Answer:
When a financial friction is added to the short-run model it: shifts the MP curve up.
Explanation:
The short-run model, IS/MP model, describes the Investment-Savings/Monetary Policy model used by the US Federal Reserve to decrease the real interest rate through the Federal Funds rate, i.
The Federal Funds rate is the interest rate that commercial banks with excess reserves lend to others in deficit. The resulting shift occasions a decrease in the real interest rate which triggers an increase in the inflation rate, and vice versa. With such short-run changes in the interest rate, inflation and output is influenced in desirable directions by the Federal Reserve as a foundation to achieve long-term shifts in the AD-AS model.
The AD-AS model is a long-term model that describes Aggregate Demand and Aggregate Supply which impact long-term inflation, interest rates, and output.
Beatrice invests $1,360 in an account that pays 3 percent simple interest. How much more could she have earned over a 4-year period if the interest had been compounded annually
Answer:
If the interest was compounded annually, the amount that would have been earned more over the simple interest method is $7.49
Explanation:
A simple interest account pays interest on only the sum deposited at an annual rate for a specified period of time while a compounding interest account adds the interest earned in each period to the principal amount and calculate the interest for the next period on this new amount (Principal + Accumulated Interest).
The formula to calculate interest under simple interest method is,
Interest = Principal * Annual Rate * Time in years
Total Interest earned = 1360 * 3% * 4
Total interest earned = 163.2
The formula to calculate interest under compound interest method is,
Interest = [Principal * (1+i)^t] - Principal
Where,
i is the interest ratet is the number of periodsInterest = 1360 * (1+0.03)^4 - 1360
Interest = 170.6919 rounded off to $170.69
If the interest was compounded annually, the amount that would have been earned more over the simple interest method is,
Extra amount = 170.69 - 163.2
Extra amount = $7.49
Prepare journal entries to record each of the following four separate issuances of stock.
a. A corporation issued 4,000 shares of $10 par value common stock for $48,000 cash.
b. A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $57,000.
c. The stock has a $3 per share stated value.A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $57,000.
d. The stock has no stated value.A corporation issued 1,000 shares of $50 par value preferred stock for $107,000 cash.
Answer:
a.
DR Cash $48,000
CR Common Stock (4,000*10) $40,000
CR Paid in Excess of Par- Common Stock $8,000
(To record common stock issued for cash)
Working
Paid in Excess of Par- Common Stock = 48,000- 40,000
= $8,000
b.No stated value
DR Organization expenses $57,000
CR Common Stock $57,000
(To record common stock issued to promoters)
c.
DR Organization expenses $57,000
CR Common Stock (2,000 * $3) $6,000
CR Paid in Excess of Par- Common Stock $51,000
(To record common stock issued to promoters)
Working
Paid in Excess of Par- Common Stock = 57,000 - 6,000
= $51,000
d.
DR Cash $107,000
CR Preferred Stock (1,000*50) $50,000
CR Paid in Excess of Par- Preferred Stock $57,000
(To record preferred stock issued for cash)
Working
Paid in Excess of Par- Preferred Stock
= 107,000 - 50,000
= $57,000
The Internal Rate of Return (IRR) represents which of the following: Multiple Choice The discount rate that must be lower than the required rate of return. The discount rate that makes the net present value equal to zero. The discount rate that makes the net present value positive. The discount rate that makes the net present value negative. The discount rate that is affected by the cash flows external to the project.
Answer:
The discount rate that makes the net present value equal to zero.
Explanation:
The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.
It is the discount rate that makes the net present value equal to zero.
I hope my answer helps you
Suppose that JB Cos. has a capital structure of 75 percent equity, 25 percent debt, and that its before-tax cost of debt is 14 percent while its cost of equity is 18 percent. Assume the appropriate weighted-average tax rate is 25 percent.
What will be JBâs WACC? (Round your answer to 2 decimal places.)
WACC ______ %
Answer:
16.13%
Explanation:
The computation of the weighted cost of capital (WACC) is shown below:
As we know that
WACC is
= weight of equity × cost of equity + weight of debt × before cost of debt × (1 - tax rate)
= 0.75 × 18% + 0.25 × 14% × (1 - 0.25)
= 13.5% + 2.625%
= 16.13%
We simply applied the above formula so that the WACC could be arrive
"______, a key feature of a customer relationship management system, is the ability to aid customer service representatives so that they can quickly, thoroughly, and appropriately address customer requests and resolve customer issues while collecting and storing data about those interactions."
Answer:
Customer support
Explanation:
Customer support offers various customer services to help customers in making cost effective and correct use of a product. Through customer support, customers requests and issues can be resolved through answering questions and providing help on onboarding, while collecting and storing data about those interactions
The core CPI looks at the price changes of a market basket without Select one: a. luxury goods b. taxes c. food and energy d. imported goods
Answer:
The correct answer is the option C: food and energy.
Explanation:
On the one hand, the concept known as "Consumer Price Index" or CPI is refered to the measure that is basically used in economics in order to obtain the variation of prices in general that happens in a certain period of time, so that means that it focus in calculating the inflation of an economy by examinating the weighted average of prices of a basket of predetermined goods.
On the other hand, the "Core CPI" calculates the inflation in the costs of goods and services of a predetermined basket by does not include the ones from the food an energy sectors.
Clemens Inc. is considering a $100 million investment in a new line of soft drinks. However, $100 million is a huge investment for Clemens; if things turn bad, it could wipe out the company. A few senior managers have suggested
Answer: expand
Explanation:
Here's the complete question:
Clemens Inc. is considering a $100 million investment in a new line of soft drinks. However, $100 million is a huge investment for Clemens; if things turn bad, it could wipe out the company. A few senior managers have suggested a smaller investment of $20 million to see if the market is as strong as they hope it is. If demand is strong and the opportunity is still available, Clemens will increase its investment at a later date. This example describes a real option to:
a. abandon
b. expand
An expansion option is an option that gives the company that bought a real option, the right to take part in certain actions, and to also expand its operations in the future even with little or no cost. In real estate, this option gives opportunities to the tenants to increase the space of the premises where they live.
This is the idea portrayed in the question when few senior managers suggested a smaller investment of $20 million should be made at first and when the demand is strong and the opportunity is still available, Clemens will increase its investment at a later date.
J.C Coats Inc. carefully develops standards for its coat making operation. Its specifications call for 2 square yards of wool per coat. The budgeted price of wool is $50 per square yard. The actual price for the wool was $38 and the usage was only 1.6 yards of wool per coat. What would be the standard cost per output for the wool?
Answer:
$100 per coat
Explanation:
Standard ;
Wool required = 2 yard square per coat
Budgeted price = $50 per square yard
Therefore,
We will need to multiply the total direct material quantity per unit for its unitary cost in order to arrive at the standard cost per unit.
Total standard cost per coat = Wool per coat × Cost per square yard,
= 2 × $50
= $100 per coat
Barnes Company purchased $58,000 of 10.0% bonds at par. The bonds mature in six years and are a held-to-maturity security. Which of the following is the correct journal entry to record the receipt of the semiannual interest payment?
a) debit Unrealized Gain-Equity, $2,900; credit Cash, $2,900.
b) debt Cash, $2,900; credit Long-Term Investments-HTM, $2,900.
c) debit Cash, $2,900; credit Interest Revenue, $2,900.
d) debit Cash, $5,800; credit Unrealized Gain-Equity, $5,800.
e) debit Cash, $5,800; credit Long-Term Investments-HTM, $5,800.
Answer:
Option B,debt Cash, $2,900; credit Long-Term Investments-HTM, $2,900,is correct
Explanation:
Semiannual interest on the bond can be computed using the below semiannual interest formula:
semiannual interest=face value*coupon rate*6/12
face value is $58000
The coupon rate is 10%
semiannual interest=$58000*10%*6/12=$2900
The receipt of $2900 semiannual interest would be debited to cash while also being credited to Long-Term investments-HTM
A bank has excess reserves of $1 million and makes a new loan for $500,000. If the bank faces a 10% required reserve ratio, by how much could the money supply increase when the loan is made
Answer:
With a 10% required reserve ratio, the money supply could increase by $500,000/r when the loan is made.
This equals $5,000,000 ($500,000/0.1) where r = 10%
Explanation:
a) The money multiplier is the amount of money that banks generate with each dollar of reserves. Reserves is the amount of deposits that the Federal Reserve requires banks to hold and not lend.
b) The formula for the money multiplier is simply 1/r, where r = the reserve ratio.
c) The reserve ratio, also known as Cash Reserve Ratio, is the percentage of deposits which commercial banks are required to keep as cash according to the directions of the central bank. It is used by the central bank to control the supply of money in the economy. When the central bank wants to increase the money supply, it lowers the reserve ratio and vice versa.
d) According to wikipedia.com, "the money supply is the total value of money available in an economy at a point of time." It is usually defined as currency in circulation plus demand deposits. It is the demand deposits that give commercial banks the ability to create money using the reserve ratio.
Two partners, Small and Big, form a partnership in which Small invested $40,000 and Big invested $60,000 for a total capital of $100,000. But Small devotes more time to the business and earns more from the firm. They have agreed to share the profits as follows:
1. The first $20,000 is allocated on the partner's capital balances.
2. The next $30,000 is allocated based on service: Small gets $20,000, and Big gets $10,000.
3. Any remaining profits are allocated equally.
4. The partnership's net income is $100,000.
Requried:
a. What is Small's portion of the net income?
b. What is Big's portion of the net income? Make the entry for this allocation.
c. What would be the right parts to the journal entry for this question?
Answer:
a. What is Small's portion of the net income?
$53,000b. What is Big's portion of the net income? Make the entry for this allocation.
Big's portion = $47,000Dr Income Summary 47,000 Cr Big, capital 47,000c. What would be the right parts to the journal entry for this question?
Debit Income summary and credit capital accountsExplanation:
partnership's net income $100,000
first $20,000
Small $8,000Big $12,000next $30,000
Small $20,000Big $10,000Remaining $50,000
Small $25,000Big $25,000total Small = $53,000
total Big = $47,000
n preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available: Net income for the year was $52,000 Accounts payable decreased by 18,000 Accounts receivable increased by 25,000 Inventories increased by 5,000 Depreciation expense was 30,000 Net cash provided by operating activities was:
Answer:
$34,000
Explanation:
Calculation for the Net cash provided by operating activities
Net income 52,000
Adjustments :
Add Depreciation expense 30,000
Less Decrease in Accounts payable (18,000)
Less Increase in accounts receivables (25,000)
Less Increase in inventories (5,000)
Net cash provided by operating activities $34,000
Therefore Net cash provided by operating activities was: $34,000
Diane Manufacturing Company is considering investing $500,000 in new equipment with an estimated useful life of 10 years and no salvage value. The equipment is expected to produce $320,000 in cash inflows and $200,000 in cash outflows annually. The company uses straight-line depreciation, and has a 30% tax rate. Diane Manufacturing desired rate of return on this project is 10%. Net cash flows for years 1 through 10 (99,000 X present value of $1 annuity factor) round to nearest dollar A. 120000 Recovery of investment in working capital (500,000 x (present value of $1 factor) B. Present Value of net cash flows C. Initial cash outlay500,000 Net Present Value
Answer:
net income per year = $49,000
annual cash flows = $99,000
NPV = $108,315.40
payback period = 5.05 years
accounting rate of return = 19.6%
Explanation:
annual cash flow = [($320,000 - $200,000 - $50,000) x 0.7] + $50,000 = $99,000
NPV = -$500,000 + [$99,000 x 6.1446 (PV annuity, 10%, 10 periods)] = -$500,000 + $608,315.40 = $108,315.40
payback period = $500,000 / $99,000 = 5.05 years
accounting rate of return = net income per year / average investment = $49,000 / [($500,000 + $0)/2] = $49,000 / $250,000 = 19.6%
What is the price of a perpetual bond that pays a $45 per year into perpetuity, and has a 3.5% yield to maturity (YTM)
Answer:
Price =$1,285.71
Explanation:
A perpetual bond is that which pays a fixed amount of interest income for the foreseeable future. It issuer does not always have an obligation for redemption under the terms of loan contract.
The price of perpetual bond can be determined as the present value of a perpetuity. An perpetuity is an annuity that pays a fixed amount of cash flow for a certain number of years
PV = A/r
PV- price of bond- ?
A- annual interest - 45
r- Yield to maturity- 3.5%
Price = 45/0.035=1,285.714
Price =$1,285.71
When organizations, in an attempt to prevent _____ asks customers to not enter characters but instead select them one by one from boxes, intruders may counter with
Answer: a. keyloggers, screen scrapers
Explanation:
When organizations, in an attempt to prevent keyloggers asks customers to not enter characters but instead select them one by one from boxes, intruders may counter with screen scrapers
Keyloggers is a program that allows another person to record the keys struck on a keyboard without the person typing knowing. The person recording can them compile the information to find out very confidential information. By asking customers to select characters this can be mitigated.
Screen Scrapers on the other hand are more lethal because they record that is being displayed on a screen and transmit it to another person thereby enabling them to see what the target is doing even if they select characters from boxes.
Determine the uniform annual value for the cash flow below at an interest rate of 11% per year.
Year 0 1 2 3 4 5 6 7 8 9
Cash Flow, 0 $ 30,000 30,000 30,000 30,000 45,000 45,000 45,000 45,000 45,000
a. $38,474
b. $37,744
c. $36,595
d. $39,595
Answer:
$36,595
Explanation:
The computation of the uniform annual value is shown below:;
Before that we need to find out the present worth which is
= $30,000 × (P/A , 11%, 4) + $45,000 × (P/A , 11%, 4) × (P/F , 11%, 4)
= $30,000 × (3.1025) + $45,000 × (3.69590) (0.65873)
= $202,630.51
Now the annual worth is
= Present value × (A/P, 11%,9)
= $202,630.51 × 0.18060
= $36,595
Another bank is also offering favorable terms, so Rahul decides to take a loan of $12,000 from this bank. He signs the loan contract at 5% compounded daily for 12 months. Based on a 365-day year, what is the total amount that Rahul owes the bank at the end of the loan's term
Answer:
$12,615.21
Explanation:
we need to determine the future value of the loan:
future value = present value x (1 + interest rate)ⁿ
present value = $12,000n = 365 days (compounded daily)interest rate = 5% / 365 days = 0.05/365 = 0.000136986future value = $12,000 x (1 + 0.000136986)³⁶⁵ = $12,000 x 1.051267496 = $12,615.21
Tru-U stock is selling for $41 a share. A 6-month call on Tru-U stock with a strike price of $45 is priced at $1.60. Risk-free assets are currently returning .29 percent per month. What is the price of a 6-month put on Tru-U stock with a strike price of $45?
Answer:
$4.82
Explanation:
Calculation for the price of the 6-month put on Tru-U stock
To find the price of a 6-month put on Tru-U stock with a strike price of $45 we are going to use Put-call parity formula to calculate it
Using this formula
Put-call parity: S + P = C + PV(E) P
Let plug in the formula
Put-call parity= $1.60 + ($45 / 1.0029^⁶) - $41 = Put-call parity=$1.60+($45/1.01752)-$41
Put-call parity=$1.60+(44.22517)-$41
Put-call parity=$45.82517-$41
Put-call parity=$4.82
Therefore the price of a 6-month put on Tru-U stock with a strike price of $45 will be $4.82
Harrelson Company manufactures pizza sauce through two production departments: Cooking and Canning. In each process, materials and conversion costs are incurred evenly throughout the process. For the month of April, the work in process accounts show the following debits.
Cooking Canning
Beginning work in process $0 $4,240
Materials 24,700 9,800
Labor 9,550 7,440
Overhead 32,800 27,100
Costs transferred in 55,000
Journalize the April transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)Date Account Titles and Explanation Debit CreditApril 30(To record materials used.)30 (To assign factory labor to production.)30 (To assign overhead to production.)30 (To record costs transferred in.)
Answer: Please explanation column for answers
Explanation: Cooking Canning
Beginning work in process $0 $4,240
Materials 24,700 9,800
Labor 9,550 7,440
Overhead 32,800 27,100
Costs transferred in 55,000
a) journal to record materials used
Date Account Debit Credit
April 30 Work in progress- cooking $24,700
Work in progress -Canning $9,800
Raw materials inventory $34,500
B) journal to record assignment of factory labor to production
Date Account Debit Credit
April 30 Work in progress- cooking $9,500
Work in progress -Canning $7,440
Factory Labour $16,940
c) journal to record assignment of overhead to production.
Date Account Debit Credit
April 30 Work in progress- cooking $32,800
Work in progress -Canning $27,100
Manufacturing Overhead $59,900
c) journal to record costs transferred in from cooking to Canning
Date Account Debit Credit
April 30 Work in progress- Canning $55,000
Work in progress -Cooking $55,000
At an output level of 6,000 units, you have calculated that the degree of operating leverage is 2.3. The operating cash flow is $12,000 in this case. a. Ignoring the effect of taxes, what are fixed costs
Answer: $15,600
Explanation:
The following information can be gotten from the question:
Output level = 6,000 units
Degree of operating leverage = 2.3
Operating cash flow = $12,000
Contribution margin = Degree of operating leverage × Operating cash flow
= 2.3 × $12,000
= $27,600
Fixed cost = contribution margin - Operating cash flow
= $27,600 - $12,000
= $15,600
a. Compute the future value of $2,500 continuously compounded for 5 years at an APR of 9 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Compute the future value of $2,500 continuously compounded for 6 years at an APR of 7 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. Compute the future value of $2,500 continuously compounded for 9 years at an APR of 4 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. Compute the future value of $2,500 continuously compounded for 6 years at an APR of 10 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
a) $3920.78
b) $3804.90
c) $3583.32
d) $4555.30
Explanation:
To find future value, use the formula below:
[tex] A=P(e)^r^n [/tex]
where
A=future value
P=present value
r=rate of interest
n=time period.
e=2.71828
a)
[tex] A=2500*(2.71828)^(^0^.^0^9^*^5^)[/tex]
=$2500*1.568312185
Future value =$3920.78
b)
[tex] A=2500*(2.71828)^(^0^.^0^7^*^6^)[/tex]
=$2500 * 1.521961556
Future value =$3804.90
c)
[tex] A=2500*(2.71828)^(^0^.^0^4^*^9^)[/tex]
=$2500 * 1.433329415
Future value =$3583.32
d)
[tex] A=2500*(2.71828)^(^0^.^1^0^*^6^)[/tex]
=$2500 * 1.8221188
Future value =$4555.30
Answer:
u9g
Explanation:
You manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 28%. The T-bill rate is 8%. Your client chooses to invest 70% of a portfolio in your fund and 30% in a T-bill money market fund. Suppose that your risky portfolio includes the following investments in the given proportions: Stock A 25 % Stock B 32 % Stock C 43 % What are the investment proportions of your client’s overall portfolio, including the position in T-bills?
Answer:
Stock A: 20%
Stock B: 25.6%
Stock C: 34.4%
Explanation:
Calculation for the investment proportions of your client's overall portfolio, including the position in T-bills
Based on the information given the T-bill rate is 8% which means we are going to multiply each stock Investments by 8%
Stock A 25%
Stock B 32%
Stock C 43%
Hence
Stock A: .25*.8= 20%
Stock B: .32*.8= 25.6%
Stock C: .43*.8= 34.4%
Therefore the investment proportions of your client's overall portfolio, including the position in T-bills will be :
Stock A: 20%
Stock B: 25.6%
Stock C: 34.4%
In the development of a SFAS matrix, the first step is to:____________.
A) enter the ratings of how the company's management is responding to each of the strategic factors.
B) calculate the weighted scores.
C) list the most important EFAS and IFAS items.
D) indicate short-term goals for the duration.
E) enter the weights for all of the internal factors.
Answer:
its A
Explanation:
I promise trust me
Bonner Corp.'s sales last year were $345,000, and its year-end total assets were $355,000. The average firm in the industry has a total assets turnover ratio (TATO) of 2.4. Bonner's new CFO believes the firm has excess assets that can be sold so as to bring the TATO down to the industry average without affecting sales. By how much must the assets be reduced to bring the TATO to the industry average, holding sales constant? Use the year-end balance in your calculations. Select the correct answer. a. $211,325 b. $211,175 c. $211,101 d. $211,250 e. $211,026
Answer:
d. $211,250
Explanation:
The TATO is the ratio of sales to assets:
TATO = sales/assets
Filling in the desired numbers, we can find the desired level of assets:
2.4 = 345,000/assets
assets = 345,000/2.4 = 143,750
Starting with assets of 355,000 the reduction necessary to bring assets down to 143,750 is ...
$355,000 -143,750 = $211,250 . . . . matches choice D
Why would a large publically traded corporation likely prefer issuing bonds as a way to raise new money as opposed to issuing more shares
Answer: B. more shares will dilute the existing value of the stock, causing its market price to fall
Explanation:
The company is already Publicly traded. If it were to issue more stock it would increased the amount of stock it has in the market which will lead to the prices reducing from a high amount of supply.
Companies generally do not want their stock prices to decrease as it sends negative signals to investors as well as the fact that management's role is to try to increase Shareholder wealth.
They will therefore rather issue bonds than risk their stock prices reducing in price.
A divorced woman with 2 young children has just re-entered the workforce part time and earns $3,000 from this work. She collects another $2,400 per year in alimony payments. The woman wishes to make a contribution to an Individual Retirement Account this year. Which statement is TRUE
Which statement is TRUE
A. No contribution can be made because the woman received alimony payments
B. A contribution can be made based only on the income earned from part-time work
C. A contribution can be made based only on the alimony payments received
D. A contribution can be made based on both the earned income from part-time work and the alimony payments received
Answer:
B. A contribution can be made based only on the income earned from part-time work
Explanation:
According to Individual Retirement Account regulations, contribution can only be made base on earned income and not a court-mandated allowance made to a former spouse by a divorced or legally separated person otherwise known as "Alimony". Alimony is just a means to support life and not a earned income. So, contribution can be made based only on the income earned from part-time work.
Mobile visual search (MVS) apps generate graphic images that are superimposed on pictures of real things (e.g., people, rooms, buildings, roads, and so on). For instance, a mobile phone user might point her phone camera at an office building and activate an app that generates the logos of all foodservice outlets (e.g., Starbucks, Subway, McDonalds) inside the building. True or False
Answer: False
Explanation:
Mobile Visual Apps were made.more along the lines of linking different content from a single picture. For instance, a single picture of a logo could link the user to the social media pages, products and other content belonging to the owner of the logo.
The product described in the text above is ' Augmented Reality '.
Currently, a U.S. trader notes that in the 6-month forward market, the Japanese yen is selling at a premium (that is, you receive more dollars per yen in the forward market than you do in the spot market), while the British pound is selling at a discount. Which of the following statements is correct?
a) If interest rate parity holds among the three countries, the United States should have the highest 6-month interest rates and Britain should have the lowest rates.
b) If interest rate parity holds among the three countries, the United States should have the highest 6-month interest rates and Japan should have the lowest rates.
c) If interest rate parity holds among the three countries, Japan should have the highest 6-month interest rates and Britain should have the lowest rates.
d) If interest rate parity holds, 6-month interest rates should be the same in the U.S., Britain, and Japan.
e) If interest rate parity holds among the three countries, Britain should have the highest 6-month interest rates and Japan should have the lowest rates.
Answer:
Hence correct answer is option e) If interest rate parity holds among the three countries, Britain should have the highest 6-month interest rates and Japan should have the lowest rates.
Explanation:
A corporation has 44,904 shares of $26 par value stock outstanding that has a current market value of $238 per share. If the corporation issues a 5-for-1 stock split, determine the number of shares outstanding. Select the correct answer. 583,752 8,981 224,520 44,904
Answer: 224,520
Explanation:
From the question, we are told that a corporation has 44,904 shares of $26 par value stock outstanding that has a current market value of $238 per share and that the corporation issues a 5-for-1 stock split. The number of shares outstanding goes thus:
Shares outstanding = 44,904 shares
We are also told that the corporation issues a 5-for-1 stock split. Therefore, the new shares will be:
= 44,904 × 5
= 224,520 shares
If the corporation issues a 5-for-1 stock split, the number of shares outstanding will be 224,520.
Swisher, Incorporated reports the following annual cost data for its single product: Normal production level 30,000units Direct materials$6.40per unit Direct labor$3.93per unit Variable overhead$5.80per unit Fixed overhead$150,000in total This product is normally sold for $48 per unit. If Swisher increases its production to 50,000 units, while sales remain at the current 30,000 unit level, by how much would the company's income increase or decrease under variable costing
Answer:
The company's income would decrease by $422,600.
Explanation:
The Variable Costing includes only variable manufacturing costs in product costs.Fixed and non-manufacturing costs are treated as period costs.
Prepare a Differential Analysis for an additional 20,000 units
Differential Analysis for an additional 20,000 units
Additional Costs :
Direct materials ($6.40 × 20,000) $128,000
Direct labor ($3.93× 20,000) $78,600
Variable overhead ($5.80× 20,000) $116,000
Fixed Overheads ($5 × 20,000) $100,000
Incremental Cost $422,600
Conclusion:
The company's income would decrease by $422,600.