Answer:
We are told that Firm A has 10 million Shares outstanding, Currently trading at $ 5/share.
They adopt Poison pill to avoid possible Hostile Acquisitions.
What then is poison pill?
Poison Pill: Poison Pill technique is used to avoid the acquisitions which may take place due to the hostile takeovers. This is a defensive mechanism used by the target company to prevent the bidders from takeover. At that time it allows the shareholders to buy more shares at a discount , if one shareholders purchase the 20% of the shares.
Here, the posison pill allows the shareholders to purchase additional share per share owned. This allows the shareholders to purchase their new shares at a price of $2/sahre if a hostile bidder purchases 20% of the equity of firm.
If a bidder buys 20% of Firm A, this allows the other share holders to buy the shares at discount which would dilute the bidders interest and increase the cost of the bid.This makes the bidder to withdraw from the decision to takeover. He has to negotiate with board inorder to revoke the plan. The Board of Directors revokes the plan by attaching option or warrant to the existing shares.
So, the Bidder may withdraw the plan to takeover due to increase in the cost of the bid due to the purchases made by the othershareholders at discount.
Explanation:
Suppose velocity is constant, the growth rate of real GDP is 3% per year, and the growth rate of money is 5% per year. Calculate the long-run rate of inflation according to the quantity theory in each of the following cases:
a. What is the rate of inflation in this baseline case?
b. Suppose the growth rate of money rises to 10% per year.
c. Suppose the growth rate of money rises to 100% per year.
d. Back to the baseline case, suppose real GDP growth rises to 5% per year.
e. What if real GDP growth falls to 2% per year?
f. Return to the baseline case and suppose the velocity of money rises at 1% per year. What happens to inflation in this case? Why might velocity change in this fashion?
Answer:
Explanation:
a)What is the rate of inflation in this baseline case?
( 5% - 3% = 2%
b)Suppose the growth rate of money rises to 10% a year.
10% - 3% = 7%
c)Suppose the growth rate of money rises to 100% a year.
One should be careful here. As we mentioned in the early days, the equalities on growth rates work if the growth rates are small. Here, we have a large growth rate and therefore we should measure Inflation using the initial quality of the quantity theory of money.
Inflation is 94%. (Check the attached document for workings)
d. Back to the baseline case, suppose real GDP growth rises to 5% per year.
5% - 5% = 0%
e)What if real GDP growth falls to 2% per year?
5% - 2% = 3%
f)Return to the baseline case and suppose the velocity of money rises at 1% per year. What happens to inflation in this case? Why might velocity change in this fashion?
NB: the second attached document has the workings.
Inflation increases as compared to original situation. Velocity of money might increase if people are making more transactions on average. The advent of ATMs may increase the velocity of money.
This year, Hamilton, a local manufacturer of off-shore drilling platforms, entered into a contract to construct a drilling platform that will be placed in the North Atlantic Ocean. The total contract price is $5,000,000, and Hamilton estimates the total construction cost at $3,000,000. Actual costs incurred this year are $600,000. If Hamilton uses the percentage of completion method, the gross profit for this year is:
Answer:
$400,000
Explanation:
Percentage completed:
$600,000/$3,000,000 20%
Hence:
Revenue $5,000,000 x .20 = $1,000,000
Less Costs to date (600,000)
Gross profit$ 400,000
Therefore If Hamilton uses the percentage of completion method, the gross profit for this year is: $400,000
During 2019, Bold Fashion, Inc., recorded credit sales of $710,000. Based on prior experience, the company estimates a 2 percent bad debt rate on credit sales. Required: Prepare journal entries for each transaction: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) a. On May 12, 2019, an account receivable of $2,600 from the prior period was determined to be uncollectible and was written off. b. Record the bad debt expense for 2019 using the Percentage of Credit Sales method.
Answer:
a. On May 12, 2019, an account receivable of $2,600 from the prior period was determined to be uncollectible and was written off.
Debit Allowance for doubtful debt $2,600
Credit Accounts receivable $2,600
Being entries to write off accounts receivable previously provided for.
If the account had not been provided for before,
Debit Bad debt expense $2,600
Credit Accounts receivable $2,600
b. Bad debt expense for 2019 using the Percentage of Credit Sales method
Debit Bad debt expense $14,200
Credit Allowance for Doubtful Debts $14,200
Being entries to record debts that may be uncollectible
Explanation:
When a company makes sales on account, debit accounts receivable and credit sales. Based on assessment, some or all of the receivables may be uncollectible.
To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i.e go bad), debit allowance for doubtful debt and credit accounts receivable.
Bad debt at 2 % of credit sales
= 2% * $710,000
= 2/100 * $710,000
= $14,200
Patent laws:
a. increase incentive to innovate by restricting entry into a market
b. give a firm the right to provide a wide variety of goods or services
c. increase incentive to innovate by giving a firm permanent and exclusive production rights
d. reduce incentive to innovate by restricting market entry
e. reduce incentive to innovate by making it difficult to use the patented innovation
Answer:
c. increase incentive to innovate by giving a firm permanent and exclusive production rights
Explanation:
Patent laws deal with new invention.
A patent is a right granted to an inventor by the government that allows the inventor to prevent others from producing, selling or using the invention for a specified period of time.
I hope my answer helps you
First National Bank charges 13.9 percent compounded monthly on its business loans. First United Bank charges 14.2 percent compounded semiannually. Calculate the EAR for First National Bank and First United Bank.
Answer:
EAR for First National Bank is 14.82%
EAR for First United Bank = is 14.70%
Explanation:
Effective Annual Rate (EAR) = (1 + stated rate/ number of compounding periods)^number of compounding periods - 1
EAR for First National Bank = (1+13.9%/12)^12 - 1 = 14.82%
EAR for First United Bank = (1+14.2%/2)^2 - 1 = 14.70%
The Oxford Heating Company has been very successful in the past four years. Over these years, it paid common stock dividend of $4 in the first year, $4.20 in the second year, $4.41 in the third year, and its most recent dividend was $4.63. The company wishes to continue this dividend growth indefinitely. The expected growth rate in dividends is closest to
Answer:
The correct answer is 5%.
Explanation:
According to the scenario, the computation of the given data are as follows:
We can calculate the growth rate by using following formula:
Growth rate = (Dividend of 3rd year ÷ Dividend of 1st year)^1/2 -1
By putting the value in the formula, we get
Growth rate = ($4.41 ÷ $4 )^1/2 - 1
= ( $0.41)^1/2 -1
= 0.05 or 5%
The expected growth rate in dividends for the Oxford Heating Company can be calculated using the compound annual growth rate (CAGR) formula. Over three periods, the dividends grew from $4.00 to $4.63, which equates to a CAGR of approximately 5%.
Explanation:The student is asking for assistance in calculating the expected growth rate of dividends for the Oxford Heating Company which has shown a pattern of increasing dividend payments over four years. To find this growth rate, we can use the formula for the compound annual growth rate (CAGR), which is:
CAGR = (EV / BV)^(1/n) - 1
where EV is the ending value, BV is the beginning value, and n is the number of periods.
Using the given dividends:
Year 1: $4.00Year 2: $4.20Year 3: $4.41Year 4: $4.63we have EV = $4.63, BV = $4.00, and n = 3 (as we are looking at the growth over three periods - from Year 1 to Year 4).
Applying the values to the CAGR formula gives us the expected growth rate of approximately 5%.
Learn more about Dividend Growth Rate here:https://brainly.com/question/18650705
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Sanchez Company's output for the current period was assigned a $419,000 standard direct labor cost. The direct labor variances included a $10,475 unfavorable direct labor rate variance and a $4,190 favorable direct labor efficiency variance. What is the actual total direct labor cost for the current period?
Answer:
the actual total direct labor cost for the current period is $425,285
Explanation:
Reconciling Standard Cost to Actual Cost
Standard Cost $419,000
Add Unfavorable direct labor rate variance $10,475
Less Favorable direct labor efficiency variance ($4,190)
Actual Cost $425,285
Fanning Company started year 1 with $135,000 in its cash and common stock accounts. During year 1, Fanning paid $101,250 cash for employee compensation and $31,050 cash for materials. Required Determine the total amount of assets and the amount of expense shown on the year 1 financial statements assuming Fanning used the labor and materials to make 1,500 chairs. Further, assume that Fanning sold 1,200 of the chairs it made. State the name(s) of the expense account(s) shown on the income statement. Determine the total amount of assets and the amount of expense shown on the year 1 financial statements assuming Fanning used the labor and materials to provide dental cleaning services to 500 patients. State the name(s) of the expense account(s) shown on the income statement.
Answer:
Fanning Company
A) Total amount of assets and total amount of expense & names of expenses in Financial Statements, assuming Fanning used labor and materials to make 1,500 chairs and sold 1,200:
i) Total Assets =
Cash = beginning cash balance less expenses plus revenue = $(135,000 - 101,250 - 31,050 + 105,840) = $108,540
Inventory $(132,300 - 105,840) = $36,460
Total = $135,000
ii) Names and Total Amount of Expenses on Income Statement:
a) Manufacturing Wages = $101.250
b) Direct Materials = $31,050
Total Production Costs = $132,300
Less Cost of Sales (1,200 x ($132,300/1,500)) = $105,840
Closing Inventory ((1,500 - 1,200) x ($132,300/1,500)) = $26,460
B) Total amount of assets and total amount of expense & names of expenses in Financial Statements, assuming Fanning used labor and materials to provide dental cleaning services to 500 patients.
i) Total Assets =
Cash = beginning cash balance less expenses plus revenue = $(135,000 - 101,250 - 31,050 + 132,300) = $135,000
Total = $135,000
ii) Names and Total Amount of Expenses on Income Statement:
a) Service Materials = $31,050
b) Service Labour = $101,250
Explanation:
a) For a manufacturing company, there is inventory of unsold finished goods to account for. The inventory value is the difference between the cost of goods sold and the cost of goods available for sale.
b) For a service company, there is no much inventory to account for, especially in this case. The whole expenses were used for rendering dental cleaning services for 500 patients.
c) In this example, we have assumed that revenue was equal to the cost of sales. There was no profit to be calculated. So it is assumed that the cash balance increased by the amount of cost of sales/revenue.
d) The total assets did not change because at the end of the activities no profit value was made. The assets would have increased or decreased if some profits or losses were recorded in both cases.
Final answer:
The total amount of assets and expenses for Fanning Company would differ depending on whether they manufacture chairs or provide services. Assets include remaining cash and inventory if applicable, while expenses are the cost of labor and materials. The financial statements would show these under Employee Compensation Expense and Materials Expense.
Explanation:
To determine the total amount of assets and the amount of expense shown on the year 1 financial statements for Fanning Company when they are creating chairs, we initially consider the opening cash balance and subtract the cash paid for wages and materials. This results in a remaining cash balance. For the chairs that are not sold, they remain as inventory on the balance sheet, which is an asset. As for the sold chairs, the revenue from the sales should be added to the total assets.
The expenses shown in this scenario would be the cost of labor and materials associated with the manufactured chairs. Therefore, the expense accounts shown on the income statement would be Employee Compensation Expense and Materials Expense.
When providing dental cleaning services, the expenses would likely be the same (Employee Compensation and Materials), assuming all labor and materials were utilized in providing the service. As a service, there would be no inventory, so all expended costs would directly reflect on the income statement as expenses, and any remaining cash would be part of the assets.
If we consider the provided reference information, the accounting profit is calculated by subtracting the total expenses (labor, capital, and materials) from the sales revenue. Therefore, the accounting profit would be: $1,000,000 (sales revenue) - $600,000 (labor) - $150,000 (capital) - $200,000 (materials) = $50,000.
he accounting department analyzes the variance of the weekly unit costs reported by two production departments. A sample of 16 cost reports for each of the two departments shows cost variances of 2.2 and 5.4, respectively. Is this sample sufficient to conclude that the two production departments differ in terms of unit cost variance
To conclude at a 10% significance level that the two departments differ in unit cost variance based on the given data, we need a calculated test statistic exceeding 1.746. However, due to the limited sample size (n=16), the test statistic is insufficient to draw such a conclusion.
Explanation:To determine if the observed difference in variances is statistically significant, we can perform a Levene's test. This test compares the variances of two populations based on the absolute deviations from the medians of their respective samples.
Calculate the pooled variance:
First, pool the variances: Sp = [(n1-1)*s1^2 + (n2-1)*s2^2] / (n1+n2-2)
Sp = [(16-1)*2.3^2 + (16-1)*5.4^2] / (16+16-2)
Sp ≈ 15.18
Calculate the test statistic:
L = (n1 + n2 - 2) * (Sn1^2 - Sn2^2) / Sp
L = (16 + 16 - 2) * ((2.3^2) - (5.4^2)) / 15.18
L ≈ 1.48
Compare the test statistic to the critical value:
At a 10% significance level (α = 0.10) and equal sample sizes (n1 = n2), the critical value for Levene's test is approximately 1.746.
Since the calculated test statistic (L ≈ 1.48) is lower than the critical value (1.746), we cannot statistically conclude that the two production departments differ in terms of unit cost variance at the 10% significance level.
However, it's important to note that the limited sample size (n=16) reduces the power of the test to detect potential differences. A larger sample size could potentially lead to a statistically significant result.
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Complete Question
The accounting department analyzes the variance of the weekly unit costs reported by two production departments. A sample of 16 cost reports for each of the two departments shows cost variances of 2.3 and 5.4, respectively. Is this sample sufficient to conclude that the two production departments differ in terms of unit cost variance? Use a = .10.
Calculate the value of the test statistic (to 2 decimals).
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All of the following are steps in the budgetary control process except: Multiple Choice Establish new objectives and a new budget. Take corrective and strategic actions. Develop the budget from planned objectives. Compare actual results to budgeted amounts and analyze differences. Communicate differences to supervisors to facilitate promotion decisions.
Answer:
Communicate differences to supervisors to facilitate promotion decisions
Explanation:
Budgets are used to control firm activities. In the process of controlling activities, managers and supervisors might meet the targets, this would be a good thing as the practices they applied are used in areas not meeting targets. thus budgets are used for motivation purposes instead of facilitating promotion decisions
Final answer:
The budgetary control process includes steps such as establishing objectives, developing the budget, and taking corrective actions, but does not include communicating differences for promotion decisions, which is outside its primary focus.
Explanation:
The budgetary control process is a crucial aspect of organizational management, ensuring that operations align with the financial goals and objectives set at the beginning of a financial period. Each step in this process is designed to enhance efficiency, accountability, and performance. Of the options provided, all steps are part of the budgetary control process except for "Communicate differences to supervisors to facilitate promotion decisions." This option does not directly contribute to the control or management of budgets but rather deals with personnel decisions which are outside the primary focus of budgetary control. The key steps in the budgetary process include establishing objectives, developing a budget based on these objectives, comparing actual results with budgeted amounts, and taking corrective actions as necessary.
Work in process, beginning:
Units in process 900
Percent complete with respect to materials 60 %
Percent complete with respect to conversion 10 %
Costs in the beginning inventory:
Materials cost $ 600 Conversion cost $ 2,150
Units started into production during the month 14,000
Units completed and transferred out 14,500
Costs added to production during the month:
Materials cost $ 39,872
Conversion cost $ 396,630
Work in process, ending:
Units in process 400
Percent complete with respect to materials 70 %
Percent complete with respect to conversion 70 %
Using FIFO methods, determine the equivalent units of production for materials and conversion costs.
Answer:
FIFO Equivalent Units Materials = 15,320
FIFO Equivalent Units Conversion = 15,680
Explanation:
FIFO methods,
The equivalent units of production
Materials and conversion costs.
Particulars Units % of Completion Equivalent Units
Materials C. Costs Materials C. Cost
Beg WIP 900 60 10 540 90
Units Transferred 14500 100 100 14500 14500
WIP Ending 400 70% 70% 280 280
Total 14900 15,320 15,680
FIFO Equivalent Units Materials = 15,320
FIFO Equivalent Units Conversion = 15,680
In Fifo method the percentage of the worked units is calculated to find the equivalent units of production.
Software Distributors reports net income of $53,000. Included in that number is depreciation expense of $9,000 and a loss on the sale of land of $4,800. A comparison of this year's and last year's balance sheets reveals a decrease in accounts receivable of $23,000, a decrease in inventory of $14,000, and an increase in accounts payable of $43,000. Required Prepare the operating activities section of the statement of cash flows using the indirect method.
Answer and Explanation:
Cash flows (Indirect method) from Operating Activities.
Particular Amount
Net Income $53,000
Adjustment:
Add: Depreciation expense $9,000
Loss on sale of land $4,800
Decrease in A/c receivables $23,000
Decrease in Inventory $14,000
Increase in A/c payable $43,000
Net Cash flows from Operating activities $146,800
Assume that in recent years both expected inflation and the market risk premium (rM − rRF) have declined. Assume also that all stocks have positive betas. Which of the following would be most likely to have occurred as a result of these changes? a. The required returns on all stocks have fallen by the same amount. b. The average required return on the market, rM, has remained constant, but the required returns have fallen for stocks that have betas greater than 1.0. c. The required returns on all stocks have fallen, but the fall has been greater for stocks with higher betas. d. Required returns have increased for stocks with betas greater than 1.0 but have declined for stocks with betas less than 1.0. e. The required returns on all stocks have fallen, but the decline has been greater for stocks with lower betas.
Answer: c. The required returns on all stocks have fallen, but the fall has been greater for stocks with higher betas.
Explanation:
The Capital Asset Pricing Model formula can be applied to this question.
The formula is,
Er = rF + b( rM - rF)
Where
Er is the required return
rF is the risk free rate
b is beta
rM - rF is the market premium.
Now looking at that formula, you can tell that if market premium falls, the required return would fall as well.
However, for stocks with larger betas, they would drop more spectacularly because they would be coming from higher values to lower.
Take a stock with beta 4 vs one with beta 5 for instance.
Assume that Market premium went from 6% to 3% and a risk free rate of 3%.
Beta 5 stock
When market premium is 6,
= 3% + 5 (6%)
= 33%
When market premium is 3,
= 3% + 5(3%)
= 18%
Beta 4 stock
When market premium is 6
= 3% + 4 (6%)
= 27%
When market premium is 3
= 3% + 4 (3%)
= 15%
Notice how the stock with beta 5 fell by 15% while the stock with beta 4 fell by 12%.
1. If Bodin Company plans to sell 480,000 units during the year, compute the number of units the firm would have to manufacture during the year. Hilton, Ronald. Managerial Accounting: Creating Value in a Dynamic Business Environment (p. 405). McGraw-Hill Higher Education. Kindle Edition.
Answer:
450,000 Units
Explanation:
The complete part of the question is as below:
Bodin Company budgets on an annual basis. The following beginning and ending inventory levels (in units) are planned for the year 20x1. Two units of raw material are required to produce each unit of finished product.
January 1 December 31
Raw material 35,000 45,000
Work in process 12,000 12,000
Finished goods 80,000 50,000
Solution:
Units to be manufactured to sell 480,000 Units = Sales + Closing Inventroy - Opening Inventory
= 480,000 + 50,000 - 80, 000 = 450, 000 Units
The number of units Bodin would have to manufacture is 450,000 Units
Answer:
A.
Bodin will have to manufacture 450,000 units and procure materials of 910units (if it plans to sell 480,000 units in the year)
B.
If it plans to sell 500,000 units however, it will have to produce additional stock of 470,000 units and procure materials of 950,000 units.
Explanation:
Production planning is a key requirement during the budget process
It works side by side with the sales budget. It is intended to fulfill the projected demand the business is positioning itself for in the period being reviewed.
It considers all levels of production needs in achieving each unit of production. Raw material, labour, conversion costs etc.
Kindly review the attached for the detailed presentation of answers.
Analysts project the following cash flows for Hopkin’s Corporation during the next three years: Year 1: – $27 million (this is negative $27 million), Year 2: $42 million, Year 3: $52 million. Free cash flow is then expected to grow at a constant 6% rate. Hopkin’s weighted average cost of capital is WACC = 11%. 12) (8 pts) What is Hopkin’s terminal, or horizon, value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.
Answer:
The terminal value is $1102.4 million
Explanation:
The terminal value is the value of future cash flows discounted back to the period from where the cash flow growth becomes constant. The calculation of terminal value is important in Discounted cash flow models because terminal value contains a large percentage of the company's value. The formula to calculate the terminal value of this company will be,
Terminal value = FCF3 * (1+g) / (WACC - g)
Terminal Value = 52 * (1+0.06) / (0.11 - 0.06)
Terminal Value = $1102.4 million
McCoy's Fish House purchases a tract of land and an existing building for $990,000. The company plans to remove the old building and construct a new restaurant on the site. In addition to the purchase price, McCoy pays closing costs, including title insurance of $2,900. The company also pays $13,800 in property taxes, which includes $8,900 of back taxes (unpaid taxes from previous years) paid by McCoy on behalf of the seller and $4,900 due for the current fiscal year after the purchase date. Shortly after closing, the company pays a contractor $49,500 to tear down the old building and remove it from the site. McCoy is able to sell salvaged materials from the old building for $4,800 and pays an additional $10,900 to level the land. Required: Determine the amount McCoy’s Fish House should record as the cost of the land
Answer:
$ 1,001,800
Explanation:
The following costs will be included in th cost of land
Purchase cost: 990,000
Closing cost: 2,900
Back Taxes: 8,900
(land taxes are payed every year, so they can't be included in the cost of land)
Total cost of land= 990,000+2,900+8,900= 1,001,800
Evaluating risk and returnStock X has a 10.5% expected return, a beta coefficient of 1.0, and a 35% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 25.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%.Calculate each stock's coefficient of variation. Round your answers to two decimal places.CVx = ________CVy = ________Calculate each stock's required rate of return. Round your answers to two decimal places.rx = _____%ry = _____%Calculate the required return of a portfolio that has $9,000 invested in Stock X and $3,500 invested in Stock Y. Round your answer to two decimal places.rp = _____ %
Answer and Explanation:
The computation is shown below:
a. For coefficient of variation
CVx is
= Standard deviation ÷ expected return
= 35% ÷ 10.5%
= 3.33
CVy is
= Standard deviation ÷ expected return
= 25% ÷ 12.5%
= 2
b. For required rate of return using the Capital Asset Pricing model , the formula is shown below:
= Risk free rate of return + Beta × market risk premium
For rx, it is
= 6% + 1 × 5%
= 6% + 5%
= 11%
For ry, it is
= 6% + 1.2 × 5%
= 6% + 6%
= 12%
c. For required rate of return of a portfolio, first we have to find out the beta which is shown below
Beta = (Invested amount in Stock X ÷ Total investment amount) × (Beta of stock X) + (Invested amount in Stock Y ÷ Total investment amount) × (Beta of stock Y)
= ($9,000 ÷ $12,500) × (1) + ($3,500 ÷ $12,500) × 1.2)
= 0.72 + 0.336
= 1.056
The total investment amount is
= $9,000 + $3,500
= $12,500
Now the required rate of return of a portfolio is
= Risk free rate of return + Beta × market risk premium
= 6% + 1.056 × 5%
= 6% + 5.28%
= 11.28%
Therefore we applied the above formulas
g Texas Corporation purchases a piece of equipment on January 1 for $300,000 and the equipment has an expected useful life of ten years. Its salvage value is estimated to be $20,000. Assuming Texas uses the double-declining balance depreciation method, what would be the accumulated depreciation at the end of the second year
Answer:
$108,000
Explanation:
For computing the accumulated depreciation for the end of the second year
First we have to find the depreciation rate which is shown below:
= One ÷ useful life
= 1 ÷ 10
= 10
Now the rate is double So, 20%
In year 1, the original cost is $300,000, so the depreciation is $60,000 after applying the 20% depreciation rate
And, in year 2, the depreciation is
=($300,000 - $60,000) × 20% = $48,000
So, the accumulated depreciation at the end of the second year is
= $60,000 + $48,000
= $108,000
Shugart sells two products. Product A sells for $77 with variable costs of $32. Product B sells for $164 with variable costs of $52. The sales mix is 51% for products A while product B's is the remainder (or 100% less 51. What is the weighted average unit contribution margin rounding to the nearest penny? As always, do not use $ signs.
Answer: 77.83 dollars.
Explanation:
Contribution margin is known as the difference between the Selling price and variable costs.
So in the above scenario,
Product A Contribution Margin = 77 - 32
= $45
Product B Contribution Margin = 164 - 52
= $112
Now we are to calculate the Weighted Average. To do that we multiply the Contribution margins by their proportion of the sales mix and then add them up.
Product A proportion = 51%
Product B proportion = 49%
Weighted Average = 0.51(45) + 0.49(112)
= 77.83
The weighted average unit contribution margin is 77.83 dollars.
If you need any clarification do comment.
The following table reports real income per person for several different economies in the years 1960 and 2010. It also gives each economy's average annual growth rate during this period. For example, real income per person in the Central African Republic was $1,010 in 1960, and it actually declined to $628 by 2010, The Central African Republic's average annual growth rate during this period was -0.95%, and it was the poorest economy in the table in the year 2010.
The real income-per-person figures are denominated in U.S. dollars with a base year of 2005. The following exercises will help you to understand the different growth experiences of these economies.
Economy Real Income per Person in 1960 (Dollars) Real Income per Person in 2010 (Dollars) Annual Growth Rate (Percent)
Australia 13,817 37,338 2.01
Finland 8,837 31,601 2.58
Thailand 772 8,467 4.91
Ireland 7,807 41,558 3.40
Pakistan 717 2,477 2.51
Central African Republic 1,010 628 -0.95
Indicate which economy satisfies each of the following statements.
Statment Australoa Cental African Republic Finland Ireland Pakistan Thailand
This economy experienced the fastest rate of growth in real income per person from 1960 to 2010
This economy had the highest level of real income per person in the year 2010
Consider the following list of four countries. Which economy began with a level of real income per person in 1960 that was below that of Finland and grew fast enough to catch up with and surpass Finland's real income per person by 2010
a. Australia
b. Central African Republic
c. Ireland
d. Pakistan
Answer:
Thailand
Ireland
c
Explanation:
Thailand has the highest annual growth rate so it is fastest economy to grow in rela income per person form 1960 to 2010 that is 4.91%
Irleand has the highest real income per person in year 2010 that is $41,558
Ireland, Pakistan and Thailand had lower real income per person than Finland in 1960 but only Ireland had higher real income per person than Finland in 2010.
A jalapeno canning company is faced with a make/buy decision. Cardboard shipping cartons can be purchased for $0.60 each or made in-house. If manufactured, two machines will be required. Machine X will cost $20,000 and have a life of 6 years with a $2,000 salvage value. Machine Y will cost $11,000 and have a life of 4 years with no salvage value. The annual maintenance cost for machines X and Y are $6,000 and $5,000 per year, respectively. A total of 4 operators will be required for the two machines at a rate of $22.50 per hour per person. In a normal 8-hour day, the 4 operators and two machines can produce 1,000 cartons.
The variable cost per carton associated with the in-house option is closest to:
A. $0.0625
B. $0.10
C. $0.72
D. $0.81
E. $0.92
Answer:
Correct option is C.
$0.72
Explanation:
The following information about in-house manufacturing is given:
Wage = $22.50 per hour per person
Production = 1000
Number of workers = 4
Total number of hours = 8
Variable cost is the cost which changes with the change in level of production. For example cost of labour.
Total cost of labour = $22.50 x 4 x 8 =$720
Cost per carton is calculated as follows:
Total cost Cost per carton /Total production= $720/1000
=$0.721
During March 2019, Annapolis Corporation recorded $40,600 of costs related to factory overhead. Alpha's overhead application rate is based on direct labor hours. The preset formula for overhead application estimated that $43,500 would be incurred, and 4,000 direct labor hours would be worked. During March, 6,250 hours were actually worked. Use this information to determine the amount of factory overhead that was (over) or under applied. (Round answers to the nearest whole dollar. Enter as a positive number if under applied. Enter as a negative number if over applied.)
Answer:
Overheads have been Over applied by $27,400
Explanation:
Overhead Applied = Predetermined Overhead Rate × Actual Activity
Predetermined Overhead Rate = Budgeted Overheads / Budgeted Activity
= $43,500 / 4,000 direct labor hours
= $ 10,88 per direct labor hour
Overhead Applied = $ 10,88 × 6,250 hours
= $68,000
Actual Overheads = $40,600
Actual Overheads $40,600 < Overhead Applied $68,000
Therefore Overheads have been Over applied by $27,400 that is $68,000 - $40,600
had $18,750 of investor-supplied operating assets (or capital), the weighted average cost of that capital (the WACC) was 9.5%, and the federal-plus-state income tax rate was 40%. What was HHH's Economic Value Added (EVA), i.e., how much value did management add to stockholders' wealth during the year
Answer:
$1,503.75
Explanation:
Sales $12,500
Operating costs $7,025
Operating income (EBIT) $5,475
WACC 9.5%
Tax rate 40%
Investor-supplied capital $18,750
EVA = EBIT(1 - T) - Investor Capital × WACC
EVA = $3,285.00 -$1,781.25
EVA = $1,503.75
Therefore the management add $1,503.75 value to stockholders' wealth during the year.
Logistics Solutions provides order fulfillment services for dot merchants. The company maintains warehouses that stock items carried by its dot clients. When a client receives an order from a customer, the order is forwarded to Logistics Solutions, which pulls the item from storage, packs it, and ships it to the customer. The company uses a predetermined variable overhead rate based on direct labor-hours. In the most recent month, 120,000 items were shipped to customers using 2,300 direct labor-hours. The company incurred a total of $7,360 in variable overhead costs. According to the company's standards, 0.02 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $3.25 per direct labor-hour.What variable overhead cost should have been incurred to fill the orders for the 120,000 items? How much does this differ from the actual variable overhead cost?
The variable overhead cost that should have been incurred to fill the orders for the 120,000 items is $7,800. The actual variable overhead cost is $7,360, which is $440 less than the cost that should have been incurred.
Explanation:To calculate the variable overhead cost that should have been incurred to fill the orders for the 120,000 items, we need to multiply the standard direct labor-hours per item by the actual number of items. The standard direct labor-hours per item is given as 0.02, and the actual number of items is 120,000, so the standard direct labor-hours should be 0.02 * 120,000 = 2,400 hours.
To calculate the variable overhead cost, we multiply the standard direct labor-hours by the variable overhead rate per direct labor-hour. The variable overhead rate is given as $3.25 per direct labor-hour, so the variable overhead cost should be 2,400 * 3.25 = $7,800.
The difference between the actual variable overhead cost and the cost that should have been incurred is $7,360 - $7,800 = -$440. This means that the actual variable overhead cost is $440 less than the cost that should have been incurred.
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The variable overhead cost that should have been incurred was $7,800 based on the standard rates and quantity of items shipped. The actual variable overhead cost was $440 lower than expected.
Explanation:To calculate the variable overhead cost that should have been incurred, we need to multiply the total items times the standard rate for direct labor-hours per item, then multiply that by the variable overhead rate per direct labor-hour. That is, (Total items) x (Standard direct labor-hours per item) x (Variable overhead rate per direct labor-hour). So, 120,000 items x 0.02 direct labor-hours per item x $3.25 per direct labor-hour = $7,800.
The difference between this calculated variable cost and the actual cost incurred is found by subtracting the actual variable overhead cost incurred from the calculated cost. That is, $7,800 - $7,360 = $440. Therefore, the company’s variable overhead cost was $440 lower than it should have been according to their standard rates and quantity of items shipped.
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A one-year call option contract on Cheesy Poofs Co. stock sells for $1,250. In one year, the stock will be worth $57 or $78 per share. The exercise price on the call option is $70. What is the current value of the stock if the risk-free rate is 2 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
Value of call option = 3.92
Explanation:
Stock price - Exercise price, 0
When share price is $57,
Payoff = Max (57 - 70, 0)
Payoff = Max (-13, 0)
Payoff = 0
When share price is $78
Payoff = Max (78 - 70, 0)
Payoff = Max (8, 0)
Payoff = 8
Value of call option = (Expected payoff * Probaliltiy) / (1 + Interest for the period)
Considering probability as 50% for each stock
Value of call option = (0 * 0.5 + 8 * 0.5) / (1 + 0.02)
Value of call option = 3.92
Presented below are two independent situations.Gambino Cosmetics acquired 10% of the 200,000 shares of common stock of Nevins Fashion at a total cost of $13 per share on March 18, 2015. On June 30, Nevins declared and paid a $60,000 dividend. On December 31, Nevins reported net income of $122,000 for the year. At December 31, the market price of Nevins Fashion was $15 per share. The stock is classified as available-for-sale.Kanza, Inc., obtained significant influence over Rogan Corporation by buying 40% of Rogan’s 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2015. On June 15, Rogan declared and paid a cash dividend of $30,000. On December 31, Rogan reported a net income of $80,000 for the year.InstructionsPrepare all the necessary journal entries for 2015 for (a) Gambino Cosmetics and (b) Kanza, Inc.
Answer:
See the explanation below
Explanation:
(a) Gambino Cosmetics
Since Gambino Cosmetics just 15% which is less than 20% of Nevins Fashion, the cost method for accounting for investments is the relevant method that is used as follows:
Stock investment = 10% * 200,000 * $13 = $260,000
Dividend income = 10% * $60,000 = $6,000
Available-for-sale (AFS) reserve = 10% * $122,000 = $12,000
Date Details Dr ($) Cr ($)
08 Mar. ‘15 Stock investments 260,000
Cash 260,000
To record investment in Nevins Fashion
30 Jun. ‘15 Cash 6,000
Dividend income 6,000
To record dividend income from investment in Nevins Fashion
31 Dec. ’15 Stock investments 12,000
AFS Reserve 12,000
To record share of income in Nevins Fashion
(b) Kanza, Inc.,
Since Kanza, Inc. acquired 40% in Rogan Corporation which is greater than 20%, the equity method for accounting for investments is the relevant method that is used as follows:
Stock investment = 40% * 30,000 * $9 = $108,000
Dividend income = 40% * $30,000 = $12,000
Investment revenue = 40% * $80,000 = $32,000
Date Details Dr ($) Cr ($)
01 Jan. ‘15 Stock investments 108,000
Cash 108,000
To record investment in Rogan Corporation
15 Jun. ‘15 Cash 12,000
Stock investment 12,000
To record dividend received from investment in Rogan Corporation
31 Dec. ’15 Stock investments 32,000
Investment revenue 32,000
To record share of income in Rogan Corporation
Journal entry is the primary record of transactions and events having monetary value in an financial year. Journal entry serves as a basis for preparation of accounts.
The entries for the given questions are provided in the attachment.
Recording of Journal Entries:Journal entries are primary records of a transaction.Accounts are prepared on the basis of entries.Entries are made for transactions that are in terms of money.There is dual effect of every transaction.Journal entry provides detail of every transaction entered into.Learn more about journal entries here:
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Trio Company reports the following information for the current year, which is its first year of operations.
Direct materials $11 per unit
Direct labor $19 per unit
Overhead costs for the year
Variable overhead $ 2 per unit
Fixed overhead $90,000 per year
Units produced this year 22,500 units
Units sold this year 16,500 units
Ending finished goods inventory in units 6,000 units
Compute the cost per unit of finished goods using 1) absorption costing and 2) variable costing.
Answer:
Absorption costing
Full cost per unit = $36
Variable costing
marginal cost = $32
Explanation:
Absorption costing
Absorption costing values inventories and units produced using full cost per unit.
Full cost per unit
= Direct material cost + Direct labour + variable overheads + Fixed prod overhead
Fixed overhead per unit
= 90,000/22,500
= $4 per unit
Full cost per unit = 11 + 19 +2 + 4 =$36
Variable costing method
Variable (marginal) costing methods values inventories and units produced using variable cost per unit i.e marginal cost
Marginal cost = Direct material cost + Direct labour + variable overheads
Cost per unit = 11 + 19 +2 =$32
Broke Benjamin Co. has a bond outstanding that makes semiannual payments with a coupon rate of 5.8 percent. The bond sells for $997.27 and matures in 16 years. The par value is $1,000. What is the YTM of the bond?
Answer:
YTM of the bond is 5.82%
Explanation:
The yield to maturity can be calculated using the rate formula in excel ,given as =rate( nper,pmt,-pv,fv)
nper is the number of times during the bond life coupon interest would be paid,which is 16 years multiplied by 2=32
pmt is the semi annual payment of the bond which is 5.8%*$1000/2=$29
pv is the current price of the bond $997.27
fv is the face value of the bond which is $1000
=rate(32,29,-997.27,1000)
rate=2.91%
that is semi-annual yield to maturity
annual yield is 2.91%*2=5.82%
The Yield to Maturity (YTM) of a bond can be calculated using the coupon rate, selling price, maturity, and par value. The YTM takes into account all coupon payments and the potential capital gain or loss upon maturity. The coupon payments for the Broke Benjamin Co. bond are $29 semiannually.
This is related to Business, specifically focusing on the realm of finance and investment. It concerns the calculation of the Yield to Maturity (YTM) for a bond. The bond in question has a semiannual payment structure with a coupon rate of 5.8 percent, a selling price of $997.27, a maturity of 16 years, and a par value of $1,000.
To calculate the YTM, one can use a financial calculator or software that can solve for the internal rate of return (IRR). The YTM is effectively the interest rate that equates the present value of all future coupon payments and the repayment of the par value at maturity with the current price of the bond.
The formula to calculate each semiannual coupon payment is: Coupon Payment = (Coupon Rate / 2) × Par Value. In this case: (0.058 / 2) × $1,000 = $29. The investor will receive $29 every six months.
The YTM is a useful measure as it considers the total return on the bond, which includes interest payments and any capital gains or losses (which would be the difference between the purchase price and the par value).
Benefits and Costs of Global Sourcing A key activity in supply chain management is the approach an international company takes in determining where and how to source its inputs. Supply chain management has become an increasingly popular and strategically important topic in international business in recent years. An important activity in supply chain management is the approach an international company takes in determining where and how to source its inputs. This exercise examines potential benefits and costs associated with global sourcing. Read the case below and answer the questions that follow. MyBad Boards designs and manufactures high performance skateboards and related gear used in extreme sports. The company's products are sold widely in North America, Europe, Australia, and East Asia, with sales of more than $20 million last year. The company currently manufactures all of its products in the United States, using raw materials and components sourced domestically. However, after experiencing rapid growth during the past five years, the company is considering the alternative of purchasing some or all of its materials from international suppliers. Which is not a reason that MyBad Boards might choose to source globally
Answer:
1. "The potential for highly competitive local markets".
This is not a reason for sourcing globally. All of the other listed items are drivers for MyBadBoards to source globally.
Explanation:
Answer:
Explanation:
The question is incomplete because the options are absent but from the first sentence "Benefits and Costs of Global Sourcing (of raw materials used in the production of goods and services)", there is good enough information.
In Supply Chain Management, a company determines where and how to source it's inputs or raw materials (land, labour, capital and entrepreneur). MyBad Boards is an international company - it exports its goods or it sells them outside of the country of production which is the USA.
The company made sales revenue exceeding $20 million last year (the 5th year of experiencing rapid growth). The company manufactures all of its products in the United States ONLY. This means that the company has manufacturing plant(s) in the USA alone. All the company's inputs are also sourced from within the USA.
The company has now decided to consider purchasing SOME or ALL of its inputs globally (outside the United States). The question is which of the options (missing options) is not a reason for this decision? This means that ALL BUT ONE of the options will be possible reasons for the new decision/consideration.
I will herefore give possible reasons for the new consideration. They will be benefit-seeking reasons rather than cost-raising reasons. Any reason in your options (which are missing here) that is in negation with any of the below options, would be the answer you are looking for.
(A) MyBad Boards will consider global sourcing of inputs if the prices or cost of these inputs has increased domestically (that is, in the USA).
(B) MyBad Boards will consider global sourcing of inputs - after 5 years of doing so domestically - if there is now a high competition (with other extreme-sports gear producers) for these raw materials hence a shortage in their availability; within the United States.
(C) MyBad Boards will consider global sourcing of inputs if it wants to have a new production plant outside of the United States.
(D) MyBad Boards will consider global sourcing of inputs if it feels/discovers that it can get the same quality of raw materials for lower prices, outside of the United States.
(E) MyBad Boards will consider global sourcing of inputs if it wants to start a new production line and the inputs needed for this new product are unavailable or of low quality or of a relatively high price in the United States.
Valutech Manufacturing uses job order costing for its production of MP3 players. The cost incurred for the current year for the production of the MP3 players totaled $12,000 of materials, $6,000 of direct labor costs, and $4,000 of manufacturing overhead applied. The company ships all goods as soon as they are completed which results in no finished goods inventory on hand at the end of any year. Beginning work in process totaled $10,000, and the ending balance is $6,000. During the year the company completed production for 400 MP3 players.
Required:
1. What is the cost per unit for each MP3 player?
Answer:
$65 per unit
Explanation:
For computing the cost per unit first we have to determine the cost of goods manufactured which is shown below:
Cost of goods manufactured = Opening work in process + direct material cost + direct labor cost + manufacturing overhead cost - ending work in process
= $10,000 + $12,000 + $6,000 + $4,000 - $6,000
= $26,000
And, there is a production of 400 MP3 players
So, the cost per unit is
= $26,000 ÷ 400 MP3 players
= $65 per unit