Answer:
a. An implied rate based on the price investors pay to purchase a bond in return for the right to receive the face amount at maturity and periodic interest payments over the remaining life of the bond.
Explanation:
The market interest rate of a bond is an implied rate based on the price investors pay to purchase a bond in return for the right to receive the face amount at maturity and periodic interest payments over the remaining life of the bond.The market interest rate of bond are specified in the bond contract, of which the ultimate purpose is to calculate cash payments.
Relix, Inc., is a domestic corporation with the following temporary timing differences for the current year. The building depreciation for tax purposes exceeds book depreciation by $13,000. The furniture and fixtures depreciation for tax purposes exceeds book depreciation by $3,800. The accrued litigation expenses in the amount of $16,000 are deductible for book purposes but not yet deductible for tax. The book-tax basis differences for the deferred assets and liabilities are listed below.
Beginning of year Current-year diff-e End of year
Gross deferred tax asset $7,140 $3,360 $10,500
Gross deferred tax liability ($12,852) ($3,528) ($16,380)
In addition to the temporary differences above, Relix reported two permanent differences between book and taxable income. It earned $2,375 in tax-exempt municipal bond interest, and it incurred $780 in nondeductible business meals expense. Relix's book income before tax is $4,800. Assume a 21% Federal corporate tax rate and no valuation allowance.
Compute Relix's total provision for income tax reported in its financial statements, and determine its book net income after tax.
If required, round your answers to the nearest dollar.
Book net income before tax $4,800
Provision for income tax expense $
Net income after tax $
Answer:
Computation of Provision for income tax expense
Particulars Amount
Pre tax financial income $4,800
Add: Non deductible business meal $780
Less: Tax exempt interest -$2,375
Less: Book tax difference in depreciation -$16,800
of building and Furniture & fixtures
Add: Accured litigation expenses $16,000
Taxable Income $2,405
Provision for income tax Expense
Current Tax (21% of $2,405) $505
Deferred tax liability $3,528
Deferred tax asset -$3,360
Total Provision for income tax expense $673
Computation of book net income after tax
Particulars Amount
Book net income before taxes $4,800
Less: Provision for income tax expense -$673
Net Income after tax $4,127
Provision for income tax expense = $673
The net income after taxes = $4123
The Pre tax financial income is given to be = $4,800
The Non deductible business meal is given to be = $780
The tax exempt interest is = $2,375
The book tax difference = $16800
The litigation expenses = $16000
From here the taxable income =
4800+780-2375-16800+16000
= $2405
21% of $2,405
= 0.21*2405
= $505.05
Deferred tax = 3528
Deferred tax asset = 3360
505+3528-3360
Income tax expense = $673
The net income before taxes = 4800
after taxes = 4800 - 673
= $4123
The net income after taxes = $4123
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Required: a. Adams Company's production cycle starts in Department A. The following information is available for July: Units Work in process, July 1 (60% complete) 71,000 Started in July 360,000 Work in process, July 31 (20% complete) 39,000 Materials are added at the beginning of the process in Department A. Using the weighted-average method, what are the equivalent units of production for materials and conversion costs for the month of July, respectively
Answer:
materials = 431,000 units and
conversion = 399,800 units
Explanation:
Note that Adams Company uses weighted-average method. This means we calculate equivalent units of production on the number of physical units completed and transferred and units in ending inventory.
Step 1 : Determine units completed and transferred
Units completed and transferred = Opening Inventory + Units Started - Ending Inventory
= 71,000 + 360,000 - 39,000
= 392,000
Step 2 : Determine equivalent units of production
Materials
Units completed and transferred (392,000 x 100%) = 392,000
Units in ending inventory (39,000 x 100%) = 39,000
Total equivalent units of production = 431,000
Conversion
Units completed and transferred (392,000 x 100%) = 392,000
Units in ending inventory (39,000 x 20%) = 7,800
Total equivalent units of production = 399,800
jayda started a corporation that creates software products for clients. which statement correctly reflects jayde's role in the corporation?
Answer:
good for herlelellelelel
Answer:
idgaf
Explanationk bye
Sarasota Company sells on credits goods that cost $310,000 to Ricard Company for $409,500 on January 2, 2020. The sales price includes an installation fee, which has a standalone selling price of $42,500. The standalone selling price of the goods is $367,000. The installation is considered a separate performance obligation and is expected to take 6 months to complete. (a) Prepare the journal entries (if any) to record the sale on January 2, 2020
Answer and Explanation:
The journal entries are shown below:
Account Receivable $409,500
To Sales Revenue $367,000
To Unearned Service Revenue $42,500
(Being account receivable is recorded)
Cost of Goods Sold $310,000
To Merchandised Inventory $310,000
(Being cost of goods sold is recorded)
These two journal entries are to be recorded
Trade credit and discounts are important strategies used by firms in the daily operations of their business. Calculate the cost of a firm's trade credit in each of the following situations (answers should be carried out to 2 decimal points, e.g. 35.78%, not 35% or 36% !) a) 2/12, Net 32 b) 3/15, Net 36 c) 2.5/18, Net 35 d) 2.25/20, Net 38
Answer:
When a discount is given as 2/12, Net 32, it means that the customer is allowed a 2% discount if they pay off their purchase in 12 days. If they don't, they would have to pay off the full amount in 32 days.
The Cost of a firm's credit is calculated by the formula:
= Discount %/ ( 100% - Discount %) * (360/Allowed payment days - Discount days)
a. 2 / 12, Net 32
= (2%/ (100 - 2% )) * (360 / (32 - 12))
= 36.73%
b) 3/15, Net 36
= (3%/ (100 - 3% )) * (360 / (36 - 15))
= 53.02%
c) 2.5/18, Net 35
= (2.5%/ (100 - 2.5% )) * (360 / (35 - 18))
= 54.30%
d) 2.25/20, Net 38
= (2.25%/ (100 - 2.25% )) * (360 / (38 - 20))
= 46.04%
You just got a job and plan to save for the college expenses for your kids. You have a son and a daughter. Your son is 4 years old, and your daughter is only 1 year old. Both of them plan to go to a four-year college at the age of 18. The estimated college expense is about $40,000 per year. Assume you plan to invest into a portfolio that offers you return about 6% per year until your daughter is graduated from college. How much money do you need to save every year if your first saving is in one year
Answer:
$11,508.25
Explanation:
your son will start college in 14 years, and the present value of his college tuition = $40,000 x 3.4651 (PVIFA, 6%, 4 periods) = $138,604
your daughter will start college in 17 years, so you need in today's dollars $138,604
you will need to save enough money to cover both tuitions;
money required to cover your son's tuition = $138,604 / 21.015 (FVIFA, 6%, 14 periods) = $6,595.48
money required to cover your daughter's tuition = $138,604 / 28.213 (FVIFA, 6%, 14 periods) = $4,912.77
total annual savings = $11,508.25
A drawback to using stock options as part of manager compensation is that Group of answer choices it encourages managers to engage in empire building. All of the listed answers are true. None of the listed answers are true. it can create an incentive for mangers to manipulate information to prop up a stock price temporarily, giving them a chance to cash out before the price returns to a level reflective of the firm's true prospects. it encourages managers to undertake projects that will increase stock price.
Answer:
C. it can create an incentive for mangers to manipulate information to prop up a stock price
temporarily, giving them a chance to cash out before the price returns to a level reflective of
the firm's true prospects.
Explanation:
A management stock option gives enable managers to have legal right in order to purchase some certain number of shares with the fixed price during some time in future time. Though there are some condition that are needed to be satisfied such as continued employment. It should be noted that drawback to using stock options as part of manager compensation is that it can create an incentive for mangers to manipulate information to prop up a stock price
temporarily, giving them a chance to cash out before the price returns to a level reflective of the firm's true prospects.
Dehner Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data: Total direct labor-hours 47,000 Total fixed manufacturing overhead cost $ 202,100 Variable manufacturing overhead per direct labor-hour $ 2.00 Recently, Job P951 was completed with the following characteristics: Number of units in the job 50 Total direct labor-hours 100 Direct materials $ 850 Direct labor cost $ 4,700 The total job cost for Job P951 is closest to: (Round your intermediate calculations to 2 decimal places.)
Answer:
Total cost= $6,180
Explanation:
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= (202,100/47,000) + 2
Predetermined manufacturing overhead rate= $6.3 per direct labor hour
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 6.3*100
Allocated MOH= 630
Finally, the total cost:
Total cost= 850 + 4,700 + 630
Total cost= $6,180
A large global automobile manufacturer is considering outsourcing the manufacturing of a solenoid used in the transmission of its SUVs. The company estimates that annual fixed costs of manufacturing the part in-house, which include equipment, maintenance, and manage-ment, amounts to $6 million. The variable costs of labor and material are $5.00 per unit. The company has an offer from a major subcontractor to produce the part for $8.00 per unit. However, the subcontractor wants the company to share in the costs of the equipment. The automobile company estimates that the total cost would be $4 million, which also includes management oversight for the new supply contact
Required:
a. How many solenoids would the automobile company need per year to make theâ in-house option leastâcostly?
b. What otherâ factors, besidesâ costs, should the automobile company consider before revising its supply chain forâ SUVs?
Answer:
A) The company must consume more than 666667 solenoids per year to make the in-house option least costly.
B) - quality of the product
- prompt delivery of products
- good communication & relationship with external parties.
Explanation:
A) Since if they use a subcontractor, they will share part of the equipment cost, Let the cross over point for manufacturing the solenoid in house and using a contractor be denoted as x.
Now, variable costs of labor and material are $5.00 per unit. This is 5x
Also from the subcontractor, production of the part is estimated at $8.00 per unit. This is 8x.
Thus;
6000000 + 5x = 4000000 + 8x
Rearranging, we have;
6000000 - 4000000 = 8x - 5x
3x = 2000000
x = 2000000/3
x ≈ 666667
Thus, the company must consume more than 666667 solenoids per year to make the in-house option least costly.
B) Apart from cost, other factors the company must consider are quality of the product, prompt delivery of products, good communication & relationship with stakeholders involved.
You want to save at least $10,000 for a down payment on a new car. In cell B6, enter a formula to calculate how much you will have saved by putting away $500 per month for 24 months at a 1.5% annual interest rate. Use the appropriate cell references. Remember to use a negative value for the Pmt argument. There is no money in the account yet and payments are applied at the end of every month, so omit both the Pv and Type arguments. (Hint: Use the FV function.)
Answer:
$14,316.76
Explanation:
How much you will have saved?
Using MS Excel to calculate the FV function
= FV(Rate, Nper, Pmt)
= FV(1,5%, 24, 500)
= 14316.7604
= $14,316.76
So, the total amount you will have saved by putting away $500 per month for 24 months at a 1.5% annual interest rate is $14,316.76
Which of the following should be considered last when searching for financing? Question 1 options: Family members Banks Commercial finance companies Credit cards
Answer:
Credit cards
Explanation:
A credit card can be defined as a small rectangular-shaped plastic card issued by a financial institution to its customers, which typically allows them to purchase goods and services on credit based on the agreement that the amount would be paid later with an agreed upon interest rate.
Credit cards should be considered last when searching for financing.
The main sources of finance are; Family members, Banks Commercial and finance companies.
Sheen Co. manufactures laser printers. It has outlined the following overhead cost drivers. Overhead Costs Pool Cost Driver Overhead Cost Budgeted cost driver Quality control Number of inspections $ 64,800 1,080 Machine operation Machine hours 132,000 1,100 Materials handling Number of batches 900 30 Miscellaneous overhead cost Direct labor hours 48,000 4,000 Sheen Co. has an order for 1,000 laser printers that has the following production requirements: Number of Inspections 175 Machine Hours 180 Number of Batches 5 Direct Labor Hours 650 Use activity-based costing to determine a unit cost for the laser printers
Answer:
Sheen Co.
The overhead unit cost for the laser printers is:
= $40.05
Explanation:
a) Data and Calculations:
Overhead Costs Pool Cost Driver Overhead Budgeted
Cost cost driver
Quality control Number of inspections $ 64,800 1,080
Machine operation Machine hours 132,000 1,100
Materials handling Number of batches 900 30
Miscellaneous Direct labor hours 48,000 4,000
Overhead Rates:
Quality control = $60 ($64,800/1,080)
Machine operation = $120 ($132,000/1,100)
Materials handling = $30 ($900/30)
Miscellaneous overhead costs = $12 ($48,000/4,000)
Quantity of order = 1,000 laser printers
Requirements of the order: Overhead Rate Total
Number of Inspections 175 $60 (175*$60) $10,500
Machine Hours 180 $120 (180*$120) 21,600
Number of Batches 5 $30 (5*$30) 150
Direct Labor Hours 650 $12 (650*$12) 7,800
Total overhead allocated to 1,000 laser printers = $40,050
Unit overhead cost for the printers = $40.05 ($40,050/1,000)
Mortensen Industries, which uses a process-costing system, adds material at the beginning of production and incurs conversion cost evenly throughout manufacturing. The following selected information was taken from the company's accounting records:
Total equivalent units of materials: 5,000
Total equivalent units of conversion: 4,400
Units started and completed during the period: 3,500
On the basis of this information, the ending work-in-process inventory's stage of completion is:_____.
a. 80%.b. 70%.c. 60%.d. 40%.
Answer:
c. 60%.
Explanation:
Calculation for what the ending work-in-process inventory's stage of completion is:
First step is to calculate the Ending WIP
Ending WIP = 5,000 - 3,500
Ending WIP = 1,500 units
Now let calculate the ending work-in-process inventory's stage of completion using this formula
Ending work-in-process inventory's stage of completio
4,400 = 3,500 + (x% * 1,500)
4,400 = 3,500 + 15x
15x = 4,400 - 3,500
15x = 900
x = 900/15
x = 60%
Therefore the ending work-in-process inventory's stage of completion is:60%
Extend the application of a method or conclusion
a.Segmentation b.Extrapolate
c.Diffusion d.Multinational
Answer:
B - Extrapolate
Explanation:
Extrapolate means to extend the application of (a method or conclusion, especially one based on statistics) to an unknown situation by assuming that existing trends will continue or similar methods will be applicable.
The Hopper Leg Winery from California's Sonoma Valley is trying to enter the wine market in France. To the company's surprise, it found that the France wine distribution channel was difficult to access as an outsider. Based on this, the market must have a(n) _________ distribution channel. fragmented intensive formal exclusive concentrated
Answer:
exclusive
Explanation:
Marketing mix can be defined as the choices about product attributes, pricing, distribution, and communication strategy that a company blends and offer its targeted markets (customers) so as to build and maintain a desired response.
Generally, a marketing mix is made up of the four (4) Ps;
1. Products: this is typically the goods and services that gives satisfaction to the customer's needs and wants. They are either tangible or intangible items.
2. Price: this represents the amount of money a customer buying goods and services are willing to pay for it.
3. Place: this represents the areas of distribution of these goods and services for easier access by the potential customers.
4. Promotions: for a good sales record or in order to increase the number of people buying a product and taking services, it is very important to have a good marketing communication such as advertising, sales promotion, direct marketing etc.
In this scenario, The Hopper Leg Winery from California's Sonoma Valley is trying to enter the wine market in France. To the company's surprise, it found that the France wine distribution channel was difficult to access as an outsider. Based on this, the market must have an exclusive distribution channel i.e the exclusive or unique rights to be a retailer for the supplier or manufacturer of the wine products.
Rupesh wants to buy a new BMW priced at $54,000. He makes a down payment of 20% of the original price. He also trades-in his old car for $10,000. (This means he sells the old car to the dealer for $10,000). For the balance, Rupesh takes a 60-month car loan at an interest rate of 3.45%. What will be the approximate payment at the end of every month
Answer:
The approximate payment at the end of every month will be $603.22.
Explanation:
Since the payment is going to be made at the end of every month, this can be calculated using the formula for calculating the present value of an ordinary annuity as follows:
PV = P * ((1 - (1 / (1 + r))^n) / r) …………………………………. (1)
Where;
PV = Present value or the balance = Price of BMW - Down payment - Old car sales amount = $54,000 - ($54,000 * 20%) - $10,000 = $33,200
P = Monthly payment = ?
r = Monthly interest rate = Annual interest rate / 12 = 3.45% / 12 = 0.0345 /
12 = 0.002875
n = number of months = 60
Substitute the values into equation (1) and solve for P, we have:
$33,200 = P * ((1 - (1 / (1 + 0.002875))^60) / 0.002875)
$33,200 = P * 55.0377058660197
P = $33,200 / 55.0377058660197
P = $603.22
Therefore, the approximate payment at the end of every month will be $603.22.
Lowell Corporation paid $80,000 to acquire all of Boston Company's net assets. Boston reported assets with a book value of $60,000 and fair value of $98,000 and liabilities with a book value and fair value of $23,000 on the date of combination. Lowell also paid $3,000 to a search firm for finder's fees related to the acquisition. What amount will be recorded as goodwill by Lowell Corporation while recording its investment in Boston
Answer:
Lowell Corporation
The amount that will be recorded as goodwill by Lowell Corporation to record its investment in Boston is:
= $5,000.
Explanation:
a) Data and Calculations:
Investment in Boston Company = $83,000
Fair value of assets = $98,000
Fair value of liabilities 23,000
Net value of assets = $75,000
Goodwill = $5,000 ($80,000 - $75,000)
b) Acquired Goodwill is the difference between the cost of purchasing Boston Company ($80,000) and the net identifiable assets of Boston Company ($75,000). The net identifiable assets are calculated by subtracting the fair value of the liabilities from the fair value of the assets.
The manager at the Overton Hotel in Lubbock believes that the success of the Texas Tech Red Raider Basketball team has an impact on the occupancy rate at the hotel during the first quarter of every year. Below are the number of victories for the Red Raiders in during the last three seasons and the hotel occupancy rate. This year, (year 4) the Red Raiders Basketball Team is expected to have another phenomenal season and win 31 games and the manager at the Overton has asked you to determine their first quarter occupancy rate for the upcoming year (year 4) using associative forecasting, given that the SLOPE = 0.0474 and the INTERCEPT =0.4743
Year Wins First Quarter Occupancy Rate
1 15 60%
2 28 90%
3 31 93%
a. 93.4%
b. 88.1%
c. 91.7%
d. 36.9%
e. 90.0%
Answer: 99.51%
Explanation:
This is a linear regression problem.
The relationship between the success of the team and the occupancy rate is in the form:
y = mx + c
y = occupancy rate
m = slope
x = number of games
c = slope
Intercept is supposed to be negative in question:
= 0.0474 * 31 + (-0.4743)
= 99.51%
Options are most probably for a variant of this question.
Congratulations, you've won the lottery! The jackpot was $10,000,000, and you have an important choice to make. You can either take your winnings in annual payments of $500,000 spread out over 20 payments (with the first payment coming immediately and then at the end of each year for the next 19 years), or you can take a one-time payment of $6,600,000 right now. What is the present value of your winnings if you opt for the annual payments and the market interest rate is 5%
Answer:
$6,542,660.43
Explanation:
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow each year from year 0 to 19 = $500,000
I = 5%
PV = $6,542,660.43
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
Sheridan Enterprises reported cost of goods sold for 2020 of $1,322,900 and retained earnings of $4,854,000 at December 31, 2020. Sheridan later discovered that its ending inventories at December 31, 2019 and 2020, were overstated by $106,470 and $36,820, respectively. Determine the corrected amounts for 2020 cost of goods sold and December 31, 2020, retained earnings. Corrected cost of goods sold $enter a dollar amount Corrected 12/31/20 retained earnings $enter a dollar amount
Answer:
See below
Explanation:
With regard to the above information,
1. Corrected cost of goods sold is computed as
= Cost of goods sold + Overstated ending inventories 2019 - overstated ending inventories 2020
= $1,322,900 + $106,470 - $36,820
= $1,253,250
2. Corrected 12/31/2020 retained earnings is computed as
= Retained earnings DEC 2020 - overstated ending inventories 2020
= $4,854,000 - $36,820
= $4,817,180
During the year ended December 31, 2018, Kelly’s Camera Shop had sales revenue of $210,000, of which $105,000 was on credit. At the start of 2018, Accounts Receivable showed a $12,000 debit balance and the Allowance for Doubtful Accounts showed a $680 credit balance. Collections of accounts receivable during 2018 amounted to $76,000.Data during 2018 follow:On December 10, a customer balance of $1,900 from a prior year was determined to be uncollectible, so it was written off.On December 31, a decision was made to continue the accounting policy of basing estimated bad debt losses on 2 percent of credit sales for the year.Required:Give the required journal entries for the two events in December.Show how the amounts related to Accounts Receivable and Bad Debt Expense would be reported on the balance sheet and income statement for 2018.On the basis of the data available, does the 2 percent rate appear to be reasonable?
Answer:
Kelly's Camera Shop
1. Journal Entries
Debit Accounts Receivable $105,000
Credit Sales Revenue $105,000
To record the sales on credit for the year.
Debit Cash $76,000
Credit Accounts Receivable $76,000
To record the cash collections on account.
Debit Allowance for doubtful accounts $1,900
Credit Accounts Receivable $1,900
To write off a bad debt.
Debit Bad Debt Expense $3,320
Credit Allowance for doubtful accounts $3,320
To record the bad debt expense for the year.
2. Balance Sheet (partial) as of December 31, 2018:
Accounts Receivable $39,100
Less Allowance for
doubtful accounts 2,100
Net Accounts Receivable $37,000
Explanation:
a) Data and Analysis:
T-accounts:
Accounts Receivable
Account Title Debit Credit
Beginning balance $12,000
Sales revenue 105,000
Cash $76,000
Bad Debts written off 1,900
Ending balance 39,100
Totals $117,000 $117,000
Allowance for Doubtful Accounts
Account Title Debit Credit
Beginning balance $680
Bad debts written off $1,900
Bad Debt Expense 3,320
Ending balance 2,100
Total $4,000 $4,000
Analysis of transactions:
Accounts Receivable $105,000 Sales Revenue $105,000
Cash $76,000 Accounts Receivable $76,000
Allowance for doubtful accounts $1,900 Accounts Receivable $1,900
Bad Debt Expense $3,320 Allowance for doubtful accounts $3,320
A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year: (3 points)
Debit Credit
Cash sales……………………………………………….. $188,000
Credit sales……………………………………………… 275,000
Accounts receivable…………………………………….. $76,000
Allowance for doubtful accounts……………………….. 1,000
Prepare the adjusting entry to estimate bad debts assuming an aging analysis estimates that 8% of the outstanding accounts receivable will be uncollectible.
Answer:
Particulars Amount
Provision for uncollectible $6,080 ($76000*8%)
Less: Provision already made $1,000
Provision to be made $5,080
Date Particulars Debit Credit
31-Dec Bad Debts $5,080
To Allowance for Doubtful Accounts $5,080
(Being the adjusting entry to estimate bad debts)
Way Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow.
Process Activity Overhead Cost Driver Quantity
Components Changeover $ 470,000 Number of batches 890
Machining 304,000 Machine hours 8,130
Setups 225,000 Number of setups 120
$ 999,000
Finishing Welding $192,000 Welding hours 5,200
Inspecting 235,000 Number of inspections 850
Rework 61,000 Rework orders 220
$ 488,000
Support Purchasing 145,000 Purchase orders 543
Providing space 33,000 Number of units 4,620
Providing utilities 65,000 Number of units 4,620
$ 243,000
Additional production information concerning its two product lines follows.
Model 145 Model 212
Units produced 1,500 3,120
Welding hours 2,000 3,200
Batches 445 445
Number of inspections 480 370
Machine hours 2,850 5,280
Setups 60 60
Rework orders 160 60
Purchase orders 362 181
Required:
1. Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders.
2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $250 for Model 145 and $170 for Model 212.
3. If the market price for Model 145 is $1,700 and the market price for Model 212 is $300, determine the profit or loss per unit for each model.
Answer:
Way Cool
1. Using ABC, the overhead cost per unit for each product line:
Model 145 Model 212
Overhead cost per unit $534.39 $266.12
2. The total cost per unit for each product line, if the direct labor and direct materials costs per unit are $250 for Model 145 and $170 for Model 212:
Model 145 Model 212
Total cost per unit $784.39 $436.12
3. If the market price for Model 145 is $1,700 and the market price for Model 212 is $300, the profit or loss per unit for each model:
Model 145 Model 212
Profit (loss) per unit $915.61 ($136.12)
Explanation:
a) Data and Calculations:
Process Activity Overhead Cost Driver Quantity
Components Changeover $ 470,000 Number of batches 890
Machining 304,000 Machine hours 8,130
Setups 225,000 Number of setups 120
Total $ 999,000
Finishing
Welding $ 192,000 Welding hours 5,200
Inspecting 235,000 Number of inspections 850
Rework 61,000 Rework orders 220
Total $ 488,000
Support
Purchasing $ 145,000 Purchase orders 543
Providing space 33,000 Number of units 4,620
Providing utilities 65,000 Number of units 4,620
Total $ 243,000
Additional production information concerning its two product lines follows:
Model 145 Model 212 Total
Units produced 1,500 3,120 4,620
Welding hours 2,000 3,200 5,200
Batches 445 445 890
Number of inspections 480 370 850
Machine hours 1,800 4,200 6,000
Setups 60 60 120
Rework orders 160 60 220
Purchase orders 362 181 543
Overhead Rates per Activity Pool:
Components Changeover $ 470,000/890 = $528
Machining 304,000/ 8,130 = $37.39
Setups 225,000/120 = $1,875
Total $ 999,000
Finishing
Welding $ 192,000/5,200 = $36.92
Inspecting 235,000/850 = $276.47
Rework 61,000/220 = $277.27
Total $ 488,000
Support
Purchasing $ 145,000/543 = $267
Providing space 33,000/4,620 = $7.14
Providing utilities 65,000/4,620 = $14.07
Total $ 243,000
Total overheads = $1,730,000
Model 145 Model 212
Units produced 1,500 3,120
Welding hours $73,840 (2,000*$36.92) $118,144 (3,200*$36.92)
Batches 234,960 (445*$528) 234,960 (445*$528)
Number of inspections 132,706 (480*$276.47) 102,294 (370*$276.47)
Machine hours 106,562 (2,850*$37.39) 197,419 (5,280*$37.39)
Setups 112,500 (60*$1,875) 112,500 (60*$1,875)
Rework orders 44,363 (160*$277.27) 16,636 (60*$277.27)
Purchase orders 96,654 (362*$267) 48,327 (181*$267)
Total overhead costs $801,585 $830,280
Units produced 1,500 3,120
Overhead cost per unit $534.39 $266.12
Total production costs:
Model 145 Model 212
Direct costs per unit $250 $170
Total direct costs $375,000 $530,400
Total overhead costs $801,585 $830,280
Total production costs $1,176,585 $1,360,680
Units produced 1,500 3,120
Total cost per unit $784.39 $436.12
Model 145 Model 212
Market price per unit $1,700.00 $300.00
Total cost per unit 784.39 436.12
Profit (loss) per unit $915.61 ($136.12)
A technological improvement in apple production will: A. Increase the demand for apples, lowering the equilibrium price but raising the equilibrium quantity of apples. B. Increase the supply of apples, raising the equilibrium price but lowering the equilibrium quantity of apples. C. Increase the supply of apples, lowering the equilibrium price and quantity of apples. D. Increase the supply of apples, lowering the equilibrium price but raising the equilibrium quantity of apples. E. Increase the supply apples, raising the equilibrium price and quantity of apples.
Answer:
C. Increase the supply of apples, lowering the equilibrium price and quantity of apples.
Explanation:
Technological improvement can be regarded as an positive change or rise in efficiency of a product as well as the process which in turn results in tangible increase in output, even though there is no significant increase in input. It should be noted that technological improvement in apple production will Increase the supply of apples, lowering the equilibrium price and quantity of apples.
On October 29, 2012, Lobo Co. began operations by purchasing razors for resale. Lobo uses the perpetual inventory method. The razors have a 90-day warranty that requires the company to replace any nonworking razor. When a razor is returned, the company discards it and mails a new one from Merchandise Inventory to the customer. The company's cost per new razor is S20 and its retail selling price is S75 in both 2012 and 2013. The manufacturer has advised the company to expect warranty costs to equal 8% of dollar sales. The following transactions and events occurred.
2012
Nov. 11 Sold 105 razors for S7,875 cash.
30 Recognized warranty expense related to November sales with an adjusting entry.
Dec. 9 Replaced 15 razors that were returned under the warranty.
16 Sold 220 razors for S16,500 cash.
29 Replaced 30 razors that were returned under the warranty.
31 Recognized warranty expense related to December sales with an adjusting entry.
2013
Jan. 5 Sold 150 razors for S11,250 cash.
17 Replaced 50 razors that were returned under the warranty.
31 Recognized warranty expense related to January sales with an adjusting entry.
Required:
a. Prepare journal entries to record these transactions and adjustments for 2012 and 2013.
b. How much warranty expense is reported for November 2012 and for December 2012?
c. How much warranty expense is reported for January 2013?
d. What is the balance of the Estimated Warranty Liability account as of December 31, 2012?
Answer:
a. See the attached excel file for the journal entries for 2012 and 2013.
b. We have the following:
Warranty Expense reported for November 2012 = $630
Warranty Expense reported for December 2012 = $1,320
Total Warranty Expense reported for 2012 = $1,950
c. Warranty Expense reported for January 2013 = $900
d. Balance of the Estimated Warranty Liability account as of December 31, 2012 = $1,050
Explanation:
a. Prepare journal entries to record these transactions and adjustments for 2012 and 2013.
Note: See the attached excel file for the journal entries for 2012 and 2013.
In the attached excel, the following workings are used:
w.1: Cost of Goods Sold = Units sold * Cost per unit = 105 * $20 = $2,100
w.2: Warranty Expense = Sales * 8% = $7,875 * 8% = $630
w.3: Estimated Warranty Liability = Units replaced * Cost per unit = 15 * $20 = $300
w.4: Cost of Goods Sold = Units sold * Cost per unit = 220 * $20 = $4,400
w.5: Estimated Warranty Liability = Units replaced * Cost per unit = 30 * $20 = $600
w.6: Warranty Expense = Sales * 8% = $16,500 * 8% = $1,320
w.7: Cost of Goods Sold = Units sold * Cost per unit = 150 * $20 = $3,000
w.8: Estimated Warranty Liability = Units replaced * Cost per unit = 50 * $20 = $1,000
w.9: Warranty Expense = Sales * 8% = $11,250 * 8% = $900
b. How much warranty expense is reported for November 2012 and for December 2012?
Warranty Expense reported for November 2012 = Sales for November 2012 * 8% = $7,875 * 8% = $630
Warranty Expense reported for December 2012 = Sales for December 2012 * 8% = $16,500 * 8% = $1,320
Total Warranty Expense reported for 2012 = Reported Warranty Expense for November 2012 + Reported Warranty Expense for December 2012 = $630 + $1,320 = $1,950
c. How much warranty expense is reported for January 2013?
Warranty Expense reported for January 2013 = Sales for January 2013 * 8% = $11,250 * 8% = $900
d. What is the balance of the Estimated Warranty Liability account as of December 31, 2012?
Total Warranty Expense reported for 2012 = $1,950
Value of returned 15 razors replaced on Dec. 9, 2012 = Units replaced * Cost per unit = 15 * $20 = $300
Value of returned 30 razors replaced on Dec. 29, 2012 = Units replaced * Cost per unit = 30 * $20 = $600
Total value of returned razors replaced in 2012 = Value of returned 15 razors replaced on Dec. 9, 2012 + Value of returned 30 razors replaced on Dec. 29, 2012 = $300 + $600 = $900
Therefore, we have:
Balance of the Estimated Warranty Liability account as of December 31, 2012 = Total Warranty Expense reported for 2012 - Total value of returned razors replaced in 2012 = $1,950 - $900 = $1,050
Consider the following information about employment across industries in Chicago.
Number of employees Location Quotient
Manufacturing 58,435 0.559
Finance and insurance 102,751 1.825
Administrative and support 107,618 1.181
Educational services 9,379 1.566
Health care and social assistance 179,570 1.046
Arts, entertainment, and recreation 19,132 0.986
If there were a national downturn in these industries, which is likely to be most closely linked to the residential real estate market in Chicago?
A. Manufacturing
B. Finance and Insurance
C. Administrative and Support
D. Educational services
E. Health care and social assistance
F. Arts, entertainment, and recreation
G. None of the above.
Answer:
B. Finance and Insurance
Explanation:
The Location Quotient (LQ) value of finance and insurance is the highest (1.825) and its employment concentration (102,751) is higighesth as well although not the highest.
We know that when (LQ) is greater that 1, its indicates the high concentration in regional growth and opportunities as finance and insurance is concerned.
On the other hand lowest, (LQ) at manufacturing is less than 1 and the employment is also low (58,435), that indicates that manufacturing employment has less of a share of the total in regional growth and opportunities.
So, if there were a national downturn in these industries, Finance and Isurance is likely to be most closely linked to the residential real estate market in Chicago.
A small town is considering paving paradise hotel to put up a parking lot. The land will cost $25,000 and the construction of the lot is estimated to be $150,000. Each year, costs associated with the parking lot are estimated to be $17,500. The income from the lot is expected to be $18,000 the first year and increase by $3,500 each year for the 12 year life of the lot. Determine the B/C ratio if interest rate is 12%. [4 points]
Answer:
0.71
Explanation:
The benefit cost ratio is used to determine the profitability of an investor. It is determined by dividing the present value of benefit by the present value of cost
Benefit cost ratio (BC) = present value of benefits / present value of costs
if BC is greater than 1, the project is profitable
If BC is less than 1, the project is not profitable
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Present value of the benefits
Cash flow in year 1 = $18,000
Cash flow in year 2 = $18,000 + 3500 = $21500
Cash flow in year 3 = $18,000 + (3500 x 2) = $25,000
Cash flow in year 4 = $18,000 + (3500 x 3) = $28500
Cash flow in year 5 = $18,000 + (3500 x 4) = $32,000
Cash flow in year 6 = $18,000 + (3500 x 5) = $35,500
Cash flow in year 7 = $18,000 + (3500 x 6) = $39,000
Cash flow in year 8 = $18,000 + (3500 x 7) = $42,500
Cash flow in year 9 = $18,000 + (3500 x 8) = $46,000
Cash flow in year 10 = $18,000 + (3500 x 9) = $49500
Cash flow in year 11 = $18,000 + (3500 x 10) = $53,000
Cash flow in year 12 = $18,000 + (3500 x 11) = $56,500
I = 12 %
PV = $202,331.70
Present value of the cost
Cash flow in year 0 = $25,000 + $150,000 = $175,000
Cash flow in year 1 to 12 = $17,500.
I = 12 %
PV = $283,401.55
B/C ratio = $202,331.70 / $283,401.55 = 0.71
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Using the appropriate present value table and assuming a 12% annual interest rate, determine the present value on December 31, 2018, of a five-period annual annuity of $5,000 under each of the following situations: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
1. The first payment is received on December 31, 2019, and interest is compounded annually.
2. The first payment is received on December 31, 2018, and interest is compounded annually.
3. The first payment is received on December 31, 2019, and interest is compounded quarterly.
Answer:
1. Present value on December 31, 2018 = $18,023.88
2. Present value on December 31, 2018 = $20,186.75
3. Present value on December 31, 2018 = $17,780.59
Explanation:
1. The first payment is received on December 31, 2019, and interest is compounded annually.
This is an example of ordinary annuity. Therefore, the present value on December 31, 2018 can be calculated using the formula for calculating the present value of an ordinary annuity as follows:
PV = P * ((1 - (1 / (1 + r))^n) / r) …………………………………. (1)
Where;
PV = present value on December 31, 2018 = ?
P = Annual annuity = $5,000
r = Annual interest rate = 12%, or 0.12
n = number of years = 5
Substitute the values into equation (1), we have:
PV = $5,000 * ((1 - (1 / (1 + 0.12))^5) / 0.12)
PV = $5,000 * 3.60477620234501
PV = $18,023.88
2. The first payment is received on December 31, 2018, and interest is compounded annually.
This is an example of annuity due. Therefore, the present value on December 31, 2018 can be calculated using the formula for calculating the present value of an annuity due as follows:
PV = P * ((1 - [1 / (1+r))^n) / r) * (1+r) .................................. (2)
Where;
Where;
PV = present value on December 31, 2018 = ?
P = Annual annuity = $5,000
r = Annual interest rate = 12%, or 0.12
n = number of years = 5
Substitute the values into equation (1), we have:
PV = $5,000 * ((1 - [1 / (1+0.12))^5) / 0.12) * (1+0.12)
PV = $5,000 * 3.60477620234501 * 1.12
PV = $5,000 * 4.03734934662641
PV = $20,186.75
3. The first payment is received on December 31, 2019, and interest is compounded quarterly.
Note: See the calculation of the present value on December 31, 2018 in the attached excel file.
This is also an example of ordinary annuity.
In the attached excel file, the following formula is used:
Discounting factor = 1 / (1 + r)^n .............. (1)
Where;
r = Quarterly interest rate = Annual interest rate / Number of quarters in a year = 12% / 4 = 0.12 / 4 = 0.03
n = number of quarters = number of years * Number of quarters in a year
From the attached excel file, we have:
Present value on December 31, 2018 = Total present value = $17,780.59
On January 1, 2021, Majestic Mantles leased a lathe from Equipment Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by Majestic. Portions of the Equipment Leasing’s lease amortization schedule appear below: Jan. 1 Payments Effective Interest Decrease in Balance Outstanding Balance 308,032 2021 30,000 30,000 278,032 2022 30,000 23,633 6,367 271,665 2023 30,000 23,092 6,908 264,757 2024 30,000 22,504 7,496 257,261 2025 30,000 21,867 8,133 249,128 2026 30,000 21,176 8,824 240,303 2027 30,000 20,426 9,574 230,729 — — — — — — — — — — — — — — — 2038 30,000 6,513 23,487 53,135 2039 30,000 4,516 25,484 27,651 2040 30,000 2,350 27,650 0 Required: 1. What is Majestic’s lease liability after the first lease payment?2. What amount would Majestic record as a right-of-use asset? 3. What is the lease term in years? 4. What is the effective annual interest rate? (Round your percentage answers to 1 decimal place.) 5. What is the total amount of lease payments? 6. What is the total effective interest expense recorded over the term of the lease?
1. Majestic’s lease liability after the first lease payment is $278,032.
2. The amount that Majestic would record as a right-of-use asset is $308,032.
3. The lease term in years is 20 years.
4. The effective annual interest rate is 8.5%.
5. The total amount of lease payments is $600,000.
6. The total effective interest expense recorded over the term of the lease is $29,1968.
Data and Calculations:Lease Amortization Schedule
Jan. 1 Payments Effective Interest Decrease Outstanding
in Balance Balance
308,032
2021 30,000 30,000 278,032
2022 30,000 23,633 6,367 271,665
2023 30,000 23,092 6,908 264,757
2024 30,000 22,504 7,496 257,261
2025 30,000 21,867 8,133 249,128
2026 30,000 21,176 8,824 240,303
2027 30,000 20,426 9,574 230,729
— — — — — — — — — — — — — — —
2038 30,000 23,487 6,513 53,135
2039 30,000 25,484 4,516 27,651
2040 30,000 27,650 2,350 0
Lease term = 20 years (2040 - 2020).
Effective annual interest rate = 8.5% ($23,633/$278,032 x 100).
Total amount of lease payments = $600,000 ($30,000 x 20).
Total effective interest expense recorded over the term of the lease = $29,1968 ($600,000 - $308,032).
Thus, the total effective interest expense recorded over the term of the lease is $29,1968.
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The following table presents Generic Motors Company's production budget. GM's inventory policy is to have ending inventory equal to20% of next month's sales.
February March April
Ending inventory 5,000
Beginning inventory 2,000
Budgeted sales 13,000 17,000 18,000
Budgeted production
Required:
a) Fill in the missing numbers in the table above.
(Hint if you get stuck: What is the relation between ending inventory for one month and beginning inventory for the following month?)
b) Why do firms want to hold inventory of finished goods? (an alternative could be to produce exactly the amount they are going to sell, and hold zero inventories)
Answer:
a.
________________________________February__March__April
Ending inventory 20% of next Months sale _3400___3600__5,000
Beginning inventory__________________ 2,000__ 3400__ 3600
Budgeted sales _____________________ 13,000__17,000_ 18,000
Budgeted production_________________ 14,400__ 17,200_ 19,400
b.
Firms wants to hold the finished goods inventry in order to deal with the future demand
Explanation:
a.
Use the following formula to calculate the Budgeted production
Budgeted Production = Beginning Inventory - Ending Inventory + Busgeted Sales
Working
________________________________February__March__April
Ending inventory 20% of next Months sale _3400___3600__5,000
Less: Beginning inventory______________2,000__ 3400__ 3600
Add: Budgeted sales _________________ 13,000__17,000_ 18,000
= Budgeted production________________14,400__ 17,200_ 19,400
b.
The finished goods inventory is held to deal with the future market demand. If the firm produce the uniits equals o the current demand then in case of increase in demand or unexpected demand increase the firms will not be able to fulfil the demand and will lose the opportunity.