Answer:
Flint Company
DR Merchandise $1,050
CR Accounts Payable $1,050
(To record purchase of merchandise)
Windsor Inc.
DR Accounts Receivable $1,050
CR Sales $1,050
(To record sale of merchandise)
DR Cost of Goods Sold $660
CR Merchandise Inventory $660
(To record change in stock from sale of merchandise)
A company incurs $2,700,000 of overhead each year in three departments: Ordering and Receiving, Mixing,?
and Testing. The company prepares 2,000 purchase orders, works 50,000 mixing hours, and performs 1,500 tests per year in producing 200,000 drums of Goo and 600,000 drums of Slime. The following data are available:
Department Expected use of Driver Cost
Ordering and Receiving 2,000 $800,000
Mixing 50,000 1,000,000
Testing 1,500 900,000
Production information for Slime is as follows:
Expected use of Driver
Ordering and Receiving 1,600
Mixing 30,000
Testing 1,000
Compute the amount of overhead assigned to Slime.
a) $1,350,000
b) $2,025,000
c) $1,645,234d) $1,840,000
Answer:
Total allocated overhead= $1,840,000
Explanation:
Giving the following information:
Department Expected use of Driver Cost
Ordering and Receiving 2,000 $800,000
Mixing 50,000 1,000,000
Testing 1,500 900,000
Production information for Slime is as follows:
Expected use of Driver
Ordering and Receiving 1,600
Mixing 30,000
Testing 1,000
First, we need to calculate the predetermined overhead rate for each activity:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Ordering and Receiving= 800,000/2,000= $400 per order
Mixing= 1,000,000/50,000= $20 per mixing hour
Testing= 900,000/1,500 = $600 per test
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Ordering and Receiving= 400*1,600= 640,000
Mixing=20*30,000= 600,000
Testing= 600*1,000= 600,000
Total allocated overhead= $1,840,000
The total system view of the marketing concept builds on the idea that
Multiple Choice
sales should be the firm's high-level objective.
a company should not have specialized departments.
each department in an organization should do what it does best.
all departments—not just marketing—should be guided by customer needs.
None of these answers is correct.
Answer: all departments—not just marketing—should be guided by customer needs.
Explanation:
The goal in marketing is for the needs of the customers to be identified. The customers have a vital role to play in every organization.
According to the marketing concept, every effort of a business should be directed towards satisfying customers which in turn brings about a profit.
Therefore, The total system view of the marketing concept builds on the idea that all departments and not just marketing should be guided by customer needs.
Which of the following are restrictive covenants often used to protect the firm’s bond value and bondholder wealth? Check all that apply. Provisions that require firing the firm’s CEO whenever the firm’s bond price decreases by more than 15% Provisions that prohibit reducing the firm’s liquidity ratio below specified levels Provisions that prohibit the borrower from increasing debt ratios above specified levels Provisions that require issuing new debt securities whenever interest rates drop below 5%
Answer:
1. Provisions that prohibit reducing the firm’s liquidity ratio below specified levels.
2. Provisions that prohibit the borrower from increasing debt ratios above specified levels.
Explanation:
A bond refers to a fixed income instrument that signifies the indebtedness of the borrower to the bond issuer (investor or creditor). Basically, they are loans that are given to government or large corporations.
This simply means that, when a bondholder or creditor purchases a bond, an agreed amount of money is being borrowed to the bond issuer as a loan. As a result of the loan being borrowed, the bond issuer is required to pay an interest with a return of principal at maturity to the bondholder (investor or creditor).
A bond covenant can be defined as a standard and legally binding agreement between an investor or creditor (bondholder) and the issuer of a bond (bond issuer) in order to protect their respective interests. The bond covenant is classified into two (2) categories;
1. Positive or affirmative covenants: which states certain requirements that must be met by the bond issuer.
2. Negative or restrictive covenants: which states certain actions that are forbidden to the bond issuer.
The following are restrictive covenants often used to protect the firm’s bond value and bondholder wealth;
1. Provisions that prohibit reducing the firm’s liquidity ratio below specified levels.
2. Provisions that prohibit the borrower from increasing debt ratios above specified levels.
The restrictive covenants are written directly in the trust indenture or bond deed. Also note, the more the restrictive covenants that exists in a bond, the lower its interest rate because it makes the bond appear safer.
Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $5,000 cash and $21,500 of photography equipment in the company in exchange for common stock. 2 The company paid $2,400 cash for an insurance policy covering the next 24 months. 5 The company purchased office supplies for $950 cash. 20 The company received $2,250 cash in photography fees earned. 31 The company paid $882 cash for August utilities. Prepare general journal entries for the above transactions.
Answer:
Pose-for-Pics
General Journal:
August 1:
Debit Cash Account $5,000
Debit Photograph Equipment $21,500
Credit Common Stock $26,500
To record the investment of cash and equipment by Madison Harris.
August 2:
Debit Insurance Prepaid $2,400
Credit Cash Account $2,400
To record the payment for insurance for 24 months.
August 5:
Debit Office Supplies $950
Credit CAsh Account $950
To record the purchase of office supplies.
August 20:
Debit Cash Account $2,250
Credit Photography Fees Earned $2,250
To record the receipt of cash for fees.
August 31:
Debit Utilities Expense $882
Credit Cash Account $882
To record the payment of cash for August utilities.
Explanation:
The general journal entries are used to initiate the recording of business transactions as they occur on a daily basis. While there other specialized journals, the general journal can be used to record any type of transaction. The journal shows the accounts that are debited and credited in the general ledger.
Determine the estimate of the mean when the process is in control.Assuming the process standard deviation is .50 and the mean of the process is the estimate calculated in Question 1, determine the Upper Control Limit (UCL) and the Lower Control Limit (LCL) for the manufacturing process.Explain the results to the vice-president of the mattress manufacturer focusing on whether, based on the results, the process is in or out of control.
The question is incomplete! Complete question along with answer and step by step explanation is provided below.
Question:
A local mattress manufacturer wants to know if its manufacturing process is in or out of control and has hired you, a statistics expert in the field, to analyze its process. Specifically, the business has run 20 random samples of size 5 over the past month and has determined the mean of each sample.
95.72 95.44 95.4 95.5 95.56 95.72 95.6 95.24 95.46 95.44 95.8 95.2 94.82 95.78 95.18 95.32 95.08 95.22 95.04 95.48
a. Determine the estimate of the mean when the process is in control.
b. Assuming the process standard deviation is .50 and the mean of the process is the estimate calculated in Question 1, determine the Upper Control Limit (UCL) and the Lower Control Limit (LCL) for the manufacturing process.
c. Explain the results to the vice-president of the mattress manufacturer focusing on whether, based on the results, the process is in or out of control.
Answer:
[tex]Mean = \bar{x} = 95.4[/tex]
[tex](LCL, \: UCL) = (94.73, \: 96.07)[/tex]
The mean of the 20 random samples of size 5 over the past month lies between the obtained control limit of (94.73, 96.07) therefore, the process is in control.
Explanation:
a. Determine the estimate of the mean when the process is in control.
The mean is given by
[tex]Mean = \bar{x} = \frac{\sum x}{n}[/tex]
Where n = 20 samples
Using Excel,
=AVERAGE(number1, number2,....)
The mean is found to be
[tex]Mean = \bar{x} = 95.4[/tex]
b. Assuming the process standard deviation is .50 and the mean of the process is the estimate calculated in Question 1, determine the Upper Control Limit (UCL) and the Lower Control Limit (LCL) for the manufacturing process.
The Upper Control Limit (UCL) is given by
[tex]$ UCL = \bar{x} + \frac{3 \cdot s}{\sqrt{n} } $[/tex]
Where [tex]\bar{x}[/tex] is the mean, s is the standard deviation and n is the size of random samples that is 5 (not 20)
[tex]UCL = 95.4 + \frac{3 \times 0.50}{\sqrt{5} } \\\\UCL = 95.4 + 0.671 \\\\UCL = 96.07[/tex]
The Lower Control Limit (UCL) is given by
[tex]$ LCL = \bar{x} - \frac{3 \cdot s}{\sqrt{n} } $[/tex]
[tex]LCL = 95.4 - \frac{3 \times 0.50}{\sqrt{5} } \\\\LCL = 95.4 - 0.671 \\\\LCL = 94.73[/tex]
So the control limits are
[tex](LCL, \: UCL) = (94.73, \: 96.07)[/tex]
c. Explain the results to the vice-president of the mattress manufacturer focusing on whether, based on the results, the process is in or out of control.
The process is in control based on the obtained results.
The mean of the 20 random samples of size 5 over the past month lies between the obtained control limit of (94.73, 96.07) therefore, the process is in control.
Imitability of a resource can occur through _?
Answer:
economic depletion
Explanation:
Please prepare a bank reconciliation for December 31, 2018 using the following information:
Deposits in transit 4,900
Bank statement balance December 31, 2018 18,500
Not sufficient funds checks (NSF) 600
Cash balance per the general ledger Dec 31, 2018 21,500
Bank service charges on bank statement 300
Checks outstanding 800
Interest income on bank statement 2,000
Answer:
You're welcome.
Explanation:
Segmented Income Statement Gorman Nurseries Inc. grows poinsettias and fruit trees in a green house/nursery operation. The following information was provided for the coming year.
Poinsettias Fruit Trees
Sales $970,000 $3,100,000
Variable cost of goods sold 460,000 1,630,000
Direct fixed overhead 160,000 200,000
A sales commission of 4% of sales is paid for each of the two product lines. Direct fixed selling and administrative expense was estimated to be $146,000 for the poinsettia line and $87,000 for the fruit tree line. Common fixed overhead for the nursery operation was estimated to be $800,000; common selling and administrative expense was estimated to be $450,000.
Required:
Prepare a segmented income statement for Gorman Nurseries for the coming year, using variable costing.
Answer:
Poinsettias records a loss of $118,125
Fruit Trees records a profit of $92,325
The company therefore records an overall $25,800 loss
NB: See the workings below see the assumption mad to allocate common expenses since none is given in the question.
Explanation:
Variable costing income statement is a type of income statement that records variable cost separately first to determine the contribution margin and thereafter record the fixed cost which is further split into direct fixed expenses and common expenses.
The segmented income statement for Gorman Nurseries for the coming year can therefore be presented as follows:
Gorman Nurseries Inc.
Segmented Income Statement
For the coming year
Particulars Poinsettias ($) Fruit Trees ($) Total ($)
Sales 970,000 3,100,000 4,070,000
Variable COGS (460,000) (1,630,000) (2,090,000)
Variable selling exp. (w1.) (38,800) (124,000) (162,800)
Contribution margin 471,200 1,346,000 1,817,200
Direct fixed overhead (160,000) (200,000) (360,000)
Direct fixed S $ Admn exp. (146,000) (87,000) (233,000)
Segment margin 165,200 1,059,000 1,224,200
Common fixed overh. (w2a) (176,077) (623,923) (800,000)
Common S $ Admn ex (w2b) (107,248) (342,752) (450,000)
Segment Net Income (loss) (118,125) 92,325 (25,800)
Workings:
w1. Variable selling expenses = Sales * Commission percentage
Poinsettias = $970,000 * 4% = $38,8000
Fruit Trees = $3,100,000 * 4% = $124,000
w2. Allocation of common expenses using the following assuptions:
a) Use cost of goods sold (COGS) to allocate Common fixed overhead:
Poinsettias = (460,000 / 2,090,000) * $800,000 = $176,077
Fruit Trees = (1,630,000 / 2,090,000) * $800,000 = $623,923
b) Use common selling and administrative expense using Sales:
Poinsettias = (970,000 / 4,070,000) * $450,000 = $176,077
Fruit Trees = (3,100,000 / 4,070,000) * $450,000 = $623,923
Deb has found it very difficult to repay her loans. Because of these difficulties, the bank decided to forgive one of her most recent loans, an amount of $73,500. After the loan was discharged, Deb had total assets of $264,000 and her remaining loans totaled $255,000. What amount must Deb include in her gross income
Answer:
$9,000
Explanation:
Calculation of the amount that Deb must include in her gross income
Total assets $264,000 -Remaining loans $255,000 =$9,000
Therefore the amount that Deb must include in her gross income would be $9,000. Hence a discharge of indebtedness will not be taxable in a situation where the taxpayer is insolvent before and after the debt might have been forgiveness and in a situation where the the discharge of indebtedness tend to makes the taxpayer solvent, the taxpayer will tend ro recognizes the taxable income to the extent of his solvency.
Given the position of the 3D printer in the growth stage of its lifeâ cycle, which of the following OMâ Strategy/Issues should the makers of 3D printers be least concerned with at the currentâ time?A) forecasting B) cost cutting C) increasing capacity D) product and process reliability E) enhancing distribution
Answer: cost cutting
Explanation:
3D printing technology is a from of technological innovation which people not many people know about and is less understood by the people and therefore few people might see reason to buy it.
The increase in the competitors offering the product and a price reduction can actually help the product from from the introduction to the growth stage of its life cycle.
The makers of the 3D printers should be more conceened with enhancing distribution, increasing capacity, forecasting and product and process reliability. They should be less concerned about cost-cutting as there are bigger issues to solve.
In theory, Texas has a dual-budget system, meaning the budget authority is shared by the governor and the legislature; however, in practice, the primary player(s) in the budget is/are
Answer:
The legislature.
Explanation:
A budget can be defined as a financial plan of estimated revenues, resources and expenses over a specific period of time in a particular country. It is usually reevaluated based on future plans and objectives periodically, typically on an annual basis.
In theory, Texas has a dual-budget system, meaning the budget authority is shared by the governor and the legislature; however, in practice, the primary player in the budget is the legislature.
In accordance with the guidelines set by the Legislative Budget Board (LBB) in Texas, all agencies in the state prepares and send a Legislative Appropriations Request (LAR) to the Legislative Budget Board (LBB) and the Governor’s Office of Budget, Planning and Policy (GOBPP).
The legislature is the primary player in the budget process because it is responsible for reviewing the budget proposals through the House Finance Committees and the Senate.
The legislature being the primary player in the budget comprises of ten (10) members from the Texas House of Representatives and Texas Senate, it is chaired by the Lieutenant Governor. A single bill is then passed after the appropriation bill has been voted on by the respective chambers.
Additionally, the single bill is then sent to the Comptroller's office for verification and certification, and lastly it's signed by the Governor into law.
A nation's central bank auctions off a new issue of 10-year bonds. What is the short-run effect on the nation's economy
Answer: Aggregate Demand Decreases
Explanation:
When the Central Bank sells bonds, it is engaging in Open Market Operations to reduce the amount of money in the Economy by taking money out of people's hands ( the money they will use to buy the bonds).
When money supply in the economy decreases, it will have the opposite effect on Interest rates as they will increase because money is no longer readily available.
When this happens both businesses and Individuals will reduce the amount of money they borrow for investment and consumption respectively which are both components of Aggregate Demand.
Aggregate Demand therefore decreases and the AD curve shifts to the LEFT to depict this.
One of your customers has just made a purchase in the amount of $23,200. You have agreed to payments of $445 per month and will charge a monthly interest rate of 1.26 percent. How many months will it take for the account to be paid off?
Answer:
85.43 months
Explanation:
Purchase = $23,200
Payment per month = $445
Interest rate = 1.26%
Therefore the solution is:
$23,200 = $445[(1 − 1/1.0126^t) / .0126]
t = 85.43 months
If increasing the number of goods produced is one way to increase productivity what is the other way to increase productivity?
A. Raise the price of the goods
B. Decrease the resources invested
C. Increase market share
D. Lower the quality of the materials used
Answer:
Explanation:
Start with D. You might be able to make a cheaper product and increase your profit margin, but eventually the word would would get around and it may lower your productivity because the sales would decrease.
The market determines whether or not you would be able increase the market share. I suppose this answer is possible, but it would mean that you would need to have capital to do it. The market need not cooperate. I wouldn't pick C unless I had to.
How can you reduce the resources invested? That should decrease the number of objects originally need for manufacturing the poduct in the first place. Not B.
Raise the price of the goods? How can that help? That increases the profit margin, not the number of goods produced.
I don't know what the best answer is out of these 4. None of them seem appropriate.
If I had to choose, I guess the best one is D
Answer:
im pretty its C
Explanation:
Huang Company's last dividend was $1.25. The dividend growth rate is expected to be constant at 27.5% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If the firm's required return (rs) is 11%, what is its current stock price
Answer:
Price of stock today = $53.29
Explanation
The Dividend Valuation Model(DVM) is a technique used to value the worth of an asset. According to this model, the value of an asset is the sum of the present values of the future cash flows would that arise from the asset discounted at the required rate of return.
This model would be applied as follows:
PV from year 1 to 3
Year Present Value ( PV)
1 1.25 × 1.275 × 1.1^(-1) = 1.4358
2 1.25 × 1.275^2 × 1.1^(-2) = 1.6492
3 1.25 × 1.275^3 × 1.1^(-3) = 1.894
Total 4.979
Year 4 and beyond
This will be done in two steps
Step 1
D× (1+g)/k-g
1.25 ×1.275^4/(0.11-0.06)
=66.066
Step 2
Present Value in year 0
=66.066 × 1.11^(-3) = 48.3068
Total present value = 4.979 + 48.306= 53.286
Price of stock today = $53.29
On September 1, the board of directors of Colorado Outfitters, Inc., declares a stock dividend on its 24,000, $15 par, common shares. The market price of the common stock is $44 on this date.
Requried:
a. Record the necessary journal entries assuming a small (10%) stock dividend
b. Record the stock dividend assuming a small (10%) stock dividend.
c. Record the stock dividend assuming a large (100%) stock dividend.
d. Record the stock dividend assuming a 2-for-1 stock split.
Answer:
September 01
Dr Stock dividends 105,600
Cr Common stock 36,000
Cr Additional paidin capital 69,600
September 01
Dr Stock dividends 360,000
Cr Common stock 360,000
September 01 No journal entry
Explanation:
1. 2. & 3. Preparation to Record the journal entries assuming a small (10%) stock dividend
September 1: Stock dividends (24,000 × 10% × $44) = 105,600
September 1: Common stock (24,000 × 10% × $15) = $36,000
1. 2. & 3. Prepartion to Record the journal entries assuming a small (100%) stock dividend,
September 1: Stock dividends (24,000 shares × $15×100%) =$360,000
To Record the stock dividend assuming a 2-for-1 stock split.
No journal entry required
Hence,
Colorado Outfitters, Inc. Journal entries
September 01
Dr Stock dividends 105,600
Cr Common stock 36,000
Cr Additional paidin capital 69,600
(105,600-36,000)
September 01
Dr Stock dividends 360,000
Cr Common stock 360,000
September 01 No journal entry
Bank Robbery. Victor robbed Safe Bank of a significant sum of cash. Safe Bank offered a reward of $10,000 for anyone who captured or provided information leading to the capture of Victor. Ted, a police officer in town, promised Safe Bank officials that he would apprehend Victor. While on duty, Ted arrested Victor at a hamburger joint in town. He found Victor based upon a hunch he had after Ursula, who dated Victor, told him about various places Victor enjoyed eating. The bank refuses to pay either Ursula or Ted any of the reward money. Which of the following is true regarding the offer of the reward?A. The bank is likely to prevail because Ursula only provided past consideration.
B. The bank is likely to prevail because Ursula was tainted by being Victor's girlfriend.
C. The bank is likely to prevail because no valid bilateral contract existed.
D. Ursula is likely to prevail because a valid bilateral contract existed.
E. Ursula is likely to prevail because an enforceable unilateral contract exists based on her provision of information leading to the capture of Victor.
Answer:
E. Ursula is likely to prevail because an enforceable unilateral contract exists based on her provision of information leading to the capture of Victor.
Explanation:
A unilateral contract is in existence because safe bank has made an offer to pay $10,000. And in a unilateral contract when an offerer like safe bank makes an offer, the offer is accepted through actual performance which Ted has done through information Ursula provided. Therefore Ursula would prevail because unilateral contracts are enforceable by the law.
On June 30, Daughtry Limited issues 8 %, 20-year bonds payable with a face value of $ 130 comma 000. The bonds are issued at 86 and pay interest on June 30 and December 31. (Assume bonds payable are amortized using the straight-line amortization method.)
Requirements
1. Journalize the issuance of the bonds on June 30.
2. Journalize the semiannual interest payment and amortization of the bond discount on December 31.
Requirement 1. Journalize the issuance of the bonds on June 30. (Record debits first, then credits. Select explanations on the last line of the journal entry.)
Requirement 2. Journalize the serniannual interest payment and amortization of the bond discount on December 31. (Record debits first, then credits. Select explanations on the last line of the journal entry.)
Answer:
June 30
Dr Cash 111,800
Dr Discount on bonds payable 18,200
Cr Bonds payable 130,000
Dec 31
Dr Interest expense 5,655
Cr Discount on bonds payable 455
Cr Cash 5,200
Explanation:
1. Preparation of the Journal entry fornthe issuance of the bonds on June 30.
June 30
Dr Cash 111,800
(86%×130,000)
Dr Discount on bonds payable 18,200
(100%-86%×130,000)
Cr Bonds payable 130,000
(To record bond issue)
2. Preparation of the Journal entry for the semiannual interest payment as well as the amortization of the bond discount on December 31.
Dec 31
Dr Interest expense 5,655
Cr Discount on bonds payable 455
(18,200/40)
Cr Cash (130,000*8%*6/12) 5,200
(To record interest)
We would expect the interest rate on Bond A to be lower than the interest rate on Bond B if the two bonds have identical characteristics except that:___________
a. Bond A was issued by a financially weak corporation and Bond B was issued by a financially strong corporation.
b. Bond A was issued by the Exxon Mobil Corporation and Bond B was issued by the state of New York.
c. Bond A has a term of 1 year and Bond B has a term of 5 years.
d. All of the above are correct.
Answer:
The option (d) is correct
Explanation:
Solution
From the given question, option (d) is correct because Bond A has a lower term of maturity, issued by a financially weak corporation and compared to government security it is offering lower returns implies it has a lower interest rate than bond B having identical characteristics expect the above.
QS 18-9 CVP analysis and target income LO P2 SBD Phone Company sells its waterproof phone case for $107 per unit. Fixed costs total $197,000, and variable costs are $32 per unit. Compute the units of product that must be sold to earn pretax income of $224,500.
Answer:
Break-even point in units= 5,620 units
Explanation:
Giving the following information:
Selling price= $107 per unit.
Fixed costs total $197,000
Variable costs= $32 per unit.
Desired profit= $224,500
To calculate the number of units required to reach the objective, we need to use the following formula:
Break-even point in units= (fixed costs desired profit) / contribution margin per unit
Break-even point in units= (197,000 + 224,500) / (107 - 32)
Break-even point in units= 5,620 units
Patrick Inc. makes industrial solvents sold in 5-gallon drum containers. Planned production in units for the first 3 months of the coming year is: January43,800 February41,000 March50,250 Each drum requires 5.5 gallons of chemicals and one plastic drum container. Company policy requires that ending inventories of raw materials for each month be 15% of the next month's production needs. That policy was met for the ending inventory of December in the prior year. The cost of one gallon of chemicals is $2.00. The cost of one drum is $1.60. Required: 1. Calculate the ending inventory of chemicals in gallons for December of the prior year, and for January and February. What is the beginning inventory of chemicals for January
Answer:
Ending inventory (December) = $72,270
Ending inventory (January) = $67,650
Ending inventory (February) = $82,912.50
Beginning Inventory (January ) = $72,270
Explanation:
The ending inventory of chemicals in gallons :
Note : Based on Company policy, this was determined as 15% of next month's production needs.
Ending inventory (December) = 43,800 × 15% × 5.5 gallons × $2.00
= $72,270
Ending inventory (January) = 41,000 × 15% × 5.5 gallons × $2.00
= $67,650
Ending inventory (February) = 50,250 × 15% × 5.5 gallons × $2.00
= $82,912.50
The beginning inventory of chemicals for January is equal to the Ending inventory for December that is $72,270
Information for Jersey Metalworks as of December 31 follows. Prepare (a) the company's schedule of cost of goods manufactured for the year ended December 31; (b) prepare the company's income statement that reports separate categories for selling and general and administrative expenses. Administrative salaries expense $ 135,000 Depreciation expense–Factory equipment 52,400 Depreciation expense–Delivery vehicles 36,200 Depreciation expense–Office equipment 24,800 Advertising expense 22,350 Direct labor 268,000 Factory supplies used 12,000 Income taxes expense 91,500 Indirect labor 35,000 Indirect material 24,000 Factory insurance 15,500 Factory utilities 14,000 Factory maintenance 7,500 Inventories Raw materials inventory, January 1 32,000 Raw materials inventory, December 31 28,000 Work in Process inventory, January 1 33,780 Work in Process inventory, December 31 37,460 Finished goods inventory, January 1 56,970 Finished goods inventory, December 31 62,000 Raw materials purchases 325,000 Rent expense–Factory 50,000 Rent expense–Office space 24,000 Rent expense–Selling Space 24,000 Sales salaries expense 97,500 Sales 1,452,000 Sales discounts 29,000
Answer and Explanation:
a. The Preparation of cost of goods manufactured for the year ended December 31 is prepared below:-
Jersey Metalworks
Cost of goods manufactured
for the year ended December 31
Particulars Amount
Direct materials
Raw materials, January 1 $32,000
Add:
Raw materials purchases $325,000
Raw materials available $357,000
Less raw materials, December 31 $28,000
Direct materials used $329,000
Direct labor $268,000
Factory overhead costs:
Depreciation expense-
Factory equipment $52,400
Factory supplies used $12,000
Indirect labor $35,000
Indirect material $24,000
Factory insurance $15,500
Factory utilities $14,000
Factory maintenance $7,500
Rent expense—Factory $50,000
Total factory overhead costs $210,400
Total manufacturing costs $807,400
Add:
Work in Process inventory, January 1 $33,780
Total cost of work in Process $841,180
Less work in Process inventory,
December 31 $37,460
Cost of goods manufactured $803,720
b.The Preparation of income statement is prepared below:-
Jersey Metalworks
Cost of goods manufactured
for the year ended December 31
Particulars Amount
Sales $1,452,000
Less: sales discounts $29,000
Net sales $1,423,000
Cost of Goods Sold
Finished goods inventory,
January 1 $56,970
Cost of goods manufactured $803,720
Goods available for sale $860,690
Less finished goods inventory,
December 31 $62,000
Cost of Goods Sold $798,690
Gross Profit $624,310
Operating expenses
Selling expenses
Sales salaries expense $97,500
Depreciation expense - Delivery
vehicles $36,200
Advertising expense $22,350
Rent expense-Selling space $24,000
Total selling expenses $180,050
General and administrative expenses
Administrative salaries expense $135,000
Depreciation expense- Office
equipment $24,800
Rent expense-Office space $24,000
Total general and administrative
expenses $183,800
Total operating expenses $363,850
Income before taxes $260,460
Income taxes expense $91,500
Net Income $168,960
We simply applied the above format to prepare the cost of goods manufactured and the income tax
Create a chart containing the three forms of business organizations: proprietorships, partnerships, and corporations. Include key users of financial information, and briefly explain their roles.
Answer:
a. Owner
b. Partners
c. Stakeholders
Explanation:
The key users of financial information of a proprietorship is the owner.
The key users of financial information of a partnership are partners.
The key users of financial information of a corporation are the stakeholders.
In a proprietorship the owner invests, manages and gains profit from the organization.
In a partnership the partners invest, manage and each partner gain profits from the organization.
While in a corporation the shareholders invest, the employees manage and the profits made are gained by the shareholders in the form of dividends.
When labor productivity increases over time, generally A) it is due to increases in the number of workers b) so do average wages C) it results in higher prices for goods and services .
Answer:
b) so do average wages
Explanation:
In perfect competition's equilibrium, productive factors are paid according to their marginal productivity. This means that productive factors' payments will be directly explained by their productivity. This comes from the fact that a firm maximizes profits, subject to its budget constraint, in an optimal way. Equilibrium solution will result in the following condition: [tex]\frac{MP_L}{MP_K} =\frac{P_L}{P_K}=\frac{Wages}{P_K}[/tex], where [tex]MP_L[/tex] is the marginal productivity of labour and [tex]PM_K[/tex] is the marginal product of capital,[tex]P_L[/tex] is the price of labour (or wages) and [tex]P_K[/tex] is the price of capital. Then, because the price of labour is proportional to its productivity, if labour productivity rises, the price of labour will increase.Oliver Company provided the following information for the coming year: Units produced and sold 160,000 Cost of goods sold per unit $6.30 Selling price $10.80 Variable selling and administrative expenses per unit $1.10 Fixed selling and administrative expenses $423,000 Tax rate 35% Required: Prepare a budgeted income statement for Oliver Company for the coming year. Round all income statement amounts to the nearest dollar.
Answer:
Oliver Company
Budgeted Income Statement For the Coming Year
Sales ($10.80 * 160,000) $1,728,000
Cost of goods sold ($6.30 * 160,000) ($1,008,000)
Gross margin(Sales - COGS) $720,000
Less: Variable selling and administrative expenses ($176,000)
($1.10 * 160,000)
Less: Fixed selling and administrative expenses ($423,000)
Operating income $121,000
Less: Income taxes (35% * 121,000) ($42,350)
Net income $78,650
If income elasticity of demand is 2.12, it means that quantity demanded will __________ by 2.12 percent for every __________ percent __________ in income.
Answer:
rise, 1.0, rise
Explanation:
As we know that
Income elasticity of demand is
= Percentage change in quantity demanded ÷ Percentage change in income
So,
Percentage change income
= 2.12% ÷ 2.12
= 1%
Therefore if the income increased that also leads to increase in quantity demanded
We simply applied the Income elasticity of demand formula so that we can get to know the situation
Green T-Shirt Processing incurs only fixed and variable costs in its operations. When 10,000 T-shirts are produced, the company’s managerial accountant noted a fixed cost per shirt of $1.00 and a variable cost per pot of $6.00.
If production is expected to increase, which of the following statements is true?a. The fixed cost per T-shirt will not change; the variable cost per T-shirt will decrease.b. Total fixed costs will decrease; the variable cost per T-shirt will not change.c. The fixed cost per T-shirt will decrease; the variable cost per T-shirt will increase.d. Total fixed costs will remain unchanged; total variable costs will increase
Answer:
.d. Total fixed costs will remain unchanged; total variable costs will increase
Explanation:
Fixed cost is cost that does not vary with production e.g rent
Variable costs are costs that vary with production. If production increases, variable costs rises and if production is reduced, variable cost falls. Examples of variable costs are wages and cost of raw materials.
If production increases, more workers and raw materials would be needed, so variable cost would increase.
I hope my answer helps you
The Ford Motor Company is considering three mutually exclusive electronic stability control systems for protection against rollover of its automobiles. The investment period is four years (equal lives) and the MARR is 12% per year. Data for fixturing costs of the system are given below.
Alternative A
IRR = 19.2&
CAPITAL INVESTMENT = $12,000
NET ANNUAL RECEIPT = $4,000
SALVAGE VALUE = $3,000
Alternative B
IRR = 18
CAPITAL INVESTMENT = $15,800
NET ANNUAL RECEIPT = $5.200
SALVAGE VALUE = $3,500
Alternative C
IRR = 19.2&
CAPITAL INVESTMENT = $8,000
NET ANNUAL RECEIPT = $3.000
SALVAGE VALUE = $1,500
Required:
Which alternative is best and why?
Answer:
Alternative C
Explanation:
project A project B project C
initial investment -12,000 -15,800 -8,000
NCF year 1 4,000 5,200 3,000
NCF year 2 4,000 5,200 3,000
NCF year 3 4,000 5,200 3,000
NCF year 4 7,000 8,700 4,500
NPV 2,055.95 2,218.53 2,065.33
IRR 19.2% 18% 19.2%
Payback period 3 years 3.04 years 2.67 years
Since all projects have a positive NPV and all NPVs have a very similar value, then we must use the projects' IRR to determine which project will be selected. We should select the project with the highest IRR.
But that leaves us with two options, project A and C, and we eliminate project B. Now we can use a third parameter which is payback period, since a shorter payback period reduces risk, it both projects have positive NPV's and high IRRs, then we should choose the project with the shortest payback period.
Project C's payback period is shortest, therefore, we should select that project.
The alternative that would be the most effective and its reason would be as follows:
- Alternative C because it offers the maximum IRR in a briefer payback period.
The IRR's and the payback period for the three alternatives are as follows:
Alternative A Alternative B Alternative C
IRR 19.2% 18% 19.2%
Payback 3 years 3.04 years 2.67 years
In order to determine the best alternative, the one with the highest IRR would be most effective. Here, two alternatives have similar IRRs and therefore, the payback period would be considered.Therefore, the one with the highest IRR and lowest payback period would be the best alternative.Thus, Alternative C is the correct answer.
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Prepare journal entries to record each of the following transactions of a merchandising company. The company uses a perpetual inventory system and the gross method
Nov. 5 Purchased 600 units of product at a cost ot s10 per unit. Terms of the sale are 2/10, n/60 the invoice is dated
Nov. 7 Returned 25 defective units from the November 5 purchase and received full credit.
Nov. 15 Paid the amount due from the November 5 purchase, less the return on November 7.
Answer:
A Merchandising Company
Journal Entries:
Nov. 5:
Debit Inventory $6,000
Credit Accounts Payable $6,000
To record the purchase of 600 units of a product at a cost of $10 per unit, terms, 2/10, n/60.
Nov. 7:
Debit Accounts Payable $250
Credit Inventory $250
To record the return of 25 defective units.
Nov. 15:
Debit Accounts Payable $5,750
Credit Cash Discount $115
Credit Cash Account $5,635
To record payment on account.
Explanation:
The journal entries show the accounts affected by each transaction. Two or more accounts are usually affected. One account receives value and is debited and the other gives value, and it is credited.
The trade terms 2/10, n/60 implies that a cash discount of 2% on the outstanding balance exists for early settlement on account within 10 days and the credit period should not exceed 60 days or two months.
Jay Seago is suing the manufacturer of his car for $3.5 million because of a defect that he believes caused him to have an accident. The accident kept him out of work for a year. The company has offered him a settlement of $700,000, of which Jay would receive $600,000 after attorneys’ fees. His attorney has advised him that he has a 50% chance of winning his case. If he loses, he will incur attorneys’ fees and court costs of $75,000. If he wins, he is not guaranteed his full requested settlement. His attorney believes that there is a 50% chance he could receive the full settlement, in which case Jay would realize $2 million after his attorney takes her cut, and a 50% chance that the jury will award him a lesser amount of $1 million, of which Jay would get $500,000. Using decision tree analysis, decide whether Jay should proceed with his lawsuit against the manufacturer.
Answer:
Since the expected value is higher for not suing ($600,000), then Jay should not sue. The expected value of the best case scenario in case of suing is only $500,000 and in the expected value of the worst case scenario is -$37,500.
Explanation:
he decides to not sue = expected value $600,000
he decides to sue:
50% chance of winning
expected value
$2,000,000 x 50% x 50% = $500,000$500,000 x 50% x 50% = $125,00050% chance of losing
expected value = -$75,000 x 50% = -$37,500