Answer:
false
Explanation:
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Examine the equal opportunity laws of another country, not the United States. Are the laws in other countries as much a concern for HRM specialists as they are in the United States?
Answer:
The equal opportunity laws of another country, not the United States is discussed below in details.
Explanation:
An equal opportunity system is a certificate that declares what measures a company takes to eliminate and stop discrimination in the workplace.
The United Kingdom employment equality law is an organization of law that legislates against prejudice-based activities in the workplace.
The prime legislation is the Equality Act 2010, which condemns discrimination in passage to education, government services, private services, and goods, or assumptions in addition to employment.
Assume that Clampett, Inc., has $390,000 of sales, $340,000 of cost of goods sold, $250,000 of interest income, and $230,000 of dividends. What is Clampett, Inc.'s excess net passive income
Answer:
Clampett, Inc.'s excess net passive income is $262,500.
Explanation:
First we need to calculate the Gross Receipt
Gross Receipt
Sales $390,000
Interest Income $250,000
Dividend $230,000
Gross receipts $870,000
25% of Gross receipt = $870,000 x 25% = $217,500
Now Calculate the passive income
Interest Income $250,000
Dividend $230,000
Passive Income $480,000
Now calculate the excess passive income
Excess passive income = Passive income - 25% of gross receipt
Excess passive income = $480,000 - $217,500 = $262,500
Explain how the Federal Reserve Board can increase or decrease the money supply using each of the following tools: reserve requirements, open-market activities, and discount rates
Answer:
Reserve requirements – Reserve requirement increases to decrease the money supply or vice versa.
Open-market activities – the Fed sell the securities to reduce money supply or purchase it to increase the money supply.
Discount rates – Decrease the discount rate to increase the money supply or vice versa.
Explanation:
The Federal Reserve increases or decreases the money supply by using various tools. So in the case of the reserve requirement, the bank increases the percentage of reserve requirement if the Fed wants to decrease the money supply and to increase the money supply it reduces the reserve requirements. In the case of open market operations, the Fed sells securities and bonds in the market in order to reduce the supply of money or to decrease the supply of money it buys the securities from the market.
In the case of a discount rate, the Fed reduces the discount rate to increase the money supply because reducing the discount rate will induce the banks to give more loans. But to decrease the money supply, the Fed increases the discount rate because an increase in the discount rate reduces the ability of banks to give loans.
yeloe corporation sells 400 shares of common stock being held as an investment. The shares were acquired six months ago at a cost of $60 a share. Yelo sold the shares for 40 share the entry to recordd the sale is
Answer:
Entry is given below
Explanation:
Bought shares 6 months ago = 400shares x $60/share
Bought shares 6 months ago = $24,000
Sold shares = 400shares x $40/share
Sold shares = $16,000
Loss on sales proceeds = $24,000 - $16,000
Loss on sales proceeds = $8,000
Entry:
DEBIT CREDIT
Cash $16,000
Loss on sale $8,000
Shares $24,000
If marginal cost is constant, what happens to a market if it alters from perfect competition to monopoly without any change in the position of the market demand curve or any variation in costs? Select one: a. Consumer surplus increases, producer surplus decreases and a deadweight loss is created. b. Consumer surplus decreases, producer surplus decreases and a deadweight loss is created. c. Consumer surplus increases, producer surplus increases and a deadweight loss is created. d. Consumer surplus decreases, producer surplus increases and a deadweight loss is created.
Answer:
Consumer surplus decreases, producer surplus increases and a deadweight loss is created.
Explanation:
A perfect competition is characterised by many buyers and sellers of homogeneous goods and services. Market prices are set by the forces of demand and supply.
price = marginal cost = marginal revenue
a monopoly is when there is only one firm operating in an industry.
in a monopoly, price is greater than marginal cost
consumer surplus is the difference between the highest amount a consumer is willing to pay for the good and the price of the good
producer surplus is the difference between the price of a good and the least amount the seller is willing to sell the good.
as a result of the transition, prices would rise. this would lead to a decrease in consumer surplus and an increase in producer surplus. deadweight loss is created.
On June 1, Carla Vista Co. Ltd. borrows $108,000 from Acme Bank on a 6-month, $108,000, 4% note. The note matures on December 1.
1. Prepare the entry on June 1.
2. Prepare the adjusting entry on June 30.
3. Prepare the entry at maturity (December 10)
4. What was the total fancing (interest expence)?
Answer:
a) Journal entry
Date Account and explanation Debit Credit
June 1 Cash $108,000
Notes payable $108,000
b) Adjusting entry
Date Account and explanation Debit Credit
June 30 Interest expense $360
(108,000*4%*1/12)
Interest payable $360
c) Journal entry
Date Account and explanation Debit Credit
Dec 10 Notes payable $108,000
Interest payable (360*6) $2,160
Cash $110,160
d) Total (interest expenses)
Interest payable = $360 * 6
= $2160
Assume a bond has been owned by four different investors during its 20-year history. Which one of the following is most likely to have been different for each of these owners?
A. Coupon rate
B. Coupon frequency.
C. Par value.
D. Yield to maturity.
During March, Zea Inc. transferred $67,000 from Work in Process to Finished Goods and recorded a Cost of Goods Sold of $73,000. The journal entries to record these transactions would include a:
Answer:
Credit to Work in process of $67,000
Explanation:
Preparation of the ournal entries to record the transactions
Since we were told Zea Inc. transferred the amount of $67,000 from Work in Process to Finished Goods this means the transaction will be recorded as:
Dr Finished Goods 67,000
Cr Work in Process 67,000
Since we were told that Zea Inc. transferred recorded a Cost of Goods Sold for the amount of $73,000 this means that the transaction will be recorded as:
Dr Cost of Goods Sold 73,000
Cr Finished Goods 73,000
Rascal Corp. borrows $500,000 by signing on a 1-year, 12% promissory note from General Finance Company and assigns $600,000 of its accounts receivable as collateral for the loan. General Finance charges a financing fee of 1% of the receivables assigned. The journal entry for Rascal to record the borrowing will include a
Answer:
Dr Cash 494,000
Dr Finance Charge expense6,000
Cr Liability - Financing arrangement 500,000
Explanation:
The journal entry for Rascal to record the borrowing
Since Rascal Corp was said to borrow $500,000 from the General Finance Company in which $600,000 of its accounts receivable as collateral for the loan was been assigned and the General Finance charges a financing fee of 1% of the receivables assigned which mean the transaction will be recorded as:
DrCash 494,000
(500,000-6,000)
Dr Finance Charge expense6,000
Cr Liability - Financing arrangement 500,000
Calculation for Cash (difference)
Account receivable $600,000 ×General Finance charges of 1% =Finance Charge expense 6,000
Nation’s Capital Fitness, Inc. operates a chain of fitness centers in the Washington, D.C., area. The firm’s controller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firm’s equipment maintenance costs must be determined. The accounting staff has suggested the use of an equation, in the form of Y = a + bX, for maintenance costs. Data regarding the maintenance hours and costs for last year are as follows:
Month Hours of Maintenance
Service Maintenance
Costs
January 520 $ 4,470
February 490 4,260
March 300 2,820
April 500 4,350
May 310 2,960
June 480 4,200
July 320 3,000
August 400 3,600
September 470 4,050
October 350 3,300
November 340 3,160
December 320 3,030
Total 4,800 $ 43,200
Average 400 $ 3,600
Required:
1-a. Using the high-low method of cost estimation, estimate the behavior of the maintenance costs incurred by Nation’s Capital Fitness, Inc.
Variable cost per hour $
Fixed cost per month $
1-b. Express the cost behavior pattern in equation form.
Maintenance cost = $ + $
2. What is the variable component of the maintenance cost?
Maintenance cost $ per hour
3. Compute the predicted maintenance cost at 590 hours of activity.
Maintenance cost $
4-a. Compute the variable cost per hour and the fixed cost per hour at 600 hours of activity.
Variable cost per hour $
Fixed cost per hour $
Answer:
Instructions are below
Explanation:
Giving the following information:
January 520 $ 4,470
February 490 4,260
March 300 2,820
April 500 4,350
May 310 2,960
June 480 4,200
July 320 3,000
August 400 3,600
September 470 4,050
October 350 3,300
November 340 3,160
December 320 3,030
A) To calculate the fixed and variable costs, we need to use the following formulas:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (4,470 - 2,820) / (520 - 300)
Variable cost per unit= $7.5
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 4,470 - (7.5*520)
Fixed costs= $570
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 2,820 - (7.5*300)
Fixed costs= $570
B)
Total cost= 570 + 7.5x
x= hours of mantainance
C) x= 590
Total cost= 570 + 7.5*590
TC= $4,995
D) x= 600
Total cost= 570 + 7.5*600
TC= $5,070
Max, an employee at HiFi LLC, is responsible for performing the job analysis process in her organization. She is currently planning the job analysis. Which of the following should typically be Max's next step?
a. Preparing for and introducing job analysis
b. Developing job descriptions and job specifications
c. Conducting the job analysis
d. Maintaining and updating job descriptions
Answer:
The correct answer is the option C: Conducting the job analysis.
Explanation:
To begin with, the term of "Job Analysis" refers to a method used in the organizations with the purpose of generating job descriptions and specifications in order to establish a better communication inside the organization and also to know better who the best candidates will be for future jobs. Therefore that this analysis focus on the correct comprehension from the analyst regarding the job that is being under analysis. When the analysis has began the person in charge of it will have to planned carafully the way that she will get the information for later transform it into the job description and that is why that once that the planning has been done the person needs to conduct the job analysis in order to obtain the results expect that are the proper description of the job and all of its specifications for future employees.
During a Value-Added Flow Analysis, the team studied a process step where they checked the customer's credit. What is the best label for this step?
Answer:
Non-Value-Adding but required.
Explanation:
A Value-Added flow analysis is a graphical visualization tool that is used for identifying non-essential activities or steps within a process. It basically, allows individuals or team to analyze, identify and separate value-adding activities from non-value-adding activities or steps in an organization. This simply means that, it avails an organization or business the ability to separate activities that add value for the user from the activities that are non-value-adding.
The value-adding activities are the steps that adds value to an organization's product or project while the non-value-adding activities are those steps which do not add any value to the organization's product.
In this scenario, during a value-added flow analysis, the team studied a process step where they checked the customer's credit. The best label for this step is Non-value-adding but required.
The process of checking a customer's credit is a necessary task or a required step but in the real sense of lean, it is considered as a non-value-adding activity. This is simply because, it is required to check the customer's credit in order to update the balance sheet and to know the amount that is granted to these customers.
However, it does not add any value to the organization.
When the end-of-period spreadsheet is complete, the adjustment columns should have:_________. a) total debits greater than total credits if a net income was earned b) total debits greater than total credits if a net loss was incurred c) total debits are equal to total credits d) total credits greater than total debits if a net income was earned
Answer:
C. Total debits are equal to total credits
Explanation:
When the end-of-period spreadsheet is complete, the adjustment columns should have:
Total debits equal to total credits.
When this happens, the trial balance is considered to be balanced.
If revenues are greater than expenses, then income statement will give a credit balance. If expenses are bigger than revenues, your income statement will show a debit balance.
The asset, liabilities, and equities of Drought Design Studio have the following balances at December 31, 2018. The retained earnings was $35,000 at the beginning of the year. At year end, common stock was $17,000 and dividends were $61,000.
Notes Payable $14,000
Rent Expense 23,000
Cash 3,200
Office Supplies 5,100
Salaries Expense 65,000
Property Tax Expense 2,200
Office Furniture $48,400
Utilities Expense 7,200
Accounts Payable 3,600
Service Revenue 154,600
Accounts Receivable 9,300
Miscellaneous Expense 3,800
Required:
Prepare the income statement for Drought Design Studio for the year ending December 31, 2018.
Answer:
Drought Design Studio
Income statement for the year ending December 31, 2018.
Revenue
Service Revenue $154,600
Expenses
Rent Expense $23,000
Salary Expense $65,000
Property Tax Expense $2,200
Utilities Expenses $7,200
Miscellaneous Expenses $3,800
Less: Total Expenses $101,200
Net Income $53,400
"An order for a New York Stock Exchange listed issue is routed by the member firm to a Third Market Maker rather than to the exchange floor. This practice is:"
Answer: Permitted if the price offered by the Third Market Maker is better.
Explanation:
The Securities and Exchange Commission (SEC) requires that when executing trades, the trader should seek for execution at the best market. This means that the trader should trade in the market that is most price efficient.
Should the stock in question be available for trade in various markets, best practice would indicate that the dealer find the market that is offering the best prices and route the order to it.
Premier Events is an event-planning company located in Lexington, Kentucky. This small company has been in business for two years but is still struggling for success. After reviewing competitors' successes and failures, the marketing manager decides to alter Premier's marketing mix. Which of the following elements is NOT a part of this process?a. Product strategyb. Economic strategyc. Distribution strategyd. Promotion strategy
Answer:
b. Economic strategy
Explanation:
Marketing mix refers to strategies used by companies to promote their products. They are factors which a company have control over such that consumers can be convinced to patronize its products. Marketing mix consist of Product, price, place and promotion, which are tools that create value and demand for a company's products to targeted customers.
•The product refers to goods and services sold to consumers. A company will introduce products that have value and highly demanded by consumers while dropping those that do not generate revenue.
• Price is the amount at which a product is offered for sale. A producer must offer it's product at a competitive price such that he is able to break even.
•Place refers to the availability of the product in the market. Right marketing channels and Distribution must be chosen inorder to reach the targeted customers.
• Promotion refers to marketing activities such as advertising, sales promotion, direct marketing, personal selling etc. The aim is to draw customers attention to a company's product and subsequently purchase those products.
With regards to the above scenario, the odd option is Economic strategy.
Clayborn Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on May 31, its Cash account shows a debit balance of $28,525. Clayborn's May bank statement shows $25,000 on deposit in the bank. Determine the adjusted cash balance using the following information:Deposit in transit $5,200Outstanding checks $4,600Bank service fees, not yet recorded by company $25A NSF check from a customer, not yet recorded by the company $600Required:What should be the adjusted cash balance?
Answer:
$27,900
Explanation:
The computation of adjusted cash balance is shown below:-
Adjusted cash balance = Balance at May 31 - bank service fees - NSF check
= $28,525 - $25 - $600
= $27,900
Therefore for computing the adjusted cash balance we simply deduct the bank service fee and NSF check from balance at may 31
Hence, the adjusted cash balance is $27,900
Adair Valley issued $20,000,000 of general obligation bonds to construct a multipurpose arena. These bonds will be serviced by a tax on the revenue from events held in the arena and will mature in 2024. During 2018, Adair Valley budgeted $2,500,000 of tax revenues and $2,000,000 for interest on the bonds in its Debt Service Fund. Prepare the journal entries necessary to record (a) the budget and (b) the expenditure when the interest comes due for payment.
Answer: Please see explanation column for answer.
Explanation:
a) Journal entry to record the budget
Account Debit Credit
Estimated Revenues $2,500,000
Appropriation $2,000,000
Budget fund $500,000
Calculation
Budget fund= Estimated Revenues-Appropriation = $2,500,000- $2,000,000= $500,000
b) Journal entry to record the the expenditure when the interest comes due for payment.
Account Debit Credit
Expenditure Interest $2,000,000
Matured Interest payable $2,000,000
During the period, labor costs incurred on account amounted to $175,000, including $150,000 for production orders and $25,000 for general factory use (indirect labor). In addition, factory overhead charged to production was $32,000. The journal entry to record the direct labor costs is a. Wages Payable 150,000 Work in Process 150,000 b. Wages Payable 175,000 Work in Process 175,000 c. Work in Process 150,000 Wages Payable 150,000 d. Work in Process 175,000 Wages Payable 175,000
Answer:
c. Work in Process 150,000 Wages Payable 150,000
Explanation:
The direct labor costs are $ 150,000 which are debited to work in process and credited by wages payable.
The indirect Labor costs are $ 125,000 which are debited to factory overhead and credited by payroll.
The $32,000 are factory overhead expenses which are charged to factory overhead control account.
Analysis :
a: The first entry is wrong because the work in process must be debited and wages payable credited.
b: The second entry is wrong because the work in process must be debited and wages payable credited. Also the indirect labor is included in the direct labor amount.
c: This entry is correct.
d: The indirect labor is included in the direct labor amount which is again wrong.
Assume that you are 30 years old today, and that you are planning on retirement at age 65. You expect your salary to be $42,000 one year from now and you also expect your salary to increase at a rate of 5% per year as long as you work. To save for your retirement, you plan on making annual contributions to a retirement account. Your first contribution will be made on your 31st birthday and will be 8% of this year's salary. Likewise, you expect to deposit 8% of your salary each year until you reach age 65. Assume that the rate of interest is 9%. The present value (PV) (at age 30) of your retirement savings is closest to
Answer:
$50,855.62
Explanation:
I prepared an excel spreadsheet to determine the yearly contributions to the plan and their future value.
once you reach 65 years, your retirement account should have $1,038,165. Now we need to determine the present value = $1,038,165 / (1 + 9%)³⁵ = $50,855.62
Trade Mart has recently had lackluster sales. The rate of inventory turnover has? dropped, and the merchandise is gathering dust. At the same time, competition has forced AquariumAquarium's suppliers to lower the prices that Aquarium will pay when it replaces its inventory. It is now December 31, 2016, and the current replacement cost Aquarium's ending inventory is $75,000 below what Aquarium actually paid for the goods, which was $200,000.
Before any adjustments at the end of the? period, the Cost of Goods Sold account has a balance of $$820,000.
Requirements:
a. What accounting action should Aquarium take in this situation?
b. Give any journal entry required.
c. At what amount should Aquarium report Inventory on the balance? sheet?
d. At what amount should the company report Cost of Goods Sold on the income? statement?
e. Discuss the accounting principle or concept that is most relevant to this situation.
Answer:
a. What accounting action should Aquarium take in this situation?
the balance of inventory account should decrease to match the replacement cost.
b. Give any journal entry required.
Dr Cost of goods sold 75,000
Cr Inventory 75,000
c. At what amount should Aquarium report Inventory on the balance? sheet?
Inventory = $200,000 - $75,000 = $125,000
d. At what amount should the company report Cost of Goods Sold on the income statement?
Cost of goods sold = $820,000 + $75,000 = $895,000
e. Discuss the accounting principle or concept that is most relevant to this situation.
US GAAP states that companies must use the lower of cost or market rule, which means that inventory must be recognized at the lowest cost either original purchase cost or market value.
The credit purchase of a new oven for $5,100 was posted to Kitchen Equipment as a $5,100 debit and to Accounts Payable as a $5,100 debit. What effect would this error have on the trial balance
Answer:
The answer is:
The effect on the trial balance is that the total Debit side will be higher the total of the Credit side of the trial balance by $10,200
Explanation:
The effect on the trial balance is that the total Debit side will be higher the total of the Credit side of the trial balance by $10,200.
Two entries of $5,100 each have been entered on the debit column of the trial balance instead of one $5,100 in debit column and the other $5,100 in the credit column. This means the debit side would have $10,200 higher than the credit side since nothing was recorded there.
1. Write about whether or not you believe productivity would go up, down, or stay the same in an enterprise where the workers are owners versus a traditional workplace. How would this affect GDP, inflation, and other macroeconomic variables
Answer:
Productivy would go up only as long as some of the workers can become competent managers.
Explanation:
The problem with worker ownership of the means of production (the firm), which is what socialism is about, is that workers do not necessarily have managerial skill, and as result, are likely to be unable to run the company efficiently.
In case this does not happen, and the workers manage to run the company well, GDP would increase because productivity in the firm would rise. Inflation would likely fall down because more productivity means more output of goods and services, and inflation tends to have a inverse relationship with output (although it also depends on other variables like the rate of growth of the money supply).
Finally, another macroeconomic variable that would positively affected is employment rate, because a more efficient company would likely require new workers.
Dazzle, Inc. produces beads for jewelry making use. The following information summarizes production operations for June. The journal entry to record June production activities for direct labor usage is:Direct materials used $87,000Direct labor used 160,000Predetermined overhead rate (based on direct labor)155%Goods transferred to finished goods 432,000Cost of goods sold 444,000Credit sales 810,000a. Debit Factory Payroll Payable $160,000; credit Cash $160,000.b. Debit Work in Process Inventory $160,000; credit Factory Payroll Payable $160,000.c. Debit Cost of Goods Sold $160,000; credit Factory Payroll Payable $160,000.d. Debit Work in Process Inventory $160,000; credit Raw Materials Inventory $160,000.e. Debit Work in Process Inventory $160,000; credit Cash $160,000.
Answer:
b. Debit Work in Process Inventory $160,000; credit Factory Payroll Payable $160,000.
Explanation:
In order to record the cost of goods manufactured, once the goods are finished, you add up all the work in process debits. The following journal entry would be:
Dr Finished goods inventory
Cr Work in process inventory (all added up)
In this case, since you are recording labor usage, you must also credit wages or payroll payable (that correspond to the amount of labor used to manufacture the goods).
A bond par value is $1,000 and the coupon rate is 4.3 percent. The bond price was $945.46 at the beginning of the year and $976.26 at the end of the year. The inflation rate for the year was 2.2 percent. What was the bond's real return for the year
Answer:
The bond's real return for the year was 5.49%
Explanation:
In order to calculate the bond's real return for the year we would have to calculate the following formula:
bond's real return for the year=(1+Nominal rate of return)/(1+Inflation) -1
According to the given data Inflation=2.2 percent
To calculate the Nominal rate of return we would have to calculate the following:
Nominal rate of return=(Selling price + Interest coupon - Purchase price)/Purchase price
According to the given data:
Selling price=$976.26
Interest coupon=$43
Purchase price=$945.46
Therefore, Nominal rate of return=($976.26 + $43 - $945.46)/ $945.46
Nominal rate of return=7.81%
Therefore, bond's real return for the year= (1+7.81%)/(1+2.2%) -1
bond's real return for the year=5.49%
The bond's real return for the year was 5.49%
Gold standard required countries to A. keep the supply of foreign exchange less than their domestic money supply. B. restrict the demand for foreign goods. C. keep the supply of their domestic money constant. D. keep the supply of their domestic money fixed in proportion to their gold holdings.
Answer:
D.) Keep the supply of there domestic money fixed in proportion to their gold holdings.
Explanation:
The Gold Standard was a monetary system under which countries fixed the value of their money in terms of a specified amount of gold. With the gold standard, countries agreed to convert the paper money into a fixed amount of gold.
Hope this helps you out! : )
If Galaxia has a GDP that is 10 times larger than Myopia, which country would likely have greater marginal returns to capital based on the law of diminishing returns to capital
Answer:
Myopia
Explanation:
The law of marginal returns states that as the total amount of any production factor increases, the output per unit of that factor will start to decrease. In other words, the marginal output or return from that factor will decrease. E.g. if you invest $100 in a small business, you will require a very high rate of return. If instead, you invest $1,000 in corporate bonds, you will only obtain moderate to low yields.
In this case, $1,000 invested in Myopia (smaller economy) should return a higher yield than $1,000 invested in Galaxia. Also, the $1,000 invested in Myopia will have a larger economic effect than the $1,000 invested in Galaxia.
Burt has come across an excellent recipe for a new beer, and he and 20 college friends decide to go into business. They form a corporation named New Brew Inc., issuing stock only to the 21 of them and not selling any stock outside the group. The beer is a huge success, and they soon need to expand. They decide to sell stock to members of the public to raise capital. What type of corporation is New Brew before the sale of stock to the public
Answer: Private Limited Company
Explanation:
From the question, we are informed that Burt has come across an excellent recipe for a new beer, and he and 20 college friends decide to go into business and they form a corporation named New Brew Inc., issuing stock only to the 21 of them and not selling any stock outside the group.
We are further told that the beer is a huge success, and they soon need to expand and decide to sell stock to members of the public to raise capital.
Before the sale of stock to the public, the corporation is a private limited company. The limited number of shareholders in this type of business is 50 and it does not trade its shares publicly.
Swifty snowboards converts regulat snowboards by adding outriggers and seats so that people who use wheel chairs can snowboard. the income statement for lasst yeaar in which 500 snowboards were produced and sold, appears here.
Revenue $150,000
Expenses:
Variable production costs $60,000
Fixed production costs 25,000
Variable selling and administration 10,000
Fixed selling and administration 35,000 130,000
$20.000
Income
Required:
A. What vołume of snowboards must be sold to ean pretax profits of $30,000?
B. Snowbird's supplier of snowboards is unable to ship more than 500 boards for the upcoming season. Snowbird has been paying the supplier $85 for each snowboard. (The cost of the snowboards is incłuded in variable production costs). More expensive snowboards are available from other manufacturers for conversion. If Snowbird's managers expect to sell more than 500 converted snowboards in the upcoming season, what is the most they would be willing to pay outside suppliers for each additional snowboard?
C. Suppose Snowbird pays the price you calculated in part (B) and sells an additional 200 snowboards. What is the commany's incremental profit on the 200 snowboards?
Answer:
A. 563 snowboards
B. $120
C. Incremental Profit:$32,000
Explanation:
Volume to meet target profit = (Target Profit + Fixed Cost) / Contribution per unit
Calculation of Contribution per unit
Revenue $150,000
Less Variable Costs ;
Variable production costs ($60,000)
Variable selling and administration ($10,000)
Contribution $80,000
Contribution per unit = $80,000 / 500 snowboards
= $160
Volume to meet target profit = ($30,000 + $25,000 + $35,000) / $160
= 562.50 or 563 snowboards
For the Additional Snowboats,Snowbird's managers are willing to pay a price close to cost of making the regular snowboards internally.
Cost of Making :
Variable production costs ($60,000 / 500) = $120
Total Cost = $120
Therefore, Snowbird's managers are willing to pay $120
For Incremental Profit or Loss, prepare a differential analysis for the additional 200 snowboards.
Differential analysis for the additional 200 snowboards
Sales (200 snowboards × $300) $60,000
Less Incremental Production Costs ( 200 × $120) ($24,000)
Less Incremental selling and administration (200 × $20) ($4,000)
Incremental Profit $32,000
If he wanted the cash award of each of the five prizes to be $45,000 and his estate could earn 7% per year, how much would he need to fund his prizes
Answer:
The answer is $3,214,285.71
Explanation:
Price of each award is $45,000
And there are 5
Therefore, we have 5 x $45,000
=$225,000.
So, $225,000 is the future value.
Rate of return(r) in 7% and it is being assumed that it is forever.
So, so how much will be needed to fund his prizes(present value)?:
PV = FV/r
= $225,000/0.07
=$3,214,285.71