Answer:
Governments are expected to have a long-life.
Explanation:
1. The interest rate that the Federal Reserve Bank (the Fed) charges member banks for loans is known as the____________ .
2. The Fed can_____________ the money supply by lowering this rate.
Answer:
1. Discount rate.
2. Increase.
Explanation:
A Federal Reserve Bank is one of the twelve regional banks of the Federal Reserve System in the United States of America. The Federal Reserve Banks are saddled with the responsibility of implementing the monetary policy designed and provided by the Federal Open Market Committee (FOMC).
Federal Reserve System also known as the Fed, was created under the Federal Reserve Act which was passed by US Congress in 1913. The Fed began its operations in the year 1914. It's a financial institution which was founded by President Woodrow Wilson and was primarily aimed at backing each banks in order to put a definitive end to the bank panics of the 1800s.
Furthermore, just like all central banks, the Fed is a government financial institution which is saddled with these responsibilities;
1. Controlling the issuance of currency in United States of America: the Fed promotes public goals such as economic growth, low inflation, and the smooth operation of financial markets.
2. Providing banking services to all the commercial banks in the country: the Fed is the "lender of last resort.
3. Regulating banking activities: it has the power to supervise and regulate banks.
The Federal Reserve Board is the governing body which essentially manages the Federal Reserve System and performs an oversight function on domestic monetary policies.
Additionally, the interest rate that the Federal Reserve Bank (the Fed) charges member banks for loans is known as the discount rate. Also, the Fed can increase the money supply by lowering this rate (discount rate) and thus, empowering the member banks to lend more money.
Miller Corporation has a premium bond making semiannual payments. The bond has a coupon rate of 10 percent, a YTM of 8 percent, and 14 years to maturity. The Modigliani Company has a discount bond making semiannual payments. This bond has a coupon rate of 8 percent, a YTM of 10 percent, and also has 14 years to maturity. Both bonds have a par value of $1,000.
a. What is the price of each bond today?
b. If interest rates remain unchanged, what do you expect the prices of these bonds to be 1 year from now? In 4 years? In 9 years? In 13 years? In 14 years?
Price of bond Miller Corporation Bond Modigliani Company Bond
1 year $ _________ $ _________
4 years $ _________ $_________
9 years $ _________ $_________
13 years $ _________ $ _________
14 years $_________ $_________
Answer:
a. What is the price of each bond today?
Miller Corporation bond = $1,179.71
Modigliani Company bond = $835.42
b. Miller Modigliani Company
Corporation Bond Bond
1 year $1,170.26 $841.89
4 years $1,142.86 $866.67
9 years $1,083.33 $920
13 years $1,019.23 $980.95
14 years $1,050 $1,040
Explanation:
YTM formula:
Miller Corporation
YTM = [coupon + (face value - market value)/n] / (face value + market value)/2
0.04 = [50 + (1,000 - x)/28] / (1,000 + x)/2
0.02(1,000 + x) = 85.71 - 0.0357x
20 + 0.02x = 85.71 - 0.0357x
0.0557x = 65.71
x = 65.71 / 0.0557 = $1,179.71
if we want to calculate the bond price in one year, we replace 28 by 26
0.04 = [50 + (1,000 - x)/26] / (1,000 + x)/2
0.02(1,000 + x) = 88.46 - 0.0385x
20 + 0.02x = 88.46 - 0.0385x
0.0585x = 68.46
x = 68.46 / 0.0585 = $1,170.26
if we want to calculate the bond price in 4 years, we replace 28 by 20
0.04 = [50 + (1,000 - x)/20] / (1,000 + x)/2
20 + 0.02x = 100 - 0.05x
0.07x = 80
x = 80 / 0.07 = $1,142.86
if we want to calculate the bond price in 9 years, we replace 28 by 10
0.04 = [50 + (1,000 - x)/10] / (1,000 + x)/2
20 + 0.02x = 150 - 0.1x
0.12x = 130
x = 130 / 0.12 = $1,083.33
if we want to calculate the bond price in 13 years, we replace 28 by 2
0.04 = [50 + (1,000 - x)/2] / (1,000 + x)/2
20 + 0.02x = 550 - 0.5x
0.52x = 530
x = 530 / 0.52 = $1,019.23
Modigliani Company
YTM = [coupon + (face value - market value)/n] / (face value + market value)/2
0.05 = [40 + (1,000 - x)/28] / (1,000 + x)/2
0.025(1,000 + x) = 75.71 - 0.0357x
25 + 0.025x = 75.71 - 0.0357x
0.0607x = 50.71
x = 50.71 / 0.0607 = $835.42
if we want to calculate the bond price in one year, we replace 28 by 26
0.05 = [40 + (1,000 - x)/26] / (1,000 + x)/2
0.025(1,000 + x) = 78.46 - 0.0385x
25 + 0.025x = 78.46 - 0.0385x
0.0635x = 53.46
x = 53.46 / 0.0635 = $841.89
if we want to calculate the bond price in 4 years, we replace 28 by 20
0.05 = [40 + (1,000 - x)/20] / (1,000 + x)/2
25 + 0.025x = 90 - 0.05x
0.075x = 65
x = 65 / 0.075 = $866.67
if we want to calculate the bond price in 9 years, we replace 28 by 10
0.05 = [40 + (1,000 - x)/10] / (1,000 + x)/2
25 + 0.025x = 140 - 0.1x
0.125x = 115
x = 115 / 0.125 = $920
if we want to calculate the bond price in 13 years, we replace 28 by 2
0.05 = [40 + (1,000 - x)/2] / (1,000 + x)/2
25 + 0.025x = 540 - 0.5x
0.525x = 515
x = 515 / 0.525 = $980.95
Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. If the terms of trade are established as 1 apple for 4 oranges, then:
Answer: a. there are no incentives for Beta to engage in international specialization and trade with Alpha.
Explanation:
Beta can produce 16 oranges or 4 apples in an hour. This means that for every Apple they produce, they can produce 4 oranges;
4 apples : 16 oranges
1 apples : 4 oranges
This is the same terms of trade being offered to them by Alpha because if they sell 1 apple to Alpha they will get 4 oranges. This is the same thing they will get when they are producing for themselves alone.
An incentive would have been them getting more oranges per apple than they can produce on their own if they sacrifice one apple which is not the case. There are simply no incentives for Beta to engage in international specialization and trade with Alpha.
6. How much do you have to deposit today so that you can withdraw $50,000 a year at the end of years 5 through 9, and $25,000 at the end of year 10? Assume that you can earn an annual rate of 8 percent.
Answer:
$158,317.88
Explanation:
we have to calculate the present value of the cash flows:
PV = $50,000 / 1.08⁵ + $50,000 / 1.08⁶ + $50,000 / 1.08⁷ + $50,000 / 1.08⁸ + $50,000 / 1.08⁹ + $25,000 / 1.08¹⁰ = $34,029.16 + $31,508.48 +$29,174.52 + $27,013.44 + $25,012.44 + $11,579.84 = $158,317.88
If we deposit $158,317.88 today, we will be able to withdraw $50,000 at the end of years 5 to 9, and $25,000 on year 10.
Record the following process costing transactions in the general journal:
a. Purchase of raw materials on account, $9, 300
b. Requisition of direct materials to Assembly Department, $4, 300 Finishing Department, $2, 400
c. Incurrence and payment of direct labor, $10, 500 (these costs should be debited to WIP Inventory-Assembly)
d. Incurrence of manufacturing overhead costs (unpaid): Property taxes-plant, $1, 800 Utilities-plant, $4, 800 Insurance-plant, $1, 700 Depreciation-plant, $3, 800
e. Assignment of conversion costs to the Assembly Department: Direct labor, $5, 000 Manufacturing overhead, $2, 600
f. Assignment of conversion costs to the Finishing Department: Direct labor, $4, 700 Manufacturing overhead, $6, 600
g. Cost of goods completed and transferred out of the Assembly Department to the Finishing Department, $10, 500
h. Cost of goods completed and transferred out of the Finishing Department into Finished Goods Inventory, $15, 600
Answer:
a.
Raw Materials $9,300 (debit)
Account Payable $9,300 (credit)
b.
Assembly Department $4,300 (debit)
Finishing Department $2,400 (debit)
Raw Materials $6,700 (credit)
c.
WIP Inventory-Assembly $10,500 (debit)
Cash $10,500 (credit)
d.
Overheads $12,100 (debit)
Property taxes-plant: Payable $1, 800 (credit)
Utilities-plant : Payable $4, 800 (credit)
Insurance-plant : Payable, $1, 700 (credit)
Provision for Depreciation-plant, $3, 800 (credit)
e.
Work In Process - Assembly Department $7,600 (debit)
Direct labor, $5, 000 (credit)
Manufacturing overhead, $2, 600 (credit)
f.
Work In Process - Finishing Department $11,300 (debit)
Direct labor, $4,700 (credit)
Manufacturing overhead, $6,600 (credit)
g.
Finishing Department, $10,500 (debit)
Assembly Department $10,500 (credit)
h.
Finished Goods Inventory $15,600 (debit)
Finishing Department $15,600 (credit)
Explanation:
Manufacturing costs accumulate in the Work In Process Account of their respective departments.
When goods are transferred out of the Assembly Department to the Finishing Department, de-recognize the cost from Assembly Department (credit) and recognized the cost in Finishing Department (debit).
When cost of goods completed are transferred out of the Finishing Department into Finished Goods Inventory, we de-recognize the cost from Finishing Department and recognize it in the Finished Goods Inventory.
Assessing Financial Statement Effects of Transactions
Services, a firm providing art services for advertisers, began business on June 1. The following accounts are needed to record the transactions for June: Cash; Accounts Receivable; Supplies; Office Equipment; Accounts Payable; Common Stock; Dividends; Service Fees Earned; Rent Expense; Utilities Expense; and Wages Expense.
Record the following transactions for June using the financial statement effects template.
June I M. DeFond invested $12.000 cash to begin the business in exchange for common stock.
2 Paid $950 cash for June rent.
3 Purchased $6,400 of office equipment on credit.
6 Purchased $3,800 of art materials and other supplies; the company paid $1,800 cash with the remainder due within 30 days.
11 Billed clients $4,700 for services rendered.
17 Collected $3,250 cash from clients on their accounts billed on June
19 Paid $5,000 cash toward the account for office equipment (sec June 3)
25 Paid $900 cash for dividends.
30 Paid $350 cash for June utilities.
30 Paid $2,500 cash for June wages.
Answer:
June 1
Cash $12.000 (debit)
Common Stock $12.000 (credit)
June 2
Rent Expense $950 (debit)
Cash $950 (credit)
June 3
Office Equipment $6,400 (debit)
Account Payable $6,400 (credit)
June 6
Supplies $3,800 (debit)
Cash $1,800 (debit)
Account Payable $2,000 (credit)
June 11
Accounts Receivable $4,700 (debit)
Service Fees Earned $4,700 (credit)
June 17
Cash $3,250 (debit)
Accounts Receivable $3,250 (credit)
June 19
Account Payable $5,000 (debit))
Cash $5,000 (credit)
June 25
Dividends $900 (debit)
Cash $900 (credit)
June 30. Utilities
Utilities Expense $350 (debit)
Cash $350 (credit)
June 30. Wages
Wages $2,500 (debit)
Cash $2,500 (credit)
Explanation:
Use the Account titles provided for guidance in respect to an account to be debited or credited.
Which of the following strategies are not generally used a. Dynamic by using options, futures, swaps, and other more complex derivatives instruments to amplify fund returns b. Passive by following indexes with minimum managerial control c. Neutral, by following market and its growth d. All of the above
Answer:
E) None of the above.
Explanation:
All the strategies described here are common among Investors.
For instance, A market-neutral strategy refers to an investment strategy deployed by an investment manager or investor that is focused on profiting from both bearish and bullish trends of one or more markets, while avoiding risks.
Cheers!
Grand River Corporation reported taxable income of $550,000 in 20X3 and paid federal income taxes of $192,500. Not included in the computation was a disallowed meals and entertainment expense of $3,000, tax-exempt income of $2,000, and deferred gain on a current-year transaction treated as an installment sale of $30,000. The corporation's current earnings and profits for 20X3 would be:_________
Answer:
$336,500
Explanation:
Grand River corporation has a taxable income of $500,000 in 20X3
They paid a federal income tax of $192,500
The amount of expense that was not added to the report is $3,000
The tax exempt income is $2,000
The deferred gain is $30,000
Therefore, the current earinings and profits of the corporation for the year 20X3 can be calculated as follows
= Taxable income-federal income taxes-expenses-tax exempt income+deferred gain
=$500,000-$192,500-$3,000+$2,000+$30,000
= $336,500
Hence the current earnings and profits for the corporation is $336,500
The specific meaning of goodwill in accounting is: Multiple Choice The amount by which a company's value exceeds the value of its individual assets and liabilities. Long term assets held as investment. The support of the board of directors for the operating decisions of management. The cost of developing, maintaining, or enhancing the value of a trademark. Rights granted an entity to deliver a product or service under specified conditions.
Answer:
Option A. The amount by which a company's value exceeds the value of its individual assets and liabilities
Explanation:
The reason is that goodwill not only measures the business valuable tangible and intangible assets but also the intangible assets that can not be valued which the company has earned due to its business operations, this includes customer loyalty, key employees, brand's value, etc.
This is the reason why the value of the company's aggregate assets are always above the aggregate market value of assets not sold altogether. Hence the option A is correct here.
The two economists associated with the development of the theory of monopolistic competition were:________
a. Carl Menger and Eugen Von Bohm-Bawerk.
b. Joan Robinson and Edward Chamberlin.
c. John Neville Keynes and John Maynard Keynes.
d. David Hume and Adam Smith.
Answer:
b. Joan Robinson and Edward Chamberlin.
Explanation:
The Theory of Monopolistic Competition was published in 1933 in a book that was written by Edward Chamberlain who was an American economist. Also, Joan Robinson, a British economist, wrote a book called The Economics of Imperfect Competition in the same year that was about the same topic. Because of that, the answer is that the two economists associated with the development of the theory of monopolistic competition were Joan Robinson and Edward Chamberlin.
The risk-free return during the sample period was 3%. What is the Sharpe measure of performance evaluation for Sooner Stock Fund
Answer: 0.3864
Explanation:
The Sharpe measure of Performance Evaluation aims to compare the performance of a stock or investment in general to that of a risk free security after the stock has been adjusted for it's risk.
The formula is;
= (Average Return of stock - Risk Free return) / Standard Deviation of stock
= (20% - 3% ) / 44%
= 17% / 44%
= 0.3864
I have attached the full question.
Political systems, the systems of government in nations, differ from country to country. It is important to understand the nature of different political systems and develop an awareness of and appreciation for the significance of national differences. Political systems are assessed according to two dimensions. The first is the degree to which they emphasize collectivism as opposed to individualism. The second is the degree to which they are democratic or totalitarian. These dimensions are interrelated and may share certain characteristics.
Match the political systems with the countries listed below.
a. China
b. United States
c. Zimbabwe
d. Italy in the 1930s
e. Saudi Arabia
f. France
Political System:
1. Totalitarianism
2. Totalitarianism
3. Representative
4. Totalitarianism
5. Right-Wing
6. Totalitarianism
7. Democracy
Answer:
a. China ⇒ Communist Totalitarianism
China is a former communist country turned in to socialist, but still not democratic. The communist party still rules the country at will without opposition.
b. United States ⇒ Representative Democracy
The US is the oldest modern democracy that still remains in the world. Other countries have older democratic institutions, but the country was not completely democratic, e.g. Parliament existed for centuries in England, but England became a democracy in 1918. The US is considered a representative democracy.
c. Zimbabwe ⇒ Tribal Totalitarianism
Zimbabwe is ruled by a military dictator.
d. Italy in the 1930s ⇒ Right-wing Totalitarianism
Benito Mussolini ruled Italy in the 1930s. He was a fascist dictator that allied with Adolf Hitler during WWII.
e. Saudi Arabia ⇒ Theocratic Totalitarianism
Saudi Arabia is a monarchy where the royal family rules at will without any opposition.
f. France ⇒ Social Democracy
France is considered a social democracy since its last governments have followed socialist ideals through democracy.
If a company made a bank deposit on September 30 that did not appear on the bank statement dated September 30, in preparing the September 30 bank reconciliation, the company should:
Answer:
The answer is 'add the deposit to the end cash balance per bank statement'
Explanation:
The company made a deposit on the last day of September and this was not recorded by the bank i.e it will not be shown on the bank statement at September 30. The company had already recorded this deposit in the cash book at office. This means the bank statement is less this deposit amount.
To correct this anomaly, the deposit that was not recorded by the bank will be added to the end cash balance as per bank statement.
A government has decided to phase out its antipoverty program support payments more slowly to help the near-poor become self-sufficient. One criticism about this policy is likely to be
Answer:
that this antipoverty program costs the government more money.
Explanation:
The criticism would be that the that this antipoverty program costs the government more money. If the government should phase its support to anti poverty payments more slowly, the criticism would be that the programs costs more money.
Therefore this option is the right answer
Equipment was purchased for $161500. Freight charges amounted to $5500 and there was a cost of $10000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $38000 salvage value at the end of its 5-year useful life. Depreciation Expense each year using the straight-line method will be
Answer:
$27,800
Explanation:
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
Cost of asset = $161500 + $5500 + 10000 =$177,000
$177,000 - $38000 = $139,000 / 5 =$27,800
depreciation expense each year would be $27,800
You expect KT industries (KTI) will have earnings per share of $ 3 this year and expect that they will pay out $ 2.25 of these earnings to shareholders in the form of a dividend. KATIE's return on new investments is 16% and their equity cost of capital is 15%. The expected growth rate for KTIs dividends is closest to:
Answer:
4%
Explanation:
the growth rate (g) = retention rate (the amount of net income that the company keeps in order to grow, and therefore, does not distribute to stockholders) x ROI (return on investments)
retention rate = ($3 - $2.25) / $3 = 0.25ROI = 16%g = 0.25 x 16% = 4%
Your company is producing a new ointment for sore muscles. You want to convince a national chain of boxing gyms to use this product. Why is it important to send a business letter in this situation
Answer:
It is important to send a business letter as a way to introduce itself as a company and in order to communicate that the company is interested in starting a relationship with the other one so therefore they can improve their situation in the market.
Explanation:
To begin with, a "Business Letter" is the type of letter that is sent from one company to another one in order to make the first step to establish a future relationship between those companies. It also can be sent from one company to its clients, suppliers, etc. Moreover, this type of communication implicates a formal and permanent record that it can be saved by any party in order to use it later as a prove of the facts established in the letter. Furthermore, every letter has its unique type of content that it will be determined by the type of relationship that the parties have with each other.
A check-processing center uses exponential smoothing to forecast the number of incoming checks each month. The number of checks received in June was 40 million, while the forecast was 42 million. A smoothing constant of .2 is used. a) What is the forecast for July
Answer:
41.6 million
Explanation:
Given:
Number of checks in June = 40,000,000
Forecast in June = 42,000,000
Smoothing constant = 0.2
Required:
Find the forecast for July
To find July's forecast, use the formula:
July's forecast = (Number of checks in June * Smoothing constant) + (Forecast demand in June * (1 - Smoothing constant))
Substitute figures:
(40,000,000 * 0.2) + (42,000,000 * (1 - 0.2))
= (8,000,000) + (42,000,000 * 0.8)
= (8,000,000 + 33,600,000)
= 41,600,000
Forcast in July is 41.6 million
There are zero coupon bonds outstanding that have a YTM of 6.27 percent and mature in 14 years. The bonds have a par value of $10,000. If we assume semiannual compounding, what is the price of the bonds?
Answer:
Price of the Bond is $4,268.26
Explanation:
The price of the bonds can be obtained using a Financial calculator by entering the data as follows :
r = 6.27%
Pmt = $0
n = 14
Fv = $10,000
Pv = ? Price of the Bond
Therefore, Pv, Price of the Bond is $4,268.2561.
Thus Price of the Bond is $4,268.26 ( 2 decimal places).
Taylor Swift purchased airline tickets for her dancers to Las Vegas online. Prior to completing the purchase she was required to initial a statement that said that she had read the applicable rules and restrictions and she agreed with them. The rules were readily available for her review by clicking on an icon. If Taylor initials the statement without reading the rules, is she bound by them? Explain why or why not using the elements of contracts.
Answer:
Yes, she is bound by the terms and conditions agreed.
Explanation:
It doesn't matter if Taylor Swift had read or not the terms and conditions of the contract because it was her negligence which doesn't have any impact on the contract. She after clicking the agreeing the terms and condition button and processng her payment has actually formed a contract. The court is not concerned with whether or not Taylor Swift has read the clauses or not.
Developing a List of Activities for Baggage Handling at an Airport
As part of a continuous improvement program, you have been asked to determine the activities involved in the baggage-handling process of a major airline at one of the airline’s hubs. Prior to conducting observations and interviews, you decide that a list of possible activities would help you to better observe key activities and ask meaningful questions.
Required
For incoming aircraft only, develop a sequential list of baggage-handling activities. Your list should contain between 8 and 10 activities.
Listed below are 8 baggage-handling activities in random order. Put the activities in sequential order by selecting the appropriate number using the drop-down answer options under the "Step" column.
(Step 6 is completed as an example)
Load aircraft
Move baggage to baggage sorting area
Unload aircraft
6 Accumulate baggage for each outgoing flight
Move baggage to outgoing aircraft
Move baggage for which hub is final destination to baggage claim area
Open cargo hatch
Sort baggage by outgoing flight numbers and/or destination
Answer:
1. Open cargo hatch
When the plane arrives, it will need to be unloaded so the first thing to do is open the cargo hatch to have access to cargo area.2. Unload aircraft
After gaining access to the cargo area, unload the aircraft.3. Move baggage to baggage sorting area
The baggage should then be moved to a place where it can be sorted.4. Move baggage for which hub is final destination to baggage claim area
If this is the final destination for the baggage then it should be moved to the baggage claim area5. Sort baggage by outgoing flight numbers and/or destination
When it is time for the outgoing flights, sort them according to which flights they will be going on.6. Accumulate baggage for each outgoing flight
After sorting them, accumulate them and prepare them to be transported to the plane they are to go to.7. Move baggage to outgoing aircraft
After accumulating them, transport them to the plane that they are to go with.8. Load aircraft
After transporting them then load the aircraft.When conducting a five Cs analysis and developing the context, which factor should NOT be included in the analysis? Group of answer choices Firm capabilities Culture Technology Legal context
Answer: Firm Capabilities
Explanation:
The 5Cs of Marketing are used by Companies to come up with effective Marketing strategies by using them to clarify exactly what needs to be accomplished.
The 5Cs are; Company, Customer, Collaborators, Competition and Context.
Firm Capabilities does not fall under Context because Context deals with Political, Social, Economical and Technological aspects of the place in question.
Firm Capabilities fall under Company analysis where the company aims to find out if it is capable of of meeting Consumer demands.
Jeff Heun, president of Vaughn Always, agrees to construct a concrete cart path at Dakota Golf Club. Vaughn Always enters into a contract with Dakota to construct the path for $174,000. In addition, as part of the contract, a performance bonus of $43,200 will be paid based on the timing of completion. The performance bonus will be paid fully if completed by the agreed-upon date. The performance bonus decreases by $10,800 per week for every week beyond the agreed-upon completion date. Jeff has been involved in a number of contracts that had performance bonuses as part of the agreement in the past. As a result, he is fairly confident that he will receive a good portion of the performance bonus. Jeff estimates, given the constraints of his schedule related to other jobs, that there is 50% probability that he will complete the project on time, a 25% probability that he will be 1 week late, and a 25% probability that he will be 2 weeks late.A) Determine the transaction price that Concrete Always should compute for this agreement.
B) Assume that Jeff Heun has reviewed his work schedule and decided that it makes sense to complete this project on time. Assuming that he now believes that the probability for completing the project on time is 90% and otherwise it will be finished 1 week late, determine the transaction price.
Answer:
A) Determine the transaction price that Concrete Always should compute for this agreement.
total transaction price = contract price ($174,000) + expected value of the bonus
expected value of the bonus:
$43,200 x 50% = $21,600($43,200 - $10,800) x 25% = $8,100($43,200 - $10,800 - $10,800) x 25% = $5,400total = $35,100total transaction price = $174,000 + $35,100 = $209,100
B) Assume that Jeff Heun has reviewed his work schedule and decided that it makes sense to complete this project on time. Assuming that he now believes that the probability for completing the project on time is 90% and otherwise it will be finished 1 week late, determine the transaction price.
total transaction price = contract price ($174,000) + expected value of the bonus
expected value of the bonus:
$43,200 x 90% = $38,880($43,200 - $10,800) x 10% = $3,240total = $42,120total transaction price = $174,000 + $42,120 = $216,120
The following describes production activities of mercer manufacturing for the year.
Actual raw materials used 17,000 lbs. at $4.20 per lb.
Actual factory payroll 5,550 hours for a total of $106,005
Actual units produced 30,030
Budgeted standards for each unit produced are .50 pound of direct material at $4.00 per pound and 10 minutes of direct labor at $20.00 per hour.
1. Compute the direct materials price and quanity variances and classify each as favorable or unfavorable.
2. Compute the direct labor rate and efficincy variances and classify each as favorable or unfavorable
Answer and Explanation:
1. The computation of direct materials price and quantity variances is shown below:-
Actual Cost = Actual quantity × Actual price
= 17,000 × $4.20
= $71,400
The Standard cost for actual quantity = Actual quantity × Standard price
= 17,000 × $4.00
= $68,000
Standard Cost = Standard quantity × Standard price
= (30,030 ÷ 0.50) × $4.00
= 15,015 × $4.00
=$60,060
Now the material price variance is
= Actual Quantity × (Standard Price - Actual Price)
= 17,000 × ($4 - $4.20)
= 17,000 × $0.20
= $3,400 unfavorable
The material quantity variance is
= Standard Price × (Standard Quantity - Actual Quantity)
= $4 × (15,015 - 17,000)
= $4 × 1,985
= $7,940 unfavorable
2. The computation of direct labor rate and efficiency variances is shown below:-
Actual Cost = Actual hours × Actual rate
= 5550 × $19.10
= $106,005
The Standard cost for actual quantity = Actual hours × Standard rate
= 5,550 × $20.00
= $111,000
Standard Cost = Standard hours × Standard rate
= 5005 × $20.00
= $100,100
The labor rate variance is
= Actual Hours × (Actual rate - standard rate)
= 5,550 × ($19.10 per hour - $20 per hour)
= 5,550 × $0.90 per hour
= $4,995 favorable
The labor efficiency variance is
= Standard Rate × (Actual hours - Standard hours)
= $20 per hour × (5,550hours - 5,005 hours)
= $20per hour × 545 hours
= $10,900 unfavorable
Louvers, Inc., accepted a $15,000, 180-day, 10 percent note from a customer on May 31. On June 30, Louvers prepared a period-end adjusting entry to accrue the $125 of interest owed on the note. The note is honored on November 27.
Required:
Prepare the necessary November 27 entry for Louvers.
Answer:
Entry for November 27 is given below
Explanation:
Note receivable = $15,000
Interest receivable = $125
Interest Revenue = $15,000 x 10% x 180/360
Interest Revenue = $750 - $125 = $625
Entry
DEBIT CREDIT
Cash $15,750
Interest receivable $125
Interest Revenue $625
Note receivable $15,000
HH Industries has 50 million shares that are currently trading for $4 per share and $200 million worth of debt. The debt is risk free and has and interest rate of 5%, and the expected return of HH stock is 11%. Suppose a strike causes the price of HH stock to fall 25% to $3 per share. The value of the risk free debt is unchanged. Assuming there are no taxes and the risk of HH's assets is unchanged, what happens to HH's equity cost of capital
Answer:
12%
Explanation:
For computing the equity cost of capital first we have to determine the weight of the capital structure after that the WACC and then finally equity cost of capital which is shown below:
Weight of capital structure
For debt
= $200 million ÷ $400 million
= 0.50
For equity
= 50 million × $4 ÷ $400 million
= 0.50
Now the WACC is
= 0.50 11% + 0.50 × 5%
= 8%
Since the value fo equity is declined by
= 50 × $3
= $150
Now the equity cost of capital is
= WACC + (WACC - interest rate) × (debt ÷ equity)
= 8% + (8% - 5%) × (200 ÷ 150)
= 12%
In each of the following independent situations, determine the dividends received deduction for the calendar year C corporation. Assume that Rose Corporation owns 15%, Pansy owns 10% and Daffodil owns 55% of the stock in the corporations paying the dividends.
Rose Corporation Pansy Corporation Daffodil Corporation
Income from operations $1,200,000 $1,200,000 $1,200,000
Expenses from operations (800,000) (1,300,000) (1,500,000)
Qualifying dividends 400,000 400,000 400,000
Required:
a. The dividends received deduction for Rose Corporation is $__________
b. The dividends received deduction for Pansy Corporation is $_____________
c. The dividends received deduction for Daffodil Corporation is $____________
Answer:
a. The dividends received deduction for Rose Corporation is $ 280,000
b. The dividends received deduction for Pansy Corporation is $ 280,000
c. The dividends received deduction for Daffodil Corporation is $ 320,000
Explanation:
a. The dividends received deduction for Rose Corporation would be calculated as follows:
dividends received deduction for Rose Corporation=Qualifying dividends*70%
dividends received deduction for Rose Corporation=$400,000*70%
dividends received deduction for Rose Corporation=$280,000
The dividends received deduction for Rose Corporation is $ 280,000
b. The dividends received deduction for Pansy Corporation would be calculated as follows:
dividends received deduction for Pansy Corporation=Qualifying dividends*70%
dividends received deduction for Pansy Corporation=$400,000*70%
dividends received deduction for Pansy Corporation=$280,000
The dividends received deduction for Pansy Corporation is $ 280,000
c. The dividends received deduction for Daffodil Corporation would be calculated as follows:
dividends received deduction for Daffodil Corporation=Qualifying dividends*70%
dividends received deduction for Daffodil Corporation=$400,000*80%
dividends received deduction for Daffodil Corporation=$320,000
The dividends received deduction for Daffodil Corporation is $ 320,000
Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1,500 monthly. The contract currently sells for $115,000.
a. What is the monthly return on this investment vehicle?
b. What is the APR?
c. What is the effective annual return?
Answer:
1.30%
15.60%
16.77%
Explanation:
The monthly return is the amount payable monthly divided by the current price of the investment vehicle.
monthly return=$1500/$115,000=1.30%
Annual percentage return=monthly return*12=1.30% *12=15.60%
Effective annual return=(1+1.30%)^12-1
EAR=1.167651776 -1
EAR=16.77%
Complete the following passage concerning macro economics.
One branch of macroeconomics focuses on long-run growth and development, while the other branch focuses on__________which are fluctuations in________typically over time periods of five years________ .One model that macroeconomists use to study these fluctuations, which are called recessions and expansions, is the_______model.
1. aggregate demand-aggregate supply
2. less
3. business cycles
4. an economy's growth rate
5. policy
6. more
7. standard of living
8. demand-supply
Answer:1.business cycles 2. an economy's growth rate 3. less 4. aggregate demand-aggregate supply model
Explanation:
One branch of macroeconomics focuses on long-run growth and development, while the other branch focuses on___business cycles_______which are fluctuations in__an economy's growth rate______typically over time periods of five years_ less___ .One model that macro economists use to study these fluctuations, which are called recessions and expansions, is the aggregate demand-aggregate supply__model.
Macroeconomics is defined as that branch of economics which studies the behavior, performance and changes of economic situations as a whole considering the factors of general price level, technology, output, consumption, aggregate demand and supply, unemployment, inflation, recession, savings, investment etc and how these affects national income and best decisions that can improve the national economic growth
The goal of macro economists is to solve problems on the business cycle ( factors the cause short term fluctuations and their effects in national income) and ways to improve long-run economic growth.
What will be your rate of return if the price of Telecom stock goes up by 10% during the next year? (Ignore the expected dividend.)
Answer:
The answer is 12%
Explanation:
Initial investment:
$5,000 in equity + $5,000 in debt
=$10,000
Number of shares bought with the initial investment is:
Initial investment/Stock price
= $10,000/$50 = 200 shares.
The shares increase in value by 10%: $10,000 x 0.10 = $1,000.
Interest on debt = $5,000 x 0.08 = $400.
The rate of return will be:
($1,000 - $400) ÷ $5,000
0.12
Expressed as a percentage:
12%