Answer:
65%
Explanation:
The computation of the percentage change in operating income is shown below:
Degree of Operating leverage = Percentage change in operating income ÷ Percentage change in sales
2.6 = Percentage change in operating income ÷ 25%
So,
Percentage change in operating income is
= 2.6 × 25%
= 65%
We simply multiplied the degree of operating leverage with the percentage in sales so that the percentage change in operating income could come
Quality Timber Pty Ltd is a well-established logging company. With below-average performance, their packaging department is consistently behind schedule. Employees often take long lunch breaks and frequently stop to chat with co-workers. However, the employees get along very well and frequently spend time together, even outside work. In this scenario, the performance norms are _____ and cohesiveness is _____, so productivity is ____.
Answer:
Quality Timber Pty Ltd
In this scenario, the performance norms are _below-average____ and cohesiveness is _ high____, so productivity is _low___.
Explanation:
It has been established that group norms influence individual behavior and group performance. Performance Norms refer to how a person should work in a given group and what his or her output should be.
Cohesion, according to wikipedia.com, "can be more specifically defined as the tendency for a group to be in unity while working towards a goal or to satisfy the emotional needs of its members." Employees of the packaging department tend to be enjoying so much group cohesiveness. But, they need to break some habits to focus on achieving corporate goals by increasing their productivity.
According to Paul Krugman of the Organization for Economic Co-operation and Development, "Productivity is commonly defined as a ratio between the output volume and the volume of inputs. In other words, it measures how efficiently production inputs, such as labour and capital, are being used in an economy to produce a given level of output." A rough assessment of the packaging department employees' performance shows low productivity, as they are "consistently behind schedule and take long lunch breaks, and frequently chat with co-workers," instead of concentrating on their jobs.
Reiss has invested $5,000 at the end of every year for the past 22 years and earns 8 percent annually. If he continues doing this, how much will his investment account be worth 12 years from now
Answer:
Total amount will be = $856584.02
Explanation:
Annual invested amount by Reiss = $5000
Interest rate earned on the invested amount = 8 percent annually or 0.08.
Total number of years the amount invested, 22 + 12 = 34 years
Now we have to find the total amount if the total investment years are 34 years. Below is the calculation.
[tex]\text{Total amount} =Annuity [ \frac{(1+r)^{n} - 1}{r}] \\= 5000 [ \frac{(1 + 0.08 )^{34} - 1}{0.08}] \\= 856584.02 \ dollars[/tex]
Ship Co. produces storage crates that require 1.2 meters of material at $.85 per meter and 0.1 direct labor hours at $15.00 per hour. Overhead is applied at the rate of $9 per direct labor hour. What is the total standard cost for one unit of product that would appear on a standard cost card?
Answer:
Standard cost= $3.42
Explanation:
Giving the following information:
Ship Co. produces storage crates that require 1.2 meters of material at $.85 per meter and 0.1 direct labor hours at $15.00 per hour. Overhead is applied at the rate of $9 per direct labor hour.
To calculate the standard cost we need to use the following formula:
Standard cost= standard direct material + standard direct labor + allocated overhead
Standard cost= 1.2*0.85 + 0.1*15 + 9*0.1
Standard cost= $3.42
A sinking fund is established by a working couple so that they will have $60,000 to pay for part of their daughter's education when she enters college. If they make deposits at the end of each 3-month period for 8 years, and if interest is paid at 10%, compounded quarterly, what size deposits must they make
Answer:
quarterly deposit= $12,460.99
Explanation:
Giving the following information:
FV= $60,000
Number of periods= 4*8= 32
i= 0.10/4= 0.025
To calculate the quarterly deposit required, we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= quarterly deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
A= (60,000*0.025) / [(1.025^32) - 1]
A= 12,460.99
Return to questionItem 12Item 12 Part 2 of 2 0.62 points Required information Use the following information for the Exercises below. [The following information applies to the questions displayed below.] Daley Company prepared the following aging of receivables analysis at December 31. Days Past Due Total 0 1 to 30 31 to 60 61 to 90 Over 90 Accounts receivable $ 585,000 $ 399,000 $ 93,000 $ 39,000 $ 21,000 $ 33,000 Percent uncollectible 1 % 2 % 5 % 7 % 10 % Exercise 9-9 Percent of receivables method LO P3 a. Estimate the balance of the Allowance for Doubtful Accounts assuming the company uses 6% of total accounts receivable to estimate uncollectibles, instead of the aging of receivables method. b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $12,300 credit. c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $1,300 debit.
Answer:
total accounts receivable = $585,000 + $399,000 + $93,000 + $39,000 + $21,000 + $33,000 = $1,170,000
a. Estimate the balance of the Allowance for Doubtful Accounts assuming the company uses 6% of total accounts receivable to estimate uncollectibles, instead of the aging of receivables method.
bad debt = $1,170,000 x 6% = $70,200
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $12,300 credit.
= $70,200 - $12,300 = $57,900
Dr Bad debt expense 57,900
Cr Allowance for doubtful accounts 57,900
c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $1,300 debit.
= $70,200 + $1,300 = $71,500
Dr Bad debt expense (= $70,200 + $1,300) 71,500
Cr Allowance for doubtful accounts 71,500
Since the allowance for doubtful accounts has a credit balance, any previous debit balance must be cancelled by crediting the amount.
The January 1, Year 1 trial balance for the Tyrell Company is found on the trial balance tab. The beginning balances are assumed. Tyrell Co. entered into the following transactions involving short-term liabilities in Year 1 and Year 2.
Year 1
Apr. 20 Purchased $40,250 of merchandise on credit from Locust, terms n/30.
May 19 Replaced the April 20 account payable to Locust with a 90-day, 10%, $35,000 note payable along with paying $5,250 in cash.
July 8 Borrowed $80,000 cash from NBR Bank by signing a 120-day, 9%, $80,000 note payable.
Aug. 17 Paid the amount due on the note to Locust at the maturity date.
Nov. 5 Paid the amount due on the note to NBR Bank at the maturity date.
Nov. 28 Borrowed $42,000 cash from Fargo Bank by signing a 60-day, 8%, $42,000 note payable.
Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank.
Year 2
Jan. 27 Paid the amount due on the note to Fargo Bank at the maturity date.
Requirement General General Trial Schedule of Calculation of Year 2
Journal Ledger Balance Payables Interest Payment
1. General Journal tab- Prepare the 2016 journal entries related to the notes and accounts payable of Tyrell Co
2. Calculation of interest tab - Use the interest formula (P x Rx T) to verify the amount of interest recorded in your entries. Verify that total interest expense agrees with the trial balance.
3. Year 2 payment tab - Prepare the January 27, 2017 entry to record the re-payment of the note at maturity
Answer: Please see explanatory column
Explanation:
Tyrell Company for 2016
Journal to record the purchase of merchandise inventory
Date Account Title Debit Credit
April 20 Merchandise inventory $40,250
2016 Accounts payable - Locust $40250
Journal to record the replacement of account with 10% notes payable
Date Account Title Debit Credit
March 19 Accounts payable - Locust $40,250
2016 10%notes payable $35,000
Cash $5,250
Journal to record the Borrowing of $80,000 cash in 120-days at 9%,
Date Account Title Debit Credit
July 8 Cash $80,000
2016 9%notes payable $80,000
Journal to record the 10%, notes payable at maturity date
Date Account Title Debit Credit
Aug 17 10% notes payable $35,000
2016 interest expense $875
Cash $35,875
Using Interest = P X R X T
= 35,000 X 10% X 90/360=$875
Journal to record the 9%, notes payable at maturity date
Date Account Title Debit Credit
Nov 5 9% notes payable $80,000
2016 interest expense $2,400
Cash $82,400
Using Interest = P X R X T
= 80,000 X 9% X 120/360=$2,400
Journal to borrowing of 42,000 for 60 days at 8% interest payable at maturity date
Date Account Title Debit Credit
Nov 28 Cash $42,000
2016 8% notes payable $42,000
Journal to record the interst accrued on the notes payable
Date Account Title Debit Credit
Dec 31 Interest expense $308
2016 interest payable $308
Using Interest = P X R X T
= 42,,000 X 8% X 33/360=$308
33 days because the note payable was issued on November 28 but interest was accrued on December 31 making the accrued interest expense to be calculated for 33 days
Tyrell Company for 2017
Journal to record the payment of 8% payable at maturity date
Date Account Title Debit Credit
Jan 31 8%notes payable $42,000
2017 interest payable $308
Interest expense $252
Cash $42,560
Using Interest = P X R X T
= 42,,000 X 8% X 27/360=$252
27 days because from december to january 27th,
Robyn's Retail had 500 units of inventory on hand at the end of the year. These were recorded at a cost of $19 each using the last-in, first-out (LIFO) method. The current replacement cost is $17 per unit. The selling price charged by Robyn's Retail for each finished product is $27. In order to record the adjusting entry needed under the lower-of-cost-or-market rule, the Merchandise Inventory will be ________. Group of answer choices debited by $8,500 credited by $8,500 debited by $1,000 credited by $1,000
Answer:
Credit inventory 1000 and debit COGS 1000
Explanation:
19*500=9500 <price it is recorded at currently
The rule requires lower cost - market vs. price. Since market cost is lower, you have to find out how much the ending inventory balance should be
17*500=8500
9500-8500=1000
The inventory booked should be lowered, thus requiring credit entry of 1000. Since it is a merchandise loss, it is counted towards cost of goods sold expense, thus debit
Based on the following data, estimate the cost of the ending merchandise inventory:
Sales (net) $1,450,000
Estimated gross profit rate 42%
Beginning merchandise inventory $100,000
Purchases (net) 860,000
Merchandise available for sale $960,000
Cost of Ending Merchandise Inventory
Merchandise available for sale $
Less cost of merchandise sold
Estimated ending merchandise inventory $
Answer:
Ending inventory $119,000
Explanation:
Estimation of cost of ending merchandise inventory:
Merchandise available for sale $960,000
Less Cost of goods sold $841,000
[1,450,000* (100%-42%)]
Ending inventory $119,000
( $960,000 - $841,000)
Therefore the cost of the ending merchandise inventory will be $119,000
Harry has a Personal Auto Policy (PAP) with liability limits of 100/$300/$50 and medical payments limits of $5,000 insuring his SUV. Harry also has other than collision and collision coverages with deductibles of $250 and $500, respectively. The local taxicab drivers are on strike and Harry decides to capitalize on the situation by transporting persons in his SUV for a fee. While transporting a businessman, Harry loses control of his SUV and hits a parked car. The damages are as follows:
Harry's medical costs - $2,000The businessman's medical costs - $1,000Damage to the parked car - $14,000Damage to Harry's car - $12,000How much, if any, will Harry's PAP insurer pay for damages under Part A—Liability Coverage?A. $0B. $14,000C. $17,000D. $29,000
Answer:
A) $0
Explanation:
The personal automobile policy (PAP) is an automobile insurance contract which most people purchase in order to protect their automobile from costs that may arise due to auto accidents.
Under the Part A—Liability Coverage, there are exclusions whereby the insurer won't pay for any damage, and one of the exclusions states that "for that “insured’s” liability arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance, no liability coverage would be provided."
In this case, since Harry used his SUV to transport people for a fee, Harry's PAP insurer won't pay for damages under Part A—Liability Coverage because he used his SUV for livery conveyance.
Some quotes were stated from "Types of Automobile Policies and the Personal Automobile Policy"
You want to go to grad school 3 years from now, and you can save $5,000 per year, beginning one year from today. You plan to deposit the funds in a mutual fund which you expect to return 9% per year. Under these conditions, how much will you have just after you make the 3rd deposit, 3 years from now
Answer:
$16,390.50
Explanation:
For computing the amount after you make the 3rd deposit we need to use the future value formula i.e to be shown in the attachment
Provided that,
Present value = $0
Rate of interest = 9%
NPER = 3 years
PMT = $5,000
The formula is shown below:
= -FV(Rate;NPER;PMT;PV;type)
So, after applying the above formula, the future value is $16,390.50
Alex expects to incur personal costs of $3,800 in Year 1, and $4,300, $5,200 and $4,600 in costs over the following three years, respectively. What is the present value of these costs at 7 percent
Answer:
$15,061.26
Explanation:
The computation of the present value for these costs are shown below:
Year Expected cash flow Discount factor at 7% Present value
1 $3,800 0.9345794393 $3,551.40
2 $4,300 0.8734387283 $3,755.79
3 $5,200 0.8162978769 $4,244.75
4 $4,600 0.762895212 $3,509.32
Total $15,061.26
Refer to the discount factor table
An investor is considering the purchase of a residential rental property that has an asking price of $400,000. The property has four rental units that are expected to rent for $1,200 each per month. Operating expenses and vacancy allowances are expected to be 45% of gross income. An 5% interest only mortgage loan is available for 5 years at 100% of the purchase price. How much cash income will the investor receive each month of the first year after paying the monthly mortgage payment
Answer:
The answer is $973
Explanation:
Solution
Given that:
A residential rental property asking price = $400,000
Property expected to rent = $1200
Operating expenses expected = 45%
Interest =5%
Mortgage loan available for =5 years
Purchase price =100%
Now, we find out the cash income the investor receive each month of the first year after paying the monthly mortgage payment
Thus
Rental income (1200*4 units)=$4800
Less: operating expenses (4800*45%)=$2160
The Net income per month=$2640
So,
Less:Monthly mortgage interest payment=$1667 [(400000*5%)
=20000/12=1667]
The Cash income =$973
Therefore the investor will receive $973 each month of the first year.
On 12/31/X4, Zoom, LLC, reported a $55,500 loss on its books. The items included in the loss computation were $27,000 in sales revenue, $12,000 in qualified dividends, $19,000 in cost of goods sold, $47,000 in charitable contributions, $17,000 in employee wages, and $11,500 of rent expense. How much ordinary business income (loss) will Zoom report on its X4 return
Answer:Ordinary Business income loss =-$20,500.
Explanation:
Ordinary business Expenses are the expenses generally accepted according to the industry standards associated with running of a business.
Here, the ordinary business expenses for Zoom include
cost of good sold= $19,-000
employee wages= $17,000
rent expense = $11,500 and therefore will be deducted from its sales revenue.
charitable contributions and qualified dividends, do not cut across all industries and so are not classified under Ordinary Buisness expences.
Ordinary Business income loss = Sales revenue - cost of good sold, -employee wages- rent expense.
$27,000- $19,000-$`17,000-$11,500= -$20,500. to be reported on its X4 return
Gizmos, Inc. produces gizmos at an average total cost of $15 and an average variable cost of $12. The only fixed input used in the production of gizmos costs $240. How many gizmos does Gizmos, Inc. produce?
Answer:
80
Explanation:
Total cost = fixed cost + variable cost
Average total cost = average fixed cost + average variable cost.
Average total cost = Total cost / quantity
Average fixed cost = fixed cost / quantity
Average variable cost = variable cost/ quantity
$15 = average fixed cost + $12
Average fixed cost = $3
Total fixed cost = $240
$3 = $240 / q
Q = 80
I hope my answer helps you
Witt Oil issued 100,000 shares of cumulative, nonparticipating preferred stock with a par value of $100 and a stated dividend of 7%. The shares sold for $96 per share. The journal record for this transaction would be
Answer:
Dr Cash$9,600,000
Dr Paid-in Capital in Excess of Par -Preferred Stock$400,000
Cr Preferred Stock$10,000,000
Explanation:
Since Witt Oil issued 100,000 shares and preferred stock with a par value of $100 in which the shares sold for $96 per share this means we have to Debit Cash with $9,600,000, Debit Paid-in Capital in Excess of Par -Preferred Stock $400,000 and Credit Preferred Stock$10,000,000
Dr Cash$9,600,000
(100,000 Shares × $96 per shares)
Dr Paid-in Capital in Excess of Par -Preferred Stock$400,000
(10,000,000 -$9,600,000)
Cr Preferred Stock$10,000,000
($100,000× per value 100)
Answer:
Dr Cash$9,600,000
Dr Paid-in Capital in Excess of Par -Preferred Stock$400,000
Cr Preferred Stock$10,000,000
Explanation:
Blossom Distribution Co. has determined its December 31, 2020 inventory on a LIFO basis at $962000. Information pertaining to that inventory follows: Estimated selling price $1000000 Estimated cost of disposal 38000 Normal profit margin 118000 Current replacement cost 882000 Blossom records losses that result from applying the lower-of-cost-or-market rule. At December 31, 2020, the loss that Blossom should recognize is
Answer:
The answer is $118,000
Explanation:
Solution
Given that:
Now
The selling price estimated is = $1,000,000
Less: Cost of disposal = $38,000
Less: Normal profit margin = $118,000
The net realizable value = $844,000
The market value of inventory is lesser of Net realizable value
Thus
The net realizable value = $844,000
The cost of replacement = $225,000
The Market value of inventory greater of the above) = $844,000
Inventory is valued at cost or market value which ever is low
Then
Cost = $962,000
The market value = $844,000
Hence
The value of Inventory (lesser of the above) = $844,000.
Now,
The loss = $962,000 - $844,000
= $118,000
Therefore, At December 31, 2020, the loss that Blossom should recognize is $118,000
Maeko likes to purchase many of the products she needs online to save herself time. Her go-to online store is Zappos. She finds most of what she needs there and has had very satisfying shopping experiences in the past. What type of brand is Zappos?
Answer:
e-brand brand.
Explanation:
In this scenario, Maeko likes to purchase many of the products she needs online to save herself time. Her go-to online store is Zappos, where she finds most of what she needs and has had very satisfying shopping experiences in the past. This type of brand are generally referred to as an e-brand.
An e-brand is a short for "electronic brand" and can be defined as a virtual marketplace where various customers have access to order or purchase a variety of products or services being provided by the company over the world wide web (internet). Generally, an e-brand is primarily focused on digital marketing and electronic buying and selling of their products through the use of internet and credit cards.
Simply stated, an e-brand eliminates the cumbersome stress of having customers being physically present in a store to buy goods or get a service.
Generally, an e-brand is advantageous because it increases sales, provides larger markets, enhances scaling up and restocking, customer data can be used for surveys etc.
Hence, Zappos is an example of an e-brand.
Answer:
C
Explanation:
Bodin Company manufactures finger splints for kids who get tendonitis from playing video games. The firm had the following inventories at the beginning and end of the month of January.
January 1 January 31
Finished goods $126,000 $117,000
Work in process 235,000 251,000
Raw material 134,000 124,000
The following additional data pertain to January operations.
Raw material purchased $190,000
Direct labor 400,000
Actual manufacturing overhead 170,000
Actual selling and administrative expenses 115,000
The company applies manufacturing overhead at the rate of 60 percent of direct-labor cost. Any overapplied or underapplied manufacturing overhead is accumulated until the end of the year.
Required:
1. Compute the company's prime cost for January.
2. Compute the total manufacturing cost for January.
3. Compute the cost of goods manufactured for January.
4. Compute the cost of goods sold for January.
5. Compute the balance in the manufacturing overhead account on January 31.
Answer:
1. Prime Costs $ 600,000
2. Total Manufacturing Costs $ 770,000
3. Cost of goods manufactured $ 754,000
4. Cost of Goods Sold $ 763,000
5: Over applied Overhead= $ 70,000
Explanation:
Add ing Direct Materials and Direct Labor gives Prime Costs.
Bodin Company
January 1 Raw material 134,000
Add Raw material purchased $190,000
Less January 31 Raw material 124,000
Direct Materials Used $ 200,000
Direct labor 400,000
1.Prime Costs $ 600,000
Actual manufacturing overhead 170,000
2. Total Manufacturing Costs $ 770,000
Adding Prime Costs to the Actual Manufacturing Overhead gives Total Manufacturing Costs.
2. Total Manufacturing Costs $ 770,000
Add January 1 Work in process 235,000
Cost of Goods Available for Manufacture $ 1005,000
Less January 31 Work in process 251,000
3. Cost of goods manufactured $ 754,000
Adding Opening Work in Process to Total Manufacturing Costs and Subtracting Closing Work in Process from Total Manufacturing Costs the gives Cost of goods manufactured .
3. Cost of goods manufactured $ 754,000
Add January 1 Finished goods $126,000
Cost of Goods Available for Sale $ 880,000
Less January 31 Finished goods $117,000
4. Cost of Goods Sold $ 763,000
Adding Opening Finished goods to Cost of Goods Manufactured and Subtracting Closing Finished goods from Cost of Goods Manufactured the gives Cost of goods sold .
Applied Manufacturing Overhead= 60% of 400,000= $ 240,000
Actual Overhead $ 170,000
5: Over applied Overhead= Applied Overhead Less Actual Overhead
= 240,000- 170,000= $ 70,000
Overheads Debit Credit
Actual Applied $240,000
$ 170,000
Over Applied
$ 70,000
$ 240,000 $ 240,000
Sexton Corp. has current liabilities of $510,000, a quick ratio of .93, inventory turnover of 6.9, and a current ratio of 1.5. What is the cost of goods sold for the company?
Answer:
The cost of goods sold for the company is $2,005,830.
Explanation:
This can be calculated from the available information using the following steps:
Step 1: Calculation of Current Assets
To do this, we use the current ratio formula as follows:
Current ratio = Current Assets / Current Liabilities
Substituting the values in the question into the equation above and solve for Current Assets, we have:
1.5 = Current Assets / $510,000
Current Assets = $510,000 * 1.5 = $765,000
Step 2: Calculation of Inventory
To do this, we use the Quick Ratio formula as follows:
Quick ratio = (Current Assets - Inventory) / Current Liabilities
Substituting the values in the question and from Step 1 into the equation above and solve for Inventory, we have:
0.93 = ($765,000 - Inventory) / $510,000
0.93 * $510,000 = $765,000 - Inventory
$474,300 = $765,000 - Inventory
$474,300 + Inventory = $765,000
Inventory = $765,000 - 474,300 = $290,700
Note that this inventory of $290,700 is the ending inventory.
Step 3: Calculation of Cost of Goods Sold
To do this, we use the Inventory Turnover formula as follows:
Inventory turnover = Cost of goods sold / Average Inventory
Note that average Average Inventory is the addition of the beginning and closing inventory divided by 2. But since the beginning inventory is not available, the practice is to use the ending inventory in place of the average inventory. This is what we do here below.
Substituting the values in the question and from Step 2 into the equation above and solve for Cost of goods sold, we have:
6.9 = Cost of goods sold / $290,700
Cost of goods sold = 6.9 * $290,7000 = $2,005,830
Therefore, the cost of goods sold for the company is $2,005,830.
Agency conflicts between managers and shareholders An agency relationship can degenerate into an agency conflict when an agent acts in a manner that is not in the best interest of his or her principal. In business, these conflicts most frequently involve the enrichment of the firm's executives or managers (in the form of money and perquisites or power and prestige) at the expense of the shareholders. This usurping of shareholder wealth is most likely to occur when shareholders do not have sufficient information about the decisions and actions being made by the firm's management. Consider the following scenario and determine whether an agency conflict exists: Daniel owns Daniel's Tantalizing Tees, a T-shirt shop in a small college town in Kansas. With a staff of three part-time employees, Daniel operates the business in accordance with his personal goals, dreams, and capabilities.
Does Daniel have an agency conflict to deal with?
A. No; by having part-time, as opposed to full-time, employees, Daniel is prevented from experiencing an agency conflict.
B. Yes; as both the owner and operator of Daniel's Tantalizing Tees, Daniel has created the necessary agency relationship through which an agency conflict can exist.
C. No; as both the owner and operator of Daniel's Tantalizing Tees, Daniel has not created the necessary agency relationship through which an agency conflict can exist.
D. Yes; there is always an inherent conflict of interest between owners and operators (managers). Consider the following scenario and determine whether an agency conflict exists: Five years ago, Li created a plant-care business that grew, stocked, and maintained fresh plants in office buildings throughout Denver. Over time, The Green Zone Inc. (TGZ) has grown from a proprietorship into a corporation, now reaching far beyond Denver. To finance and support this growth, TGZ issued shares that were sold to TGZ employees, Li's family members, and selected outsiders. Li is TGZ's chairman of the board of directors and CEO, but he is no longer the largest shareholder. At the latest annual meeting, two mutually exclusive proposals were placed on the ballot for discussion and vote. The first was put forth by Li and TGZ's management team, and the second was proposed by a small group of other shareholders. Both groups are adamantly opposed to the other group's proposal, even though both proposals would likely have the same effect on TGZ's value and riskiness.
Does an agency conflict exist between TGZ's management and the small group of opposing shareholders?
A. Yes; an agency relationship exists, and an agency relationship always gives rise to agency conflicts, regardless of the actual behavior of the participants.
B. Yes; any conflict or disagreement between the firm's managers and its shareholders constitutes an agency conflict.
C. No; although an agency relationship exists between TGZ's management-including Li as TGZ's chairman and CEO and the firm's shareholders-there is no agency conflict, because no expropriation or wasting of the shareholders' wealth has occurred.
D. No; Li was the original owner of TGZ, so he would always be sensitive to the concerns of the firm's current owners (shareholders) and would not engage in an agency conflict. For the past 40 years, companies have attempted to attract, retain, and encourage managers by developing attractive compensation packages. These compensation packages have also been intended to reduce potential agency conflicts between these managers and the firm's shareholders. In the best interest of shareholders, compensation packages should be structured in a way such that managers have an incentive to maximize the____value of the company's common stock price. Great Fortunes Baking Company's stockholders are mostly individual investors, and there is relatively little institutional ownership. If several pension and mutual funds were to take large positions in Great Fortunes Baking Company's stock, direct shareholder intervention would be likely to motivate the firm's management. Katz Investment Group's stock price is currently trading at $20 per share. The consensus among market analysts is that the stock should trade for $27.5 per share, given the amount, timing, and riskiness of the company's dividends. Is Katz Investment Group more or less likely to receive a hostile takeover bid?
1. Less likely
2. More likely
Answer:
1. C. No; as both the owner and operator of Daniel's Tantalizing Tees, Daniel has not created the necessary agency relationship through which an agency conflict can exist.
For an agency problem to exist, the owners and the managers must be two different sets of people. If they are the same person, then practically speaking, they cannot usurp their own wealth.
2. C. No; although an agency relationship exists between TGZ's management-including Li as TGZ's chairman and CEO and the firm's shareholders-there is no agency conflict, because no expropriation or wasting of the shareholders' wealth has occurred.
Indeed there is an Agency relationship in effect because some shareholders are not in management. However, it cannot be said that there is a agency conflict because there is no evidence shown that shareholder wealth is being expropriated.
3. Intrinsic
The Intrinsic value of a stock is the value that an investor believes the stock is worth. A Manager should therefore get incentives that will inspire them to take investor perception of stock high. When this happens it increases shareholder wealth primarily through capital gain.
4 ... direct shareholder intervention would be more likely to motivate the firm's management.
Institutional Investors such as Pension and Mutual funds usually have more say in a company as they represent several shareholders and have expertise in the field. Should they get involved, their direct intervention would motivate the firm's management.
5. More likely
If investors believe that the stock should be trading for higher than it actually is, this is incentive to try to lay their hands on the stock to take advantage of this undervaluation. They would be able to offer the current shareholders more money than what it is currently worth which will most likely get them the shares they want. This is classified as a Hostile takeover.
White Company budgeted for $200,000 of fixed overhead cost and volume of 40,000 units. During the year, the company produced and sold 39,000 units and spent $210,000 on fixed overhead. The fixed overhead cost spending variance is: $5,000 unfavorable. $10,000 unfavorable. $5,000 favorable. $10,000 favorable.
Answer:
$8,000
Explanation:
this is the answer hopefully....
The fixed overhead cost spending variance is $5,000 unfavorable. Thus the correct option is 1.
What is fixed overhead?Costs known as fixed overheads are expenses that don't vary based on variations in the volume of business activity each month. These expenses are necessary in order to run a business.
The calculation for fixed overhead is
Fixed overhead rate= Budgeted overhead cost/ Budgeted volume
= 200,000/40,000
= 5 per unit of output
The Fixed overhead absorption rate is 5 per unit of output.
Calculation for fixed overhead cost spending variance
= (Actual output- budgeted output) * Fixed overhead absorption rate
=(39,000-40,000)* $5
=$5,000 unfavorable
Hence, the fixed overhead cost spending variance is $5,000 unfavorableTherefore, option 1 is appropriate.
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The auditors are concerned that these practices are inadequate and that more secure alternatives should be explored. Management has expressed counter concerns about the high cost of purchasing new equipment and relocating its data center. Required: What risks currently exist that are of concern to the auditors
Answer:
Audit Risk
Explanation:
Auditors could be Internal or External auditors, however, they both perform similar function in accessing company financial statements or reports. If the auditors are unable to find out financial misstatement and flag the report as correct, meanwhile, the report in actual sense contain errors, it is termed Audit Risk. It comprises of three components which are Detection risk, Inherent Risk, and Control risk
Calculate the effective annual interest rate for the following: a. A 3-month T-bill selling at $97,270 with par value $100,000. (Round your answers to 2 decimal places.) b. A 13% coupon bond selling at par and paying coupons semiannually. (Round your answers to 2 decimal places.)
Answer:
(a) The effective annual interest rate for a 3-month T-bill selling at $97,270 with par value $100,000 is 11.71%
(b) The effective annual interest rate for a 13% coupon bond selling at par and paying coupons semiannually is 13.42%
Explanation:
(a) A 3-month T-bill selling at $97,270 with par value $100,000
EAR =[tex][par value /price]^n-1}[/tex]
n = 3 months or 12/3 = 4 times in a year
= [tex][100,000/97,270]^4 - 1[/tex]
=[tex][1.028066]^4 -1[/tex]
= 1.1171 - 1
= .1171 or 11.71%
b) EAR(coupon bond) = [tex][1+.13/2]^2 -1[/tex]
=[tex][1+.065]^2 -1[/tex]
= [tex][1.065]^2 -1[/tex]
= 1.1342 - 1
= .1342 or 13.42%
You have just bought a 10-year security that pays $500 every six months. Another equally risky security also has a maturity of 10 years, and pays 10%, compounded monthly (that is, the nominal rate is 10%). What price should you have paid for the security that you just purchased
Answer:
PV= $6,178.61
Explanation:
Giving the following information:
Number of years= 10
Cash flow= 500 semiannually
Discount rate= 10% compounded monthly
First, we need to calculate the semiannual interest rate:
i= 0.10/12= 0.00833
i= (1.00833^6) - 1= 0.051
Now, we need to calculate the final value of security:
FV= {A*[(1+i)^n-1]}/i
A= cash flow
FV= {500*[(1.051^20) - 1] / 0.051
FV= $16,708.79
Finally, the present value:
PV= FV/(1+i)^n
PV= 16,708.79/1.051^20
PV= $6,178.61
Parino Company has three product lines in its retail stores: books, videos, and music. The allocated fixed costs are based on units sold and are unavoidable. Demand of individual products is not affected by changes in other product lines. Results of the fourth quarter are presented below:
Books Music Videos Total
Units sold 1,000 2,000 2,000 5,000
Revenue $ 24,000 $ 48,000 $ 30,000 $102,000
Variable departmental costs 15,000 22,000 23,000 60,000
Direct fixed costs 3,000 6,000 4,000 13,000
Allocated fixed costs 4,400 8,800 8,800 22,000
Net income (loss) $ 1,600 $11,200 $ (5,800) $ 7,000
Prepare an incremental analysis of the effect of dropping the Video product line. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Incremental revenue 42000 Incremental savings on variable costs -14000 Incremental savings on direct fixed costs -5000 Incremental decrease in profit to drop video line 9800
Answer:
($3,000)
Explanation:
Preparation of the incremental analysis of the effect of dropping the Video product line.
Incremental analysis:
Incremental revenue($30,000)
Incremental savings on variable costs +23,000
Incremental savings on direct fixed costs +4000
The Incremental decrease in profit to drop the video line($3,000)
Incremental analyses tend to only show the differences that occured in revenues and costs. While the comparative income statements, tend to show the net amounts to be reported after the drop are not incremental analyses.
Therefore the incremental analysis of the effect of dropping the Video product line will be ($3,000)
Preferred stock valuation TXS Manufacturing has an outstanding preferred stock issue with a par value of $68 per share. The preferred shares pay dividends annually at a rate of 9%. a. What is the annual dividend on TXS preferred stock? b. If investors require a return of 4% on this stock and the next dividend is payable one year from now, what is the price of TXS preferred stock? c. Suppose that TXS has not paid dividends on its preferred shares in the past two years, but investors believe that it will start paying dividends again in one year. What is the value of TXS preferred stock if it is cumulative and if investors require a(n) 4% rate of return?
Answer:
a. Annual dividend on TXS preferred stock is $6.12 per share.
b. The price of TXS preferred stock is $153 per share.
c. The value of TXS preferred stock if it is cumulative and if investors require a(n) 4% rate of return is $164.77 per share.
Explanation:
These can be calculated as follows:
a. What is the annual dividend on TXS preferred stock?
The formula for calculating the annual dividend on preferred stock is given as follows:
Annual dividend on preferred stock = Par value of preferred stock * annual dividend rate
Since we have the following for TXS:
Par value of preferred stock = $68 per share
Annual dividend rate = 9%
Therefore, we have:
Annual dividend on preferred stock = $68 * 9% = $6.12 per share
Therefore, annual dividend on TXS preferred stock is $6.12 per share.
b. If investors require a return of 4% on this stock and the next dividend is payable one year from now, what is the price of TXS preferred stock?
The formula for calculating the price of preferred stock is given as follows:
Price of preferred stock = Dividend per share / Preferred stock required rate of return
Since for TXS, we have
Dividend per share = $6.12 per share
Preferred stock required rate of return = 4%, or 0.04
Therefore, we have:
Price of preferred stock = $6.12 / 0.04 = $153 per share
Therefore, the price of TXS preferred stock is $153 per share.
c. Suppose that TXS has not paid dividends on its preferred shares in the past two years, but investors believe that it will start paying dividends again in one year. What is the value of TXS preferred stock if it is cumulative and if investors require a(n) 4% rate of return?
Cumulative preferred stock implies that unpaid previous dividends can be carried forward as arrears to when the dividend is paid.
Since TXS has not paid dividends on its cumulative preferred shares in the past two years, but will start paying dividends again in one year implies that preferred stockholders will receive the dividends in arrears of one year together with the next dividend payment.
Based on this, we have
TXS preferred stock value = PV of two dividends + Preferred stock price
PV of two dividends = Present value of two dividends in arrears to paid now = M / (1 + r)^n
Where,
M = 2 * Annual dividend on TXS preferred stock = 2 * $6.12 = $12.24
r = 4%, or 0.04
n = 1 year
Therefore, we have:
PV of two dividends = $12.24 / (1 + 0.04)^1 = $11.77
Since from part b. preferred stock price is $153 per share, we therefore have:
TXS preferred stock value = $11.77 + 153 = $164.77 per share
Therefore, the value of TXS preferred stock if it is cumulative and if investors require a(n) 4% rate of return is $164.77 per share.
As per the question, the TXS company has outstanding preferred stock issues with a value that is parred USD 68 per share and prefers to pay the dividend at an annual rate of 9%.
Thus the yearly dividend of the TXS on preferred stock is a. total dividend on TXS stock is of $6.12 per share. If the investors gained four percent on this stock and next is made payable 1 year from now, then the prices of TXS stock will be $153/share. If the TXS is not being paid then the preferred share for the two-year period is total and if investors require at 4% rate of return which is at $164.77 per share.Learn more about the TXS Manufacturing has an outstanding.
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Prom Night Formal Wear has the following stockholders' equity accounts at December 31, 2018: Common Stock, $1 par value, 1,900,000 shares; Additional Paid-in Capital, $23 million; Retained Earnings, $16 million; and Treasury Stock, 40,000 shares, $1.85 million. Prepare the stockholders' equity section of the balance sheet. (Enter your answers in dollars, not in millions. Amounts to be deducted should be indicated with a minus sign.)
Answer:
Prom Night Formal Wear
Balance sheet
Stockholders' equity section
December 31, 2018
PARTICULAR AMOUNT
Stockholders equity
Common stock $1,900,000
Additional Paid-in capital $23,000,000
Total Paid-Up Capital $24,900,000
Retained earning $16,000,000
Treasury stock ($1,850,000)
Total Stockholder equity $39,050,000
Use the information below to answer the following question. Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. Date Blankets Units Cost May 3 Purchase 5 $20 10 Sale 3 17 Purchase 10 24 20 Sale 6 23 Sale 3 30 Purchase 10 30 Assuming that the company uses the perpetual inventory system, determine the ending inventory value for the month of May using the FIFO inventory cost method.
Answer:
Boxwood Company
Determination of the Ending Inventory, using the FIFO method:
Date Blankets Units Unit Cost Total cost
May 17 Purchase 3 24 $72
May 30 Purchase 10 30 $300
Total cost of Ending Inventory = $372 ($72 + 300)
Explanation:
a) Inventory Records during May:
Date Blankets Units Cost
May 3 Purchase 5 $20
May 10 Sale 3
May 17 Purchase 10 24
May 20 Sale 6
May 23 Sale 3
May 30 Purchase 10 30
May 31 Ending Balance 13
FIFO method of costing inventory is based on the assumption that a business entity sells older stock of goods first before the latest goods brought into the store. FIFO means First-in, First-out. It is one of the methods of costing inventory. Others include LIFO, Weighted Average, and Specific Identification.
The trial balance of Kroeger Inc. included the following accounts as of December 31, 2021: Debits Credits Sales revenue 8,340,000Interest revenue 56,000Gain on sale of investments 116,000 Gain on debt securities 138,000 Loss on projected benefit obligation 156,000Cost of goods sold 144,000Selling expense 740,000Goodwill impairment loss 520,000Interest expense 26,000General and administrative expense 460,000The gain on debt securities represents the increase in the fair value of debt securities and is classified a component of other comprehensive income. Kroeger had 300,000 shares of stock outstanding throughout the year. Income tax expense has not yet been recorded. The effective tax rate is 25%.Required: Prepare a 2021 separate statement of comprehensive income for Kroeger Inc.
Answer:
Kroeger Inc.
Statement of Comprehensive Income for the year ended December 31, 2021:
Income after taxes $4,966,500
Gain on debt securities 138,000
Loss on projected benefit obligation (156,000)
Net Income $4,948,500
Explanation:
a) Kroeger Inc. Trial Balance as of December 31, 2021:
Debits Credits
Sales revenue 8,340,000
Interest revenue 56,000
Gain on sale of investments 116,000
Gain on debt securities 138,000
Loss on projected benefit obligation 156,000
Cost of goods sold 144,000
Selling expense 740,000
Goodwill impairment loss 520,000
Interest expense 26,000
General and administrative expense 460,000
b) Kroeger Inc. Income Statement for the year ended December 31, 2021:
Sales revenue $8,340,000
less Cost of goods sold 144,000
Gross Profit $8,196,000
General & Admin. Expense 460,000
Selling expenses 740,000 1,200,000
Operating Income $6,996,000
Interest Revenue 56,000
Interest Expense (26,000)
Goodwill impairment loss (520,000)
Gain on sale of investments 116,000
Income before taxes $6,622,000
Income Tax (25%) $1,655,500
Income after taxes 4,966,500
c) According to the corporate finance institute, "the Statement of Comprehensive Income provides a summary of a company's net assets over a given period of time. It highlights the adjustments on equity and other comprehensive income (OCI). Other comprehensive income includes net after taxes and other unrealized incomes minus unrealized losses, such as unrealized gains or losses on hedge/derivative financial instruments and foreign currency transaction gains or losses.
d) Goodwill impairment is recognized as a loss on the income statement under other operating expenses and as a reduction in the goodwill account.
e) Investopedia.com says that "projected benefit obligation (PBO) is an actuarial measurement of what a company will need at the present time to cover future pension liabilities." Under U.S. GAAP, the adjustments for PBO are recorded through other comprehensive income in shareholders' equity and are amortized into the income statement over time.
f) A gain on sale of investments is the amount by which the proceeds from the sale of investments exceed the carrying amount of the investments. It is reported as a non-operating gain in the income statement.
g) Securities that are held-for-trading are recorded on the balance sheet at their fair value, and the unrealized gains and losses are recorded on the income statement. According to strategiccfo.com "Unrealized income or losses are recorded in an account called accumulated other comprehensive income, which is found in the owner's equity section of the balance sheet." They are gains and losses from changes in the value of assets or liabilities that have not yet been settled and recognized.
Dave Ryan is the CEO of Ryan's Arcade. At the end of its accounting period, December 31, Ryan's Arcade has assets of $643,800 and liabilities of $244,230. Using the accounting equation, determine the following amounts: a. Stockholders' equity as of December 31 of the current year. $ b. Stockholders' equity as of December 31 at the end of the next year, assuming that assets increased by $83,730 and liabilities increased by $18,540 during the year.
Answer and Explanation:
As we know that
Total assets = Total liabilities + total stockholder equity
a. Stockholder equity s of December 31 of the current year is
$643,800 = $244,230 + total stockholder equity
So, the total stockholder equity is
= $643,800 - $244,230
= $399,570
b. Now in the case of increased, the total stockholder equity at the end of the year is
($643,800 + $83,730) = ($244,230 + $18,540) + total stockholder equity
$727,530 = $262,770 + total stockholder equity
So, the total stockholder equity is
= $727,530 - $262,770
= $464,760