Answer:
(a) FIFO (b) LIFO (c) weighted
average cost:
Cost of goods available for sale $2,600 $2,600 $2,600
Ending inventory 1,540 1,500 1,516
Sales $1,400 $1,400 1,400
Cost of goods sold 1,060 1,100 1,083
Gross profit $340 $300 $317
Explanation:
a) Data and Calculations:
Units Unit Cost Unit Selling Price
July 1 Beginning Inventory 40 $ 10 $400
July 13 Purchase 200 11 2,200
July 25 Sold ( 100 ) $ 14 (1,400)
July 31 Ending Inventory 140
July 31 Goods available 240
Average unit cost = $10.83 ($2,600/240)
FIFO:
Cost of goods available for sale $2,600 ($400 + $2,200)
Ending inventory 1,540 (140 * $11)
Sales $1,400 ($14 * 100)
Cost of goods sold 1,060 (40 * $10 + 60 * $11)
Gross profit $340
LIFO:
Cost of goods available for sale $2,600 ($400 + $2,200)
Ending inventory 1,500 (40 * $10 + 100 * $11)
Sales $1,400 ($14 * 100)
Cost of goods sold 1,100 (100 * $11)
Gross profit $300
Weighted Average:
Cost of goods available for sale $2,600 ($400 + $2,200)
Ending inventory 1,516 (140 * $10.83)
Sales $1,400 ($14 * 100)
Cost of goods sold 1,083 (100 * $10.83)
Gross profit $317
How much must you deposit in a bank account today to have $1,000 at the end of 5 years if the bank quotes a rate of 5%, compounded daily? Assume a 365-day year and round your answer to the nearest dollar.
Answer:
PV= $774.54
Explanation:
Giving the following information:
Future value= $1,000
Number of periods= 5*365= 1,825 days
Interest rate= 0.05/365= 0.00014
To calculate the initial investment, we need to use the following formula:
PV= FV / (1+i)^n
PV= 1,000 / (1.00014^1,825)
PV= $774.54
"The fund is earning a low, but safe, 3% per year. The withdrawals will take place annually starting today. How soon will the fund be exhausted if Debbie withdraws $40,000 each year?"
Answer:
The question is missing the amount that Debbie's fund has, so I looked for similar questions and the number I found was $368,882.
we can use the present value of an annuity due formula to determine how long it will take Debbie to empty her account.
present value of annuity due = (payment / i) x {1 - [1 / (1 + i)ⁿ]} x (1 + i)
368,882 = (40,000 / 0.03) x {1 - [1 / (1 + 0.03)ⁿ]} x (1 + 0.03)
368,882 = 1,333,333.33 x 1.03 x {1 - [1 / (1 + 0.03)ⁿ]}
368,882 = 1,373,333.33 x {1 - [1 / (1 + 0.03)ⁿ]}
1 - [1 / (1.03)ⁿ] = 368,882 / 1,373,333.33 = 0.268603398
1 - 0.268603398 = [1 / (1.03)ⁿ]
0.731396601 = 1 / (1.03)ⁿ
1.03ⁿ = 1 / 0.731396601 = 1.367247261
n = log 1.367247261 / log 1.03 = 0.135847062 / 0.012837224 = 10.58 years
Debbie will exhaust the fund in 10.58 years. That means that Debbie will be able to withdraw $40,000 for 10 years, and then the last withdrawal will be lower.
Explanation:
Ivanhoe Construction Company had a contract starting April 2021, to construct a $23000000 building that is expected to be completed in September 2023, at an estimated cost of $21000000. At the end of 2021, the costs to date were $7560000 and the estimated total costs to complete had not changed. The progress billings during 2021 were $3800000 and the cash collected during 2021 was 3100000. Ivanhoe uses the percentage-of-completion method. At December 31, 2021 Ivanhoe would report Construction in Process in the amount of:
Answer:
$8280000
Explanation:
From the given information;
The percentage of the completion method used in construction is equal to the contract price multiplied by the percentage of estimated total cost incurred to date i.e.
Cumulative cost to date $7560000
Estimated total cost $21000000
Percentage of completion 36% ( $7560000/ $21000000 )
The contract price for this project is $23000000
Therefore,
At December 31, 2021 Ivanhole would report construction in process in the amount of: $23000000 × 36%
= $8280000
At the end of the current year, Leer Company reported total liabilities of $319,000 and total equity of $119,000. The company's debt ratio on the last year-end was:___________.
a. 72.8%.
b. 268%.
c. 3-68%.
d. 37.3%.
e. $438,000
Answer:
72.8%
Explanation:
The first step is to calculate the total assets
Total assets= Total liabilities + total equity
= $319,000 + $119,000
= $438,000
Therefore the debt ratio can be calculated as follows
= Total liabilities/total assets
= $319,000/$438,000
= 0.728×100
= 72.8%
Explain the risks associated with leveling resources, compressing or crashing projects, and imposed durations or "catch-up" as the project is being implemented. Why is it critical to develop a time-phased baseline? Subscribe to unlock
Answer:
Explain the risks associated with leveling resources, compressing or crashing projects, and imposed durations or "catch-up" as the project is being implemented.
a project manager will try to level resources in order to even out the use of resources throughout the whole project, but that can result in a deficit of resources during critical times. E.g. trying to use 25% of resources during each year for a project that lasts 4 years. But some activities require a lot o resources but last a short time, while other activities might last longer and consume fewer resources. a project manager will try to compress a project's schedule because he/she wants to finish early, ideally without affecting the project's scope. The problem with compressing a project is that you might have to skip or eliminate certain activities in order to so so. E.g. a lot of pharmaceutical companies are trying to develop a vaccine that ends the current health crisis, and their rush are not following the appropriate steps. crashing activities refers to trying to finish some critical activity early by assigning more resources to it. The risks of crashing critical activities is that they might not be well done, or it might be too expensive.Why is it critical to develop a time-phased baseline?
Without a well done time-phased baseline, it is very difficult to prepare a project schedule, or at least one that actually works. It is also important because it is very useful for cost control, and projects can easily go out of control and cost more than their budget.
Bryant Company has a factory machine with a book value of $88,100 and a remaining useful life of 7 years. It can be sold for $30,900. A new machine is available at a cost of $413,300. This machine will have a 7-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $579,100 to $505,700. Prepare an analysis showing whether the old machine should be retained or replaced.
Answer: The old factory machine should be replaced as from computation below will lead to a lower cost for Bryant Company
Explanation:
Particulars Retain Equipment Replace Equipment Net Income
Increase/Decrease
Variable manufacturing costs
$4,053,700 $3,539,900 $513,800
$579,100 x 7 $505,700 x 7
New machine cost $413,300 -$410,300.
Sale of old machine -$30,900 $30,900.
Total $4,053,700 $3,922,300 $134,400
The old factory machine should be replaced as from computation will lead to a lower cost of $3,922,300 instead of $4,053,700 for Bryant Company
Princetown Inc. has a $4.82 million basis in 68% of the outstanding stock of Merryvale Corporation. Merryvale manufactures Christmas decorations, cards, and wrapping paper. Princetown's board of directors recently learned that Merryvale is bankrupt. The board voted unanimously to dissolve the corporation and distribute all assets to Merryvale's creditors. What is the tax consequence to Princetown of the board's actions?
Answer:
$4.82 million ordinary loss
Explanation:
Note: The option to the question is attached
Merryvale is an affiliated corporation, so Princetown is allowed an ordinary loss in the worthlessness of the stock
Assume that if Ivanhoe Water accepts Clifton’s offer, the company can use the freed-up manufacturing facilities to manufacture a new line of growing lights. The company estimates it can sell 80,410 of the new lights each year at a price of $13. Variable costs of the lights are expected to be $10 per unit. The timer unit supervisory and clerical staff would be transferred to this new product line. Calculate the total relevant cost to make the timer units and the net cost if they accept Clifton's offer.
Question Completion:
Question 2 Ivanhoe Water Co. is a leading producer of greenhouse irrigation systems. Currently, the company manufactures the timer unit used in each of its systems. Based on an annual production of 40,330 timers, the company has calculated the following unit costs Direct fixed costs include supervisory and clerical salaries and equipment depreciation. Direct materials Direct labor Variable manufacturing overhead Direct fixed manufacturing overhead Allocated fixed manufacturing overhead $12 10 (30% salaries, 70% depreciation) 10 Total unit cost $42 Clifton Clocks has offered to provide the timer units to Sandhill at a price of $34 per unit. If Sandhill accepts the offer, the current timer unit supervisory and clerical staff will be laid off (a1) Your answer is correct. Calculate the total relevant cost to make or buy the timer units. (Round answers to O decimal places, eg, S250.) Make Buy 100825 1371220
Answer:
Ivanhoe Water
1. Total relevant cost to make the timer units:
If Ivanhoe does not accept the Clifton's offer, its total cost = $35 * 40,330 = $1,411,5500
If it accepts Clifton's offer, the total cost = $34 * 40,330 = $1,371,220
2. Net cost = $40,330
Explanation:
a) Data and Calculations:
Cost of producing 40,330 timers
Direct materials $12
Direct labor 7
Variable manufacturing overhead 3
Direct fixed manufacturing overhead 10
Allocated fixed manufacturing overhead 10 (30% salaries, 70% depreciation)
Total unit cost $42
Clifton's offer = $34 per unit
Total relevant cost to make the timer units:
If Ivanhoe does not accept the Clifton's offer, its total cost = $35 * 40,330 = $1,411,5500
If it accepts Clifton's offer, the total cost = $34 * 40,330 = $1,371,220
Net cost = $40,330
Out of the total cost of $42, $7 for the depreciation is not considered relevant. This leaves the relevant cost at $35 per unit. Any cost that cannot be eliminated by a decision is not relevant, it is a sunk cost. The salaries of the supervisory and clerical staff can be eliminated, so it is relevant here.
Dorchester Company had the following balances at the end of 2018 and 2019 respectively: Net Credit Sales - $875,000 for 2018 and $1,032,000 for 2019. Accounts Receivable - $84,000 for 2018 and $107,000 for 2019. Allowance for Doubtful Accounts - $4,000 for 2018 and 7,500 for 2019 Calculate the accounts receivable turnover ratio to one decimal place.
Answer:Accounts Receivable Turnover Ratio = 11.50 times
Explanation:
Accounts Receivable Turnover Ratio is calculated using
Net Credit Sales / Average Accounts Receivable
Net Credit Sales for 2019 = $1,032,000
Net Accounts Receivable in 2018 = Accounts Receivable in 2018 - Allowance for Doubtful Accounts in 2018
= $84,000 - $4,000
= $80,000
Net Accounts Receivable in 2019 = Accounts Receivable in 2019 - Allowance for Doubtful Accounts in 2019
= $107,000 - $7,500
= $99,500
Average Accounts Receivable = (Net Accounts Receivable in 2018 + Net Accounts Receivable in 2019) / 2
= ($80,000 + $99,500) / 2
= $179,500 / 2
= $89,750
Accounts Receivable Turnover Ratio = Net Credit Sales in 2019 / Average Accounts Receivable
= $1,032,000/ $89,750
= 11.498
= 11.50 times
Answer:
PoyPoy
Explanation:
g Larry recorded the following donations this year: $540 cash to a family in need $2,440 to a church $540 cash to a political campaign To the Salvation Army household items that originally cost $1,240 but are worth $340. What is Larry's maximum allowable charitable contribution if his AGI is $60,400
Answer:
$2780
Explanation:
Given the following donations by Larry:
Cash to family in need $540
Cash to political campaign = $540
Church donation = $2440
Donation to salvation Army household = $340 (worth)
The allowable charitable contribution when applied to the an individual's adjustable Gross income. These contribution must be made to qualified charitable organizations in other to become eligible for deduction. In the scenario above, the qualified charitable organization include the donation to church and the salvation Army household :
Hemce, maximum allowable charitable contribution is :
$(2,440 + 340) = $2780
Donald is an agent representing Xmart, a large department store chain. Xmart has sent him to deal with Fred in regard to purchasing Fred's land in order to erect a new store. When Donald first meets Fred, Fred calls Xmart to verify that Donald is in fact an agent authorized to deal on Xmart's behalf. Xmart sends Fred a written confirmation of Donald's authorization to act as its agent and states that a contract signed by Donald will be honored by Xmart. Donald and Fred meet every other day during the negotiations. While the negotiations are still ongoing, Donald is fired by Xmart because it doesn't feel that he is making sufficient progress. Why is it important for Xmart to communicate with Fred regarding Donald's firing
Answer:
If Xmart doesn't notify Fred that Donald is not there agent anymore, then any agreement made between Donald and Fred will be valid and binding to Xmart.
Donald is no longer Xmart's agent, but unless Fred is notified, he still may act as an apparent agent. Apparent agents are people that someone could assume are acting on behalf of a principal, e.g. a person that wears a store's uniform inside a store is presumably a salesperson or someone that works for the store, therefore, he/she is an apparent agent. You do not ask for employment contracts when you enter a store.
Which of the following best describes why German firms were nationalized after World War II?
A. Extract money.
B. Job preservation.
C. Ideology.
D. Happenstance.
Answer:
D. Happenstance.
Explanation:
The fact that German firms were nationalized has often been regarded as mere happenstance; meaning it just occurred based on the circumstances they were in immediately after World War II.
It thus encompasses several factors such as the cost of operations, changes in government, etc, not just one factor.
German firms were nationalized after World War II because of Happenstance.
World War II:The fact that German companies were nationalized has frequently been dismissed as a coincidence, implying that it happened simply because of the circumstances in which they found themselves following World War II.
It thus incorporates multiple aspects, not just one, such as operational costs, government changes, and so on.
So, option "D" is the correct answer to the following question.
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What is the beta for a 2 stock portfolio with a 0.54 weight in Walmart stock and the remainder in Amazon
Answer: 0.73
Explanation:
Walmart Beta = 0.3616
Amazon's beta = 1.1634
The beta of the portfolio will be a weighted average of the portfolio beta;
= (Walmart beta * Walmart weight) + ( Amazon beta * Amazon weight)
= (0.3616 * 0.54) + ( 1.1634 * (1 - 0.54))
= 0.730428
= 0.73
Granfield Company has a piece of manufacturing equipment with a book value of $36,500 and a remaining useful life of four years. At the end of the four years the equipment will have a zero salvage value. The market value of the equipment is currently $21,300. Granfield can purchase a new machine for $113,000 and receive $21,300 in return for trading in its old machine. The new machine will reduce variable manufacturing costs by $18,300 per year over the four-year life of the new machine. The total increase or decrease in net income by replacing the current machine with the new machine (ignoring the time value of money) is:
Answer:
($18,500)
Explanation:
Book value of manufacturing equipment = $36,500
Current market value of equipment = $21,300
Cost of new machine = $113,000
Cash received from trading old machine = $21,300
Variable manufacturing costs of new machine reduced by $18,300 per year, over the four year
Total increase/decrease in net income = Cost of new machine + Cash received from trading old machine + Reduction in variable manufacturing costs
= ($113,000) + $21,300 + $18,300 × 4
= ($113,000) + $21,300 + $73,200
= ($18,500)
It therefore means that the total decrease in net income by replacing the current machine with the new machine is $18,500
A company forecasts growth of 6 percent for the next five years and 3 percent thereafter. Given last year's free cash flow was $100, what is its horizon value (PV looking forward from year 4) if the company cost of capital is 8 percent?
a. $0
b. $1,672
c. $2,000
d. $2,676
Answer:
d. $2,676
Explanation:
The computation of the horizontal value is shown below:
FCF1 = (100 × 1.06) = 106
FCF2 = (106 × 1.06) = 112.36
FCF3 = (112.36 × 1.06) = 119.1016
FCF4 = (119.1016 × 1.06) = 126.247696
FCF5 = (126.247696 × 1.06) = 133.8225578
Now
Horizon value is
= FCF5 ÷ (Cost of capital - Growth rate)
= 133.8225578 ÷ (0.08 - 0.03)
= $2,676
Hence, the correct option is d.
According to the question,
The computation of the horizontal value will be:
→ [tex]FCF_1 = 100\times 1.06[/tex]
[tex]= 106[/tex]
→ [tex]FCF_2 = 106\times 1.06[/tex]
[tex]= 112.36[/tex]
→ [tex]FCF_3 = 112.36\times 1.06[/tex]
[tex]= 119.1016[/tex]
→ [tex]FCF_4 = 119.1016\times 1.06[/tex]
[tex]= 126.25[/tex]
→ [tex]FCF_5 = 126.25\times 1.06[/tex]
[tex]= 133.8226[/tex]
hence,
The horizon value will be:
= [tex]\frac{FCF_5}{Cost \ of \ capital - Growth \ rate}[/tex]
By putting the values, we get
= [tex]\frac{133.8226}{0.08-0.03}[/tex]
= [tex]2,676[/tex] ($)
Thus the above approach i.e., "option d" is right.
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Lightfoot Company sells its product for $55 per unit and has variable costs of $30 per unit. Total fixed costs are $25,000. Suppose variable costs increase by 10% due to an increase in the cost of direct materials. What will be the effect on the breakeven point in units if variable costs increase by $5 due to an increase in the cost of directmaterials?
A. It will increase by 250 units.
B. It will decrease by 167 units.
C. It will decrease by 250 units.
D. It will increase by 167 units.
Answer:
The Break-even point in units will increase by 250 units.
Explanation:
Giving the following information:
Fixed costs= $25,000
Selling price= $55
Unitary varaible cost= $30
First, we need to calculate the current break-even point in units:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 25,000 / 25
Break-even point in units= 1,000
Now, the new Break-even point in units:
Break-even point in units= 25,000 / (55 - 35)
Break-even point in units= 1,250
The Break-even point in units will increase by 250 units.
Consider a mutual fund with $240 million in assets at the start of the year and 10 million shares outstanding. The fund invests in a portfolio of stocks that provides dividend income at the end of the year of $2.5 million. The stocks included in the fund's portfolio increase in price by 5%, but no securities are sold and there are no capital gains distributions. The fund charges 12b-1 fees of .75%, which are deducted from portfolio assets at year-end. a. What is the fund's net asset value at the start and end of the year
Answer:
Net asset value at the start of the year = $240,000,000 / 10,000,000 shares
Net asset value at the start of the year = $24
Asset in the beginning $240,000,000
Increase in value $240,000,000*5% $12,000,000
Assets at the end $352,000,000
Less: 12b-1 Charges $352,000,000 * 0.75%) $2,640,000
Asset at the end $349,360,000
Net asset value at the end of the year = $349,360,000/10,000,000 shares
Net asset value at the end of the year = $34.936
Mattress Wholesalers, Inc. is constantly trying to reduce inventory in its supply chain. Last year, cost of goods sold was $ million and inventory was $ million. This year, costs of goods sold is $ million and inventory investment is $ million. a) What was its weeks of supply last year? nothing weeks (round your response to two decimal places). b) What is its weeks of supply this year? nothing weeks (round your response to two decimal places). c) Is Mattress Wholesalers making progress in its inventory reduction effort? Since the number of weeks that cover the supply has ▼ decreased not changed increased , Mattress Wholesalers is making ▼ negative progress no progress progress in its inventory-reduction effort.
Answer:
A. Weeks supply= 10.7
B. Weeks supply= 9.53
C. Yes
DECREASED, PROGRESS
Explanation:
A. Calculation for last year’s weeks of supply
First step is to find the Average cost of sold good on week basis
Using this formula
Average cost of sold good on week basis =Cost of goods sold /Numbers of weeks in a year
Let plug in the formula
Average cost of sold good on week basis= $7.54 million/ 52
Average cost of sold good on week basis= $ 0.145 million
Last step is to find last year Weeks supply using this formula
Last year Weeks supply=Investment in inventory/ Average cost of sold good on week basis
Let plug in the formula
Last year Weeks supply=$1.46/0.145
Last year Weeks supply= 10.7
B. Calculation for weeks supply this year?
Using this formula
Average cost of sold good on week basis =Cost of goods sold /Numbers of weeks in a year
Let plug in the formula
Average cost of sold good on week basis= $8.62 million/ 52
Average cost of sold good on week basis= $ 0.165769 million
Last step is to find this year Weeks supply using this formula
This year Weeks supply=Investment in inventory/ Average cost of sold good on week basis
Let plug in the formula
This year Weeks supply=$1.58/0.165769
This year Weeks supply= 9.53
C. Yes, Mattress Wholesalers is making progress in its inventory reduction effort .
Since the numbers of weeks that cover the supply had DECREASED, Wholesalers is making PROGRESS in its inventory reduction effort
Answer the following questions on the basis of the following three sets of data for the country of North Vaudeville: (A) (B) (C) Price Level Real GDP Price Level Real GDP Price Level Real GDP 110 235 110 285 100 210 100 235 100 260 100 235 95 235 95 235 100 260 90 235 90 210 100 285 a. Which set of data illustrates aggregate supply in the immediate short run in North Vaudeville? (Click to select) The short run? (Click to select) The long run? (Click to select) b. Assuming no change in hours of work, if real output per hour of work decreases by 5 percent, what will be the new levels of real GDP in the right column of B?
Question attached
Answer and Explanation:
1a. We can see immediate short run aggregate supply in North vaudeville in column A. This is because the price is fixed while output increases
1b. We can see short run aggregate supply in North vaudeville in column c. This is because output increases with price increase.
1c we can see long run aggregate supply in North vaudeville in column B. This is because output is constant with price increase.
Assuming output per hour of work decreases by 25% for column C then for each price, output is:
2A. Given price P= 110, output is 285(1-0.25) = 213.75
2B. Given price P = 100, output is 260(1-0.25) = 195
2C. Given price P = 95, output is 235(1-0.25) = 176.25
2D. Given price P = 90, output is 210(1-0.25) = 157.50
3. The new data from question 2 reflects a decrease in aggregate supply.
eorge and Weezy received $30,200 of Social Security benefits this year ($12,000 for George; $18,200 for Weezy). They also received $5,000 of interest from jointly owned City of Ranburne Bonds and dividend income. What amount of the Social Security benefits must George and Weezy include in their gross income under the following independent situations
Answer:
$0
Explanation:
George and Weezy will not get any amount as social security benefit if they file married joint. The sum of their modified AGI plus the 50% of their social security benefit is [$5,000 + $8,000 + $15,100]. This equals to $28,100 which is below the minimum amount of social security.
On December 31, 2019, The Bates Company's revenue is $440,000 and expenses total $340,000 before consideration of the following: Accrued wages total $21,000; Accrued revenues total $56,000; Depreciation expense is $27,000; Rental revenue of $7,000 was earned; the rent from a tenant was initially recorded by Bates as unearned rent revenue; The income tax rate is 40% of income before income taxes. What is Bates' net income after consideration of the above information
Answer:
Explanation:
Revenue = $440,000
Expenses = $340000
Accrued wages = $21000
Accrued revenues = $56000
Depreciation exp = $27000
Rental value earned but not recorded = $7000
Income tax rate = 40%
Total revenue = 440000 +56000 + 7000 = $503000
Total expenses = 340000 + 21000 + 27000 = $388000
Income before tax = 503000 - 388000 = $115000
income tax = 115000 x .4 = $46000
Net income = 115000 - 46000 = $69000 .
If the interest rate this year is 8.8% and the interest rate next year will be 10.8%, what is the future value of $1 after 2 years? What is the present value of a payment of $1 to be received in 2 years?
Answer:
Results are below.
Explanation:
Giving the following information:
The interest rate this year is 8.8% and the interest rate next year will be 10.8%.
a) To calculate the future value, we need to use the following formula:
FV= PV*(1+i)^n
FV1= 1*1.088= 1.088
FV2= 1.088*1.108=$1.206
b) To calculate the present value, we need to use the following formula:
PV=FV/(1+i)^n
PV2= 1/1.108= 0.903
PV1= 0.903/1.088= $0.83
true or false. a factor that can come between the purchase intention and purchase decision is the attitude of others g
Answer:
True
Explanation:
Before a consumer makes a decision to buy a product, several factors can affect him. Two distinct factors are the attitude of others and unexpected situational factors. When the customer notices that a lot of people around him have a negative disposition or opinion about a product, they are likely to be discouraged from buying that product.
This is even more likely to happen if the consumer lacks enough motivation to buy that product. So the attitude of others can affect the buyer's intention which is his motivation and the final decision to purchase that product.
A lot of factors can come between purchase intensions. A factor that can come between the purchase intention and purchase decision is the attitude of others is a true statement.
The more positive a person's attitude toward the a product, the greater their purchase intentions.
Another factor consider is perceived playfulness that also affects purchase intention positively.
The factors that affect a consumer's purchase intention can be said to be product perception, shopping experience, customer service etc.
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1. When will countries trade? Assuming 2 goods, food and clothing, and that both countries’ preferences are homothetic (but not necessarily identical), determine whether two countries will trade in each of the following situations: (a) Countries have identical preferences and identical endowments. (b) Countries have identical preferences, their endowments differ, and their endowments are not in the same ratio of food to clothing. (c) Countries have identical preferences, their endowments differ, but the ratio of food to clothing is the same in both countries. (d) Countries have identical endowments but different preferences. (e) Countries have both different preferences and different endowments.
Answer:
(a) Countries have identical preferences and identical endowments.
Explanation:
Analyzing the statement, there is information that the preferences of countries are homothetic (but not necessarily identical) with respect to the 2 goods, food and clothing.
That is why it is correct to state that countries will not trade with each other, as countries have identical preferences and identical allocations, which means that the demands for these goods will be related to the prices of the goods and not in relation to income or preferences.
Therefore, there is no need to commercialize these two goods between these countries, except in situations of scarcity.
Heels, a shoe manufacturer, is evaluating the costs and benefits of new equipment that would custom fit each pair of athletic shoes. The customer would have his or her foot scanned by digital computer equipment; this information would be used to cut the raw materials to provide the customer a perfect fit. The new equipment costs $107,000 and is expected to generate an additional $43,000 in cash flows for five years. A bank will make a $107,000 loan to the company at a 15% interest rate for this equipment’s purchase. Compute the recovery time for both the payback period and break-even time. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
Chart Values are Based on:
10%
Cumulative Cash Inflow Present Value of Inflow Year Present Value PV Factor (Outflow) (Outflow)
(91,000) x 1.0000- (91,000) $ (91,000) 36,000 x 36,000 x 2.5 years
Answer:
Payback period = 2.49 years
Break-even time = 3.36 years
Explanation:
a. Calculation of payback period
The payback period can be described as the amount of time it will take a firm recover its cost on a project or an investment.
The payback period can be calculated as follows:
Equipment cost = $107,000
Annual cash flow = $43,000
Payback period = Equipment cost / Annual cash flow = $107,000 / $43,000 = 2.49 years
b. Calculation of break-even time
Note: See the attached excel file for the computation of the cumulative present value of inflow (outflow).
In the attached excel, the present value (PV) factor is calculated using the following formula:
PV factor = 1/(1 + r)^n ............................... (1)
Where;
r = interest rate = 15%
n = a particular year from 1 to 5.
Break even time can be described as the amount of time that is needed for both the discounted cash flows and the initial cost of a project to be equal.
The break-even time is calculated using the following formula:
Break-even time = X + (Y / Z) .................... (2)
X = Last year with a negative cumulative cash flow = 3
Y = Absolute value of cumulative cash flow at the end of period X = $8,821.32
Z = Present value of cash inflow for the period following X = $24,585.39
Break-even time = 3 + ($8,821.32 / $24,585.39) = 3 + 0.36 = 3.36 years
Sydney accepts delivery of $39,000 of merchandise it purchases for resale from Troy: invoice dated May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $26,130.
Sydney pays $440 cash to Express Shipping for delivery charges on the merchandise.
Sydney returns $1,100 of the $39,000 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $737.
Sydney pays Troy for the amount owed. Troy receives the cash immediately.
part 2 Prepare journal entries that Troy Wholesalers (seller) records for these three transactions.
Record the merchandise sold on account.
Record the cost of goods sold.
Record the sales return.
Record the cost of sales return.
Record the cash collected for credit sales.
Answer:
39,000 Explanation:
FOB shipping point. The goods cost Troy $26,130.
Nancy Company has an idle machine that originally cost $200,000. The book value of the machine is $100,000. The company is considering three alternative uses of the idle machine: Alternative 1: Disposal of machine. Disposal value of machine is $50,000. Alternative 2: Use the idle machine to increase production of Product A. Contribution margin from additional sales of Product A is estimated to be $60,000. Alternative 3: Use the idle machine to increase production of Product B. Contribution margin from additional sales of Product B is estimated to be $70,000. When considering Alternative 2, what is the opportunity cost of the idle machine
Answer:
$10,000
Explanation:
The opportunity cost of the idle machine when considering Alternative 2 can be calculated by deducting the benefit from alternative 2 from the benefits of alternative 3
DATA
Benefits from alternative 1 = $50,000
Benefit from alternative 2 = $60,000
Benefit from alternative 3 = $70,000
Net financial benefit from Alternative 3 = Benefit from alternative 3 - opportunity cost
Net financial benefit from Alternative 3 = $70000-60000
Net financial benefit from Alternative 3 = $10000
Simpleton, Inc. budgeted a material cost of $10 per lb. They ended up purchasing 2,300 lbs at $16 per lb. and using 1,800 lbs for production. The material price variance is:
Answer:
Direct material price variance= $13,800 unfavorable
Explanation:
Giving the following information:
Simpleton, Inc. budgeted a material cost of $10 per lb.
Actual:
2,300 lbs at $16 per lb.
To calculate the direct material price variance, we need to use the following formula:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (10 - 16)*2,300
Direct material price variance= $13,800 unfavorable
The journal entry to record the transfer of units to the next department in process accounting is a(n):
Answer:
Decrease in one asset and an increase in another asset
Explanation:
The journal entry to record the transfer of units to the next department in process accounting is a(n):
i. Decrease in one asset
ii. Increase in another asset
The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.55 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year indefinitely. Investors require a return of 14 percent on the company's stock. a. What is the current stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will the stock price be in 3 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What will the stock price be in 7 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
(A) 20.54
(B) 24.46
(C) 30.88
Explanation:
(A) The current stock price can be calculated as follows
Po= 1.55(1+6/100)/(14/100-6/100)
= 1.55(1+0.06)/(0.14-0.06)
= 1.55(1.06)/0.08
=1.643/0.08
= 20.54
(B) The stock price after 3 years can be calculated as follows
Po = 1.55(1+6/100)^4/(14/100-6/100)
= 1.55(1+0.06)^4/(0.14-0.06)
= 1.55(1.06)^4/0.08
= 1.55(1.2624)/0.08
= 1.9567/0.08
= 24.46
(C) The stock price after 7 years can be calculated as follows
Po= 1.55(1+6/100)^8/(14/100-6/100)
= 1.55(1+0.06)^8/(0.14-0.06)
= 1.55(1.06)^8/(0.08)
= 1.55(1.5938)/0.08
= 2.470/0.08
= 30.88