Answer:
Budgeted labour cost =$8,550
Explanation:
Labour budgeted is prepared using the production budget data. This is simply because the budgeted labour hour is a function of the budgeted production units.
Budgeted labour hours = Production budget × standard hours per unit
= 380 × 1.5 hours=570
Budgeted labour cost= Budgeted labour hours × Standard labour rate
= 570 hours × $15 =$8550
Budgeted labour cost =$8,550
Exercise 7-3A Allocate costs in a basket purchase (LO7-1) Red Rock Bakery purchases land, building, and equipment for a single purchase price of $360,000. However, the estimated fair values of the land, building, and equipment are $115,000, $253,000, and $92,000, respectively, for a total estimated fair value of $460,000. Required: Determine the amounts Red Rock should record in the separate accounts for the land, the building, and the equipment
Answer:
Land = $90,000
Building = $198,000
Land = $72,000
Explanation:
The Fair Values of Land, Building and Equipment are used to apportion the single purchase price to the respective asset accounts as follows :
Land = $115,000/ $460,000 × $360,000
= $90,000
Building = $253,000/ $460,000 × $360,000
= $198,000
Land = $92,000/ $460,000 × $360,000
= $72,000
What is true regarding static budgets? Select one: a. It is the budgeted amount used to calculate standard costs. b. It is the budgeted amount used to calculate the actual costs. c. It is also called moving or nonstationary budgets. d. All of the above
Answer:
b. It is the budgeted amount used to calculate the actual costs.
Explanation:
Static budget is the budget which remains the same even if there is some changes made but the flexible budget do not remain the same.
Moreover, the static budget is the main budget that used to prepare the standard cost by considering the budgeted activity level
Therefore it is the budget in which the budgeted amount should be considered in order to determine the actual cost that helps to make the flexible budget
PWD Incorporated is an Illinois corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year: Item Amount Federal Treatment Illinois income taxes $ 33,361 Deducted on federal return Indiana income taxes $ 18,480 Deducted on federal return Ohio Commercial Activity Tax $ 3,992 Deducted on federal return Illinois municipal bond interest $ 9,984 Excluded from federal return Indiana municipal bond interest $ 15,100 Excluded from federal return Federal T-note interest $ 2,492 Included on federal return PWD's federal taxable income was $104,000. Calculate PWD's Illinois state tax base.
Answer:
PWD's Illinois state tax base = $168,449
Explanation:
DATA
Illinois income taxes = $33,361
indiana income taxes = $18,480
Illinois municipal bond interest = $9,984
Indiana municipal bond interest = $15,100
Federal T-note interest = $2,492
Federal taxable income = $104,000
PWD's Tax Base = ?
Solution
PWD's Illinois Tax base can be calculated as follows
Formula
Illinois state tax base = Federal taxable income+Indiana income taxes+Illinois income taxes+Indiana municipal bond interest – federal t-note interest
Illinois state tax base = $104,000 + $18,480 + $33,361 + $15,100 - $2,492
PWD's Illinois state tax base = $168,449
Costs that remain constant in total dollar amount as the level of activity changes are called Group of answer choices
Answer: Fixed Costs
Explanation:
Tom and Suri decide to take a worldwide cruise. To do so, they need to save $15,000. They plan to invest $2,500 at the end of each year for the next six years to earn 9% compounded annually. Calculate the future value of the investment. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Round your answer to 2 decimal places.)
Answer: $18,808.25
Explanation:
There is a constant cashflow of $2,500 making this an annuity.
The future value of the $2,500 paid every year for 6 years at 9% will be;
Future value of Annuity = 2,500 * Future Value of Annuity factor, 6 periods, 9%) (refer to attached table)
= 2,500 * 7.5233
= $18,808.25
The future value of the amount is more than the amount they would require.
Webby Inc. is a web development company. Webby’s monthly production function for developing websites is given in the table below. Webby pays $4,000 a month in rent for office space and equipment. It pays each programmer $3,000 a month. There are no other production costs. Fill in the table of production costs.
Answer and Explanation:
The computation of the filling of the given table for the production cost is shown in the attachment below:
As we know that
Total cost = Fixed cost + variable cost
Average fixed cost = fixed cost ÷ websites
Average Variable cost = Variable cost ÷ websites
Therefore the average total cost is
= Average fixed cost + average variable cost
The marginal cost is
= Change in total cost ÷ change in quantity
These formulas are used to complete the table as given below.
McHale Company does business in two customer segments, Retail and Wholesale. The following annual revenue information was determined from the accounting system's invoice information:
20Y5
Retail $249,570
Wholesale $366,685
Total Revenue $616,255
20Y4
Retail $265,500
Wholesale $324,500
Total Revenue $590,000
Prepare a horizontal analysis of the segments. Round percentages to one decimal place. Enter negative values as negative numbers
Answer:
McHale Company
Horizontal Analysis of the segments
For the years 20Y4 and 20Y5
20Y5 20Y4 Difference amount Difference Percent
Retail $249,570 $265,500 $15,930 6.0%
Wholesale $366,685 $324,500 $42,185 13.0%
Total revenue $616,255 $590,000 $58,115 3.85%
Difference Percent Working
Retail= $15,930 / $265,500 * 100 = 6%
Wholesales = $42,185 / $324,500 * 100 = 13%
Total revenue = $58,115 / $590,000 * 100 = 3.85%
Raven Corporation owns three machines that it uses in its business. It no longer needs two of these machines and is considering distributing them to its two shareholders as a property dividend. All three machines have a fair market value of $20,000 each. Their basis is as follows: Machine A, $27,000; Machine B, $20,000; and Machine C, $12,000. The corporation has asked you for advice.
A. If Raven distributes Machine A, the result will be a_______loss of $_______.
B. If Raven distributes Machine B, the result will be_______of $______.
C. If Raven distributes Machine C, the result will be a______of $______.
D. Therefore, to________on Machine A, Raven should consider______Machine A. Raven should consider distributing Machine B because there will be______on the distribution. To______on Machine C, Raven should consider_______Machine C.
Answer:
A.If Raven distributes Machine A, the result will be a NONDEDUCTIBLE LOSS of $7,000
B. If Raven distributes Machine B, the result will be NO GAIN OR LOSS OF $0
C. If Raven distributes Machine C, the result will be a TAXABLE GAIN of $8,000
D.Therefore to PRESERVE THE LOSS on Machine A, Raven should consider SELLING Machine A. Raven should consider distributing Machine B because there will be NO RECOGNIZED GAIN OR LOSS on the distribution. To AVOID RECOGNIZING THE GAIN on Machine C, Raven should consider NEITHER SELLING NOR DISTRIBUTING Machine C
Explanation:
A. If Raven distributes Machine A, the result will be a NONDEDUCTIBLE LOSS of $7,000
Calculation as
(20,000 – 27,000) =-$7,000
B. If Raven distributes Machine B, the result will be NO GAIN OR LOSS OF $0
Calculated as :
(20,000-20,000)=$0
C. If Raven distributes Machine C, the result will be a TAXABLE GAIN of $8,000
Calculated as:
(20,000-12,000)=$8,000
D.Therefore to PRESERVE THE LOSS on Machine A, Raven should consider SELLING Machine A. Raven should consider distributing Machine B because there will be NO RECOGNIZED GAIN OR LOSS on the distribution. To AVOID RECOGNIZING THE GAIN on Machine C, Raven should consider NEITHER SELLING NOR DISTRIBUTING Machine C
Juggernaut Satellite Corporation earned $18.5 million for the fiscal year ending yesterday. The firm also paid out 40 percent of its earnings as dividends yesterday. The firm will continue to pay out 40 percent of its earnings as annual, end-of-year dividends. The remaining 60 percent of earnings is retained by the company for use in projects. The company has 2 million shares of common stock outstanding. The current stock price is $80. The historical return on equity (ROE) of 14 percent is expected to continue in the future.
What is the required rate of return on the stock?
Answer:
13.41%
Explanation:
Last Year: Earnings = $18,500,000
Shares Outstanding = 2,000,000
Earnings per share = Earnings / Shares Outstanding
= $18,500,000 / 2,000,000
= $9.25
Dividend per share, D0 = Earnings per share * Payout Ratio
Dividend per share, D0 = $9.25 * 40%
Dividend per share, D0 = $3.70
Retention Ratio = 60%
Return on Equity = 14%
Growth Rate, g = Return on Equity * Retention ratio
Growth Rate, g = 14% * 0.60
Growth Rate, g = 8.40%
Current Price, P0 = $80.00
Next Year: Dividend per share, D1 = D0 * (1 + g)
Dividend per share, D1 = $3.70 * (1 + 8.40%)
Dividend per share, D1 = $3.70 * 1.084
Dividend per share, D1 = $4.0108
Required Rate of Return = D1 / P0 + g
= $4.0108 / $80.00 + 0.0840
= 0.0501 + 0.0840
= 0.1341
= 13.41%
. Business Source Premier (EBSCO) and Lexis Nexis Academic are examples of research ________. a. periodicals b. indexes c. databases d. reports
Answer:
C.
Explanation:
These are all research databases
Keidis Industries will pay a dividend of $5.15, $6.25, and $7.45 per share for each of the next three years, respectively. In four years, you believe that the company will be acquired for $69.00 per share. The return on similar stocks is 11.4 percent. What is the current stock price
Answer:
The answer is $59.85
Explanation:
This question will be solved using the Dividend Discount Model. It is one of the valuation methods used in valuing price of Equity/stock.
Po = D1 + (1 + r)^n + D2 + (1 + r)^n + D2 + (1 + r)^n + CF4 /(1 + r)^n
Po is the current worth of stocks
D1, D2, D3 is the dividend paid in year 1, 2 and 3
CF4 is the price of the company in year 4
r is the discount rate
n is the number of years
$5.15 /1.114^1 + $6.25 /1.114^2 +$7.45/1.114^3 + $69/1.114^4
$4.62 + $5.04 + $5.39 + $44.80
Current price of the stock = $59.85
Classical economists contend that official measures of unemployment: Multiple Choice understate the problem due to the existence of discouraged workers. overstate the problem because most unemployment is voluntary. understate the problem due to involuntary part-time employment. overstate the problem because most unemployment is cyclical.
Answer: overstate the problem because most unemployment is voluntary.
Explanation:
Unemployment is a term that is used to refer to individuals who are looking for job but can not find a job.
Classical economists contend that official measures of unemployment
overstate the problem because most unemployment is voluntary.
According to the Classical economists, there is increase in employment because those seeking employment do not want to work for lower wages but will rather wait for high paying jobs and this therefore leads to overstating of the unemployment rate.
Trak Corporation incurred the following costs while manufacturing its bicycles.
Bicycle components $100,000
Advertising expense $45,000
Depreciation on plant 60,000
Property taxes on plant 14,000
Property taxes on store 7,500
Delivery expense 21,000
Labor costs of assembly-line workers 110,000
Sales commissions 35,000
Factory supplies used 13,000
Salaries paid to sales clerks 50,000
Required:
Identify each of the above costs as direct materials, direct labor, manufacturing overhead, or period costs.
Please find the answer below.
Explanation:
Bicycle components $100,000 - Direct materials
Advertising Expense $45,000 - Period costs
Depreciation on plant $14,000 - manufacturing overhead
Property taxes on plant $14,000 - manufacturing overhead
Property taxes on store $7,500 - manufacturing overhead
Delivery expense $21,000 - period costs
Labor costs of assembly-line workers $110,000 - Direct labor
Sales commissions $35,000 - Period costs
Factory supplies used $13,000 - Period costs
Salaries paid to sales clerks $50,000 - period costs
Cheers.
Granfield Company has a piece of manufacturing equipment with a book value of $45,000 and a remaining useful life of four years. At the end of the four years the equipment will have a zero salvage value. The market value of the equipment is currently $23,000. Granfield can purchase a new machine for $130,000 and receive $23,000 in return for trading in its old machine. The new machine will reduce variable manufacturing costs by $20,000 per year over the four-year life of the new machine. The total increase or decrease in net income by replacing the current machine with the new machine (ignoring the time value of money) is:
Answer:
i think the answer is 115
Explanation:
if you add 45.000+23.000+23.000+20.000+4 =115 there your answer
thank you i love to help people i am only a 7th grade almost 8th grader
Super Carpeting Inc. (SCI) just paid a dividend (D₀) of $3.12 per share, and its annual dividend is expected to grow at a constant rate (g) of 6.50% per year. If the required return (r s ) on SCI’s stock is 16.25%, then the intrinsic value of SCI’s shares is
Answer:
Intrinsic Value = $33.23
Explanation:
The intrinsic value of a stock using the dividend valuation model is the present value of the the future dividend expected from the stock discounted at the required rate of return.
This model is represented as follows
D(1+g)/(r-g) = P
Price, D- dividend payable in now, ke- required rate of return, g- growth rate
D- 3.12 , g-6.50% r-6.25%
Intrinsic value = (3.12× 1.065)/(0.1625-0.065)= $33.228
Intrinsic Value = $33.23
A customer buys 100 shares of ABC stock at $44 and sells 1 ABC Jan 45 Call at $5. Subsequently, the market price of ABC goes to $59 and the call contract is exercised. The customer has a:
Answer:
loss = $1,000
Explanation:
the customer will receive $5 (call price) + $44 (call price) = $49 for every share that he/she owns.
since the market price was $59, then the customer lost $59 - $49 = $10 for every share that he/she owned, resulting in a total loss = $10 per share x 100 shares = $1,000
A call option gives the buyer the option to purchase a stock at a set price during a specific time frame.
EVA/MVA The financial statements reflect historical data, but managers' performance must be evaluated on the basis of values. To provide this information, financial analysts have developed two measures: Market Value Added (MVA) and Economic Value Added (EVA). Market Value Added represents the difference between the money stockholders have invested in the firm versus the cash they could receive if the firm were sold. The equation for MVA is:
Answer:
MVA = (Shares outstanding * Stock price) - Total common equity
Explanation:
Market value added is the excess of equity over its book value. It is the difference between money invested by stockholders and the cash they will receive if the company is sold. The higher MVA of a company means performance of the company management is good and is in the favor of stockholders.
Dora Inc. reported the following on the company's cash flow statement: Sales $3,500,000 Net cash flow from operating activities 350,000 Net cash flow used for investing activities (100,000) Net cash flow used for financing activities (200,000) Free cash flow 290,000 What is the ratio of free cash flow to sales
Answer:
8.3%
Explanation:
Dora Inc. reported a sales of $3,500,000
The net cash flow from operating activities is $350,000
The net cash flow used for investing activities is $100,000
The net cash flow used for financial activities is $200,000
The free cash flow is $290,000
Therefore, the free cash flow to sales ratio can be calculated as follows
Free cash flow to sales ratio= Free cash flow/Sales × 100%
= $290,000/$3,500,000 × 100
= 0.0828×100
= 8.3%
Hence the ratio of the free cash flow to sales is 8.3%
The information necessary for preparing the 2018 year-end adjusting entries for Winter Storage appears below. Winter's fiscal year-end is December 31.
a. Depreciation on the equipment for the year is $7,000.
b. Salaries earned (but not paid) from December 16 through December 31, 2018, are $3,400.
c. On March 1, 2018, Winter lends an employee $12,000 and a note is signed requiring principal and interest at 6% to be paid on February 28, 2019.
d. On April 1, 2018, Winter pays an insurance company $15,000 for a one-year fire insurance policy. The entire $15,000 is debited to prepaid insurance at the time of the purchase.
e. $1,500 of supplies are used in 2018.
f. A customer pays Winter $4,200 on October 31, 2018, for six months of storage to begin November 1, 2018. Winter credits deferred revenue at the time of cash receipt.
g . On December 1, 2018, $4,000 advertising is paid to a local newspaper. The payment represents advertising for December 2018 through March 2019, at $1,000 per month. Prepaid advertising is debited at the time of the payment.
Required: Record the necessary adjusting entries at December 31, 2018.
Answer:
Adjusting entries are entries that indicate the events of the company that have occurred but not yet recorded by the company.
a. DATE DESCRIPTION DEBIT CREDIT
Dec 31 Depreciation Expenses $7,000
2018 Accumulated Expenses $7,000
(Record depreciation on equipment )
b. DATE DESCRIPTION DEBIT CREDIT
Dec 31 Salary expenses $3,400
2018 Salary payable $3,400
(Record salary incurred but not paid)
c. DATE DESCRIPTION DEBIT CREDIT
Dec 31 Interest receivables $660
2018 (12,000 * 6% * 11/12)
Interest revenue $660
(Record of interest earned)
d. DATE DESCRIPTION DEBIT CREDIT
Dec 31 Insurance Expenses $11,250
2018 (15,000 * 9/12)
Prepaid Insurance $11,250
(Record payment of insurance expenses)
e. DATE DESCRIPTION DEBIT CREDIT
Dec 31. Supplies Expenses $1,500
2018 Supplies $1,500
(Record of supplies)
f. DATE DESCRIPTION DEBIT CREDIT
Dec 31, Deferred revenue $1,400
2018 (4,200 * 2 month / 6 month)
Service revenue $1,400
(Record advance payment for services provided)
g. DATE DESCRIPTION DEBIT CREDIT
Dec 31, Advertisement Expenses $1,000
2018 Prepaid Advertisement $1,000
(Record payment for advertisement)
On January 2, 2021 Pod Company purchased 30% of the outstanding common stock of Jobs, Inc. and used the equity method to account for the investment. During 2021, Jobs reported net loss of $160,000 and distributed dividends of $100,000. The ending balance in the Investment in Jobs Company account at December 31, 2021 was $640,000 after applying the equity method. What was the purchase price Pod Company paid for its investment in Jobs, Inc.? "g"
Answer:
The purchase price is 7 million 435 thousnad 638.92 dollars
Explanation:
E6-23 (similar to) Aunt Betty Bakery reported net sales revenue of $ 59 comma 000 and cost of goods sold of $ 17 comma 000. Compute Aunt Betty's correct gross profit if the company made either of the following independent accounting errors. a. Ending merchandise inventory is overstated by $ 4 comma 000. b. Ending merchandise inventory is understated by $ 4 comma 000.
Answer:
a. Ending merchandise inventory is overstated by $4,000.
net sales revenue of $59,000
cost of goods sold of $17,000 + $4,000 = $21,000
gross profit = $38,000
Since ending inventory was overstated, it means that COGS were understated.
b. Ending merchandise inventory is understated by $4,000.
net sales revenue of $59,000
cost of goods sold of $17,000 - $4,000 = $13,000
gross profit = $46,000
Since ending inventory was understated, it means that COGS were overstated.
In calculating a predetermined overhead rate, a recent trend in automated manufacturing operations is to choose an activity base related to
Answer: c. machine hours.
Explanation:
In reference to Automated Operations, the Activity base that is usually used to in determining a pre-determined overhead rate are Machine hours.
It is standard practice to relate overhead to the Direct Labor involved in the production of a commodity and since in this case the direct Labor mostly consists of Machines (Automated) then it is best to relate activities to the Machine hours involved instead.
Cindy's current year adjusted gross income (AGI) is $300,000 and her current year total tax liability is $60,000. Her immediate prior year AGI is $200,000 with a total tax liability of $40,000. To avoid an underpayment interest penalty, what is Cindy's minimum required total tax payment amount for the current year
Answer:
The answer is $44,000
Explanation:
Solution
Given that
Now
Present/current year AGI = $300000
Present /current year tax liability = $60000
Prior year AGI = $200000
Prior year tax liability = $40000
Thus
As per Tax rule or applying the Tax rule
If Adjusted gross income(AGI) of prior year is below $250000 then the minimum required tax payment in the current year in order to avoid interest penalty is lower of
(1) 90% of present /current year tax (liability) or
(2) 110% of prior year tax liability
So
Because the prior year AGI is $200000 which is lower than $250000, in order to avoid interest penalty, the minimum required payment amount of tax liability in current/present year is lower of
(1) 90% of current year tax liability of $60000
Then
$60000 *90% = $54000
Or
(2)110% of prior year tax liability of $40000
$40000 ×110% = $44000
Hence, minimum required total tax payment amount for the current year is $44,000
As a firm's sales grow, its current assets also tend to increase. For instance, as sales increase, the firm's inventories generally increase, and purchases of inventories result in more accounts payable. Thus, spontaneous liabilities that reduce AFN arise from transactions brought on by sales increases. True or false?
Answer: True
Explanation:
Current assets are the assets that a company had and which are expected to be either used or sold over the next year. Examples of current assets are cash, cash equivalents, stock inventory, accounts receivable, marketable securities, and other liquid assets.
It should be noted that when the sales of a from continue to grow, the current assets of such company also increases. An example is when there is an increase in the sales increase, this.will also have an impact on the firm's inventories as there will be an increase.
How much would you need to deposit in an account now in order to have $4000 in the account in 5 years? Assume the account earns 3% interest compounded monthly.
Answer:
PV= $3,443.48
Explanation:
Giving the following information:
Future value= $4,000
Interest rate= 0.03/12= 0.0025
Number of months= 5*12= 60
To calculate the initial investment required, we need to use the following formula:
PV= FV/(1+i)^n
PV= 4,000/(1.0025^60)
PV= $3,443.48
railway cabooses just paid its annual dividend of 1.70 per share. The company has been reducing the dividends by 11.3 percent each year. How much are you willing to pay today to purchase stock in this company if your required rate of return is 12 percent?
Answer:
8.24
Explanation:
According to the given situation, the computation of purchase stock is shown below:-
Purchase price = Dividend in paid in next year ÷ (required rate of return - Growth rate)
= (1.70 ÷ (1 - 0.113)) ÷ (0.12 - (-0.113))
= 1.92 ÷ 0.233
= 8.24
Therefore for computing the purchase price we simply applied the above formula.
We have the following data for a hypothetical open economy: GNP = $12 comma 00012,000 Consumption (C) = $7 comma 2007,200 Investment (I) = $1 comma 0001,000 Government Purchases (G) = $1 comma 6001,600 Tax Collections (T) = $1 comma 2001,200 What is the value of private savings plus public savings? $nothing (Enter your answer as an integer. Include a minus sign if necessary.) What is the value of the current account balance CA? $nothing (Enter your answer as an integer. Include a minus sign if necessary.)
Answer:
The value of private savings plus public savings is $3,200
The value of the current account balance CA is $2,200
Explanation:
In order to calculate the value of private savings plus public savings we would have to make the following calculation:
Total saving = private saving+public saving
Total saving =GNP-Tax Collections-Consumption+Tax Collections-Government Purchases
Total saving =$12,000-$1,200-$7,200+$1,200-$1,600
Total saving =$3,200
To calculate the value of the current account balance CA we would have to make the following calculation:
value of the current account balance CA=GNP-Consumption-Investment-Government Purchases
value of the current account balance CA= $12,000 - $7,200 -$1,000-$1,600
value of the current account balance CA= $2,200
Absorption and Variable Costing Comparisons: Production Equals Sales Assume that Smuckers manufactures and sells 30,000 cases of peanut butter each quarter. The following data are available for the third quarter of 2017. Total fixed manufacturing overhead $120,000 Fixed selling and administrative 20,000 Sales price per case 34 Direct materials per case 16 Direct labor per case 7 Variable manufacturing overhead per case 3 Required a. Compute the cost per case under both absorption costing and variable costing. Absorption $Answer Variable $Answer b. Compute net income under both absorption costing and variable costing. Do not use a negative sign with your answers. SMUCKERS Absorption Costing Income Statement For the Third Quarter of 2017 Sales Answer Answer Answer Answer Answer Answer Answer Net income Answer SMUCKERS Variable Costing Income Statement For the Third Quarter of 2017 Sales Answer Answer Answer Answer Answer Fixed expenses: Answer Answer Selling and administrative Answer Answer Net income Answer
Answer:
a:Total Variable Costs $26
a:Total Manufacturing Costs = $ 30
b:Net Income Variable Costing $100,000
b: Net Income Absorption Costing $ 100,000
Explanation:
Smuckers Manufacturers
Costs per case under Variable Costing
Direct materials per case 16
Direct labor per case 7
Variable manufacturing overhead per case 3
Total Variable Costs $26
Costs per case under Absorption Costing
Direct materials (30,000*16) 480,000
Direct labor (30,000*7) 210,000
Variable manufacturing overhead (30,000*3) 90,000
Total Variable Costs 780,000
Total fixed manufacturing overhead $120,000
Total Manufacturing Costs $ 900,000
Total Manufacturing Costs per Case= $ 900,000/ 30,000= $ 30
The difference between the variable and absorption costing is that the product costs include variable and fixed costs in absorption costing. But in variable costing the product costs include only variable costs.
SMUCKERS
Variable Costing Income Statement
For the Third Quarter of 2017
Sales (30,000*34) 1020,000
Direct materials (30,000*16) 480,000
Direct labor (30,000*7) 210,000
Variable manufacturing overhead (30,000*3) 90,000
Total Variable Costs 780,000
Contribution Margin 240,000
Fixed Expenses 140,000
Total fixed manufacturing overhead $120,000
Fixed selling and administrative 20,000
Net Income 100,000
In this case the net income under both variable and absorption costing does not change because the units produced are units sold. No cost is charged to ending inventory under absorption costing.
SMUCKERS
Absorption Costing Income Statement
For the Third Quarter of 2017
Sales (30,000*34) 1020,000
Direct materials (30,000*16) 480,000
Direct labor (30,000*7) 210,000
Variable manufacturing overhead (30,000*3) 90,000
Total fixed manufacturing overhead $120,000
Total Manufacturing Costs 900,000
Gross Profit 120,000
Fixed Expenses 20,000
Fixed selling and administrative 20,000
Net Income 100,000
Several years after reengineering its production process, King Corporation hired a new controller, Christine Erickson. She developed an ABC system very similar to the one used by King's chief rival. Part of the reason Erickson developed the ABC system was because King's profits had been declining, even though the company had shifted its product mix toward the product that had appeared most profitable under the old system. Before „ adopting the new ABC system, the company had used a plantwide overhead rate, based on direct labor hours developed years ago. For the upcoming year, King's budgeted ABC manufacturing overhead allocation rates are as follows:
Activity Allocation Base Activity Cost allocation rate
Materials handling Number of parts $4.00 per part
Machine setup Number of setups $375.00 per setup
Insertion of parts Number of parts $28.00 per part
Finishing Finishing direct labor hours $54.00 per hour
The number of parts is now a feasible allocation base because King recently purchased bar-coding technology. King produces two wheel models: Standard and Deluxe Budgeted data for the upcoming year are as follows:
Standard Delux
Parts per wheel 8 10
Setups per 1,000 wheels 20 20
Finishing direct labor hours per wheel 2 3.5
Total direct labor hours per wheel 2.6 3.4
The company's managers expect to produce 1,000 units of each model during the year.
Required:
a. Compute the total budgeted manufacturing overhead cost for the upcoming year.
b. Compute the manufacturing overhead cost per wheel of each model using ABC.
c. Compute the company's traditional plantwide overhead rate. Use this rate to determine the manufacturing overhead cost per wheel under the traditional system.
Answer:
King Corporation
a. Computation of total budgeted manufacturing overhead cost:
Activities Standard Deluxe Total
Materials handling (number of parts):
Standard = 8 x $4 x 1,000 $32,000
Deluxe = 10 x $4 x 1,000 $40,000 $72,000
Machine setup (number of parts):
= 20 x $375 $7,500 $7,500 $15,000
Insertion of parts (number of parts):
Standard = 8 x $28 x 1,000 $224,000
Deluxe = 10 x $28 x 1,000 $280,000 $504,000
Finishing (direct labor hours):
Standard = 2 x $54 x 1,000 $108,000
Deluxe = 3.5 x $54 x 1,000 $189,000 $297,000
Total $371,500 $516,500 $888,000
b. Computation of the manufacturing overhead cost per wheel of each model using ABC:
Standards = $371,500/1,000 = $371.50
Deluxe = $516,500/1,000 = $516.50
c. Computation of the company's traditional plantwide overhead rate to determine manufacturing overhead cost per wheel:
Overhead rate = $888,000/6,000 = $148
Manufacturing overhead cost per wheel:
Standard = $148 x 2.6 = $384.80
Deluxe = $148 x 3.4 = $503.20
Explanation:
a) Calculations:
Total overhead cost = $888,000
Allocation based on total direct labor hours per wheel
Plantwide overhead rate:
Total labor hours:
Standard 2.6 x 1,000 = 2,600 hours
Deluxe 3.4 x 1,000 = 3,400 hours
Total labor hours = 6,000 (2,600 + 3,400)
= $888,000/6,000 = $148 per direct hour
b) According to wikipedia.com, "Activity-based costing is a costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each. This model assigns more indirect costs into direct costs compared to conventional costing."
CDB stock is currently priced at $80. The company will pay a dividend of $4.57 next year and investors require a return of 10.8 percent on similar stocks. What is the dividend growth rate on this stock
Answer:
The answer is 5.09%
Explanation:
The model used in this question is the Dividend Discount Model and it is one of the methods used in determining the price of stock. Here, the price of stock had already been determined. We are looking for one of the variables (growth rate) used in determining the price.
The formula for determining price of stock is:
Po = D1/r - g
Where Po is the price of stock
D1 is the dividend for next year
r is the rate of return
g is the dividend growth rate
$80 = $4.57/0.108 - g
Cross multiply:
8.64 - 80g = 4.57
80g = 8.64 - 4.57
80g = 4.07
g = 4.07/80
g =0.05088
g = 5.09%