Answer:
Is reported a Depreciation expense of $ 2,000,000 in the general fund's operating statement, related to this equipment, in 2015. The right answer is C
Explanation:
According to the given data we have the following:
equipment cost at the beginning of 2015=$16,000,000
equipment useful life=8-year
Therefore in order to to calculate what is reported in the general fund's operating statement, related to this equipment, in 2015 we would have to calculate the straight line depreciation with the following formula:
Straight line depreciation =( Cost - salvage value ) / useful life
Straight line depreciation = ( $16,000,000-0 ) / 8
Straight line depreciation =$ 2,000,000
Therefore, is reported a Depreciation expense of $ 2,000,000 in the general fund's operating statement, related to this equipment, in 2015
Answer:
C). Expense of $2,000,000
Explanation:
Straight line depreciation =
( Cost - salvage value ) / useful life
( 16,000,000-0 ) / 8 = 2,000,000
19. Which of the following statements is FALSE? A) Leverage can reduce the degree of managerial entrenchment because managers are more likely to be fired when a firm faces financial distress. B) When a firm is highly levered, creditors themselves will closely monitor the actions of managers, providing an additional layer of management oversight. C) According to the empire building hypothesis, leverage increases firm value because it commits the firm to making future interest payments, thereby reducing excess cash flows and wasteful investment by managers. D) Managers of large firms tend to earn higher salaries, and they may also have more prestige and garner greater publicity than managers of small firms. As a result, managers may expand (or fail to shut down) unprofitable divisions, pay too much for acquisitions, make unnecessary capital expenditures, or hire unnecessary employees.
Answer: C) According to the empire building hypothesis, leverage increases firm value because it commits the firm to making future interest payments, thereby reducing excess cash flows and wasteful investment by managers.
Explanation:
This statement is false because it is not the definition of the Empire Building Hypothesis.
It is rather, the definition of the Free Cash Flow Hypothesis which essentially believes that a company that is making a lot of free cashflow is not as disciplined in handling money as a company that has debt obligations. It claims that when a company has a lot of free cash flow it tends to invest in bad projects.
The FREE CASH FLOW HYPOTHESIS not the Empire Building Hypothesis therefore believes that leverage increases firm value because it commits the firm to making future interest payments, thereby reducing excess cash flows and wasteful investment by managers.
Why is cash flow important to government entities? How does an administrator plan for cash flow? What tools are available for this purpose?
Answer:
Cash flow is important to government entities because:
As with non-government entities, cash flow is important to government organizations because it is required for the operations of any organization regardless of whether they are government-owned or not, for-profit or not.
The measurable difference in the cash balance of any organization from one period to the next is referred to as Cashflow. No business or entity can continue operations if they keep taking out or spending more cash than they can make.
An administrator can plan for cash flow using a Cash Flow Planner.
This can take the form of a simple excel spread sheet with one column showing on one side all the monies that one is expecting to come in (Account Receivables) and an adjacent column showing all the monies one is expecting to pay out (Account payables).
At the bottom of the excel, you can show the bank balance.
There are specialised apps that help perform this function. An example would be Quickbooks, Planware, Cash Flow Planner, etc.
Cheers!
George Large (SSN 000-11-1111) and his wife Marge Large (SSN 000-22-2222) live at 2000 Lakeview Drive, Cleveland, OH 49001 and want you to prepare their 2017 income tax return based on the information below: George Large worked as a salesman for Toyboat, Inc. He received a salary of $80,000 ($8,500 of federal income taxes withheld and $1,800 of state income taxes withheld) plus an expense reimbursement from Toyboat of $5,000 to cover his employee business expenses. George must make an adequate accounting to his employer and return any excess reimbursement, none of the reimbursement was related to the meals and enter- tainment. Additionally, Toyboat provides George with medical insurance worth $7,200 per year. George drove his car a total of 24,000 miles during the year, and he placed the car in service on June 1, 2015. His log indicates that 18,000 miles were for sales calls to customers at the customers' offices and the remainder was personal mileage. George uses the standard mileage rate method. George is a college basketball fan. He purchased two season tickets for a total of $4,000. He takes a customer to every game, and they discuss some business before, during, and after the games. George also takes clients to business lunches. His log indicates that he spent $1,500 on these business meals. George also took a five-day trip to the Toyboat headquarters in Musty, Ohio. He was so well-prepared that he finished his business in three days, so he spent the other two days sightseeing. He had the following expenses during each of the five days of his trip: Airfare $200 Lodging $85/day Meals $50/day Taxicabs $20/day Marge Large is self-employed. She repairs rubber toy boats in the basement of their home. The total square footage of the Larges' home, including the basement, is 3,000 square feet. The portion of the basement used in Marge's business is 750 square feet. The busi- ness code is 811490. She had the following income and expenses: Income from rubber toy boat repairs $15,000 Cost of supplies 5.000 Contract labor 3,500 Telephone (business) 500 The Larges use the simplified method to figure their deduction for Marge's business use of their home. The Larges incurred the following total other expenses: Real estate taxes 2,500 Mortgage interest 4,500 Cash charitable contributions 3.500
Prepare Form 1040, Schedules A, C, and SE for Form 1040, and Form 2106 for the 2017 year. (Assume no depreciation for this problem and that no estimated taxes were paid by the Larges.)
Answer:
Check the explanation
Explanation:
1040 form
Your first name : George Last Name: Large SSN:000-11-1111
Spouse’s first name :Marge Last Name: Large SSN:000-22-2222
Home address:
2000, Lake View Drive,
City, town or post office, state, and ZIP code:
Cleveland, OH,49001
Filing Status:
2) Married filing jointly
Income :
7)Salary:::::::::::::::::::::::::::::::::::::::::::$80,000
12 Business income:::::::::::::::::::::::::$4,375(SCHEDULE C)
22) Gross income=$84,375
27 Deductible part of self-employment tax.=$669.37
($4,375 * 15.3%/100=$669.37( $117,000 or less, multiply line 4 by 15.3% as per irs for 2014)
36 Add lines 23 through 35 = $669.37
37 Subtract line 36 from line 22. =$84,375 - $669.37=$83,705.63
38) Amount from line 37 (adjusted gross income) =$83,705.63
40 Itemized deductions:::::::::::::::::::::::::::::::::::::::::$18,870.89(see SCHEDULE A)
41 Subtract line 40 from line 38 :::::::::::::::::::::::::$64,923.98($83,793.12 - $18,870.89=$64,922.23)
42) Exemptions:::::::::::::::::NIL
43)Taxable income Subtract line 42 from line 41::::::::::::::::$64,922.23
55) Taxable income(no other credits and Tax)::::::::::::::::::::::$64,923.98
other taxes :
56 Self-employment tax:::::::::::::::::::::: $669.37
61) total tax =$669.37
Payments
62 Federal income tax withheld:$8,500
72 ) total payments= $8,500
_______________________________________________________
SCHEDULE A (Form 1040) Itemized Deductions
Taxes paid
6 Real estate taxes :::::::::::::::::::::::::::::$2,500
9 Add lines 5 through 8::::::::::::::::::::::::$2,500
10 Home mortgage interest :::::::::::::::::$3,375 *75/100=$3,375)
15 Add lines 10 through 14 .:::::::::::::::::$3,375
16 Gifts to Charity::::::::::::::::::::::::::::::::$3,500
19 Add lines 16 through 18 :::::::::::::::::::$3,500
21 Unreimbursed employee expenses:::$11,170( see the explanation 2106 form)
24 Add lines 21 through 23::::::::::::::::::$11,170
25 Enter amount from Form 1040, line 38 :::::::$83,793.12
26 Multiply line 25 by 2%:::::::::::::::::::::::::::::::$1 674.11
($83,705.63* 2/100=1 674.11)
27 Subtract line 26 from line 24=$9,494.14
($11,170 - 1 674.11=$9,495.89)
29)Total Itemized Deduction
29 Add the amounts in the far right column for lines 6 through 28. Also, enter this amount on Form 1040, line 40=$18,870.89
($2,500 +$3,375+$3,500+$9,495.89=$18,870.89
_______________________________________________________________________
SCHEDULE C (Form 1040)
Name of proprietor:Marge Large SSN:000-22-2222
A) Principal business: Repair Rubber Toy Boats:::::::::::::Business Code::::::::811490
Part 1
1) Gross receipts or sales::::::::::::::::::::::::::::$15,000
7 Gross income:::::::::::::::::::::::::::::::::::::::::::$15,000
Part II
Expenses:
11 Contract labor=$3,500
16 Interest: a Mortgage=$1,125($4,500 *25/100=$1,125)
22 Supplies =$5,000
25 Utilities=$500($2,000 * 25/100=$500)
27a)Other expenses= $500(phone )
28) Total expenses : Add lines 8 through 27a:$10,625
29 Tentative profit Subtract line 28 from line 7 =$4,375
_________________________________________________
Form 2106
Employee Business Expenses
Part 1
Expense
1) Vehicle Expense :$ 10080 (0.56 cents * 18,000 miles)
3 Travel expense::::::::::::::::::::::::::$515($200 + $255 + $60)
(Airfare =$200
Loding = $85 per day * 3days= $255
Taxicabs=$20 per day *3days=$60)
5)Meals and entertainment expenses=$50 *50/100 per day *3 days=$75 +$5,500=$5,575
(Customer means and Entertainment=$1500+$4,000=$5,500)
6) total Expense =$16,170
7)reimbursements received =$5,000
8)Subtract line 7 from line 6=$16,170 - $5,000=$11,170
"A production line is to be designed to make 375 El-More dolls per day. Each doll requires 11 activities totaling 16 minutes of work. The factory operates 750 minutes per day. What is the required cycle time for this assembly line?"
Answer: 2minutes
Explanation:
Cycle time is the time between the starting and completion of a process. The average time taken to complete in between the process is the cycle time.
Given
No of units produced = 375 El
No of operational hours = 750 minutes
Calculation of cycle time for this assembly line
The formula for cycle time = 1/Throughput rate.
Throughput rate = (Units Produced or Tasks completed)/ Time
=375/750
=0.5
Throughput rate =0.5
cycle time = 1/Throughput rate
=1/0.5
=2 minutes
The required cycle time for the assembly line is 2 minutes.
The cycle time is the time taken or the time difference between the starting time and the time taken to complete the process. it can be used to take future decisions for processing the similar task.
Computation:
Given,
Units produced =375 El
Operational hours =750 minutes
First, the throughout rate is computed:
The formula used is:
[tex]\begin{aligned}\text{Throughout Rate}&=\dfrac{\text{Units Produced }}{\text{Operational Hours}}\end{aligned}[/tex]
Substituting the values in the formula:
[tex]\begin{aligned}\text{Throughout Rate}&=\dfrac{375}{750}\\&=0.5\end{aligned}[/tex]
Now using the value of throughout rate for computing the cycle time:
[tex]\begin{aligned}\text{Cycle Time}&=\dfrac{1}{\text{Throughout Rate}}\\&=\dfrac{1}{0.5}\\&=2\;\text{minutes}\end{aligned}[/tex]
Thus, the cycle time is 2 minutes.
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Canine Supply Company’s budgeted sales for January, February, and March are $120,000, $160,000, and $140,000, respectively. Based on past experience, ABC expects that 25% of a month’s sales will be collected in the month of sale, 65% in the following month, and 9% in the second month following the sale. Budgeted cash receipts for the month of March would be
Answer:
$149,800
Explanation:
- 25% will be received the same month = 140000*0.25 = 35000.
- 65% will be received the following month = 160000*0.65 = 104000.
- 9% will be received the second month after = 120000*0.09 = 10800.
Hence total receipt will be = 35000+104000+10800 = 149800.
Hope this helps.
Good Luck.
Develop a production schedule to produce the exact production requirements by varying the workforce size for the following problem. The monthly forecasts for Product X for January, February, and March are 1,150, 1,530, and 1,190, respectively. Safety stock policy recommends that half of the forecast for that month be defined as safety stock. There are 22 working days in January, 19 in February, and 21 in March. Beginning inventory is 520 units. Storage cost is $5 per unit per month based on ending inventory level, standard pay rate is $7 per hour, hiring and training cost is $200 per worker, layoff cost is $300 per worker, and worker productivity is 0.1 unit per hour. Assume that you start off with 42 workers and that they work 8 hours per day.
Answer:
developing a production schedule to produce the exact workforce requirement is explicitly explained at the attachment below. The total cost of the production schedule is $ 316,592
Explanation:
Catamount Company had current and accumulated E&P of $585,000 at December 31, 20X3. On December 31, the company made a distribution of land to its sole shareholder, Caroline West. The land's fair market value was $234,000 and its tax and E&P basis to Catamount was $292,500. The tax consequences of the distribution to Catamount in 20X3 would be:
Answer and Explanation:
No loss will be recognized in the year 20X3 and a provide a reduction in E&P of $292,500
Given:
Current and accumulated E&P = $585,000
Fair market value = $234,000
Profit on accumulation:
Profit on accumulation = Current and accumulated E&P - Fair market value Profit on accumulation = $585,000 - $234,000
Profit on accumulation = $351,000
Distribution is divided because accumulated profit in year 20X3 is higher then distribution.
Green Planet Corp. has (a) 5,800 shares of cumulative 11% preferred stock with a $2 par value and (b) 22,000 shares of common stock with a $0.01 par value. During its first two years of operation, Green Planet declared and paid the following total cash dividends. Compute the dividends paid each year to each of the two classes of stockholders: preferred and common.
Answer:
Find attached complete question:
Year 1:
Preferred stock dividends is $760
common stock is $0
Year 2:
Preferred stock dividends is $1,792
Common stock dividends is $408
Explanation:
The dividends paid as found in the attached were:
Year 1 $760
Year 2 $2,200
Preferred stock dividends =$2*5800*11%=$1276
Hence in the year the $760 would be paid preferred stockholders leaving a balance of $516 ($1,276-$760) to be paid next year.
preferred stock dividends in the second year=$516+$1276=$1,792
Common stock dividends in year 2=$2,200-$1,792=$408
The Computation of the Dividends Paid to Preferred and Common Stockholders is as follows:
Preferred Common
Stockholders Stockholders
Year 1 $760 $0
Year 2 $1,792 $408
Data and Calculations:
5,800 shares, 11% Cumulative Preferred Stock at $2 par value = $11,600
22,000 shares, Common Stock at $0.01 par value = $220
Year 1 Cash Dividends = $760
Year 2 Cash Dividends = $2,200
The Computation of the Dividends Paid to Preferred and Common Stockholders is as follows:
Preferred Stockholders Common Stockholders
Arrears Amount Paid
Year 1 $1,276 ($11,600 x 11%) $516 $760 $0 ($760 - $760)
Year 2 $1,276 ($11,600 x 11%) $1,792 $1,792 $408 ($2,200 - $1,792)
Thus, only cumulative preferred stockholders received dividends in Year 1 with their Year 1 balance cumulating in Year 2.
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The United States taxes the domestic and remitted foreign earnings of U.S. based MNEs no matter where the earnings occurred. This is an example of a/an ________ approach to levying taxes.
Answer:
The correct answer is A) worldwide.
Explanation:
The concept of a global approach to tax collection is the determination of the tax burden without considering the origin of the profits reported in the tax declaration, which implies the homogenization of the tax burden that becomes effective taking into account double treaties. taxation, where information is received from other countries on the behavior of foreign branches in this regard.
Happy Company wants to raise $2 million with debt financing. The funds are needed to finance working capital, and the firm will repay them with interest in one year. Happy Company’s treasurer is considering three options:
a. Borrowing U.S. dollars from Security Pacific Bank at 8 percent.
b. Borrowing British pounds from Midland Bank at 14 percent.
c. Borrowing Japanese yen from Sanwa Bank at 5 percent.
If Happy borrows foreign currency, it will not cover it; that is, it will simply change foreign currency for dollars at today’s spot rate and buy the same foreign currency a year later at the spot rate that is in effect. Happy Company estimates the pound will depreciate by 5 percent relative to the dollar and the yen will appreciate 3 percent relative to the dollar in the next year. From which bank should Happy Company borrow?
Explanation:
Happy Company will consider both capital expenses and foreign exchange threats.
If Happy's calculations are right, borrowing from Minland Bank is the best choice.
However, since forecasts are based solely on estimation, the choice is still centered on Happy Company's risk appetite, whether to take an 8 per cent flat rate, a strong 14 per cent rate, but with a chance of decline or a small 5 per cent rate, but with a possibility of appreciation.
Considering the interest rates and currency valuation changes, Happy Company should borrow either from Security Pacific Bank in the US or from Sanwa Bank in Japan. Both options equate to an 8% interest rate, resulting in a repayment amount of $2.16 million.
Explanation:In order to determine from which bank Happy Company should borrow, we'll need to take into account not only the initial interest rates, but also the expected appreciation or depreciation of each currency relative to the dollar over the next year.
From Security Pacific Bank, borrowing in USD at 8% means Happy Company would need to repay $2.16 million.
Borrowing from Midland Bank in pounds at 14%, plus the estimated 5% depreciation of the pound relative to the dollar, effectively gives an interest rate of 9%. This would require repayment of approximately $2.18 million.
Finally, borrowing from Sanwa Bank in yen at 5% interest, plus the 3% expected appreciation of the yen relative to the dollar, would be equivalent to an interest rate of 8%. This totals to a repayment of $2.16 million.
Given these calculations, the best option would likely be to borrow either from Security Pacific Bank, or from Sanwa Bank, as both would require the same repayment amount. However, there may be other factors not considered in this calculation such as transaction fees or exchange rate volatility that could impact the final decision.
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On July 1, Alaskan Adventures issues a $120,000, eight-month, 6.5% note. Interest is payable at maturity. What is the amount of interest expense that the company would record in a year-end adjustment on December 31
Answer:
December 31 Interest expense $3900 Dr
Interest Payable $3900 Cr
Explanation:
The interest and principal is both payable at maturity thus we need to accrue the interest payment and create a liability against the amount of interest due. The adjustment is made 6 months from the issue of the note thus the interest for 6 months is due. The entry would be to record 6 month's interest that relates to this year. The interest expense will be,
120000 * 0.065 * 6/12 = $3900
As the payment is not made until maturity we will credit interest payable by this amount.
The company would record an interest expense of $3,260.27 in a year-end adjustment on December 31.
Explanation:The interest expense recorded in a year-end adjustment on December 31 can be calculated using the formula: Interest = (Principal x Rate x Time) / Days in a Year. In this case, the principal is $120,000, the rate is 6.5%, and the time is 8 months. To convert the time to a fraction of a year, divide by 12, which gives us 8/12 or 2/3. Since the interest is payable at maturity, we can assume that the note will be held to the full 8 months. We also need to consider that December has 31 days, so the number of days in a year is 365.
Using the formula, the interest expense can be calculated as follows: Interest = ($120,000 x 0.065 x (2/3)) / 365. Solving this equation, we get Interest = $3,260.27.
Therefore, the company would record an interest expense of $3,260.27 in a year-end adjustment on December 31.
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The A&M Hobby Shop carries a line of radio-controlled model racing cars. Demand for the cars is assumed to be constant at a rate of 40 cars per month. The cars cost $60 each, and ordering costs are approximately $15 per order, regardless of the order size. The annual holding cost rate is 20%.
(a) Determine the economic order quantity and total annual cost under the assumption that no backorders are permitted.
If required, round your answers to two decimal places.
Q* =
Total Cost = $
(b) Using a $45 per-unit per-year backorder cost, determine the minimum cost inventory policy and total annual cost for the model racing cars.
If required, round your answers to two decimal places.
S* =
Total Cost = $
(c) What is the maximum number of days a customer would have to wait for a backorder under the policy in part (b)? Assume that the Hobby Shop is open for business 300 days per year.
If required, round your answer to two decimal places.
Length of backorder period = days
(d) Would you recommend a no-backorder or a backorder inventory policy for this product? Explain.
If required, round your answers to two decimal places.
Recommendation would be - Select your answer -backorderno-backorderItem 6 inventory policy, since the maximum wait is only days and the cost savings is $ .
(e) If the lead time is six days, what is the reorder point for both the no-backorder and backorder inventory policies?
If required, round your answers to two decimal places.
Reorder point for no-backorder inventory policy is .
Reorder point for backorder inventory policy is .
Answer:
Task a:Task a.1EOQ = 34.64 orders
Task a.2Total annual cost = $29,215.69
Task b:Task b.1Total Cost Minimum inventory policy=( bS2/ 2Qbo) + P (Qbo- S)2/2Qbo + K(D/Qbo)
Task b.2Total annual cost = $207.91
Task cThe maximum number of days = 6.09 days
Task dThe saving in using backorder is $207.79
Task eTask e.1:Reorder point = 9.6
Task e.2:Reorder point = 3.51
Explanation:
Demand per month= 40 cars
Annual Demand (D)= 12*40 = 480
Ordering cost per order (K)= $15
Holding Cost= 20% of cost= $60 *0.2 = 12
Task aDetermine the economic order quantity and total annual cost under the assumption that no backorders are permitted.
If required, round your answers to two decimal places.
Task a.1Calculate EOQEOQ = [tex]\sqrt\frac{2CoD}{Ch}[/tex]
EOQ = [tex]\sqrt\frac{2*15*480}{12}[/tex]
EOQ = 34.64 ordersTask a.2Total annual cost:
Total annual cost = P×D + Co × ([tex]\frac{D}{EOQ}[/tex]) + Ch × ([tex]\frac{EOQ}{2}[/tex])
Total annual cost = 60 × 480 + (15 × [tex]\frac{480}{34.64}[/tex]) + (12 × [tex]\frac{34.64}{2}[/tex])
Total annual cost = $28,800 + $207.85 + $207.84
Total annual cost = $29,215.69
Task b:Using a $45 per-unit per-year backorder cost, determine the minimum cost inventory policy and total annual cost for the model racing cars.
If required, round your answers to two decimal places.
S* =
Total Cost = $
Solution:
Task b.1Minimum cost inventory policy:Backorder Cost (b)= $45
Qbo= Q* × √( b+h/ h)
= 35*√(12+45/ 45)
= 35* 1.12
=39.28
Shortage (S)= Qbo * (K/K+b)
= 39* (15/15+45)
= 39* 0.25
= 9.75
Total Cost Minimum inventory policy=( bS2/ 2Qbo) + P (Qbo- S)2/2Qbo + K(D/Qbo)
Task b.2Total annual cost = 45* 9.752 / 2* 392 + 60 (39-9.75)2/ 2* 392 + 15 ( 480/39)
= 1.40+ 21.9.+ 184.61
=$207.91
Task c:What is the maximum number of days a customer would have to wait for a backorder under the policy in part (b)? Assume that the Hobby Shop is open for business 300 days per year.
If required, round your answer to two decimal places.
Solution:Length of backorder days (d) = Demand ÷ amount of working days
d = 480 ÷ 300
d = 1.6
Calculate the backorders as the maximum number of backorders divided by the demand per day
s/d = 9.75/1.6 = 6.09 days (answer)
Task dWould you recommend a no-backorder or a backorder inventory policy for this product? Explain. If required, round your answers to two decimal places.
Recommendation would be inventory policy, since the maximum wait is only days and the cost savings is $._____
Solution:
Calculate the difference in total between not using backorder:
$207.85 + $207.85 - 207.91 = $207.79
The saving in using backorder is $207.79.
Task eIf the lead time is six days, what is the reorder point for both the no-backorder and backorder inventory policies? If required, round your answers to two decimal places.
Task e.1Reorder point for no-backorder inventory policy is .
Task e.2Reorder point for backorder inventory policy is .
Solution:Task e.1Reorder point for no-backorder inventory policy is .
Reorder point = d*lead timeReorder point = 1.6*6
Reorder point = 9.6
Task e.2Reorder point for backorder inventory policy is .
Reorder point = d*lead time - S
Reorder point = 1.6*6 - 6.09
Reorder point = 3.51
To determine the Economic Order Quantity (EOQ) and total annual cost:
EOQ Calculation: EOQ formula is:Total Cost without backorders: $29520.55
Backorder Cost Calculation: Minimum cost policy with backorders involves EOQ with backorder cost (C) taken into account:Maximum number of backorder days:
Given: Hobby Shop open for 300 days per year
Length of backorder period = (Q*/D) * (P/P+S), where P is the number of backorders filled during the cycle and S = remaining time backorder is held.
Therefore, maximum waiting time = (20.55/480) * 300 = 0.12 * 300 = 36 days.
Recommendation
It would be prudent to recommend a backorder policy because the cost savings of $21,122.18 annually outweigh the inconvenience of 36 days of potential backorders.Reorder PointWithout backorders:Long Construction Company uses the percentage-of-completion method of accounting for long-term construction contracts. During 2021, Long began work on a $400 million fixed-fee construction contract, which was completed in 2024. Cost incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions):
Cost Incurred
Estimated Costs to Complete as of December 31
2021
$60
$240
2022
$84
$176
For the year 2022, Long should have recognized gross profit on this contract of:
a.$20 million.
b.$18 million.
c.$16 million.
d.$14 million.
Answer:
$400 million less ($176+$84)=$14 million
Explanation:
the percentage of completion method of accounting is more like of income statement because it is used to assess the companys performance and financial position
MIRR calculation) Emily's Soccer Mania is considering building a new plant. This project would require an initial cash outlay of $10.2 million and would generate annual cash inflows of $3.2 million per year for years one through four. In year five the project will require an investment outlay of $5.2 million. During years 6 through 10 the project will provide cash inflows of $5.2 million per year. Calculate the project's MIRR, given a discount rate of 8 percent.'
Answer:
The project's MIRR is 14.54% as found in the attached
Explanation:
The MIRR which is the modified internal rate of return can be computed using excel formula MIRR which stated thus:
=MIRR(values,finance_ rate,reinvest_rate)
values are the cash flows both inflows and outflows derivable from the projects such as $10.2 million in year 1,$3.2 million in the first four years as well as the $5.2 million cash outflow in year 5 and the $5.2 inflows from year six onward.
The finance rate and reinvest rate are same as the discount rate of 8%.
Eventually,the MIRR gave 14.54% as computed in the attached spreadsheet.
Marigold Corp. had 1,000,000 shares of common stock issued and outstanding at December 31, 2017. On July 1, 2018 an additional 1,000,000 shares were issued for cash. Marigold also had stock options outstanding at the beginning and end of 2018 which allow the holders to purchase 292000 shares of common stock at $21 per share. The average market price of Marigold’s common stock was $28 during 2018. The number of shares to be used in computing diluted earnings per share for 2018 is
Answer:
1,573,000 shares
Explanation:
The computation of the shares computing diluted earnings per share for 2018 is shown below:
= 1,000,000 shares × 6 months ÷ 12 months + 2,000,000 shares × 6 months ÷ 12 months + [($28 - $21) ÷ 28 ] × 292,000 shares
= 500,000 shares + 1,000,000 shares + 73,000 shares
= 1,573,000 shares
The 2,000,000 shares is come from
= 1,000,000 shares + 1,000,000 shares
= 2,000,000 shares
Aikmen Lab plans to purchase a new centrifuge machine for its Georgia facility. The machine costs $279,000 and is expected to have a useful life of 7 years, with a terminal disposal value of $50,000. Savings in cash operating costs are expected to be $63,000 per year. However, additional working capital is needed to keep the machine running efficiently. The working capital must continually be replaced, so an investment of $30,000 needs to be maintained at all times, but this investment is fully recoverable (will be "cashed in") at the end of the useful life. Aikmen Lab's required rate of return is 10%. Ignore income taxes in your analysis. Assume all cash flows occur at year-end except for initial investment amounts. Aikmen Lab uses straight-line depreciation for its machines.
Required:
1. Calculate net present value.
2. Calculate internal rate of return.
3. Calculate accrual accounting rate of return based on net initial investment.
4. Calculate accrual accounting rate of return based on average investment.
5. You have the authority to make the purchase decision. Why might you be reluctant to base your decision on the DCF methods?
Answer:
initial outlay costs of the project = $279,000 (machine) + $30,000 (additional working capital) = $309,000
CF1 = $63,000CF2 = $63,000CF3 = $63,000CF4 = $63,000CF5 = $63,000CF6 = $63,000CF7 = $63,000 + $50,000 (salvage value) + $30,000 (working capital) = $143,000discount rate = 10%
using an excel spreadsheet:
1) =NPV(10%,63000,63000,63000,63000,63000,63000,143000) = $347,763 - $309,000 = $38,763
2) =IRR(-309000,63000,63000,63000,63000,63000,63000,143000) = 13.34%
3) accounting rate of return based on net initial investment = average net profit / net initial investment
average net profit = $63,000 - $32,714 (depreciation cost) = $30,286net initial investment = $309,000accounting rate of return based on net initial investment = $30,286 / $309,000 = 9.8%
4) accounting rate of return based on average investment = average net profit / average investment
average net profit = $63,000 - $32,714 (depreciation cost) = $30,286average investment = ($309,000 + $80,000) / 2 = $194,500accounting rate of return based on average investment = $30,286 / $194,500 = 15.57%
5) Generally the discounted cash flow method is the most widely accepted way to determine whether a project should be accepted or not, and to be honest the NPV is positive and the IRR is higher than the required rate of return. The only rate that was lower was the accounting rate of return on net investment (9.8%) but it was really close.
If I was the manager that decided whether or not to carry out the project I would go for it.
Selling, general, and administrative expenses were $69,000; net sales were $313,500; interest expense was $7,400; research and development expenses were $32,700; net cash provided by operating activities was $82,200; income tax expense was $7,900; cost of goods sold was $171,600. Required: a. Calculate operating income for the period. b. Calculate net income for the period.
Answer:
Operating income is $40,200
Net income is $24,900
Explanation:
The operating income is the net sales minus the costs of goods sold, the selling,general and administrative expenses,research and development expenses.This is known as earnings before interest and tax(EBIT).
The net income is the operating income minus the interest expense as well as the tax expense for the year,which is known as earnings after tax.
Net sales $313,500
Costs of goods sold ($171,600)
Gross profit $141,900
Selling,general and administrative expenses ($69,000)
Research and development expenses ($32,700)
Operating income $40,200
Interest expense ($7,400)
income tax expense ($7,900)
net income $24,900
The operating income for the period is calculated as $40,200, and net income for the period comes out to be $24,900.
Explanation:To begin with, the operating income can be calculated using the following formula: Net sales - Cost of goods sold - Selling, General and Administrative expenses - Research and Development expenses. So, using the given numbers, operating income will be $313,500(net sales) - $171,600 (cost of goods sold) - $69,000 (selling, general and administrative expenses) - $32,700 (research and development expenses) = $40,200.
Moving on to net income, it can be calculated by subtracting the interest expense and the income tax expense from the operating income. So, the net income will be $40,200 (operating income) - $7,400 (interest expense) - $7,900 (income tax expense) = $24,900.
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On June 1, 2017, Windsor, Inc. was started with an initial investment in the company of $22,420 cash. Here are the assets, liabilities, and common stock of the company at June 30, 2017, and the revenues and expenses for the month of June, its first month of operations:Cash$ 4,830 Notes payable$12,460Accounts receivable4,470 Accounts payable970Service revenue7,730 Supplies expense1,100Supplies2,300 Maintenance and repairs expense700Advertising expense400 Utilities expense200Equipment26,230 Salaries and wages expense1,630Common stock22,420 In June, the company issued no additional stock but paid dividends of $1,720.Prepare an income statement for the month of June.
Answer:
The answer is attached
Explanation:
The Pecking Order view on capital structure:
a. Argues that firm's first choice for capital is new equity due to the fact that dividends are not contractually required.
b. Argues that the firm's first choice for capital is new debt as interest payments are tax-deductible.
c. Argues that a firm's first choice for capital is retained earnings as there is no informational cost associated with using retained earnings.
d. Argues that firms are indifferent between new equity, debt and retained earnings as sources of capital.
Answer:
c. Argues that a firm's first choice for capital is retained earnings as there is no informational cost associated with using retained earnings.
Explanation:
The Pecking order theory states that a business should first of all seek for internal funds (retained earnings) as a first choice of capital.
When internal funds are depleted, it can now look to debt as a source of finance.
In turn when debt options have been exhausted the last resort is to look for funding from equity.
So the Pecking order argues that a firm's first choice for capital is retained earnings as there is no informational cost associated with using retained earnings.
Radisson Enterprises sells a product for $69 per unit. The variable cost is $40 per unit, while fixed costs are $206,045. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $75 per unit.
Answer:
1. 7,105 units
2. 5,887 units
Explanation:
The computation of given question is shown below:-
a. Contribution margin per unit = Sale price - Variable cost
= $69 - $40
= $29
Break-even point in sales units = Fixed costs ÷ Contribution margin per unit
= $206,045 ÷ 29
= 7,105 units
b. Contribution margin per unit
= $75 - $40 = $35
Break-even point = Fixed cost ÷ Contribution margin per unit
$206,045 ÷ $35
= 5,887 units
Production Budget
Assume that Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. The S12L7 sells for $475, and the S12L5 sells for $300. Projected sales (number of speakers) for the coming five quarters are as follows:
S12L7 S12L5
First quarter, 20X1 1,120 1,820
Second quarter, 20X1 3,080 1,960
Third quarter, 20X1 7,840 7,420
Fourth quarter, 20X1 6,440 5,460
First quarter, 20X2 1,260 1,680
The vice president of sales believes that the projected sales are realistic and can be achieved by the company.
Stillwater Designs needs a production budget for each product (representing the amount that must be outsourced to manufacturers located in Asia). Beginning inventory of S12L7 for the first quarter of 20X1 was 340 boxes. The company's policy is to have 20% of the next quarter's sales of S12L7 in ending inventory. Beginning inventory of S12L5 was 170 boxes. The company's policy is to have 30% of the next quarter's sales of S12L5 in ending inventory.
Required:
a.Prepare a production budget for each quarter for 20X1 and for the year in total.
Stillwater Designs
Production Budget for S12L7
For the Year Ended December 31, 20X1
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Year
Sales
Desired ending inventory
Total needs
Less: Beginning inventory
Units produced
b. Prepare a production budget for each quarter for 20X1 and for the year in total. If required, round your answers to nearest whole value.
Stillwater Designs
Production Budget for S12L5
For the Year Ended December 31, 20X1
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Year
Sales
Desired ending inventory
Total needs
Less: Beginning inventory
Units produced
Answer:
Stillwater Designs
Production Budget for S12L7
For the Year Ended December 31, 20X1
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
Sales 1,120 3,080 7,840 6,440
Desired ending inventory 616 1,568 1,228 252
Total needs 1,736 4,648 9,068 6,692
Less: Beginning inventory (340) (616) (1,568) (1,228)
Units produced 1,396 4,032 7,500 5,464
Stillwater Designs
Production Budget for S12L5
For the Year Ended December 31, 20X1
1,680
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
Sales 1,820 1,960 7,420 5,460
Desired ending inventory 588 2,220 1,638 504
Total needs 2,408 4,180 9,058 5,964
Less: Beginning inventory (170) (588) (2,220) (1,638)
Units produced 2,238 3,592 6,838 4,326
Explanation:
Production Budget shows the quantities of finished goods that must be produced to meet expected sells plus any increase of inventory levels that might be required.
Final answer:
The production budget for Stillwater Designs is calculated by considering the projected sales, desired ending inventory, and beginning inventory for both S12L7 and S12L5 subwoofers. Production budgets determine units to be produced each quarter. Additionally, economies of scale imply that producing larger quantities can lead to lower average costs until a limit is reached.
Explanation:
The production budget for Stillwater Designs' automotive subwoofers, the S12L7 and S12L5, must take into account projected sales, desired ending inventory, and beginning inventory to determine the units produced each quarter. For the S12L7, with beginning inventory of 340 units and a 20% ending inventory policy, we calculate units produced by first determining the necessary ending inventory and total needs for each quarter, then subtracting current inventory. The S12L5 follows a similar process but begins with 170 units and maintains a 30% ending inventory policy.
On the topic of economies of scale, the decision by a manager of an automobile assembly plant on whether to produce cars or SUVs, given equal input quantities, should also consider potential cost reductions at higher production levels. As production quantity increases, average costs may decrease due to economies of scale, up to a certain point where these cost benefits plateau or diminish.
Dennis and Rhonda are married with two boys, Blake and Chase. They have the following accounts with the following balances at their local bank: Dennis (single account) $300,000 Rhonda (single account) $100,000 Dennis & Rhonda (joint account) $400,000 Rhonda & Blake (joint account) $100,000 How much of all of their accounts will be insured by the FDIC?
Answer:
$850000
Explanation:
Dennis ( SINGLE ACCOUNT ) = $300000
Rhonda (single account ) = $100000
Dennis and Rhonda ( joint account ) = $400000
Rhonda and Blake (joint account ) = $100000
The FDIC will insure individual accounts up to the tune of $250000 and also shares of each individual in every joint account will also be insured as well
From Dennis single account : $250000 is insured
From Rhonda single account : $100000 is insured
from Dennis share in the joint account with Rhonda : $200000 is insured
likewise Rhonda's share which is also : $200000
Rhonda and Blake shares from their joint account will be insured as well : $10000
Total insured amount by FDIC = 250000 + 100000 + 200000 +200000 +100000 = $850000
Suppose in the year 2018, people spent $200 on durable goods, $200 on non-durable goods, and $100 on services. During the same year, the government paid $200 to soldiers and police officers, spent $100 building missiles and highways, spent $200 on welfare and unemployment benefits and $300 on social security payments. During this year the United States had imports totaling up to $500 while exporting $400 worth of goods and services. Finally, firms spent $200 on machines that will increase their productive capacity and they raised the amount of goods in their inventories from $400 at the beginning of the year to $500 at the end of the year.
Required:
1. Please use this information to calculate total GDP for 2018.
a. $1,500
b. $1,300
c. $1,200
d. $1,000
Answer:
d. $1,000
Explanation:
Gross domestic product is the sum of all final goods and services produced in an economy within a given period which is usually a year.
GDP = Consumption spending by households on durable and non durable goods and services + Investment spending by businesses + Government Spending + Net Export
Consumption spending = $200 + $200 + $100 = $500
Investment spending = $200 + $(500 - 400) = $300
Government spending = $200 + $100 = $300
Transfer payments aren't included in the calculation of GDP. So, the $200 spent on welfare and unemployment benefits and $300 on social security payments isn't included in the calculation of GDP.
Net export = Export- Import = $400 - $500 = $-100
GDP = $500 + $300 + $300 - $100 = $1000
I hope my answer helps you
Preparing a Direct Labor Budget Tulum Inc. makes a Mexican chocolate mix. Planned production in units for the first 3 months of the coming year is: January 24,700 February 22,000 March 30,200 Each box of chocolate mix takes 0.4 direct labor hour. The average wage is $17 per hour. Prepare a direct labor budget for the months of January, February, and March, as well as the total for the first quarter.
Answer:
Jan = $306 in direct labour costs
Feb = $272 in direct labour costs
March = $357 in direct labour costs
Total for the quarter = $935 in direct labour costs
Explanation:
0.4 hours is 24 minutes
January
= 24 700 units / 24 minutes = 1029
1029 minutes would be required for 24 700 units
1029 minutes / 60 = 17.15 hours. We round up to 18 hours
18 hours* $17 per hour = $306
Therefore, $306 in direct labour costs in January
February
= 22 000 units / 24 minutes = 917
917 minutes would be required to produce 22 000 units
917 minutes / 60 = 15.3 hours. We round up to 16 hours
16 hours * $17 per hour = $272
Therefore, $272 in direct labour costs in February
March
= 30 200 units / 24 minutes = 1258
1258 minutes would be required to produce 30 200 units
1258 minutes / 60 = 20.97 hours. We round up to 21 hours
21 hours * $17 per hour = $357
Therefore, $357 in direct labour costs in March
Total for the quarter = 306 + 272 + 357 = 935
$935 in direct labour costs for the first quarter
Answer:
The direct labor costs for January ,February and March are $ 167960
$ 149600 and $ 205360 and total is $ 522,920
The direct labor hours for January ,February and March are 9880 8800 and 12080 . Total Direct Labor hours are 30760
Explanation:
Tulum Inc.
Direct Labor Budget
January February March Total
Units 24,700 22,000 30,200 76,900
DLH per unit 0.4 0.4 0.4
DLHs 9880 8800 12080 30760
Wage/hr $ 17 $ 17 $ 17
Wages $ 167960 $ 149600 205360 $ 522,920
The direct labor costs for January ,February and March are $ 167960
$ 149600 and $ 205360 and total is $ 522,920
The direct labor hours for January ,February and March are 9880 8800 and 12080 . Total Direct Labor hours are 30760
Suppose there are two firms (1 and 2) located along a surface water resource and that the profit functions of each firm are provided below, where 7iNSYsLDJFEN13ZU0zrrDQ8e1tBLr7r8AAAAAElF is the quantity of water used by firm i.
Firm a:wPHcbYArNlLhwAAAABJRU5ErkJggg==
Firm b: O4fW7gxNIFgAAAABJRU5ErkJggg==
If each firm uses the amount of water that maximizes its own profits, what is the total quantity of water that will be used?
Suppose that there are only 20 total units of water available. What is the allocation of the 20 units of water across the two firms that maximizes total profits?
Relative to the allocation of water that you found in part (b), by how much do total profits decrease if the 20 units are instead evenly distributed to the two firms (in other words, each firm is allocated 10 units of water)?
Answer:
See attached files
Explanation:
George Corporation had the following transactions occur in the current year: 1. Cash sale of merchandise inventory. 2. Sale of delivery truck at book value. 3. Sale of George Corporation common stock for cash. 4. Issuance of a note payable to a bank for cash. 5. Sale of a debt security held as an available-for-sale investment. 6. Collection of loan receivable. How many of the above items will appear as a cash inflow from investing activities on a statement of cash flows for the current year? Two items Three Items Four Items Five or more items
Answer: Three items will appear being;
2. Sale of delivery truck at book value
5. Sale of a debt security held as an available-for-sale investment
6. Collection of loan receivable.
Explanation:
The Investment Section of the Cash Flow Statement contains activities related to investment such as the buying or selling of fixed assets and the buying or selling of other company stocks or bonds.
Out of the above therefore, there are 3 activities that would fall under this section of the Cash Flow Statement.
They are;
2. Sale of delivery truck at book value.
- This refers to the sale of a Fixed asset and as such it goes to the investment section.
5. Sale of a debt security held as an available-for-sale investment.
- As a debt security of another firm that was considered available for sale, this goes to the Investment Section as well.
6. Collection of loan receivable.
- Finally, collection of loan receivable means that the company loaned money to another company making it an investment related cash inflow as it is a long term Investment income source.
The following data for Romero Products Inc. are available:
For the Year Ended December 31 Actual Planned Difference
Sales $8,360,000 $8,200,000 $160,000
Variable costs:
Variable cost of goods sold $3,496,000 $3,280,000 $216,000
Variable selling and administrative expenses 760,000 902,000 (142,000)
Total variable costs $4,256,000 $4,182,000 $74,000
Contribution margin $4,104,000 $4,018,000 $86,000
Number of units sold 38,000 41,000
Per unit:
Sales price $220 $200
Variable cost of goods sold 92 80
Variable selling and administrative expenses 20 22
Prepare an analysis of the sales quantity and unit price factors.
Answer:
Sales quantity factor = - $600,000
Unit price factor = $760,000
Explanation:
sales quantity factor is the effect of change in number of units sold with respect to the budgeted price or planned price.
Unit price factor is the change in price per unit with respect to the actual number of units sold.
Unit price factor $(220-200)×38,000 = $760,000
Sales quantity factor (38,000 - 41,000) × $200 = -$600,000
Kindly see attached picture
An analysis of Romero Products Inc.'s performance reveals a shortfall in the sales quantity factor given fewer units were sold than planned. However, the unit price factor was positive as higher prices were achieved than planned. Additionally, despite an increase in variable cost of goods, a favourable variances in variable selling and administrative expenses led to a higher contribution margin than planned.
Explanation:The sales quantity factor can be analyzed by looking at the difference in the number of units sold. While Romero Products Inc. planned to sell 41,000 units, they only sold 38,000 units. This difference of 3,000 units is a negative factor for the company since it represents lost potential revenue.
The unit price factor can be analyzed by comparing the actual and planned sales price per unit. Romero Products Inc. was able to sell their product at a higher price than planned - $220 per unit instead of the projected $200 per unit. This $20 advantage per unit is a positive factor for the company as it increases revenue.
It's essential to recognize that the variable costs also increased, with the cost of goods sold being higher than planned ($92 against the planned $80). However, variable selling and administrative expenses were lower than planned ($20 compared to $22). Therefore, the company's contribution margin - the sales revenue minus the variable costs - was higher than planned.
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ABC opened for business on January 1, 2018, and paid for two insurance policies effective that date. The liability policy was $36,000 for 18 months, and the crop damage policy was $12,000 for a two-year term. What was the balance in ABC's Prepaid Insurance account as of December 31, 2018
Answer:
$18,000
Explanation:
Data provided in the question
Liability policy for 18 months = $36,000
And, the crop damage policy = $12,000 for two years
So by considering the above information, the balance in the ending prepaid insurance account is
= Liability policy ÷ number of years
= $36,000 ÷ 2 years
= $18,000
By dividing the liability policy with the number of years we can get the ending balance and the same is shown above
A company estimates the following manufacturing costs for the next period: direct labor, $500,000; direct materials, $181,000; and factory overhead, $122,000. Required: 1. Compute its predetermined overhead rate as a percent of direct labor. 2. Compute its overhead cost as a percent of direct materials.
Answer:
1) 24.4%
2) 67.4%
Explanation:
The basis on which overheads are to be applied is considered under 'denominator' value.
1)
Numerator = Estimated factory $122,000
Denominator = Direct Labor $500,000
Overhead Rate = 122,000 / 500,000 = 0.244 ==> 24.4%
2)
Numerator = Estimated factory overhead $122,000
Denominator = Direct Material $181,000
Overhead Rate = 122,000 / 181,000 = 0.674 ==> 67.4%
At December 31, 2020, Pharoah Company has outstanding three long-term debt issues. The first is a $2,370,000 note payable which matures June 30, 2023. The second is a $5,580,000 bond issue which matures September 30, 2024. The third is a $12,850,000 sinking fund debenture with annual sinking fund payments of $2,570,000 in each of the years 2022 through 2026.Prepare the required note disclosure for the long-term debt at December 31, 2020.
Answer:
The first is a $2,370,000 note payable which matures June 30, 2023.
The second is a $5,580,000 bond issue which matures September 30, 2024.
annual sinking fund payments of $2,570,000 in each of the years 2022 through 2026.
Year Amount of long term debt Working
2021 $0
2022 $2,570,000
2023 $4,940,000 = $2,570,000 + $2,370,000
2024 $8,150,000 = $,2,570,000 + $5,580,000
2025 $2,570,000
2026 $2,570,000
Long term debt is debt that must be paid in a period of time longer than one year. Debts that are due in less than one year are classified as current debts or liabilities. That is why there is no long term debt for 2021 (current year).