Answer:
360-degree appraisal
Explanation:
The term being described by the question is known in business as a 360-degree appraisal. During this appraisal method, a staff member's work during a specific time interval is discussed and critiqued by various other employees as well as the supervisors, unlike other methods that focus only on the point of view of the employees' supervisors and bosses.
Grandiose Growth has a dividend growth rate of 10%. The discount rate is 8%. The end-of-year dividend will be $5 per share.
What is the present value of the dividend to be paid in year 1? Year 2? Year 3?
Answer:
Year 1 2 3
Present value 5.09 5.19 5.28
Explanation:
The Present Value of a future sum is the worth today where the sum is discounted at a particular rate of return.
The formula below would be of help to work out the Present Value
Present Value = FV× (1+r)^(-n)
FV - Future Value, r- rate of return, n- number of years
Present value = $5× 1.10× 1.08^(-1)= 5.092
Present Value = $5× 1.10^2×1.08^(-2)= 5.186
Present Value in year 3 = $5× 1.10^3×1.08^(-3)= 5.28
Year 1 2 3
Present value = 5.092 5.186 5.28
On January 1, 2010, the balance in Tabor Co.'s Allowance for Bad Debts account was $13,085. During the first 11 months of the year, bad debts expense of $21,937 was recognized. The balance in the Allowance for Bad Debts account at November 30, 2010, was $9,919.Required:(a) What was the total of accounts written off during the first 11 months? (Hint: Make a T-account for the Allowance for Bad Debts account.)Bad debt write offs $(b) As the result of a comprehensive analysis, it is determined that the December 31, 2010, balance of the Allowance for Bad Debts account should be $9,450. Show the adjustment required in the journal entry format.Allowance for bad debt Debit $Bad debt expenses Credit $
Answer:
(a) What was the total of accounts written off during the first 11 months?
bad debts written for the first 11 months = allowance for bad debt accounts January 1 balance + bad debt expense - allowance for bad debt accounts November 30 balance = $13,085 + $21,937 - $9,919 = $25,103
(b) As the result of a comprehensive analysis, it is determined that the December 31, 2010, balance of the Allowance for Bad Debts account should be $9,450. Show the adjustment required in the journal entry format.Allowance for bad debt Debit $Bad debt expenses Credit $
to determine the amount of bad debt expense that must be adjusted, we must subtract the estimated balance in December 31 from the balance in November 30 = $9,919 - $9,450 = $469. Since the November 30 amount is larger, it means that we over estimated our bad debt expense and it must be reduced:
Dr Allowance for doubtful accounts 469
Cr Accounts receivable 469
Production Department 1 Production Department 2 Production Department 3 Support Department 1 cost driver 1,400 100 500 Support Department 1’s costs total $142,000. Using the direct method of support department cost allocation, determine the costs from Support Department 1 that should be allocated to each production department.
Answer:
Department 1 cost Allocation =$99,400
Department 2 cost Allocation=$7,100
Department 3 cost Allocation=$35,500
Explanation:
Calculation for determining the costs from Support Department 1 that should be allocated to each production department using the direct method of support department cost allocation,
The first step is to find the Support department total cost drivers
Using this formula
Support department total cost drivers = Production Department 1 + Production Department 2 + Production Department 3
Let plug in the formula
Support department total cost drivers= 1,400+100+500
Support department total cost drivers = 2,000
Second step is to determine the costs from Support Department 1 that should be allocated to each production department.
Production Department 1
Support Department 1 Allocation
142,000* 1,400/2,000= $99,400
Production Department 2
Support Department 1 Allocation
142,000 * 100/2,000= $7,100
Production Department 3
Support Department 1 Allocation
142,000* 500/2,000= $35,500
Therefore the costs from Support Department 1 that should be allocated to each production department will be :
Department 1 cost Allocation =$99,400
Department 2 cost Allocation=$7,100
Department 3 cost Allocation=$35,500
Worldwide Logistics provides the following information: Operating income $ 1 comma 550 comma 000 Net sales $ 14 comma 000 comma 000 Average total assets $ 2 comma 000 comma 000 Management's target rate of return 30% What is the company's residual income?
Answer:
The company's residual income is $950,000.
Explanation:
Residual Income is calculated as Operating Income less Cost of Investment.
Calculation of Residual Income :
Operating income $1,550,000
Less Cost of Investment ($2,000,000 × 30%) ($600,000)
Residual Income $950,000
Conclusion :
The company's residual income is $950,000.
ctivity-Based Costing and Conventional Costs Compared Chef Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month. Gas Cooker Charcoal Smoker Units 1,000 4,000 Number of batches 60 10 Number of batch moves 80 20 Direct materials $20,000 $100,000 Direct labor $20,000 $27,000 Manufacturing overhead follows: Activity Cost Cost Driver Materials acquisition and inspection $288,000 Amount of direct materials cost Materials movement 16,900 Number of batch moves Scheduling 42,000 Number of batches $346,900 Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent. (a) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars. HINT: Use 7.3809 for overhead rate calculations. Total cost Answer Gas Cooker Answer per unit Charcoal Smoker Answer per unit (b) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing. Total cost Answer Gas Cooker Answer per unit Charcoal Smoker Answer per unit PreviousSave AnswersNext
Answer:
(a) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars.
Gas Cooker:
total cost = $20,000 + $20,000 + $147,618 = $187,618
cost per unit = $187.62
Charcoal Smoker
total cost = $20,000 + $27,000 + $199,284 = $246,284
cost per unit = $61.57
(b) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing.
Gas Cooker:
total cost = $20,000 + $20,000 + $48,000 + $13,520 + $36,000 = $137,520
cost per unit = $137.52
Charcoal Smoker
total cost = $100,000 + $27,000 + $240,000 + $3,380 + $6,000 = $376,380
cost per unit = $94.10
Explanation:
Gas Cooker Charcoal Smoker
Units 1,000 4,000
Number of batches 60 10
Number of batch moves 80 20
Direct materials $20,000 $100,000
Direct labor $20,000 $27,000
Manufacturing overhead follows:
Activity Cost Cost Driver
Materials acquisition $288,000 Amount of direct
and inspection materials cost
$48,000
$240,000
Materials movement $16,900 Number of batch moves
$13,520
$3,380
Scheduling $42,000 Number of batches
$36,000
$6,000
SPU, Ltd., has just received its sales expense report for January, which follows.Item AmountSales commissions $370,500Sales staff salaries 92,400Telephone and mailing 43,000Building lease payment 60,000Utilities 17,100Packaging and delivery 82,000Depreciation 36,750Marketing consultants 52,190You have been asked to develop budgeted costs for the coming year. Because this month is typical, you decide to prepare an estimated budget for a typical month in the coming year and you uncover the following additional data:1. Sales volume is expected to increase by 14 percent.2. Sales prices are expected to decrease by 10 percent.3. Commissions are based on a percentage of sales revenue.4. Sales staff salaries will increase 4 percent next year regardless of sales volume.5. Building rent is based on a five-year lease that expires in three years.6. Telephone and mailing expenses are scheduled to increase by 8 percent even with no change in sales volume. However, these costs are variable with the number of units sold, as are packaging and delivery costs.7. Utilities costs are scheduled to increase by 2 percent regardless of sales volume.8. Depreciation includes furniture and fixtures used by the sales staff. The company has just acquired an additional $57,000 in furniture that will be received at the start of next year and will be depreciated over a 10-year life using the straight-line method.9. Marketing consultant expenses were for a special advertising campaign that runs from time to time. During the coming year, these costs are expected to average $64,500 per month.Required:Prepare a budget for sales expenses for a typical month in the coming year.
Answer:
SPU, Ltd.Sales ExpenseReport for January Sales Expense Budget
Item Amount Amount
Sales commissions $370,500 $380,133
Sales staff salaries 92,400 92,096
Telephone and mailing 43,000 52,942
Building lease payment 60,000 60,000
Utilities 17,100 17,442
Packaging and delivery 82,000 93,480
Depreciation 36,750 37,225
Marketing consultants 52,190 64,500
Total Sales Expenses $753,940 $797,818
Explanation:
1. Sales volume is expected to increase by 14 percent.
2. Sales prices are expected to decrease by 10 percent.
3. Commissions are based on a percentage of sales revenue.
Sales Commissions = $380,133 ($370,500 x 1.14 x 0.9)
4. Sales staff salaries will increase 4 percent next year regardless of sales volume.
Sales staff salaries = $96,096 ($92,400 x 1.04)
5. Building rent is based on a five-year lease that expires in three years.
6. Telephone and mailing expenses are scheduled to increase by 8 percent even with no change in sales volume. However, these costs are variable with the number of units sold, as are packaging and delivery costs.
Telephone and mailing = $52,942 ($43,000 x 1.08 x 1.14)
Package and delivery = $93,480 ($82,000 x 1.14)
7. Utilities costs are scheduled to increase by 2 percent regardless of sales volume.
Utilities = $17,442 ($17,100 x 1.02)
8. Depreciation includes furniture and fixtures used by the sales staff. The company has just acquired an additional $57,000 in furniture that will be received at the start of next year and will be depreciated over a 10-year life using the straight-line method.
Previous depreciation = $36,750
Current year's addition 475 ($57,000/10 years/12 months)
Total for the month $37,225
9. Marketing consultant expenses were for a special advertising campaign that runs from time to time. During the coming year, these costs are expected to average $64,500 per month.
Chad, a sole proprietor of a private boat charter business, purchased and placed into service ten boats for $260,000 each on May 1, Year 1. These were the only assets Chad placed into service in Year 1. Assume the boats have a 10 year MACRS recovery period. What is the maximum amount, if any, that Chad can deduct in Year 1 if he does not elect out of bonus depreciation
Answer:
The maximum amount that Chad can depreciate in yer 1 if he decides not to elect bonus depreciation is $26,000
Explanation:
MACRS 10 year depreciation rate of recovery half year convention:
Year Depreciation % Purchase cost Depreciation
1 10% $260,000 $26,000
2 18% $260,000 $46,800
3 14.40% $260,000 $37,440
4 11.52% $260,000 $29,952
5 9.22% $260,000 $23,972
6 7.37% $260,000 $19,162
7 6.55% $260,000 $17,030
8 6.55% $260,000 $17,030
9 6.56% $260,000 $17,056
10 6.55% $260,000 $17,030
11 3.28% $260,000 $8,528
Partners, LLC members and S Corporation shareholders are not taxed on the amount they withdraw from the entity in a nonliquidating distribution when they have sufficient basis (disregarding any other limitation).
a. True
b. False
Answer:
Partners: True
LLC: True
S Corporation: False
Explanation:
When dividends are withdrawn from a business tax is only due on a S Corporation because the tax paid for the profits of an organization is not by the stockholder withdrawing the dividends which is why when dividend is withdrawn the tax is to be paid.
When dividends are withdrawn in a partnership or and LLC then no tax is payable as tax is already paid on the profits made by the business that is why dividends are not taxable when withdrawn.
If the interest rate is 10%, what is the present value of a security that pays you $1,500 next year, $1,400 the year after, and $1,300 the year after that?
Answer:
The present value is $3,497.3
Explanation:
In order to calculate the present value of a security that pays you $1,500 next year, $1,400 the year after, and $1,300 the year after we would have to make the following calculation:
Present Value = payment next year x P/F(10%, 1) + payment the year after x P/F(10%, 2) + payment the year after that x P/F(10%, 3)
Present Value= $1,500 x 0.9091 + $1,400 x 0.8264 + $1,300 x 0.7513
Present Value = $1,363.65 + $1,156.96 + $976.69
Present Value = $3,497.3
The present value is $3,497.3
Rowdy's Restaurants Cash Flow ($ in millions) Cash received from: Customers $ 1,800 Interest on investments 200 Sale of land 100 Sale of Rowdy's common stock 600 Issuance of debt securities 2,000 Cash paid for: Interest on debt $ 300 Income tax 80 Debt principal reduction 1,500 Purchase of equipment 4,000 Purchase of inventory 1,000 Dividends on common stock 200 Operating expenses 500 Rowdy's would report net cash inflows (outflows) from operating activities in the amount of:
Answer:
Net cash flow from operating activities $120
Explanation:
Cash flows from operating activities
Cash collections:
Cash collected from customers $1,800Cash from interest revenue $200 $2,000Cash payments:
Operating expenses ($500)Inventory ($1,000)Interest on debt ($300)Income tax ($80) ($1,880)Net cash flow from operating activities $120
Which of the following is a disadvantage of using variable costing? Select one: A. Two sets of accounting records must be maintained. B. Inventory values tend to be overstated. C. CVP relationships are more difficult to determine than under absorption costing. D. Per-customer or per-product contribution margin is obscured.
Answer:
Two sets of accounting records must be maintained.
Explanation:
Variable costing is the costing in which only variable cost is considered i.e direct material cost, direct labor cost, variable manufacturing overhead cost therefore no fixed cost could be considered
Under this the disadvantage is that it recognized two accounting records sets which are to be maintained
Hence, the first option is correct
Cantrell Company is required by law to collect and remit sales taxes to the state. If Cantrell has $4,500 of cash sales that are subject to an 6% sales tax, what is the journal entry to record the cash sales
Answer:
Debit Cash $4,770
Credit Sales $4,500
Credit Sales Taxes Payable 270
Explanation:
Preparation of the journal entry to record the cash sales for Cantrell Company
Debit Cash $4,770
Credit Sales $4,500
Credit Sales Taxes Payable 270
Explanation:
Since Cantrell Company is been required to receive and remit the sales taxes in which If Cantrell has $4,500 of cash sales that are subject to an 6% sales tax this means we have to Debit Cash $4,770, Credit Sales $4,500 and Credit Sales Taxes Payable 270.
The Sales Taxes Payable will be :
Sales × Sales Tax Rate
Sales Taxes Payable = $4,500 × 0.06= $270
( A Credit to Sales Taxes Payable)
The Cash Received will be:
Sales + Sales Taxes Payable
Cash Received = $4,500 + $270 = $4,770
( A Debit to Cash)
Suppose a stock had an initial price of $70 per share, paid a dividend of $2.30 per share during the year, and had an ending share price of $82.
Requried:
a. Compute the percentage total return.
b. What was the dividend yield and the capital gains yield?
Answer:
Stock, Dividend, and Yield:
a) Computation of the percentage total return:
Total return = Dividend + Capital appreciation = $14.30 ($2.30 + $12)
Percentage of total return = $14.30/$70 x 100 = 20.43%
b1) Dividend yield = Dividend per share / price per share = $2.30/$70 = 0.032857 or 3.29%
b2) Capital gains yield = (Current price - initial investment)/ initial investment = ($82 - $70)/$70 = 0.1714 or 17%
Explanation:
a) The Dividend yield is a financial ratio (dividend/price) that shows how much a company pays out in dividends each year relative to its stock price.
b) Capital gains yield is the percentage price appreciation on an investment. It is calculated as the increase in the price of an investment, divided by its original acquisition cost. For instance, an equity security that is purchased for $700 and later sold for $825, the capital gains yield is 17.86%.
c) The total return from an investment is the sum of the dividend or interest received plus capital gains.
Chou Co. has a net income of $47,000, assets at the beginning of the year are $254,000 and assets at the end of the year are $304,000. Compute its return on assets.
Answer:
Return on assets=28.54%
Explanation:
Return on asset is the average rate of return generated by the asset investment of a business. It is the net income earned as a proportion of the average investment.
Return on assets = net income / Average assets× 100
Average asset value = (opening balance + closing balance of assets)/2
=( 254,000 + 304,000)/2= 164700
Return on assets = 47,000/164,700 × 100 =28.54%
Return on assets=28.54%
Suppose that Spain and Germany both produce rye and olives. Spain's opportunity cost of producing a crate of olives is 5 bushels of rye while Germany's opportunity cost of producing a crate of olives is 10 bushels of rye.By comparing the opportunity cost of producing olives in the two countries, you can tell that_______has a comparative advantage in the production of olives and_______has a comparative advantage in the production of rye. Suppose that Spain and Germany consider trading olives and rye with each other. Spain can gain from specialization and trade as long as it receives more than______of rye for each crate of olives it exports to Germany. Similarly, Germany can gain from trade as long as it receives more than_______of olives for each bushel of rye it exports to Spain. Which of the following prices of trade (that is, price of olives in terms of rye) would allow both Germany and Spain to gain from trade? a. 9 bushels of rye per crate of olives.b. 15 bushels of rye per crate of olives.c. 8 bushels of rye per crate of olives.d. 3 bushels of rye per crate of olives.
Answer:
1. By comparing the opportunity cost of producing olives in the two countries, you can tell that Spain has a comparative advantage in the production of olives and Germany has a comparative advantage in the production of rye.
Germany is able to produce more Rye if it is not producing olives meaning that they are more efficient in this giving them the comparative Advantage.
Spain is able to produce 2x more Olives than Germany for the same amount of Rye so they are more efficient in this manner.
2. Spain can gain from specialization and trade as long as it receives more than 5 bushels of rye for each crate of olives it exports to Germany.
If Spain can get more bushels per Olives than it can produce on it's own then they will make a gain.
3. Similarly, Germany can gain from trade as long as it receives more than ⅒ or 0.1 crate of olives for each bushel of rye it exports to Spain.
Similarly if Germany can get more crates of Olives per Rye than it can produce then it makes a gain. For each Bushel of Rye, Germany can create 0.1 crate of olives. Should they get more than this 0.1 crate then they make a gain.
4. The amount of Rye being exchanged for Olives should be between 5 and 10 bushels.
a. 9 bushels of rye per crate of olives.
c. 8 bushels of rye per crate of olives
At both 8 and 9 bushels of Rye per Olive Crate Germany would be getting more Rye per crate of olive than they can produce on their own and similarly at both 8 and 9 bushes of Rye for olives, Spain would getting more bushels than they could have gotten if they gave up olives to produce Rye.
Mary makes monthly deposits of $450 at the end of each month over 25 consecutive years to support her retirement. If the account earns an interest rate of 7.5%, which amount comes closest to the value of the deposits at the end?
a. $120,938
b. $343,343
c. $382,667
d. $394,767
e. $367,100
Answer:
d. $394,767
Explanation:
For computing the amount of deposit at the end we need to apply the future value formula i.e to be shown in the attachment
Given that,
Present value = $0
Rate of interest = 7.5% ÷ 12 months = 0.625%
NPER = 25 years × 12 months = 300 months
PMT = $450
The formula is shown below:
= -FV(Rate;NPER;PMT;PV;type)
So, after applying the above formula, the future value is $394,767
Suppose that Italy and Germany both produce rye and cheese. Italy's opportunity cost of producing a pound of cheese is 5 bushels of rye while Germany's opportunity cost of producing a pound of cheese is 10 bushels of rye.
By comparing the opportunity cost of producing cheese in the two countries, you can tell that ? ( Italy OR Germany? ) has a comparative advantage in the production of cheese and ? ( Italy OR Germany? ) has a comparative advantage in the production of rye.
Suppose that Italy and Germany consider trading cheese and rye with each other. Italy can gain from specialization and trade as long as it receives more than ? (1 bushel , 1/10 bushel,1/5 bushel,5 bushel,10 bushel ?) of rye for each pound of cheese it exports to Germany. Similarly, Germany can gain from trade as long as it receives more than ? (1 pound , 1/10 pound ,1/5 pound ,5 pound ,10 pound ?) of cheese for each bushel of rye it exports to Italy.
Based on your answer to the last question, which of the following prices of trade (that is, price of cheese in terms of rye) would allow both Germany and Italy to gain from trade? Check all that apply.
6 bushels of rye per pound of cheese
7 bushels of rye per pound of cheese
4 bushels of rye per pound of cheese
1 bushel of rye per pound of cheese
Answer:
Italy has a comparative advantage in the production of cheese.
Germany has a comparative advantage in the production of rye.
5 bushels of rye
1/10 pound of cheese
6 bushels of rye per pound of cheese
7 bushels of rye per pound of cheese
Explanation:
Italy: 1 pound of cheese = 5 bushels of rye
Germany: 1 pound of cheese = 10 bushels of rye
Therefore, the opportunity cost of producing one pound of cheese in Italy is lower than the cost of producing one pound of cheese in Germany, which means that Italy has a comparative advantage in the production of cheese. The opposite can be said about rye since it costs the Germans only half a pound of cheese to produce 5 bushels of rye, while it costs the Italians a whole pound. Therefore, Germany has a comparative advantage in the production of rye.
This means that Italy can gain from specialization if it gains more than 5 bushels of rye for each pound of cheese.
As for Germany, can gain from specialization if it gains more than 1/10 pound of cheese for each bushel of rye.
Therefore, from the alternatives presented, the following would represent a gain from trade for both countries:
6 bushels of rye per pound of cheese
7 bushels of rye per pound of cheese
Mountain Top Markets has total assets of $48,700, net working capital of $1,100, and retained earnings of $21,200. The firm has 12,500 shares of stock outstanding with a par value of $1 per share and a market value of $7.10 per share. The stock was originally issued to the firm's founders at par value. What is the market-to-book ratio
Answer: 2.63
Explanation:
The Market to Book ratio is also referred to as the price to book ratio. It is a financial evaluation of the market value of a company relative to its book value. It should be noted that the market value is current stock price of every outstanding shares that the company has while the book value is the amount that the company will have left after its assets have been liquidated and all liabilities have been repaid.
The market-to-book ratio will be the market price per share divided by the book value. It should be noted that the book value per share is the net worth of the business divided by the number of outstanding shares. The book value will be:
= [(12500 ×1) + $21200]/12500
= ($12500 + $21200)/$12500
= $33700/12500
=$2.70
The market-to-book ratio will now be:
= $7.10/$2.70
=2.63
Ridley Company estimates that overhead costs for the next year will be $4,057,500 for indirect labor and $600,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 115,000 machine hours are planned for this next year, what is the company's plantwide overhead rate
Answer:
Predetermined manufacturing overhead rate= $40.5 per machine-hours
Explanation:
Giving the following information:
Estimated overhead:
Indirect labor= $4,057,500
Factory utilities= $600,000
Total overhead= $4,657,500
Estimated machine-hours= 115,000
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 4,657,500/115,000
Predetermined manufacturing overhead rate= $40.5 per machine-hours
Charlie’s Furniture Store has been in business for several years. The firm's owners have described the store as a "high-price, high-service" operation that provides lots of assistance to its customers. Margin has averaged a relatively high 34% per year for several years, but turnover has been a relatively low 0.4 based on average total assets of $800,000. A discount furniture Store is about to open in the area served by Charlie's, and management is considering lowering prices to compete effectively.Required:a. Calculate current sales and ROI for Charlie’s Furniture Store. (Round your "ROI" to 1 decimal place.)b. Assuming that the new strategy would reduce margin to 20%, and assuming that average total assets would stay the same, calculate the sales that would be required to have the same ROI as Charlie’s currently earns. (Do not round intermediate calculations.)c. Suppose you presented the results of your analysis in parts a and b of this problem to Charlie, and he replied, "What are you telling me? If I reduce my prices as planned, then I have to practically double my sales volume to earn the same return?" Given the results of your analysis, what is the actual amount of increase in sales required? (Do not round intermediate calculations.)d. Now suppose Charlie says, "You know, I'm not convinced that lowering prices is my only option in staying competitive. What if I were to increase my marketing effort? I'm thinking about kicking off a new advertising campaign after conducting more extensive market research to better identify who my target customer groups are." In general, explain to Charlie what the likely impact of a successful strategy of this nature would be on margin, turnover, and ROI.
Answer:
a. Calculate current sales and ROI for Charlie’s Furniture Store.
asset turnover formula = net sales / average assets
0.4 = net sales / $800,000
net sales = $320,000
ROI = net income / investment
net income = $320,000 x 34% = $108,800
ROI = $108,800 / $800,000 = 13.6%
b. Assuming that the new strategy would reduce margin to 20%, and assuming that average total assets would stay the same, calculate the sales that would be required to have the same ROI as Charlie’s currently earns.
net income = net sales x 20% (new margin)
net sales = $108,800 / 20% = $544,000
c. Suppose you presented the results of your analysis in parts a and b of this problem to Charlie, and he replied, "What are you telling me? If I reduce my prices as planned, then I have to practically double my sales volume to earn the same return?" Given the results of your analysis, what is the actual amount of increase in sales required?
sales increase = ($544,000 - $320,000) / $320,000 = 70% increase
d. Now suppose Charlie says, "You know, I'm not convinced that lowering prices is my only option in staying competitive. What if I were to increase my marketing effort? I'm thinking about kicking off a new advertising campaign after conducting more extensive market research to better identify who my target customer groups are." In general, explain to Charlie what the likely impact of a successful strategy of this nature would be on margin, turnover, and ROI.
An extensive market research and a "successful" marketing campaign are generally expensive. Even if the marketing campaign is really successful in increasing sales, costs would also increase. So the equation may or may not change, depending if the contribution margin of the additional units sold will be able to cover the expenses of a complex marketing campaign. If you spend $100 to earn $100 more, your situation hasn't changed at all. Which means that net income may or may not increase, therefore, the profit margin, ROI and asset turnover may not change.
Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books:
1. Andrea invested $13,500 cash in the business.
2. Andrea contributed $20,000 of photography equipment to the business.
3. The company paid $2,100 cash for an insurance policy covering the next 24 months.
4. The company received $5,700 cash for services provided during January.
5. The company purchased $6,200 of office equipment on credit.
6. The company provided $2,750 of services to customers on account.
7. The company paid cash of $1,500 for monthly rent.
8. The company paid $3,100 on the office equipment purchased in transaction #5 above.
9. Paid $275 cash for January utilities.
Based on this information, the balance in the A. Apple, Capital account reported on the Statement of Owner's Equity at the end of the month would be:__________.
a. $31,400.
b. $39,200.
c. $31,150.
d. $40,175.
e. $30,875.
Answer:
2356
Explanation:
3546478967654322 321
You notice that Coca-Cola has a stock price of $ 40.68 and EPS of $ 2.04. Its competitor PepsiCo has EPS of $ 3.43. But, Jones Soda, a small batch Seattle-based soda producer has a P/E ratio of 35.2. Based on this information, what is one estimate of the value of a share of PepsiCo stock? g
Answer:
Estimate Value of a share= $71.81
Explanation:
The value of a share can be determined using the price earning ratio model. According to this model, the price of a share is estimated as the EPS of the company multiplied by a representative P/E ratio.
Value of share = EPS × P/E
The appropriate P/E ratio would be that of a similar operator in the same industry, in this case , Jones Soda.
Hence the estimate value of share =2.04 × 35.2=71.81
Estimate Value of a share= $71.81
"In your opinion, how has social media affected customer service in a broad sense? Provide evidence that supports your opinion."
Explanation:
Social media directly impacted the relationship between consumer and company.
First, you need to consider how the internet and social media are widely used by thousands of people around the world as a way to connect with others and exchange information.
Realizing this phenomenon, companies decided to use social media as a way to interact with their customers and attract more audiences. Social media works as a space where the construction of the relationship takes place more instantly and a little less formally, which allows for more in-depth interaction and the creation of a valuable relationship between company and customer.
Through the social media it is possible that the time of an answer for example is drastically reduced, which alters the consumer perception in a positive way.
It is also possible that companies use social media as a tool to improve relationship marketing, which is the creation of value for the customer through content, photos and posts, which generate engagement, approximation, loyalty and connection with consumers.
In response to the financial crisis that began in 2007, the government began to bail out banks deemed "too big to fail." Critics of this action argued that this would create the prospect of future bailouts and encourage banks to be fiscally irresponsible in the future. This illustrates
Answer:
The moral hazard problem
Explanation:
Moral hazard problem is defined as a situation where a party gets involved in a risky venture knowing that another party will incur the cost of failure.
For example if a borrower knows that he can take borrowed funds and default easily, he will tend to not pay back because the lender will bear the loss.
During the the financial crisis that began in 2007, the government began to bail out banks deemed "too big to fail."
This created fiscal irresponsibility in banks that knew if they are at risk of failing they will be bailed out by the government.
Simko Company issued $750,000, 8-year, 6 percent bonds on January 1, 2018. The bonds were issued for $710,000. Interest is payable annually on December 31. Using straight-line amortization, prepare journal entries to record (a) the bond issuance on January 1, 2018, and (b) the payment of interest on December 31, 2018.
Answer:
Bond issuance:
Dr cash $710,000
Dr discount on bonds payable $40,000
Cr bonds payable $750,000
The payment of interest on December 31, 2018:
Dr interest expense $50,000
Cr discount on bonds payable $5000
Cr cash $45,000
Explanation:
The bonds were issued at a discount to their face value, as a result, the discount on bonds payable is computed thus:
discount on bonds payable=$750,000-$710,000=$40,000
Bonds payable would be credited with $750,000 while cash and discount on bonds payable would be debited with $710,000 and $40,000 respectively
annual discount amortization=$40,000/8=$5000
annual coupon=$750,000*6%=$45000
Total revenue equals the price multiplied by the quantity. The relative change price and quantity is given by the concept of ________________.
Answer: elasticity
Explanation:
Elasticity has to do with how the changes in price affects the quantity I goods and services that are demanded by the consumers in the market.
Sometimes, a change in price may lead to either a larger change in the quantity demand or it ma lead to a minimal effect on the quantity of good demanded. This is the concept of elastic and inelastic demand.
When the attitude of continuous improvement exists throughout an organization, every manager and employee is challenged to continuously experiment with new and improved business practices.
a. True
b. False
Answer:
Option A
True
Explanation:
The attitude of continuous improvement entails that the members of an organization strive to improve on themselves, operations, and processes within the organization. It usually entails learning from both mistakes and business practices of other companies to ensure that there is a constant improvement in the day to day activities of the business.
During the process of continuous improvement, every manager and employee is definitely expected to try out new policies, and practices to see how well they fit in and aid the company to achieve her overall business goals.
This is the only way a strong "continuous improvement " attitude can be maintained company-wide.
Hence, the answer is option A: True.
has 10 percent coupon bonds on the market with 19 years to maturity. The bonds make semiannual payments and currently sell for 107.8 percent of par. What is the current yield on the bonds?
Answer:
4.62%
Explanation:
we need to calculate the yield to maturity of the bond:
YTM = [coupon + (face value - market value)/n] / [(face value + market value)/2]
coupon = $50face value = $1,000market value = $1,078n = 38 semiannual paymentsYTM = [$50 + ($1,000 - $1,078)/38] / [($1,000 + $1,078)/2]
YTM = $47.95 / $1,039 = 4.615 ≈ 4.62%
The financial statement effects of the budgeting process are summarized on the cash budget and the capital expenditures budget. true or false
Answer:
true
Explanation:
the government believes that the equilibrium price is too low and tries to help almond growers by settinga price floor at Pf. What are represents the portion of consumer surplus that have been transsferred to produce surplus as a result of the price floor.
Answer: D) B
Explanation:
The Producer Surplus refers to the area below the Price Floor but above the Supply Curve and left of the new Quantity supplied. It comprises of areas B and E.
Before the Price Floor was introduced, area A, B and C were the Consumer Surplus as they were above the price but below the Demand Curve.
After the Price Floor was introduced however, area B has become a Producer Surplus.