Answer:
$3,529 million
Explanation:
current sales level $3 billion at 85% of fixed assets operating capacity
if assets operate at full capacity, 100%, then total seals could be:
$3 billion / 0.85 = $3,529 million
Generally very few facilities operate at 100% of their capacity, since the operating capacity is determined before the facility starts to operate and must include the estimated future sales for several years, not just one year. Also, if everything works well, sales levels should increase on a yearly basis, so a little spare capacity is not such a bad thing.
Suppose Ginger deposits $5,000 in cash into her checking account at the Bank of Skidoo. Show this transaction in a T-account for the Bank of Skidoo.
Bank of Skidoo
Assets Liabilities
Reserves$ Deposits $
The Bank of Skidoo has no excess reserves and is subject to a 6 percent required reserve ratio. Assume the Bank of Skidoo makes the maximum loan possible from Ginger's deposit to Thurston. Show this transaction in a new T-account for the Bank of Skidoo.
Bank of Skidoo
Assets Liabilities
Reserves$ Deposits $
Thurston decides to use the money he borrowed to purchase a sail boat. He writes a check for the entire loan amount to âGilligan's Seagoingâ Vessels, which deposits the check in itsâ bank, the Paradise Bank ofâ Kona, Hawaii. When the checkâ clears, the Bank of Skidoo transfers the funds to the Paradise Bank. Show these transactions in a newâ T-account for the Bank of Skidoo.
The maximum amounts of deposits that can be created from Ginger's initial deposit is $_____
The maximum amounts of loans that can be created from Ginger's initial deposit is $_____
Answer:
1) Suppose Ginger deposits $5,000 in cash into her checking account at the Bank of Skidoo. Show this transaction in a T-account for the Bank of Skidoo.
Reserves Checkable deposits
debit credit debit credit
5,000 5,000
2) The Bank of Skidoo has no excess reserves and is subject to a 6 percent required reserve ratio. Assume the Bank of Skidoo makes the maximum loan possible from Ginger's deposit to Thurston. Show this transaction in a new T-account for the Bank of Skidoo.
Reserves Loans
debit credit debit credit
5,000 4,700
4,700
300
3) Thurston decides to use the money he borrowed to purchase a sail boat. He writes a check for the entire loan amount to Gilligan's Seagoing Vessels, which deposits the check in its bank, the Paradise Bank of Kona, Hawaii. When the check clears, the Bank of Skidoo transfers the funds to the Paradise Bank. Show these transactions in a new T-account for the Bank of Skidoo.
Reserves Checkable deposits
debit credit debit credit
5,000 5,000
4,700 4,700
300 300
4,700
4,400
4) The maximum amounts of deposits that can be created from Ginger's initial deposit is $_____
Increase in checkable deposits = change in bank reserves / required reserves = $5,000 / 6% = $83,333.33
The maximum amounts of loans that can be created from Ginger's initial deposit is $_____
the maximum amount of loans that can be created in Ginger's bank is $4,700, but the maximum amount that loans can be created in the whole banking system = $83,333.33 - $5,000 = $78,333.33
During December, Far West Services makes a $3,200 credit sale. The state sales tax rate is 6% and the local sales tax rate is 2.5%. (Note: the sales tax amount is in addition to the credit sale amount.) Record sales and sales tax payable. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
Dr Accounts receivable 3,472
Cr Sales 3,20
Cr Sales tax payable 272
Explanation:
Since $3,200 is the credit sale and the state sales tax rate is 6% while the local sales tax rate is 2.5% which means we have to calculate for 6% of 3,200 as well as 2.5% of 3,200 which is: Sales tax payable
6%×3,200=192
2.5%×3,200=80
192+80= 272
The last step is to Debit Accounts receivable with 3,472 (3,200+272) , Credit Sales 3,200 and Credit Sales tax payable with 272
Far West Services Journal entry
Dr Accounts receivable 3,472
(3,200+272)
Cr Sales 3,200
Cr Sales tax payable 272
Pizza is a normal good if the demand Group of answer choices
a. for pizza rises when income rises.
b. for pizza rises when the price of pizza falls.
c. curve for pizza slopes upward.
d. curve for pizza shifts to the right when the price of burritos rises, assuming pizza and burritos are substitutes.
Answer:
Option A, For Pizza rise when income rises.
Explanation:
Option A is correct because the income of the consumer and the demand for normal goods are positively related. So when consumer's income increases then the demand for normal goods also increases. If the income falls then the demand for normal goods also falls. Therefore, the movement in the same direction shows that there is a direct relationship between normal goods and the income of the consumer.
Wilturner Company incurs $74,000 of labor related directly to the product in the Assembly Department, $23,000 of labor not directly related to the product but related to the Assembly Department as a whole, and $10,000 of labor for services that help production in both the Assembly and Finishing departments. The journal entries to record the labor would include:
Answer:
Dr Work in Process Inventory 97,000 and Dr Factory Overhead 10,000
Explanation:
Wilturner Company journal entries to record the labor will be to Debit work in process inventory with 97,000 because the company incurs $74,000 of labor which was related directly to the product in the Assembly Department and the $23,000 of labor was not directly related to the product and then Debit Factory Overhead with 10,000.
Dr Work in Process Inventory 97,000
($74,000+$23,000)
Debit Factory Overhead 10,000
A recent college graduate from Clayton State University has the choice of buying a new car for $33,500 or investing the money for four years with an 11% expected annual rate of return. He has an investment of $41,000 in equities and bonds which yields 8% expected annual rate of return. If the graduate decides to purchase the car, the best estimate of the opportunity cost of that decision is
Answer:
$3,280
Explanation:
The annuity factor of 11% at four years will be;
annuity = (1 - 1 / (1 +r)^n ) / r
annuity = 3.102
P = Pmt * annuity
P = 41,000 * 3.102
P = 127,182
If college graduate decided to buy a car then the annual yield that he receives from the investment in bonds will be opportunity cost.
$33,500 * 8% = $3,280
In general, the better candidates for shortening are: Early tasks opposed to later tasks. Later tasks opposed to early tasks. Burst tasks opposed to merge tasks. Merge tasks opposed to burst tasks.
Answer:
Early tasks opposed to later tasks.
Explanation:
Shortening is a strategic procedure used by project managers to reduce or shorten a project's duration by cutting the duration of critical path tasks.
The rationale behind shortening of a project is basically to have a competitive advantage or edge in the market. In order to compete successfully, project managers are always expected to be spontaneous in bringing their company's goods and services to the market in a flash.
There are two important ways of shortening a particular project, these are;
1. Crashing.
2. Task splitting.
In project management, the longest task is considered to be the most effective and efficient candidate activities to shorten a project's duration.
In general, the better candidates for shortening are early tasks opposed to later tasks. The early start of tasks represents one of the primary date used in project scheduling and it's the earliest date a project manager commences an activity, with respect to all its predecessors and successors.
Early tasks usually involves the use of an easy approach to project kickoff while later tasks uses the difficult approach.
Ratio analysis A company reports accounting data in its financial statements. This data is used for financial analyses that provide insights into a company's strengths, weaknesses, performance in specific areas, and trends in performance. These analyses are often used to compare a company's performance to that of its competitors, or to its past or expected future performance. Such insight helps managers and analysts improve their decision making.There are several groups of ratios most decision makers and analysts use to examine different aspects of a company's performance. Based on the descriptions of ratios listed, identify the relevant category of ratios.Ratios that help determine whether a company can access its cash and pay its short-term obligations are called______ratios.Ratios that help determine the efficiency with which a company manages its day-to-day tasks and assets are called______ratios.Ratios that help assess a company's ability to service the interest and repayment obligations on its long-term debt and the degree to which it uses borrowed versus invested financial capital are called______ratios. _______ratios help measure a company's ability to generate income and profits based on its invested capital.______ratios examine the market value of a company's share price, its profits and cash dividends, and the book value of the firm's assets and relate them to other data items to determine how the firm is perceived in the stock market. Ratio analysis is an important component of evaluating company performance. It can provide great insights into how a company matches up against itself over time and against other players within the industry. However, like many tools and techniques, ratio analysis has a few limitations and weaknesses. Which of the following statements represent a weakness or limitation of ratio analysis? A. Seasonal factors can distort data B. Window dressing might be in effect. C. Market data is not sufficiently considered.
Answer: 1. a. Liquidity Ratios
b. Activity Ratios
c. Financial Ratios
d. Profitability Ratios
e. Market Value Ratios
2. A. Seasonal factors can distort data
B. Window dressing might be in effect.
Explanation:
a. Liquidity Ratios give the company an idea of it's ability to access hard currency. Examples include the Current ratio and the Quick ratio.
b. Activity Ratios allows stakeholders know how efficient the company is at running daily operations. Examples include; Receivables Turnover and Asset Turnover ratios.
c. Financial Ratios are very important to the company as they can decide if a company will be able to get loans. They include ratios that measure the firm's ability to pay off debt as well as the overall condition of the firm in terms of it's finances.
Examples include; Net Profit Margin and Debt to Asset ratio.
d. Profitability Ratios
These help ascertain the ability of the business to make returns based on its resources. Examples include Return on Assets and Return on Equity.
e. Market Value Ratio
These essentially help the company and other stake holders know what the company is worth in the market. An example is the Book Value per Share ratio.
2. Seasonal Factors may indeed distort data depending on the type of industry that the firm is into and ratios will usually not show this. For instance, an Ice Cream company will not have strong sales in winter so when interpreting ratio analysis it would be important to note that this could happen.
Another weakness is that ratios are calculated based on the figures that are given by a company. These figures may not truly reflect the actual situation of the company when management supply more optimistic figures than is true. This is called Window Dressing.
It will have the effect of distorting the ratios so that they do not represent a true representation of the actual situation of the company.
Suppose you work as a manager in a firm. Your job is to hire the right number of people to maximize profit. Every worker you hire costs $150 per day, and each unit of output sells for $18 per unit. Given your current labor force, you know that if you hire another worker, that person will increase your output by 32.
1. What is the marginal product of the worker you are considering hiring?
2 What is the value of the marginal product of labor for this potential employee?
3. What is the marginal profnt or loss for hiring this employee? (Use a negative number if hiring this person results in a net loss
4. Should this additional worker be hired?
Answer: 1. 32
2. $576
3. $426
4. Yes
Explanation:
1. What is the marginal product of the worker you are considering hiring?
From the question, we are informed that given current labor force, hiring another worker will increase the output by 32. This means that the marginal product of the worker you are considering hiring is 32.
2 What is the value of the marginal product of labor for this potential employee?
The value of the marginal product of labor for this potential employee will be the product of the price of each unit of output sale and the marginal product of the employee. This will be:
= $18 × 32
= $576
3. What is the marginal profit or loss for hiring this employee?
The marginal profit or loss will be the difference between the value of the marginal product of labor for this potential employee and the hiring cost per day for every worker. This will be:
= $576 - $150
= $426
There is a marginal profit of $426.
4. Should this additional worker be hired?
Yes, the additional worker should be hired because there is a positive marginal profit.
Midyear on July 31st, the Baldwin Corporation's balance sheet reported: Total Liabilities of $101.255 million Cash of $8.040 million Total Assets of $163.111 million Retained Earnings of $34.226 million. What was the Baldwin Corporation's common stock
Answer:
Stock = 27.629 million
Explanation:
Baldwin Corporation
Balance Sheets
Assets
Cash of $8.040 million
Total Assets $163.111 million
Liabilities and Owner's Equity $163.111 million
Stock 27.629 million
Total Liabilities $101.255 million
Retained Earnings $34.226 million
According to Balance sheet approach total assets must equal total liabilities and Owner's Equity.
Total assets including cash are given which are equal to $163.111 million and when we subtract total liabilities and retained earning from it we get the value of stock.
Stock = Total Assets- Total Liabilities - Retained Earnings
Stock = $163.111 million - $101.255 million-$34.226 million
Stock = 27.629 million
Scenario 5.1 Suppose that personal income is $250 billion. Furthermore, assume that retained corporate earnings are $2 billion, social security taxes are $15 billion, social security benefit checks equal $16 billion, the capital consumption allowance is $32 billion, and corporate taxes amount to $40 billion. Refer to Scenario 5.1. Gross national product of this nation will be:
Answer:
Gross national product of this nation will be $323 billion
Explanation:
In order to calculate the Gross national product of this nation we would have to calculate the following formula:
Gross national product of this nation=personal income+retained corporate earnings+social security taxes+corporate taxes+capital consumption allowance-social security benefits
Gross national product of this nation=$250 billion+$2 billion+$15 billion+$40 billion+$32 billion-$16 billion
Gross national product of this nation=$323 billion
Gross national product of this nation will be $323 billion
Cold Goose Metal Works Inc. is a small firm, and several of its managers are worried about how soon the firm will be m, able to recover its initial investment from Project Alpha's expected future cash flows. To answer this question, Cold Goose's CFO has asked that you compute the project's payback period using the following expected net cash flows and assuming that the cash flows are received even throughout each year. Complete the following table and compute the project's conventional payback period. For full credit, complete the entire table. The conventional payback period ignores the time value of money, and this concerns Cold Goose's CFO He has now asked you to compute Alpha's discounted payback period, assuming the company has a 9% cost of capital. Complete the following table and perform any necessary calculations. Round the discounted cash flow values to the nearest whole dollar, and the discounted payback period to the nearest two decimal places. For full credit, complete the entire table. Which version of a project's payback period should the CFO use when evaluating Project Alpha, given its theoretical superiority? a) The discounted payback period b) The regular payback period One theoretical disadvantage of both payback methods-compared to the net present value method s that they fail to consider the value of the cash flows beyond the point in time equal to the payback period. How much value does the discounted payback period method fail to recognize due to this theoretical deficiency? a) $3, 504, 802 b) $1, 939, 656 c) $1 486, 453 d) $5, 421, 307
Answer:
the answer is $3,504,802.
In what ways could prisoners of war earn a profit? What would motivate a prisoner to want profit?In what ways could prisoners of war earn a profit? What would motivate a prisoner to want profit?
Answer:
By working to produce goods for manufacturing companies
By working on prison farms.
Other ways may also include working in construction projects in or outside the prison yard.
Explanation:
In this modern day, prisoners of war are sometimes employed to manufacture good while in prison. They are usually utilized as a cheap labor source in which they are paid less than the normal wage of freemen. Some of the manufacturing jobs done are usually contracted to the prison by outside manufacturing firms, or sometimes by the prison itself; in order to generate additional income. These works keep the prisoners busy and also earn them profit.
In some cases, some of the prisoners are are made to work on the prison farm. The prisoners are paid minimal wages for their services. This types of jobs keep the prisoners occupied and fit and helps feed the prisoners too. The excess income generated fro the sales of the farm products can be used to pay the prisoners. Also, prisoners can participate in construction projects in and outside the prison yard.
One of the biggest motivator for prisoners wanting profit is the fact that they have hope that they will be out some day. This profit is needed as a boost for these prisoners when they come out, prior to being employed. Also, some of these prisoners sometimes need this profit to provide themselves with some necessary stuffs not provided by the prison system.
1. A contract calls for a total payment of $800,000 with a guarantee. Essentially the contractor is guaranteed to make at least $200,000 above his costs. If the contractor can demonstrate his costs exceed $600,000, the project will pay the difference, with a $50,000 ceiling on the overage. The contractor demonstrates he spent $623,000. How much (gross) must the project remit to the contractor?
Answer:
The gross which the project has to remit to the contractor is $823,000
Explanation:
There are two things that must be fulfilled for the project to remit to the contractor is the amount .
1) First is the guaranteed payment of $800,000.
2) Second, the contractor's expense is more than $600,000, with a payment cap of up to $ 50,000.
The contractor has demonstrated that the cost incurred is $623,000 which is $23,000 above the limit of $600,000.
As this gap is still below $50,000, this will be handed over to the contractor by the client.
The gross which the project has to remit to the contractor = $800,000 + $23,000 = $823,000
What is one of the main reasons why the need for effective communication on teams has been growing so much in the last few decades?
Different insights and opinions in a collaborative setting can open up new better methods
For each separate case below, follow the three-step process for adjusting the Accumulated Depreciation account at December 31.
1. Determine what the current account balance equals.
2. Determine what the current account balance should equal.
3. Record the December 31 adjusting entry to get from step 1 to step 2.
Assume no other adjusting entries are made during the year.
A. The Krug Company's Accumulated Depreciation account has a $13,500 balance to start the year. A review of depreciation schedules reveals that $14,600 of depreciation expense must be recorded for the year Accumulated depreciation
1. Determine what the current account balance equals.
2. Determine what the current account balance should equal.
3. Record the December 31 adjusting entry to get from step 1 to step.
B. The company has only one fixed asset (truck) that it purchased at the start of this year. That asset had cost $44,000, had an estimated life of five years, and is expected to have zero value at the end of the five years.
1. Determine what the current account balance equals.
2. Determine what the current account balance should equal.
3. Record the December 31 adjusting entry to get from step 1 to step.
The company has only one fixed asset (truck) that it purchased at the start of this year. That asset had cost $44,000, had an estimated life of five years, and is expected to be valuedd at the end of the seven years.
1. Determine what the current account balance equals.
2. Determine what the current account balance should equal.
3. Record the December 31 adjusting entry to get from step 1 to step.
Answer:
The three-step process for adjusting the Accumulated Depreciation account at December 31.
A. The Krug Company's Accumulated Depreciation account has a $13,500 balance to start the year. A review of depreciation schedules reveals that $14,600 of depreciation expense must be recorded for the year Accumulated depreciation
Steps:
1. Determine what the current account balance equals.
The Accumulated Depreciation account has $13,500 credit balance.
2. Determine what the current account balance should equal.
The Accumulated Depreciation account should equal $28,100 ($13,500 + $14,600) = balance + depreciation charge for the year.
3. Record the December 31 adjusting entry to get from step 1 to step 2
Debit Depreciation Expenses $14,600
Credit Accumulated Depreciation $14,600
To record the depreciation charge for the period.
B. The company has only one fixed asset (truck) that it purchased at the start of this year. That asset had cost $44,000, had an estimated life of five years, and is expected to have zero value at the end of the five years.
1. Determine what the current account balance equals.
Accumulated Depreciation account should equal zero.
2. Determine what the current account balance should equal.
The Accumulated Depreciation account, credit balance should equal $8,800.
3. Record the December 31 adjusting entry to get from step 1 to step.
Debit Depreciation Expenses $8,800
Credit Accumulated Depreciation $8,800
To record depreciation charge for the period.
Explanation:
Adjusting entries are prepared at the end of an accounting period to being the accounts to the accrual basis from the state of the cash basis. The purpose is to reflect on transactions that took place instead of emphasizing the receipt and payment of cash. These entries, therefore, agree with the accrual concept which requires that transactions be recognized based on the period to which the expense or revenue is incurred or earned instead of when cash payment or receipt takes place.
Tom is talking to his friend Bob, who has an interest in Freedom, LLC, about purchasing his LLC interest. Bob's outside basis in Freedom, LLC, is $7,000. This includes his $1,900 one-fourth share of the LLC's debt. Bob's 704(b) capital account is $14,000. If Tom bought Bob's LLC interest for $11,000, what would Tom's outside basis be in Freedom, LLC
Answer: $12,900
Explanation:
From the question, we are told that Tom is talking to his friend Bob, who has an interest in Freedom, LLC, about buying his LLC interest. Bob's outside basis in Freedom, LLC, is $7,000 which includes his $1,900 one-fourth share of the LLC's debt. Bob's 704(b) capital account is $14,000. We are further told that Tom bought Bob's LLC interest for $11,000.
Tom's outside basis be in Freedom, LLC will be the amount that he paid for Bob's LLC interest plus the share of LLC’s debt. This will be:
= $11,000 + $1,900
= $12,900
All of the following statements regarding the double-entry system are true except:__________. 1. both sides of the accounting equation must be affected when recording a transaction using the double-entry system. 2. the double-entry system provides a logical method for recording transactions. 3. when using the double-entry system, the sum of all debits to the accounts must equal the sum of all credits. 4. a two-sided effect of each transaction is recorded in appropriate accounts when using the double-entry system.
Answer: both sides of the accounting equation must be affected when recording a transaction using the double-entry system
Explanation:
The double entry principle states that for every financial transaction that takes place, there will be an opposite and equal effects in two different accounts at least. It simply implies that there for every transactions that happens, there are two entries which are the credit entry and the debit entry.
In a double entry principle, the addition of all the debits to the accounts must be thesame as the addition of all credits.
Option A which states that both sides of the accounting equation must be affected when recording a transaction using the double-entry system isn't correct. Both side of the accounting equation aren't affected.
Super Carpeting Inc. just paid a dividend of $2.64 and its dividend is expected to grow at a constant rate of 5.50% per year. If the required return on Super's stock is 13.75% what is the intristic value of Super's shares?
A- $48.00 per share
B- $32.00 per share
C- $33.76 per share
D- $38.40 per share
Which of the following statements is true about the constant growth model?
A- the constant growth model can be used if a stock's expected constant growth rate is more than its required return
B- The constant growth model can be used if a stock's expected constant growth rateis less than its required return
Use the constant growth model to calculate the appropriate values to complete the following statements about Super Carpeting Inc.
If Super stock is equilibrium, the current expected dividend yield on the stock will be ______ per share
Super's expected stock price one year from today will be ____ per share
If Super's stock is in equilibrium, the current expected capital gains yield on Supers stock will be _____
Answer:
1. C. $33.76 per share
2. B- The constant growth model can be used if a stock's expected constant growth rateis less than its required return
3. 8.25% ; $35.62 ; 5.5%
Explanation:
1. Using the Constant Growth Model to calculate the intrinsic value would be best given the above values.
The formula is;
Value = Next Dividend / (Required Return - Growth rate)
Value = (2.64 * ( 1 + 5.5%)) / ( 13.75% - 5.5%)
Value = 2.7852/8.25%
Value = $33.76
2. Going by the formula, if the expected growth rate is more than the required return, the intrinsic value would be a negative number and a stock's price cannot go below 0. The growth rate has to be less than the required return for this to work.
3. At Equilibrium, the stock dividend is growing as it should.
Dividend Yield should therefore be;
= Next Dividend / Stock Value * 100
= (2.7852 / 33.76) * 100
= 8.25%
Stock Price should grow at the growth rate so;
= 33.76 * ( 1 + 0.055)
= $35.62
Gains yield refers to what rate the stock will change in value. Growth rate is 5.5% so that will be the answer.
Carmel Corporation is considering the purchase of a machine costing $36,000 with a 6-year useful life and no salvage value. Carmel uses straight-line depreciation and assumes that the annual cash inflow from the machine will be received uniformly throughout each year. In calculating the accounting rate of return, what is Carmel's average investment
Answer: $18,000
Explanation:
From the question, we are told that Carmel Corporation is considering buying a machine that cost $36,000 with a 6-year useful life and no salvage value and the straight-line depreciation was used on the assumption that the annual cash inflow from the machine will be received uniformly throughout each year.
Accounting rate of return will be the average profit divided by the average investment
The average investment is made of up of the cost of the asset, its salvage value and working capital. Average investment will be the machines and cost divided by 2.
= $36000/2
= $18000.
The average investment is $18,000
A retail dealer in garments is currently selling 24,000 shirts annually. He supplies the following details for the year ended 31st March 2007. Selling price per shirt: P800 Variable cost per shirt: P600 Fixed Cost: Staff salaries: P2 400 000 General Office Cost: P800, 000 Advertising Cost: P800, 000 REQUIRED: a) Calculate Break-even Point in sales revenue and number of shirts sold. b) What is the margin of safety of the dealer expressed as a percentage . c) Assume that 30, 000 shirts were sold during the year, find out the net profit of the firm. d) Assuming that in the coming year, an additional staff salary of P1,000, 000 is anticipated, and price of shirt is likely to be increased by 15%, what should be the break-even point in number of shirts and sales? e) If taxation rate is 12.5%, and fixed cost increase to 6 000 000 what is the level of sales that must be achieved to a targeted profit of P8 000 000.
Answer:
a) Calculate Break-even Point in sales revenue and number of shirts sold.
20,000 shirts $16,000,000b) What is the margin of safety of the dealer expressed as a percentage .
16.67%c) Assume that 30, 000 shirts were sold during the year, find out the net profit of the firm.
$2,000,000d) Assuming that in the coming year, an additional staff salary of P1,000, 000 is anticipated, and price of shirt is likely to be increased by 15%, what should be the break-even point in number of shirts and sales?
15,625 shirts $14,375,000e) If taxation rate is 12.5%, and fixed cost increase to 6 000 000 what is the level of sales that must be achieved to a targeted profit of P8 000 000.
47,322 shirts$43,536,240Explanation:
selling price per shirt $800 x 24,000 = $19,200,000
variable cost per shirt $600 x 24,000 = $14,400,000
total fixed costs $4,000,000
net income $800,000
contribution margin per unit = $800 - $600 = $200
break even point = $4,000,000 / $200 = 20,000 shirts x $800 = $16,000,000
margin of safety = (current sales - break even point) / current sales = ($19,200,000 - $16,000,000) / $19,200,000 = 16.67%
if 30,000 shirts were sold:
contribution margin 30,000 x $200 = $6,000,000
fixed costs $4,000,000
net income $2,000,000
if sales price increases to $920, contribution margin = $320
fixed costs increase to $5,000,000
break even point = $5,000,000 / 320 = 15,625 shirts x $920 = $14,375,000
fixed costs increase to %6,000,000
targeted profit $8,000,000 + tax rate = $9,142,857
sales target = ($6,000,000 + $9,142,857) / $320 = 47,321.43 ≈ 47,322 shirts
Consider the following three types of airplanes: Airbus planes that seat 320 passengers and cost $200 million each, Boeing planes that seat 250 passengers and cost $125 million each, and Lockheed planes that seat 275 passengers and cost $200 million each. You are the purchasing manager of an airline company and have a spending goal of $2,900 million for the purchase of new aircrafts to seat a total of 4,480 passengers. Also, you must buy twice as many Lockheed airplanes as Airbus planes. How many of each type of airplane should you order
Answer:
9 Airbus planes, 1 Boeing plane & 4 Lockheed airplanes
Explanation:
We will develop equations from the information provided
Let the planes be tagged as seen below:
Airbus = x, Boeing = y, Lockheed = z
From the cost of the planes, we have:
200 x + 125 y + 200 z = 2900 ---Eqn 1
From the number of passenger seats, we have:
320 x + 250 y + 275 z = 4480 ---Eqn 2
Twice as many Lockheed airplanes as Airbus planes
⇒ 2z = x ---Eqn 3
Substitute x = 2z into Eqn 1, we have:
200 (2z) + 125 y + 200 z = 2900
125 y + 400 z + 200 z = 2900
125 y + 600 z = 2900 ---Eqn 4
Substitute x = 2z into Eqn 2, we have:
320 (2z) + 250 y + 275 z = 4480
250 y + 640 z + 275 z = 4480
250 y + 915 z = 4480 ---Eqn 5
Multiply Eqn 4 by 2
125 y * 2 + 600 z * 2 = 2900 * 2
⇒ 250 y + 1200 z = 5800 ---Eqn 6
(250 y + 915 z = 4480) ---Eqn 5
Subtracting Eqn 5 from Eqn 6, we have:
250 y - 250 y + 1200 z - 915 z = 5800 - 4480
285 z = 1320
z = 4.6
Substitute z to Eqn 3, x = 2z
⇒ x = 2 * 4.6 = 9.2
x = 9.2
Substitute x & z into Eqn 1
200 x + 125 y + 200 z = 2900
200 * 9.2 + 125 y + 200 * 4.6 = 2900
125 y = 2900 - (1840 + 920)
125 y = 140
y = 1.1
Since it is airplanes that are to be bought, the value of x, y & z must be integers (you cannot buy 4.6 airplanes). As such, we will round down values of airplanes to be bought sodo that we will not exceed the budget.
x = 9, y = 1, z = 4
∴That implies that I will buy 9 Airbus planes, 1 Boeing plane & 4 Lockheed airplanes
Ernesto owns a house painting company. Total sales for the past year were $75,000. His bills for running the business were $30,000. Stan, who owns a furniture-making company, previously asked Ernesto to come work for him at a salary of $40,000. Ernesto's accounting profit is______ and his economic profit is ________$
Answer:
Accounting profit = $45,000
Economic profit = $5,000
Explanation:
The computation of accounting profit and economic profit is shown below:-
Accounting profit = Sales - External expenses
= $75,000 - $30,000
= $45,000
Economic profit = Accounting profit - Implicit cost
= $45,000 - $40,000
= $5,000
Therefore for computing the accounting profit and economic profit we simply applied the above formula so that each one could arrive
Accounts payable are: Multiple Choice Long-term liabilities. Estimated liabilities. Amounts owed to suppliers for products and/or services purchased on credit. Always payable within 30 days. Not usually due on specific dates.
Answer: Amounts owed to suppliers for products and/or services purchased on credit.
Explanation: Account payable as a liability arises on account of credit purchases and therefore, are amounts owed to suppliers for products and/or services purchased on credit. While accounts payable can be either a short-term or a long-term liability based on the duration available to pay the same, they are typically paid within thirty or sixty days which makes them current liabilities. However, the duration of credit that is available to companies making such purchases are based on both the credibility of such companies, the history of past purchases and how timely they repay their debts.
The fiscal year-end unadjusted trial balance for Collins Company is found on the trial balance tab. Collins Company uses a perpetual inventory system. It categorizes the following accounts as selling expenses: depreciation expense—store equipment, sales salaries expense, rent expense—selling space, store supplies expense, advertising expense. It categorizes the remaining expenses as general and administrative.
Descriptions of items that require adjusting entries on January 31 follow.
A) Store supplies still available at fiscal year-end amount to $2,950.
B) Expired insurance, an administrative expense, for the fiscal year is $1,880.
C) Depreciation expense on store equipment, a selling expense, is $6,300 for the fiscal year.
D) To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $11,560 of inventory is still available at fiscal year-end.
Missing information:
Cash 1,000
Merchandise inventory 12,500
Store supplies 5,800
Prepaid insurance 2,400
Store equipment 42,900
Accumulated depreciation - Store equip. 15,250
Accounts payable 10,000
Common stock 5,000
Dividends 2,200
Retained earnings 27,000
Sales 111,950
Sales discounts 2,000
Sales returns and allowances 2,200
Cost of goods sold 38,400
Salaries expense 35,000
Rent expense 15,000
Advertising expense 9,800
Total 169,200 169,200
Answer:
the closing entries should be:
Dr Sales revenues 107,750
Cr Income summary 107,750
Dr Income summary 110,270
Cr Cost of goods sold 39,340
Cr Salaries expense 35,000
Cr Rent expense 15,000
Cr Advertising expense $9,800
Cr Supplies expense 2,950
Cr Insurance expense 1,880
Cr Depreciation expense 6,300
Dr Retained earnings 2,520
Cr Income summary 2,520
Dr Retained earnings 2,200
Cr Dividends 2,200
Explanation:
A) Store supplies still available at fiscal year-end amount to $2,950.
Dr Supplies expense 2,950
Cr Supplies 2,950
B) Expired insurance, an administrative expense, for the fiscal year is $1,880.
Dr Insurance expense 1,880
Cr Prepaid insurance 1,880
C) Depreciation expense on store equipment, a selling expense, is $6,300 for the fiscal year.
Dr Depreciation expense 6,300
Cr Accumulated depreciation - Store equip. 6,300
D) To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $11,560 of inventory is still available at fiscal year-end.
Dr Shrinkage expense or COGS (I prefer to use COGS) 940
Cr Merchandise inventory 940
the adjusted income statement:
Revenues:
Sales $111,950 Sales discounts ($2,000) Sales returns and allowances ($2,200) $107,750Cost of goods sold ($39,340)
Gross profit $68,410
Operating expenses:
Salaries expense ($35,000) Rent expense ($15,000) Advertising expense ($9,800) Supplies expense ($2,950)Insurance expense ($1,880)Depreciation expense ($6,300) ($70,930)Net loss ($2,520)
How much do I need to retire? Here are your assumptions. You are 30. You will retire when you are 65. You want $40,000 a year when you retire. You will be an aggressive investor today and have an average market return of 9%. When you retire, you will be conservative in your investing and get into bonds that have a market return of 4.5%. You expect that inflation will be 3%. You currently have $20,000 you put into the market this morning. You are expecting to live until 85. How much do you need to have saved when you turn 65? (Hint: if you want to work out how much you need to save every year, under PMT, it will be 36 years)
Answer:
The amount to be saved at the age of 65 is $1940755.74
Explanation:
To calculate the amount needed at 65 including inflation = 40000 * 1.0336 = 115931.13
Present Value of Growing Annuity = PMT / (r-g) [ 1 - {(1+g)/(1+r)}n ]
= 115931.13 / (0.045 - 0.03) [ 1 - (1.03/1.045)20 ]
= 7728742.2 * 0.2511089
= 1940755.74
The assets and liabilities of Thompson Computer Services at March 31, the end of the current year, and its revenue and expenses for the year are listed below.
Accounts payable $2,000 Miscellaneous expense $1,030
Accounts receivable 10,340 Office expense 1,240
Cash 21,420 Supplies 1,670
Fees earned 73,450 Wages expense 23,550
Land 47,000 Dividends 16,570
Building 157,630
The common stock was $120,000 and the retained earnings were $60,000 at April 1, the beginning of the current year. During the year, shareholders purchased an additional $25,000 in stock. Use this information to answer the questions that follow.
a. Prepare an income statement for the current year ended March 31.
b. Prepare a statement of retained earnings for the current year ended March 31.
c. Prepare a balance sheet for Thompson's Computer Service.
Answer: Please see explanation column for answers
Explanation: Given Revenue and expenses
Accounts payable $2,000 Miscellaneous expense $1,030, Accounts receivable 10,340 Office expense 1,240
Cash 21,420, Wagesexpense 23,550 Supplies 1,670 Land 47,000, Building 157,630, Dividends 16,570, Fees earned 73,450
a. income statement for the current year ended March 31.
Fees earned = Revenue
Fees earned 73, 450
Expenses Incurred
Wages expense -$23,550
Miscellaneous expense - $1,030
Office expense -$1,240
Total Expenses 25,820
Net income $47,630
Working : Net income = fees earned ( Revenue )- Total expenses =
$73,450 - $25,820 = $47,630
2.statement of retained earnings for the current year ended March 31.
Retained earning at April 1ST $60,000
Net income $47,630
Dividend $16,570
Retained earnings $91,060
Working
Retained earning = Retained earning from april 1st + Net income -- Dividend
$60,000 + $47,630) - $16,570 = $91,060
3.
A balance sheet is a company's financial statement that shows its assets, liabilities and shareholders' equity to illustrate the financial position of the company showing what the company has as its assets, n is owing , and the amount liable to shareholders.at a particular time. In a balance sheet, Assets must equal Liabilities and Shareholders’ Equity..
Balance sheet for Thompson's Computer Service.
Current assets
Cash $21,420
Account receivables $10,340
Supplies $1,670
Total current assets $33,430
Property land and equipment
Land $47,000
Building $ 157,630
Total Property land and equipment $204,630
Total assets $238,060
Liabilities and equity
Accounts payable $2,000
Stock holder's equity
Common stock $145,000
Retained earnings $91,060
Stock holder's equity $236,000
Total Stock holder's equity and Liabilities $ 238,060
we can see in the balance sheet that Stock holder's equity and Liabilities = Total Assets
Merck & Company reported the following from its 2016 financial statements. $ millions 2013 2014 2015 2016 Accounts receivable, net $7,184 $6,626 $6,484 $7,018 Allowance for doubtful accounts 146 153 165 195 a. Compute accounts receivable gross for each year. $ millions 2013 2014 2015 2016 Accounts receivable, gross b. Determine the percentage of allowance to gross account receivables for each year. Round answers to two decimal places (ex: 0.02345 = 2.35%). 2013 2014 2015 2016 % allowance c. Assume that we want to reformulate the balance sheet and income statement to reflect a constant percentage of allowance to gross accounts receivables for each year. Compute the four-year average and then reformulate the balance sheet and income statements for each of the four years. Follow the process shown in Analyst Adjustments 5.2 and assume a tax rate of 35%. Four- year average of percentage of allowance to gross accounts receivables. Round answer to two decimal places (ex: 0.02345 = 2.35%)
Answer:
a. Compute accounts receivable gross for each year.
2013 $7,3302014 $6,7792015 $6,6492016 $7,213b. Determine the percentage of allowance to gross account receivables for each year.
2013 1.99%2014 2.26%2015 2.48%2016 2.70%c. 2013 2014 2015 2016
adjusted allowance for $173 $160 $157 $170
doubtful accounts
Balance sheet adjustments:
allowance for doubtful accounts $27 $7 -$8 -$25
accounts receivable net $7,157 $6,633 $6,476 $6,993
deferred tax liability -$9.45 -$2.45 $2.8 $8.75
retained earnings $9.45 $2.45 -$2.8 -$8.75
Income statement adjustments:
bad debt expense $27 $7 -$8 -$25
income tax expense -$9.45 -$2.45 $2.8 $8.75
net income $9.45 $2.45 -$2.8 -$8.75
Explanation:
2013 2014 2015 2016
Accounts receivable, net $7,184 $6,626 $6,484 $7,018
Allowance for doubtful accounts $146 $153 $165 $195
four year average of allowance for doubtful accounts = (1.99 + 2.26 + 2.48 + 2.7) / 4 = 2.36%
Which of the following events would cause the supply curve to decrease from Upper S 1 to Upper S 2? A. Lower expected future prices. B. An increase in the price of inputs. C. Upper A decrease in the price of inputs. D. An increase in the number of firms in the market.
An increase in the price of inputs supply curve to decrease from Upper to upper and law of supply.
Thus, The cost of production inputs is a significant component in addition to the product price, which is the primary factor according to the Law of Supply.
The cheapest price at which a business may sell a good without going bankrupt is the sum of money required to make it. Taking inputs and applying a procedure to them to produce an inputs constitutes the process of producing a good or service.
The finished good or service is the output, and the inputs are things like raw materials, labor, utilities, licensing costs, and even other goods. These materials are sometimes referred to as production factors. The cost of producing the good rises when input prices rise. And as a result, companies must sell their products at each price.
Thus, An increase in the price of inputs supply curve to decrease from Upper to upper and law of supply.
Learn more about Law of supply, refer to the link:
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studoc Suppose there is uncertainty about the growth rate. With 50% probability the growth rate will be 6%, with 50% probability the growth rate will be 10%. What are the respective market values under the two growth rates
Answer:
Given there is uncertainty about the growth rate, the respective market values under the two growth rates is the weighted average rate of growth, which is: 50% x 6% + 50% x 10% = 8%.
Explanation:
3. If the average price of an airline ticket on a certain route rises from $200 to $250, the number of tickets sold drop from 800 to 600. Calculate the price elasticity of demand. Is the demand elastic or inelastic?
Answer:
-Price elasticity of demand=0.77
-The demand is inelastic because the elasticity is 0.77 and this number is less than 1.
Explanation:
The formula to calculate the price elasticity of demand is:
Price elasticity of demand=% change in the quantity demanded/% change in the price
To use this formula you have to calculate the % change in the quantity demanded and % change in the price:
% change in the quantity demanded=(Q2-Q1/((Q2+Q1)/2))*100
% change in the quantity demanded=(250-200/((250+200)/2))*100
% change in the quantity demanded=(50/(450/2))*100
% change in the quantity demanded=(50/225)*100
% change in the quantity demanded=22.22%
% change in the price=(P2-P1/((P2+P1)/2))*100
% change in the price=(600-800/((600+800)/2))*100
% change in the price=(-200/(1400/2))*100
% change in the price=(-200/700)*100
% change in the price=-28.57%
Now, you can replace the values in the formula to to calculate the price elasticity of demand:
Price elasticity of demand= 22.22%/-28.57%
Price elasticity of demand=0.77
The price elasticity of the demand is 0.77. An elastic demand is when the elasticity is greater than 1 and an inelastic demand is when the elasticity is less than one. So, according to this, the demand is inelastic because the elasticity is 0.77 and this number is less than 1.