Answer:
1. Airplanes.
2. Ice-cream plants.
3. Building maintenance.
4. Engines.
5. Automobiles.
6. Barns.
7. Lift trucks.
8. Swimming pools.
9. Machinery.
Explanation:
In this scenario, Harvey Industries, a Wisconsin company, specializes in the assembly of high-pressure washer systems and in the sale of repair parts for these systems. The products range from small portable high-pressure washers to large industrial installations for snow removal from vehicles stored outdoors during the winter months.
Basically, the high-pressure water cleaning is a process that involves using water running at a very high pressure and sometimes high temperature to remove mold, dirt, dusts, loose paint, snow removal, grime etc from physical objects such as vehicles, equipments, buildings, billboards through the use of a plunger pump.
The typical uses for high-pressure water cleaning include: Airplanes, Ice-cream plants, Building maintenance, Engines, Automobiles, Barns, Lift trucks, Swimming pools, Machinery etc.
The proper application of high-pressure water cleaning helps to reduce environmental degradation, ensure equipments or environment are clean and neat. Also, high and tight places that cannot be easily reached by humans can still be cleaned with the help of a high-pressure water cleaner.
An electric utility is considering a new power plant in northern Arizona. Power from the plant would be sold in the Phoenix area, where it is badly needed. Because the firm has received a permit, the plant would be legal; but it would cause some air pollution. The company could spend an additional $40 million at Year 0 to mitigate the environmental Problem, but it would not be required to do so. The plant without mitigation would cost $209.71 million, and the expected cash inflows would be $70 million per year for 5 years. If the firm does invest in mitigation, the annual inflows would be $75.84 million. Unemployment in the area where the plant would be built is high, and the plant would provide about 350 good jobs. The risk adjusted WACC is 17%.a) Calculate the NPV and IRR with and without mitigation.
b) How should the environment effects be dealt with when evaluating this project?
c) Should this project be undertaken? If so, should the firm do the mitigation?
Answer:
Without Mitigation:
Net Present Value $14,244,200
IRR 19.92%
With mitigation
Net Present Value: $ -7,071,600
IRR = 15.76%
The project should be started without hte mitigation effort as would decrease the return below the cost of capital of the company.
Explanation:
Present value without mitigation
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 70.00
time 5
rate 0.17
[tex]70 \times \frac{1-(1+0.17)^{-5} }{0.17} = PV\\[/tex]
PV $223.9542
Less
cost $209.71
Net Present Value 14,2442
IRR (using excel)
we input the -209.71 in one cell
then, we enter the 70 millon five times below the cost
and use the IRR formula to get the answer:
0.1992 = 19.92%
With mitigation:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 75.84
time 5
rate 0.17
[tex]75.84 \times \frac{1-(1+0.17)^{-5} }{0.17} = PV\\[/tex]
PV $242.6384
Less
249.71 cost
Net present value -7,0716
IRR:
A
1 -249.71
2 +75.84
3 +75.84
4 +75.84
5 +75.84
6 +75.84
=IRR(A1:A6)
= 0.1576
10. Problems and Applications Q10 High-income people are willing to pay more than lower-income people to avoid the risk of death. For example, they are more likely to pay for safety features on cars. True or False: One reason a rich town may put in a traffic light while a poor town does not is that the rich town may value a human life more highly in its cost-benefit analysis. True False
Answer:
True
True
Explanation:
Cost benefit analysis is used in decision making. This involves weighting the cost of doing something to the benefit derived from it which can be monetary or in this case non-monetary.
The cost benefit analysis is subjective and in our case it differs from lower-income people to that of higher - income people. A rich town may value a human life more highly in its cost-benefit analysis and would be willing to pay more than lower-income people to avoid the risk of death.
Suppose that Tommy takes a workplace personality quiz that shows that he is highly creative. Store managers decide to transfer him to the produce department, where he is trained in cutting produce and displaying it on the shelves. Which approach to job design best characterizes this scenario?
Answer:
The Motivational approach
Note: Find an attached image of the complete question to this solution below.
Explanation:
Solution
In this scenario Tommy is one of the person in meat department that has specialized skill in cutting process that even neglect his pain making the cutting process.
The transferring to producing department make him to show the produced cutting meat to attract customers to the store.
That step taken in regards to Tommy by the store managers is a motivational approach.
Source: The research for the complete question was taken from quiz-let platform
Outstanding stock of the Blue Corporation included 50000 shares of $5 par common stock and 18000 shares of 5%, $10 par non-cumulative preferred stock. In 2019, Blue declared and paid dividends of $7500. In 2020, Blue declared and paid dividends of $25000. How much of the 2020 dividend was distributed to preferred shareholders
Answer:
The dividends to be distributed among preferred stockholders in 2020 is $9000
Explanation:
The preferred stock holders are always paid dividends before the common stock holders. The amount left after paying preferred stockholders is paid to common stockholders as dividends.
Non cumulative preferred stock does not accrue or accumulates dividends. Thus, if dividends are not paid in a particular year, the company has no obligation to pay these dividends ever in the future.
Preferred stock dividend per year = 18000 * 10 * 0.05
Preferred stock dividend per year = $9000
As the preferred stock is non cumulative, then the remaining dividends for 2019 (which are 9000 - 7500 = $1500) will not be paid in 2020.
So, the preferred stock dividends to be paid in 2020 will be $9000 as the declared dividends are more than that required to pay the preferred stockholders.
Oscar Clemente is the manager of Forbes Division of Pitt, Inc., a manufacturer of biotech products. Forbes Division, which has $4 million in assets, manufactures a special testing device. At the beginning of the current year, Forbes invested $5 million in automated equipment for test machine assembly. The division's expected income statement at the beginning of the year was as follows:Sales revenue $ 16,000,000 Operating costs Variable 2,000,000 Fixed (all cash) 7,500,000 Depreciation New equipment 1,500,000 Other 1,250,000 Division operating profit $ 3,750,000A sales representative from LSI Machine Company approached Oscar in October. LSI has for $6.5 million a new assembly machine that offers significant improvements over the equipment Oscar bought at the beginning of the year. The new equipment would expand division output by 10 percent while reducing cash fixed costs by 5 percent. It would be depreciated for accounting purposes over a three-year life. Depreciation would be net of the $500,000 salvage value of the new machine. The new equipment meets Pitt's 20 percent cost of capital criterion. If Oscar purchases the new machine, it must be installed prior to the end of the year. For practical purposes, though, Oscar can ignore depreciation on the new machine because it will not go into operation until the start of the next year. The old machine, which has no salvage value, must be disposed of to make room for the new machine. Pitt has a performance evaluation and bonus plan based on ROI. The return includes any losses on disposal of equipment. Investment is computed based on the end-of-year balance of assets, net book value. Ignore taxes. Oscar Clemente is still assessing the problem of whether to acquire LSI’s assembly machine. He learns that the new machine could be acquired next year, but if he waits until then, it will cost 15 percent more. The salvage value would still be $500,000. Other costs or revenue estimates would be apportioned on a month-by-month basis for the time each machine (either the current machine or the machine Oscar is considering) is in use. Fractions of months may be ignored. Ignore taxes.Required: Calculate ROI for the coming year assuming that the new equipment is bought at the beginning of the year. (Do not round intermediate calculations. Round your final answer to nearest whole percentage.)
Answer:
Forbes Division of Pitt, Inc.Performance Reportby Oscar Clemente
ROI = $1,900,000/$4,500,000 x 100 = 42.222%
(Return on Investment = Operating Income/net book value of new investment x 100)
Explanation:
a) Forbes Division's Expected Income Statement at the beginning of the year: Year 1 Year 2
Sales revenue $ 16,000,000 $ 17,600,000
Operating costs:
Variable 2,000,000 2,200,000
Fixed (all cash) 7,500,000 6,750,000
Depreciation: New equipment 1,500,000 2,000,000
Other 1,250,000 1,250,000
Disposal of old equipment (loss) 3,500,000
Division operating profit $ 3,750,000 $ 1,900,000
b) Return on Investment (ROI) is a financial performance measure which evaluates the efficiency of an investment, by trying to directly measure the amount of return on a particular investment, relative to the investment's cost.
c) The Formula for ROI calculation is to subtract the initial value of the investment from the final value of the investment (which equals the net return), then dividing this new number (the net return) by the cost of the investment, and, finally, multiplying it by 100. In this Forbes Division, the operating income is taken as the difference between the initial value of the investment and the final value of the investment.
Jack's Construction Co. has 80,000 bonds outstanding that are selling at par value. Bonds with similar characteristics are yielding 8.5%. The company also has 4 million shares of common stock outstanding. The stock has a beta of 1.1 and sells for $40 a share. The U.S. Treasury bill is yielding 4% and the market risk premium is 8%. Jack's tax rate is 35%. What is Jack's weighted average cost of capital
Answer:
The answer is =10.36%
Explanation:
The weighted average cost of capital (WACC) is a way that a company calculates its cost of financing and acquiring assets by comparing the debt and equity structure of the business.
WACC = WeRe + WdRd
We is weight of equity
Re is cost of equity
Wd is weight of debt
Rd is cost of debt
For its cost of equity:
Ke = Rf + beta(market risk premium)
Where Ke is cost of equity
Rf is risk free rate of return( treasury bill return)
4% + 1.1 x 8%
= 12.8%
Total debt 80,000 x $1,000 = $80million
Common: 4million x $40 = $160million
Total = $80milllion + $160million
=$240million.
Therefore, WACC is
WdRd= 80/240 x [8.5% x(1-35%)]
80/240 x 5.5%
=1.83%
WeRe = 160/240 x 12.8%
= 8.53%
=1.83% + 8.53%
=10.36%
Gerald received a one-third capital and profit (loss) interest in XYZ Limited Partnership (LP). In exchange for this interest, Gerald contributed a building with an FMV of $37,000. His adjusted basis in the building was $18,500. In addition, the building was encumbered with a $9,750 nonrecourse mortgage that XYZ LP assumed at the time the property was contributed. What is Gerald's outside basis immediately after his contribution
Answer:
$12,000
Explanation:
According to the given situation,the computation of the outside basis is shown below:-
Total Outside basis = Adjusted basis - Non-recourse mortgage + G's share of mortgage
= $18,500 - $9,750 + ($9,750 × 3)
= $18,500 - $9,750 + $3,250
= $12,000
Therefore for computing the total outside basis we simply applied the abovbe formula.
Oscar owns a building that is destroyed in a hurricane. His adjusted basis in the building before the hurricane is $130,000. His insurance company pays him $140,000 and he immediately invests in a new building at a cost of $142,000. What is Oscar's basis on his new building?
Answer: $132,000
Explanation:
Oscar's new basis on the building will be the basis of the old building plus any additional investment he added.
This is the because there is no gain on the $140,000 he received because it was an Involuntary Conversion amount and he reinvested it into another building within a period of 2 years.
As there is no gain, the building will retain it's original basis but will add any amount outside the involuntary replacement cost of the building.
The Additional basis will be,
= Cost of building - Insurance
= 142,000 - 140,000
= $2,000
The Basis for the new building is,
= 130,000 + 2,000
= $132,000
Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 24 percent for the next three years, with the growth rate falling off to a constant 7 percent thereafter. If the required return is 11 percent, and the company just paid a dividend of $2.05, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
The current price per share is $84.16
Explanation:
The dividend discount model (DDM) estimates the value of a share/stock based on the present value of the expected future dividends from the stock. We will use the two stage growth model of DDM here as the growth in dividends of the stock is divided into two stages.
The formula for current price under two stage growth model is,
P0 = D0 * (1+g1) / (1+r) + D0 * (1+g1)^2 / (1+r)^2 + ... + D0 * (1+g1)^n / (1+r)^n +
[( D0 * (1+g1)^n * (1+g2)) / (r - g2)] / (1+r)^n
Where,
g1 is initial growth rate
g2 is the constant growth rate
r is the required rate of return
So, the price of the stock today will be,
P0 = 2.05 * (1+0.24) / (1+0.11) + 2.05 * (1+0.24)^2 / (1+0.11)^2 +
2.05 * (1+0.24)^3 / (1+0.11)^3 + [( 2.05 * (1+0.24)^3 * (1+0.07)) / (0.11 - 0.07)] / (1+0.11)^3
P0 = $84.1556 rounded off to $84.16
The Securities and Exchange Commission and the Federal Aviation Administration are examples of agencies engaged in A. the regulation of nonmonopolistic industries. B. health and safety regulation. C. social regulation. D. the regulation of natural monopolies.
Answer:
A. the regulation of nonmonopolistic industries.
Explanation:
The Securities and Exchange Commission and the Federal Aviation Administration are examples of agencies engaged in the regulation of nonmonopolistic industries.
A nonmonopolistic industry is one that is characterized by competition among various service providers in a country and generally there's a government agency that regulates their actions and activities in the public.
The Securities and Exchange Commission (SEC) is a governmental agency saddled with the sole responsibility of regulating the securities or capital markets, as well as protecting investors in a country.
In the U.S, the Securities and Exchange Commission (SEC) as an independent government agency was established under the Securities Act of 1933 and the Securities and Exchange Act of 1934 of the United States of America.
Hence, SEC has the power to propose securities rules and regulations, and enforce federal securities law in the securities market.
The Federal Aviation Administration (FAA) was founded on the 23rd of August, 1958 under the Federal Aviation Act of 1958 of the United States of America. It is an independent government agency with the responsibility of regulating civil aviation, commercial space transportation, construction and maintenance of airports, air traffic management and operations of navigation systems for both civil and military aircrafts, and issuance of licenses to airline operators with their personnel.
Master Hatter's demand for hats is 25,000 per year. The order cost is $425 and the carrying cost is $4.50 per unit. The cost paid (price) to the hat manufacturer is $75 per hat.
A. Compute the Economic Order Quantity and enter it here.
B. The supplier has indicated that Master Hatter can have a price of $25 per hat if he orders at least 2000 at a time.
C. In order to minimize total costs (inventory plus purchase costs). Master Hatter should order blank hats and will save blank dollars each year.
Answer with its Explanation:
Part A. Economic order quantity Computation
Economic order quantity can be calculated by using the following formula:
EOQ = Squaroot of (2* D * S / H)
Here
Ordering cost per order is $425 which is S
Annual Holding cost per unit per year is $4.5 which is H
Annual Demand is 25000 Units
By putting values, we have:
EOQ = (2 * 25000 * $425 / $4.5) ^(1 / 2) = 2173 Hats
Part B.
Total Cost at EOQ = Purchasing Cost + Total Ordering cost + Holding Cost
By putting values, we have:
Total Cost = 25,000 Units * $25 per unit + ($25,000 / 2173 Hats) * $425 + (2173 Hats / 2) * $4.5 = $634,778 Annual Cost
Part C.
For ordering at-least 2000 units per order, the total cost would be:
Total Cost under 2000 order quantity = 25,000 * $25 per unit + (25000/2000) * $425 + (2000/2) * $4.5
Total Cost under 2000 order quantity = $634,813
By ordering at least 2000 hats will bring a loss of $35 ($634,778 - $634,813), hence Master Hatter must only order in EOQ.
5. Sarasota Bicycles has been manufacturing its own wheels for its bikes. The company is currently operating at 100% capacity, and variable manufacturing overhead is charged to production at the rate of 30% of direct labor cost. The direct materials and direct labor cost per unit to make the wheels are $3.00 and $3.60 respectively. Normal production is 200,000 wheels per year. A supplier offers to make the wheels at a price of $8 each. If the bicycle company accepts this offer, all variable manufacturing costs will be eliminated, but the $84,000 of fixed manufacturing overhead currently being charged to the wheels will have to be absorbed by other products. Required: a. Prepare an incremental analysis for the decision to make or buy the wheels. b. Should Sarasota Bicycles buy the wheels from the outside supplier
Answer:
It is better to make the wheels
Explanation:
Sarasota Bicycles
Incremental Analysis
Make Buy
Direct materials $3.00
Direct labor $3.60
Variable OH (3.06*30%) 1.08
Total 7.68 8
Normal production 200,000 200,000
Total Costs 1536000 1600,000
Fixed Overheads 84,000 84,000
Total Costs 1620,000 1684,000
As fixed costs are irrelevant costs that would not change whether the company makes or buys wheels and the cost to make the wheels $7.08 is less than the cost to buy $ 8.0. It is better to make the wheels . Buying the wheels from the outside supplier is costly.
a. Incremental Analysis for making the wheels at Sarasota Bicycles is as follows:
Make Buy Differential
Alternative 1 Alternative 2 Cost
Relevant cost per unit $7.68 $8.00 $0.32 ($8.00 - $7.68)
Total cost $1,536,000 $1,600,000 $64,000 (200,000 x $0.32)
b. Sarasota should not buy the wheels from the outside supplier. It should continue to make them as it saves $64,000 per year from making the wheels.
Data and Calculations:
Direct materials cost per unit = $3.00
Direct labor cost per unit = $3.60
Variable manufacturing overhead = $1.08 ($3.60 x 30%)
Total variable cost per unit = $7.68
Number of wheels per year = 200,000
Outside Supplier's Price = $8 per unit
Thus, Sarasota Bicycles gains $64,000 by making the wheels instead of buying from the outside supplier.
Learn more: https://brainly.com/question/15313511
Ownership of retail outlets may be necessary if: a. products are expended in consumption. b. products are inexpensive. c. the products produced by the manufacturer are not complex. d. products are intended for one-time use. e. the required standards of after-sales service for complex products are to be maintained.
Answer:
E. The required standards of after-sales service for complex products are to be maintained.
Explanation:
The standard of after sale service is necessary in a case like this because after sales service is said to be all you need to know regarding or concerning the product you bought or the services that has been rendered to you.
In as much as a market can be any arrangement where buying and selling is been done and the online platform or medium is pulling through in a lot of sales in recent times, retail outlets show not to be always necessary but sometimes can be necessary in a critical case such as the above scenario. Here, the required standards of after sales services for some products which are complex is to be maintained, retail outlets are said to be possibly necessary.
Mars Corp. is choosing between two different capital investment proposals. Machine A has a useful life of four years, and machine B has a useful life of six years. Each proposal requires an initial investment of $200,000, and the company desires a rate of return of 10 percent. Although machine B has a useful life of six years, it could be sold at the end of four years for $35,000.
Year Present Value of $1 at 10 Percent
1 0.909
2 0.826
3 0.751
4 0.683
5 0.621
6 0.513
Machine A will generate net cash flow of $70,000 in each of the four years. Machine B will generate $80,000 in year 1, $70,000 in year 2, $60,000 in year 3, and $40,000 per year for the remaining three years of its useful life. Which of the following statements portrays the most accurate analysis between the two proposals?
a. Mars should invest in Machine A becuase the net present value of Machine A after 4 years is higher than the net present value of Machine B after 4 years.
b. Mars should invest in Machine B becuase the net present value of Machine A after 4 years is lower than the net present value of Machine B after 6 years.
c. Mars should invest in Machine B becuase the net present value of Machine A after 4 years is lower than the net present value of Machine B after 4 years.
d. Mars should invest in Machine A becuase the net present value of Machine A after 4 years is higher than the net present value of Machine B after 6 years.
Answer:
c. Mars should invest in Machine B becuase the net present value of Machine A after 4 years is lower than the net present value of Machine B after 4 years.
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
Considering that machine b can be sold on 4 years, The NPV of machine b should be calculated based on the cash flow in for 4 years
NPV can be calculated using a financial calculator.
Machine A :
Cash flow in year 0 = $-200,000
Cash flow each year from year 1 to 4 = $70,000
I = 10%
NPV = 21,890.58
Machine B :
Cash flow in year 0 = $-200,000
Cash flow each year from year 1 = $80,000
Cash flow each year from year 2 = $70,000
Cash flow each year from year 3 = $60,000
Cash flow each year from year 4 = $40000 + $35,000 = $75,000
I = 10%
NPV = $26,883.41
Machine b should be accepted because its NPV is greater than that of machine A
To find the NPV using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
I hope my answer helps you
Many consumers buy soft drinks and potato chips together when they shop at a grocery, convenience, or mass merchandiser store. But when querying its marketing information system (MIS), one convenience store discovered that when consumers bought a sandwich, many also purchased toothpaste. This information was obtained from checkout scanner data from its stores nationwide. This convenience store used________ to extract this hidden information from its MIS to find the statistical link between the two product categories.
Answer:
Data mining
Explanation:
Data mining is the process in which we can extract the raw data into useful data that would become beneficial for the company.
Large data is available and if we take the data i.e important or useful so this process we called data mining
In the given situation, it is discovered that when the consumers purchased a sandwich so many customers purchased toothpaste along with it. And for extracting the hiding information from its MIS the store used the data mining technique.
Secular inflation in the United States since 1960 has been most likely be the result of persistent leftward shifts of the aggregate demand curve. persistent rightward shifts of the long-run aggregate supply curve. persistent leftward shifts of the long-run aggregate supply curve. persistent rightward shifts of the aggregate demand curve.
Answer:
Persistent leftward shifts of the aggregate demand curve.
Explanation:
The inflation results in decreasing the aggregate demand. The real spending decreases the value of money. Secular inflation is prolonged period of slight price increase. This type of inflation continues to persist over a long time. The secular inflation in the United States has been due to leftward shift of aggregate demand curve.
NU YU announced today that it will begin paying annual dividends. The first dividend will be paid next year in the amount of $.27 a share. The following dividends will be $.32, $.47, and $.77 a share annually for the following three years, respectively. After that, dividends are projected to increase by 2.3 percent per year. How much are you willing to pay today to buy one share of this stock if your desired rate of return is 12 percent
Answer:
The maximum hat should be paid for the stock today is $6.48
Explanation:
The price of the stock today can be calculated using the dividend discount model. It bases the price or value of a stock on the present value of the expected future dividends from the stock.
The price of the stock today is,
P0 = 0.27/(1+0.12) + 0.32/(1+0.12)^2 + 0.47/(1+0.12)^3 + 0.77/(1+0.12)^4
[ (0.77 * (1+0.023)) / (0.12 - 0.023) ] / (1+0.12)^4
P0 = $6.48092 rounded off to $6.48
Periodic Inc. provides formal training to newly recruited Business Developers to guide them in designing new business initiatives. The new recruits are in the _____ stage of the creative process.
Answer:
Preparation stage.
Explanation:
Since Periodic Inc. provides formal training to newly recruited Business Developers to guide them in designing new business initiatives. The new recruits are in the preparation stage of the creative process.
A creative process is a mental approach to innovation, it involves all the process of conceiving an idea and using this ideas to create a new and original product.
Generally, the creative process can be classified into five (5) stages, these are;
1. Preparation: this is typically the first stage of the creative process and it involves the process of gathering information by doing a whole lot of background research that would inspire you to do it.
2. Incubation: at this second stage of the creative process, you will let your mind wander away in imagination, in order to construct your thoughts.
3. Insight: this is the third stage of the creative process and it involves connecting the dots in your thoughts. It is simply the "eureka" moment where a perfect idea fits into your head.
4. Evaluation: this is the fourth stage of the creative process and it involves verifying and sifting your ideas to ensure they are in tandem with your aim, objectives and goals.
5. Implementation: this is the final stage of the creative process and it is the stage where the beautiful and insightful ideas are put into actions to develop a product.
Hence, the new recruits are in the preparation stage of the creative process.
Suppose that a young couple has just had their first baby and they wish to ensure that enough money will be available to pay for their child's college education. Currently, college tuition, books, fees, and other costs average $20,000 per year. On average, tuition and other costs have historically increased at a rate of 6% per year. Assuming that college costs continue to increase an average of 6% per year and that all her college savings are invested in an account paying 8% interest, then the amount of money she will need to have available at age 20 to pay for all four years of her undergraduate education is closest to ________.
Answer:
$256,571
Explanation:
College Graduation fee for four years in the present value
PV = $20,000 x 4 = $80,000
As historically the fee has risen by 6% we need to find future value when the baby will be 20 years old by using future value formula
Let's say
FV = Future value
PV = Present value
n = number of years
i = Interest
Workings
FV = PV x ((1+growth rate)^n)
FV = $80,000 x ( (1+0.06)^20)
FV = $256,571
As the bank interest rate is 8% the saving need to be deposited annualy can be calculated as
Savings = (FV x i) / ((1+i)^n)-1)
Savings = ($256,571 x 0.08) / ((1+0.08)^20)-1)
Savings = 20,525.68 / 3.66
Savings = $5,608
Dynamo Corporation manufactures toasters. Each toaster comes with a 5-year assurance-type warranty. The toasters sell for $60 each. During Year 1, Dynamo sells 600 toasters, for cash. Past experience shows that the average warranty costs are $4 each or $2,400 for these toasters. In Year 1, Dynamo pays $500 cash for warranty costs on the toasters sold that year. Required: Prepare Dynamo’s journal entries related to the sales and warranty in Year 1.
Answer:
Journal entry to record sale of toasters and warranty
Dr Cash 36,000
Cr Sales revenue 36,000
Dr Warranty expense 2,400
Cr Warranty liability 2,400
Adjusting entry for actual warranty expense
Dr Warranty liability 500
Cr Cash 500
Since the warranty covers a 5 year period, the remaining warranty expense cannot be recognized as warranty revenue yet. Only after the warranty period is over, will any money left over will be recognized as revenue.
art E14 is used by M Corporation to make one of its products. A total of 20,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Per Unit Direct materials $ 4.30 Direct labor $ 8.90 Variable manufacturing overhead $ 9.40 Supervisor's salary $ 4.80 Depreciation of special equipment $ 3.20 Allocated general overhead $ 8.40 An outside supplier has offered to make the part and sell it to the company for $30.30 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including the direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition, the space used to make part E14 could be used to make more of one of the company's other products, generating an additional segment margin of $32,000 per year for that product. The annual financial advantage (disadvantage) for the company as a result of buying part E14 from the outside supplier should be:
Answer:
It is more profitable to continue making the product. On this level of production, the company saves $26,000 if it makes the product in-house.
Explanation:
Giving the following information:
Units= 20,000
Per Unit Cost:
Direct materials $4.30
Direct labor $8.90
Variable manufacturing overhead $9.40
Supervisor's salary $4.80
An outside supplier has offered to make the part and sell it to the company for $30.30 each.
Rent space= $32,000 per year
We will take into account only the differential costs.
Make in-house:
Total cost= 20,000* (4.3 + 8.9 + 9.4 + 4.8)= $548,000
Buy:
Total cost= 20,000*30.3 - 32,000= $574,000
It is more profitable to continue making the product. On this level of production, the company saves $26,000 if it makes the product in-house.
The widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $22, $12, $8, $4, and $2 (one seller at each price). Five buyers are willing to buy one widget at the following prices: $8, $12, $22, $30, and $38 (one buyer at each price). For each price shown in the following table, use the given information to enter the quantity demanded and quantity supplied.
Price Quantity Demanded Quantity Supplied
($ per widget) (widgets) (widgets)
$2
$4
$8
$12
$20
$32
$44
In this market, the equilibrium price will beper widget, and the equilibrium quantity will be:________
Answer:
Price Quantity Supplied Quantity Demanded
$2 1 1
$4 2 1
$8 3 1
$12 4 2
$20 4 2
$32 5 4
$44 5 5
In this market, the equilibrium price will beper widget, and the equilibrium quantity will be:
In this market, the equilibrium price will be $44, because is the price where the quantity supplied and the quantity demanded is the same: 5 widgets supplied, and 5 widgets demanded.
The City of Southern Pines maintains its books so as to prepare fund accounting statements and records worksheet adjustments in order to prepare government-wide statements. As such, the City’s internal service fund, a motor pool fund, is included in the proprietary funds statements. Balance sheet asset accounts include: Cash, $102,000; Investments, $150,400; Due from the General Fund, $18,300; Inventories, $396,000; and Capital Assets (net), $1,169,700. Liability accounts include: Accounts Payable, $61,500; Long-Term Advance from Enterprise Fund, $738,000. The only transaction in the internal service fund that is external to the government is interest revenue in the amount of $4,400. Exclusive of the interest revenue, the internal service fund reported net income in the amount of $84,000. An examination of the records indicates that services were provided as follows: one-third to general government, one-third to public safety, and one-third to public works. Prepare necessary adjustments in order to incorporate the internal service fund in the government-wide statements as a part of governmental activities. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Answer: The answer has been attached
Explanation:
The journal is a book in accounting that is used to record the transactions that affect a business. It should be noted that the double entry method of bookkeeping is utilised while recording in a journal.
The journal has been attached in the following way:
1. The journal was used to record the balance sheet particulars.
2. To record the transaction in the internal service fund that is external to the government.
3. To record the internal service fund in the government-wide statements as a part of governmental activities.
It should also be noted that the net income of $84,000 was to be shared as one-third to general government, one-third to public safety, and one-third to public works. This means they'll all receive ($84,000/3) = $28,000 each.
Further explanation can be found in the attached file.
Consider an assembly line with 20 stations. Each station has a 0.5% probability of making a defect. At the end of the line, an inspection step singles out the defective units. The inspection step catches 80% of all defects. From inspection, units that are deemed to be non-defective
are moved to the shipping department.
If a defect is found at inspection, it is sent to the rework department.
Rework fixes about 95% of the defective units. Units are directly shipped from the rework department with no further inspection taking place.
1- What is the probability that a unit ends up in rework (in decimal form)?
2- What is the probability that a defective unit is shipped (in decimal form)?
Answer:
Assembly Line1. Probability that a unit ends up in rework = Probability of defect in 20 stations multiplied by the probability of catching defects = 0.8%(1% x 80%) = 0.008
2. Probability that a defective unit is shipped = Probability of defective units during inspection plus Probability of defective units during rework = 25% (20% + (100-95%)) = 0.25
Explanation:
a) Probability of defect in 20 stations = 0.5% x 20 = 1%. Each station has a 0.05%
b) Probability of defective units during inspection = 20% (100% - 80)
c) Probability of defective units during rework = 5% (100% -95)
c) Probability is the likelihood or chance of an event occurring. Divide the number of events by the number of possible outcomes. This will give us the probability of a single event occurring.
The following monthly data are available for Sheridan Company which produces only one product: Selling price per unit, $38; Unit variable expenses, $14; Total fixed expenses, $42000; Actual sales for the month of June, 7000 units. How much is the margin of safety for the company for June
Answer:
$199,500
Explanation:
The computation of the margin of safety is shown below:
As we know that
margin of safety = Actual sales - break even sales
where,
Actual sales is
= Actual sales units × Selling price per unit
= 7,000 units × $38
= $266,000
And, the break even sales is
= Fixed cost ÷ contribution margin per unit
= $42,000 ÷ ($38 - $14)
= $42,000 ÷ $24
= 1,750 units
Now the break even sales is
= Break even units × selling price per unit
= 1,750 units × $38
= $66,500
So, the margin of safety is
= $266,000 - $66,500
= $199,500
Congratulations! You just finished up your MHA. You are now making the big bucks!! You are pulling down $75,000 a year. Your estimated payroll taxes are 20%. You also have a small healthcare consultancy and you make $100 a month for your wonderful advice. You have a lot of expenses: You bought a new car - the car note is $350 a month. Gas for your car is $50 a month You have a mortgage of $850. Health insurance is $400 You love to eat out and you spent $300 a month in food. You have a student loan payment of $300 You have a credit card monthly statement of $1,100 How much do you have left at the end of this month?
Answer:
Balance available on hand at month-end is $1,750
Explanation:
Monthly gross salary= $6,250 ($75,000 / 12 month)
Less: Payroll Taxes $1,250 ($6,250 * 20%)
Net Monthly salary $5,000
Add: Monthly Consultancy Income $100
Monthly income available on hand $5,150 $5,150
Less: Monthly Car note $350
Monthly Car gas $50
Monthly mortgage $850
Monthly Health insurance $400
Monthly food spending $300
Monthly student loan payment $300
Monthly credit card payable $1,100
Total deductions $3,350 $3,350
Balance available on hand at month-end $1,750
On November 7, 2017, Mura Company borrows $360,000 cash by signing a 90-day, 9% note payable with a face value of $360,000. (Use 360 days a year. Do not round your intermediate calculations.) 1. Compute the accrued interest payable on December 31, 2017.
Answer:
The accrued interetst is $4860 and $3240
Explanation:
Solution
Recall that:
Mura Company borrows= $360,000
Time =90/360
rate = 9%
Face value =$360,000
The next step is to compute the accrued interest payable on December 31, 2017.
Now,
Interest = 360000*9%*90/360=8100$
year end interest accrual:
Principal =$360000
time 54/360
Interest =360000*9%*54/360 = $4860
Interest recognized on February 5
Principal =$360000
Rate= 9%
Time= 36/360
Interest 360000*9%*36/360 = $3240
Value of a retirement annuity Personal Finance Problem An insurance agent is trying to sell you an annuity, that will provide you with $6 comma 200 at the end of each year for the next 20 years. If you don't purchase this annuity, you can invest your money and earn a return of 4%. What is the most you would pay for this annuity right now? Ignoring taxes, the most you would pay for this annuity is
Answer:
The maximum to be paid= $84,260.023
Explanation:
The maximum amount to be paid is the present value of the series of annual cash inflow discounted at the opportunity cost rate of 4% per annum.
This is given in the relationship below:
PV = A ×( 1- (1+r)^(-n))/r )
A- annual amount receivable- 6,200. r-rate of return - 4%, n-number of years- 20
PV = 6,200 × ( 1 - (1+0.04)^(-20)/0.04)
= 6,200 × 13.5903
= $84,260.023
The maximum to be paid= $84,260.023
The greater the number of compounding periods within a year, then (1) the greater the future value of a lump sum investment at Time 0 and (2) the smaller the present value of a given lump sum to be received at some future date. Truie or False
Answer:
True
Explanation:
If there is a more number of compounding periods within a year so it would result into the higher price of future value for lump sum investment in year 0 but the case would be adverse with the present value i.e there is less amount in the present value with regard to lumpsum amount i.e to be recieved in the future date
Hence, the given statement is true
Marin Inc. has an investment in trading securities of $143000. This investment experienced an unrealized loss of $7300 during the current year. Assuming a 33% tax rate, the amount of this loss that would reported as part of other comprehensive income would be:
Answer:
This would be the loss on paper only.
Explanation:
Given investment trading securities = $143000
During the current year, the loss experienced on investment = $7300
The tax rate = 33%
However, this loss that is reported as the part of other comprehensive income would be the loss on paper only because the actual loss can be seen when the stock is sold but this unrealized loss is on paper only so there will no effect of this loss in comprehensive income.