Answer: 0%
Explanation:
The inflation-adjusted rate of return removes the effects of inflation from a return to find out the real return that an investment made.
Simple formula is;
= Nominal return - Inflation rate
= 6% - 6%
= 0%
The real rate of return is 0% meaning that if inflation is taken into account, the investment did not yield anything.
Arjun, a U.S. citizen, is a product manager who moved to Argentina to work at the South American office of Senlot Corporation, an American company. Based on this information, Arjun is a(n) ________ manager.
Answer:
The correct answer will be "Expatriate manger".
Explanation:
Expatriate managers may be described among those who don't seem country's citizens whereby they operate and were appointed due to various their advanced organizational skills but rather because of certain employment organization expertise.They support their businesses to develop international operations, reach international markets as well as transition expertise and competencies to business relationships of their corporations.So that Arjun is an Expatriate manger,
Suppose a gardener produces both green beans and corn in her garden. If she must give up 14 bushels of corn to get 5 bushels of green beans, then her opportunity cost of 1 bushel of green beans is…
Answer:
2.8 bushle of green beans
Explanation:
The computation of the opportunity cost of 1 bushel of green beans is shown below:
= Number of bushels give up ÷ Number of bushels get
= 14 bushels ÷ 5 bushels
= 2.8
By dividing the number of bushels give up from the number of bushels get so that we can get the opportunity cost and the same is to considered
Hence the opportunity cost is 2.8 bushle of green beans
Carol wants to invest money in a 6% CD account that compounds semiannually. Carol would like the account to have a balance of $50,000 five years from now. How much must Carol deposit to accomplish her goal
Answer:
PV= $37,204.70
Explanation:
Giving the following information:
Interest rate= 6% compounded semiannually= 0.03
Future value= $50,000
Number of periods= 5*2= 10
To calculate the initial investment to reach the objective, we need to use the following formula:
PV= FV/(1+i)^n
PV= 50,000/(1.03^10)
PV= $37,204.70
Jose Ruiz manages a car dealer’s service department. His department is organized as a cost center. Costs for a recent quarter are shown below. Cost of parts $ 22,400 Mechanics’ wages 14,300 Manager’s salary 8,000 Building depreciation (allocated) 4,500 Shop supplies 1,200 Utilities (allocated) 800 Administrative costs (allocated) 2,200 Calculate the total costs that would appear on a responsibility accounting report for the service department.
Answer: Total Cost = $37,900
Explanation:
Responsibility accounting refers to a system where managers of different departments in a company are responsible and held accountable for the management of the controllable costs in their department.
Here the controllable costs on the manager, Jose Ruiz are Cost of parts, the Mechanics wages and Shop supplies.
Calculating the total costs that would appear on a responsibility accounting for the service department would be :
Particulars Amount
Cost of parts $22,400
Mechanics’ wages $14,300
Shop supplies $1,200
Total Cost $37,900
Honda’s BP program involves: a. A formalized approach for teaching the supplier to improve its own processes b. Tight control of suppliers c. Elimination of the bottom 10% of suppliers at the end of the program d. All of the above e. Only a and b
Answer:
a.
Explanation:
A BP Program or Best Practices Program is one that focuses on the process of reviewing different policy alternatives that have been proven to be effecting when dealing with certain issues in the past that have reoccurred in the present and applying them. Honda's unique BP program involves a formalized approach for teaching the supplier to improve its own processes in order for them not to have to outsource.
Bob and Alice want to remodel their bathroom in 4 years. They estimate the job will cost $35,000. How much must they invest now at an annual interest rate of 4% compounded quarterly to achieve their goal? The Morenos invest $9000 in an account that grows to $11,000 in 4 years. What is the annual interest rate r if interest is compounded
a. Quarterly
b. Continuously
A) a. 2.192% b.2.179%
B) a. 4.5432% b.4.5153%
C) a. 6.0576% b. 6.0204%
D) a. 5.048% b.5.017%
Answer:
Bob and Alice want to remodel their bathroom in 4 years. They estimate the job will cost $35,000. How much must they invest now at an annual interest rate of 4% compounded quarterly to achieve their goal?
we need to use the present value formula:
present value = future value / (1 + interest rate)ⁿ = $35,000 / (1 + 1%)¹⁶ = $29,848.74
The Morenos invest $9000 in an account that grows to $11,000 in 4 years. What is the annual interest rate r if interest is compounded
a. Quarterly
$9,000 = $11,000 / (1 + r)¹⁶
(1 + r)¹⁶ = $11,000 / $9,000 = 1.2222
¹⁶√(1 + r) = ¹⁶√1.2222
1 + r = 1.01262
r = 0.01262 = 1.26% ⇒ quarterly interest rate
annual interest rate = 1.26% x 4 = 5.048%
b. Continuously
future value = present value x eᵃⁿ
future value = $11,000present value = $9,000e = 2.718a = interest rate ???n = 4 years$11,000 = $9,000 x 2.718⁴ⁿ
2.718⁴ⁿ = $9,000 / $11,000 = 0.818181818
⁴√2.718⁴ⁿ = ⁴√0.818181818
2.718ⁿ = 0.95107
nlog2.718 = log0.95107
n 0.434249452 = -0.021787543
n = -0.021787543 / 0.434249452 = -0.05017, since n must be positive, then
n = 0.05017 = 5.017%
D) a. 5.048% b. 5.017%
The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $ 299 comma 000. a. What is the book value of the equipment?
Answer: $86,112
Explanation:
The MACRS depreciation rate for recovery period of 5 years is attached to the table below.
In the first year, there was a depreciation of;
= 299,000 * 20%
= $59,800
In the second year;
= 299,000 * 32%
= $95,680
In the third year;
= 299,000 * 19.20%
= $57,408
The Accumulated Depreciation in Year 3;
= 59,800 + 95,680 + 57,408
= $212,888
Book Value in third year;
= 299,000 - 212,888
= $86,112
Suppose the wealth effect is such that a $10 change in wealth produces a $2 change in consumption at each level of income. Assume real estate prices tumble such that wealth declines by $160. Instructions: Enter your answers as whole numbers. a.What will be the new level of consumption at the $680 billion level of disposable income
Answer: $632 billion
Explanation:
The wealth effect is such that a $10 change in wealth produces a $2 change in consumption. This means that for every change in wealth, we can expect a change of;
= 2/10
= 20 % of the wealth figure in consumption.
Real Estate prices have tumbled and prices decreased by $160.
That means that consumption decreased by;
= 160 * 20%
= $32
At the $680 billion level of disposable income, Consumption was $664 billion. The new Consumption figure is therefore;
= 664 - 32
= $632 billion
Patrick Inc. makes industrial solvents sold in 5-gallon drums. Planned production in units for first 3 months of the coming year is:
January 43,800
February 41,000
March 50,250
Each drum that requires 5.5 gallons of chemicals and one plastic drum. Company policy requires ending inventories of raw materials for each month be 15% of the next month's production needs. That policy was met for the ending inventory of December in the prior year. The cost of one gallon of chemicals is $2.00. The cost of one drum is $1.60.
Required:
1. Calculate the ending inventory of chemicals in gallons for December of the prior year and for January and February. What is the beginning inventory of chemicals for January?
2. Prepare a direct materials purchases budget for chemicals for the months of January and February.
3. Calculate the ending inventory of drums for December of the prior year and for January and February.
4. Prepare a direct materials purchases budget for drums for the months of January and and February.
Answer:
1) 36,135 gallons
2) direct materials budget - chemicals
January February March
units to be produced 43,800 41,000 50,250
direct materials per unit 5.5 5.5 5.5
total direct materials 240,900 225,500 276,375
+ ending inventory 33,825 41,456 -
- beginning inventory -36,135 -33,825 -41,457
direct materials purchase 238,590 233,131 -
cost per unit $2 $2 $2
cost of direct materials $477,180 $466,262 -
3) ending inventory for December 6,570 drums
ending inventory for January 6,150 drums
ending inventory for February 7,538 drums
4) direct materials budget - drums
January February March
units to be produced 43,800 41,000 50,250
direct materials per unit 1 1 1
total direct materials 43,800 41,000 50,250
+ ending inventory 6,150 7,538 -
- beginning inventory -6,570 -6,150 -7,538
direct materials purchase 43,380 42,388 -
cost per unit $1.60 $1.60 $1.60
cost of direct materials $69,408 $67,820.80 -
Explanation:
planned production:
January 43,800
February 41,000
March 50,250
each drum requires 5.5 gallons of chemicals and 1 plastic drum
How does a traditional adversarial relationship with suppliers change when a firm decides to move to a few suppliers
Answer and Explanation:
The traditional adversarial relationship with suppliers would change when a firm makes a decision to move to the new suppliers. The firm would focus more on the channels that provides more growth prospects.
Firms seek to build long term relationships with the few suppliers. Such long run relationship makes it more likely to recognize the specific objectives of the acquiring firm and the end customer.
Explain the provisions of section 302 of the Sarbanes-Oxley Act including obligations of officers; nature and scope of assertions; accounting requirements; and legal liability of officers.
Answer:
"Section 302 of the Sarbanes-Oxley Act states that the CEO and CFO are directly responsible for the accuracy, documentation and submission of all financial reports as well as the internal control structure to the SEC," according to sarbanes-oxley-101.com. So, Section 302 is essentially about the responsibilities of principal officers of the company, especially the principal executive and financial officers.
1. Obligations of officers: To certify each annual and quarterly report. To ensure that the issued financial statements and other financial information are not misleading. To ensure that the information is fairly presented.
2. Nature and Scope of Assertions:
a) That the information presented are fairly presented with no misleading statements
b) That the internal controls are in place and operating effectively
c) To asset that they are aware of all material information relating to the issuing company
d) That they have evaluated internal controls, their effectiveness, and changes in controls.
3. Accounting requirements:
a) Ensure effective internal accounting controls
b) Disclose all material financial information to auditors and audit committee
c) File periodic reports to SEC in compliance with section 13(a) and 15(d) of the SEC Act of 1934.
4. Legal liability of officers: This is covered in Section 906 of the Sarbanes-Oxley Act. The section prescribes that officers are liable for "penalties upward of $5 million in fines and 20 years in prison" for any violation of the Act.
Explanation:
The Sarbanes-Oxley Act of 2002 is a federal law which was made in response to the accounting scandals following the collapse of Worldcom and Enron. The purpose of the Act was to safeguard shareholders, employees, and the public from accounting errors and fraudulent financial practices by listed companies. According to sarbanes-oxley-101.com, the Act requires "all financial reports to include an Internal Controls Report," to prove the accuracy and adequacy of controls for ensuring that financial information is not misleading.
The Internet helps consumers make well-informed decisions because of
which of the following?
O A. It speeds up the pace of both production and consumption
B. It provides the information that is crucial for making good choices
O O
O c. Private financial information can be handled more securely.
D. E-commerce makes it more convenient to purchase goods.
Answer:
B. It provides the information that is crucial for making good choices
Explanation:
The internet is mainly a worldwide network where information flows between all the participants (internet users). For this reason, the Internet has a great flow of information about consumer goods that individuals use to make well-informed purchase decisions.
Answer: The answer is B. or "It provides the information that is crucial for making good choices."
Explanation: It took the test or at least a very similar test.
A real estate office handles a 80-unit apartment complex. When the rent is $560 per month, all units are occupied. For each $45 increase in rent, however, an average of one unit becomes vacant. Each occupied unit requires an average of $50 per month for service and repairs. What rent should be charged to obtain a maximum profit
Answer:
$2,090 should be charged as rent to obtain maximum profit.
Explanation:
Let's assume x is the number of occupied apartment.
Therefore, the total rent the company is getting can be represented as;
{(560 + 45(80-x)}x-50x
Y=560x + 3600x - 45x^2 - 50x
Y=4110x - 45x^2
Y^'=(4110x - 45x^2)^'
Y=4110 - 90x
Y=0
4110-90x = 0
90x = 4110
x = 45.67
Rent is therefore;
560 + (80 - 46)45
=560 + 1530
=$2,090
$2,090 should be charged as rent to obtain maximum profit.
The calculation is as follows:
Let's us assume x is the number of occupied apartment.
The total rent the company can be expressed as {(560 + 45(80-x)}x-50x
Y=560x + 3600x - 45x^2 - 50x
Y=4110x - 45x^2
Y^'=(4110x - 45x^2)^'
Y=4110 - 90x
Y=0
4110-90x = 0
90x = 4110
x = 45.67
Rent is therefore;
560 + (80 - 46)45
=560 + 1530
=$2,090
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A customer, age 60, has a fixed annuity contract with a value of $16,000. The cost basis in the contract is $10,000. If the customer withdraws $5,000 and the IRS taxes distributions on a LIFO basis, the tax consequence of a withdrawal will be:
Answer:
$5,000 taxable
Explanation:
In this scenario, the tax consequence of withdrawal will be $5,000 taxable. This is because annuity contract contributions are not tax-deductible, meaning that the original contribution of $10,000 has already been taxed. Therefore in this situation all $5,000 will be taxable, luckily since the individual is over the age of 59 1/2 then the distribution is not subjected to a 10% penalty tax for premature distribution.
You purchased 400 shares of stock at a price of $55.77 per share. Over the last year, you have received total dividend income of $455. What is the dividend yield
Answer:
The dividend yield on the stock investment is 2.04%
Explanation:
The dividend yield is the total dividends received amounting to $455 divided by the cost of shares purchased at $55.77 per share.
Cost of share purchase=$55.77*400
cost of share purchase=$22,308.00
total dividends=$455.00
dividend yield=$455.00/$22,308.00
dividend yield=2.04%
Income statements under absorption and variable costing Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (3,000 units) $2,310,000 Production costs (3,000 units): Direct materials $993,300 Direct labor 427,200 Variable factory overhead 69,600 Fixed factory overhead 109,200 1,599,300 Selling and administrative expenses: Variable selling and administrative expenses $49,600 Fixed selling and administrative expenses 20,800 70,400 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet a. Prepare an income statement according to the absorption costing concept. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31 $ $ $ b. Prepare an income statement according to the variable costing concept. Gallatin County Motors Inc. Variable Costing Income Statement For the Month Ended July 31 $ $ $ Fixed costs: $ $ c. What is the reason for the difference in the amount of Operating income reported in (a) and (b)
Answer:
Gallatin County Motors, Inc.
a. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31:
Sales (3,000 units) $2,310,000
Production costs (3,000 units):
Direct materials $993,300
Direct labor 427,200
Variable factory overhead 69,600
Fixed factory overhead 109,200
Total production costs 1,599,300 1,599,300
Gross profit $710,700
Selling and administrative expenses:
Variable selling and administrative $49,600
Fixed selling and administrative 20,800
Net Income $640,300
b. Gallatin County Motors Inc. Variable Costing Income Statement For the Month Ended July 31:
Sales (3,000 units) $2,310,000
Production costs (3,000 units):
Direct materials $993,300
Direct labor 427,200
Variable factory overhead 69,600
Variable selling and administrative 49,600
Total production costs 1,539,700 1,539,700
Contribution $770,300
Fixed expenses:
Fixed factory overhead 109,200
Fixed selling and administrative 20,800 130,000
Net Income $640,300
c. Reason for the difference in the amount of the operating income in (a) and (b):
There is no difference in this case. A difference would arise if there were beginning and closing inventories from the different treatment of fixed production overheads, which are absorbed in the product costs.
Explanation:
Gallatin County Motors, Inc.'s income statement under absorption costing technique measures the cost of production and net income by taking into full account the full production costs, including fixed overheads. It reports a gross profit figure which compares the full cost of production and the service revenue.
On the other hand, Gallatin County Motors, Inc.'s income statement under the variable costing technique measures the cost of production and net income by taking into account all the variable costs. With this technique, a contribution margin is the difference between service revenue and variable costs.
Differences in the reported net income arise from the presence of beginning and ending inventory. Another difference is that while absorption costing income statement reports a gross profit figure before net income, the variable costing income statement reports a contribution margin and, in addition, regards all fixed costs as period costs.
An income statement for Gallatin County Motors, Inc. uses an absorption costing approach to calculate the cost of production and net income by accounting for all production expenses, including fixed overheads.
It gives a gross profit statistic that compares the whole cost of manufacturing to the income from services.
The calculations of the net operating income have been attached below.
c. Reason for the discrepancy in operating income amounts in (a) and (b):
In this scenario, there is no distinction. If there were beginning and closing inventories, a difference would develop due to the different treatment of fixed production overheads, which are included in product costs.
This same existence between marking inventories creates differences in the recorded net income.
Another distinction is that, although an absorption costing income statement shows gross profit before net profit, a flexible budget income statement shows a contribution margin and treats all fixed expenses as period costs.
To know more about the calculations of the net operating income, refer to the link below:
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Contribution margin per unit and break-even units LO P2 SBD Phone Company sells its waterproof phone case for $90 per unit. Fixed costs total $135,000, and variable costs are $36 per unit.
(1) Determine the contribution margin per unit.
(2) Determine the break-even point in units.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Selling price= $90
Unitary variable cost= $36
Fixed costs= $135,000
First, we need to calculate the contribution margin per unit.
Contribution margin= selling price - unitary variable cost
Contribution margin= 90 - 36= $54
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 135,000 / 54
Break-even point in units= 2,500 units
15. Magic Inc. has a DSO of 35 days, and its annual sales are $4,000,000. What is its accounts receivable balance
Answer:
$383,565
Explanation:
For the computation of accounts receivable balance first we need to find out the number of days which is shown below:-
Number of a day = Sales ÷ Number of days in a year
= $4,000,000 ÷ 365
= $10,959
Now
Accounts receivable balance
= Days × Number of day s
= 35 × $10,959
= $383,565
Therefore for computing the accounts receivable balance we simply applied the above formula.
Here we assume the number of days in a year is 365
identify this financial statement: which financial statement would best display a companys plant propery and equipment use in their factory everyday to help generate a slaes revenue
Answer: C) Balance Sheet
Explanation:
The Plant, Property and Equipment (PPE) that a company owns are reported in the Balance Sheet under Fixed Assets.
These Assets are considered investments because of their long term use and they help a company in generating it's sales Revenue.
They are also depreciated as well to account for the period they are in action and are usually recorded in the Balance Sheet at their Net amounts (depreciated amounts).
The demand and supply for catnip are given by the following tables: Demand Price Quantity Supply Price Quantity $1.50/lb 2.00 2.50 3.00 3.50 4.00 10 lb 9 8 7 4 3 $1.50/lb 2.00 2.50 3.00 3.50 4.00 4 lb 5 6 7 10 11 What quantity is sold in equilibrium, and at what price
Answer:
7
$3
Explanation:
Equilibrium is the point where Quanitity supplied equals quantity demanded. The price at this point is known as the equilibrium price and the Quanitity at this point is known as equilibrium Quanitity.
Quanitity demanded is equal to Quanitity supplied at 7 units. Price at this point is $3
Please check the attached image for a clearer image of this question.
I hope my answer helps you
Answer:
What that guy said above me
Explanation:
In order to find the future worth, F, from a present amount, P, 5 years from now at an interest rate of 6 % per year, compounded quarterly, what interest rate must be used in the F/P factor, (F/P,i%,n), when n is 20 quarters
Answer:
Interest rate = 1.5%
Explanation:
Given:
Future value = F
Present value = P
Number of Year (n) = 5 year × 4 quarters = 20
Interest rate = 6 % per year = 6 / 4 = 1.5% = 0.015
Computation:
Future value = Present value[tex](1+i)^n[/tex]
F/P = (1+0.015)²⁰
F/P = 1.34685501
When n = 20 quarters
F/P = (1+i)²⁰
1.34685501 = (1+i)²⁰
i = 0.015
Interest rate = 1.5%
Seashore Home provides house-sitting for people while they are away on vacation. Some of its customers pay immediately after the job is finished. Some customers ask that the business send them a bill. As of the end of the year, Seashore Home has collected $3,200 from cash-paying customers. Seashore Home’s remaining customers owe the business $1,380. Seashore Home recorded $3,200 of service revenue for the year.
If Seashore Home had recorded their service revenue using the other method, how much service revenue would they have recorded for the year?
Answer:
$4,580
Explanation:
Cash method:
Currently, Seashore is recording revenue on a cash basis and recorded $3,200 from the customers.
Accrual Method(Other Method)
So r\the revenue recorded by seashore using the accrual method would be the sum of both cash and credit customers.
Revenue = $3,200 + $1,380
Revenue = $4,580
Mitch likes his coworkers, thinks his pay is fair, and appreciates the interesting assignments his boss gives him, so Mitch is likely to have high A. emotional stability, B. self-management, C. self-awareness, D. job satisfaction
Answer:
D. job satisfaction
Explanation:
Job satisfaction measures how contented a staff is with his job. It measures how the employee feels about his job.
Mitch likes his job, his co workers and his salary. Mitch is likely to have a high job satisfaction
I hope my answer helps you
A good manager can be flexible when it comes to sticking to the original plan; to get good results, the intended strategy has to become the realized strategy.
a. True
b. False
Answer:
False
Explanation:
Hope this helps my loves :)
Refer to the following list of liability balances at December 31, 2019.
Accounts Payable $13,000
Employee Health Insurance
Payable 1,150
Employee
Income Tax Payable 1,200
Estimated Warranty Payable (Due 2020) 1,500
Long-Term Notes Payable (Due 2022) 41,000
FICA-OASDI Taxes Payable 1,160
Sales Tax Payable 770
Mortgage Payable (Due 2023) 8,000
Bonds Payable (Due 2024) 59,000
Current Portion of Long - Term Notes Payable 5,500
What is the total amount of long-term liabilities?
A. $100,000
B. $108,000
C. $41,000
D. $49,000
Answer:
B. $108,000
Explanation:
The computation of the total amount of long-term liabilities is shown below:-
Total amount of long-term liabilities = Long term notes payable (Due 2022) + Mortgage payable (Due 2023) + Bonds payable (Due 2024) + Long term liabilities
= $41,000 + $8,000 + $59,000
= $108,000
Therefore for computing the total amount of long-term liabilities we simply applied the above formula and we have not considered as they are not relevant and not covered into long-term liabilities as they all are current liabilities
A product found in homes built before 1978 is harmful to children. It can lead to birth defects and is generally hazardous. It should only be cleaned up by specialists, and is a required disclosure for sales of real property. What environmental hazard is this?
Answer:
Asbestos
Explanation:
This environmental hazard is asbestos. Exposure to asbestos especially for a long term period is very detrimental to health. It's fibres can be easily inhaled to the lungs which is dangerous and can cause fibrotic lung disease and also lung cancer. It can lead to defects in birth when inhaled by a pregnant woman and many other health problems. During sales of property it is very important that such hazard is disclosed to the other party.
Mark recently graduated with honors from his college. He has bragged to his friends that his academic performance has prepared him so well for a successful career that he can forget school or training in his future. In evaluating the future of the workplace, Mark is:_______.
a. exactly right. His past performance should carry him to success.
b. completely wrong. Studies show that a college education has little to do with success.
c. over confident. Global competition means that continuous learning will be needed in the future to adapt to rapid changes. probably right.
d. probably right. Specialized training today is a key to continued success in the future.
The flying of new employees to a three-day training session at Uberversity in San Francisco to learn about the company is part of the organization's:_______
a) labor relations
b) selection process
c) performance management
d) benefits
e) onboarding
Answer:
e) onboarding
Explanation:
Onboarding is the process by which new employees are introduced to the companie's culture including operational procedures and training on their job roles.
Onboarding is an important step in making the employee more efficient on the job. It is also called organisational socialising.
In the given scenario where new employees fly to a three-day training session at Uberversity in San Francisco to learn about the company, is an onboarding process.
Universal Travel uses the contribution margin income statement internally. Universal's first quarter results are as follows: LOADING...(Click the icon to view the income statement.) Universal's relevant range is sales of between $ 115 comma 000 and $ 650 comma 000. Read the requirementsLOADING.... Requirement 1. Prepare contribution margin income statements at sales levels of $ 240 comma 000 and $ 430 comma 000. (Hint: Use the contribution margin ratio.) Begin by preparing the contribution margin income statement at the $ 240 comma 000 level. (Round the variable expense rate to the nearest whole percent. Enter losses with a minus sign or parentheses.) Universal Travel Contribution Margin Income Statement Three Months Ended March 31 Sales revenue Less: Variable expenses Contribution margin Less: Fixed expenses Operating income (loss)
Question Completion:
Contribution Income Statement for three months ended March 31, 2020:
Sales $600,000
Variable Expense $240,000
Contribution $360,000
Fixed expense $155,000
Operating Income $205,000
Answer:
Universal Travel
Contribution Margin Income Statements at sales levels of $240,000 and $430,000:
Sales $240,000 $430,000
Variable Expense $96,000 $172,000
Contribution $144,000 $258,000
Fixed expense $155,000 $155,000
Operating Income or
(Loss) ($11,000) $103,000
Explanation:
a) Data:
Sales $600,000
Variable Expense $240,000
Contribution $360,000
Fixed expense $155,000
Operating Income $205,000
b) Calculation of the Contribution Margin Ratio = $360,000/$600,000 x 100 = 60%
c) With Contribution Margin Ratio as 60%, the variable cost ratio is calculated as follows:
= 100% - 60% = 40%
This ratio is used to calculate the variable cost, and then the result of the workings follow sequentially. It is assumed that the fixed cost does not change within the relevant sales ranges.
This can also be used to work out different income statement data.
Assume a companys income statefor year 9 is as follows:
Year 9
Income Statement Data in 000s
Total Revenues $650,000
Cost of Goods Sold 380,000
Delivery Costs 45,000
Marketing Costs 53,000
Administrative Expenses 11,000
Operating Profit (Loss) 161,000
Other Income (Expense) 2,600
Interest Income (Expense) 10,800
Pre-tax Profit (Loss) 147,600
Income Taxes 44,280
Net Profit (Loss) $103,320
Based on the above income statement data the companys interestcoverate ratio is:_______.
a. 14.91 and 20.2%.
b. 13.67 and 15.9%.
c. 16.71 and 23.3%.
d. 17.22 and 24.6%.
e. 19.29 and 21.4%.
Answer:
14.91 and 24.77%
Explanation:
The computation of the company interest coverage ratio is shown below:-
Interest coverage ratio = Earning before interest and tax ÷ Interest
= $161,000 ÷ $10,800
= 14.91
Operating profit margin = (Earning before interest and tax ÷ Revenue) × 100
= $161,000 ÷ $650,000 × 100
= 24.77%
Therefore we have applied the above formula and hence option is not available.