
Mar 12 Cash(20,000-200) $18,000
Cost of merchandise sold (20,000 x 1%) $ 200
Account Receivable-Equinox Co $20,000
To record cost of merchandise sold using American Express
Date Account Titles and Explanation Debit Credit
Mar 14 Cash $12,380
Sales $12,380
To record cost of merchandise sold on account
Cost of Merchandise Sold $9,120
Merchandise Inventory $9,120
To record merchandise sold on Account
Date Account Titles and Explanation Debit Credit
Mar 16 Accounts Receivable-Targhee Co $28,500
Sales $28,500
To record cost of merchandise sold on account
Cost of Merchandise Sold $14,690
Merchandise Inventory $14,690
To record credit memo for returned merchandise
Date Account Titles and Explanation Debit Credit
Mar 18 Sales $4,400.00
Accounts Receivable-Targhee Co $4,400.00
To record cost of merchandise sold on account
Cost of Merchandise Sold $2,910.00
Merchandise Inventory $2,910.00
To record merchandise sold on Account
Date Account Titles and Explanation Debit Credit
Mar 19 Accounts Receivable- Vista Co $7,400
Sales $7,400
To record cost of merchandise sold on account
Cost of Merchandise Sold $4,630
Merchandise Inventory $4,630
To record freight charges on behalf of Vista Co
Accounts Receivable- Vista Co $55.00
Cash $55.00
To record transaction of receipt of check from Targhee Co(
Date Account Titles and Explanation Debit Credit
Mar 26 Cash (24,100 - 241) $23,859
Cost of merchandise sold(24,100 x1%) $241
Account Receivable-Targhee Co(28,500 -4,400) $24,100
To record transaction of receipt of check from Vista co
Date Account Titles and Explanation Debit Credit
Mar 28 Cash(7455-149.1) $7,305.00
Sales Discount (2% x $7455) $149.10
Account Receivable-Vista Co $7,400 +55) $7,455
To record transaction of receipt of check from Empire Co
Date Account Titles and Explanation Debit Credit
Mar 31 Cash $51,450.00
Account Receivable- Empire Co $51,450.00
To record payment of delivery for mechandise
Date Account Titles and Explanation Debit Credit
Mar 31 Delivery Expenses $5,100.00
Cash $5,100.00
To record p[payment of service charges to BANK
Apr 3 Credit card Expenses $850
Cash $850
To record payment of Sales Tax Division
Apr 15 Sales Tax Payable $6,212
Cash $6,212
3. If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?
Complete Question:
The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $166,436. The bank statement indicated a balance of $195,688 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:
a. Checks outstanding totaled $19,427.
b. A deposit of $12,300, representing receipts of June 30, had been made too late to appear on the bank statement.
c. The bank collected $26,500 on a $25,000 note, including interest of $1,500.
d. A check for $4,000 returned with the statement had been incorrectly recorded by Pala Medical Co. as $400. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.
e. A check drawn for $195 had been erroneously charged by the bank as $915.
f. Bank service charges for June amounted to $55.
Answer:
Pala Medical Co.
Cash amount in the balance sheet = $189,281
Explanation:
a) Calculations:
Adjusted Cash balance at June 30, 20Y1
Cash balance $166,436
c) Note received by bank 25,000
c) Interest on the note 1,500
d) Returned check (3,600)
e) Bank charges (55)
Adjusted cash balance $189,281
b) Balance as per bank statement = $195,688
a. Checks outstanding totaled ($19,427)
b. A deposit of $12,300
e. Overstated cheque 720
Adjusted bank statement balance $189,281
c) Preparing a bank reconciliation helps to identify discrepancies between the cash book balance of Pala Medical Co and the company's bank statement balance. After the necessary adjustments, the two balances always agree and the adjusted figure is taken to the balance sheet.
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
Your firm (an Australian firm) makes a sale to a Japanese customer. The sale price is 200 million Japanese Yen payable in exactly three months from today. The current exchange rate is AUD/JPY = 90 (i.e., 1 Australian Dollar (AUD) is worth 90 Japanese Yen (JPY)). The current interest rates in Australia and Japan are 3% p.a. and 0.5% p.a., respectively.Given this information, please answer the following questions. Please label your answers according to parts.(a) Given that Australian Dollar is the domestic currency, what is the direct quote of the exchange rate between Australian Dollar and Japanese Yen ? Please round the final answer to five decimal places.(b) What is the theoretical current forward exchange rate quoted directly in terms of Australian Dollar (i.e. JPY/AUD) for delivery three months from today ? Show your input to the formula to arrive at the final answer. Please round the final answer to five decimal places.(c) How can the firm take advantage of any decreases in the exchange rate and also ensure that it receives at least Australian $2 million ? (Hint: Which derivative instrument can be used to achieve this objective?(d) Ignoring the cost of the derivative instrument to be used in part (c), what would be the outcome from hedging if the spot exchange rate in 3 month’s time is (i) AUD/JPY=150 and (ii) AUD/JPY = 50?
Answer:
An Australian Firm Selling to a Japanese Customer
a) Direct Quote of the Exchange Rate between Australian Dollar and Japanese Yen:
A$ 1 = ¥90
Meaning 1 Australian Dollar = 90 Japanese Yen.
Therefore, the price of the goods would be A$ 2,222,222.22222 (¥200 million)/ ¥90
b)Theoretical Current Forward Exchange Rate, quoted in terms of JPY/AUD for delivery in three months:
= Spot Rate x (1 + Japanese Interest Rate) / (1 + Australian Interest Rate) x 360/90
= ¥90 x (1 +0.005) / (1 +0.03) x 360/90 = ¥90 x 1.005/1.03 x 360/90
= ¥351.26214 =A$1
c) The Australian firm can take advantage of any decreases in the exchange rate and also ensure that it receives at least Australian $2 million by entering into a Currency Forwards Contract.
d) If the spot exchange rate in 3 month's time is:
(i) AUD/JPY=150, the outcome of the hedging with a Currency Forwards Contract to get at least A$ 2 million would be the gain of:
Forward Exchange outcome in Australian Dollars = ¥200 million/ ¥150 =
A$ 1,333,333.33333
Hedging outcome minus Forward Exchange outcome
A$2 million - A$ 1,333,333.33333 = A$666,666.66667
(ii) AUD/JPY = 50, the outcome of the hedging with a Currency Forwards Contract to get at least A$ 2 million would be the loss of:
Forward Exchange outcome = in Australian Dollars = ¥200 million/ ¥50 =
A$4 million
Hedging outcome minus Forward Exchange outcome
A$2 million - $4 million = -A$2million
Explanation:
a) Currency forwards contracts and future contracts are used to hedge the currency risk. For example, a company expecting to receive ¥200 million in 90 days, can enter into a forward contract to deliver the ¥200 million and receive equivalent Australian dollars in 90 days at an exchange rate specified today.
b) If A$ 1 = ¥90
Therefore, the price of the goods would be A$ 2,222,222.22222 (¥200 million)/ ¥90 in Australian Dollars.
You run a medium-sized farming equipment repair firm in North Dakota. Your busiest season is the late fall through winter months when area farmers need repairs done to their equipment. Because you have limited cash flow, keeping extra people on your payroll is expensive and undesirable. You have determined that each worker must work 120 hours per month and you can repair an average of 42 machines each month. If their labor productivity rate is 0.52 how many workers can you employ at your company
Answer:
0.67
Explanation:
Let x be the number of labors we need to employ at our company
If 120 hours of labor prepare 42 machines and productivity rate is 0.52 then the equation would be like
x*0.52*120hours = 42 machines
x = 42/(0.52x120)
x = 0.67
Grossnickle Corporation issues 20-year, noncallable, 7.1% annual coupon bonds at their par value of $1,000 one year ago. Today, the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they now have 19 years to maturity
Answer:
Price of bond= $1,185.72
Explanation:
The price of a bond is the present value (PV) of the future cash inflows expected from the bond discounted using the yield to maturity.
These cash flows include interest payment and redemption value
The price of the bond can be calculated as follows:
Step 1
PV of interest payment
annual coupon rate = 7.1%
Annual Interest payment =( 7.1%×$1000)= $71
Annual yield = = 5.5%
PV of interest payment
= A ×(1- (1+r)^(-n))/r
A- interest payment, r- yield - 5.5%, n- no of periods -19 periods
= 71× (1-(1.055)^(-19))/0.055)
= 71× 11.60765352
= 824.143
Step 2
PV of redemption value (RV)
PV = RV × (1+r)^(-n)
RV - redemption value- $1000, n- 19, r- 5.5%
= 1,000 × (1+0.055)^(-19)
= 361.579
Step 3
Price of bond = PV of interest payment + PV of RV
$824.143 + $361.579
Price of bond= $1,185.72
What is the 5 stage plan for productive meetings? - Why is this important and how will it improve the success of developing a charter? - What is an example of a meeting where you've had the same experience as the video?
Answer:
Answer:
The 5 stage plans for productive meeting :
1. Agenda of meeting : This is very important in every meeting , what we need to discuss , why this meeting is so important for everyone ,etc .
2. Attendees :We have to clear about the level of meeting and we need to be specific. The number of people in the meeting should not be too large if it is not necessary .
3. Short meeting :The time period of meeting should not be too large , because in the large meeting people are getting bored and did not show full concentration during the meeting.
4. Agenda orientation:Meeting should be under and proper agenda , meeting should be deviate from the goal.
5. Outcome from meeting:After completing the meeting , there should be a list of outcome from that meeting and need to apply .
Team Charter:
Team charter is very important tool for proper functioning of a team.It help the team to achieve a specific target within the given time limit.Following are the reasons why team charter is so important.
1. Charter support
2. Define team target
3. Proper communications between team
4. Effective planning
5. Authority level
Video meeting:
Generally Skype is used for video meeting. When all the people are at different location , Skype used for online meeting.The cost of that meeting is not too high , so we can say that this is also a cost effective meeting.
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
The term market economy is often used interchangeably with what other term?
A. Socialism
B. Capitalism
C. Communism
D. Democracy
Answer:
B. Capitalism
Explanation:
Capitalism is a type of economic system where individuals or corporations own capital goods and make financial decisions based on market prices, cost of production, and distribution of goods which are determined by competition in the free market.
The term "market economy" is often used interchangeably with Capitalism because they are similar.
On October 1, Vaughn's Carpet Service borrows $349000 from First National Bank on a 4-month, $349000, 9% note. What entry must Vaughn's Carpet Service make on December 31 before financial statements are prepared
Answer:
Dr Notes Payable 349,000
Dr Interest Payable 10,470
Cr Cash 359,470
Explanation:
Preparation of Vaughn's Carpet Service Journal entry
Since we were told that Vaughn's Carpet Service borrows the amount of $349,000 on 1st October from First National Bank based on a 4-month, $349,000, 9% note the transaction will be recorded as :
Dr Notes Payable 349,000
Dr Interest Payable 10,470
Cr Cash 359,470
$349,000 +($349,000 *.09* 4/12)
=$349,000+10,470
=$359,,470
True or false: The plantwide overhead rate method uses multiple rates to allocate overhead costs to products.
Answer:
Flase.
Explanation:
The plantwide overhead rate method uses multiple rates to allocate overhead costs to products.
False.
As the name indicates, the plantwide overhead rate uses a single rate to allocate overhead. When the predetermined overhead rate is calculated using the activity base method, you have as many predetermined rates as activities.
To calculate a plant-wide overhead rate, you need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
True or False: If a firm changes its credit policy and allows customers to pay in 90 days instead of 60 days, and everything else remains the same, the net cash flow in the next quarter is likely to decrease.
Answer:
True
Explanation:
by increasing the time customers can pay to 90 days, the amount of cash inflows is likely to reduce. thus, the net cash flow in the next quarter is likely to decrease.
If a small electric automobile manufacturer is able to gain the social return generated by its electric motor, its demand for financial capital would
Answer: shift to the left
Explanation:
The social return helps in comparing the value of benefits and the costs to achieving the benefits. The social return is the ratio of net present value of the benefits in comparison to the net present value of the investment or the costs to getting the benefits.
In this case, if a small electric automobile manufacturer is able to gain the social return generated by its electric motor, it would decrease the demand for financial capital which simply means that the demand for financial capital will shift to the left. This shift to the left is as a result of the gain in its social return gotten by the electric motor.
Eva received $60,000 in compensation payments from JAZZ Corp. during 2018. Eva incurred $5,000 in business expenses relating to her work for JAZZ Corp. JAZZ did not reimburse Eva for any of these expenses. Eva is single and she deducts a standard deduction of $12,000. Based on these facts answer the following questions:
Use Tax Rate Schedule for reference. (Round your final answer to the nearest whole dollar amount.)
a. Assume that Eva is considered to be an employee. What is her regular income tax liability for the year? (Round your answer to 2 decimal places.)
Regular tax liability: $____________________
b. Assume that Eva is considered to be a self-employed contractor. What is her self-employment tax liability for the year?
Self-employment tax liability: $___________________
c. Assume that Eva is considered to be a self-employed contractor. What is her regular tax liability for the year? (Round your answer to 2 decimal places.)
Regular tax liability: $____________________
Answer:
A.Regular income tax liability
$8,181.25
B.Self-employment tax liability $6,870.84
C.Regular tax liability $7,538.50
Explanation:
a.The computation of Eva's regular income tax liability
(1) Salary $60,000
(2) Standard deduction(12,000)
Itemized deductions less than standard deduction.
(4) Taxable income (60,000-12,000)$48,000
(48,000 – 34,000) × 25% + 4,681.25 [see tax rate schedule for Single individuals]
Therefore Eva's regular income tax liability is $8,181.25.
b. Calculation for Eva self-employment tax liability for the year
The self-employment tax rate is 12.4% of the Social Security tax
Hence, Self-employment tax applies to net earnings
92.35% of the net earnings from self-employment is been often subjected to self-employment tax.
Hence,
Net Earnings = $.60,000 x 92.35% = $ 55,410
Therefore,
Eva Self-employment tax liability will be:
= $ 55,410 x 12.4% = $6,870.84
c.Calculation for Eva regular tax liability for the year
Eva received compensation for the Year = $60,000
Standard deduction = $12,200
Taxable Income for the Year = $47,800
Tax Brackets and Rates, 2018
Rate For Unmarried Individuals, Taxable
Income Over
10 $0
12 $9,700
22 $39,475
24 $84,200
32 $160,725
35 $204,100
37 $510,300
Hence
Eva's Regular Tax liability for the Year 2019 will be calculated as:
- 9,700 10 970.00
9,700 39,475 12 4,737.00
39,475 8,325 22 1,831.50
Total 7,538.50
970.00+4,737.00+1,831.50=7,538.50
Therefore Eva's Regular Tax liability for the Year 2018 will be $7,538.50
Julie Whiteweiler made $930 this week. Only social security (fully taxable) and federal income taxes attach to her pay. Whiteweiler contributes $100 each week to her company's 401(k) plan and has $25 put into her health savings account (nonqualified) each week. Her employer matches this $25 each week.
Required:
Determine Whiteweiler's take-home pay if she is single and claims 4 allowances (use the wage-bracket method).
Answer:
Step 1: Calculate FICA (OASDI & HI):
Total wage subjected to FICA is $930. Why? Contributions to 401K is only exempted from Fed. Income Tax Withholding (FIT) not FICA. As for HSA contrib., it is exempted for both FICA and FIT. However, the plan is non-qualified, which means that $25 contributed by employee is taxable for both. The $25 matching from employer for HSA is excluded from income and income taxes.
OASDI RATE 2012: 4.2% of $930; therefore, $39.06
HI RATE 2012: 1.45% of $930; therefore, $13.49
TOTAL FICA TAX: $52.55
STEP 2: Calculate FIT:
Total earnings subjected to FIT is ($930-100)= $830. Why? $100 contributions to 401k is exempted from FIT. HSA contrib. is unqualified.; therefore, contributions from employee is taxable. Using Wage Bracket Method 2012, the FIT is $89.
STEP 3: Getting the Take-Home Pay answer:
($930-100(401k))-25(HSA:Employee)-$52.55(FICA)-89(FIT)=$663.45
Explanation:
The movie E.T. the Extraterrestrial grossed $435,110,554 in box office receipts in 1982. The movie Titanic grossed $659,363,944 in 1997. The Consumer Price Index was 96.5 in 1982, 160.5 in 1997 and 255.657 in 2019. What is the value of the E.T. box office receipts adjusted for inflation in 1997
Answer:
E.T. the Extraterrestrial
Adjustment for inflation in 1997
Value of E.T. box office receipts = $723,681,284.11 ($435,110,554/96.5 x 160.5)
Explanation:
To adjust a 1982 receipts for inflation in 1997, the 1982 receipts is divided by the 1982 price index and multiplied by the 1997 price index. This results to an inflation-reflected receipts in 1997.
The adjustment helps to put a value that is equivalent to the current price (assessed period's current price) having factored in inflation.
A Consumer Price Index is a statistical estimate that measures the changes in the price level of a weighted average market basket of consumer goods and services purchased by households. It is measured periodically to reflect inflation.
Inflation is the general rise in the prices where a unit of currency yesterperiod buys less today than it did. It is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time.