Final answer:
The standard cost for one gallon of Pane Corp.'s nutrition drink is calculated by adjusting each ingredient's required amount for standard waste, then multiplying by the standard price, resulting in a total cost of $5.57.
Explanation:
To calculate the standard cost for one gallon of the nutrition drink, we need to determine the standard usage (quantity) of each ingredient that accounts for the standard waste and then compute the cost by multiplying this adjusted quantity by the standard price.
For Lime Kool-Drink: The amount required is 24.0 oz with a 4% waste, thus the standard usage is 24.0 oz / (1 - 0.04) = 25 oz. Multiplying the standard usage by the standard price gives us $0.15 per oz × 25 oz = $3.75.
For Sugar: The amount needed is 0.72 lb with a 10% waste, so the standard usage is 0.72 lb / (1 - 0.10) = 0.8 lb. Therefore, the cost is $0.65 per lb × 0.8 lb = $0.52.
For Protein Tablets: No waste is considered, hence the standard usage is 2 tablets. The cost is $0.40 per tablet × 2 tablets = $0.80.
For Water: The quantity required is 50 oz with no waste, hence the standard usage remains 50 oz. The cost is $0.01 per oz × 50 oz = $0.50.
Adding up the cost of each ingredient, we get the total standard cost for one gallon of the nutrition drink which is $3.75 + $0.52 + $0.80 + $0.50 = $5.57.
Horton Consulting is considering investing in a video conferencing system. How would the firm primarily benefit from such a system? providing variety to employees through job rotation minimizing the time it takes to train employees eliminating the need for costly software upgrades saving time and money traveling to meetings
Answer:
The correct answer is *saving time and money traveling to meetings
Explanation:
Through video conferencing, travelling time.and the costs of travelling, including costly over seas travelling can be minimised and the meetings will be more effecient as well. Moreover, this will help employees to manage their work life balance a well.
"A small company wishes to set up a fund" that can be used for technology purchases over the next 6 years. Their forecast is for $12,000 to be needed at the end of year 1, decreasing by $2,000 each year thereafter. The fund earns 8% per year. How much money must be deposited to the fund now to just deplete the fund after the last withdrawal?
Answer:
The money that must be deposited to the fund now to just deplete the fund after the last withdrawal is $34,428.
Explanation:
This is a case of decreasing annuity, in which every year is decreased a fixed ammount. In this case, the decrease does not have a constant rate, so the formula for a increasing (or decreasing) annuity is not applicable.
We have to calculate the present value in a traditional way:
[tex]PV=\sum_{k=1}^6CF_i/(1+i)^k\\\\PV=12,000/(1.08)+10,000/(1.08)^2+8,000/(1,08)^3+6,000/(1.08)^4+4,000/(1.08)^5+2,000/(1.08)^6\\\\PV= 11,111+ 8,573 +6,351+ 4,410+ 2,722+1,260\\\\PV=34,428[/tex]
Answer:
$34,438.11
Explanation:
The explanation is given in the picture below
Grove Inc. is a publicly traded chemical company that reported the following financial statements for the most recent year. $1,000.00 $750.00 Income Statement: Most Recent Year (in $ millions) Revenues - Operating Expenses (includes $150 million in depreciation) EBIT - Interest Expenses Taxable income - Taxes Net Income $250.00 $50.00 $200.00 $60.00 $140.00 Balance Sheet: Start of year Cash $- Current liabilities Other Current Assets $1,000 Debt Fixed Assets $1,250 Equity Total $2,250 $500 $250 $1,500 $2,250 Assuming that this company will maintain its existing after-tax return on capital next year and that it expects operating income to grow 6% over the year, estimate the expected free cash flow to the firm next year. (The company's effective tax rate this year is not expected to change next year)
Answer:
FCFF = $335.50
Explanation:
Formula of Free Cash Flow to the firm ( FCFF) :
FCFF= Net Income+ Interest(1- tax rate)+ Depreciation+ working capital changes- capital investment
Now let us note some critical points and assumptions which are necessary to solve the question.
As the question says that the company will maintain its existing after tax return on capital invested next year, hence that means that the net income for the next year remains the same, which is $140.
It is also that the company expects it's Operating Income(EBIT) to increase by 6% every year, hence it's operating income(EBIT) for the next year will be $250*(1.06)= $265
Tax rate remains the same, that is, (60/200*100)= 30%
As there is no details with respect to working capital changes and any capital investment made, hence it is assumed to zero changes and no additional investment.
It is assumed that the depreciation method being followed is straight line method, hence depreciation value next year would be the same, that is, 150
Now let's finalise our income statement:
EBIT = $265 given in the question
Interest = ( $65) backward calculation
Taxable Income = $200
Taxes (30%) = ($60)
Net income = $140 given in question.
Hence our FCFF will be :
$ 140 + $65*(1-0.30) + $150 = $335.50
Income statements and balance sheets data for Virtual Gaming Systems are provided below.
VIRTUAL GAMING SYSTEMS
Income Statements
For the year ended December 31
2019 2018
Net sales $3,500,000 $3,026,000
Cost of goods sold 2,478,000 1,948,000
Gross profit 1,022,000 1,078,000
Expenses:
Operating expenses 953,000 856,000
Depreciation expense 28,000 26,000
Loss on sale of land 0 7,800
Interest expense 17,000 14,000
Income tax expense 7,800 47,000
Total expenses 1,005,800 950,800
Net income $ 16,200 $ 127,200
VIRTUAL GAMING SYSTEMS
Balance Sheets
December 31
2019 2018 2017
Assets
Current assets:
Cash $ 200,000 $184,000 $142,000
Accounts receivable 74,000 79,000 58,000
Inventory 124,000 103,000 133,000
Prepaid rent 13,800 11,800 5,760
Long-term assets:
Investment in bonds 103,000 103,000 0
Land 298,000 208,000 238,000
Equipment 298,000 268,000 208,000
Less: Accumulated depreciation (94,000) (66,000) (40,000)
Total assets $1,016,800 $890,800 $744,760
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 203,400 $ 64,000 $108,160
Interest payable 8,400 5,600 2,800
Income tax payable 11,800 14,000 13,800
Long-term liabilities:
Notes payable 380,000 283,000 223,000
Stockholders' equity:
Common stock 298,000 298,000 298,000
Retained earnings 115,200 226,200 99,000
Total liabilities and stockholders’ equity $1,016,800 $890,800 $744,760
Questions:
2018 2019
Receivables turnover ratio times times
Inventory turnover ratio times times
Current ratio to 1 to 1
Debt to equity ratio % %
2018 2019
Gross profit ratio % %
Return on assets % %
Profit margin % %
Asset turnover times times
Answer:
Receivables turnover ratio = net credit sales during the year / average accounts receivable
2018 = $3,026,000 / [($58,000 + $79,000)/2] = 44.2 2019 = $3,500,000 / [($79,000 + $74,000)/2] = 45.8Inventory turnover ratio = cost of goods sold / average inventory
2018 = $1,948,000 / [($133,000 + $103,000)/2] = 16.52019 = $2,478,000 / [($103,000 + $124,000)/2] = 21.8
Current ratio = current assets / current liabilities
2018 = ($184,000 + $79,000 + $103,000 + $11,800) / ($64,000 + $5,600 + $14,000) = 4.52019 = ($200,000 + $74,000 + $124,000 + $13,800) / ($203,400 + $8,400 + $11,800) = 1.8Debt to equity ratio = total liabilities / total shareholder equity
2018 = $366,600 / $524,200 = 0.7 = 70%2019 = $603,600 / $413,200 = 1.5 = 146%Gross profit ratio = gross profit / net sales
2018 = $1,078,000 / $3,026,000 = 36%2019 = $1,022,000 / $3,500,000 = 29%Return on assets = net income / average total assets
2018 = $127,200 / [($890,800 + $744,760)/2] = 15.6%2019 = $16,200 / [($1,016,800 + $890,800)/2] = 1.7%Profit margin = net income / net sales
2018 = $127,200 / $3,026,000 = 4.2%2019 = $16,200 / $3,500,000 = 0.5%Asset turnover = net sales / average total assets
2018 = $3,026,000 / [($890,800 + $744,760)/2] = 3.72019 = $3,500,000 / [($1,016,800 + $890,800)/2] = 3.7Answer:
Receivables turnover ratio = net credit sales during the year / average accounts receivable
2018 = $3,026,000 / [($58,000 + $79,000)/2] = 44.2 2019 = $3,500,000 / [($79,000 + $74,000)/2] = 45.8
Inventory turnover ratio = cost of goods sold / average inventory
2018 = $1,948,000 / [($133,000 + $103,000)/2] = 16.5 2019 = $2,478,000 / [($103,000 + $124,000)/2] = 21.8
Current ratio = current assets / current liabilities
2018 = ($184,000 + $79,000 + $103,000 + $11,800) / ($64,000 + $5,600 + $14,000) = 4.5 2019 = ($200,000 + $74,000 + $124,000 + $13,800) / ($203,400 + $8,400 + $11,800) = 1.8
Debt to equity ratio = total liabilities / total shareholder equity
2018 = $366,600 / $524,200 = 0.7 = 70% 2019 = $603,600 / $413,200 = 1.5 = 146%
Gross profit ratio = gross profit / net sales
2018 = $1,078,000 / $3,026,000 = 36% 2019 = $1,022,000 / $3,500,000 = 29%
Return on assets = net income / average total assets
2018 = $127,200 / [($890,800 + $744,760)/2] = 15.6% 2019 = $16,200 / [($1,016,800 + $890,800)/2] = 1.7%
Profit margin = net income / net sales
2018 = $127,200 / $3,026,000 = 4.2% 2019 = $16,200 / $3,500,000 = 0.5%
Asset turnover = net sales / average total assets
2018 $3,026,000 / [($890,800 + $744,760)/2] = 3.7 2019 $3,500,000 / [($1,016,800 + $890,800)/2] = 3.7
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Brad, Scott, and Jake each contribute property to form BSJ Corporation. Brad contributes a building with a fair market value of $450,000 and a basis of $100,000 and receives 45% of the stock of BSJ. Scott contributes $100,000 cash and equipment with a fair market value and tax basis of $350,000, receiving 45% of the stock of BSJ. Jake contributes a collection of vintage automobiles with a fair market value of $150,000 and tax basis of $130,000 in exchange for 10% of the stock of BSJ and $50,000 cash. What tax basis will each take in their respective BSJ stock
Answer:
The answer is $700,000
Explanation:
From the example given, we find the tax basis will each take in their respective BSJ stock
Contributions done partner wise (All values in $)
Partner Contribution Tax Share in Stock % of Tax Base Tax base in stock
Name Base
Brad 450000 100000 45% 17% 120689.7
Scott 100000 350000 45% 60% 422413.8
Jake 150000 130000 10% 22% 156896.6
700000 580000 100% 700000
Therefore, The Total Assets contributed will be equivalent to stock of BSJ issued = $ 700,000
On January 1, 2021, Splash City issues $460,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Required: Assuming the market interest rate on the issue date is 8%, the bonds will issue at $460,000. Record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
The journal entry is shown below:
Explanation:
Journal Entry.
Jan.1 Cash A/c Dr $460,000
To Bonds payable A/c $460,000
(Bond issue is being recorded)
Jun.30 Interest Expense A/c Dr $18,400
To Cash A/c $18,400 ($460,000×4% = $18,400)
(Interest is being recorded)
Dec.31 Interest Expense A/c Dr $18,400
To Cash A/c $18,400 ($460,000×4% = $18,400)
(Interest is being recorded)
The appropriate journal entries to record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021 are:
Splash City Journal entries
January 01, 2021
Debit Cash $460,000
Credit Bonds payable $460,000
(To record Issuance of bonds )
June 30, 2021
Debit Bond interest expense $18,400
Credit Cash $18,400
(8%/2×$460,000 )
(To record Interest on bond paid)
December 31, 2021
Debit Bond interest expense $18,400
Credit Cash $18,400
(To record Interest on bond paid)
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14. A company that has a profit can increase its return on investment by: A. increasing sales revenue and operating expenses by the same dollar amount. B. increasing average operating assets and operating expenses by the same dollar amount. C. increasing sales revenue and operating expenses by the same percentage. D. decreasing average operating assets and sales by the same percentage.
Answer:
increasing sales revenue and operating expenses by the same percentage.
Explanation:
Return of investment is defined as the profit that is gained on a certain amount of invested capital in a business.
A business ensures it has a high return on investments to satisfy customer need for profit. It is a ratio of net profit to invested capital.
This also boosts confidence to invest more.
To increase ROI a firm will need to increase profit and operating expense by the same percentage.
For example if profit in a business is $100 and operating expense is $80, the net profit will be $20
However if we increase both sales revenue and operating expense by 10%, we will have profit of $110 and a operating expense of $88. The net profit will now be $22 resulting in a higher ROI.
Answer:
C. Increasing sales revenue and operating expenses by the same dollar amount.
Explanation:
ROI or return on Investment is the amount the which is received as a return on your capital invested. Hence the more the better for business.
For example,
The Sales revenue is $200 and the operating expenses are $100, so the net profit will be => 200-100 = $100.
Now if we increase the sales revenue and operating expenses by the same percentage let say 10%.
The NEW sales revenue will be = 200*1.1 = $220.
The NEW operating costs will be = 100*1.1 = $110.
Hence, the new profit will be = 220-110 = $110.
Therefore, increasing sales revenue and operating costs by the same percentage would increase ROI by $10.
Hope this helps.
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You are thinking about a project to expand your business. In order to start the project, you have to invest $200,000 in new equipment and $50,000 in working capital. You have to spend $15,000 for installation and $5,000 for shipping of the equipment. A few months ago, you spend $7,000 on consulting. The marginal tax rate of your company is 34%. What is the initial outlay of this project
Answer:
The initial outlay of this project is $270,000
Explanation:
According to the given data we have the following:
cost of new machine= $200,000
shipping cost=$5,000
installation cost=$15,000
working capital=$50,000
Therefore, in order to calculate the initial outlay of this project we would have to make the following calculation:
initial outlay of this project=cost of new machine+shipping cost+installation cost+working capital
initial outlay of this project= $200,000+$5,000+$15,000+$50,000
initial outlay of this project= $270,000
A restaurant is considering adding fresh brook trout to its menu. Customers would have the choice of catching their own trout from a simulated mountain stream or simply asking the waiter to net the trout for them. Operating the stream would require $10,600 in fixed costs per year. Variable costs are estimated to be $6.70 per trout. The firm wants to break even if 800 trout dinners are sold per year. What should be the price of the new item
Answer:
Selling price = $19.95
Explanation:
The break-even point is the level of activity where a business makes no profit or loss. At this level of activity, the total contribution equals the total fixed costs.
To calculate the break even point in a multi product scenario, we use the formula below:
Break-even point (units)= Fixed cost for the period / contribution per unit
800 = 10,600/ y
Cross multiplying
800y = 10,600
800y = 10,600
800 y = 10,600
y = 10,600/800
y= 13.25
Selling price = contribution + variable cost
= 13.25 + 6.70 = $19.95
The restaurant should set the price of the trout meal at $19.95 in order to break even taking into account their annual fixed costs and per meal variable cost based on an estimated sale of 800 meals a year.
Explanation:The challenge brought forward in this problem is determining the break-even price for the restaurant's proposed new dish: the brook trout. To calculate this, we need to take into account both fixed and variable costs. Fixed costs are costs that do not change with the level of output - in this case, the $10,600 per year for operating the stream. Variable costs, on the other hand, change according to the level of output, which in this instance is $6.70 per trout. The restaurant anticipates selling 800 trout dinners a year.
To break even, the total revenue must equal total costs. Total cost is the sum of fixed and variable costs.
Variable cost for 800 trout will be $6.70 * 800 = $5,360,
The total costs will be $10,600 + $5,360 = $15,960.
Therefore, the break-even price per meal should be the total costs divided by the number of meals sold, i.e $15,960 / 800 = $19.95. So, the restaurant should price the trout meal at $19.95 to break even.
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The W3C advisory committee must review every proposal for a(n) ______ made up of representatives of the W3C membership group, invite experts, and W3C team members to work on the ________, which may involve writing one or more ______. These go through an extensive review process that includes Requests For Comments (RFC). At any point in the process, a(n) _______ may be terminated.
Answer:
The W3C advisory committee must review every proposal for a meeting made up of representatives of the W3C membership group, invite experts, and W3C team members to work on the activity , which may involve writing one or more proposals . These go through an extensive review process that includes requests for comments(RFC). At any point in the process, a request may be terminated.
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A firm has $820 in inventory, $3,200 in fixed assets, $670 in accounts receivable, $390 in accounts payable, $500 in long-term debt, and $360 in cash. What is the amount of the net working capital
Answer:
Look it up
Explanation:
A piece of equipment costs $2,500. If this asset depreciates on a 5-year schedule, the Net Fixed Asset value on the Balance sheet in year 2 will be more or less than this same asset depreciating on a 3-year schedule?
Answer:
More
Explanation:
The computation of balance sheet after 2 will be more or less is shown below:-
After 2 years
Net fixed value after 2 years
For 5 years schedule
$2,500 - (($2,500 ÷ 5) × 2)
= $1,500
For 2 year schedule
$2,500 - (($2,500 ÷ 3) × 2)
= $833.33
After 2 year Net fixed assets will be higher for 5 year schedule at schedule of 2 year.
The Net Fixed Asset value of a $2,500 asset on the Balance Sheet in year 2 will be higher when depreciating over a 5-year schedule compared to a 3-year schedule, due to less accumulated depreciation.
Explanation:If a piece of equipment costs $2,500 and depreciates on a 5-year schedule, to determine the Net Fixed Asset value on the Balance Sheet in year 2 and compare it to the same asset depreciating on a 3-year schedule, we use the straight-line depreciation method. This method equally spreads the cost of the asset over its useful life. The annual depreciation for a 5-year schedule is $2,500 / 5 = $500, and for a 3-year schedule, it's $2,500 / 3 = $833.33. After 2 years, the accumulated depreciation for the 5-year schedule is 2 * $500 = $1,000, and for the 3-year schedule, it's 2 * $833.33 = $1,666.66. Therefore, the Net Fixed Asset value on the Balance Sheet after 2 years would be $1,500 for the 5-year schedule and $833.34 for the 3-year schedule. This means the Net Fixed Asset value will be more when depreciating over 5 years compared to 3 years.
Bingerton Industries uses a perpetual inventory system. The company began the year with inventory of $77,000. Purchases of inventory on account during the year totaled $302,000. Inventory costing $327,000 was sold on account for $504,000. Required: Record transactions for the purchase and sale of inventory. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
Refer explanation
Explanation:
1. Purchase of Inventory ($302000)
This transaction has occurred on account which means that payment was not made immediately but would be made at a future date, thus a creditor to the business.
Debit : Purchases account : $302000
Credit : Accounts Payables account : $302000
2. Sale of inventory ($504000)
The sale of inventory requires two separate transactions. The sale is accounted and along with this, the amount of inventory sold would also have to be accounted as an asset reduction.
A. To reduce inventory:
Debit : Cost of Sales account : $327000
Credit : Inventory account : $327000
B. Record the sale:
Debit : Accounts Receivables account : $504000
Credit : Sales account : $504000
This too is a sale on account which means that a debtor has been incurred who will pay for the sale at a later date.
The following order book exists for a particular stock. The last trade on the stock was at $58.34. Buy Orders Sell Orders Shares Price Shares Price 250 $58.33 250 $58.36 200 58.32 800 58.37 900 58.31 1,000 58.39 175 58.29 600 58.40 350 58.41 a. If you place a market buy order for 200 shares, at what price will it be filled?
a) Price of a buy order of 200 shares is $58.36.Because there was an offer of sale that is 250 shares at $58.36 per share, so the price would remain constant at 200 Shares.
A person who decides to buy or sell securities based on publicly available information and analysis is called a(n) ______ trader. 1. public 2. inside 3. normal 4. informed 5. block
Answer:
4. informed
Explanation:
An Informed trader only makes his buying or selling decision based on publicly available information.
The 2012 financial statements of Marker Co. contain the following selected data (in millions).
Current Assets $ 75
Total Assets 140
Current Liabilities 40
Total Liabilities 95
Cash 8
The debt to total assets ratio is:
a.67.9%.
b.96.4%.
c.28.6%.
d.256%
Answer:
a.67.9%.
Explanation:
Debt to Total Assets Ratio = Total Liabilities / Total Assets x 100
Total Liabilities = $95,000,000
Total Assets = $140,000,000
Debt to Total Assets Ratio = $95,000,000 / $140,000,000 x 100
Debt to Total Assets Ratio = 0.679 x 100
or
Debt to Total Assets Ratio = 67.9%
Hence, The Assets of Marker Co. are 67.9% funded by creditors.
Inventory records for Dunbar Incorporated revealed the following:
Date Transaction Number
of Units Unit
Cost
Apr. 1 Beginning inventory 550 $2.33
Apr. 20 Purchase 310 2.68
Dunbar sold 560 units of inventory during the month. Ending inventory assuming weighted-average cost would be (Do not round your intermediate calculations. Round weighted-average unit cost to four decimals if necessary. Round your answer to the nearest dollar amount):
$737.
$694.
$817.
$752.
Ending inventory assuming weighted-average cost would be $694
Solution:
Given,
Dunbar sold 560 units of inventory
Apr. 1 Beginning inventory 550 $2.33
Apr. 20 Purchase 310 2.68
Now,
Ending inventory = 560 -550 = 10
= 310 -10 = 300
Ending inventory = 300 × $2.33 = $694
The ending inventory for Dunbar Incorporated, calculated using the Weighted-Average method, would be $737.
Explanation:To calculate the ending inventory using the weighted-average cost method, you first need to calculate the total cost of the inventory and the total number of units. Then, divide the total cost by the total number of units to get the weighted-average unit cost.
First, calculate the total cost of inventory: (550 units * $2.33) + (310 units * $2.68) = $1281.5 + $830.8 = $2112.3. Then, calculate the total units: 550 units + 310 units = 860 units. Divide total cost by total units for the weighted-average unit cost: $2112.3 / 860 units = $2.456.
After selling 560 units, there are 300 units left in ending inventory (860-560=300). Multiply these remaining units by the weighted-average unit cost to get the ending inventory value: 300 units * $2.456 = $737.
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Zira Co. reports the following production budget for the next four months. April May June July Production (units) 582 610 616 596 Each finished unit requires four pounds of raw materials and the company wants to end each month with raw materials inventory equal to 40% of next month’s production needs. Beginning raw materials inventory for April was 931 pounds. Assume direct materials cost $5 per pound. Prepare a direct materials budget for April, May, and June.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Production (units):
April= 582
May= 610
June= 616
July= 596
Each finished unit requires four pounds of raw materials.
Desired ending inventory= 40% of next month’s production needs. Beginning raw materials inventory for April was 931 pounds.
Assume direct materials cost $5 per pound.
To calculate the purchases of raw material, we need to use the following formula for each month:
Purchases= sales + desired ending inventory - beginning inventory
April (in pounds):
Production= (582*4)= 2,328
Desired ending inventory= (610*4)*0.4= 976
Beginning inventory= (931)
Total pounds= 2,373
Total cost= 2,373*5= $11,865
May (in pounds):
Production= (610*4)= 2,440
Desired ending inventory= (616*4)*0.4= 986
Beginning inventory= (976)
Total pounds= 2,450
Total cost= 2,450*5= $12,250
June (in pounds):
Production= (616*4)= 2,464
Desired ending inventory= (596*4)*0.4= 954
Beginning inventory= (986)
Total pounds= 2,450
Total cost= 2,432*5= $12,160
After compiling a list of potential customers, a salesperson must a. determine whether or not each prospect is really in his target market. b. contact each of the prospects to get an initial feel for how likely they are to purchase his products. c. evaluate whether each prospect is able, willing, and authorized to buy the product. d. find and analyze information about each prospect's specific needs and current brand choices. e. develop a presentation for each of the potential customers on his list.
Answer:
Evaluate whether each prospect is able, willing and authorized to buy the product.
Explanation:
A sales person can be defined as an individual that sells goods and services to a variety of customers. A sales person utilizes different mediums inorder to persuade the customers to purchase their product.
A sales person must possess the following characteristics:
1) He/she must be a good listener that must be able to get information about the various needs and requirements of the customers.
2) He/she must be able to effectively compete with other competitors in the market.
3) The sales person must be able to build a strong relationship with the customers.
Organic Laboratories allocates research and development costs to its three research facilities based on each facility's total annual revenue from new product developments: Facility location Kentucky Arizona Illinois Total New product revenue $ 56,000,000 $ 100,000,000 $ 84,000,000 $ 240,000,000 Research & Development $ 60,000,000 Using revenue as an allocation base, the amount of costs allocated to the Illinois research facility is calculated to be: Multiple Choice $14,000,000. $28,000,000. $33,000,000. $17,000,000. $21,000,000.
Answer:
$21,000,000
Explanation:
Ratio is used in allocating the research and development cost
This is the expression of relationship between two or more data showing the number of times one data contains or is contained in another data
Total research and development cost = $60,000,000
Revenue
Kentucky = $56,000,000
Arizona -= $ 100,000,000
Illinois = $84,000,000
Total = $240,000,000
Illinois allocation of research and development cost=
84,000,000/240,000,000*60,000,000 =$21,000,000
Refer to Exhibit 26-3. If Firms J, K, and L were to merge, the four-firm concentration ratio would ____________________ and the Herfindahl Index would _____________________.
a. rise to 59 percent; rise to 1,212
b. rise to 28 percent; rise to 10,000
c. rise to 50 percent; rise to 1,062
d. not be affected; not be affected
e. rise to 60 percent; fall to 986
Answer:
A
Explanation:
See attached file
Mary Willis is the advertising manager for Sheffield Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will add $24,600 in fixed costs to the $128,000 currently spent. In addition, Mary is proposing that a 5% price decrease ($20 to $19) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $12 per pair of shoes. Management is impressed with Mary’s ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety. Collapse question part (a) Compute the current break-even point in units, and compare it to the break-even point in units if Mary’s ideas are used. (Round answers to 0 decimal places, e.g. 1,225.) Current break-even point pairs of shoes New break-even point pairs of shoes
Answer:
If Mary's idea is implemented the break-even point would increase from 16,000 units to 21,800 units
Explanation:
The break-even point is the level of activity where a business makes no profit or loss. At this level of activity, the total contribution equals the total fixed costs.
To calculate the break even point in units, we use the formula below:
Break-even point = Fixed cost for the period / selling price - variable cost
Current break-even point = 128,000/(20-12)
= 16,000 units
With Mary's idea, the break-even point will be
New break-even point = ( 128,000+ 24600)/(19-12)
= 21,800 units
If Mary's idea is implemented the break-even point would increase from 16,000 units to 21,800 units
Suppose that your firm's current unlevered value, V*, is $800,000, and its marginal corporate tax rate is 35 percent. Also, you model the firm's PV of financial distress as a function of its debt level according to the relation: PV of financial distress = 800,000 × ((D/V*)^2). What is the firm's levered value if it issues $200,000 of perpetual debt to buy back stock?
Final answer:
The firm's levered value after issuing $200,000 of perpetual debt and considering the tax shield and PV of financial distress is $820,000.
Explanation:
Calculation of Firm's Levered Value
To calculate the firm's levered value, we must consider both the tax shield from debt and the present value (PV) of financial distress costs. The firm's unlevered value (V*) is $800,000 and it plans to issue $200,000 of perpetual debt. The corporate tax rate is 35%, creating a tax shield on the debt. Additionally, the PV of financial distress as a function of the debt ratio (D/V*) is given by the formula: 800,000 × ([tex](D/V*)^2[/tex]).
First, we calculate the tax shield as follows:
Tax Shield = Debt × Tax Rate = $200,000 × 35% = $70,000.
Next, we calculate the PV of financial distress:
PV of Financial Distress = 800,000 × ([tex]($200,000/$800,000)^2[/tex]) = 800,000 × ([tex]0.25^2[/tex]) = 800,000 × 0.0625 = $50,000.
Finally, we determine the levered value (V) by adding the tax shield to the unlevered value and then subtracting the PV of financial distress:
Levered Value = V* + Tax Shield - PV of Financial Distress = $800,000 + $70,000 - $50,000 = $820,000.
The firm's levered value after issuing $200,000 of debt to buy back stock is $820,000.
The Museum of Modern Art (MOMA) charges a general admission of $25. For seniors, admission is $15. (b) Barnes & Noble offers a "Buy Two, Get the Third Free" deal for paperbacks. (c) Subscription to The Wall Street Journal costs $4.25 per week for a one-year subscription, $4.00 per week for a two-year subscription and $3.75 per week for a three-year subscription. (d) On February 28, 2019, Disneyland introduced three different prices based on the calendar. A "value" ticket (for Mondays through Thursdays during weeks when most schools are in session) now costs $97. A "regular" ticket (most weekends and many summertime weeks) costs $117. A "peak" ticket (most of December, spring break weeks, July weekends) costs $135.
Answer:
a) This is third degree value separation. In this various costs are being charged to various purchaser groups.in this case segregation is done based on age.General affirmation charges are $25 while seniors are charged at $15.
b) This is second degree value separation. In this various costs are being charged for various amounts. Amount limits are given on mass purchases. Here offer is given i.e Buy two get third free.
c) This is second degree value separation. As the length of membership is expanded the cost is diminished or we can say that markdown is offered if higher amount is purchased.For multi year membership $3.75 is charged and for multi year $4 is charged and most elevated is for 1 year which is $4.25
d) This is third degree value separation. In this market is part based on top and off pinnacle season. Here various costs are being charged relying upon a specific market fragment, for example age profile, salary gathering, time of use.When most schools are in meeting least cost of $97 is charged as kids will less inclined to come to Disneyland since they and their folks won't be keen on missing the school. Most significant expense of $135 is charged in December when there is spring breaks as kids will get a kick out of the chance to appreciate the excursions by visiting Disneyland and in this manner, proprietors can procure greatest income. On ends of the week the ticket cost is kept at $117. This will be time when understudies are free and can decide to visit Disneyland or they can remain at home at complete the school assignments.
A firm is considering moving its manufacturing plant from Chicago to a new location. The industrial engineering department was asked to identify the various alternatives together with the costs to relocate the plant and the benefits. The engineers examined six likely sites, together with the do-nothing alternatives of keeping the plant at its present location. Their findings are summarized as follows: Plant Location First Cost ($000s) Uniform Annual Benefit($000s) Denver $300 $52 Dallas 550 137 San Antonio 450 117 Los Angeles 750 167Cleveland 150 18Atlanta 200 49Chicago 0 0The annual benefits are expected to be constant over the 8-year analysis period.Required:(a) Construct a choice table for interest rates from 0% to 100%.(b) IT the firm uses a 10% annual interest in its economic analysis, where should the manufacturing plant be located.Use MARR=15%, and only use Excel to check your results.
Answer:
City 2% 10% 20% 30% 50% 100%
Denver 80.93 -22.58 -100.47 -147.92 -200.06 -248.20
Dallas 453.59 180.88 -24.31 -149.32 -286.69 -413.54
SanAntonio 407.08 174.19 -1.05 -107.81 -225.13 -333.46
LosAngeles 473.36 140.93 -109.19 -261.57 -429.03 -583.65
Cleveland -18.14 -53.97 -80.93 -97.36 -115.40 -132.07
Atlanta 158.95 61.41 -11.98 -56.69 -105.82 -151.19
Chicago 0.00 0.00 0.00 0.00 0.00 0.00
b) The manufacturing plant should be located in Dallas (IRR=19%).
Explanation:
We have the cost and uniform annual benefits for each city:
Plant Location First Cost ($000s) Uniform Annual Benefit($000s)
Denver 300 52
Dallas 550 137
San Antonio 450 117
Los Angeles 750 167
Cleveland 150 18
Atlanta 200 49
Chicago 0 0
The cash flow can be written as:
[tex]NPV=-I_0+CF[\frac{1-(1+i)^{-8})}{i}]=-I_0+CF\cdot A[/tex]
where:
I0: first cost.
CF: uniform annual benefit
i: discount rate
A: annuity factor
The annuity factor that multiplies the CF is equal for every city, so it can be calculated beforehand:
[tex]A=\frac{1-(1+i)^{-8})}{i}[/tex]
For some rate of returns, we have:
r=2% A=7.33
r=10% A=5.33
r=20% A=3.84
r=30% A=2.92
r=50% A=1.92
r=100% A=1.00
a) Then, for each city, we have this NPV, in function of differents discount rates:
City 2% 10% 20% 30% 50% 100%
Denver 80.93 -22.58 -100.47 -147.92 -200.06 -248.20
Dallas 453.59 180.88 -24.31 -149.32 -286.69 -413.54
SanAntonio 407.08 174.19 -1.05 -107.81 -225.13 -333.46
LosAngeles 473.36 140.93 -109.19 -261.57 -429.03 -583.65
Cleveland -18.14 -53.97 -80.93 -97.36 -115.40 -132.07
Atlanta 158.95 61.41 -11.98 -56.69 -105.82 -151.19
Chicago 0.00 0.00 0.00 0.00 0.00 0.00
b) The firm uses a 10% annual interest. For this situation, we can look up in the table from the previos question and see that Dallas has the higher NPV at this discount rate.
So the manufacturing plant should be located in Dallas.
(NOTE: the IRR of the project relocating to Dallas is 19%)
Firms consider many factors when deciding on plant locations, with labor costs, supplier proximity, taxes, and local governance being key. Environmental regulation costs are minor compared to these factors. When facing higher labor costs, firms may choose to invest in capital-intensive production to increase labor productivity.
Explanation:When deciding on the relocation of its manufacturing plant, a firm must consider various factors, including but not limited to the costs of labor and financial capital, proximity to reliable suppliers and customers, the quality of the local infrastructure such as transportation, communications, and electrical power, the level of taxes, and the competence and honesty of the local government. While the cost of complying with environmental regulations is a factor, it usually accounts for a mere 1 to 2% of the total costs faced by large industrial plants, making it much less significant than the other factors.
The selection of a plant location involves a careful analysis of long-run costs, including both fixed and variable costs. For example, an automobile designer like Kitt has to choose between a labor-intensive or a robot-intensive assembly plant, with the decision hinging upon the anticipated production volume. High fixed costs could be justified if the variable costs per unit decrease significantly with increased production.
In response to increased labor costs, such as those resulting from union negotiations, firms might opt for production methods that favor capital over labor to increase labor productivity. This decision can affect the total cost of production and must be strategically considered by firms.
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 20,000 Variable expenses 13,000 Contribution margin 7,000 Fixed expenses 3,780 Net operating income $ 3,220 Required: 1. What is the contribution margin per unit
Answer:
$7
Explanation:
Given: Sales volume= 1000 units.
Sales= $20000.
Variable expense= $13000.
Contribution margin= $7000.
Fixed expense= $3780
Net operating income= $3220.
Now, finding the contribution margin per unit.
Formula; Contribution margin per unit= [tex]\frac{(sales- variable\ expense)}{Number\ of\ sales\ units}[/tex]
⇒ Contribution margin per unit= [tex]\frac{(20000-13000)}{1000}[/tex]
⇒ Contribution margin per unit= [tex]\frac{7000}{1000}[/tex]
∴ Contribution margin per unit= [tex]\$ 7[/tex]
Hence, $7 is the contribution margin per unit.
During its first year of operations, White Company bills credit customers $15,100 for services rendered. During the year, White receives $10,500 from all customers, $2,500 of which is received from cash customers. Required: What amount of revenue should be shown on the income statement for the year
Answer:
Total revenue = $17,600
Explanation:
Given:
Bills credit to customers during the year = $15,100
Receive amount from customer = $10,500
Amount received in cash = $2,500
Total revenue during the year =?
Computation of total revenue during the year:
According to the accrual basis of accounting, total revenue includes the sum of credit and cash sales.
Total revenue = Cash sales + Credit sales
Total revenue = $2,500 + $15,100
Total revenue = $17,600
White Company should show $15,100 as revenue on the income statement, which represents the total amount billed to customers for services during the year.
Explanation:The revenue to be shown on the income statement for White Company should reflect the amount billed to customers for services rendered, regardless of when cash is received. Since White Company billed credit customers $15,100 for services, this is the amount that should be reported as revenue on the income statement for the year. The actual cash received, including from cash customers, is relevant to the cash flow statement but does not alter the revenue figure on the income statement.
5. You want to buy a new sports car 3 years from now, and you plan to save $6,700 per year, beginning one year from today. You will deposit your savings in an account that pays 5.2% interest. How much will you have just after you make the 3rd deposit, 3 years from now?
The amount that i will have is $21,163.32
Let understand that we will employ the use of Future value of annuity (FVA) formulae here.
I am planning to save $6,700 per year beginning one year todayThe savings will be an account that pays 5.2% interest.
The solution for the amount goes as follows
[tex]Future value of annuity = Annuity * [(1+rate)^{time} - 1] / rate\\Future value of annuity = $6,700 * [(1.052)^3 - 1] / 0.052\\Future value of annuity = $6,700 * 3.158704\\Future value of annuity = $21,163.3168\\Future value of annuity = $21,163.32[/tex]
In conclusion, the amount that i will have after making the 3rd deposit, 3 years from now is $21,163.32.
See similar solution here
brainly.com/question/12173518
Final answer:
To calculate the total amount just after the 3rd deposit 3 years from now, we use the future value of an annuity formula considering an annual deposit of $6,700 at a 5.2% interest rate. The calculation involves understanding the compound interest for each deposit over 3 years.
Explanation:
The question involves calculating the future value of a series of savings deposited annually at a given interest rate. To find out how much you will have just after making the 3rd deposit, 3 years from now, with an annual deposit of $6,700 at an interest rate of 5.2%, we use the future value of an annuity formula: FV = P × [ (a + i)⁾ⁿ - 1 ) / i ], where P is the annual deposit, i is the annual interest rate, and n is the number of deposits.
For this scenario:
P = $6,700i = 5.2% or 0.052 (as a decimal)n = 3Inserting these values into the formula gives us the future value just after the 3rd deposit. Each deposit compounds over different periods: the first for 2 years, the second for 1 year, and the third does not compound at the time of the final calculation.
The detailed step-by-step calculation includes computing compound interest for each deposit individually and then summing these amounts to get the total value just after the 3rd deposit.
Sloan Transmissions, Inc., has the following estimates for its new gear assembly project: price = $2,900 per unit; variable costs = $580 per unit; fixed costs = $5.2 million; quantity = 88,000 units. Suppose the company believes all of its estimates are accurate only to within ±15 percent. What values should the company use for the four variables given here when it performs its best-case scenario analysis? What about the worst-case scenario?
Answer:
in its best case scenario:
selling price = $2,900 + 15% = $3,335 per unit
variable costs = $580 - 15% = $493 per unit
fixed costs = $5.2 million - 15% = $4.42 million
quantity = 88,000 + 15% = 101,200 units
estimated profits in best case scenario = $337,502,000 - $49,891,600 - $4,420,000 = $283,190,400
in its worst case scenario:
selling price = $2,900 - 15% = $2,465 per unit
variable costs = $580 + 15% = $667 per unit
fixed costs = $5.2 million + 15% = $5.98 million
quantity = 88,000 - 15% = 74,800 units
estimated profits in best case scenario = $184,382,000 - $49,891,600 - $5,980,000 = $128,510,400
The firm is still profitable because the contribution margin is huge even in the worst case scenario. In he best case scenario the break even point is 1,556 units, while the break even point in the worst case scenario is 3,326 units. It's a very low break even point considering total expected sales.
Steve has estimated the cash inflows and outflows for his dental firm for next year. The report that he has prepared summarizing these cash flows is called a: A. pro forma income statement. B. sales projection. C. cash budget. D. receivables analysis. E. credit analysis.
Answer:
C. cash budget.
Explanation:
As we know that
The cash budget refers to the inflow and outflow of cash in which inflow refers to the receipts of the service rendered while the outflow could be in terms of purchase of long term assets in cash, expenses incurred in cash, etc
So while estimated the cash inflows and cash outflows, the cash budget is to prepared so that the firm get to know its cash position