Answer:
b. $30.00 per hour
Explanation:
Overhead application rate = Budgeted Overhead / Budgeted Activity
= $900,000 / 30,000 labor hours
= $30 per direct labor hour
Conclusion :
The overhead application rate is $30.00 per hour.
In the Unified Process (UP) methodology, "most of the Requirements activities" occurs during the _____ phases.
Answer:
Inception and Elaboration phases
Explanation:
INCEPTION PHASES can be defined as the phase in which the vision of the end-product is been define as well as the associated business case and as well enables the defining the overall scope of a project.
The ELABOTATION PHASE on the other hand can be seen as the phase which help to refine the definition of a product as well help to develop a more precise plan for its development as well as the deployment.
Therefore In the Unified Process (UP) methodology, "most of the Requirements activities" occurs during the INCEPTION AND ELABORATION phases because unified process is a software development process that enables as well uses the UML language to help represent models or type of the software system to be developed.
When all firms earn zero economic profits producing the output level where P=MR=MC and P=AC and there is no incentive to leave or join the market, the market is in __________.
Answer:
Long-run equilibrium.
Explanation:
When all firms earn zero economic profits producing the output level where P=MR=MC and P=AC and there is no incentive to leave or join the market, the market is in long-run equilibrium.
In a perfectly competitive market in long-run equilibrium, a long-run equilibrium avails firms the opportunity to adjust all inputs and all fixed costs are maximized. Also, it's characterized by free entry and exit, as such there isn't a fixed number of firms. This simply means that, since the number of firms in a long-run equilibrium can change, a firm must exit the market as a result of losses i.e when the firm is unable to cover its fixed costs in the long-run while new firms are allowed entry into the market when it anticipates potential profits or gains.
However, the firms always strive to maximize profits by increasing their level of output, such that P = MC. Also, the firms wouldn't be willing to leave or enter into the market because they are not making any profit, such that P=AC.
In a nutshell, in the long run equilibrium P=MR=MC and P=AC.
Where, P represents the price.
Answer:
The correct answer is: long-run equilibrium.
Explanation:
To begin with, the market that is refered in the question is a perfect competitive one, you can tell by the fact that the price equals the marginal revenue(MR) and that equals the marginal costs(MC) and also the price equals the average cost and that combination only happens in the competitive market and therefore that the relationship established happen when that industry is in the long run equilibrium and there is no incentive to leave or join the market.
A corporation reports the following year-end balance sheet data. The company's acid-test ratio equals:Cash $ 41,000 Current liabilities $ 76,000 Accounts receivable 56,000 Long-term liabilities 31,000 Inventory 61,000 Common stock 101,000 Equipment 146,000 Retained earnings 96,000 Total assets $ 304,000 Total liabilities and equity $ 304,000 a. 0.54b. 1.28c. 2.08d. 0.35e. 0.65
Answer:
The company's acid-test ratio equals: b. 1.28 .
Explanation:
Acid Test Ratio is a liquidity ratio that shows how efficient the resources have been utilized. It is also known as the Quick Ratio.
Acid Test Ratio = ( Current Assets - Inventory ) / Current Liabilities
Current Assets Calculation :
Cash $41,000
Accounts receivable $56,000
Inventory $61,000
Total Current Assets $158,000
Current Liabilities Calculation :
Current liabilities $76,000
Total Current Liabilities $76,000
Acid Test Ratio = ($158,000 - $61,000) / $76,000
= 1.2763 or 1.28
Conclusion :
The company's acid-test ratio equals: b. 1.28 .
No Doubt Company includes one coupon in each box of soap powder that it packs, and 10 coupons are redeemable for a premium (a kitchen utensil). In 2020, No Doubt Company purchased 8,800 premiums at 80 cents each and sold 110,000 boxes of soap powder at $3.30 per box; 44,000 coupons were presented for redemption in 2014. It is estimated that 60% of the coupons will eventually be presented for redemption.
Instructions
Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2014.
Answer:
Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2014.
Explanation:
ere presented for redemption in 2014. It is estimated that 60% of the coupons will eventually be prese
Tatum Company has four products in its inventory. Information about the December 31, 2021, inventory is as follows: Product Total Cost Total Net Realizable Value 101 $ 122,000 $ 101,000 102 91,000 111,000 103 61,000 51,000 104 31,000 51,000 Required: 1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or net realizable value (LCNRV) rule is applied to individual products. 2. Assuming that inventory write-downs are common for Tatum Company, record any necessary year-end adjusting entry.
Answer and Explanation:
1. The computation of carrying value of inventory is shown below:-
Product Cost NRV Inventory Value which is lesser
101 $122000 $101,000 $101,000
102 $91,000 $111,000 $91,000
103 $61,000 $51,000 $51,000
104 $31,000 $51,000 $31,000
Total $305,000 $314,000 $274,000
2. The Journal entry is shown below:-
a. Cost of Goods sold Dr, $31,000
To Inventory $31,000
(Being write off inventory is recorded)
b. Loss on inventory write off Dr, $31,000
To Inventory $31,000
(Being write off inventory is recorded)
B2B co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $120,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 48,000 units of the equipment's product each year. The expected annual income related to this equipment follows.
Sales $75,000
Costs Materials, labor, and overhead (except depreciation on new equipment) 40,000
Depreciation on new equipment 10,000
Selling and administrative expenses 7,500
Total costs and expenses 57,500
Pretax income 17,500
Income taxes (40%) 7,000
Net income $10,500
Required:
a. Compute the payback period.
b. Compute the accounting rate of return for this equipment.
Answer:
a. 5.85 years
b. 17.5%
Explanation:
a. For the computation of payback period first we need to find out the annual cash flow which is shown below:-
Annual Cash Inflow = Sales - Material - Selling and Administrative Expenses - Income Tax
= $75,000 - $40,000 - $7,500 - $7,000
= $20,500
Payback period = Initial investment ÷ Annual cash flow
= $120,000 ÷ $20,500
= 5.85 years
b. The computation of the accounting rate of return is shown below:-
accounting rate of return = Net income ÷ Average investment
= $10,500 ÷ ($120,000 ÷ 2)
= $10,500 ÷ $60,000
= 17.5%
a. The payback period would be 5.85 years.
b. The accounting rate of return for the given equipment would be 17.5%.
The payback period is computed when the initial investment is divided by the annual cash flow of the business. Therefore, the annual cash flow would be derived as follows:
[tex]75,000 - $40,000 - $7,500 - $7,000\\=$20,500[/tex]
Here, material expense, selling and administrative expenses, and Income tax is all deducted from the total sales.
Now, the payback period is calculated below:
[tex]\frac{120,000}{20,500} \\=5.85[/tex]
Finally, the accounting rate of return computation would be:
[tex]\frac{10,500}{60,000} \\=0.175*100\\=17.5[/tex]
Here, the net income is divided by average investment, that is:
[tex]\frac{120,000}{2} \\=60,000[/tex]
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Use the following information to determine this company's cash flows from financing activities.
A. Net income was $473,000.
B. Issued common stock for $74,000 cash.
C. Paid cash dividend of $13,000.
D. Paid $125,000 cash to settle a note payable at its $125,000 maturity value.
E. Paid $119,000 cash to acquire its treasury stock.
F. Purchased equipment for $86,000 cash.
Use the above information to determine this company's cash flows from financing activities.
Answer:
The answer is ($183,000)
Explanation:
This section deals with cash flows used to fund(e.g borrowing and repayment of loans) the business
Statement of cash flow(Partial)
Issued common stock for cash----------------------------------------------------------$74,000
Paid cash dividend-------------- ($13,000)
Paid cash to settle a note payable -----------------------------------------------($125,000)
Paid cash to acquire its treasury stock----------------------------------------($119,000)
Net cash flow from financing activities-----------------------------------------($183,000)
Determine the legality of the transaction.
KlineCorp wants to conduct business with Company B in another country. While visiting Company B, the management team of Company A offers some of the foreign employees some free products from their company.
Illegal bribe
Legal or illegal, depending on the purpose
Legal bribe
Answer:
Option B. Legal or illegal, depending on the purpose.
Explanation:
It depends what is the purpose of the free product. As we know that the company A desires to conduct business with the company B. If the free products for introducing their products which the visiting employees of Company B will use and is legal. This move will help the company B to form an opinion about the free product which they had received and is legally beneficial for both of the companies.
If the free products are for having unfair business deals then it is definitely illegal and is bribe.
Net working capital is defined as current assets divided by current liabilities.
a. True
b. False
Answer:
The answer is False.
Explanation:
False, because the net working capital is determined by subtracting all the current liabilities from the current assets. But in the question, it says net working capital is determined by dividing the current assets with current liabilities which is wrong. Therefore, if the current assent is 10000 dollars and current liabilities are 5000 dollars then net working capital is 10000 – 5000 = $5000.
The CAPM applies to Group of answer choices portfolios of securities only. efficient portfolios and efficient individual securities only. all portfolios and individual securities. individual securities only. efficient portfolios of securities only.
Answer:
all portfolios and individual securities.
Explanation:
CAPM is an acronym for capital asset pricing model. The capital asset pricing model (CAPM) can be defined as a model or formula that can be used to calculate an investment risk and the expected return on an investment (assets).
Simply stated, the capital asset pricing model gives an investor the relationship between the risk of investing in securities and its expected returns. Thus, it assists investors in making well-informed decisions about whether or not to add to a portfolio.
Additionally, the expected return could be either a profit or loss depending on the risks associated with the securities.
Mathematically, the CAPM is given by this formula;
[tex]R_{a} = R_{rf} + \beta_{a} * (R_{m} - R_{rf})[/tex]
Where;
[tex]R_{a} = Expected return on a security\\R_{rf} = Risk-free rate\\\beta_{a} = beta of the security\\R_{m} = Expected return of the market\\(R_{m} - R_{rf}) = Equity market premium[/tex]
In a nutshell, it is important to note that the capital asset pricing model (CAPM) applies to all portfolios and individual securities.
A firm had the following accounts and financial data for 2013. The firm's net profit after taxes for 2013 was ______.
Answer:
Therefore, the firm's net profit after taxes for 2013 was $320.
Explanation:
Note: This question is not complete. But a complete question is has been provided in the attached file. Kindly find the attached file.
Net profit after taxes is the profit that is obtained after all expenses including taxes have been deducted from revenue.
The net profit after tax of a firm can be determined by preparing an income statement.
Therefore, an income statement is prepared for this question to determine the firm's net profit after taxes as follows:
Income Statement
For the Year 2013
Particulars $
Sales 3,060
Cost of goods sold (1,800)
Gross Profit 1,260
Operating expenses (600)
Operating profit 660
Interest expense (126)
Profit before tax 534
Tax (534 * 40%) (214)
Net profit after tax 320
Therefore, the firm's net profit after taxes for 2013 was $320.
You take out a loan for $4000 at an annual interest rate of 5% (compounded annually). You must pay back the loan in 3 annual installments. How much of the principal is still outstanding after you make the first payment? g
Answer: = $2,731.14
Explanation:
First find the annual payment.
The payment will be constant so is an annuity.
Present Value of an Annuity = Payment * Present Value Interest Factor of an annuity
4,000 = Payment * PVIFA( 3 periods, 5%)
4,000 = Payment * 2.7232
Payment = 4,000 / 2.7232
Payment = $1,468.86
This annual Payment is divided into an interest component and a component going towards principal repayment.
Interest component = 5% * 4,000
= $200
Amount going to principal = 1,468.86 - 200
= $1,268.86
Amount of Principal Outstanding = 4,000 - 1,268.86
= $2,731.14
Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy Janitorial on October 17. What entry should Uniform Supply make on December 31, to record the accrued interest on the note
Answer:
The answer is
Dr: Notes Receivable $4,800
Dr: Interest Receivable $120
Cr: Sales $4,920
Explanation:
The yearly interest rate is 10%
So the interest rate for 90 days(assume 360 days make a year?
90/360 x 10%
2.5% is the interest rate for 90 days.
The interest payment for 90 days will be;
2.5% x $4,800
= $120
The entry will now be:
Dr: Notes Receivable $4,800
Dr: Interest Receivable $120
Cr: Sales $4,920
"Smokers are more likely to be murdered than nonsmokers." This statement is an example of: Select one: a. the fallacy of unintended consequences:. b. a positive economic statement. c. a normative economic statement. d. a value judgment.
Answer:
positive economic statement
Explanation:
positive economic statement are statements based on facts. they are objective, descriptive and measurable.
The information that smokers are liable to die young is based on extensive research on the effects of smoking on smokers
On January 1, 2018,MechanicsCredit Union (MCU)issued 8 %,20-yearbonds payable with face value of $ 200 comma 000.These bonds pay interest on June 30 and December 31. The issue price of the bonds is 106.Journalize the following bond transactions:
A. Issuance of the bonds on January 1, 2018.
B. Payment of interest and amortization on June 30, 2018.
C. Payment of interest and amortization on December 31, 2018.
D. Retirement of the bond at maturity on December 31, 2037, assuming the last interest payment has already been recorded.
Answer:
A. Issuance of the bonds on January 1, 2018.
Dr Cash 212,000
Cr Bonds payable 200,000
Cr Premium on bonds payable 12,000
B. Payment of interest and amortization on June 30, 2018.
premium on bonds payable = $12,000 / 40 coupons = $300 per coupon
Dr Interest expense 7,700
Dr Premium on bonds payable 300
Cr Cash 8,000
C. Payment of interest and amortization on December 31, 2018.
Dr Interest expense 7,700
Dr Premium on bonds payable 300
Cr Cash 8,000
D. Retirement of the bond at maturity on December 31, 2037, assuming the last interest payment has already been recorded.
Dr Bonds payable 200,000
Cr cash 200,000
You purchased a share of stock for $50. Two years later you received $2 as dividend and sold the share for $59. What was your holding period return
Answer:
The answer is =22%
Explanation:
Holding period return is the total return from asset or investment portfolio over a period of time. Holding period return is expressed as a percentage.
Its formula is:
[(value at the end of the period- original value) + income or dividend]/ original valuex 100
[2 + (59 - 50)] / 50x 100
(2 + 9 ) / 50x 100
11/50 x 100
=22%
In the current year, Riflebird Company had operating income of $220,000, operating expenses of $175,000, and a long-term capital loss of $10,000. How do Riflebird Company and Roger, the sole owner of Riflebird, report this information on their respective Federal income tax returns for the current year under the following assumptions
Note: If an amount is zero, enter "0".a. Riflebird Company is a proprietorship (Roger did not make any withdrawals from the business). Roger reports $ ________ net operating profit and $_______ long-term capital loss on his tax return.b. Riflebird Company is a C corporation (no dividends were paid during the year). Roger reports $__________ net operating profit and $________ long-term capital loss on his tax return.
Answer:
a. Riflebird Company is a proprietorship (Roger did not make any withdrawals from the business). Roger reports $45,000 net operating profit and $10,000 long-term capital loss on his tax return.
The IRS classifies sole proprietorships are pass through entities which are not taxed directly, instead their owners (proprietors) are taxed.
b. Riflebird Company is a C corporation (no dividends were paid during the year). Roger reports $35,000 net operating profit and $0 long-term capital loss on his tax return.
If Riflebird is classified as a corporation, then there is no such thing as capital gains or losses for corporations, all income and losses are considered operating income or losses.
Which method of business buying is most likely to be used when the products being purchased are standardized based on certain characteristics
Answer:
Description
Explanation:
The description method of business buying is when the seller provides the list of features that the product should have and the seller has to provide a product that fulfills those characteristics. It is used when the product need to have certain features according to the company's needs. Because of this, the answer is that the method of business buying that is most likely to be used when the products being purchased are standardized based on certain characteristics is description.
The manufacturing of semiconductor chips produces 2% defective chips. Assume the chips are independent and that a lot contains 1000 chips.
(a) Approximate the probability that more than 25 chips are defective.
(b) Approximate the probability that between 20 and 30 chips are defective.
Answer:
P(X>25)=0.107488
P(20<X<30)= 0.440427
0r 0.53490
Explanation :
Given from the question that the percentage of defective chips produced in the manufacturing of semiconductor is 2%
We are to Assume that the chips are independent and that a lot contains 1000 chips.
Then the following probabilities are to be estimated
a)More than 25 chips are defective
b)Between 20 and 30 chips are defective.
The percentage of defective chips produced in the manufacturing of semiconductor is 2%, therefore, our p=0.02.
The total number of chips, hence our n=1000.
Let X denote the number of defective chips in the manufacturing of semiconductor. So we will be able to calculate our mean
So the mean of X,
np= (10000.02). = 20
The variance of X can also be calculated as
np(1-p)= (10000.020.98). = 19.6
nq= n(1-p)=1000(1-0.2)=980 >5
Since np>5 and n(1-p)>5, then the requirements are satisfied
a) the z- score which is the value decreased by the mean value np and divided by the standard deviation now = np(1-p)
Z=
can be determined here
Z= x-np/√np(1-p)
z= [25.5-1000(0.02)]/√[1000(0.02)(1-0.02)]
z=1.24
if we check the normal distribution table using P(X>25)= P(X>25.5) = P(z>1.24) then we have the value of 0.107488
b) z= 20.5-1000(0.2)/√1000(0.02)(1-0.02)
z= 0.11
z= x-np/√np-(1-np)
z= 29.5-1000(0.2)/√1000(0.02)(1-0.02) = 2.15
CHECK THE ATTACHMENT TO COMPLETE THE SOLUTION
Probabilities are used to determine the chances of events
The given parameters are:
[tex]p = 2\%[/tex] --- the proportion of defective chips[tex]n =1000[/tex] --- the number of defective chipsStart by calculating the mean and the standard deviation
[tex]\bar x = np[/tex]
[tex]\bar x = 2\% \times 1000[/tex]
[tex]\bar x = 20[/tex] --- the mean
[tex]\sigma = \sqrt{\bar x \times (1 -p)}[/tex]
[tex]\sigma = \sqrt{20 \times (1 -2\%)}[/tex]
[tex]\sigma = 4.43[/tex] ---the standard deviation
(a) The probability that more than 25 chips are defective
Using continuity correction, the probability is represented as:
[tex]P(x > 25) = P(x > 25.5)[/tex]
Start by calculating the z-score using:
[tex]z = \frac{x - \bar x}{\sigma}[/tex]
So, we have:
[tex]z = \frac{25.5 - 20}{4.43}[/tex]
[tex]z = \frac{5.5}{4.43}[/tex]
[tex]z = 1.241[/tex]
The probability is then represented as:
[tex]P(x > 25) = P(z > 1.241)[/tex]
Using z probability calculator, we have:
[tex]P(x > 25) = 0.1073[/tex]
Hence, the probability that more than 25 chips are defective is 0.1073
(b) The probability that between 20 and 30 chips are defective
Using continuity correction, the probability is represented as:
[tex]P(20 < x < 30) = P(20.5 < x < 29.5)[/tex]
Start by calculating the z-scores for both x values:
[tex]z = \frac{x - \bar x}{\sigma}[/tex]
So, we have:
[tex]z = \frac{20.5 - 20}{4.43}[/tex]
[tex]z = \frac{0.5}{4.43}[/tex]
[tex]z = 0.113[/tex]
[tex]z = \frac{29.5 - 20}{4.43}[/tex]
[tex]z = \frac{9.5}{4.43}[/tex]
[tex]z = 2.144[/tex]
The probability is then represented as:
[tex]P(20 < x < 30) = P(0.113 < z < 2.144)[/tex]
Rewrite as:
[tex]P(20 < x < 30) =P( z < 2.144) - P(z < 0.113 )[/tex]
Using z probability calculator, we have:
[tex]P(20 < x < 30) =0.98398 - 0.54498[/tex]
[tex]P(20 < x < 30) =0.4390[/tex]
Hence, the probability that between 20 and 30 chips are defective is 0.4390
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A registered representative wishes to give a speech to a group of 35 potential retail clients at a restaurant. The speech is scripted and is a general discussion about investing in securities. Which statement is TRUE?
Answer:
Prior principal approval must be obtained and a copy of the speech must be retained in your firm's Office of Supervisory Jurisdiction
Explanation:
Because the speech is to be givento 35 attendees, it is under the Retail Communication. Every speech should be honest and of good taste; and the speech must be informational, but far from promotional.
It is not required that the speech content has to be pre-filed with the SEC. A copy must be kept a period of f 3 years for inspection by FINRA examiners. The speech script would be kept on file in the firm's supervisory compliance office that is the Office of Supervisory Jurisdiction.
Consider the difference between Liechtenstein’s per capita GDP and the per capita GDP of the U.S. Chances are you have never heard of the country of Liechtenstein, so you may be surprised that such a small country can have a significantly higher per capita GDP than the U.S. Using at least two outside sources, research why Liechtenstein’s per-capita GDP is so high. To be sure your sources are reputable, follow these guidelines when searching: The author of the source should be clear. The author should have expertise in the field the person is writing on. For instance, if you are reading a source on an environmental issue, the author should have research experience with the topic. The source should be academic, meaning it is published by a respected site or source in the field of study (e.g. official government or university Web sites, academic journals, or reputable news sources). The source should not state opinions as facts. The source should clearly cite its sources and should not include dated information. In a brief paragraph, explain why Liechtenstein’s per-capita GDP is so high. Cite your sources, explain why your sources are reputable, and summarize the strengths and weaknesses of each source.
Answer:
The sources are various documents written by the OECD: The Organization for Economic Co-operation and Development, and official sources made by the Government of Liechtenstein.
There are many reasons why Liechtenstein has such a high GDP Per capita. The first reason is its political system, which is surprisingly federal, even for such a small state. This means that the different municipalities of Liechtenstein compete among themselves for investment and development, for example, by offering lower tax rates.
The second reason is precisely the economic incentives that the country offers to private businesses. Relatively low taxation, very good infraestructure, well-educated human capital, and closeness to the wealthy markets of Germany, Switzerland, and Austria are among the economic incentives that make Liechtenstein a country with more companies registered (around 70,000) than inhabitants (around 38,000).
Promoters of an LLC are Select one: a. are never personally liable on pre-formation debt. b. always liable on pre-formation debt. c. only liable on pre-formation debt until a novation occurs.
Answer:
The answer is C. only liable on pre-formation debt until a novation occurs.
Explanation:
The corporation and the third-party agree to release the promoter from liability and to substitute the corporation in place of the promoter as the party liable on the contract. May be express or implied.
Lopez Corporation incurred the following costs while manufacturing its product:
Materials used in product $130,000 Advertising expense $46,100
Depreciation on plant $64,500 Property taxes on plant $20,000
Property taxes on store $7,600 Delivery expense $26,800
Labor costs of
assembly-line workers $120,900 Sales commissions $39,300
Factory supplies used $32,600 Salaries paid to sales clerks $54,900
Work in process inventory was $14,000 at January 1 and $16,700 at December 31.
Finished goods inventory was $61,800 at January 1 and $49,800 at December 31.
Required:
Compute cost of goods manufactured.
Cost of goods manufactured $
Answer:
Cost of goods manufactured is $365,300
Explanation:
Particulars Amount $
Materials used in product 130,000
Labor costs of assembly-line workers 120,900
250,900
Factory overheads
Depreciation on plant 64,500
Property taxes on plant 20,000
Factory supplies used 32,600
Add Work In Progress 14,000
Less: Work In Progress -16,700 114,400
Cost of goods manufactured $365,300
The nominal interest rate in Fiji is 3%, while the nominal interest rate in the U.S. is 5%. Real interest rates in both countries are 2%. According to purchasing power parity (PPP), the Fijian dollar (F$) may be expected to ________ by ________%.
Answer:
1.98%
Explanation:
The computation is shown below:-
As we know that
PPP equation i.e
Nominal Interest rate = Real interest rate + Inflation rate
Now
The Inflation rate for Fiji is
= 5% - 2%
= 3%
And, the Inflation rate for US is
= 3% - 2%
= 1%
As we can see that the inflation rate for Fiji is more than the inflation rate for US so we should be depreciated the currency by considering the inflation differential which is shown below:
= (1 + 3%) ÷ (1 + 1%) -1
= 1.98%
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales $ 1,645,000 Variable expenses 623,950 Contribution margin 1,021,050 Fixed expenses 1,123,000 Net operating income (loss) $ (101,950) In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: Division East Central West Sales $ 445,000 $ 610,000 $ 590,000 Variable expenses as a percentage of sales 53 % 23 % 42 % Traceable fixed expenses $ 299,000 $ 327,000 $ 203,000 Required: 1. Prepare a contribution format income statement segmented by divisions. 2-a. The Marketing Department has proposed increasing the West Division's monthly advertising by $21,000 based on the belief that it would increase that division's sales by 12%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease) if the proposal is implemented? 2-b. Would you recommend the increased advertising?
Answer:
Windgate Company
1. Segmented Income Statement
Company East Central West
Sales $ 1,645,000 $445,000 $610,000 $590,000
Variable expenses 623,950 235,850 140,300 247,800
Contribution margin 1,021,050 209,150 469,700 342,200
Fixed expenses Traceable 759,000 229,000 327,000 203,000
Fixed expenses: Common 364,000
Net operating income (loss) $ (101,950) ($19,850) $142,700 $139,200
2-a. Division West:
Sales $660,800 (590,000 x 1.12)
Variable expenses 247,800
Contribution 413,000
Fixed Costs 224,000
Net operating income (loss) $ 189,000
Difference = $49,800 ($189,000 - 139,200)
The net operating income would increase by $49,800.
2-b. I would recommend the increased advertising. It brings in more profit than the costs.
Explanation:
a) Data:
Income Statement
Sales $ 1,645,000
Variable expenses 623,950
Contribution margin 1,021,050
Fixed expenses 1,123,000
Net operating income (loss) $ (101,950)
b) Windgate Company's segmented income statement has enabled the tracing of fixed costs to the three divisions and the calculation of net operating income for the three divisions. Thus, revealing that Division East was not profitable. From this information, management can decide to make some changes or altogether dispose of Division East in order to redeem the fortunes of the company.
The stock of Wiley United has a beta of 1. The market risk premium is 11.5 percent and the risk-free rate is 2.3 percent. What is the expected return on this stock in percent
Answer:
9.41%
Explanation:
Wiley United has a beta of 1
The market risk premium 11.5%
= 11.5/100
=0.115
Risk free rate is 2.3%
= 2.3/100
= 0.023
Therefore the expected rate of return can be calculated as follows
Expected rate of return= Risk free rate+beta(market return-risk free rate)
= 0.023+1(0.115-0.023)
= 1.023(0.092)
= 0.0941×100
=9.41%
Hence the expected return on the stock is 9.41%
Listmann Corp. processes four different products that can either be sold as is or processed further. Listed below are sales and additional cost data: Product Sales Value with no further Processing Additional Processing Costs Sales Value after further processing Premier $ 1,350 $ 900 $ 2,700 Deluxe 450 225 630 Super 900 450 1,800 Basic 90 45 180 Which product(s) should not be processed further?
Answer:
Which product(s) should not be processed further?
Deluxe products should not be processed further because the cost of further processing is higher than the additional benefits.
Explanation:
Product Sales value with Additional processing Sales value after
no further processing costs further processing
Premier $1,350 $900 $2,700
Deluxe $450 $225 $630
Super $900 $450 $1,800
Basic $90 $45 $180
further processing added value difference
costs
Premier $900 $1,350 $450
Deluxe $225 $180 ($180)
Super $450 $900 $450
Basic $45 $90 $45
The next dividend payment by Savitz, Inc., will be $2.12 per share. The dividends are anticipated to maintain a growth rate of 8 percent forever. If the stock currently sells for $43 per share, what is the required return?
Answer:
The answer is 12.9%
Explanation:
This question will be solved using the Dividend Discount Model(DDM).
Po = D1/r - g
Po is the current worth of stocks
D1 is the next dividend paid
r is the rate of return
g is the growth rate
$43 = $2.12/ r - 0.08
43r - 3.44 = 2.12
43r = 5.56
r = 5.56/43
=0.129
Expressed as a percentage:
The required return for Savitz, Inc., is therefore 12.9%
IBM lets frontline employees spend up to $5,000 to solve a customer problem on the spot, which is an example of which of the following steps that a marketing CEO can take to create a market- and customer-focused company?
A) Empower the employees.
B) Hire strong marketing talent.
C) Get outside help and guidance
.
D) Install a modern marketing planning system.
E) Develop strong in-house marketing training programs.
Answer:
A) Empower the employees.
Explanation:
Based on this information it can be said that the best step in order to create a market- and customer-focused company would be to empower the employees. Doing so will drastically increase employee productivity as they will be more willing to work, and strive to be as efficient as possible. This in term increases both market and customer focus overall as the employees will target customer satisfaction which leads to sales.
Suppose 1-year T-bills currently yield 7.00% and the future inflation rate is expected to be constant at 4.70% per year. What is the real risk-free rate of return, r*
Answer:
2.30%
Explanation:
Data has given as:
Yield for 1 year T-bill = 7.00%
Future inflation rate = 4.7%
In order to find the risk-free rate of return we need to deduct future inflation rate from the yield for the year
Risk-free Rate of return = 1 year T-bill yield - inflation
Risk-free Rate of return = 7.00% - 4.70%
Risk-free Rate of return = 2.30%