Answer:
$927,946
Explanation:
journal entry to record bond issuance:
Dr Cash 891,857
Dr Discount on bonds payable 108,143
Cr Bonds payable 108,143
amortization of bond discount = ($891,857 x 12%) - $90,000 = $17,023
bond's carrying value at the end of year 1 = $908,880
amortization of bond discount = ($908,880 x 12%) - $90,000 = $19,066
bond's carrying value at the end of year 1 = $927,946
Firm C currently has 320,000 shares outstanding with current market value of $33 per share and generates an annual EBIT of $1,500,000. Firm C also has $1 million of debt outstanding. The current cost of equity is 9 percent and the current cost of debt is 6 percent. The firm is considering issuing another $3 million of debt and using the proceeds of the debt issue to repurchase shares (a pure capital structure change). It is estimated that the cost of the new debt will be 7 percent and that the cost of equity will rise to 10 percent with the additional debt. The marginal tax rate is 34 percent. a. What is the current market value of the firm
Answer: $11,560,000
Explanation:
Market value = Equity + Debt
Equity = 320,000 shares * 33
= $10,560,000
Debt = $1,000,000
Market value = 10,560,000 + 1,000,00
= $11,560,000
Mcewan Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on 48,000 direct labor-hours, total fixed manufacturing overhead cost of $307,200, and a variable manufacturing overhead rate of $2.80 per direct labor-hour. Job X941, which was for 50 units of a custom product, was recently completed. The job cost sheet for the job contained the following data:
Total direct labor-hours 300
Direct materials $600
Direct labor cost $6,400
Required:
Calculate the selling price for Job X941 if the company marks up its unit product costs by 20%.
Answer:
$234.24 per unit
Explanation:
The computation of the selling price for Job X941 is shown below:
But before that following calculations need to be determined
The Predetermined overhead rate is
= Variable overhead per DLH + Fixed overhead per DLH
= $2.80 + ($307,200 ÷ 48,000)
= $9.2 per DLH
Now the Total cost of Job X941 is
= Direct materials + Direct labor + Overhead applied
= $600 + $6,400 + (300 × $10)
= $9,760
And, finally
The Selling price per unit of Job X941 is
= Unit product costs × 120%
= ($9,760 ÷ 50) × 120%
= $234.24 per unit
According to the text, comparison shopping
A company using public relations sends information to media outlets such as
newspapers and radio stations. Who decides what information about the
company the outlets will publish?
A. The media outlets
B. The audience for the media outlets
C. The marketer
D. The publicity agency
N it
Answer:
A. the media outlets
Explanation:
took the test
A company using public relations sends information to the media outlets such as newspapers and radio stations because it is the media outlets who decide what information the company will publish. Hence, option A is appropriate.
What are Public Relations?Public relations or the PR sectors are very important functions for the company as well as the institution of their own. The main method of understanding is that the nature of public relations is not very well known, but can be understood to have taken place for a very long period.
The Public Relations in an organization strategically manages the relationship of that organization with that of the individuals and the public residing in their place. The main thing regarding public Relations is that everyone can be upheld for whatever they have been doing for a long period.
Public Relations is given the task to increase the consumer or the public who are more friendly with that the Company to increase. Hence, option A is correct.
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b. A Venezuelan-style economic collapse would be less likely in a mixed economy like the United States because
a. corruption is less likely when economic power is more diffused.
b. private industry has strong financial incentives to produce efficiently.
c. mixed economies like the United States usually have a more equal distribution of income.
d. inflation is always low in a mixed economy.
Answer:
a. corruption is less likely when economic power is more diffused. b. private industry has strong financial incentives to produce efficiently.Explanation:
Venezuela is a planned / command economy which means that the government directs production of goods and services in the country. This can lead to corruption as those in government would become quite powerful and engage in activities that would make them richer at the expense of the nation because they will have the required access to do so.
As the government directs most things, there is less private industry and competition. With a lack of competition, companies will not see the need to compete and would end up being inefficient.
These are what happened in Venezuela.
Since EBIT is not necessarily indicative of cash flow, many financial analysts adjust the formulation by: a. adding unpaid taxes to EBIT in the TIE formula b. adding unpaid taxes and interest to EBIT in the formula c. adding depreciation to EBIT in the TIE formula d. adding unpaid taxes, interest and depreciation to EBIT in the TIE formula
Answer: c. adding depreciation to EBIT in the TIE formula
Explanation:
The Times Interest Earned Ratio is used to measure the ease by which a company can pay its interest charges using its earnings before tax.
As depreciation is a non-cash expense, the amount apportioned to depreciation can be used when paying for interest so adding it back to the EBIT ensures that the cash resources of the company are included in the analysis of whether a company can pay back debt.
True or False: The largest companies performed the best over the past 12 months. Give evidence to support your answer.
The largest companies performed the best over the past twelve months, this given statement is false because over the last twelve months companies have faced huge losses due to pandemic.
What losses did businesses face during the Pandemic?Businesses have reduced employment, supply chain have got affected, lack of storage, less demand for products and services, human resource loss, productivity loss, and increased expenditures of the firms, these are some of the major losses faced by the companies during the pandemic.
Thus, the given statement is false.
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Robert became quite well-to-do as founder and president of Carlson Auto Paint and Supply, Inc. (CAPS). Now, he wants to start a permanent fund to support research directed toward improved sustainability of painted surfaces at his alma mater. He plans to contribute money now so that $200,000 per year can be withdrawn each year forever, beginning in year 7. If the fund earns interest at a rate of 8% per year, how much money must be donated now
Answer:
The answer is "1475,000".
Explanation:
Given:
[tex]n=6\ year \ \ \ \text{because it start with 7 beginning year} \\\\r=8\% = 0.08\\\\P= \$ 200,000[/tex]
calculating the 6-year future value:
[tex]= \frac{\$200,000}{0.08} \\\\= \$2,500,000[/tex]
Using formula:
[tex]\bold{PV=FV(1+r)^{-n}}[/tex]
[tex]=\$2,500,000(1+0.08)^{-7} \\\\ =\$2,500,000(0.59)\\\\=\$1475,000[/tex]
Sheffield Corp. assigned $1601000 of accounts receivable to Pharoah Company as security for a loan of $1344000. Pharoah charged a 2% commission on the amount of the loan; the interest rate on the note was 9%. During the first month, Sheffield collected $404000 on assigned accounts after deducting $1480 of discounts. Sheffield accepted returns worth $5400 and wrote off assigned accounts totaling $11910. The amount of cash Sheffield received from Pharoah at the time of the assignment was
Answer:
$1,317,120
Explanation:
Cash received by Sheffield Corporation at the time of assignment = Amount borrowed - Commission paid
= $1,344,000 - ($1,344,000 * 2%)
= $1,344,000 - $26,880
= $1,317,120
So, the amount of cash Sheffield received from Pharoah at the time of the assignment was $1,317,120
The borrower questions the amount of the Notary/ Signing fee appearing on the settlement statement, The Notary agent should
Answer: Recommend that such borrower should contact the representative of the lender before the signing of the documents.
Explanation:
In a scenario whereby a borrower is questioning the amount of the notary or the signing fee that appears on the settlement statement, the notary agent should simply tell the borrower that he or she should contact the representative of the lender before the signing of the documents.
If that is done, the borrower can then know the next thing to do after hearing from the lenders representative.
The borrower questions the amount of the Notary/ Signing fee appearing on the settlement statement, The Notary agent should Recommend that the borrower contact the lender's representative before signing the documents.
Recommend that the borrower contact the lender's representative before signing the documents. In the event that a borrower questions the amount of the notary and the signing fee that appears on the settlement declaration, the notary agent should simply inform the borrower that he or she should contact the lender's representative before signing the documents.
If this is done, the borrower will know what to do next after hearing from the lender's representative.
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Holly Company has the following information for December 1 to December 31. All direct materials are 100% complete.Work-in-Process Beginning balance December 345 units, 20% complete for conversion $25,185Completed 900 units and transferred to finished goods inventory $245,700Direct materials 135,000Direct labor 49,500Factory overhead:Property taxes 6,750Depreciation 39,000Utilities 23,800Indirect labor 6,000Ending balance December 31, 445 units, 40% completeRequired: Calculate equivalent units using the weighted-average and FIFO methods.
Answer:
Equivalent units using the weighted-average : Materials = 1,345 units, Conversion Costs = 1,078 units and FIFO methods : Materials = 1,000 units, Conversion Costs = 1,009 units.
Explanation:
Weighted-average method
This method focuses on completed units and units in ending work in process
Materials = 900 x 100 % + 445 x 100 % = 1,345 units
Conversion Costs = 900 x 100 % + 445 x 40 % = 1,078 units
FIFO method
This method focuses on work done during the production period only
Materials = 345 x 0 % + 555 x 100% + 445 x 100 % = 1,000 units
Conversion Costs = 345 x 80 % + 555 x 100% + 445 x 40% = 1,009 units
Conclusion
Equivalent units using the weighted-average : Materials = 1,345 units, Conversion Costs = 1,078 units and FIFO methods : Materials = 1,000 units, Conversion Costs = 1,009 units.
If a firm offers a service that is valuable, rare, and costly to imitate, but a substitute exists for the service, the firm will: a. achieve competitive parity. b. have a competitive disadvantage. c. have a temporary competitive advantage. d. gain a sustainable competitive advantage.
Answer:
c. have a temporary competitive advantage
Explanation:
In this case, it is correct to say that the company has a temporary competitive advantage, as there is a substitute for its valuable, rare and expensive service to imitate.
The company gained a competitive advantage in the market for being the only one to offer that service, which by the attributes confer barriers of entry for new competitors, but when there is a substitute for the service and that have the same characteristics, it is correct to say that the company it will lose its competitive advantage in a matter of time, because with more competitors in the market it is common for there to be some loss of market share, so in this case it is ideal for the company to adapt and seek new attributes to innovate, generate more value for consumers and so seek a differential that will guarantee you a higher position in the market.
National defense is a good that is non excludable and nonrival in consumption. Suppose that, instead of national defense being paid with tax dollars, national defense is paid by voluntary contributions from (potentially) all individuals within Latvia.
Alan, who is a Latvian citizen, must decide whether he wants to contribute to the national defense budget Further, suppose that there are a total of 10 citizens, including Alan. For the optimal amount of safety, each citizen should pay $10. Every $1 contributed (by anyone) to the national defense, leads to increased security, which each person values at $0.25. This means that every dollar spent on defense is worth $2.50 to Latvia as a whole.
Suppose that, instead of relying on voluntary contributions, the government simply levies a tax of $10 on each person to pay for national defense. How much better or worse off would Alan be if everyone (including himself) were taxed $10 instead of contributing voluntarily?
If Alan is worse off, be sure to put a negative sign in front of the number.
Answer:
Alan is better off by $15
Explanation:
the number of citizens in latvia = 10
if citizens were levied $10 each, total amount
= 10*10
=$100
each persons valuation = 100*0.25
= $25
$25 is also Alans valuation sice he is a part of this population.
since he contribited $10, his net gain would be
$25.00 - $10.00
= $15.00
Alan is better of by $15 in the tax system.
Leslie McCormack is in the spring quarter of her freshman year of college. She and her friends already are planning a trip to Europe after graduation in a little over three years. Leslie would like to contribute to a savings account over the next three years in order to accumulate enough money to take the trip. Assume an interest rate of 6%, compounded quarterly. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
How much will she accumulate in three years by depositing $580 at the end of each of the next 12 quarters, beginning three months from now?
Table or calculator function:
Payment:
n =
i =
Future Value:
Answer:
the future value is $ 7,563.90
Explanation:
The computation of the future value is shown below:
Given that
RATE = 0.06 ÷ 4 = 0.015
NPER = 12
PMT = $580
PV = $0
The formula is given below:
= -FV(RATE,NPER,PMT,PV)
After applying the above formula the future value is $ 7,563.90
Jenny, who is married and the mother of three, is 25 years old and expects to work until 70. She earns $45,000 per year. Jenny expects inflation to be 3% over her working life, and the appropriate risk-free discount rate is 5%. Her personal consumption is equal to 25% of her after-tax earnings, and her combined federal and state marginal tax bracket is 15%. What is the amount of life insurance necessary for Jenny using the Human Life Value method
Answer:
$855,903.20
Explanation:
Real discounting rate=> i= [i'-f]/[1+f]. Where i is the real interest rate. i' is the nominal interest rate which is given as 5% and f is the rate of inflation
i = (5%-3%)/1+3%)
i = 2/1.3
i = 1.94%
Her after tax earnings = 45,000*(1-0.15) = $38,250
Personal consumption = 25% of this, 38,250*0.75 = $28,688.
We are discounting her earnings back 45 years at 1.94%. The equation will be: 28,688 * {1-(1+0.01940)^-45} / {0.01940}
= 28,688 * {1 - 0.42120322099] / 0.01940
= 28,688 * 29.83488551597938
= 855903.1956824165
= $855,903.20
So, the amount of life insurance necessary for Jenny using the Human Life Value method is $855,903.20
Alice MeyerMeyer?,owner of Flower DirectFlower Direct?, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery? fee,
MeyerMeyer wants to set the delivery fee based on the distance driven to deliver the flowers. MeyerMeyer wants to separate the fixed and variable portions of her van operating costs so that she has a better idea how delivery distance affects these costs. She has the following data from the past 7? months:
February and May are always Flower DirectFlower Direct?'s biggest months because of? Valentine's Day and? Mother's Day, respectively. Use the? high-low method to determine
Flower DirectFlower Direct?'s cost equation for van operating costs. Use your results to predict van operating costs at a volume of 16 comma 00016,000 kilometres.
? / ? = variable cost (slope)
? - ? = fixed cost
Use the? high-low method to determine Flower DirectFlower Direct?'s operating cost equation. ?(Round the variable cost to the nearest cent and the fixed cost to the nearest whole? dollar.)
Y = $?x + $?
Use the operating cost equation you determined above to predict van operating costs at a volume of 16 comma 00016,000 kilometres
the operating costs at a volume of 16 comma 00016,000 kilometres is ?$ ?
Table :
Month Kilometres Driven Van Operating Costs
January 16,000 $5,490
February 17,500 5,700
March 14,900 4,910
April 16,200 5,340
May 16,900 5,820
June 15,100 5,410
July 14,500 4,920
Answer:
Flower Direct1. Operating cost equation = $0.26x + $1,150
2. Prediction of operating costs at a volume of 16,000 is:
= $5,310
Explanation:
a) Data and Calculations:
Month Kilometres Driven Van Operating Costs
January 16,000 $5,490
February 17,500 5,700
March 14,900 4,910
April 16,200 5,340
May 16,900 5,820
June 15,100 5,410
July 14,500 4,920
High-Low Method:
February 17,500 5,700
July 14,500 4,920
Difference 3,000 780
Variable cost per unit = $780/3,000 = $0.26
Total variable cost at February figures = $4,550 (17,500 * $0.26)
Total fixed costs at February figures = $1,150 ($5,700 - $4,550)
Operating cost equation = $0.26x + $1,150
Operating cost at a volume of 16,000 = $1,150 + $0.26 * 16,000
= $1,150 + 4,160
= $5,310
Page 577 17.2. How do banks create money? Consider this hypothetical balance sheet for YooHoo Bank, in the fictional country of Hellond. YooHoo Bank Assets (in thousands of U.S. dollars) Liabilities and owner's equity (in thousands of U.S. dollars) Government securities $1,700 Checking deposits $10,000 Required reserves $800 Owner's equity $1,500 Excess reserves $100 Loans $8,900 Total assets $11,500 Liabilities and net worth $11,500 Calculate YooHoo Bank’s required reserve ratio, as a percentage. Round to the nearest percent if necessary. Type an answer and press enter to submit%
Answer:
8%
Explanation:
Following is the require reserve ratio:
Required reserve ratio = Reserves/ Deposits
Required reserve ratio = $800/$10,000 * 100
Required reserve ratio = 0.08 * 100
Required reserve ratio = 8%
So, the required reserve ratio for YooHoo Bank’s is 8%.
The PLM Partnership balance sheet includes the following assets on December 31 of the current year: Basis FMV Cash $ 230,000 $ 230,000 Accounts receivable 0 75,000 Land 70,000 100,000 Total $ 300,000 $ 405,000 Pamela, a 1/3 partner, has an adjusted basis of $100,000 for her partnership interest. If Pamela sells her entire partnership interest to Emma for $135,000 cash, how much capital gain and ordinary income must Pamela recognize from the sale?
Answer: Capital gain recognized = $10000
Ordinary Income recognized = $25000
Explanation:
Since Pamela is a 1/3 partner, we should note that her share of the unrealized receivables will be 1/3 of the unrealized receivables and this will be:
= 1/3 × $75000
= $25000
Therefore, $25,000 of ordinary income will be recognized by Pamela and the capital gain will be:
= $35000 - $25000
= $10,000
Two important group outcomes or consequences of the interactive
process that unfolds between a leader, follower, and the situation
include:
Answer:
task performance and group maintenance.
Explanation:
Leadership can be defined as a process which typically involves motivating, encouraging and inspiring employees working under an individual to be innovative and create positive changes that will foster growth and enhance the success of a business firm or company in the future.
This ultimately implies that, beyond an individual possessing the traits or qualities of a leader, leadership in itself is a process that revolves around the activities or happenings between the leader and those who he or she is leading, which are the followers. Thus, leadership is simply a continuous process and it's transactional in nature because it occurs between a leader and the followers.
A leader can be defined as an individual who is saddled with the responsibility of controlling, managing and maintaining a group of people under him or her.
Some types of power expressed by leaders are referent power, coercive power, etc.
Hence, two important group outcomes or consequences of the interactive process that unfolds between a leader, follower, and the situation include task performance and group maintenance.
Leaders are saddled with the responsibility of ensuring that the follower performs his or her duties or tasks as stated in the contract and to foster cohesion among the various team members.
We have the following information. We have two companies we are considering. They are Anthony and Ben and their betas are 1 and 1.4, respectively. The T bond rate is .02 and the rate of return in the market is .12. The debt rates of the two firms are .30 and .60 in order we have mentioned them. Finally, their tax rates are .25 and .40, respectively. Compute their cost of equity. If they each pay $4 and their growth rate is .01, what are their prices
Answer:
Goof
Explanation:
Kyle, a single taxpayer, worked as a freelance software engineer for the first three months of 2020. During that time, he earned $76,000 of self-employment income. On April 1, 2020, Kyle took a job as a full-time software engineer with one of his former clients, Hoogle Inc. From April through the end of the year, Kyle earned $196,000 in salary. What amount of FICA taxes (self-employment and employment related) does Kyle owe for the year
Answer:
$18,943.40
Explanation:
FICA taxes when Kyle was self employed = $76,000 x 15.3% = $11,628
Social security taxes while employed = ($137,700 - $76,000) x 6.2% = $3,825.40
Medicare taxes while employed = [($200,000 - $76,000) x 1.45%] + [($196,000 + $76,000 - $200,000) x 2.35%] = $1,798 + $1,692 = $3,490
Total FICA taxes = $18,943.40
1) In the TOPCASH model, Analytics considerations include:
a. Is the analytics installation reliable?
b. The potential value of including specific goal tracking
c. All of the above
Answer:
b. The potential value of including specific goal tracking.
Explanation:
Top cash model is the one which prioritizes the cash value as compared to the product features. The potential value of a product is identified and then the price for the product is set. This creates value for money for customers.
Dermody Snow Removal's cost formula for its vehicle operating cost is $3,030 per month plus $333 per snow-day. For the month of December, the company planned for activity of 15 snow-days, but the actual level of activity was 17 snow-days. The actual vehicle operating cost for the month was $8,300. The spending variance for vehicle operating cost in December would be closest to:
Answer:
391 F
Explanation:
Calculation to determine what The spending variance for vehicle operating cost in December would be closest to
Using this formula
Spending variance for vehicle operating cost = Flexible budget-Actual
Let plug in the formula
Spending variance for vehicle operating cost= (333*17+3,030)-8300
Spending variance for vehicle operating cost=(5,661+3,030)-8,300
Spending variance for vehicle operating cost=8,691-8,300
Spending variance for vehicle operating cost=391 F
Therefore The spending variance for vehicle operating cost in December would be closest to
391 F
On January 1, 2018, Surreal Manufacturing issued 600 bonds, each with a face value of $1,000, a stated interest rate of 3 percent paid annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market interest rate was 4 percent, so the total proceeds from the bond issue were $583,352. Surreal uses the effective-interest bond amortization method and adjusts for any rounding errors when recording interest in the final year.
Required:
1. Prepare a bond amortization schedule 2-5.
2. Prepare the journal entries to record the bond issue, the interest payments on December 31, 2018 and 2019, the interest and face value payment on December 31, 2020 and the bond retirement.
Answer:
Period Bonds Interest Cash Increase in Bonds payable
Payable Expenses Paid Bonds payable at the end
2018 583352 23334.08 18000 5334.08 588686.1
2019 588686.1 23547.44 18000 5547.44 594233.5
2020 594233.5 23766.48 18000 5766.48 600000
Journal entries
Jan 01 2018
Cash account Dr $583352
Discount on Bonds Payable Dr $16648
Bonds payable Cr $600000
Dec 31 2018
Interest expense Dr $23334.08
Cash account Cr $18000
Discount on bonds Payable Cr $5334.08
Dec 31 2019
Interest expense Dr $23547.44
Cash account Cr $18000
Discount on bonds Payable Cr $5547.44
Dec 31 2020
Interest expense Dr 23766.48
Cash account Cr $18000
Discount on bonds Payable Cr $5766.48
Dec 31 2020
Bonds Payable Dr $600000
Cash account Cr $600000
01.01.2020 (Redemption at 101)
Bonds Payable Dr $600000
Loss on redemption of bonds Dr $11766.48
Cash account (600000*101%) Cr $606000
Discount on bonds payable Cr $5766.48
1. Surrel Manufacturing's bond amortization schedule is as follows:
Bond Amortization Schedule
Date Cash Payment Interest Expense Amortization Carrying Value
Jan. 1, 2018 $583,352
Dec. 31, 2018 $18,000 $23,334 $5,334 $588,686
Dec. 31, 2019 $18,000 $23,547 $5,547 $594,233
Dec. 31, 2020 $18,000 $23,767 $5,767 $600,000
2. Journal Entries to record the bond issuance, interest payments are as follows:
January 1, 2018
Debit Cash $583,352
Debit Bonds Discounts $16,648
Credit Bonds Payable $600,000
To record the issuance of the bonds at a discount.December 31, 2018
Debit Interest Expense $23,334
Credit Bonds Discounts $5,334
Credit Cash $18,000
To record the payment of interest and discount amortization.December 31, 2019
Debit Interest Expense $23,547
Credit Bonds Discounts $5,547
Credit Cash $18,000
To record the payment of interest and discount amortization.December 31, 2020
Debit Interest Expense $23,767
Credit Bonds Discounts $5,767
Credit Cash $18,000
To record the payment of interest and discount amortization.December 31, 2020
Debit Bonds Payable $600,000
Credit Cash $600,000
To record the retirement of the bonds payable.Data and Calculations:
Face value of bonds issued = $600,000 (600 x $1,000)
Bonds proceeds = $583,352
Bonds discounts = $16,648
Coupon interest rate = 3%
Market interest rate = 4%
Maturity period = 3 years
Issuance date = January 1, 2018
Maturity date = December 31, 2020
December 31, 2018:
Cash payment = $18,000 ($600,000 x 3%)
Interest Expense = $23,334 ($583,352 x 4%)
Amortization of discounts = $5,334 ($23,334 - $18,000)
Carrying value of bond = $588,686 ($583,353 + $5,334)
December 31, 2019:
Cash payment = $18,000 ($600,000 x 3%)
Interest Expense = $23,547 ($588,686 x 4%)
Amortization of discounts = $5,547 ($23,547 - $18,000)
Carrying value of bond = $594,233 ($588,686 + $5,547)
December 31, 2020:
Cash payment = $18,000 ($600,000 x 3%)
Interest Expense = $23,767 ($594,233 x 4%)
Amortization of discounts = $5,767 ($23,767 - $18,000)
Carrying value of bond = $600,000 ($594,233 + $5,767)
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The following information is available for the Lock-Tite Company, which produces special-order security products and uses a job-order costing system.April 30 May 31Inventories Raw materials $ 43,000 $ 43,000 Work in process 9,300 20,900 Finished goods 53,000 33,100Activities and information for May Raw materials purchases (paid with cash) 188,000 Factory payroll (paid with cash) 250,000 Factory overhead Indirect materials 12,000 Indirect labor 57,500 Other overhead costs 92,500 Sales (received in cash) 1,600,000 Predetermined overhead rate based on direct labor cost 55%Compute the following amounts for the month of May using T-accounts:1. Cost of direct materials used.2. Cost of direct labor used.3. Cost of goods manufactured4. Cost of goods sold*5. Gross profit.6. Overapplied or underapplied overhead.
Answer:
1. $176,000
2. $192,500
Explanation:
1. Cost of direct materials used = $ 43,000 + $ 188,000 - $ 43,000 = $ 188,000 - $ 12,000 = $176,000
2. Cost of direct labor used = $ 250,000 - $57,500 = $192,500
Hyu Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the labor-hours for the upcoming year at 52,400 labor-hours. The estimated variable manufacturing overhead was $2.82 per labor-hour and the estimated total fixed manufacturing overhead was $1,196,840. The actual labor-hours for the year turned out to be 53,000 labor-hours. The predetermined overhead rate for the recently completed year was closest to:
Answer:
The predetermined overhead rate for the recently completed year would be $25.66
Explanation:
The predetermined overhead rate is computed as;
= Total estimated manufacturing overhead / estimated direct labor
Where;
Total estimated manufacturing overhead = Estimated total fixed manufacturing overhead + estimated variable manufacturing overhead rate × estimated labor hours
= $1,196,840 + $2.82 × 52,400
= $1,196,840 + $147,768
= $1,344,608
Therefore,
Predetermined rate = $1,344,608 / 52,400 hours
Predetermined rate = $25.66
Johnson and Gomez, Inc. is a small firm involved in the production and sale of electronic business products. The company is well known for its attention to quality and innovation.
During the past 15 months, a new product has been under development that allows users improved access to e-mail and video images. Johnson and Gomez code named the product the Wireless Wizard and has been quietly designing two models: Basic and Enhanced. Development costs have amounted to $183,000 and $264,000, respectively. The total market demand for each model is expected to be 41,000 units, and management anticipates being able to obtain the following market shares: Basic, 20 percent; Enhanced, 15 percent. Forecasted data follow.
Basic Enhanced
Projected Selling Price $350.00 $450.00
Per-unit productions costs:
Direct material 43.00 69.00
Direct labor 23.00 31.00
Variable overhead 37.00 49.00
Marketing and advertising (fixed but avoidable) 196,000 305,000
Sales commissions* 15% 10%
*Computed on the basis of sales dollars.
Since the start of development work on the Wireless Wizard, advances in technology have altered the market somewhat, and management now believes that the company can introduce only one of the two models. Consultants confirmed this fact not too long ago, with Johnson and Gomez paying $34,600 for an in-depth market study. Sales salaries (excluding commission) will be $86,000 no matter which product is sold. The marketing and advertising costs indicated for each product are incurred only if that product is sold. Other fixed overhead is expected to be the same, regardless of which product is introduced.
Required:
1. Compute the unit contribution margin for both models. (Round your answers to 2 decimal places.)
2. Which of the following should be ignored in making the product-introduction decision? (You may select more than one answer.)
a. Development costs
b. Market study
c. Marketing and Advertising
d. Fixed manufacturing overhead
e. Variable manufacturing overhead
f. Sales salaries
3-a. Prepare a financial analysis and determine which of the two models should be introduced.
3-b. The company would be advised to select the Enhanced model or Basic model?
4. What other factors should Johnson and Gomez, Inc. consider before a final decision is made? (You may select more than one answer.)
a. Possibility of merger of the firm with a bigger player
b. Growth potential of the Basic and Enhanced models
c. Competitive products in the marketplace
d. Aesthetic differences between the two products
e. Break-even points
f. Data validity
g. Previous years' sales trends
h. Production feasibility
i. Effects, if any, on existing product sales
Answer:
1) contribution margin for each product
basic: $ 194.50
enhanced $ 256.00
2)
we could ignore the sunk cost of development and market study
as they were already incurred.
3) we should introduce the basic model as their operating income is greater than enhanced.
3-b)
b. Growth potential of the Basic and Enhanced models
e. Break-even points
f. Data validity
i. Effects, if any, on existing product sales
Explanation:
1)
Basic:
materials 43
labor 23
variable 37
sales commissions 15% 52.5
total variable cost 155.5
CM 194.5
CMR 0.555714286
Enhanced:
Sales Price 450
Materials 69
Labor 31
Variable MO 49
sales com. 10% 45
total variable cost 194
CM 256
CMR 0.568888889
3)
Market 41000 41000
Share 0 0.15
Sales Volume 8,200 6,150
[tex]\left[\begin{array}{cccc}&Basic&Enhanced&Differential\\Sales Volume&8200&6150&\\CM_{unit}&194.5&256&49792\\ CM_{Total}&1594900&1574400&20500\\S.A&-282000&-391000&109000\\Operating&1398900&1269400&129500\\\end{array}\right][/tex]
U.S. Steel has established an alcoholic rehabilitation program for the city of Pittsburgh. The company provides the facilities and the personnel to operate the program. U.S. Steel is practicing
Answer:
social responsibility
Explanation:
For the city of Pittsburgh, U.S. Steel has launched an alcoholic rehabilitation programme. The company offers the necessary facilities and employees to run the programme. U.S. Steel is practicing social responsibility.
Social responsibility is an ethical paradigm in which an individual is expected to collaborate and engage with other individuals and organisations for the benefit of those around them which will inherit the world that the individual leaves behind.
Every individual is responsible for maintaining a balance among the economy as well as the ecosystem in which they live. There may be a trade-off between material economic development and the welfare of society and the environment. Social responsibility applies not only to businesses, but to anybody whose actions have an impact on the environment.
Learn more about social, here:
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abuat Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 135 Units in beginning inventory 0 Units produced 2,700 Units sold 2,210 Units in ending inventory 490 Variable costs per unit: Direct materials $ 37 Direct labor $ 27 Variable manufacturing overhead $ 7 Variable selling and administrative expense $ 8 Fixed costs: Fixed manufacturing overhead $59,400 Fixed selling and administrative expense $6,630 The total gross margin for the month under the absorption costing approach is:
Answer:
$92,820
Explanation:
Calculation to determine what The total gross margin for the month under the absorption costing approach is:
First step is to calculate the Absorption costing unit product cost
Direct materials $ 37
Direct labor $ 27
Variable manufacturing overhead $ 7
Fixed manufacturing overhead cost $22 ($59,400/2,700)
Absorption costing unit product cost $93
Now let calculate the The total gross margin for
Sales $298,350
($ 135 per unit × 2,210 units)
Less Cost of goods sold $205,530
($93 per unit × 2,210 units)
Gross margin $92,820
($298,350-$205,530)
Therefore The total gross margin for the month under the absorption costing approach is:$92,820
Sandy Shores Corporation operates two stores: J and K. The following information relates to J: Sales revenue$1,300,000 Variable operating expenses 600,000 Fixed expenses: Traceable to J and controllable by J 275,000 Traceable to J and controllable by others 80,000 J's segment contribution margin is: Multiple Choice $700,000. $745,000. $425,000. $620,000. $345,000.
Answer:
Sandy Shores Corporation
J's Segment Contribution Margin is:
= $700,000.
Explanation:
a) Data and Calculations:
Sales revenue $1,300,000
Variable operating expenses 600,000
Contribution $700,000
Fixed expenses:
Traceable to J and controllable by J 275,000
Traceable to J and controllable by others 80,000
Total fixed expenses 355,000
Net operating income $345,000
b) The contribution margin is the difference between total sales revenue and the variable costs. The idea of segment contribution margin is that it covers the fixed expenses, whether controllable by the segment or not.