Answer:
Impact on Net Earnings to Sales and Net Earnings to Total Book Assets:
a) A company's Net Earnings to Sales and Net Earnings to Total Book Assets will increase due to the 30% increase in sales. This result will be different with an increase by a similar margin in the Cost of Goods Sold.
b) Net Earnings to Sales and Net Earnings to Total Book Assets will decrease by 30% as a result of the increase in Property, Plant, and Equipment, because this increase also increased the operating and administrative expense (depreciation), even though Sales and Cost of Goods Sold remained constant.
Explanation:
The net earnings to sales is an expression of the ratio of the net income to the sales revenue. The net earnings result after deducting all costs from sales revenue. The net earnings to total book assets are the same expression as the Return on Assets.
Financial statements of a manufacturing firm The following events took place for Rushmore Biking Inc, during February, the first month of operations as a producer of road bikes:
• Purchased $390,000 of materials.
• Used $353,000 of direct materials in production.
• Incurred $101,600 of direct labor wages.
• Applied factory overhead at a rate of 34% of direct labor cost.
• Transferred $463,900 of work in process to finished goods.
• Sold goods with a cost of $441,400.
• Revenues earned by selling bikes, $ 730,300.
• Incurred $148,500 of selling expenses.
• Incurred $72,200 of administrative expenses
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet
a. Prepare the income statement for Rushmore Biking for the month ending February 28.
Round your answers to the nearest dollar
Rushmore Biking Inc.
Income Statement
For the Month Ended February 28
Revenues
Cost of Goods Sold
Gross Profit Selling and Administrative Expenses:
Total Selling and Administrative Expenses
Answer and Explanation:
The Preparation of income statement is prepared below:-
Rushmore Biking Inc.
Income statement
For the month ended February 28
Particulars Amount
Revenues $7,30,300
Less: Cost of goods sold $4,41,400
Gross profit $2,88,900
Selling and administrative expenses:
Selling expenses $1,48,500
Administrative expenses $72,200
Less: Total Selling and administrative
expenses $2,20,700
Income from operations $68,200
What happens when the price of a good increases
Answer:
the value of good increases (goes up)
The cost of equipment purchased by Bonita, Inc., on June 1, 2020, is $119,700. It is estimated that the machine will have a $10,500 salvage value at the end of its service life. Its service life is estimated at 7 years, its total working hours are estimated at 54,600, and its total production is estimated at 728,000 units. During 2020, the machine was operated 6,600 hours and produced 60,500 units. During 2021, the machine was operated 6,050 hours and produced 52,800 units. Compute depreciation expense on the machine for the year ending December 31, 2020, and the year ending December 31, 2021, using the following methods. (Round depreciation per unit to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 45,892.) 2020 2021 (a) Straight-line $ $ (b) Units-of-output $ $ (c) Working hours $ $ (d) Sum-of-the-years'-digits $ $ (e) Double-declining-balance (twice the straight-line rate)
Answer:
(a) Straight-line $ $
straight line depreciation expense = $109,200 / 7 = $15,600
depreciation expense 2020 = $15,600 x 7/12 = $9,100
depreciation expense 2020 = $15,600
(b) Units-of-output $ $
depreciation expense per unit of output = $109,200 / 728,000 = $0.15 per unit
depreciation expense 2020 = $0.15 x 60,500 = $9,075
depreciation expense 2020 = $0.15 x 52,800 = $7,920
(c) Working hours $ $
depreciation expense per working hour = $109,200 / 54,600 = $2 per working hour
depreciation expense 2020 = $2 x 6,600 = $13,200
depreciation expense 2020 = $2 x 6,050 = $12,100
(d) Sum-of-the-years'-digits
total years = 7 + 6 + 5 + 4 + 3 + 2 + 1 = 28
depreciation expense 2020 = $109,200 x 7/28 x 7/12 = $15,925
depreciation expense 2021 = ($27,300 - $15,925) + (109,200 x 6/28 x 7/12) = $25,025
(e) Double-declining-balance (twice the straight-line rate)
depreciation expense 2020 = $119,700 x 2/7 x 7/12 = $19,950
depreciation expense 2021 = ($34,200 - $19,950) + ($85,500 x 2/7 x 7/12) = $28,500
Explanation:
depreciable value = $119,700 - $10,500 = $109,200
useful life = 7 years
working hours = 54,600
production = 728,000 units
What are the major objectives of macroeconomics? Write a brief definition of each of these objectives. Explain carefully why each objective is important?
Answer:
Some of the major objectives of macroeconomics are:
Economic growth: more specifically, non-inflationary, sustainable economic growth, in order to raise the living standards of the people by increasing the production of goods and services.Low inflation: inflation is the general rise in the price level of goods and services of a economy within a period of time. High inflation has shown to be damaging to the economy, and this is why one of the most important macroeconomic goals is to keep inflation low.Low unemployment: unemployment is very damaging for both individuals and society. Unemployed people are likely to be unable to live by themselves. Maintaining unemployment low is one of the most important macroeconomic objectives and it often conflicts with the goal of keeping inflation low, at least in the short-term.Balanced Budget: macroeconomists try to advise governments to keep low levels of debt, and to not spend too much more than they earn from tax revenue, public entreprise profits, and other sources of public income.
Danielle has to send a message to her manager. It is taking her extra time to draft the message because of the number of edits she has to make. What type of communication is Danielle carrying out?
Answer:
Written communication
Explanation:
Written communication involves writing the message that you want to communicate. A written message can be edited and rectified before sending it to the receiver.
The following transactions occurred during July: Received $940 cash for services provided to a customer during July. Received $2,800 cash investment from Bob Johnson, the owner of the business. Received $790 from a customer in partial payment of his account receivable which arose from sales in June. Provided services to a customer on credit, $415. Borrowed $6,400 from the bank by signing a promissory note. Received $1,290 cash from a customer for services to be performed next year. What was the amount of revenue for July
Answer:
July's revenue = $940 + $415 = $1,355
Explanation:
Received $940 cash for services provided to a customer during July. ⇒ INCLUDED IN JULY'S REVENUE
Received $2,800 cash investment from Bob Johnson, the owner of the business. ⇒ NOT CONSIDERED REVENUE
Received $790 from a customer in partial payment of his account receivable which arose from sales in June. ⇒ INCLUDED IN JUNE'S REVENUE
Provided services to a customer on credit, $415. ⇒ INCLUDED IN JULY'S REVENUE
Borrowed $6,400 from the bank by signing a promissory note. ⇒ NOT CONSIDERED REVENUE
Received $1,290 cash from a customer for services to be performed next year. ⇒ DEFERRED REVENUE
For each separate case below, follow the three-step process for adjusting the unearned revenue liability account at December 31
Step 1: Determine what the current account balance equals.
Step 2: Determine what the current account balance should equal
Step 3: Record the December 31 adjusting entry to get from step 1 to step 2.
Assume no other adjusting entries are made during the year a. Tao Co. recelves $10,000 cash in advance for four months of legal services on October 1, 2017, and records it by debiting Cash and crediting Unearned Revenue both for $10,000. It is now December 31, 2017, and Tao has provided legal services as planned. hat adjusting entry should Tao make to account for the work performed from October 1 through December 31, 2017? Unearned revenue
Step 1: Determine what the current account balance equals.
Step 2: Determine what the current account balance should equal
Step 3: Record the December 31 adjusting entry to get from step 1 to step 2 b.
A. Caden started a new publication called Contest News. Its sub subscriber, Caden debits Cash and credits Unearned Subscription Revenue for the amounts received. The company has 100 new subscribers as of July 1, 2017. It sends Contest News to each of these subscribers every month from July through December Assume no changes in subscribers, prepare the journal entry that Caden must make as of December 31, 2017, to adjust the Subscription Revenue account and the Unearned Subscription Revenue account pay $24 to receive 12 monthly issues.
Answer:
1. Assume no other adjusting entries are made during the year a. Tao Co. receives $10,000 cash in advance for four months of legal services on October 1, 2017, and records it by debiting Cash and crediting Unearned Revenue both for $10,000. It is now December 31, 2017, and Tao has provided legal services as planned. hat adjusting entry should Tao make to account for the work performed from October 1 through December 31, 2017?
Step 1: Unearned Revenue has a credit balance of $10,000
Step 2: Unearned Revenue should have a credit balance of $2,500 only.
Step 3: Adjusting Journal Entry:
Debit Unearned Revenue $7,500
Credit Service Revenue $7,500
To record revenue for services performed to December 31, 2017.
2. Caden started a new publication called Contest News. Its sub subscriber, Caden debits Cash and credits Unearned Subscription Revenue for the amounts received. The company has 100 new subscribers as of July 1, 2017. It sends Contest News to each of these subscribers every month from July through December Assume no changes in subscribers, prepare the journal entry that Caden must make as of December 31, 2017, to adjust the Subscription Revenue account and the Unearned Subscription Revenue account pay $24 to receive 12 monthly issues.
Step 1: Unearned Subscription Revenue has a credit balance of $2,400
Step 2: Unearned Subscription Revenue should have a credit balance of only $1,200.
Step 3: Adjusting Journal Entry:
Debit Unearned Subscription Revenue $1,200
Credit Subscription Revenue $1,200
To record subscription revenue for services performed to December 31, 2017.
Explanation:
Tao Co and Caden follow the three-step process of adjusting unearned revenue liability accounts at year-end. The purpose of the steps is to ensure that correct amounts remain as balances in the unearned revenue accounts. The steps also help to adjust the Earned Revenue account to its proper amount in recognition of goods or services provided in accordance with the accrual concept and the matching principle of generally accepted accounting principles.
In 2006, the nation of Zimbabwe reduced the value of its currency by 60 percent to bring its value more in line with the relative value of most other world currencies. This reduction of value is called
Answer: C. devaluation
Explanation:
Devaluation of a currency is the term used to describe the reduction of a currency's value by the authority that produces said currency.
It is done deliberately and is usually done to strengthen a country's balance of trade because the exports of the country will become cheaper which will increase the demand for it.
By reducing the value of their currency themselves, the nation of Zimbabwe devalued their currency in 2006.
Explanation:
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Lutz Company produces a product in two departments: (1) Mixing and (2) Finishing. The company uses a process cost accounting system. (a) Purchased raw materials for $50,000 on account. (b) Raw materials requisitioned for production were: Direct materials Mixing department $20,000 Finishing department 14,000 (c) Incurred labor costs of $74,000. (d) Factory labor used: Mixing department $44,000 Finishing department 30,000 (e) Manufacturing overhead is applied to the product based on machine hours used in each department: Mixing department-400 machine hours at $30 per machine hour. Finishing department-500 machine hours at $20 per machine hour. (f) Units costing $56,000 were completed in the Mixing Department and were transferred to the Finishing Department. (g) Units costing $70,000 were completed in the Finishing Department and were transferred to finished goods. (h) Finished goods costing $40,000 were sold on account for $55,000.
Answer and Explanation:
The Journal entries are shown below:-
a. Raw materials inventory Dr, $50,000
To Accounts Payable $50,000
(Being purchase of raw material is recorded)
b. Work in process - mixing Dr, $20,000
Work in process - finishing Dr, $14,000
To Raw materials inventory $34,000
(Being work in process is recorded)
c. Factory labor Dr, $74,000
To Wages payable $74,000
(Being labor cost incurred is recorded)
d. Work in process - mixing Dr, $44,000
Work in process - finishing Dr, $30,000
To Factory labor $74,000
(Being factor labor used is recorded)
e. Work in process - mixing Dr, $12,000 (400 × $30)
Work in process - finishing $10,000 (500 × $20)
To Manufacturing overhead $22,000
(Being manufacturing overhead applied is recorded)
f. Work in process - finishing Dr, $56,000
To Work in process - mixing $56,000
(Being completed is recorded)
g. Finished goods Dr, $70,000
To Work in process - finishing $70,000
(Being is recorded)
h. Accounts receivable Dr, $55,000
To Sales revenue $55,000
(Being sales is recorded)
Cost of goods sold Dr, $40,000
To Finished goods $40,000
(Being cost of goods sold is recorded)
The following is a partial trial balance for the Green Star Corporation as of December 31, 2021:
Account Title Debits Credits
Sales revenue 1,400,000
Interest revenue 35,000
Gain on sale of investments 55,000
Cost of goods sold 740,000
Selling expenses 185,000
General and administrative expenses 80,000
Interest expense 45,000
Income tax expense 135,000
There were 100,000 shares of common stock outstanding throughout 2021.
Required:
Prepare a single-step income statement for 2021, including EPS disclosures.
Prepare a multiple-step income statement for 2021, including EPS disclosures.
Answer and Explanation:
The presentation of the income statement is presented below:
Income statement
Revenues and gains:
Sales revenue 1,400,000
Add: Interest revenue 35,000
Add: Gain on sale of investment 55,000
Total revenues and gains 1,490,000
Less:
Expenses and losses:
Cost of goods sold 740,000
General and administrative expenses 80,000
Selling expenses 185,000
Interest expense 45,000
Total expenses and losses 1,050,000
Income before income tax 440,000
Income tax expense - 135,000
Net income 305,000
EPS = Net income ÷ Number of common shares
($305,000 ÷ 100,000) 3.05
2.
Income statement
Sales 1,400,000
Less: Cost of goods sold - $740,000
Gross profit 660,000
Less:
Operating expenses:
General and administrative expenses $80,000
Selling expenses $185,000
Total operating expenses -$265,000
Operating income $395,000
Other incomes and expenses
Interest revenue $35,000
Gain on sale of investment $55,000
Interest expense -$45,000
Total other income, net $45,000
Less: Income before income tax $440,000
Income tax expense -$135,000
Net income $305,000
EPS = Net income ÷ Number of common shares
(305,000 ÷ 100,000) 3.05
During the next two months, General Cars must meet (on time) the following demands for trucks and cars:
month 1—400 trucks, 800 cars;
month 2—300 trucks, 300 cars.
During each month, at most 1,000 vehicles can be produced.
Each truck uses 2 tons of steel, and each car uses 1 ton of steel.
During month 1, steel costs $400 per ton; during month 2, steel costs $600 per ton.
At most, 1,500 tons of steel may be purchased each month (steel may only be used during the month in which it is purchased).
At the beginning of month 1, 100 trucks and 200 cars are in inventory. At the end of each month, a holding cost of $150 per vehicle is assessed. Each car gets 20 mpg, and each truck gets 10 mpg. During each month, the vehicles produced by the company must average at least 16 mpg.
Formulate an LP to meet the demand and mileage requirements at minimum cost (include steel costs and holding costs).
Answer:
the formulation of the given linear program is,
Minimize
z = 400S1 + 600S2 + 150 ( LT1 + LT2 + LC1 + LC2)
Subject to the constraints
T1 + C1 ≤ I000
T2 + C2 ≤ 1000
2T1 + C1 = S1
2T2 + C2 = S2
100 + T1 = 400 + LT1
LT1 + LT2 = 300 + LT2
200 + C1 = 800 + LC1
LC1 + C2 = 300 + LC2
S1,S2 ≤ 1 500
4C1 - 6T1 ≥ 0
4C2 - 6T2 ≥ 0
All variables ≥ 0
Explanation:
Firstly;
Let T1 be number of trucks to be produced in month 1 and T2 be number of trucks to be produced in month 2.
Let C1 be number of cars to be produced in month 1 and C2 be number of cars to be produced In month 2.
Let S1 be tons of steel used in month 1 and S2 be tons of steel used in month 2.
Let LT1 be number of trucks in inventory at the end of month 1 and LT2 be number of trucks In inventory at the end of month 2.
Let LC1 be number of cars in inventory at the end of month 1 and LC2 be number of cars in inventory at the end of month 2.
Now the objective is to minimize the cost, so
z = [(cost of steel during month 1)(tons of steel used in month 1)] + [(cost of steel during month 2)( tons of steel used in month 2)] + [(holding cost at the end of each month )(trucks and cars in inventory at the end of each month)]
= 400S1 + 600S2 + 150 ( LT1 + LT2 + LC1 + LC2)
Thus, the objective function Is, Minimize
z = 400S1 + 600S2 + 150 ( LT1 + LT2 + LC1 + LC2)
Constraint1 Each month, the production capacity of the vehicle is 1000 vehicles.
Number of trucks produced in month 1 + number of cant produced in month 1 ≤ 1000
T1 + C1 ≤ 1000
Number of trucks produced in month 2 + number of cars produced in month 2 ≤ 1000
T2 + C2 ≤ 1000
Constraint2 Each month. each truck uses 2 tons of steel and each car uses 1 ton of steel.
[(Tons of steel used to produce truck in month 1) + (tons of steel used to produced cars in month 1)] = S1
2T1 + C1 = S1
[(Tons of steel used to produce truck in month 2) + (tons of steel used to produced cars in month 2)] = S2
2T2 + C2 = S2
Constraint3 At the beginning of month 1, 100 trucks are in inventory.
[100 trucks at the beginning are in inventory +
number of trucks produced in month 1] = [400 trucks are demanded in month 1 + number of trucks in inventory at the end of the month 1]
100 + T1 = 400 + LT1
[trucks at the beginning of month 2 in inventory + number of trucks produced in month 2 ] = [300 trucks are demanded in month 2 + number of trucks in inventory at the end of the month 2]
LT1 + T2 = 300 + LT1
Constraint 4 At the beginning of month 1, 200 cars are in Inventory
[200 cars at the beginning are in inventory + number of cars produced in month 1] = [800 cars are demanded in month 1 + number of cars in inventory at the end of the month 1]
200 + C1 = 800 + LC1
[cars at the beginning of month 2 in inventory + number of cars produced in month 2 ] = [300 cars are demanded in month 2 + number of cars in inventory at the end of the month 2]
LC1 + C2 = 300 + LC2
Constraint 5 At most, 1,500 tons of steel can be purchased each month.
S1 ≤ 1,500
S2 ≤ 1,500
Constraint 6 Each month, vehicle produced by company must average at least 16mpg.
[{{(mpg of trucks)(number of trucks produced in month 1)} + {(mpg of cars)(number of cars produced in month 1)}} / {(number of trucks produced in month 1 ) + ( number of Cars produced in month 1)}] ≥ 16
(10T1 + 20C1 / T1 + C1) ≥ 16
4C1 - 6T1 ≥ 0
[{{(mpg of trucks)(number of trucks produced in month 2)} + {(mpg of cars)(number of cars produced in month 2)}} / {(number of trucks produced in month 2 ) + ( number of Cars produced in month 2)}] ≥ 16
(10T2 + 20C2 / T2 + C2) ≥ 16
4C2 - 6T2 ≥ 0
Therefore, the formulation of the given linear program is,
Minimize
z = 400S1 + 600S2 + 150 ( LT1 + LT2 + LC1 + LC2)
Subject to the constraints
T1 + C1 ≤ I000
T2 + C2 ≤ 1000
2T1 + C1 = S1
2T2 + C2 = S2
100 + T1 = 400 + LT1
LT1 + LT2 = 300 + LT2
200 + C1 = 800 + LC1
LC1 + C2 = 300 + LC2
S1,S2 ≤ 1 500
4C1 - 6T1 ≥ 0
4C2 - 6T2 ≥ 0
All variables ≥ 0
Which of the following budgeting options increases the marketing budget by the rate of the company's inflation?
rule of thumb budgeting
objective and task budgeting
competitive budgeting
arbitrary budgeting
Answer:
D. objective and task budgeting I believe
Explanation:
Really difficult, but not impossible, to determine the tasks necessary to reach goals and estimating the costs associated with tasks
Deepa Dalal opened a free-standing radiology clinic. She had anticipated that the costs for the radiological tests would be primarily fixed, but she found that costs increased with the number of tests performed. Costs for this service over the past nine months are as follows:
Month Radiology Test Total Cost
January 2,800 $135,500
February 2,600 $135,060
March 3,100 $175,000
April 3,500 $170,600
May 3,400 $176,900
June 3,700 $186,600
July 3,840 $174,450
August 4,100 $195,510
September 3,450 $85,300
1) Compute the cost formula for radiology services using the high-low method.
2) Calculate the predicted cost of radiology services for October for 3,500 tests using the formula found in Requirement 1.
Answer:
Results are below.
Explanation:
To calculate the fixed and variable cost under the high-low method, we need to use the following formulas:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (195,510 - 135,060) / (4,100 - 2,600)
Variable cost per unit= $40.3
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 195,510 - (40.3*4,100)
Fixed costs= $30,280
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 135,060 - (40.3*2,600)
Fixed costs= $30,280
Now, the total cost for 3,500 tests:
Total cost= 30,280 + 40.3*3,500
Total cost= $171,330
Journalize the following business transactions in general journal form. Identify each transaction by number. You may omit explanations of the transaction. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
1. Stockholders invest $40,000 in cash in starting a real estate office operating as a corporation.
2. Purchased $500 of supplies on credit.
3. Purchased equipment for $25,000, paying $3,500 in cash and signed a 30-day, $21,500, note payable.
4. Real estate commissions billed to clients amount to $4,000.
5. Paid $700 in cash for the current month's rent.
6. Paid $250 cash on account for office supplies purchased in transaction 2.
7. Received a bill for $800 for advertising for the current month.
8. Paid $2,500 cash for office salaries.
9. Paid $1,200 cash dividends to stockholders.
10.Received a check for $2,000 from a client in payment on account for commissions billed in transaction 4.
Answer: Please find answers in the explanation column
Explanation:
Account titles Debit Credit
To Record Investment by stockholders
1 Cash $40,000
Common Stock $40,000
To record purchase of supplies on credit
2 Supplies $500
Accounts Payable $500
To record payment in part for cash and signing a note
3 Equipment $25,000
Cash $ 3,500
Note Payable $21,500
To record commission billed to clients
4 Accounts Receivable $4,000
Service Revenue $4,000
To record rent paid for the month
5 Rent Expense $700
Cash $700
To record cash paid to supplies purchased on account
6 Accounts Payable $250
Cash $250
To record receipt on advertising
7 Advertising Expense $800
Accounts Payable $800
To record cash for salaries
8 Salaries Expense $2,500
Cash $2,500
To record cash paid as dividends
9 Dividends $1,200
Cash $1,200
To record receipts of cash from accounts receivable
10 Cash $2,000
Accounts Receivable $2,000
Acceptance. Amy Kemper was seriously injured when her motorcycle was struck by a vehicle driven by Christopher Brown. Kemper’s attorney wrote to Statewide Claims Services, the administrator for Brown’s insurer, asking for "all the insurance money that Mr. Brown had under his insurance policy." In exchange, the letter indicated that Kemper would sign a "limited release" on Brown’s liability, provided that it did not include any language requiring her to reimburse Brown or his insurance company for any of their incurred costs. Statewide then sent a check and release form to Kemper, but the release demanded that Kemper "place money in an escrow account in regards to any and all liens pending." Kemper refused the demand, claiming that Statewide’s response was a counteroffer rather than an unequivocal acceptance of the settlement offer. Did Statewide and Kemper have an enforceable agreement? Discuss.
Answer:
In the clarification section down, the definition including its concern is mentioned.
Explanation:
In terms of strategy, two important components necessarily entail an "Agreement."
Offer AcceptanceStep 1: Approval + Bid = Agreement
Step 2: Agreement + Enforceability = Contract.
Throughout water to establish a legal Arrangement or Contract, those would be the two underlying equations to be met. Going to come to something like the case's reality, The counsel for Kemper addressed to Statewide Claims Management, Brown's insurance company agent, calling for "all the premium money something which Mr. Brown seems to be under his insurance contract." Statewide decided to send the document and perhaps freedom of the individual to Kemper throughout reaction to the aforementioned request, however, they pointed to Kemper's current requirement that she should put money during an emergency fund concerning anything and everything outstanding liens.Kemper disagreed with all of the above assumptions as well as denied the proposal, arguing that perhaps the response from Nationwide was a counteroffer. If we correctly examine the aforementioned situation, without even any discussion, we will realize that it is indeed a pure "Counter Bid." Why whenever the offender becomes encouraged with just 2 choices, YES/NO, whenever an Offeror makes an object to something like the Offeree. and then when the promise offers a conditional response, it destroys the initial offer so it corresponds to Counter Offer.In quite a similar manner, the Nationwide reaction to Kemper's letter here alone leads to "Counter Bid" and becomes an Absolute acceptance, but not. i.e., there is no approval of an invitation, and no deal remains.There is, however, no "Acceptance" to either the original Bid, and therefore no binding mediation agreements between Nationwide and Kemper have been established.
Compute the discounted payback statistic for Project C if the appropriate cost of capital is 7 percent and the maximum allowable discounted payback period is three years. (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Project C
Time: 0 1 2 3 4 5
Cash flow: –$1,400 $640 $600 $640 $380 $180
Should the project be accepted or rejected?
accepted
rejected
Modern Flooring is considering a new product line. The new line would require $134,000 of fixed assets and net working capital of $24,000. The firm will apply straight-line depreciation to a zero salvage value over three years. The new line is expected to produce an operating cash flow of $35,000 the first year with that amount decreasing by 10 percent annually for two years before the new line will be discontinued. The fixed assets can be sold for $25,000 at the end of the project and all net working capital will be recovered. What is the net present value of the new line at a discount rate of 11.5 percent and a tax rate of 35 percent
Answer:
-51,784
Explanation:
Net present value can be calculated by first calculating the present values of operating cash flows each year and the sum up all the present values.
Year 0 1 2 3
Operating CF 35000 31500 28350
Fixed asset -134000
Net working capital -24000 24000
Disposal after tax 16250
(25000x0.65)
Net cashflow -158000 35000 31500 68600
PV Factor 1 0.896 0.804 0.721
PV -158000 31390 25337 49488
NPV = -158000 + 31390 + 25337 + 49488
NPV = -51,784
Workings
PV Factor
Year 0 = 1/(1.115)^0 = 1
Year 1 = 1/(1.115)^1 = 0.896
Year 2 = 1/(1.115)^2 = 0.804
Year 3 = 1/(1.115)^3 = 0.721
Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases: Activities Indirect Activity Costs Allocation Base Account inquiry (hours) $86,200 2,900 Account billing (lines) $53,000 32,000 Account verification (accounts) $36,250 23,500 Correspondence (letters) $85,000 11,000 Potter & Weasley uses activity based costing. The above activities are used by Departments P and Q as follows: Department P Department Q Account inquiry (hours) 400 800 Account billing (lines) 10,000 4,000 Account verification (accounts) 6,000 7,000 Correspondence (letters) 1,000 2,000 What is the cost per driver unit for the account inquiry activity? (Round all answers to two decimal places.) A. $29.72 B. $7.73 C. $7.84 D.
Answer:
A. $29.72
Explanation:
The calculation of cost per driver unit is shown below:-
Cost per driver unit = Indirect cost relating to account inquiry ÷ Allocation base relating to account inquiry
= $86,200 ÷ 2,900
= $29.72 per hour
Therefore for computing the cost per driver unit we simply divide the Indirect cost relating to account inquiry by allocation base relating to account inquiry.
Beginning work in process inventory: Units in beginning work in process inventory500 Materials costs$ 7,800 Conversion costs$ 9,100 Percent complete with respect to materials85% Percent complete with respect to conversion55% Units started into production during the month7,000 Units transferred to the next department during the month6,100 Materials costs added during the month$ 102,700 Conversion costs added during the month$ 184,400 Ending work in process inventory: Units in ending work in process inventory1,400 Percent complete with respect to materials60% Percent complete with respect to conversion50% The cost per equivalent unit for materials for the month in the first processing department is closest to:
Answer:
$15.76
Explanation:
beginning WIP 500 units
materials 85% complete, so 15% added during the period (EUP during current month = 75 units)
conversion costs 55% complete, so 45% added during the period (EUP during current month = 225 units)
units started 7,000
units transferred out 6,100
units started and transferred out = 6,100 - 500 = 5,600 (EUP = 5,600 units)
ending WIP 1,400 units
materials 60% complete (EUP = 840 units)
conversion costs 50% complete (EUP = 700 units)
materials cost for the month = $102,700
total EUP for the month = 6,515 units
total cost per EUP for materials = $102,700 / 6,515 = $15.7636 ≈ $15.76
3. Continuous review inventory control is being applied to purchase motors for an electric fan manufacturer. Demand is uniformly distributed between 500 and 600 motors per week. Each order costs $250 to prepare, place and receive. Motors cost $2.75/unit and the holding cost rate is 1% per week. Management proposes using the EOQ order quantity and setting reorder points to ensure a 97% fill rate. Find the imputed(implied) cost of a shortage and the expected number of shortages per year.
Answer:
The expected no. of shortage will be "0.27".
Explanation:
The given values are:
Ordering cost,
O = $250
Holding cost (i),
= 1% (per week)
= 52% (a year)
Cost of goods (C),
= $2.75
The average annual demand is:
[tex]=\frac{600+500}{2}\times 52 \ weeks[/tex]
[tex]=28600 \ units[/tex]
Now,
⇒ [tex]EOQ=\sqrt{(2\times D\times \frac{O}{C}\times i)}[/tex]
[tex]=\sqrt{2\times 18600\times \frac{250}{2.75}\times 52 \ percent}[/tex]
[tex]=\sqrt{10000000}[/tex]
[tex]=3162.27[/tex]
In a year, the number of orders will be:
⇒ [tex]\frac{D}{EOQ}=\frac{28600}{3162.27}[/tex]
[tex]=9.04 \ i.e., \ 9 \ orders[/tex]
Demand mean will be:
= [tex]\frac{500+600}{2}[/tex]
= [tex]550 \ units \ Demand \ SD[/tex]
= [tex]max[\frac{(Upper \ limit - Mean)}{3} , \frac{(mean-lower \ limit)}{3} ][/tex]
= [tex]max [\frac{50}{3} ,\frac{50}{3} ][/tex]
= [tex]16.66 \ units[/tex]
So, in a year, the expected number of the shortages will be:
⇒ [tex]Number \ of \ orders \ in \ a \ year\times fill \ rate[/tex]
⇒ [tex]9\times (1-97 \ percent)[/tex]
⇒ [tex]0.27[/tex]
A manufacturing company produces products 1, 2, and 3. The three products have the following resource requirements and produce the following profit:
Profit Labor (hr/unit) Material (lb/unit) Profit ($/unit)
1 5 4 $3
2 2 6 5
3 4 3 2
At present, the firm has a daily labor capacity of 240 available hours and a daily supply of 400 pounds of material. Management has developed the following set of goals, arranged in order of their importance to the firm:
1. Because of recent labor relations difficulties, management wants to avoid underutilization of normal production capacity.
2. Management has established a satisfactory profit level of exist500 per day.
3. Overtime is to be minimized as much as possible.
4. Management wants to minimize the purchase of additional materials to avoid handling and storage problems.
Required:
Formulate a goal programming model (multi-criteria model) to determine the number of each product to produce to best satisfy the goals.
di+, di- are the deviation variables for i-th objectives.
Product_1, product_2, product_3 are respectively the products 1,2 and 3 to be produced in a day. Those are the Standard variables
goal: (1/400)*d4+ (2/240)*d3+ (3/500)*d2-+ Min (4/240)*d1-
variables are equal or bigger than zero
400 = 5*product_1 + 6*product_2 + 3*product_3 - d4- + d4+
240 = 5*product_1 + 2*product_2 + 4*product_3 - d3- + d3+
240 = 5*product_1 + 2*product_2 + 4*product_3 + d1- - d1+
500 = 3*product_1 + 5*product_2 + 2*product_3 + d2- - d2+
Determine the amount of tax liability in the following situations. In all cases, the taxpayer is using the filing status of married filing jointly. Use the appropriate Tax Tables or Tax Rate Schedules.
1. Taxable income of $62,449 that includes a qualified dividend of $560.
2. Taxable income of $12,932 that includes a qualified dividend of $322.
3. Taxable income of $144,290 that includes a qualified dividend of $4,384. (Round your intermediate computations to 2 decimal places and final answer to the nearest whole dollar amount.)
4. Taxable income of $43,297 that includes a qualified dividend of $971.
5. Taxable income of $262,403 that includes a qualified dividend of $12,396. (Round your intermediate computations to 2 decimal places and final answer to the nearest whole dollar amount.)
Answer:
1. Taxable income of $62,449 that includes a qualified dividend of $560.
tax liability = $1,975 + [12% x ($62,449 - $19,750)] = $7,098.88
2. Taxable income of $12,932 that includes a qualified dividend of $322.
tax liability = $12,932 x 10% = $1,293.20
3. Taxable income of $144,290 that includes a qualified dividend of $4,384.
tax liability = $9,235 + [22% x ($144,290 - $80,250)] + ($4,384 x 15%) = $23,981.40 ≈ $23,981
4. Taxable income of $43,297 that includes a qualified dividend of $971.
tax liability = $1,975 + [12% x ($43,297 - $19,750)] = $4,800.64 ≈ $4,801
5. Taxable income of $262,403 that includes a qualified dividend of $12,396.
tax liability = $29,211 + [24% x ($262,403 - $171,050)] + ($12,396 x 15%) = $52,995.12 ≈ $52,995
Explanation:
I used the 2020 tax bracket. Everyone earning over $78,750 but less than $488,850 must pay a 15% tax rate for their qualified dividends.
A small nation of 10 people idolizes the TV show The Voice. All they produce and consume are karaoke machines and CDs, in the following amounts: Karaoke Machines CDs Quantity Price Quantity Price (Dollars) (Dollars) 2020 20 50 60 5 2021 21 70 80 6 Using a method similar to that used to calculate the consumer price index, the percentage change in the overall price level is . (Note: Use 2020 as the base year, and fix the basket at 2 karaoke machines and 6 CDs.) Using a method similar to that used to calculate the GDP deflator, the percentage change of the overall price level is . (Note: Again, use 2020 as the base year.) Which of the following statements is correct
Answer:
1. Using a method similar to that used to calculate the consumer price index, the percentage change in the overall price level is;
Value of market basket of the good in 2020
= (50 * 2) + (5 * 6)
= $130
Value of market basket of the good in 2021
= (70 * 2) + (6 * 6)
= $176
CPI in 2020
= 130/ 130 * 100
= 100
CPI in 2021
= 176 / 130 * 100
= 135.38
Percentage change
= (135.38 - 100)/100
= 35.38%.
2. Using a method similar to that used to calculate the GDP deflator, the percentage change of the overall price level is ;
Nominal GDP in 2020 = (50 * 20) + (5 * 60) = $1,300
Nominal GDP in 2021 = (70 * 21) + (6 * 80) = $1,950
Real GDP using 2020 prices
Real GDP in 2020 = (50 * 20) + (5 * 60) = $1,300
Real GDP in 2021 = (50 * 21) + (5 * 80) = $1,450
GDP deflator in 2020 = (Nominal GDP in 2020 / Real GDP in 2020) * 100 = (1,300 / 1,300) * 100 = 100
GDP deflator in 2021 = (Nominal GDP in 2021 / Real GDP in 2021) * 100 = (1,950 / 1,450) * 100 = 134.48
Percentage Change = [(134.48 - 100) / 100] * 100
= 34.48%
Lear Inc. has $940,000 in current assets, $420,000 of which are considered permanent current assets. In addition, the firm has $740,000 invested in fixed assets.
A. Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 9%. The balance will be financed with short-term financing, which currently costs 5%. Lear’s earnings before interest and taxes are $340,000. Determine Lear’s earnings after taxes under this financing plan. The tax rate is 30%.
B. As an alternative. Lear might wish to finance all fixed assets and permanent current assets plus half of its temporary current assets with long-term financing and the balance with short-term financing. The same interest rates apply as in part a. Earnings before interest and taxes will be $340,000. What will be Lear's earnings after taxes? The tax rate is 30%.
Answer: See explanation
Explanation:
A. Current assets = permanent current assets + temporary current assets
Temporary current assets:
= $940,000 - $420,000
= $520,000
Short-term interest expense:
= 5% × [$520,000 + ½ ($420,000)]
= 5% ($520,000 + $210,000)
= 5% × ($730,000)
= 0.05 × $730,000
= $36,500
Long-term interest:
= 9% × [$740,000 + ½ ($420,000)]
= 9% × ($740,000 + $210,000)
= 9% × $950,000
= 0.09 × $950,000
= $85,500
Total interest expense:
= $36,500 + $85,500
= $122,000
Earnings before interest and taxes $340,000
Less: Interest expense = $122,000
Earnings before taxes = $218,000
Less: Taxes (30%) = $65,400
Earnings after taxes = $152,600
B. Short term interest expense:
= $260,000 × 5%
= $260,000 × 0.05
= $13,000
Long term interest expense:
= ($740,000 + $420,000 + $260,000) × 9%
= $1,420,000 × 0.09
= $127,800
Total interest expense:
= $13000 + $127800
= $140,800
Earnings before interest and taxes $340,000
Less: Interest expense = $140,800
Earnings before taxes = $199,200
Less: Taxes (30%) = $59760
Earnings after taxes = $139440
At the beginning of the month, the Painting Department of Skye Manufacturing had 24,000 units in inventory, 80% complete as to materials, and 20% complete as to conversion. The cost of the beginning inventory, $32,650, consisted of $26,400 of material costs and $6,250 of conversion costs. During the month the department started 119,000 units and transferred 126,000 units to the next manufacturing department. Costs added in the current month consisted of $283,440 of materials costs and $562,825 of conversion costs. At the end of the month, the department had 17,000 units in inventory, 30% complete as to materials and 15% complete as to conversion. If Skye Manufacturing uses the weighted average method of process costing, compute the costs per equivalent unit of materials and conversion respectively for the Painting Department.
Answer:
Materials $2,36
Conversion $4,43
Explanation:
Weighted-Average:
completed + ending WIP
(there is not differenciation between completed and started and completed)
Equivalent units Materials: 126,000 + 17,000 x 30% = 131,1 00
Conversion: 126,000 + 17,000 x 15% = 128,55 0
Material Equivalent cost:
283,440 + 26,400 = 309,840
$309,840 / 131,100 = 2,3633867
Conversion Equivalent cost:
562,825 + 6,250 = 569,075
569,075 / 128,550 = 4,4268767
What is the term for the joining of two or more firms involved in different stages of producing the same good or service?
horizontal merger
conglomerate
closely held corporation
vertical merger
Answer:
vertical merger
Explanation:
2) If a country, like the US, can produce all of the goods and services needed by
their citizens, why would they want to specialize in producing only some products
and trade with other countries for other products wanted by their citizens?
Answer:
See below
Explanation:
Specialization means a company or country concentrating on producing few commodities. In practice, a state or company will focus on the products it can produce more efficiently. It means focusing on goods they can manufacture at a lower cost compared to other countries.
The USA can specialize in the goods and services it can produce at a lower cost than other nations. It can then export these products to other countries at competitive prices. For products that are costly to manufacture in the USA, it is prudent to import them from countries that can produce them at lower costs.
Some products manufactured in other countries at a lower cost may be sold in the USA at fair prices than when produced in the USA.
g Phoenix industries has pulled off a miraculous recovery. Four years ago it was near bankruptcy. Today, it was announced a $1 per share dividend to be paid a year from now, the first dividend since the crisis. Analysts expect dividends to increase by $1 a year for another 2 years. After the third year dividends growth is expected to settle down to a more moderate longterm growth rate of 8%. If the firm's investors expect to earn a return of 16% on this stock, what must the price be
Answer:
Market Share price $ 31,12
Explanation:
The price of the stock will be the same as the present value of their dividends:
Year Dividend Presnet Value
First year $1,00 $ 0,8621
Second $2,00 $ 1,7241
Third $3,00 $ 2,5862
Total Value $ 5,1724
Now, we solve for the horizon value
3 x (1.08) / (0.16 - 0.08) = 40,50
And, as this is three year ahead we also discounted like the other dividends:
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 40,50
time 3,00
rate 0,16
[tex]\frac{40,5}{(1 + 0,16)^{3} } = PV[/tex]
PV 25,95
And last, we add up the horizon with the other dividends:
5.17 + 25,95 = 31,12
Sanchez Corporation Selected Financial Information 12/31/X2 12/31/X1 Cash $ 20,000 $ 25,000 Accounts receivable (net) 100,000 110,000 Inventories 190,000 155,000 Total current assets 310,000 290,000 Long-term assets 230,000 210,000 Current liabilities 200,000 190,000 Long-term liabilities 40,000 50,000 Shareholders' equity 300,000 260,000 Net income $ 40,000 Interest expense 10,000 Income tax expense 20,000 The debt to equity ratio for 20X2 is: Multiple Choice 0.80 0.44 0.67 0.13
Answer:
0.80
Explanation:
The computation of the debt to equity ratio is shown below:-
Total debt = Current Liabilities + Long - term liabilities
= $200,000 + $40,000
= $240,000
Total Equity = Shareholders’ equity = $300,000
Now,
Debt to equity ratio = Total Debt ÷ Total Equity
= $240,000 ÷ $300,000
= 0.80
Brief Exercise 3-36 (Algorithmic) Preparing and Analyzing Closing Entries At December 31, 2019, the ledger of Aulani Company includes the following accounts, all having normal balances: Sales Revenue, $83,200; Cost of Goods Sold, $43,700; Retained Earnings, $20,000; Interest Expense, $3,200; Dividends, $5,000; Wages Expense, $8,000, and Interest Payable, $2,100. Required: 1. Prepare the closing entries for Aulani at December 31, 2019. If an amount box does not require an entry, leave it blank. Dec. 31 (Close revenues) Dec. 31 (Close expenses) Dec. 31 (Close Income Summary) Dec. 31 (Close Dividends) 2. How does the closing process affect Aulani's retained earnings? of $
Answer and Explanation:
1. The Closing entries are shown below:-
a. Sales revenue Dr, $83,200
To Income summary $83,200
(Being Close revenue is recorded)
b. Income summary Dr, $54,900
To Cost of goods sold $43,700
To Interest expense $3,200
To Wages expense $8,000
(Being Close expense is recorded)
c. Income summary Dr, $28,300 (83,200 - $54,900)
To Retained earnings $28,300
(Being close income summary is recorded)
d. Retained earnings Dr, $5,000
To Dividend $5,000
(Being Close dividend is recorded)
2. The amount affect after retained earning by
Net income = $28,300 - $5,000
= $23,300