Westover Winds just paid a dividend of $2.10 per share. The company will increase its dividend by 8 percent next year and will then reduce its dividend growth rate by 2 percentage points per year until it reaches the industry average of 2 percent dividend growth, after which the company will keep a constant growth rate forever. What is the price of this stock today given a required return of 11 percent?
Answers
Answer:
Price today = $26.54
Explanation:
The price of the stock can be calculated using the Dividend Discount Model (DDM). The DDM values the stock based on the present value of the expected future dividends from the stock.
The formula to calculate the price of the stock is attached.
Price today = 2.1 * (1+0.08) / (1+0.11) + 2.1 * (1+0.08) * (1+0.06) / (1+0.11)^2 +
2.1 * (1+0.08) * (1+0.06) * (1+0.04) / (1+0.11)^3 +
[(2.1 * (1+0.08) * (1+0.06) * (1+0.04) * (1+0.02)) / (0.11 - 0.02)] / (1+0.11)^3
Price today = $26.54
Related Questions
Listmann Corp. processes four different products that can either be sold as is or processed further. Listed below are sales and additional cost data: Product Sales Value with no further Processing Additional Processing Costs Sales Value after further processing Premier $ 1,350 $ 900 $ 2,700 Deluxe 450 225 630 Super 900 450 1,800 Basic 90 45 180 Which product(s) should not be processed further?
Answers
Answer:
Which product(s) should not be processed further?
Deluxe products should not be processed further because the cost of further processing is higher than the additional benefits.
Explanation:
Product Sales value with Additional processing Sales value after
no further processing costs further processing
Premier $1,350 $900 $2,700
Deluxe $450 $225 $630
Super $900 $450 $1,800
Basic $90 $45 $180
further processing added value difference
costs
Premier $900 $1,350 $450
Deluxe $225 $180 ($180)
Super $450 $900 $450
Basic $45 $90 $45
In Japan, the _____ helps small companies identify potential export opportunities.
a. MITI
b. IMF
c. WTO
d. ITA
e. USEAC
Answers
Answer:
a. MITI
Explanation:
In Japan, the MITI helps small companies identify potential export opportunities
The full meaning of MITI his Ministry of International Trade and Industry which is the ministry which is responsible for always on the lookout for export opportunities and they are as well responsible for industry, investment, productivity as well as small and medium enterprise.
Lastly MITI also help in controlling Japan's foreign trade as well as helping to supervise the international commerce and ensuring the smooth flow of goods and service in the national economy.
Consider the following income statement for the Heir Jordan Corporation:
HEIR JORDAN CORPORATION
Income Statement
Sales $ 46,200
Costs 34,200
Taxable income $ 12,000
Taxes (30%) 3,600
Net income $ 8,400
Dividends $ 2,800
Addition to retained earnings 5,600
The balance sheet for the Heir Jordan Corporation follows. Based on this information and the income statement, supply the missing information using the percentage of sales approach. Assume that accounts payable vary with sales, whereas notes payable do not. (Leave no cells blank - be certain to enter "0" whenever the item is not a constant percentage of sales. Enter each answer as a percent rounded 2 decimal places, e.g., 32.16.)
HEIR JORDAN CORPORATION
Balance Sheet
Percentage of Sales Percentage of Sales
Assets Liabilities and Owners’ Equity
Current assets Current liabilities
Cash $ 2,450 Accounts payable $ 4,000
Accounts receivable 4,000 Notes payable 8,400
Inventory 9,000
Total $ 15,450 Total $ 12,400
Long-term debt $ 21,000
Owners’ equity
Common stock and paid-in surplus $ 14,000
Retained earnings 5,650
Fixed assets
Net plant and equipment $ 37,600 Total $ 19,650
Total assets $ 53,050 Total liabilities and owners’ equity $ 53,050
Answers
Answer and Explanation:
The preparation of the balance sheet is prepared below:-
Assets Amount Percentage Liabilities Amount Percentage
Cash 2,450 5.30% Payable 4,000 8.66%
Receivables 4,000 8.66% Notes 8,400 0
Inventory 9,000 19.48% Total Current 12,400 0
Total 15,450 33.44% Debt 21,000 0
Fixed
Assets 37,600 81.39% Common Stock 14,000 0
Total 53,050 114.83% Retained Earnings 5,650 0
Total Equity 19,650 0
Total Liabilities & OE 53,050 0
In this question, the total assets and the account payable are varied with the sales while on the other hand there is no requirement for liabilities and equity
Moreover, we divided all assets and account payable with sales of $46,200 and in other columns we put 0 as shown above
In the current year, Riflebird Company had operating income of $220,000, operating expenses of $175,000, and a long-term capital loss of $10,000. How do Riflebird Company and Roger, the sole owner of Riflebird, report this information on their respective Federal income tax returns for the current year under the following assumptions
Note: If an amount is zero, enter "0".a. Riflebird Company is a proprietorship (Roger did not make any withdrawals from the business). Roger reports $ ________ net operating profit and $_______ long-term capital loss on his tax return.b. Riflebird Company is a C corporation (no dividends were paid during the year). Roger reports $__________ net operating profit and $________ long-term capital loss on his tax return.
Answers
Answer:
a. Riflebird Company is a proprietorship (Roger did not make any withdrawals from the business). Roger reports $45,000 net operating profit and $10,000 long-term capital loss on his tax return.
The IRS classifies sole proprietorships are pass through entities which are not taxed directly, instead their owners (proprietors) are taxed.
b. Riflebird Company is a C corporation (no dividends were paid during the year). Roger reports $35,000 net operating profit and $0 long-term capital loss on his tax return.
If Riflebird is classified as a corporation, then there is no such thing as capital gains or losses for corporations, all income and losses are considered operating income or losses.
Bond T is a zero coupon bond and has 11 years until maturity. If the yield to maturity is 10%, the Macaulay duration of this bond is
Answers
Answer:
11 years
Explanation:
The Macauly duration of a bond is generally calculated for coupon bearing bonds sold either at par or at premium or discount values. When we are asked about the Macauly duration of a zero coupon bond, the answer is simply the time to maturity of the bond, or the bond duration. In this case, the time to maturity is 11 years which equals the Macauly duration.
On April 1, 10,000 shares of $20 par common stock were issued at $24.
Required:
Illustrate the effects on the accounts and the financial statements.
Answers
Answer:
The journal entry to record this transaction would be:
April 1, 10,000 shares issued
Dr Cash 240,000
Cr Common stock 200,000
Cr Additional paid in capital 40,000
The balance sheet is affected:
Assets = Liabilities + Stockholders' equity
Cash = NA Common stock APIC
$240,000 $200,000 + $40,000
increases increases increases
The cash flow statement is also affected since cash from financing activities increases by $240,000. The statement of shareholders' equity is also affected because equity increases by $240,000.
The income statement is not affected.
Promoters of an LLC are Select one: a. are never personally liable on pre-formation debt. b. always liable on pre-formation debt. c. only liable on pre-formation debt until a novation occurs.
Answers
Answer:
The answer is C. only liable on pre-formation debt until a novation occurs.
Explanation:
The corporation and the third-party agree to release the promoter from liability and to substitute the corporation in place of the promoter as the party liable on the contract. May be express or implied.
A seller accepts a contingent backup offer from a second buyer and notifies the first buyer under a release clause. The first buyer decides to remove the sale of buyer's property contingency. What happens next
Answers
Answer: Completion of transaction and down payment
Explanation:
Contingency backup offer is when the seller has an already potential buyer for a property.
In this scenario, the seller would have to conclude with the first buyer to avoid fractions and disagreement in some factors and to see if the buyer can make a down payment on the propery.
Determine the ending inventory using the periodic inventory system and the weighted average cost method (rounded to the nearest cent), assuming that 18 units were sold at a price of $14. Date Item Units Cost Total June 1 Beginning inventory 6 $5 $30 June 12 Purchase 10 6 60 June 18 Purchase 8 7 56 Totals 24 — $146 a.$36.48 b.$109.44 c.$145.92 d.$56.00
Answers
Answer:
The ending inventory using the periodic inventory system and the weighted average cost method is $36.48
Explanation:
Weighted Average Method.
The average cost of goods held is recalculated each time a new delivery of goods is received. Issues are then priced out at this weighted average cost.
First Calculate the average cost per unit
average cost per unit = Total cost / total units
= ($30 + $60 + $56) / 24
= $6.08
Then calculate ending inventory cost
ending inventory cost = units at hand × average cost per unit
= 6 units × $6.08333
= $36.48
Conclusion :
The ending inventory using the periodic inventory system and the weighted average cost method is $36.48
n January, Marigold company requisitions raw materials for production as follows: Job 1 $920, Job 2 $1,600, Job 3 $720, and general factory use (indirect materials) $700. Prepare a summary journal entry to record raw materials used. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answers
Answer and Explanation:
The summarized journal entry for using the raw material is shown below:
Work in process inventory $3,240 ($920 + $1,600 + $720) Dr
Manufacturing overhead 700 Dr
To Raw material inventory $3,940
(Being the raw material used is recorded)
For recording this we debited the work in process and factory overhead as it increased the assets and expenses and credited the raw material inventory as it decreased the assets
One of the limitations of aggregate accounting is that: Multiple Choice it includes market transactions that should be excluded. it doesn't take depreciation into account. it measures market activity, not social welfare. there isn't enough data available in most developed countries to have national income accounts.
Answers
Answer:
The correct answer is: it measures market activity, not social welfare.
Explanation:
Aggregate accounting is the process of collecting different data from almost all financial accounts of a family or individual in a single location.
Therefore, although this is an efficient indicator for measuring a country's economic activity, it cannot be used as a measure of social well-being, as it does not understand essential aspects that promote human well-being. One of its limitations is that the index does not include non-market transactions, the degree of social income inequality, environmental degradation, the negative externalities of the productive system, etc.
On January 1, 2018,MechanicsCredit Union (MCU)issued 8 %,20-yearbonds payable with face value of $ 200 comma 000.These bonds pay interest on June 30 and December 31. The issue price of the bonds is 106.Journalize the following bond transactions:
A. Issuance of the bonds on January 1, 2018.
B. Payment of interest and amortization on June 30, 2018.
C. Payment of interest and amortization on December 31, 2018.
D. Retirement of the bond at maturity on December 31, 2037, assuming the last interest payment has already been recorded.
Answers
Answer:
A. Issuance of the bonds on January 1, 2018.
Dr Cash 212,000
Cr Bonds payable 200,000
Cr Premium on bonds payable 12,000
B. Payment of interest and amortization on June 30, 2018.
premium on bonds payable = $12,000 / 40 coupons = $300 per coupon
Dr Interest expense 7,700
Dr Premium on bonds payable 300
Cr Cash 8,000
C. Payment of interest and amortization on December 31, 2018.
Dr Interest expense 7,700
Dr Premium on bonds payable 300
Cr Cash 8,000
D. Retirement of the bond at maturity on December 31, 2037, assuming the last interest payment has already been recorded.
Dr Bonds payable 200,000
Cr cash 200,000
Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:
Machine-hours required to support estimated production 155,000
Fixed manufacturing overhead cost $ 653,000
Variable manufacturing overhead cost per machine-hour $ 4.70
Required:
1. Compute the plantwide predetermined overhead rate.
2. During the year, Job 400 was started and completed. The following information was available with respect to this job:
Direct materials $ 390
Direct labor cost $ 220
Machine-hours used 37
Compute the total manufacturing cost assigned to Job 400.
3. If Job 400 includes 60 units, what is the unit product cost for this job?
4. If Moody uses a markup percentage of 120% of its total manufacturing cost, then what selling price per unit would it have established for Job 400?
find- Predetermined overhead rate =
total manufacturing cost=
If Job 400 includes 60 units, what is the unit product cost for this job?
If Moody uses a markup percentage of 120% of its total manufacturing cost, then what selling price per unit would it have established for Job 400?
Answers
Answer:
Instructions are below.
Explanation:
Giving the following information:
Machine-hours required to support estimated production 155,000
Fixed manufacturing overhead cost $ 653,000
Variable manufacturing overhead cost per machine hour $ 4.70
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= (653,000/155,000) + 4.7
Predetermined manufacturing overhead rate= $8.91 per machine hour
Job 400:
Direct materials $ 390
Direct labor cost $ 220
Machine-hours used 37
To allocate overhead, we need to use the following formula:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 8.91*37= $329.67
Now, we can calculate the total cost and unitary cost:
Total cost= 390 + 220 + 329.67= 939.67
Unitary cost= 939.67/60= $15.66
Finally, the selling price for Job 400:
Selling price0 939.67*1.2= $1,127.6
Corporation had net income for 2016 of $ 42 comma 000. GAZ had 16 comma 000 shares of common stock outstanding at the beginning of the year and 14 comma 000 shares of common stock outstanding as of December 31, 2016. During the year, GAZ declared and paid preferred dividends of $ 4 comma 500. Therefore, GAZ's earnings per share for 2016 is $ 2.50. Assume the market price of GAZ's common stock is $ 12 per share. Compute GAZ's price/earnings ratio. Select the formula, then enter the amounts to calculate the company's price/earnings ratio as of December 31, 2016. (Abbreviations used: Ave. = average, OS = outstanding, SE = stockholders' equity, shrs = shares. Round the ratio to two decimal places.) / = Price/earnings ratio / =
Answers
Answer:
GAZ's price/earnings ratio is 4.8
Explanation:
In order to calculate GAZ's price/earnings ratio we would have to calculate the following formula:
GAZ's price/earnings ratio=market value per share/earnings per share
market value per share= $ 12
earnings per share=net income- preferred dividend/Average number of common shares
earnings per share=$42,000-$4,500/(16,000+14,000)/2
earnings per share=$2.50
Therefore, GAZ's price/earnings ratio= $ 12/$2.50
GAZ's price/earnings ratio=4.8
GAZ's price/earnings ratio is 4.8
The stock of Wiley United has a beta of 1. The market risk premium is 11.5 percent and the risk-free rate is 2.3 percent. What is the expected return on this stock in percent
Answers
Answer:
9.41%
Explanation:
Wiley United has a beta of 1
The market risk premium 11.5%
= 11.5/100
=0.115
Risk free rate is 2.3%
= 2.3/100
= 0.023
Therefore the expected rate of return can be calculated as follows
Expected rate of return= Risk free rate+beta(market return-risk free rate)
= 0.023+1(0.115-0.023)
= 1.023(0.092)
= 0.0941×100
=9.41%
Hence the expected return on the stock is 9.41%
When all firms earn zero economic profits producing the output level where P=MR=MC and P=AC and there is no incentive to leave or join the market, the market is in __________.
Answers
Answer:
Long-run equilibrium.
Explanation:
When all firms earn zero economic profits producing the output level where P=MR=MC and P=AC and there is no incentive to leave or join the market, the market is in long-run equilibrium.
In a perfectly competitive market in long-run equilibrium, a long-run equilibrium avails firms the opportunity to adjust all inputs and all fixed costs are maximized. Also, it's characterized by free entry and exit, as such there isn't a fixed number of firms. This simply means that, since the number of firms in a long-run equilibrium can change, a firm must exit the market as a result of losses i.e when the firm is unable to cover its fixed costs in the long-run while new firms are allowed entry into the market when it anticipates potential profits or gains.
However, the firms always strive to maximize profits by increasing their level of output, such that P = MC. Also, the firms wouldn't be willing to leave or enter into the market because they are not making any profit, such that P=AC.
In a nutshell, in the long run equilibrium P=MR=MC and P=AC.
Where, P represents the price.
Answer:
The correct answer is: long-run equilibrium.
Explanation:
To begin with, the market that is refered in the question is a perfect competitive one, you can tell by the fact that the price equals the marginal revenue(MR) and that equals the marginal costs(MC) and also the price equals the average cost and that combination only happens in the competitive market and therefore that the relationship established happen when that industry is in the long run equilibrium and there is no incentive to leave or join the market.
What is the value of zero-coupon bond with a par value of $1,000 and a yield to maturity of 5.20%? The bond has 12 years to maturity.
Answers
Answer:
$544.265
Explanation:
Given:
FV = $1,000
Yield to maturity = 5.2%
N = 12 years
Required:
Find the value of the zero coupon bond.
Use the formula:
PV = FV * PVIF(I/Y, N)
Thus,
PV = 1000 * PVIF(5.2%, 12)
= 1000 * 0.544265
= $544.265
The value of the zero coupon bond is $544.3
No Doubt Company includes one coupon in each box of soap powder that it packs, and 10 coupons are redeemable for a premium (a kitchen utensil). In 2020, No Doubt Company purchased 8,800 premiums at 80 cents each and sold 110,000 boxes of soap powder at $3.30 per box; 44,000 coupons were presented for redemption in 2014. It is estimated that 60% of the coupons will eventually be presented for redemption.
Instructions
Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2014.
Answers
Answer:
Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2014.
Explanation:
ere presented for redemption in 2014. It is estimated that 60% of the coupons will eventually be prese
Spiro Hospital is investigating the possibility of investing in new dialysis equipment. Two local manufacturers of this equipment are being considered as sources of the equipment. After-tax cash inflows for the two competing projects are as follows: Year Puro Equipment Briggs Equipment 1 $320,000 $120,000 2 280,000 120,000 3 240,000 320,000 4 160,000 400,000 5 120,000 440,000 Both projects require an initial investment of $560,000. In both cases, assume that the equipment has a life of 5 years with no salvage value. Required: Round present value calculations and your final answers to the nearest dollar. 1. Assuming a discount rate of 12%, compute the net present value of each piece of equipment.
Answers
Answer:
NPV for puro = $289,529.95
NPV for briggs = $374,450.85
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
net present value can be calcuated using a financal calcuatopr
Puro Equipment
cash flow in year 0 = $-560,000
cash flow in year 1= $320,000
cash flow in year 2 = $280,000
cash flow in year 3 = $240,000
cash flow in year 4 = 160,000
cash flow in year 5 = 120,000
I = 12%
NPV = $289,529.95
Briggs Equipment
cash flow in year 0 = $-560,000
cash flow in year 1= $120,000
cash flow in year 2= $120,000
cash flow in year 3= $320,000
cash flow in year 4= 400,000
cash flow in year 5= 440,000
I = 12%
NPV = $374,450.85
To find the NPV 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
The computation of the net present values of the two equipment are as follows:
Puro Equipment Briggs Equipment
Initial investment ($560,000) ($560,000)
Present value of cash inflows $849,600 $934,520
Net present value $289,600 $374,520
Data and Calculations:
Estimated useful life = 5 years
Discount factor = 12%
Initial cash outlay in each equipment = $560,000
Year Puro Equipment
Cash Flows PV Factor Present Value
0 ($560,000) 1 ($560,000)
1 $320,000 0.893 285,760
2 280,000 0.797 223,160
3 240,000 0.712 170,880
4 160,000 0.636 101,760
5 120,000 0.567 68,040
Total present value of cash inflows $849,600
Net present value = $289,600
Year Briggs Equipment
Cash Flows PV Factor Present Value
0 ($560,000) 1 ($560,000)
1 $120,000 0.893 107,160
2 120,000 0.797 95,640
3 320,000 0.712 227,840
4 400,000 0.636 254,400
5 440,000 0.567 249,480
Total present value of cash inflows $934,520
Net present value = $374,520
Thus, the net present value of Puro Equipment is $289,600 while that of Briggs Equipment is $374,520.
Learn more: https://brainly.com/question/17185385
The next dividend payment by Savitz, Inc., will be $2.12 per share. The dividends are anticipated to maintain a growth rate of 8 percent forever. If the stock currently sells for $43 per share, what is the required return?
Answers
Answer:
The answer is 12.9%
Explanation:
This question will be solved using the Dividend Discount Model(DDM).
Po = D1/r - g
Po is the current worth of stocks
D1 is the next dividend paid
r is the rate of return
g is the growth rate
$43 = $2.12/ r - 0.08
43r - 3.44 = 2.12
43r = 5.56
r = 5.56/43
=0.129
Expressed as a percentage:
The required return for Savitz, Inc., is therefore 12.9%
Suppose you're in charge of establishing economic policy for this small island country. Which of the following policies would lead to greater productivity in the weaving industry? Check all that apply. Sharply increasing the interest rate on student loans to people pursuing advanced degrees in weaving Imposing restrictions on foreign ownership of domestic capital Encouraging saving by allowing workers to set aside a portion of their earnings in tax-free retirement accounts Imposing a tax on looms
Answers
Answer:
Encouraging saving by allowing workers to set aside a portion of their earnings in tax-free retirement
Imposing restrictions on foreign ownership of domestic capital
Explanation:
When analyzing stages of economic development in the United States, it appears that we have entered the "tertiary stage." This is a stage marked by a shift toward:_______
A) agriculture.B) manufacturing.C) services.D) population increases.
Answers
Answer:
C) services.
Explanation:
This is easily explained to be the stepping in to a tertiary stage. As it is explained that economic development analysis stages consists of different phases and levels. This services that is been denoted in this growth in the US plays a key role in financial services, humanity, health and other visible relevant parts which help in the building and aiding of economic growth of a country's economy.
Information technology and educational services in a product offering. These services are seen to boost different parts of an economy especially in developing countries is mostly concentrated in financial services, hospitality, retail, health and human services.
Oak Outdoor Furniture manufactures wood patio furniture. If the company reports the following costs for June 2018,Wood $ 270,000Nails, glue, stain 18,000Depreciation on saws 5,300Indirect manufacturing labor 45,000Depreciation on delivery truck 1,700Assemblyline workers' wages 51,000What is the balance in the Manufacturing Overhead account before overhead is allocated to jobs? Assume that the labor has beenincurred, but not yet paid. Prepare journal entries for overhead costs incurred in June. What is the balance in the Manufacturing Overhead account before overhead is allocated to jobs?1. First, prepare an entry for the overhead costs for materials used.2. Next, prepare an entry for the overhead costs for labor incurred.3. Finally, prepare an entry for all other overhead costs.
Answers
Answer:
0. Manufacturing Overhead account balance before allocation.
Every expense incurred that is not directly linked to manufacturing of wood patio furniture goes here.
Oak Outdoor Furniture Manufacturing Overhead June 30
Nails, Glue, Stain 18,000
Depreciation on Saws 5,300
Indirect Manufacturing Labour 45,000
Balance $68,300
1. Journal entry for the overhead costs for materials used.
DR Manufacturing Overhead $18,000
CR Raw material Inventory $18,000
(To record cost of indirect materials used)
2. Journal entry for the overhead costs for labor incurred.
DR Manufacturing Overhead $45,000
CR Wages Payable $45,000
(To record cost of overhead labor costs incurred)
3. Journal entry for all other overhead costs.
DR Manufacturing Overhead $5,300
CR Accumulated Depreciation $5,300
(To record depreciation on saws)
A total asset turnover ratio of 5.1 indicates that: Multiple Choice For every $1 in sales, the firm acquired $5.1 in assets during the period. For every $1 in assets, the firm produced $5.1 in net sales during the period. For every $1 in assets, the firm earned gross profit of $5.1 during the period. For every $1 in assets, the firm earned $5.1 in net income. For every $1 in assets, the firm paid $5.1 in expenses during the period.
Answers
Answer:
For every $1 in assets, the firm produced $5.1 in net sales during the period.
Explanation:
The formula to compute the total asset turnover ratio is shown below:
Total Asset turnover ratio = Net Sales ÷ Average Total Asset
where,
Net sales come after deducting the sales discounts, and other expenses
And, the average total assets could be computed by taking an average of opening and closing total assets
So, the total asset turnover shows that for every $1 of assets would create $5.1 of sales
Hence, the first option is correct
Hiram’s Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an activity-based costing study. The intern, in consultation with the owner, identified three major activities and then completed the first-stage allocations of costs to the activity cost pools. The results appear below: Activity Cost Pool Activity Measure Total Cost Total Activity Serving a party of diners Number of parties served $ 33,000 6,000 parties Serving a diner Number of diners served $ 138,000 15,000 diners Serving a drink Number of drinks ordered $ 24,000 10,000 drinks The above costs include all of the costs of the restaurant except for organization-sustaining costs such as rent, property taxes, and top-management salaries. Some costs, such as the cost of cleaning the linens that cover the restaurant's tables, vary with the number of parties served. Other costs, such as washing plates and glasses, depends on the number of diners served or the number of drinks served. Prior to the activity-based costing study, the owner knew very little about the costs of the restaurant. She knew that the total cost for the month (including organization-sustaining costs) was $240,000 and that 15,000 diners had been served. Therefore, the average cost per diner was $16.
Required:
1. According to the activity-based costing system, what is the total cost of serving each of the following parties of diners? (Round your intermediate calculations and final answers to 2 decimal places.)
a. A party of four dinners who order three drinks-?
b. A party of two dinners who do not order any drinks-?
c. A party of one dinner who order two drinks-?
2. Convert the total costs you computed in (1) above to costs per diner. In other words, what is the average cost per diner for serving each of the following parties? (Round your intermediate calculations to 2 decimal places and final answers to 3 decimal places.)
a. A party of four dinners who order three drinks-?
b. A party of two dinners who do not order any drinks-?
c. A party of one dinner who order two drinks-?
Answers
Answer:
Kindly check attached picture
Explanation:
Required:
1. According to the activity-based costing system, what is the total cost of serving each of the following parties of diners? (Round your intermediate calculations and final answers to 2 decimal places.)
a. A party of four dinners who order three drinks-?
b. A party of two dinners who do not order any drinks-?
c. A party of one dinner who order two drinks-?
2. Convert the total costs you computed in (1) above to costs per diner. In other words, what is the average cost per diner for serving each of the following parties? (Round your intermediate calculations to 2 decimal places and final answers to 3 decimal places.)
a. A party of four dinners who order three drinks-?
b. A party of two dinners who do not order any drinks-?
c. A party of one dinner who order two drinks-?
Kindly check attached picture for detailed explanation.
Average cost per dinner is $12.375, $11.95, $19.50 respectively
Average cost based problem:Computation:
1.A.
Activity pool Activity rate Activity Activity cost
Parties $5.5 1 $5.5
Dinners $9.2 4 $36.8
Drinks $2.4 3 $7.2
Total $49.50
1.B.
Activity pool Activity rate Activity Activity cost
Parties $5.5 1 $5.5
Dinners $9.2 2 $18.4
Drinks $2.4 0 0
Total $23.9
1.C.
Activity pool Activity rate Activity Activity cost
Parties $5.5 1 $5.5
Dinners $9.2 1 $9.2
Drinks $2.4 2 $4.8
Total $19.50
2. Average cost per dinner
A = 49.50 / 4 = $12.375 per dinner
B =23.9 / 2 = $11.95 per dinner
C = 19.50 / 1 = $19.50 per dinner
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Classy Cruiseline offers nightly dinner cruises departing from several cities on the eastern coast of the United States including Charleston, Baltimore, and Alexandria. Dinner cruise tickets sell for $ 80 per passenger. Classy Cruiseline's variable cost of providing the dinner is $ 40 per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is $ 360 comma 000 per month. The company's relevant range extends to 16 comma 000 monthly passengers. Use this information to compute the following: a. What is the contribution margin per passenger? b. What is the contribution margin ratio? c. Use the unit contribution margin to project operating income if monthly sales total 13 comma 000 passengers. d. Use the contribution margin ratio to project operating income if monthly sales revenue totals $ 775 comma 000.
Answers
Answer:
a. Contribution margin per passenger = $40
b. Contribution margin ratio = 50%
c. Operating Income = $160,000
d. Operating Income = $27,500
Explanation:
a. Contribution margin per passenger = Ticket price per passenger - Variable cost per passenger
Contribution margin per passenger = $80 - $40
Contribution margin per passenger = $40
b. Contribution margin ratio = Contribution margin per passenger / Ticket price per passenger
Contribution margin ratio = $40 / $80
Contribution margin ratio = 0.5
Contribution margin ratio = 50%
c. Contribution margin per passenger = $40
Sales (in units) = 13,000 Passengers
Total Contribution = $520,000
Fixed Costs = $360,000
Operating Income = $160,000
d. Sales revenue = $775,000
Contribution margin ratio = 50%
Total Contribution =$387,500 ($775,000 * 50%)
Fixed Costs = $360,000
Operating Income = $27,500
B2B co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $120,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 48,000 units of the equipment's product each year. The expected annual income related to this equipment follows.
Sales $75,000
Costs Materials, labor, and overhead (except depreciation on new equipment) 40,000
Depreciation on new equipment 10,000
Selling and administrative expenses 7,500
Total costs and expenses 57,500
Pretax income 17,500
Income taxes (40%) 7,000
Net income $10,500
Required:
a. Compute the payback period.
b. Compute the accounting rate of return for this equipment.
Answers
Answer:
a. 5.85 years
b. 17.5%
Explanation:
a. For the computation of payback period first we need to find out the annual cash flow which is shown below:-
Annual Cash Inflow = Sales - Material - Selling and Administrative Expenses - Income Tax
= $75,000 - $40,000 - $7,500 - $7,000
= $20,500
Payback period = Initial investment ÷ Annual cash flow
= $120,000 ÷ $20,500
= 5.85 years
b. The computation of the accounting rate of return is shown below:-
accounting rate of return = Net income ÷ Average investment
= $10,500 ÷ ($120,000 ÷ 2)
= $10,500 ÷ $60,000
= 17.5%
a. The payback period would be 5.85 years.
b. The accounting rate of return for the given equipment would be 17.5%.
The payback period is computed when the initial investment is divided by the annual cash flow of the business. Therefore, the annual cash flow would be derived as follows:
[tex]75,000 - $40,000 - $7,500 - $7,000\\=$20,500[/tex]
Here, material expense, selling and administrative expenses, and Income tax is all deducted from the total sales.
Now, the payback period is calculated below:
[tex]\frac{120,000}{20,500} \\=5.85[/tex]
Finally, the accounting rate of return computation would be:
[tex]\frac{10,500}{60,000} \\=0.175*100\\=17.5[/tex]
Here, the net income is divided by average investment, that is:
[tex]\frac{120,000}{2} \\=60,000[/tex]
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Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy Janitorial on October 17. What entry should Uniform Supply make on December 31, to record the accrued interest on the note
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Answer:
The answer is
Dr: Notes Receivable $4,800
Dr: Interest Receivable $120
Cr: Sales $4,920
Explanation:
The yearly interest rate is 10%
So the interest rate for 90 days(assume 360 days make a year?
90/360 x 10%
2.5% is the interest rate for 90 days.
The interest payment for 90 days will be;
2.5% x $4,800
= $120
The entry will now be:
Dr: Notes Receivable $4,800
Dr: Interest Receivable $120
Cr: Sales $4,920
Use the following information to determine this company's cash flows from financing activities.
A. Net income was $473,000.
B. Issued common stock for $74,000 cash.
C. Paid cash dividend of $13,000.
D. Paid $125,000 cash to settle a note payable at its $125,000 maturity value.
E. Paid $119,000 cash to acquire its treasury stock.
F. Purchased equipment for $86,000 cash.
Use the above information to determine this company's cash flows from financing activities.
Answers
Answer:
The answer is ($183,000)
Explanation:
This section deals with cash flows used to fund(e.g borrowing and repayment of loans) the business
Statement of cash flow(Partial)
Issued common stock for cash----------------------------------------------------------$74,000
Paid cash dividend-------------- ($13,000)
Paid cash to settle a note payable -----------------------------------------------($125,000)
Paid cash to acquire its treasury stock----------------------------------------($119,000)
Net cash flow from financing activities-----------------------------------------($183,000)
The University Store, Inc. is the major bookseller for four nearby colleges. An income statement for the first quarter of the year is presented below: University Store, Inc. Income Statement For the Quarter Ended March 31 Sales $ 800,000 Cost of goods sold 560,000 Gross margin 240,000 Selling and administrative expenses Selling $ 100,000 Administrative 110,000 210,000 Net operating income $ 30,000 On average, a book sells for $40.00. Variable selling expenses are $3.00 per book; the remaining selling expenses are fixed. The variable administrative expenses are 5% of sales; the remainder of the administrative expenses are fixed. The net operating income computed using the contribution approach for the first quarter is:
Answers
Answer: $30,000
Explanation:
Sales are $800,000 and the average price is $40. Number of units sold is;
= 800,000/40
= 20,000 units
Sales $ 800,000
Less: Cost of Goods Sold ($560,000)
Gross Margin $240,000
Less : Variable Costing
Selling Expenses (20,000 units X $3.00) ($60,000)
Administrative Expenses (5% of $ 800,000) ($40,000)
Contribution Margin $140,000
Less: Fixed Cost
Selling Expenses ($100,000 - $60,000) ($40,000)
Administrative Expenses ($110,000 -$40,000) ($70,000)
Net Operating Income $30,000