Answer:
D. DR Dividends receivable 2,400 CR Dividend income 2,400.
Explanation:
The journal entry is shown below:
Dividend receivable Dr $2,400
To Dividend income $2,400
(Being the receipt of the baker dividend is recorded)
For recording this we debited the dividend receivable as it increased the balance of dividend and credited the dividend income as it also increased the income
Therefore option D is correct
Q4) An investment offers a total return of 12.8 percent over the coming year. Janice thinks the total real return on this investment will be only 7 percent. What does Janice believe the approximate inflation rate will be over the next year
Answer:
inflation rate= 5.8%
Explanation:
Giving the following information:
An investment offers a total return of 12.8 percent over the coming year. Janice thinks the total real return on this investment will be only 7 percent.
The real return on investment includes the effect on inflation.
Real rate of return= total return - inflation rate
0.07=0.128 - inflation rate
inflation rate= 0.058= 5.8%
A customer is considering to Fire Sprinkler a building to lower his insurances premium: Two choices were presented to him : (Hint: Alternates with unequal economic lives may be compared by assuming replacement in kind at the end of the shorter life, thus maintaining the same level of uniform payment) i=10%
Question:
A customer is considering to Fire Sprinkler a building to lower his insurances premium: Two choices were presented to him:
(Hint: Alternates with unequal economic lives may be compared by assuming replacement in kind at the end of the shorter life, thus maintaining the same level of uniform payment) i=10%
Partial System: Initial Cost 8,000.00, Insurance Cost $1,000.00/Year Life N=15 year
Full System $ 15,000, Insurance Cost $250/Year Life N=20 year
A) Full System $8,100
B) Full System $1,694.50
C) Partial System $8,540.00
D) Partial System $1,770.40
Answer:
The correct answer is B)
Explanation:
To chose the partial system means to incur a total sprinkler cost of $16,000 at the end of 30 years. With an added Insurance cost of $30,000. Total cost of protecting assets comes to $46,000.
The full system, however, entails a total sprinkler cost of $15,000 and an added insurance cost of $5,000. Total cost of protecting assets here comes to $20,000 over a 20 year period.
Prorated valued show B to be the least cost appliable.
Cheers!
Given that annual deposit rates for Dollars and Euros are 6% and 4% respectively for the next 5 years. If the current spot rate of the Euro is $1.4015, obtain the implied rate for the Euro five years from now if International Fisher Equation holds exactly.
a. $1.5415
b. $1.2742
c. $1.4284
d. $1.3750
e. None of the above.
Answer:
The correct answer is (a) $1.5415
Explanation:
Solution
Given that:
Annual deposit rate for dollar =6%
Annual deposit rate for Euro = 4%
n = 5 years
The present spot rate of Euro =$1,4015
The next step is to obtain the implied rate for the Euro.
Thus
Implied rate = $1,4015[(1.06)/(1.04)]^5
= $1,4015 * 1.019230769^5
=$1,4015* 1.099923877
=$1.5415
Hence the implied rate for Euro 5 years from now is $1.5415
Garden Corporation uses cost-plus pricing with a 30% mark-up. The company is currently selling 12,000 units at $21.45 per unit. Each unit has a variable cost of $11.50. In addition, the company incurs $60,000 in fixed costs annually. If demand falls to 10,000 units, how much will the company have to charge per unit in order to earn the same annual profit
Answer:
$23.44
Explanation:
The computation of profit charge per unit for earning same annual profit is shown below:
Given that
No of Units Sold = 12,000
Sale Price of each Unit = $21.45
Variable Cost = 11.50
So,
Contribution Per Unit is
= Selling price per unit - variable cost per unit
= $21.45 - $11.50
= $9.95
So,
Total Contribution is
= 12,000 units × $9.95
= $119,400
And,
Fixed Costs for the year is $60,000
So, the Profit for the year is
= Contribution margin - fixed cost
= $119,400 - $60,000
= $59,400
Now If the demand for the product falls to 10,000 Unit
So we assume Number of units expected to be sold is10,000
Since Variable cost Per Unit is 11.50
So, the Total Variable Cost is
= 10,000 units × $11.50
= $115,000
And,
Fixed Cost per annum $60,000
Expected Profit $59,400
So, the total amount is
= $115,000 + $60,000 + $59,400
= $234,400
So, the price per unit charged is
= $234,400 ÷ 10,000 units
= $23.44
Mica, a minor, signs a contract to pay National Health Club a monthly fee for twenty-four months to use its facilities. Six months later, after reaching the age of majority, Mica continues to use the club. This act is Group of answer choices
Answer:
Ratification
Explanation:
Since in the question, it is given that the mica who is a minor signed a contract regarding 24 months monthly fee for the national health club
Now after six months she or he is reaching her majority age and she or he continues to take the facilities of the club so this act we called as ratification as this a valid contract between the mica and the health club because he or she reaches the age of majority
Lower of Cost or Market Black Corporation uses the LIFO cost flow assumption. Each unit of its inventory has a net realizable value of $300, a normal profit margin of $35, and a current replacement cost of $250. Determine the amount per unit that should be used as the market value to apply the lower of cost or market rule to determine Black’s ending inventory.
Answer:
$265
Explanation:
The computation of Net realizable value-normal profit margin by using the lower of cost or market rule is shown below:-
Amount per unit = Net realizable value or Ceiling - Normal profit margin
= $300 - $35
= $265
Therefore for computing the amount per unit we simply applied the above formula i.e by deducting the normal profit margin from the net realizable value so that the amount per unit could come
Six years ago, James Corporation sold a $100 million bond issue to expand its facilities. Each debenture has a $1,000 par value, an original maturity of 20 years (there are now 14 years left to maturity), and an annual coupon rate of 11.5% with semiannual payments. If you require a 14% return, what price would you pay today for a James bond?
Answer:
Price of Bonds=$848.286
Explanation:
The value of the bond is the present value (PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV) discounted at the yield rate
Value of Bond = PV of interest + PV of RV
The value of bond for James Corporation can be worked out as follows:
Step 1
PV of interest payments
PV = A × (1+r)^(-n)/r
A- semiannual interest payment, n-number of periods, r- semi annul yield
A-semi- annul interest payment:
=11.5%× 1,000× 1/2 = 75
r-semi-Annual yield = 14%/2 = 7%
n-Maturity period =1 4 × 2= 28
PV of interest payment:
=57.5 × (1- (1+0.07)^(-28)/0.07)
= 697.88
Step 2
PV of Redemption Value
= 1,000 × (1.07)^(-28) = 150.40
Step 3
Price of bond
=697.88 + 150.40
=$848.286
A delivery company is considering adding another vehicle to its delivery fleet; each vehicle is rented for $100 per day. Assume that the additional vehicle would be capable of delivering 1,500 packages per day and that each package that is delivered brings in ten cents in revenue. Also assume that adding the delivery vehicle would not affect any other costs.
Required:
a. What is the MRP? What is the MRC? Should the firm add this delivery vehicle?
b. Now suppose that the cost of renting a vehicle doubles to S200 per day. What are the MRP and MRC? Should the firm add a delivery vehicle under these circumstances?
c. Next suppose that the cost of renting a vehicle falls back down to SIOO per day but, due to extremely congested freeways, an additional vehicle would only be able to deliver 750 packages per day. What are the MRP and MRC in this situation? Would adding a vehicle under these circumstances increase the firm's profits?
Answer:
a. What is the MRP? What is the MRC? Should the firm add this delivery vehicle?
marginal revenue product = marginal product of labor x marginal revenue per output unit
MRP = 1,500 packages x $0.10 per package = $150
marginal resource cost (MRC) = $100 (the cost of renting the delivery truck)
The company should add the delivery truck because MRP is higher than MRC.
b. Now suppose that the cost of renting a vehicle doubles to $200 per day. What are the MRP and MRC in this situation?
MRP = $150 (doesn't change from question a)
MRC = $200 (the cost of renting the delivery truck)
The company should not add the delivery truck because MRP is less than MRC.
c. Next suppose that the cost of renting a vehicle falls back down to $100 per day, but, due to extremely congested freeways, an additional vehicle would only be able to deliver 750 packages per day. What are the MRP and MRC in this situation? Would adding a vehicle under these circumstances increase the firm's profits?
MRP = 750 packages x $0.10 per package = $75
MRC = $100
The company should not add the delivery truck because MRP is less than MRC.
ix months ago, you purchased 2,900 shares of ABC stock for $32.58 a share. You have received dividend payments equal to $.70 a share. Today, you sold all of your shares for $35.26 a share. What is your total dollar return on this i
Answer:
$9802
Explanation:
The total return is the sum of the dividend value and the increase in share value:
return per share = $0.70 +($35.26 -32.58) = $3.38
Then the return on 2900 shares is . . .
2900 × $3.38 = $9802
A business is considering a cash outlay of $880,000 for the purchase of land, which it intends to lease for $200,000 per year. If alternative investments are available that yield a 15 percent return, the opportunity cost of the purchase of the land is
Answer:
132000$
Explanation:
880000 *0,15=132000
A business is considering a cash outlay of $880,000 for the purchase of land, which it intends to lease for $200,000 per year. If alternative investments are available that yield a 15 percent return, the opportunity cost of the purchase of the land is $132,000.
What is an opportunity cost rate?When economists talk about a resource's "opportunity cost," they mean the worth of the resource's next-highest-valued alternative usage.
Given
Cost of Land = $880,000
Return = 15%
Lease = $200000
Required to the opportunity cost =?
opportunity cost = cost of land x return rate
opportunity cost = 880,000 x 15 = $132,000
Opportunity cost is crucial for businesses because it helps them decide how to effectively use their limited resources and cash. A corporation can pick which choice gives the highest or most productive return by calculating the opportunity cost of a specific option or options.
Thus, the opportunity cost of the purchase of the land is $132,000.
Learn more about the opportunity cost here:
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Prepare the journal entry to record Autumn Company’s issuance of 78,000 shares of no-par value common stock assuming the shares:
a. Sell for $32 cash per share.
b. Are exchanged for land valued at $2,496,000.
Answer:
A Journal entry was recorded for Autumn Company which is given below.
Explanation:
Solution
(A) Journal Entry:
No Account and Explanation Debit Credit
a Cash (78000*32) 2496000
Common Stock 2496000
(To record issued common stock)
(B) Journal Entry:
No Account and Explanation Debit Credit
b Land 2496000
Common Stock 2496000
(To record issued common stock)
In its first year of operations, Roma Company reports the following. Earned revenues of $47,000 ($39,000 cash received from customers). Incurred expenses of $26,500 ($20,950 cash paid toward them). Prepaid $7,250 cash for costs that will not be expensed until next year. Compute the company’s first-year net income under both the cash basis and the accrual basis of accounting.
Answer:
Net Income
Cash basis $10,800
Accrual basis $20,500
Explanation:
Computation of Roma company’s first-year net income under both the cash basis and the accrual basis of accounting will be:
Cash basis Accrual basis
Revenue $39,000 $47,000
Expenses $28,200 $26,500
Net Income $10,800 $20,500
Cash paid $20,950
Add Prepaid cash $7,250
=$28,200
Therefore first-year net income cash basis will e $10,800 and accrual basis will be $20,500
Which of these employees is facing an ethical dilemma?
A. The manager at Almas Inc. has to make a vendor choice between his underqualified cousin and a highly-experienced, trusted supplier.
B. Lars has to decide whether the annual profits of the company should be distributed to the employees as a salary hike or in the form of non-monetary benefits.
C. Javier has felt unsure about a car he purchased and has been reading only good reviews about the car to console himself.
D. After seeing a whole new collection of phones at a store, Max is regretting the purchase of an outdated phone he made last month.
E. Salena is responsible for deciding whether she should upgrade the manufacturing unit with new machines and reduce costs or retain the impoverished manual labor force.
Answer:
The employee facing ethical dilemmas is SELENA because Salena is responsible for deciding whether she should upgrade the manufacturing unit with new machines and reduce costs or retain the impoverished manual labor force
Explanation:
Ethical dilemma can be seen as the way in which a person or an individual is finding it hard to make a decision between two alternatives due to the difficulty in deciding on the one to accept or reject ,Which is why ETHICAL DILEMMAS may lead to arising of complexity out of the situational conflict in which choosing one alternative may result in transgressing another.
Although no matter the difficulty on deciding on which one to go for a choice has to be made between the two equally undesirable alternatives.
Therefore a person or an individual often faces ethical dilemmas on their day to day activities , because knowing how to do the right thing as well as knowing the difference between the one that is right and wrong can be difficult and often times subjective which is what Salena was facing by finding it hard to decide on the two alternatives which is either she should upgrade the manufacturing unit with new machines and reduce costs or retain the impoverished manual labor force.
Chester Company plans to introduce a new product. A market research specialist claims that 20,000 units can be sold at a $100 selling price. Assuming the company desires a profit margin of 22% of sales, what is the target cost per unit
Answer:
$78
Explanation:
Profit margin is the ratio of profit to sales while the profit is the difference between the sales and the cost.
As such, profit margin is the ratio of the difference between the sales and the cost to the sales.
Given that margin is 22%, it means that
22% = profit/(20,000 * $100)
Profit = $440,000
Total cost = $2,000,000 - $440,000
= $1,560,000
Target cost per unit = $1,560,000/20,000
= $78
Joe has just moved to a small town with only one golf course, the Northlands Golf Club. His inverse demand function is pequals 160minus2 q, where q is the number of rounds of golf that he plays per year. The manager of the Northlands Club negotiates separately with each person who joins the club and can therefore charge individual prices. This manager has a good idea of what Joe's demand curve is and offers Joe a special deal, where Joe pays an annual membership fee and can play as many rounds as he wants at $20 , which is the marginal cost his round imposes on the Club. What membership fee would maximize profit for the Club? The manager could have charged Joe a single price per round. How much extra profit does the Club earn by using two-part pricing? The profit-maximizing membership fee (F) is $nothing . (Enter your response as a whole number.)
Answer:
Club membership fee of $60 would maximize profit.
If the club charges tow part pricing the maximum revenue can be $3500.
Explanation:
Joe has entered into a monopoly because he is owner of single golf course in the Northlands.
Demand function for Joe's golf course is:
P = 160 - 2q
P = $20 , q = 50
160 - 2 (50) = 60
Consumer surplus = 0.5 * equilibrium quantity
Consumer Surplus for Joe is ; 0.5 * 50 (160 - 20) = $3500
If MR = MC then demand function will become :
160 - 4q
If q = 25 then
160 - 4 * 25 = 60
Merit Consulting Company regularly performs services for its clients on credit but does not offer discount terms. Because the company was concerned about the credit-worthiness of a new client, that client paid $2,500 in cash at the time that the consulting services were performed. This transaction is recorded into Merit's cash receipts journal by entering __________
A. 2,500 in the Cash Dr. column
B. 2,500 in the Accounts Receivable Cr. column and 2,500 in the Other Accounts Cr. column
C. 2,500 in the Cash Dr. column and 2,500 in the Accounts Receivable Cr. column
D. 2,500 in the Cash Dr. column and 2,500 in the Other Accounts Cr. column
Answer:
Merit Consulting Company
When a client paid $2,500 in cash at the time that the consulting services were performed, the transaction is recorded into Merit's Cash Receipts Journal by entering.
A. 2,500 in the Cash Dr. column.
Explanation:
There is usually a single column for subsidiary or special journals like the Cash Receipts Journal. The journal simply accumulates the total per the period before posting this total to the controlling account.
A special journal records transactions of a particular type. Examples are Purchases, Sales, Returns Outwards and Inwards, Cash Receipts, and Cash Payment Journals.
When your father was born 46 years ago, his grandparents deposited $450 in an account for him. Today, that account is worth $25,000. What was the annual rate of return on this account
Answer:
9.1%
Explanation:
To calculate the annual rate of return on this account you can use the following formula:
r = ( FV / PV )^1/n - 1, where
r= rate of return
FV= future value= 25,000
PV= present value= 450
n= number of periods of time= 46
r=(25,000/450)^(1/46)-1
r=55.56^0.0217-1
r=1.091-1
r=0.091 → 9.1%
According to this, the annual rate of return on this account was 9.1%.
The following information for the past year for the Blaine Corporation has been provided:Fixed costs:Manufacturing$ 125, 000$125,000Marketing24,00024,000Administrative20,00020,000Variable costs: Manufacturing $ 110,000$110,000 Marketing 30,00030,000 Administrative 34,00034,000 During the year, the company produced and sold 60,00060,000 units of product at a selling price of $ 12.40$12.40 per unit. There was no beginning inventory of the product at the beginning of the year.What is the contribution margin ratio for Blaine Corporation (round to 1 decimal)?A. 70.470.4 %B. 53.953.9 %C. 22.722.7 %D. 76.676.6 %
Answer:
D. 76.6 %
Explanation:
Contribution Margin Ratio = Contribution / Sales × 100
First Calculate the Contribution
Contribution = Sales - Variable Costs
= (60,000 units × $ 12.40) - ($110,000+$30,000+$34,000)
= $744,000 - $174,000
= $570,000
Then Calculate Contribution Margin Ratio
Contribution Margin Ratio = $570,000 / $744,000 × 100
= 76.61290
= 76.6 % ( 1 decimal)
Grand Canal Incorporated issued 10-year bonds six years ago with an annual coupon rate of 9.625% APR. The bonds have a face value of $1,000.00 each and were issued at par value. Today, investors want a 5.99% return for bonds of similar risk and maturity. What is the current market price of Grand Canal bonds
Answer:
$1,125.98
Explanation:
market price of the bonds = present value of face value + present value of coupons
PV of face value = $1,000 / (1 + 0.0599)⁴ = $792.39
PV of coupons = coupon x {1 - [1/(1 + r)ⁿ]} / r = 96.25 x {1 - [1/(1 + 0.0599)⁴]} / 0.0599 = 96.25 x 3.34659 = $333.59
market value = $792.39 + $333.59 = $1,125.98
Summit Systems has an equity cost of capital of 11.0 %, will pay a dividend of $1.50 in one year, and its dividends had been expected to grow by 6.0 % per year. You read in the paper that Summit Systems has revised its growth prospects and now expects its dividends to grow at a rate of 3.0 % per year forever.
A. What is the new value of a share of Summit Systems stock based on this information?
B. If you tried to sell your Summit Systems stock after reading this news, what price would you be likely to get? Why?
Answer:
A) The new value of a share of Summit Systems stock based on this information is $17.65
B) $17.65. This is due to the fact that If the information about Summit Systems has reached the capital market, the revised growth rate has already been applied.
Explanation:
Given:
Equity cost of capital = 11.0 %
Dividend in one year = $1.50
Dividends growth per year = 6.0 %
A) If expected growth rate is 6.0%:
Value of share = Expected dividend ÷ (Cost of capital - Growth rate)
Value of share = $1.50 ÷ (0.1150 - 0.060)
Value of share = $27.27
If expected growth rate is 3.0%:
New_Value of share = Expected dividend ÷ (Cost of capital - Growth rate)
New_Value of share = $1.50 ÷ (0.1150 - 0.030)
New_Value of share = $17.65
Which of the following statements is most correct? Many large firms operate different divisions in different industries, and this makes it hard to develop a meaningful set of industry benchmarks for these types of firms. Financial ratios should be interpreted with caution because there exist seasonal and accounting differences that can reduce their comparability. Financial ratios should be interpreted with caution because it may be difficult to say with certainty what is a "good" value is neither high nor low. Ratio analysis facilitates comparisons by standardizing numbers. All of the statements above are correct.
Answer:
All of the statements above are correct.
Explanation:
All of the following statements listed below are correct and true about business management;
1. Many large firms operate different divisions in different industries, and this makes it hard to develop a meaningful set of industry benchmarks for these types of firms.
Hence, industry average or benchmarks are more applicable to a small and medium enterprise than it's to large enterprises. The industry benchmark is a process that is focused on comparing an industry with other successful industries.
2. Financial ratios should be interpreted with caution because there exist seasonal and accounting differences that can reduce their comparability.
Hence, it is important to interpret financial ratios with care and reasonable logic as factors such as inflation and depreciation.
3. Financial ratios should be interpreted with caution because it may be difficult to say with certainty what is a "good" value is neither high nor low.
4. Ratio analysis facilitates comparisons by standardizing numbers.
Ratio analysis can be defined as the analysis and comparison of various line items in the financial statements of a business such as the income statement or balance sheet, in order to gain insight into its operational efficiency, profitability and liquidity. Types of ratio analysis are liquidity, efficiency, solvency, market value, and profitability ratio.
(Appendix 11.1) Depreciation for Financial Statements and Income Tax Purposes Dinkle Company purchased equipment for $50,000. The equipment has an estimated residual value of $5,000 and an expected useful life of 10 years. Dinkle uses straight-line depreciation for its financial statements. Required: What is the difference between the company's income before taxes reported on its financial statements and the taxable income reported on its tax return in each of the first 2 years of the asset's life if the asset was purchased on January 2, 2016, and its MACRS life is 5 years?
Answer and Explanation:
The computation is shown below:
For year 1
According to the Company's Books Depreciation
= (Orginal Cost - Salvage value) ÷ useful Life
= ($50,000 - $5,000) ÷ 10 years
= $4,500
According to the Income Tax Depreciation
= Cost × MACRS Rate for Year 1
= $50,000 × 20%
= $10,000
So, the difference in year 1 is
= $10,000 - $4,500
= $5,500
For year 2
According to the Company's Books Depreciation
= (Orginal Cost - Salvage value) ÷ useful Life
= ($50,000 - $5,000) ÷ 10 years
= $4,500
According to the Income Tax Depreciation
= Cost × MACRS Rate for Year 2
= $50,000 × 32%
= $16,000
So, the difference in year 1 is
= $16,000 - $4,500
= $11,500
Moss Co. issued $780,000 of five-year, 11% bonds, with interest payable semiannually, at a market (effective) interest rate of 10%. Determine the present value of the bonds payable, using the present value tables in Exhibit 5 and Exhibit 7. Round to the nearest dollar.
Answer:
$810,113.2678
Explanation:
The computation of the present value of the bond payable is shown below:
= Issued amount × discount factor of 5% at 10 years + Issued amount × half of the bond interest × PVIFA factor of 5% at 10 years
= $780,000 × 0.613913254 + $780,000 × 5.5% × 7.7217
= $478,852.3378 + $331,260.93
= $810,113.2678
Refer to the discount factor table and PVIFA factor table
Tactical decisions define Group of answer choices the day-to-day activities of the organization. the goals and plans of the organization. the domain of operations managers, who are close to the customer. the steps taken to achieve the goals and objectives.
Answer:
E. the steps taken to achieve the goals and objectives.
Explanation:
Tactical decisions are the decisions made by the mid-level management in an organization, in a bid to implement the strategic plans of the director-general of the organization. These decisions are made and implemented within a short period of time. Some tactical decisions include;
1. Structuring of workforce
2. Purchase of items and resources
3. Marketing strategies
4. Allocation of jobs to employees.
When these decisions are made by the middle-level management, they are under obligation to answer to the directors of the organization as to how these decisions were implemented.
The due diligence process of analyzing and evaluating an existing business ________. Group of answer choices may be just as time consuming as the development of a comprehensive business plan for a start-up helps to determine if the company will generate sufficient cash to pay for itself and leave you with a suitable rate of return on your investment helps to determine what the company's potential for success is All of these
Answer:
All of these.
Explanation:
The due diligence process of analyzing and evaluating an existing business, is the process responsible for revealing the positive and negative aspects of a business.
This process aims to satisfy the buyer and seller by examining the main details of a transaction and ensuring its legality and evaluating most of the facts of the deal.
The agreement must then satisfy the due diligence aspects, so that the two parties involved can price and finalize the transaction effectively.
Therefore, all answer options are correct.
please discuss the similarities and differences between transformational and charismatic leadership. Choose an individual that qualifies as a charismatic or transformational leader and explain why. Also, in your analysis, what are some of the unique characteristics of this individuals followers that might identify him/her as charismatic or transformational
Answer:
The transformational leaders are bureaucratic and charismatic are people oriented in nature.
Explanation:
The charismatic leaders are also called as the transformational leaders and shares various things. Charismatic leaders make their status better and transformational leaders focus on the transformation of the organization's vision. The main difference is the focus and the audience. The charismatic leaders are committed and have engaging personalities like martin Luther king as his speeches were often more tangible than other leaders and used to have a huge influence on the people he met. The charismatic leaders are more emotionally attached to their audience. They work towards an emphasis on the greater good. More people-oriented.
Production estimates for July are as follows:
Estimated inventory (units), July 1 725
Desired inventory (units), July 31 1, 200
Expected sales volume (units), July 7,500
For each unit produced four hours of direct labor is required. The labor rate per hour is $15. The number of direct labor hours required for July production is:_________
Answer:
31,900
Explanation:
For the computation of the number of direct labor hours required for July production first we need to find out the production in units which is shown below:-
Production in units = Expected sales in Units + Ending Inventory - Beginning inventory
= 7,500 + 1,200 - 725
= 7,975
Total direct labor hours required = Production in units × Hours per unit
= 7,975 × 4
= 31,900
We simply applied the above formulas
Ski West, Inc., operates a downhill ski area near Lake Tahoe, California. An all-day adult lift ticket can be purchased for $85. Adulit customers also can purchase a season pass that entitles the pass holder to ski any day during the season, which typically runs from December 1 through April 30. Ski West expects its season pass holders to use their passes equally throughout the season. The company's fiscal year ends on December 31. On November 6, 2018, Jake Lawson purchased a season pass for $450.1. What will be included in the Ski West 2018 Income statement and balance sheet related to the sale of the season pass to Jake Lawson? Complete this question by entering your answers in the tabs below. 2. When should Ski West recognize revenue from the sale of its season passes?3. Prepare the appropriate ournal enteries that Sky West would record on November 6 and December 31.
Answer:
Ski West, Inc.
1. What Ski West 2018 should include in its Income statement and balance sheet related to the sale of the season pass to Jake Lawson?
a) Income Statement:
Season Passes Revenue = $90 ($450/5). This represents December season pass by Jake Lawson.
b) Balance Sheet:
Unearned Season Passes Revenue $360 as a current liability.
2. When Ski West should recognize revenue from the sale of its season passes:
Revenue should be recognized on December 31.
3. Journal Entries on November 6 and December 31:
November 6:
Debit Cash Account $450
Credit Unearned Season Passes Revenue $450
To record the receipt from Jake Lawson.
If this sale was on account, then the Accounts Receivable is debited instead.
December 31:
Debit Unearned Season Passes Revenue $90
Credit Season Passes Revenue $90
To record the earned revenue from Jake Lawson's.
Explanation:
Unearned revenue is not recognized in the income statement. It is taken to the Balance Sheet as a current liability. It is not recognized because it does not belong to the current period, as specified by the accrual concept and matching principle.
A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 5 percent. This firm is earning $5.50 on every $50 invested by its founders.
a. What is its percentage rate of return? 11 percent.
b. Is the firm earning an economic profit? Yes If so, how large? 6 percent.
c. Will this industry see entry or exit? Entry
d. What will be the rate of return earned by firms in this industry once the industry reaches long-run equilibrium?
Answer: The answers are given below
Explanation:
a. What is its percentage rate of return?
From the question, we are told that the firm is earning $5.50 on every $50 invested by its founders. The percentage of return will now be:
= $5.50/$50 × 100%
= 0.11 × 100%
= 11%
b. Is the firm earning an economic profit? If so, how large?
The economic profit will be the difference that exists between the percentage of return which is 11% and the normal rate of profit which is 5%. This will be:
= 11% - 5%
= 6%
The firm is earning economic profit of 6%.
c. Will this industry see entry or exit?
There will be entry into the industry. This is because the percentage of return which is 11% is greater than the normal rate of profit which is 5%.
d. What will be the rate of return earned by firms in this industry once the industry reaches long-run equilibrium?
The rate of return earned by firms in this industry once the industry reaches long-run equilibrium will be 5% which is the normal rate of profit in the economy.
Firm A's demand for a product is 15 units per month. Its supplier charges an ordering cost of $5 per order and $10 per unit with a 10% discount for orders of 15 units or higher. Firm A incurs a 25% annual holding cost. What is Firm A's annual ordering costs if it orders at a quantity of 28 units?
Answer:
Annual ordering cost=$32.142
Explanation:
Annual ordering cost = Annual demand/order quantity × ordering cost per order
Annual demand = 15 × 12 = 180 units
Kindly note that there are 12 months in year.
Annual Ordering cost = 180/28 × $5= $32.142
Annual ordering cost=$32.142