They are regarded as nonoperating income or costs, interest, dividends to preferred stock, and dividends to common stock are exceptions to the general rule of the percent of sales approach.
What is the sales method?Generally, Interest, dividends to preferred stock, and dividends to common stock are exemptions to the general rule of the percent of sales method because they are considered as nonoperating income or expenses.
These items are not directly related to the operation of a business, and therefore, are not included in the calculation of the percent of sales method.
This method is used to determine the expected amount of income or expenses based on a company's sales revenue, and nonoperating items such as interest and dividends are not considered to be part of a company's core operations.
Read more about sales methods
https://brainly.com/question/29110758
#SPJ1
Mandy, who has AGI of $80,000 before considering rental activities, is active in three separate real estate rental activities. Mandy has a marginal tax rate of 22%. She has $12,000 of losses from Activity A, $18,000 of losses from Activity B, and income of $10,000 from Activity C. She also has $2,100 of tax credits from Activity A. Calculate her deductions and credits allowed and the suspended losses and credits.
Answer: See explanation
Explanation:
Mandy's deductions and credits allowed and the suspended losses and credits are calculated as follows:
Mandy's deduction (her utilized loss) total = $12000 + $18000 - $10000 = $20000
Her suspended loss = $0
After deducting the loss, Mandy has available a deduction equivalent of = $5000
Hee utilized credit is ($5000 × 22%) = $1100 and her suspended credit is ($2100 - $1100) = $1000.
which best describes which careers would work in offices. for 100 points
Answer:
Trochanter
Explanation:
Marketing Information Management and Research, Distribution and Logistics, and Marketing Communications and Promotion employees can work in offices
~Thanks
~Hope this helps
Answer:
Marketing Information Management and Research, Distribution and Logistics, and Marketing Communications and Promotion employees can work in offices.
Explanation:
ik bc edge 2022
Credit unions are for-profit organizations. O A True ОВ. False
Communication which occurs with
people of similar positions would fall
under which category?
A. synchronous
C. vertical
B. a synchronous
D. horizontal
Communication which occurs with people of similar positions is called horizontal.
What is communication?Giving, receiving, and exchanging information are all parts of communication, which might take the form of talking, writing, listening, or reading. Effective communicators pay close attention to others' perspectives, talk or write effectively, and respect them. Kids that have good communication skills may communicate both in person and online. Understanding how words and visuals influence other people is essential for texting, talking, and publishing safely. By modeling effective communication, training kids to use social media responsibly, and exposing them to material that values healthy communication, you may aid in their development as communicators. Depending on whether information is exchanged between people, members of other species, or non-living objects like computers, different types of communication can be classified. The contrast between verbal and non-verbal communication is significant for human communication. Language-based communications are exchanged during spoken conversation. Esperanto is an example of an artificial language, although it may also occur through natural languages like English or Japanese.
To know more about communication, visit:
https://brainly.com/question/26152499
#SPJ1
As loan analyst for Second Bank, you have been presented the following information.
Pink Co. Blue Co.
Assets
Cash 120,000 320,000
Receivables 220,000 302,000
Inventories 570,000 518,000
Total current assets 910,000 1,140,000
Other assets 500,000 612,000
Total Assets 1,410,000 1,752,000
Liabilities and Stockholder's Equity
Current liabilities 305,000 350,000
Long-term liabilities 400,000 500,000
Capital Stock and Retained Earnings 705,000 902,000
Total liabilities and Stockholder's equity 1,410,000 1,752,000
Annual Sales 930,000 1,500,000
Rate of Gross Profit on sales 30% 40%
Each of these companies has requested a loan of $50,000 for 6 months with no collateral offered. In as much as your bank has reached its quota for loans of this type, only one of these requests is to be granted.
Question:
Which of the two companies, as judged by the information given above, would you recommend as the better risk and why? Assume that the ending account balances are representative of the entire year.
I have the work done...I just need to check my work. I would appreciate any help as soon as possible.
Based on the computed liquidity ratios below, the loan should be advanced to Blue Co. It has better performing liquidity ratios than Pink Co.
What are liquidity ratios?
Liquidity ratios assess a company's ability to pay off its short-term liabilities. Liquidity ratios determine how quickly a company can convert assets and use them to pay off debts. The higher the ratio, the easier it is to clear debts and avoid payment defaults.
Current Ratio = Current assets/Current liabilities
Pink Co. Blue Co.
Current Ratio $910,000/$305,000 $1,140,000/$350,000
= 2.98 = 3.25
Quick Ratio = (Current assets - Inventory)/Current liabilities
Pink Co. Blue Co.
Quick Ratio 910,000-570,000/305,000 1,140,000-518,000/350,000
= 1.11 =1.77
Operating Cash Flow Ratio = Cash/Current liabilities
Pink Co. Blue Co.
Operating Cash Flow Ratio = $120,000/$305,00 $320,000/$350,000
= 0.39 = 0.91
Therefore, Blue company is at better risk due to high liquidity ratios.
To learn more about liquidity ratios, click here:
https://brainly.com/question/30065467
#SPJ1
Decrease in accounts receivable $ 33,000 Increase in accounts payable $ 20,000 Increase in retained earnings $ 110,000 Cash paid for purchase of new music equipment $ 29,000 Depreciation expense $ 6,800 Klutz uses the indirect method to prepare its statement of cash flows. What is Klutz's net cash provided by (used in) operating activities
Answer:
$262,800
Explanation:
Missing word: "Klutz Dance Studio had net income of $203,000 for the year just ended. Klutz collected the following additional information to prepare its statement of cash flows for the year:"
Particulars Amount
Net income $203,000
Adjustments to reconcile net income to
net cash flows from operating activities
Depreciation $6,800
Decrease in accounts receivable $33,000
Increase in accounts payable $20,000 $59,800
Net cash provided by operating activities $262,800
15 stores and their distribution warehouse. The Paint Supply Store franchise sells an average of 70 gallons of Purple Paint every week (for 52 weeks per year). Their current policy is that when they place an order for Purple Paint from their supplier, they order 90 gallons at a price of $4.00 per gallon. [The company does not hold Safety Stock] It takes 2.50 weeks to receive an order from the supplier. Administrative costs for Ordering paint have been estimated to be $35 per order. Holding Costs = 40% of the purchase price per gallon per year. What is the Total Annual Inventory Cost for the company's current policy?
Answer: $1,487.56
Explanation:
Total annual inventory cost = Ordering cost + Inventory Holding cost
Ordering cost = Number of orders * ordering cost
= (Annual demand / Order quantity) * 35
= ((52 weeks per year * 70) / 90) * 35
= $1,415.56
Inventory holding cost:
= Average inventory * holding cost
= (90 gallons / 2) * (40% * 4)
= $72
Total annual inventory cost = 1,415.56 + 36
= $1,487.56
The Kentucky government approves tax incentives to encourage more industry to move to the state. Which of the following statements best describes a potential negative externality? (1 point)
a
Development results in reduction of green space.
b
Taxes for local road maintenance decrease.
c
The state gambling industry fails to fund education.
d
The state park system loses positive media coverage.
Answer:
a
Explanation:
A good has positive externality if the benefits to third parties not involved in production is greater than the cost. an example of an activity that generates positive externality is research and development. Due to the high cost of R & D, they are usually under-produced. Government can encourage the production of activities that generate positive externality by granting subsidies.
A good has negative externality if the costs to third parties not involved in production is greater than the benefits. an example of an activity that generates negative externality is pollution. Pollution can be generated at little or no cost, so they are usually overproduced. Government can discourage the production of activities that generate negative externality by taxation. Taxation increases the cost of production and therefore discourages overproduction. Tax levied on externality is known as Pigouvian tax.
Government can regulate the amount of externality produced by placing an upper limit on the amount of negative externality permissible
LM Enterprises produces two products in a common production process, each of which is processed further after the split-off point. Joint costs incurred for the current month are $36,000. The following information for the current month was also gathered: Product Units Produced Units Sold Separable Costs Selling Price per Unit L 10,000 9,500 $20,000 $ 8 M 5,000 4,000 $40,000 20 What amount would be the joint cost allocated to product M, assuming that LM Enterprises uses the estimated net realizable value method to allocate costs
Answer:
$18,000
Explanation:
The computation is shown below
As we know that
Net realizable value = eventual sales price - separable costs.
For Product L, the net realizable value is
= (10,000 units ×$8) - $20,000
= $80,000 - $20,000
= $60,000
For Product M, the net realizable value is
= (5,000 units ×$20) - $40,000
= $100,000 - $40,000
= $60,000
Now Net realizable value of the two products is
= $60,000 + $60,000
= $120,000
Product M is allocated 60 ÷ 120 or 50% of joint costs.
So,
= 50% of $36,000
= $18,000
Nantua Corporation has two divisions, Southern and Northern. The following information was taken from last year's income statement segmented by division: Total Company Southern Northern Sales $4,000,000 $2,500,000 $1,500,000 Contribution margin $1,650,000 $1,050,000 $600,000 Divisional segment margin $850,000 $700,000 $150,000 Net operating income last year for Nantua Corporation was $400,000. In last year's income statement segmented by division, what were Nantua's total common fixed expenses? Group of answer choices $450,000 $800,000 $1,250,000 $1,300,000
Answer:
$450,000
Explanation:
the computation of the total common fixed expenses is shown below:
= Divisional segment margin - net operating income
= $850,000 - $400,000
= $450,000
By deducting the net operating income from the divisional segment margin we can determine the total common fixed expense
And, the same is to be considered
Speedy Delivery Systems can buy a piece of equipment that is anticipated to provide an 11 percent return and can be financed at 6 percent with debt. Later in the year, the firm turns down an opportunity to buy a new machine that would yield a 9 percent return but would cost 15 percent to finance through common equity. Assume debt and common equity each represent 50 percent of the firm’s capital structure. a. Compute the weighted average cost of capital. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Answer:
10.5%
Explanation:
WACC = weight of equity x cost of equity + weight of debt x cost of debt x (1 - tax rate)
(6% x 0.5) + (15% x 0.5) = 3% + 7.5% = 10.50%
The following accounts are from last year's books at Sharp Manufacturing: Raw Materials Bal 0 (b) 87,000 (a) 93,000 5,000 Work In Process Bal 0 (f) 251,000 (b) 69,000 (c) 82,000 (e) 100,000 0 Finished Goods Bal 0 (g) 226,000 (f) 251,000 25,000 Manufacturing Overhead (b) 18,000 (e) 100,000 (c) 12,000 (d) 67,000 (h) 3,000 3,000 Cost of Goods Sold (g) 226,000 (h) 3,000 223,000 Sharp uses job-order costing and applies manufacturing overhead to jobs based on direct labor costs. What is the amount of cost of goods manufactured for the year?
Answer:
$251,000
Explanation:
Calculation to determine the amount of cost of goods manufactured for the year
Using this formula
Cost of goods manufactured=Debit to Finished Goods+Credit to Work in Process
Let plug in the formula
Cost of goods manufactured =$226,000+$25,000
Cost of goods manufactured =$251,000 (entry f)
Therefore the amount of cost of goods manufactured for the year is $251,000 (entry f)
Net Present Value Analysis [LO12-2]
Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return that she is earning. For example, three years ago she paid $13,000 for 200 shares of Malti Company’s common stock. She received a $420 cash dividend on the stock at the end of each year for three years. At the end of three years, she sold the stock for $16,000. Kathy would like to earn a return of at least 14% on all of her investments. She is not sure whether the Malti Company stock provide a 14% return and would like some help with the necessary computations.
Required:
1. Compute the net present value that Kathy earned on her investment in Malti Company stock.
2. Did the Malti Company stock provide a 14% return?
Answer:
NPV = $-1,225.37
No. The return is less than 14%, because the net present value is negative
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.
NPV can be calculated using a financial calculator
Cash flow in year 0 = $-13,000
Cash flow in year 1 and 2 = 420
Cash flow in year 3 = $420 + $16,000 = $16,420.
I = 14%
NPV = $-1,225.37
The return is less than 14%, because the net present value is negative
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Sandi, shift supervisor at Johnson Meatpacking, has the highest performing team. One reason for this is how she controls her team's activities. First, she ensures that her subordinates are properly trained and properly equipped with the necessary protective equipment and work tools. Then, during the shift, she carefully monitors her workers' actions, taking notes and even measurements as needed. Finally, at the end of each work week, she analyzes her notes and measurement data, and she uses the results of her analysis to make needed production changes the following week. When Sandi is monitoring her workers' actions, she is exercising ________ control.Multiple Choicefeedforwardconcurrentforwardfeedbackexternal
Answer:
concurrent
Explanation:
Concurrent control is when the work done by labour is monitored as the task is being performed. This is to ensure that the product of labour meets quality standards.
Feedback control involves reviewing information on the performance of workers to determine if performance meets quality standards.
Feedforward controls is also known as preventive control : identifies deviation from quality standards before they occur
The payroll records of Speedy Software show the following information about Marsha Gottschalk, an employee, for the weekly pay period ending September 30, 2017. Gottschalk is single and claims one allowance. Compute her Social Security tax (6.2%), Medicare tax (1.45%), federal income tax withholding, state income tax (1.0%), and net pay for the current pay period.
Total (gross) earnings for current pay period $620
Cumulative earnings of previous pay periods $8,060
Answer:
The Social Security Tax is $38.44
The Medicare Tax is $8.99
The Federal Income Tax withholding is $70.00
The Income Tax is $6.2
The Net Pay is $496.37
Explanation:
Use the following formula to calculate the Social Security Tax
Social Security Tax = Gross Pay x Social Security tax rate = $620 x 6.2% = $38.44
Use the following formula to calculate the Medicare Tax withholding
Medicare Tax = Gross Pay x Medicare tax rate = $620 x 1.45% = $8.99
Federal Income Tax withholding = $70.00 ( From the attached Table )
Use the following formula to calculate the Income Tax
Income Tax = Gross Pay x Income tax rate = $620 x 1% = $6.2
Use the following formula to calculate the net pay
Net Pay = Gross Pay - Social Security Tax - Medicare Tax - Federal Income Tax withholdiing - Income Tax = $620 - $38.44 - $8.99 - $70.00 - $6.2 = $496.37
Which of the following are ways that business directly benefits
society?
Choose 5 correct answers.
Encourages innovation
Raises self-esteem
Extends lifespan
Builds social bonds in the workplace
Provides employment
Encourages entrepreneurship
Teaches critical thinking skills
Allows for specialization through competition
Answer: Encourages innovation
Raises self-esteem
Provides employment
Encourages entrepreneurship
Teaches critical thinking skills
Explanation: All the above five points can be the core points for a business to have a good impact on the society. A business does not only helps to grow the one who is the boss but it also benefits the society in many ways. A business with the above mentioned goals is a boon for the society.
Which is the best general statement about the role of government in business in the United States?
Answer: Government acts to allow markets to function efficiently
The best general statement is that "Government acts to allow markets to function efficiently". Therefore, option B is correct.
The United States has a mixed economy, which means that it is a combination of a market economy and a command economy. In a market economy, businesses are free to operate without much government interference.
The government's role in business in the United States is to allow markets to function efficiently. This means that the government creates a framework in which businesses can compete and innovate without being unduly burdened by regulations. The government also provides some services that would be difficult or impossible for businesses to provide on their own, such as national defense and education.
Learn more about the government, here:
https://brainly.com/question/29894427
#SPJ4
Your question is incomplete, most probably the full question is this:
Which is the best general statement about the role of government in business in the United States?
O A. Government owns the resources of production.
OB. Government acts to allow markets to function efficiently.
OC. The government determines what goods and services are produced.
O D. Government has no role in business.
An outside supplier has offered to manufacture product Y for you at a wholesale price of $2 per unit. You currently make product Y in-house at a cost of $7/unit, which consists of $2/unit of fixed costs and $5/unit of variable costs. You need 1,000 units of Y per month. If you outsource the production of Y to the outside supplier in the short term, your profit will: Group of answer choices increase by $3,000 decrease by $2,000 decrease by $3,000 increase by $2,000 remain the same
Answer:
The profit will increase by $3,000.
Explanation:
This is a make or buy decision and the only relevant cost is the variable cost as the fixed is sunk cost. Therefore, we have:
Cost of buying from outside = Cost of buying from outside per unit * Number of units needed = $2 * 1,000 = $2,000
Cost making it internally = Variable cost per unit * Number of units needed = $5 * 1,000 = $5,000
Since Cost making it internally is greater, the amount by which profit increase can be calculated as follows:
Amount of increase in profit = Cost making it internally - Cost of buying from outside = $5,000 - $2,000 = $3,000
Therefore, the profit will increase by $3,000.
7. How micro and macro economics are interdependent
to each other?
Explanation:
Actually micro and macroeconomics are interdependent. The theories regarding the behaviour of some macroeconomic aggregates (but not all) are derived from theories of individual behaviour. ... Similarly, the theory of aggregate consumption function is based upon the behaviour patterns of individual consumers.
The efficient frontier of risky assets is:_______
A. The portion of the minimum-variance portfolio that represents the highest standard deviations.
B. The portion of the minimum-variance portfolio that includes the portfolios with the lowest standard deviation.
C. The portion of the minimum-variance portfolio that lies above the global minimum variance portfolio.
D. The set of portfolios that have zero standard deviation.
Teal Mountain Corporation recorded a right-of-use asset for $312,900 as a result of a finance lease on December 31, 2019. Teal Mountain’s incremental borrowing rate is 10%, and the implicit rate of the lessor was not known at the commencement of the lease. Teal Mountain made the first lease payment of $58,429 on on December 31, 2019. The lease requires 7 annual payments. The equipment has a useful life of 7 years with no residual value.
Prepare Teal Mountain's December 31, 2017, entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places e.g. 5,275.)
Date Account Titles and Explanation Debit Credit
December 31, 2017
Answer:
Date Account titles and Explanation Debit Credit
31 Dec 19 Lease liability $32,982
Interest expense $25,447
[(312900-58,429)*10%]
Cash $58,429
(To record interest expense)
31 Dec 19 Amortization expense $44,700
[312,900/7]
Right of use asset $44,700
(To record amortization of the right of use asset)
→
QUESTION 3 of 10: Which of the following demonstrate your restaurant's concept?
The thing that demonstrate your restaurant's concept is a) your food.
What is restaurant concept ?A restaurant is a place of business that prepares and provides customers with food and beverages. Although many restaurants also provide take-out and food delivery services, meals are often served and consumed on the premises. Within the hospitality industry, which is a subset of the larger service industry, restaurants, bars, and other similar enterprises typically belong under the "food and drink" category.
The topic that characterizes your restaurant serves as your restaurant concept. Restaurant themes describe the overarching theme or philosophy that underpins a restaurant's menu, service method, and musical selection.
Therefore, option A is correct.
Learn more about food at:
https://brainly.com/question/25884013
#SPJ1
missing options:
a) Your food b) Your staff c) Your presentation d) All of the above. d) All of the above.
Which entities offer certifications and qualifications in accounting that will help increase your future earning potential, deepen your knowledge, and enhance your credibility in the field?
Answer:
Entities that offer certifications and qualifications in accounting that will help increase your future earning potential, deepen your knowledge, and enhance your credibility in the field include:
Explanation:
Certified Public Accountant (CPA), Certified Financial Analyst (CFA), Certified Fraud Examiner (CFE), and Certified Internal Auditor (CIA). Additionally, organizations such as the American Institute of Certified Public Accountants, the Institute of Management Accountants, and the International Ethics Standards Board for Accountants (IESBA) offer certifications and qualifications that are beneficial for those in the accounting field.
Anastasia is a principal who is responsible for telling one of her teachers that the school will be cutting her Spanish program in the fall. She has been friends with this teacher for years and knows that the teacher will be very upset. What is the most appropriate communication channel for Anastasia to choose to share this news with the teacher in this scenario?
Question 2 options:
She should send the teacher a formal, typed letter.
She should talk to the teacher face-to-face.
She should send the teacher a text message.
She should post the news on the school website.
Answer she should talk to her face to face
Explanation:
if she respects this woman that is the best way to keep it
Harry Company sells 38,000 units at $37 per unit. Variable costs are $30.71 per unit, and fixed costs are $136,200. Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) operating income. a. Contribution margin ratio (Enter as a whole number.) fill in the blank 1 % b. Unit contribution margin (Round to the nearest cent.) $fill in the blank 2 per unit c. Operating income $fill in the blank 3
Answer:
Results are below.
Explanation:
First, we will determine the unitary contribution margin:
Unitary contribution margin= selling price - unitary variable cost
Unitary contribution margin= 37 - 30.71
Unitary contribution margin= $6.29
Now, the contribution margin ratio:
contribution margin ratio= Unitary contribution margin / selling price
contribution margin ratio= 6.29 / 37
contribution margin ratio= 0.17
Finally, the operating income:
Operating income= total contribution margin - fixed costs
Operating income= 38,000*6.29 - 136,200
Operating income= $102,820
Broadbean Co. had the following amounts on its balance sheet on December 31, 2018: Common stock and Additional paid in capital $ 106,000 Retained earnings 642,000 Treasury stock 82,000 Accumulated other comprehensive income (loss) $ (25,000 ) During 2019, Broadbean Co. reported net income of $46,200, declared cash dividends of $31,800, purchased additional treasury stock for $8,400, and experienced a foreign currency translation gain of $3,600. What amount will Broadbean report as total stockholders’ equity at December 31, 2019 on its statement of stockholders’ equity? Multiple Choice
Answer:
$650,600
Explanation:
Stockholders’ equity as at December 31, 2019
Common stock and Additional paid in capital $106,000
Retained earnings {642000+46200-31800] $656,400
Less: Treasury stock [82000+8400] $90,400
Accumulated other comprehensive income ($21,400)
(loss) [(25000)+3600]
Stockholders’ equity $650.600
Actual sales price is 20% higher than budgeted. Actual sales revenue in dollars is 14% higher than budgeted. Actual sales volume in units is 5% lower than budgeted. Actual input quantity per unit is 2% higher than budgeted. Actual input price is 4% lower than budgeted. Which of the following is true: Group of answer choices Sales volume variance is unfavorable and input efficiency variance is unfavorable Sales volume variance is unfavorable and input efficiency variance is favorable Sales volume variance is favorable and input efficiency variance is unfavorable Not enough information Sales volume variance is favorable and input efficiency variance is favorable
Answer: Sales volume variance is unfavorable and input efficiency variance is unfavorable
Explanation:
The sales volume variance is regarded as the difference in the revenue or the profit which is as a result of the difference between the actual sales and the budgeted sales.
With regards to the question, since the Actual sales volume in units is 5% lower than the budgeted sales, we can infer that the sales volume variance will be unfavourable. On the other hand, since, the actual input quantity per unit is 2% higher than budgeted input quantity per unit, then we can infer that the input efficient variance is unfavourable.
"Group Think" happens when
everyone agrees with the same
thought.
True or false
It is a phenomenon that can lead to poor decision-making True.
What is group think?Group think is a phenomenon in which a group of people, influenced by their desire for consensus, make irrational or poor decisions. It often occurs when group members are unwilling or unable to express their individual opinions, or when group members feel pressure from an authority figure to come to an agreement. Group think can lead to poor decision-making, as group members may ignore potential problems or negative information that could be beneficial to the decision-making process. Additionally, group think can lead to conformity among members, making it difficult for them to think outside the box and come up with creative solutions.
Group Think can lead to poor decision-making because it eliminates any divergence of opinion, leading to conformity and the absence of critical thought. This can lead to an inability to objectively evaluate the risks and benefits involved in a decision, as well as a lack of creativity and innovation. Additionally, group think can lead to a lack of accountability, as members of a group may be less likely to challenge decisions or provide constructive criticism.
To know more about group think click-
https://brainly.com/question/13763896
#SPJ1
Assume that the required reserve ratio is10 percent, banks keep no excess reserves,and borrowers deposit all loans made by banks.Suppose you have saved $100 in cash at home and decide to deposit it in your checking account.As a result of your deposit, the money supply can increase by a maximum of
Answer:
The right answer is "10".
Explanation:
The given values are:
Deposit amount,
= $100
Required reserve ration,
= 10%
or,
= 0.1
Now,
The formula to calculate the multiplier will be:
⇒ [tex]Multiplier=\frac{1}{Required \ reserve \ ratio}[/tex]
On putting the values in the above formula, we get
⇒ [tex]=\frac{1}{0.1}[/tex]
⇒ [tex]=10[/tex]
Consider a project with the following data: accounting break-even quantity = 16,700 units; cash break-even quantity = 15,000 units; life = four years; fixed costs = $150,000; variable costs = $32 per unit; required return = 15 percent. Ignoring the effect of taxes, find the financial break-even quantity. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer: 17381.80 units
Explanation:
To solve the question, the OCF need to be known. To solve this, we need to know the price of the project which will be:
15000 = $150,000/(P - $32)
15000P - 480000 = 150000
15000P = 150000 + 480000
15000P = 630000.
P = 630000/150000
P = 42
Since we know the price, we'll calculate depreciation which will be:
16700 = ($150,000 + D)/($42 -$32)
Depreciation = 17000
Based on the information, initial investment will now be:
= 4 × 17000
= 68000
Then, we can now solve the OCF which will be:
68000 = OCF(PVIFA15%,4)
OCF = 23818.04
Therefore, the financial breakeven quantity will be:
= 150,000 + 23818.04/(42-32)
= (150000 + 23818.04)/10
= 173818/10
= 17381.80 units
Therefore, the financial breakeven quantity is 17381.80 units