Answer:
Yes, accept the special order.
Explanation:
Before Special Order After Special Order
120 units 160
Sales $8,400 $10,000
Less Variable Costs ($2,400) ($3,200)
Contribution $6,000 $6,800
Less Fixed Costs ($1,400) ($1,400)
Net Income $4,600 $5,400
Conclusion
As a result of special order, we have an additional profit of $800. Therefore, accept the special order.
A USP should NOT be unique and memorable.
False
True
I don't know
It depends
Answer:
false
Explanation:
Enterprise Solutions Inc. licenses its productivity software to Blackmon Company for $100,000, payable at contract inception. Enterprise agrees to provide semiannual software upgrades over the 5-year length of the contract to enable Blackmon to benefit from any technological advancement. Enterprise concludes that the software license is not distinct from the promised upgrades. Required: What journal entries are necessary for Enterprise to account for this transaction
Answer:
Date Account Titles & Explanation Debit Credit
Jan 1 Cash $100,000
Unearned Revenue $100,000
(To record the contract consideration in advance)
Dec 31 Unearned Revenue $20,000
Sales Revenue $20,000
($100,000/5 years)
(To record the annual expired transaction revenue)
Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: Sales are budgeted at $210,000 for November, $190,000 for December, and $180,000 for January. Collections are expected to be 50% in the month of sale and 50% in the month following the sale. The cost of goods sold is 55% of sales. The company would like maintain ending merchandise inventories equal to 45% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase. Other monthly expenses to be paid in cash are $22,700. Monthly depreciation is $13,700. Ignore taxes. Balance Sheet October 31 Assets Cash $ 22,500 Accounts receivable 72,500 Merchandise inventory 51,975 Property, plant and equipment, net of $574,500 accumulated depreciation 1,096,500 Total assets $ 1,243,475 Liabilities and Stockholders' Equity Accounts payable $ 256,500 Common stock 822,500 Retained earnings 164,475 Total liabilities and stockholders' equity $ 1,243,475 The cost of December merchandise purchases would be:
Answer:
Bramble Corporation
The cost of December merchandise purchases would be:
= $102,025.
Explanation:
a) Data and Calculations:
Cost of goods sold = 55% of sales
Ending Inventory = 45% of the next month's cost of goods sold.
November December January
Budgeted sales $210,000 $190,000 $180,000
Cost of goods sold $115,500 $104,500 $99,000
Ending inventory $47,025 $44,550
Cost of goods available $149,050
Less Beginning inventory 47,025
Purchases for December $102,025
Cost of goods sold:
November = 55% of $210,000 = $115,500
December = 55% of $190,000 = $104,500
January = 55% of $180,000 = $99,000
Ending Inventory:
October = $51,975
November = 45% of $104,500 = $47,025
December = 45% of $99,000 = $44,550
Beginning Inventory:
November = $51,975
December = $47,025
January = $44,550
Check:
Beginning Inventory $47,025
Purchases for December 102,025
Goods available for sale $149,050
Less Ending Inventory 44,550
Cost of goods sold $104,500
Continent Construction Company is a building contractor specializing in small commercial buildings. The company has the opportunity to accept one of two jobs; it cannot accept both because they must be performed at the same time and Continent does not have the necessary labor force for both jobs. Indeed, it will be necessary to hire a new supervisor if either job is accepted. Furthermore, additional insurance will be required if either job is accepted. The revenue and costs associated with each job follow.
Cost Category Job A Job B
Contract price $800,000 $750,000
Unit—level materials 250,000 220,000
Unit—level labor 260,000 310,000
Unit—level overhead 40,000 30,000
Supervisor's salary 70,000 70,000
Rental equipment costs 26,000 29,000
Depreciation on tools (zero market value) 19,900 19,900
Allocated portion of companywide facility—sustaining costs 10,400 8,600
Insurance cost for job 18,200 18,200
Required
a. Assume that Continent has decided to accept one of the two jobs. Fill in the information relevant to selecting one job versus the other. Recommend which job to accept.
b. Assume that Job A is no longer available. Continent's choice is to accept or reject Job B alone. Fill in the information relevant to this decision. Recommend whether to accept or reject Job B.
Answer:
1. Job A is considered for recommendation
2. Accept B
Explanation:
1. We calculate contribution for A and B
For job A
$(800000-250000-260000-40000-26000)
= $224000
For job B
$(750000-220000-310000-30000-29000)
= $161000
We compare the costs of both jobs. A has more contribution compared to B so we consider A.
2. A is no longer available
We add supervisors salary as well as insurance as additional costs
$(750000-220000-310000-30000-29000-70000-18200)
= 72800
The contribution from b is positive so the decision is to accept it.
Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $265,000, variable expenses of $141,600, and traceable fixed expenses of $66,800. The Alpha Division has sales of $575,000, variable expenses of $321,800, and traceable fixed expenses of $126,300. The total amount of common fixed expenses not traceable to the individual divisions is $126,200. What is the company's net operating income
Answer:
$57,300
Explanation:
Calculation to determine the company's net operating income
Sales $840,000
($265,000+$575,000)
Less Variable expenses $463,400
($141,600+$321,800)
Contribution margin $376,600
($840,000-$463,400)
Less Traceable fixed expenses $193,100
($66,800+$126,300)
Divisional segment margin $183,500
Less Common fixed expenses $126,200
Net Operating Income $57,300
Therefore the company's net operating income will be $57,300
You are the manager of a Midwestern tractor factory planning to produce one of two new products, a zero-turn riding lawn mower or a compact tractor. You learned in college that setting the right price for your new product will assist you in maximizing profits while maintaining a good relationship with your customers. You expect the demand for the mower to be 100,000 units and the demand for the tractor to be 2,000 units. The annual cost of carrying these products in inventory is $50 for a mower and $100 for a tractor.
1. What are the total revenues for the mowers for each order?
a. $12,110,000
b. $11,055,000
c. $12,400,000
d. $13,065,000
2. What are the total revenues for the tractors for each order?
a. $2,410,000
b. $2,529,000
c. $2,493,000
d. $2,730,000
Question Completion:
You estimate that the average variable cost (AVC) will be $100 for the mower and $1,000 for the tractor. The total fixed cost (TFC) will be $50,000 for the mower and $100,000 for the tractor. What is the total cost of the mowers for each order?
$17,000,000
$2,100,000
$10,050,000
$1,900,000
What is the total cost of the tractors for each order?
$600,000
$5,200,000
$2,100,000
$4,100,00
2. What is the average total cost of the mowers?
$190.28
$210.75
$100.50
$140.10
What is the average total cost of the tractors?
$1,800
$1,200
$2,000
$1,050
3. You consult with your colleagues, and you all agree that effective pricing can assist you in avoiding the serious financial problems that may occur if prices are too high or too low. If the price is high, you may price yourselves out of the market. If the price is low, you may be underpaid for your work. Consequently, you decide to employ a 30 percent markup. What is the new price of the mower?
$195.50
$230.20
$95.15
$130.65
What is the new price of the tractor?
$1,365
$2,050
$2,300
$1,000
4. What are the profits for the mower under this scenario?
$30.15
$50.20
$60.10
$25.50
What are the profits for the tractor?
$255
$520
$610
$315
5. What are the total revenues for the mowers for each order?
$13,065,000
$11,055,000
$12,400,000
$12,110,000
What are the total revenues for the tractors for each order?
$2,410,000
$2,529,000
$2,493,000
$2,730,000
Answer:
Mower Tractor
1. The total cost $10,050,000 $2,100,000
2. Average cost $100.50 $1,050
3. Selling price $130.65 $1,365
4. Profit $30.15 $315
5. Total Revenue $13,065,000 $2,730,000
Explanation:
a) Data and Calculations:
Mower Tractor
Average variable cost (AVC) $100 $1,000
The total fixed cost (TFC) $50,000 $100,000
Annual Demand 100,000 2,000
Annual carrying cost/unit $50 $100
Total costs: Mower Tractor
Variable cost $10,000,000 $2,000,000
(100,000*$100) (2,000*$1,000)
Fixed cost 50,000 100,000
Total cost $10,050,000 $2,100,000
Average cost $100.50 $1,050
Markup (30%)
Selling price $130.65 $1,365
Profit $30.15 $315
Total revenue $130.65 * 100,000 $1,365 * 2,000
= $13,065,000 $2,730,000
g Financial statements are linked within and across periods in that a) The income statement and the balance sheet are linked via retained earnings b) The statement of cash flows is linked to the income statement as net income is a component of operating cash flows c) The statement of cash flows is linked to the balance sheet as the change in the balance sheet cash account reflects the net cash inflows and outflows for the period d) All of the above e) None of the above
Answer:
Financial statements are linked within and across periods in that
d) All of the above.
Explanation:
The linkage of all the financial statements can be traced to how they share interconnected information about the financial position and performance of an entity. The three more prominent financial statements include the income statement for the period, the statement of cash flows, and the balance sheet. While the income statement shows the financial performance by determining the profitability, the statement of cash flows concentrates on the inflow and outflow of cash, and the balance sheet shows the financial position, disclosing the assets, liabilities, and equity balances.
Hurren Corp. makes a product with the following standard costs per unit of output: Standard Quantity Standard Price Direct materials 4.4 grams $8 per gram Direct labor 0.7 hours $19 per hour The company reported the following results concerning this product in June: Master budget output 6,600 units Actual output 6,500 units Purchases of raw materials 31,800 grams Raw materials used in production 28,380 grams Actual price of raw materials purchased $8.10 per gram Actual labor hours 4,500 hours Actual labor rate $19.90 per hour The labor rate variance for June is:
Answer:
the labor rate variance is $4,050 unfavorable
Explanation:
The computation of the labor rate variance is shown below:
= Actual hours × (standard rate - actual rate)
= 4,500 hours × ($19 per hour - $19.90 per hour)
= $4,050 unfavorable
Hence, the labor rate variance is $4,050 unfavorable
Netty is trying to decide what her niche product should be for her business, Handknit by Netty. She is considering two products, socks and sweaters. A pair of socks take on average 5 hours to knit. Sweaters take on average 15 hours to knit. The socks sell for $25 each and have a variable cost of $5. The sweaters sell for $95 and have a variable cost of $35. Netty has 1,000 hours available to knit. Which product should she produce and why
Solution :
The contribution margin per hour :
Particulars Socks Sweaters
Selling price 25 95
Variable cost 5 35
Contribution margin 20 60
Hours per unit 5 15
CM per hour 4 4
From here, we see that the contribution margin per unit of the resources are same for the two products. So Netty can produce either one of the product, i.e. either sweater or socks.
Either one because the two productsAnswer:
Explanation:
A company is forecasted to generate free cash flows of $25 million next year and $29 million the year after. After that, cash flows are projected to grow at a stable rate in perpetuity. The company's cost of capital is 12.0%. The company has $34 million in debt, $19 million of cash, and 23 million shares outstanding. Using an exit multiple for the company's free cash flows (EV/FCFF) of 17, what's your estimate of the company's stock price
Answer:
$18.41
Explanation:
Equity value = FCF next year / (1 + cost of capital) + FCF in year 2 / (1 + cost of capital)^2 + 1 / (1 + cost of capital)^2 * [ (FCF in year 2 * exit multiple)]
= $25 million/1.12 + $29 million/1.12^2 + 1 / 1.12^2*[($29 million*17)]
= $25 million/1.12 + $29 million/1.12^2 + $493 million/1.12^2
= $25 million / 1.12 + $522 million / 1.12^2
= $438.4566327 million
The stock price = ($438.4566327 million - Debt + Cash) / Number of shares outstanding
= ($438.4566327 million - $34 million + $19 million) / 23 million shares
= $423.4566327 million / 23 million shares
= 18.4111579435
= $18.41
Cordova, Inc., reported the following receivables in its December 31, 2020, year-end balance sheet: Current assets: Accounts receivable, net of $48,000 in allowance for uncollectible accounts $ 380,000 Interest receivable 21,100 Notes receivable 380,000 Additional information: The notes receivable account consists of two notes, a $120,000 note and a $260,000 note. The $120,000 note is dated October 31, 2020, with principal and interest payable on October 31, 2021. The $260,000 note is dated March 31, 2020, with principal and 10% interest payable on March 31, 2021. During 2021, sales revenue totaled $2,080,000, $1,940,000 cash was collected from customers, and $37,000 in accounts receivable were written off. All sales are made on a credit basis. Bad debt expense is recorded at year-end by adjusting the allowance account to an amount equal to 10% of year-end gross accounts receivable.
Required:
1. In addition to sales revenue, what revenue and expense amounts related to receivables will appear in Cordova’s 2021 income statement?
2. Calculate the receivables turnover ratio for 2021. (Round your answer to 2 decimal places.)?
Answer:
1) interest on $110,000 note = $21,000 - ($260,000 x 10% x 9/12) = $1,500
interest per month = $1,500 / 2 = $750
interest revenue = ($260,000 x 10% x 3/12) + ($750 x 10) = $14,000
ending gross accounts receivable = $380,000 + $2,080,000 - $1,940,000 = $520,000
bad debt expense = $520,000 x 10% = $52,000
interest revenue = $14,000
bad debt expense = $52,000
2) receivables turnover = sales / average accounts receivables = $2,080,000 / [($380,000 + $468,000)/2] = $2,080,000 / $424,000 = 4.91
Explanation:
makes a product with the following standards for direct labor and variable overhead: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct labor 0.20 hours $ 26.00 per hour $ 5.20 Variable overhead 0.20 hours $ 6.20 per hour $ 1.24 In November the company's budgeted production was 6500 units, but the actual production was 6300 units. The company used 1550 direct labor-hours to produce this output. The actual variable overhead cost was $8990. The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for November is:
Answer:
See
Explanation:
Given that;
Direct labor hours used to produce this output = 1,550
Actual variable overhead cost = $8,990
Variable overhead per hour = $6.2
The variable overhead rate variance for July is;
= Direct labor hours used to produce this out put × (Actual variable overhead rate per hour - Variable overhead per hour)
= 1,550 × ($8,990/1,550 - $6.2)
= 1,550 × ($5.8 - $6.2)
= 1,550 × (-$0.4)
= $620 favorable
Rusty has been experiencing serious financial problems. His annual salary was $100,000, but a creditor garnished his salary for $20,000; so the employer paid the creditor (rather than Rusty) the $20,000. To prevent creditors from attaching his investments, Rusty gave his investments to his 21-year-old daughter, Rebecca. Rebecca received $5,000 in dividends and interest from the investments during the year. Rusty transferred some cash to a Swiss bank account that paid him $6,000 interest during the year. Rusty did not withdraw the interest from the Swiss bank account. Rusty also hid some of his assets in his wholly owned corporation that received $150,000 rent income but had $160,000 in related expenses, including a $20,000 salary paid to Rusty. Rusty reasons that his gross income should be computed as follows:
Salary received $80,000
Loss from rental property ($150,000-$160,000) (10,000)
Gross income $70,000
Compute rustys correct gross income for the year, and explain any differences between your calculation and rusty
Answer:
Rusty annual salary was $100,000.
Rusty will not be taxed on the interest and dividend amount of $5,000 as Rebecca is the owner of the assets that is producing this income.
Secondly, Rusty will also need to report the $6,000 interest income. This has to be reported even though it has not been withdrawn.
Thirdly, he received $20,000 as salary from his wholly owned corporation.
Salary from employer $100,000
Salary from wholly owned corporation $20,000
Dividends and interest from the investments $0
Interest from Swiss bank account $6,000
Rental loss incurred $0
Gross income $126,000
Nerrod Company sells its products at $720 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs:
Activity Cost Driver and Rate
Sales calls $510 per visit
Order processing $155 per order
Deliveries $50 per order + $0.50 per mile
Sales returns $65 per return and $3.00 restocking per unit returned
Nerrod Company has gathered the following data pertaining to activities it performed for two of its customers:
XBT NINTO
Number of orders 21 2
Number of parts per order 610 2,110
Sales returns:
Number of returns 4 10
Number of units returned 40 50
Number of sales calls 8 15
Miles per delivery 10 20
Shipping terms FOB, Factory FOB, Destination
What is Nerrod's total customer batch-level cost applicable to Ninto?
Answer:
Total allocated costs= $11,470
Explanation:
To allocate costs to product NINTO, we need to use the following formula:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Sales call= 510*15= 7,650
Order processing= 155*2= 310
Deliveries= 50*2 + 0.50*20= 110
Sales returns= 65*50 + 3*50= 3,400
Total allocated costs= $11,470
The Acme Company produces and sells widgets. They currently charge $48 per widget, and they sell 452 widgets per week. If the price is increased to $54.58 per widget, then 62 fewer widgets per week can be sold. Assuming that demand is linear, find the value for elasticity of demand at the current price. Round as necessary.
Answer:
1
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
percentage change in quantity demanded = (452 - 62 / 452) - 1 = -0.137
percentage change in price = (54.58 / 48) - 1 = 0.137
=-0.137 / 0.137 = -1
-1 in absolute terms = 1
LBC Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 4.2 hours of direct labor at the rate of $21.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June. The company plans to sell 27,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 490 and 70 units, respectively. Budgeted direct labor costs for June would be: Multiple Choice $559,500 $2,344,356 $2,363,106 $2,381,856
Answer:
$2,344,356
Explanation:
Given the above information,
June production :
Planned sales + ending inventory - beginning inventory
= (27,000 + 70 - 490) units
= 26,580 units
Total direct labor hour required for production
= 26,580 units × 4.2
= 111,636 labor hour
Cost of production
= Total direct labor hour × rate per hour
= 111,636 × $21
= $2,344,356
Mid-South Auto Leasing leases vehicles to consumers. The attraction to customers is that the company can offer competitive prices due to volume buying and requires an interest rate implicit in the lease that is one percent below alternate methods of financing. On September 30, 2021, the company leased a delivery truck to a local florist, Anything Grows.
The lease agreement specified quarterly payments of $3,000 beginning September 30, 2019, the inception of the lease, and each quarter (December 31, March 31, and June 30) through June 30, 2021 (three-year lease term). The florist had the option to purchase the truck on September 29, 2011, for $6,000 when it was expected to have a residual value of $10,000.
The estimated useful life of the truck is four years. Mid-South Auto Leasing's quarterly interest rate for determining payments was 3% (approximately 12% annually). Mid-South paid $25,000 for the truck. Both companies use straight-line depreciation. Anything Grows' incremental interest rate is 12%.
Required:
a. Calculate the amount of dealer's profit that Mid-South would recognize in this sales-type lease. (Be careful to note that, although payments occur on the last calendar day of each quarter, since the first payment was at the inception of the lease, payments represent an annuity due.)
b. Prepare the appropriate entries for Anything Grows and Mid-South on September 30, 2019.
c. Prepare an amortization schedule(s) describing the pattern of interest expense for Anything Grows and interest revenue for Mid-South Auto Leasing over the lease term.
d. Prepare the appropriate entries for Anything Grows and Mid-South Auto Leasing on December 31, 2019.
e. Prepare the appropriate entries for Anything Grows and Mid-South on September 29, 2019, assuming the bargain purchase option was exercised on that date.
Answer:
A) sales revenue 26,569.40
B)
cash 3,000 debit
lease receivables 23,569.40 debit
sales revenues 26,569.40 credit
COGS 25,000 debit
Truck Inventory 25,000 credit
--entries for the lessor--
truck 26,569.40 debit
cash 3,000 credit
lease payable 23,569.40 credit
C)
[tex]\left[\begin{array}{cccccc}$Time&$Beg&$Cuota&$Interes&$Amort&$Ending\\0&26569.4&3000&&3000&23569.4\\1&23569.4&3000&707.08&2292.92&21276.48\\2&21276.48&3000&638.29&2361.71&18914.77\\3&18914.77&3000&567.44&2432.56&16482.21\\4&16482.21&3000&494.47&2505.53&13976.68\\5&13976.68&3000&419.3&2580.7&11395.98\\6&11395.98&3000&341.88&2658.12&8737.86\\7&8737.86&9000&262.14&8737.86&0\end{array}\right][/tex]
For the lessor, the interest will be revenue.
For the lessee, the interest will be an expense
D)
cash 3,000 debit
lease receivable 2,292.92 credit
interest revenue 707.08 credit
--entry for the lessor---
lease payable 2,292.92 debit
interest expense 707.08 debit
cash 3,000 credit
--entry for the lessee--
E)
cash 9,000 debit
lease receivable 8,737.86 credit
interest revenue 262.14 credit
--entry for the lessor---
lease payable 8,737.86 debit
interest expense 262.14 debit
cash 9,000 credit
--entry for the lessee--
Explanation:
1) The sales revenue will be the present value of the future payment.
Present Value of Annuity
[tex]C \times \displaystyle \frac{1-(1+r)^{-time} }{rate}(1+rate) = PV\\[/tex]
C 3,000
time 8
rate 0.03
[tex]3000 \times \displaystyle \frac{1-(1+0.03)^{-8} }{0.03}(1+0.03) = PV\\[/tex]
PV $21,690.8489
PRESENT VALUE OF LUMP SUM
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 6,000.00
time 7.00
rate 0.03
[tex]\frac{6000}{(1 + 0.03)^{7} } = PV[/tex]
PV 4,878.55
Sales revenue: 21,690.85 + 4,878.55 = 26,569.40
journal entries explanation:
we debit cash for the lessor as it is receiving it.
we credit cash for the lessee as it is paying with cash.
the lease receivables will be credited when the lessor collects from the lessee as it is a decreasing asset
Lease payables will be debited as payments are made because, the obligation to pay decreases.
For the borrower the interest is revenue. For the lessee the interest represents expense
The following materials standards have been established for a particular product: Standard quantity per unit of output 6.0 meters Standard price $ 19.00 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased 10,200 meters Actual cost of materials purchased $ 201,500 Actual materials used in production 9600 meters Actual output 1580 units What is the materials price variance for the month
Answer:
See below
Explanation:
First, we have to compute the actual price
Actual price = Actual cost of material purchased × Actual material purchased
= $201,500 ÷ 10,200 metres
= $19.75
Therefore,
Material price variance
= Actual quantity × (Actual price - Standard price)
= 10,200 × ($19.75 - $19)
= 10,200 × $0.75
= $7,650 favourable
Why does operations managers need to get involved into planning?
Answer:
See below
Explanation:
The reason is that he oversees the entire operations of an organization, hence must know what the planning entails at the beginning.
Again, if the operating manager is involved in planning at the early stage, he would be able to contribute meaningfully towards the success of the plan
A company received 500 applications for a specific position.30 were given an assignment test. Only 15 were invited to an interview. The yield ratio of passing the interview is
a.
75%
b.
20%
c.
50%
d.
25%
A project has four activities: A, B, C, and D. The budgeted (planned) cost of each activity is $22K, $14K, $12K, and $28K, respectively. The planned percentages complete for the current date are 90%, 80%, 70%, and 20% respectively. The actual percentages complete for the current date are 100%, 90%, 75%, and 10% respectively. The actual cost of the work performed to date is $40K. What is the schedule performance index for the project
Answer:
1.03
Explanation:
Activity Amount spent Planned % Planned value
A 22,000 90% $19,800
B 14,000 80% $11,200
C 12,000 70% $8400
D 28,000 20% $5600
Total planned value $45,000
Activity Amount spent Actual percentage Earned value
A 22,000 100% $22,000
B 14,000 90% $12,600
C 12,000 75% $9000
D 28,000 10% $2,800
Total Earned value $46,400
Schedule performance Index = Total Earned value/Total planned Value
Schedule performance Index = 46,400/45,000
Schedule performance Index = 1.03
The market for apples is in equilibrium at a price of $0.50 per pound. If the government imposes a price ceiling in the market at $0.40 per pound: a. the price ceiling will not affect the market price or output. b. quantity supplied will increase. c. there will be a shortage of the good. d. quantity demanded will decrease.
Answer:
c. there will be a shortage of the good.
Explanation:
The market for apples is in equilibrium at a price of $0.50 per pound. If the government imposes a price ceiling in the market at a price of $0.40 per pound: c. there will be a shortage of the good.
The correct answer is - c. there will be a shortage of the good.
Reason -
At the equilibrium price, the demand = supply
If the price is increased by the equilibrium price then, there are more customers(i.e. quantity demanded is increase ) and there is shortage of goods (i.e quantity supplied will decrease)
So, the correct option is - c. there will be a shortage of the good.
Letterheads _____.
should have a design that is different from the business card
contain the same information as a business card
convey information about an organization
and business cards should be of similar design
are rarely used by small businesses
(Multiple Answers)
I think it's "should have a design that is different from the business card"
Answer:
Convey information about an organization.
Contain the same information as a business card.
And business cards should be of similar design.
Explanation:
Those are the correct answers on Edge. Hope this helps!
On February 1, 2020, Bonita Industries factored receivables with a carrying amount of $645000 to Sandhill Co.. Sandhill Co. assesses a finance charge of 3% of the receivables and retains 5% of the receivables. Relative to this transaction, you are to determine the amount of loss on sale to be reported in the income statement of Bonita Industries for February. Assume that Bonita factors the receivables on a without recourse basis. The loss to be reported is
Answer:
$19,350
Explanation:
The finance charge is 3%. If the 5% retention is a non-refundable security, then the total loss would be 8% (3%+5%).
The nature of the retention is not given, so it is considered that it is refundable, then the total loss would be $19,350 ($645,000*3%).
Thus, the total loss to be reported is $19,350
Assume that the marginal propensity to consume is 0.75, net exports decline by $10 billion, and government spending increases by $20 billion. Given that there is no crowding out, the equilibrium gross domestic product can increase by a maximum of:_______
Answer: $40 billion
Explanation:
The change will be determined by the value of the Multiplier.
The Multiplier shows how much a change in government spending and exports will impart GDP.
Multiplier = 1 / ( 1 - MPC)
= 1 / ( 1 - 0.75)
= 4
Change in GDP = Multiplier * (Government spending + exports)
= 4 * (20 billion -10 billion)
= 4 * 10
= $40 billion
Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 130 shares of its common stock on May 1 for $6,500. On July 1, it reissued 65 of these shares at $53 per share. On August 1, it reissued the remaining treasury shares at $48 per share. What is the balance in the Paid-in Capital, Treasury Stock account on August 2
Answer:
Fortune Company
There is a balance of ($65) in the Paid-in Capital, Treasury Stock account on August 2.
However, this balance will be transferred to the Additional Paid-in Capital account at year-end, since there are no outstanding shares for the Treasury Stock account.
Explanation:
a) Data and Calculations:
May 1 Repurchase of 130 shares (Treasury Stock) = $6,500
July 1 Reissue of 65 shares at $53 per share = (3,445)
August 1 Reissue of 65 shares at $48 per share = (3,120)
August 2, Balance in the Paid-in Capital = ($65)
b) The Treasury Stock account is a contra Paid-in Capital account which records transactions involving the repurchase and reissue of treasury shares. Treasury shares represent the company's own shares which are repurchased from its investors.
A-Rod Manufacturing Company is trying to calculate its cost of capital for use in making a capital budgeting decision. Mr. Jeter, the vice-president of finance, has given you the following information and has asked you to compute the weighted average cost of capital.
The company currently has outstanding a bond with a 10.6 percent coupon rate and another bond with an 8.2 percent rate. The firm has been informed by its investment banker that bonds of equal risk and credit rating are now selling to yield 11.5 percent. The common stock has a price of $60 and an expected dividend (D1) of $1.80 per share. The historical growth pattern (g) for dividends is as follows:
1.35
1.49
1.64
1.80
The preferred stock is selling at $80 per share and pays a dividend of $7.60 per share. The corporate tax rate is 30 percent. The flotation cost is 2.5 percent of the selling price for preferred stock. The optimum capital structure for the firm is 25 percent debt, 10 percent preferred stock, and 65 percent common equity in the form of retained earnings.
(a) Compute the historical growth rate. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole percent. Omit the "%" sign in your response.)
Growth rate %
(b) Compute the cost of capital for the individual components in the capital structure. (Round growth rate to nearest whole percent. Round your answers to 2 decimal places. Omit the "%" sign in your response.)
Cost of capital
Debt (Kd) %
Preferred stock (Kp)
Common equity (Ke)
(c) Calculate the weighted cost of each source of capital and the weighted average cost of capital. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "%" sign in your response.)
Weighted cost
Debt (Kd) %
Preferred stock (Kp)
Common equity (Ke)
Weighted average cost of capital (Ka) %
Answer:
PV = 1.35
FV = 1.8
n = 3
a. Growth rate = Rate(N, -PV, FV)
Growth rate = Rate(3, -1.35, 1.8)
Growth rate = 0.10
Growth rate = 10%
B. Cost of debt Kd (After tax) = 11.5%*(1-0.30) = 8.05%
Cost of preference share Kp = Dividend/Price = 7.6 /[80*(1 - 0.025)] = 9.74%
Cost of equity Ke = D1/P0+g = 1.8/60 + 0.1 = 0.03+0.1 = 0.13 = 13%
c. Source Weight A COC(%)(B) Weight cost of capital(A*B)
Debt 25% 8.05% 2.01%
Preferred stock 10% 9.74% 0.97%
Common stock 65% 13.00% 8.45%
Weighted average cost of capital 11.44%
Hughes Co. is growing quickly. Dividends are expected to grow at a rate of 22 percent for the next three years, with the growth rate falling off to a constant 5 percent thereafter. If the required return is 12 percent and the company just paid a $2.35 dividend, what is the current share price? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Answer: $53.94
Explanation:
Current share price is the present value of the dividends for the next 3 years and the terminal value in year 3.
Terminal value = D₄ / ( required return - growth rate)
= (2.35 * 1.22³ * 1.05) / (12 % - 5%)
= $64
D₁ = 2.35 * 1.22 = $2.867
D₂ = 2.867 * 1.22 = $3.49774
D₃ = 3.49774 * 1.22 = $4.2672428
Share price = (2.867 / (1 + 12%)) + (3.49774 / 1.12²) + (4.2672428 / 1.12³) + (64/1.12³)
= $53.94
Eileen wanted to rent a share in a ski house for the upcoming winter, a six-month season. The house owner would not allow Eileen to pay the rent in six equal payments over the course of the ski season and, instead, required full payment up front. Eileen found an investment opportunity promising a 7% annual return. She also found a loan with a 4% annual interest rate. She decided to take out the loan to pay the landlord the full amount of the rental. Every month, Eileen planned to deposited one sixth of the loan amount (or what would have been the monthly rental payment) into the investment and take the chance that the investment would return what it promised.
Answer:
owner would not allow Helen to pay the rent in six equal payments over the course of the ski season and, instead, required full payment up front.
Explanation:
Lance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are trading at well below par value. He has his eye on a bond issued by the Leisure Time Corporation. The $1,000 par value bond pays 6 percent annual interest and has 15 years remaining to maturity. The current yield to maturity on similar bonds is 11 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.
a. What is the current price of the bonds?
b. By what percent will the price of the bonds increase between now and maturity? (Round "PV Factor" to 3 decimal places, intermediate and final answers to 2 decimal places. Omit the "%" sign in your response.) Price increases by %
Answer:
Future value = FV = 1000
Annual interest = i = 0.06
Yield to maturity = y = 0.15
Number of years = N = 15
Annuity Value = A = 60
PV_IFA = 5.847
PV_IF = 0.1229
1. PV of interest = A*PV_IFA = 350.82
PV of principal = FV * PV_IF = 122.9
Bond Price = $473.72
2. Percent increase at maturity
Maturity Value $1,000.00
Current price $473.72
Dollar increase $526.28