Answer:
Closing net cash balance= $55,000
Explanation:
The cash flow statement is a financial statement that provides information about the sources and the usage of cash during a particular accounting period usually a year.
It provides the cash inflow and outflows under three (3 ) categories of operating investing, financing.
The total net cash balance is the sum of the net cash balances under the 3 categories
Net cash balance
$
Operating activity 28,000
Investing activities 10,000
Financing activities 12,000
Net cash balance 50,000
Opening cash balance 5,000
Closing net cash balance 55,000
A recent survey of 280 small firms (with annual revenue less than $12 million) asked whether an increase in the minimum wage would cause the firm to decrease capital spending. Possible responses to the survey question were: "Yes," "No," or "Don’t Know." This data is best classified as
Answer:
nominal scale
Explanation:
nominal scale are scales that are used to assign events into discrete classifications.
Nominal scales have no order and there is no means to measure the distance between the possible responses. they are just classifications.
George's Chemicals allocates overhead based on machine hours. Selected data for the most recent year follow. Estimated manufacturing overhead cost $235,000 Actual manufacturing overhead cost $244,200 Estimated machine hours 20,300 Actual machine hours 22,700 The estimates were made as of the beginning of the year, while the actual results were for the entire year. The predetermined manufacturing overhead rate per machine hour is closest to
Answer:
$11.58 per machine hour
Explanation:
Given that: Estimated Manufacturing overhead cost =$235,000, Actual manufacturing overhead cost = $244,200 Estimated machine hours = 20,300, Actual machine hours= 22,700
The predetermined manufacturing overhead rate per machine hour = Estimated manufacturing overhead cost / Estimated machine hours
= $235,000 / 20,300
= $11.5763
= $11.58 per machine hour
The Horstmeyer Corporation commenced operations early in 2018. A number of expenditures were made during 2018 that were debited to one account called intangible asset. A recap of the $223,000 balance in this account at the end of 2018 is as follows:
Date Transaction Amount
2/3/18 State incorporation fees and legal costs related to
organizing the corporation $ 10,000
3/1/18 Fire insurance premium for three-year period 5,000
3/15/18 Purchased a copyright 35,000
4/30/18 Research and development costs 55,000
6/15/18 Legal fees for filing a patent on a new product resulting
from an R&D project 5,000
9/30/18 Legal fee for successful defense of patent developed above 27,000
10/13/18 Entered into a 10-year franchise agreement with franchisor 55,000
Various Advertising costs 31,000
Total $ 223,000
Required: Prepare the necessary journal entry to clear the intangible asset account and to set up accounts for separate intangible assets, other types of assets, and expenses indicated by the transactions.
Answer:
Journal Entry to record various expenditure incorrectly charged to the intangible asset account
Date Account Title Debit Credit
Organisation cost expenses $10,000
Prepaid insurance $5,000
Copyright $35,000
Research and development exercise $55,000
Patent $32,000
Franchise $55,000
Advertising expenses $31,000
Intangible asset $223,000
(To record the cash expenditure)
Working note
Patent cost= Legal fee for filling a patent + Legal fee for defense
= $5,000 + $27,000
= $32,000
Xbox and PlayStation pay close attention to video game blogs to monitor the latest trends and popular games, because they know that video game players always want the newest games. This information helps Xbox and Playstation create new products in order to
Answer:
This question is incomplete, the options are missing. The options are the following:
a) Keep up in the market where sales come primarily from new products
b) Satisty engineering and design needs and specifications
c) Take advantage of the long product lifecycle of video games
d) Create diversification and reduce risk
e) Avoid market penetration of products that have been on the market for a long time.
And the correct answer is the option B: Satisfy engineering and design needs and specifications.
Explanation:
To begin with, the fact that those companies and others pay close attention to the video game blogs is because their managers know no just that the gamers always want the newest games but also because in that way they can know what are the current problems of the video games and what are the mistakes that need to be correct it in order to upgrade the next game and selling it by all its new features. Therefore that by doing that they try to understand the gamers needs and specifications of engineering and design of the games so in that way they would by more of the better games and the sales would increase.
A fixed asset with a cost of $52,025 and accumulated depreciation of $44,221 is traded for a similar asset priced at $55,501. Assuming a trade-in allowance of $5,664, the recognized loss on the trade is
Answer:
$2,140
Explanation:
When a commercial substance exists in the course of the exchange of an old asset for a new one , the gain or loss on this assets is recognized,
Commercial substance can be said to exist when the exchange assets impact the future cash flow. The extended useful life of the involved assets in the question the the newly acquired asset through exchange support this.
Workings
Cost of the fixed assets = 52,025
Accumulated depreciation = 44,221
Book value = 7,804
Trade in allowance = 5,664
loss = 7,804 - 5664 = 2,140
To avoid charges of discrimination or wrongful actions, legal advisors recommend that organizations write employment rejection letters that are ________. a. as specific as possible b. written using the direct strategy c. general, simple, and short d. form letters
Answer:
C. General, simple, and short.
Explanation:
A formal rejection letter is said to said to be given or delivered to a job applicant in a field in which he/she must have formally applied for a role or position in a said organisation or hiring firm. This form of letter is known or advised to be general, simple and short. It is meant to be implied to generally everyone that applied for the same said position. It should never be insinuative hereby leading an applicant on; giving them hopes there could be an opening anytime soon.
That is why it is advised to avoid any form of discrimination charge or wrongful actions so as not to involve or spring up legal actions.
Given the following information, calculate the net operating income assuming below-line treatment of capital expenditures: property: 6 office units, contract rents per unit: $2,750 per month; vacancy and collection losses: 19%; operating expenses: $45,500; capital expenditures: 7%.
Answer:
$114,880
Explanation:
The computation of the net operating income is shown below:
= (Number of office units × contract rents per unit × total number of months in a year) - (Number of office units × contract rents per unit × total number of months in a year × vacancy and collection losses - operating expenses)
= (6 × $2,750 × 12 months) - (6 × 2,750 × 12 months × 19% - $45,500)
= $198,000 - $37,620 - $45,500
= $114,880
We simply applied the above formula
What is the purpose of internal controls? Companies use strong internal controls to guarantee that loss is eliminated. Internal controls are used by managers as a way to reduce outstanding customer balances. Managers utilize internal controls as a basis of employee performance reviews. To help managers know if the business is receiving the assets and services it has paid for.
Answer:
The correct answer is: Companies use strong internal controls to guarantee that loss is eliminated.
Explanation:
The purpose of internal controls in an organization is to reduce losses.
It can be defined as the set of methods and procedures used by a company to ensure that its results are reliable, protection of the company's assets, efficiency in the allocation of resources, etc.
Effective internal control helps an organization to obtain essential information for making offensive or defensive decisions, therefore it corresponds to essential tools in the risk management process that seeks to reduce financial losses and assists in reaching the goals and objectives determined by the company's strategic planning .
Kuhn company is considering a new project that will require an initial investment of $4 million. It has a target capital structure of 58% debt, 6% preferred stock and 36% common equity. Kuhn has noncallable bonds outstanding that mature in 15 years with a face value of $1,000, an annual coupon rate of 11%, and a market price of $1,555.38. The yield on the company's current bonds is a good approximation of the yield on any new bonds that it issues. The company can sell shares of preferred stock that pay an annual dividend of $8 at a price of $92.25 per share. You can assume that Jordan does not incur any flotation costs when issuing debt and preferred stock. Kuhn does not have any retained earnings available to finance this project, so the firm will have to issue new common stock to help fund it. Its common stock is currently selling for $33.35 per share, and it is expected to pay a dividend of $2.78 at the end of next year. Flotation costs will represent 8% of the funds raised by issuing new common stock. The company is projected to grow at a constant rate of 9.2%, and they face a tax rate of 40%. What is Kuhn's WACC for this project? Please show work.
a. 7.65%
b. 9.00%
c. 10.35%
d. 9.45%
Answer:
b. 9.00%
Explanation:
For the computation of WACC first we need to follow some steps which is shown below:-
Step 1
Cost of debt = 5.48% which is explained with the help of attachment.
Given that,
Present value = $1,555.38
Future value or Face value = $1,000
PMT = 1,000 × 11% = $110
NPER = 15 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after applying the above formula, the cost of debt is
Step 2
Cost of preferred stock = Annual preferred dividend ÷ Price
= $8 × $92.25
= 0.086721
Step 3
Cost of equity = Dividend ÷ (Stock price × (1 - flotation cost)) + Growth rate
= 2.78 ÷ (33.35 × (1 - 0.08)) + 0.092
= 18.26%
WACC = Weight of debt × Cost debt) + (Weight of preference stock × Cost of preference stock) + (Weight of equity × cost of equity)
= (0.58 × (0.0548 × (1 - 0.4)) + (0.06 × 0.086721) + (0.36 × 0.1826068)
= 9.00%
Kuhn's WACC for this project will be 9.00%.
Based on the information given, the cost of preferred stock will be:
= Annual preferred dividend / Price
= $8 / $92.25
= 0.086721
Then, the cost of equity will be calculated as:
= Dividend ÷ (Stock price × (1 - flotation cost)) + Growth rate
= 2.78 ÷ (33.35 × (1 - 0.08)) + 0.092
= 18.26%
Therefore, the weighted average cost of capital (WACC) will be:
= (0.58 × (0.0548 × (1 - 0.4)) + (0.06 × 0.086721) + (0.36 × 0.1826068)
= 9.00%
Therefore, Kuhn's WACC for this project will be 9.00%.
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1. The roles of money Brian is heading out to lunch. He goes to the bank and withdraws $30 from his savings account. He heads to a local deli that sells half sub sandwiches for $4.99 and whole subs for $7.99. Brian decides that he's pretty hungry and goes for the whole. He pays with a $10 bill and tells the cashier to keep the change. Identify what role money plays in each of the following parts of the story. Hint: Select each role only once. Role of Money Medium of Exchange Unit of Account Store of Value Brian can easily determine that the whole sandwich, while twice as long as the half, is priced at less than twice as much. Brian accumulates money in his savings account for future purchases. Brian buys his lunch with a $10 bill.
Answer:
Brian can easily determine that the whole sandwich, while twice as long as the half, is priced at less than twice as much.
unit of accountBrian accumulates money in his savings account for future purchases.
Store of valueBrian buys his lunch with a $10 bill.
Medium of exchangeExplanation:
Money's four functions are:
Medium of exchange = you can use money to purchase or sells goods and services. Unit of account = money helps us to understand the relative value of goods and services, since the higher the price, the higher the value of a good or service is. Store of value = you can save money for future useStandard of deferred payment = money allows people to take or hand out loans that will be repaid in the futureAccording to its 2013 10-K, how many more shares can Colgate repurchase in the future under it share repurchase program?
Answer:
The correct answer is -25,937,562
Explanation:
25,937,562 additional offers can be repurchased by Colgate later on under its offer repurchase program as indicated by its 2013 10-K. Likewise, 6,760,592 offers were repurchased by the organization.
31,905,271 offers and 30,425,271 offers were as far as possible for repurchase in the classification of Maximum Number of Shares that may yet be bought under the plans or projects however the most recent cutoff for Maximum Number of Shares that may yet be bought under the plans or projects is 25,937,562 Shares.
Thus, the correct answer is -25,937,562
A U.S.-based company, Global Products Inc., has wholly owned subsidiaries across the world. Global Products Inc. sells products linked to major holidays in each country.
The president and board members of Global Products Inc. believe that the managers of their wholly owned country-level subsidiaries are best motivated and rewarded with both annual salaries and annual bonuses. The bonuses are calculated as a predetermined percentage of pretax annual income.
Señora Larza, the president of Global Products of Mexico, has worked hard this year to make her Mexican subsidiary profitable. She is looking forward to receiving her annual bonus, which is calculated as a predetermined percentage (15 percent) of this year's pretax annual income earned by Global Products of Mexico. A condensed income statement for Global Products of Mexico for the most recent year is as follows (amounts in thousands of pesos).
Sales MXN 25,000
Expenses 23,000
Pretax Income MXN 2,000
The U.S. headquarters financial group translates each of its wholly owned subsidiary's results into U.S. dollars for evaluation. After translating the Mexican pesos income statement into U.S. dollars, the condensed income statement for Global Products of Mexico is as follows (amounts in thousands of dollars).
Sales US $7,000
Expenses 8,100
Pretax Income US $(1,100)
Required:
A1. Calculate the bonus amount based on (1) the Mexican peso-based Pretax Income and (2) the U.S. dollar-based Pretax Income.
A2. Translate the peso-based bonus to U.S. dollars using a current exchange rate.
B. Calculate the average exchange rate used to translate the Mexican pesos income statement into the U.S. dollar statement for the categories: (1) Sales and (2) Expenses.
A1. Bonus on mexican peso-based Pretax Income
Bonus U.S. dollar-based Pretax Income
A2. U.S. dollars
B. Average exchange rate for sales pesos
Average exchange rate for expenses pesos
Answer:
Global Products Inc.
Global Products of Mexico
Señora Larza
A1. Bonus on mexican peso-based Pretax Income
= MXN 2,000 x 15% = MXN 300
Bonus U.S. dollar-based Pretax Income
= -$1,100 x 15% = -$165, there is no U.S. dollar-based bonus
A2. U.S. dollars
Current Exchange rate = US$1 = MXN 20.0369 (July 18, 2020)
MXN 2,000 = MXN 2,000/MXN 20.0369 = $98.19
B. Average exchange rate for sales pesos
Sales MXN 25,000 = US $7,000,
The exchange rate = US $1 = MXN 3.5714 (MXN 25,000/ US $7,000)
Average exchange rate for expenses pesos
Expenses MXN 23,000 = US $ 8,100
The exchange rate = US $1 = MXN 2.8395 (MXN 23,000/US $ 8,100)
Explanation:
Señora Larza, the president of Global Products of Mexico seems to have a bonus in Mexican peso, but when the bonus pre-tax income is translated into US dollars, the bonus turns negative just like the pre-tax income was negative. This implies that since the U.S. headquarters translates each subsidiary's results into U.S. dollars for evaluation, Señora Larza did not qualify for bonus payment for the current year.
The disparity is caused by the different exchange rates for translating the sales revenue and the expenses. Exchange rates are the rates at which currencies exchange their values for international account settlements.
A corporation issued 6,000 shares of its $2 par value common stock in exchange for land that has a market value of $84,000. The entry to record this transaction would include:
Answer:
A debit to Land for $12,000
Explanation:
The entry to record in this transaction include a debit to Land for $12,000
Particulars Debit Credit
Land $84,000
Common stock $12,000
(6,000 * $2)
Paid in capital in excess $72,000
of par, common stock
The monopolist should NEVER produce in the Question 10 options: range of output for which there is a price elasticity exceeding one. range of output for which the price elasticity of demand is infinity. elastic segment of its demand curve because it can increase total revenue and reduce total cost by lowering price. inelastic segment of its demand curve because further lowering of the price reduces total revenue.
Answer:
inelastic segment of its demand curve because further lowering of the price reduces total revenue
Explanation:
Monopolistic competition is a state of the industry that deals with several firms that are closely linked to each other but offer distinct goods. In fact, this market provides free entry and exit
Therefore the monopolist never produced inelastic section of the demand curve as the price should be decline that results into fall in the total revenue
Hence, the last option is correct
S10-5 (book/static) On February 28, 2017, Rural Tech Support purchased a copy machine for $ 53 comma 400. Rural Tech Support expects the machine to last for six years and to have a residual value of $ 3 comma 000. Compute depreciation expense on the machine for the year ended December 31, 2017, using the straight-line method.
Answer:
$7,000
Explanation:
depreciation expense using straight line method = (purchase cost - salvage value) / useful life = ($53,400 - $3,000) / 6 years ) = $8,400 per year
since the machine was used for 10 months, the depreciation expense for 2017 = $8,400 x 10/12 = $7,000
the adjusting journal entry should be:
December 31, 2017, depreciation expense
Dr Depreciation expense 7,000
Cr Accumulated depreciation - copy machine 7,000
Schuepfer Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 2,700 units are planned to be sold in March. The variable selling and administrative expense is $3.20 per unit. The budgeted fixed selling and administrative expense is $35,770 per month, which includes depreciation of $4,200 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the March selling and administrative expense budget should be:___________.
a. $40,210
b. $44,410
c. $31,570
Answer:
Total cash disbursement= $40,210
Explanation:
Giving the following information:
The sales budget shows 2,700 units are planned to be sold in March. The variable selling and administrative expense are $3.20 per unit.
The budgeted fixed selling and administrative expense are $35,770 per month, which includes depreciation of $4,200 per month.
The depreciation expense is not a cash disbursement.
Total cash disbursement= total variable cost + total fixed cost
Total cash disbursement= 2,700*3.2 + (35,770 - 4,200)
Total cash disbursement= $40,210
Prepare journal entries to record the following production activities.
a. Incurred $75,000 of direct labor in production (credit Factory Payroll Payable).
b. Incurred $20,000 of indirect labor in production (credit Factory Payroll Payable).
c. Paid factory payroll.
Answer:
1.Dr Work in progress inventory75,000
Dr Payable Factory payroll 75,000
2. Dr Factory overhead 20,000
Cr Factory Payroll Payable 20,000
3. Dr Factory wages payable 95,000
(75,000+20,000)
Cr Cash 95,000
Explanation:
Preparation to record Journal entry
1. Since the amount of $75,000 was been Incurred of the direct labour production this means we have to record the transaction as :
Dr Work in progress inventory75,000
Dr Payable Factory payroll 75,000
2. Since the amount of $20,000 was Incurred of indirect labor in production this means we have to record the transaction as:
Dr Factory overhead 20,000
Cr Factory Payroll Payable 20,000
3. Since factory payroll was paid the transaction will be recorded as :
Dr Factory wages payable 95,000
(75,000+20,000)
Cr Cash 95,000
Where would it be right to apply the product concept?
Answer:
In marketing
Explanation:
The Product concept is the understanding of the best features of a product which a marketer wishes to sell. Before a product is sold, it is very important that the marketer gets a proper understanding of the product. This knowledge would help him convince the customer that the product is the best and would actually meet his needs.
For producers, realizing this need of customers would help them focus on making products with superior quality that can as well meet the requirements of customers. These products should also be able to thrive in a very competitive environment.
The Purple Martin has annual sales of $687,400, total debt of $210,000, total equity of $365,000, and a profit margin of 5.9 percent. What is the return on assets
Answer:
7.1%
Explanation:
Purple martin has an annual sales of $687,400
The total debt is $210,000
Total equity is $365,000
Profit margin is 5.9%
= 5.9/100
= 0.059
The first step is to calculate the net income
Net income= sales×profit margin
= $687,400×0.059
= $40,556.6
The next step is to calculate the total assets
Total assets= Total debt+Total equity
= $210,000+$365,000
= $575,000
Therefore, the return on assets can be calculated as follows
ROA= Net income/Total assets
= 40,556.6/575,000
= 0.0705×100
= 7.1%
Hence the return on assets is 7.1%
Larkspur Appliance Co. manufactures low-price, no frills appliances that are in great demand for rental units. Pricing and cost information on Larkspur main products are as follows. Item Standalone Selling Price (Cost) Refrigerator $500 ($260 ) Range 570(270 ) Stackable washer/dryer unit 690(400 ) Customers can contract to purchase either individually at the stated prices or a three-item bundle with a price of $1,800.The bundle price includes delivery and installation. Larkspur also provides installation (not a separate performance obligation). Respond to the requirements related to the following independent revenue arrangements for Larkspur Appliance Co. On June 1, 2017, Larkspur sold 100 washer/dryer units without installation to Laplante Rentals for $69,000. Laplante is a newer customer and is unsure how this product will work in its older rental units. Larkspur offers a 60-day return privilege and estimates, based on prior experience with sales on this product, 4% of the units will be returned. Prepare the journal entries for the sale and related cost of goods sold on June 1, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
Answer:
The journal entries to record the sale on June 1 are:
June 1, 2017, 100 units of washer/dryer to Laplante Rentals
Dr Cash 69,000
Cr Sales revenue 69,000
Dr Cost of goods sold 40,000
Cr Inventory 40,000
If the next question asks to record the return privilege and estimates, it should be recorded as both an asset (estimated returns inventory) and a liability (customer refunds payable).
You purchased an airplane for $500,000 and will depreciate it using a 7-year an MACRS. Salvage value in year 4 is expected to be $250,000. The airplane is expected to increase revenues by $200,000 per year, however, O&M costs are expected to be $30,000 per year. Your company is in a 40% tax bracket and your MARR is 15%. Show the end of year cash flows for this project for years 0 through 4. What is the Net Present Worth of this investment?
Year 0_____
Year 1____
Year 2______
Year 3_____
Year 4______
NPW_____
Answer:
Year 0 = -$500,000
Year 1 = $130,580
Year 2 = $150,980
Year 3 = $136,980
Year 4 = $433,260
NPV = $65,495
Explanation:
depreciation expense per year under 7 year MACRS table:
year 1 = $500,000 x 14.29% = $71,450
year 2 = $500,000 x 24.49% = $122,450
year 3 = $500,000 x 17.49% = $87,450
year 4 = $500,000 x 12.49% = $62,450
cash flow year 1 = [($200,000 - $30,000 - $71,450) x (1 - 40%)] + $71,450 = $130,580
cash flow year 2 = [($200,000 - $30,000 - $122,450) x (1 - 40%)] + $122,450 = $150,980
cash flow year 3 = [($200,000 - $30,000 - $87,450) x (1 - 40%)] + $87,450 = $136,980
cash flow year 4 = [($200,000 - $30,000 - $62,450 + $93,800 gain on sale) x (1 - 40%)] + $62,450 + $250,000 = $433,260
MARR = 15%
using a financial calculator, NPV = $65,495
true or false For a given labor market, an increase in the productivity (MP) of labor will shift the demand curve for labor rightward. Group of answer choices
Answer:
false
Explanation:
zkjai kdiai kaixisi
The Company uses a periodic inventory system. For specific identification, ending inventory consists of 215 units, where 190 are from the January 30 purchase, 5 are from the January 20 purchase, and 20 are from beginning inventory. Determine the cost assigned to ending inventory and to cost of goods sold using (a) specific identification, (b) weighted average, (c) FIFO, and (d) LIFO.
Answer:
Ending inventory:
(a) specific identification = $2,720(b) weighted average = $2,810.05(c) FIFO = $2,687.50(d) LIFO = $3,010Cost of goods sold:
(a) specific identification = $6,495(b) weighted average = $6,404.95(c) FIFO = $6,527.50(d) LIFO = $6,205Explanation:
Date Activity Units Cost Total
Jan. 1 Beg. inventory 215 $14 $3,010
Jan. 10 Sales 165
Jan. 20 Purchase 160 $13 $2,080
Jan. 25 Sales 190
Jan. 30 Purchase 330 $12.50 $4,125
total Purchases 705 $13.07 $9,215
Ending inventory:
(a) specific identification = (190 x $12.50) + (5 x $13) + (20 x $14) = $2,720
(b) weighted average = 215 x $13.07 = $2,810.05
(c) FIFO = 215 x $12.50 = $2,687.50
(d) LIFO = 215 x $14 = $3,010
Cost of goods sold:
(a) specific identification = $9,215 - $2,720 = $6,495
(b) weighted average = $9,215 - $2,810.05 = $6,404.95
(c) FIFO = $9,215 - $2,687.50 = $6,527.50
(d) LIFO = $9,215 - $3,010 = $6,205
Students arrive at the Administrative Services Office at an average of one every 15 minutes, and their requests take on average 10 minutes to be processed. The service counter is staffed by only one clerk, Judy Gumshoes, who works eight hours per day. Assume Poisson arrivals and exponential service times.
a. What percentage of time is Judy idle?
b. How much time, on average, does a student spend waiting in line?
c. How long is the (waiting) line on average?
d. What is the probability that an arriving student (just before entering the Administrative Services Office) will find at least one other student waiting in line?
Answer:
a) %idle time = 0.33
b)40.2minutes
c)40.02customers
d)0.5219
Step-by-step explanation:
It was said in the question Students arrive at the Administrative Services Office at an average of one every 15 minutes which means that
λ = 60/15= 4customers/hr
It was stated that their requests take on average 10 minutes to be processed which means that
μ = average of 10minutes = 60/10 = 6customers/hr
Then let us use these information to solve the given questions
a) percentage when judy was idle = (1- λ/μ)= 1- 0.67= 0.33
%service time = 0.67
%idle time = 0.33
b)To calculate How much time, on average that a student spend waiting in line then we make use of the formula below
= λ/ μ( μ- λ)
= 0.67hrs = 0.67 x60 = 40.2minutes
c) To calculate How long the waiting line on average;
= average waiting time x arrival rate = 0.67hrs x 6customers/hr
= 40.02customers
d) the probability that an arriving student will find at least one other student waiting in line is calculated below;
P( idle time i.e no customer to attend to) = 0.33
P1( Probability of having a customer to attend to) = 0.33 x 0.67= 0.2211
P( Probability of having 2 customer to attend to) = 0.33 x 0.67x0.67 = 0.1481
Therefore, the probability of finding at least one customer = 1 -[ po + p1]
= 1 - 0.33- 0.1481 = 0.5219
Semans is a manufacturer that produces bracket assemblies. Demand for bracket assemblies (X) is 127 units. The following is the BOM in indented form:
ITEM DESCRIPTION USAGE
X Bracket assembly 1
A Wall board 5
B Hanger subassembly 2
D Hanger casting 3
E Ceramic knob 2
C Rivet head screw 3
F Metal tong 4
G Plastic cap 1
Below is a table indicating current inventory levels:
Item X A B C D E F G
Inventory 27 19 74 23 201 262 975 100
b. What are the net requirements for each item? (Leave no cells blank - be certain to enter "0" wherever required.)
Item Net Requirements
X
A
B
C
D
E
F
G
Answer and Explanation:
The computation of net requirements for each item is shown below:-
Net requirement = Gross requirement - Inventory
To compute the Gross requirement we will use the following formulas:
A = 5 × Net requirement of X
= 5 × 127
= 635
B = 2 × Net requirement of X
= 2 × 127
= 254
C = 3 × Net requirement of X
= 3 × 127
= 381
D = 3 × Net requirement of B
= 3 × 180
= 540
E = 2 × Net requirement of B
= 2 × 180
= 360
F = 4 × Net requirement of C
= 4 × 358
= 1,432
G = 1 × Net requirement of C
= 1 × 358
= 358
Item Gross Requirement Inventory Net Requirement
X 127 1 127
A 635 19 616
B 254 74 180
C 381 23 358
D 540 201 339
E 360 262 98
F 1,432 975 457
G 358 100 258
Therefore we have applied the net requirement formula.
Use the following information to work the problems. Each problem stands alone.
Bernard Windows is a small company that installs windows. Its cost structure is as follows:
Selling price for each window installation $500
Variable cost of each window installation $400
Annual fixed costs $150,000
#1. This is also TRY IT 3-2 on page 75.
Calculate (a) the breakeven point in units and revenue and (b) the number of windows Bernard Windows must install and the revenues needed to earn a target operating income of $100,000.
#2. TRY IT 3-3 on page 77.
Same information as above but now tax rate is 30%. Calculate the number of windows Bernard Windows must install and the revenues needed to earn a target net income of $63,000.
#3. TRY IT 3-4 on page 82. Calculate the margin of safety in units and dollars and the margin of safety percentage if the company expects to sell 2,400 windows in the year.
#4. TRY IT 3-5 on page 84. Number of units sold is 2500.
Bernard is considering changing its sales compensation for next year. Bernard would pay salespeople a 5% commission next year and reduce fixed costs by $62,500. Calculate the degree of operating leverage at sales of 2,500 units under the two options. Comment briefly on the result.
#5. TEY IT 3-6 on page 87.
Bernard Windows plans to sell two different brands of windows-- Chad and Musk--- and budgets the following:
Chad Musk Total
Expected sales 2500 1000 3500
Revenues (500 and 350 per unit) $1,250,000 $350,000 $1,600,000
Variable cost ( 400 and 275 per unit) $1,000,000 $275,000 $1,275,000
Contribution margin (100 and 75 ) 250,000 $75,000 $325,000
Fixed costs $195,000
Operating income $130,000
Calculate the break even point for Bernard Windows in terms of the (a) number of units sold and (b) revenues.
Answer:
1.(a). Breakeven point (in units) = Fixed cost / Contribution margin per unit
Contribution margin per unit = Selling price per unit - Variable cost per unit
= 500 - 400 = 100 per unit
Breakeven point = 150,000 / 100 per unit
Breakeven point = 1500 units
Breakeven point ( in revenue) = Fixed Cost / Contribution margin ratio
Contribution margin ratio = ( Selling price per unit - Variable cost per unit) / Selling price per unit ×100
= ($500 - $400) / $500 ×100
= 20%
Breakeven point ( in revenue) = $150,000 / 20%
Breakeven point ( in revenue) = $750,000
(b). Let x be the unknown quantity of units Bernard Windows must sell to earn an operating income of $100,000. Selling price is $500
Revenue - Variable cost - Fixed cost = operating income
($500 * x) - ($400*x) - $150,000 = $100,000
($100* x) = $250,000
x = $250,000 / $100 per unit = 2,500 units
Quantity of units required to be sold = 2,500 units
Revenue to earn an operating income of $100,000 is
Revenue = Number of units required to be sold * Selling Price
Revenue = 2,500 * $500 = $1,250,000
2. Target operating income = Target net income / (1 - Tax Rate)
= $63,000 / (1 - 0.30)
= $90,000
In other words, to earn a target net income of $63,000, Bernard Windows Target operating income is $90,000.
Proof: Target operating income $90,000
Tax at 30% ( $90,000*0.30) $27,000
Target net income $63,000
Calculation of number of units Bernard Windows must sell:
Quantity of units required to be sold = Fixed cost + Target operating income / Contribution margin per unit
= $150,000 + $90,000 / $100 = $2,400 units
Quantity of units required to be sold = 2,400 units
Revenue to earn net income of $63,000 is:
Revenue = Number of units required to be sold * Selling price
= 2,400 * $500
Revenue = $1,200,000
3. Margin of Safety = Budgeted revenue - Breakeven revenue
= $1,200,000 - $750,000
Margin of Safety = $450,000
Margin of safety (in units) = Budgeted Sales (units) - Breakeven Sales (units)
= 2,400 - 1,500
Margin of safety (in units) = 900 units
The margin of safety indicated that sales would have to decrease by 900 units and revenue by $450,000 before the breakeven point is reached.
Margin of safety percentage = Margin of safety in dollars / Budgeted revenues
= $450,000 / $1,200,000 * 100 = 37.5%
This result means that revenue would have to decrease substantially, by 60%, to reach the breakeven revenues.
5. Let we assume that the budgeted sales mix (2,500 units of chad windows sold for every 1,000 units of Musk windows sold, that is a ratio of 5:2) will not change at different levels of total unit sales.
Number of units of Contribution Margin
Chad Windows and per unit for Chad Windows
Musk Windows in and Mask Windows Contribution
each bundle margin the bundle
Chad Windows 5 $100 $500
Musk windows 2 $75 $150
Total $650
To calculate breakeven point, we calculate the number of bundles Bernard needs to sell.
Breakeven point in bundles = Fixed cost / Contribution margin per bundle
= $195,000 / $650 = 300 bundles
a. Breakeven point in units of Chad Windows and Musk windows is as follows:
Chad windows: 300 bundles× 5 units per bundle = 1,500 units
Musk windows: 300 bundles ×2 units per bundle = 600 units
Total number of units to breakeven = 1,500 + 600 = 2,100 units
b. The breakeven point in dollars for Chad windows and Musk windows is as follows:
Chad windows: 1,500 units × $500 per unit = $750,000
Musk windows: 600 units ×$350 per unit = $210,000
Breakeven revenue = $750,000 + $210,000 = $960,000
Compare investment alternatives You have two investment opportunities. One will have an 8% rate of return on an investment of $10,000; the other will have a 10% rate of return on principal of $14,000. You would like to take advantage of the higher-yielding investment but have only $10,000 available.
Required:
What is the maximum rate of interest that you would pay to borrow the $4,000 needed to take advantage of the higher yield?
Answer:
15%
Explanation:
The maximum rate of return that would be paid to borrow an additional $4,000 needed can be calculated as
[tex]Rate of return =\frac{Amount of interest}{Amount borrowed}[/tex]
Rate of return = $600/$4000
Rate of return = 0.15 or 15%
NOTE: The amount of interest is the difference of interest earned at higher yield and interest earned at a lower yield.
Interest earned (higher yield) = $10,000 x 8%
Interest earned (higher yield) = $800
Interest earned (lower yield) = $14,000 x 10%
Interest earned (lower yield) = $1,400
Difference = $1,400-$800
Difference = $600
A stock has an expected return of 15.0 percent, its beta is 0.90, and the risk-free rate is 5.3 percent. What must the expected return on the market be
Answer:
16.07%
Explanation:
The computation of the expected return on the market is shown below
As we know that
Expected Return on stock = Risk free return + beta ( Expected Market Rate of Return - Risk free return )
15 % = 5.3% + 0.90 × (Expected Market Rate of Return - 5.3%)
15 % - 5.3% ÷ 0.90 = Expected Market Rate of Return - 5.3%
10.77% = Expected Market Rate of Return - 5.3 %
So, expected market rate of return is
= 10.77 + 5.3%
= 16.07%
We simply applied the above formula
Prepare journal entries to record each of the following four separate issuances of stock. A corporation issued 4,000 shares of $5 par value common stock for $35,000 cash. A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $40,000. The stock has a $1 per share stated value. A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $40,000. The stock has no stated value. A corporation issued 1,000 shares of $50 par value preferred stock for $60,000 cash.
Answer:
1. Dr Cash $35,000
Cr Common Stock $20,000
Cr Paid-in Capital in excess of par value Common Stock $15,000
2.Dr Organization expenses $40,000
Cr Common stock $2,000
Cr Paid-in cap in excess of stated value Common Stock $38,000
3.Dr Organization expenses $40,000
Cr Common stock, no-par value $40,000
4. Dr Cash 60,000
Cr Preferred stock 50,000
Cr Paid-in cap in excess of par value, preferred stock 10,000
Explanation:
1. Based on the information given we told that they issued 4,000 shares of $5 par value of common stock for the amount of $35,000, which means that the transaction will be recorded as:
Dr Cash $35,000
Cr Common Stock $20,000
(4,000 Shares *$ 5 Par Value)
Cr Paid-in Capital in excess of par value Common Stock $15,000
($35,000-$20,000)
2.Since they issued 2,000 shares of no-par common stock estimated to be worth the amount of $40,000. This means that the transaction will be recorded as:
Dr Organization expenses $40,000
Cr Common stock $2,000
(2,000 Shares*$1 stated value)
Cr Paid-in cap in excess of stated value Common Stock $38,000
(40,000-2,000)
3. Based on the information given we were told that they issued 2,000 shares of no-par common estimated to be worth the amount of $40,000 in which the stock has no stated value, this means that the transaction will be recorded as.
Dr Organization expenses $40,000
Cr Common stock, no-par value $40,000
4. Based on the information given we were told that they issued 1,000 shares of $50 par value preferred stock for the amount of $60,000 which means that the transaction will be recorded as:
Dr Cash 60,000
Cr Preferred stock 50,000
(1,000 Shares *$50 par value)
Cr Paid-in cap in excess of par value, preferred stock 10,000
(60,000-50,000)
Rust Pipe Co. was established in 1994. Four years later the company went public. At that time, Robert Rust, the original owner, decided to establish two classes of stock. The first represents Class A founders' stock and is entitled to eleven votes per share. The normally traded common stock, designated as Class B, is entitled to one vote per share. The normally traded common stock, designated as Class B, is entitled to one vote per share. In late 2010, Mr. Stone, an investor, was considering purchasing shares in Rust Pipe Co. While he knew the existence of founders’ shares were not often present in other companies, he decided to buy the shares anyway because of a new technology Rust Pipe had developed to improve the flow of liquids through pipes. Of the 1,800,000 total shares currently outstanding, the original founder's family owns 52,525 shares.
Required:
What is the percentage of the founder's family votes to Class B votes?
Answer:
Rust Pipe Co.
The Percentage of the Founder's Family Votes to Class B Votes:
= Founder's Family Votes / Class B Votes x 100 = 577,775/1,747,475 x 100 = 33.-6%
Explanation:
Total votes for the Founder's Family = 52,525 x 11 = 577,775
Class B votes = 1,747,475 (1,800,000 - 52,525) x 1 vote = 1,747,475
Founders of companies who want to go public but still retain control of the entity may decide to issue two or more classes of shares in order to allocate more voting rights to some classes than the others.
In this case, while the founder's family currently held 52,525 shares representing 29.2% of the total outstanding shares, in voting rights, the founder's family has 33.6% control.