Answer:
The answer is in a perfect competition profit is maximized when marginal cost equal marginal revenue and price is equal to average revenue and marginal revenue, while in monopolist profit is maximized when marginal cost is equal to marginal revenue.
Explanation:
The firm in a perfectly competitive market is a price taker,the price in the market is determined by the market forces of demand and supply. The firm has to sell their product at the ruling market price.The demand curve facing the firm in perfectly competitive market is horizontal or perfectly elastic, profit is therefore maximized when the marginal cost is equal to average revenue and marginal revenue. The firm in the market operate at the output level in which the price and marginal revenue is equal to marginal cost. Whatever prices that change the market demand or supply will change the demand curve faced by the firm.The firm cannot do anything to this than to accept the market price and the demand curve.
In a monopoly the demand curve is identical to the demand curve of the firm, because industry demand curve is downward sloping.The monopolist can either set the price or quantity not the two.when one is determined the value of the other will be determined by the demand function. The profit maximization of the monopolist also requires that marginal cost must be equal to marginal revenue just like in the case of perfect completion.when the monopolist equates MR and MC the monopolist determines its output and the market price for the product. The revenue curve is steeper than the demand curve,because the straight line is the market demand. The firm will have to reduce The price of the product if they want to sell more of their product the unit of the product sold is the AR which is equal to the price.Therefore the AR curve of the monopolist and the perfect competition MR and AR are both identical that informed the reason why the marginal revenue curve is steeper than the demand curve for a single price monopolist.
In a perfect competition market, the Marginal Revenue is equal to the price (MR = P), and for monopolist, the marginal revenue is not equal to the price, because changes in quantity of output affects the price.
Why is price equal to Marginal revenue in pure competition?Marginal revenue (MR) is an increase in the total revenue resulting from an increase in one unit of product. As the price always remains constant in perfect competition, increasing the total revenue from the production of 1 additional unit will be equal to the price.
Therefore, Price = Marginal Revenue (P = MR) in perfect competition.
In a monopoly the demand curve is the same as the firm's demand curve, in that the industry demand curve drops downwards. One owner can set the price or quantity and not both.
If one is determined the price of the other will be determined by the demand function. Increasing the monopolist's profit also requires that the marginal cost should be equal to the marginal revenue as if it were in perfect competition.
The Marginal revenue curve is steeper than the demand curve because a straight line is market demand. The firm will have to lower the Product Price if it wants to sell more of its product a unit of sale sold average revenue equal to the Price.
So the AR curve of AR monopolist and perfect competition MR and AR are both same.
Thus, this is the reason why the marginal revenue curve is steeper than the demand curve in the case of a monopolist.
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Which of the following statements is CORRECT? a. The cash budget and the capital budget are developed separately, and although they are both important to the firm, one does not affect the other. b. Since depreciation is a non-cash charge, it neither appears on nor has any effect on the cash budget. c. Shorter-term cash budgets, in general, are used primarily for planning purposes, while longer-term budgets are used for actual cash control. d. The typical cash budget reflects interest paid on loans as well as income from the investment of surplus cash. These numbers, as well as other items on the cash budget, are expected values; hence, actual results might vary from the budgeted amounts. e. The target cash balance should be set such that it need not be adjusted for seasonal patterns and unanticipated fluctuations in receipts, although it should be changed to reflect long-term changes in the firm's operations.
Answer:
e- The typical cash budget reflects interest paid on loans as well as income from the investment of surplus cash. These numbers, as well as other items on the cash budget, are expected values; hence, actual results might vary from the budgeted amounts.
Explanation:
Cash budgets are the budgets that are prepared to forecast the cashflows of the company. The amounts appearing in the Cash budget statement are the budgeted amounts measured by the company.
However, the interest to be paid on loans in the next year is a pre-determined value i.e. the rates of interest on loan are fixed and the return on investment is also fixed. Hence, these both values can be determined exactly. The other amounts appearing on the budget statement are forecasted amounts and the actual results may vary from the budgeted amounts.
Sam is an experienced engineer, but he works as a draftsperson. His company has a pleasant work atmosphere. Though he is well paid, he is frustrated with his job as he does not get a sense of meaning or accomplishment. He decides to quit his job by the end of that month. In the context of Herzberg's two-factor theory, which of the following factors is missing in Sam's company
Answer:
Motivators
Explanation:
The motivating factor for Sam was an appropriate and suitable job profile for him. The other factors were covered well by the Hygiene factors and also the Extrinsic rewards were well in place. However, the motivator for him was his contents of the job profile itself which was prominently missing in Sam’s company which raised his levels of dissatisfaction.
The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. If order size was 1,000 kilograms of resin, what would be the length of an order cycle?
A. 0.05 daysB. 4 daysC. 16 daysD. 20 daysE. 50 days
Answer:
D. 20 days
Explanation:
Daily usage rate: 50 kg each day
Order size: 1,000 kg
lead time: 4 days
Since the question just wants to know the length of an order cycle, all of the monetary information can be disregarded.
The company must maintain a stock, at the time of order, big enough to supply production during the lead time. Minimum stock should be:
[tex]Min = 50\frac{kg}{day} * 4\ days\\Min = 200 \ kg[/tex]
Therefore, the company must reorder when stock reaches 200 kg. The length of the order cycle is the number of days for the company to reach minimum stock added to the order lead time:
[tex]C = \frac{1000 - 200}{50} +4\ days\\C= 20\ days[/tex]
Concord Corporation has 5400 shares of 6%, $50 par value, cumulative preferred stock and 108000 shares of $1 par value common stock outstanding at December 31, 2020, and December 31, 2019. The board of directors declared and paid a $14000 dividend in 2019. In 2020, $70000 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2020?
Answer:
$18,400
Explanation:
For computing the preferred dividend, first we have to find out the yearly dividend which is shown below:
= Number of shares × par value per share × dividend rate
= 5,400 shares × $50 × 6%
= $16,200
In 2019, the dividend was paid of $14,000
Remaining dividend left is $16,200 - $14,000 = $2,200
So, the total preference dividend in 2019 would be
= Yearly dividend + remaining dividend left
= $16,200 + $2,200
= $18,400
Lakeland, Inc. has 25,000 shares of 6%, $100 par value, noncumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2018. There were no dividends declared in 2017. The board of directors declares and pays a $250,000 dividend in 2018. What is the amount of dividends received by the common stockholders in 2018? $0 $150,000 $250,000 $100,000
Answer:
$100000
Explanation:
Given: Total Dividend paid= $250000.
Preferred stock is 25000 shares of 6%, $100 par value.
First, lets calculate preferred stock.
Preferred stock= [tex][25000\times \$ 100\times 6%][/tex]
∴ Preferred stock= $150000
Now, calculating the amount of dividends received by common stockholder.
Dividend received by stockholder= [tex](Total\ Dividend\ paid \ by \ company - preferred\ dividend)[/tex]
Common stockholder´s dividend= ([tex](250000-150000)= \$ 100000[/tex]
∴ Common stockholder´s dividend is $100000.
One year ago, Norbert Wagner purchased 30 shares of DUX Inc., stock for $20 per share. During the last year, DUX Inc., experienced strong earnings and paid dividends of $0.50 per share. Norbert just sold the stock for $19 per share.Ignoring taxes, Norbert’s return from investing in DUX Inc., was"A. 7.50%B. -2.50%C. -5.00%D. 7.89%
Answer:
option (B) -2.50%
Explanation:
Data provided in the question:
Number is shares purchased = 30
Purchasing price = $20 per share
Dividend paid = $0.50 per share
Selling price of the shares = $19 per share
Now,
Total investment = 30 × $20
= $600
Total sales value = 30 × $19
= $570
Total dividend Received = 30 × $0.50
= $15
Thus,
Rate of Return from Investment
= [ { Sales - Investment + Dividend Received} ÷ Purchase Price] × 100%
= [ { $570 - $600 + $15 } ÷ $600] × 100 %
= [ -$15 ÷ $600 ] × 100 %
= - 2.50%
Hence,
The correct answer is option (B) -2.50%
Carlson Company uses a predetermined rate to apply overhead. At the beginning of the year, Carlson estimated its overhead costs at $240,000, direct labor hours at 40,000, and machine hours at 10,000. Actual overhead costs incurred were $249,280, actual direct labor hours were 41,000, and actual machine hours were 11,000.
Answer:
The estimated rate based on labour hour==6
The actual rate based on labour hour=6.08
The rate based on machine hour=24
The rate based on machine hour= 22.66
Explanation:
Given that Carlson estimated its overhead costs to be $240,000,direct labor hours at 40,000 and machine hours at 10,000 as well as the actual overhead costs incurred of $249,280, actual direct labor hours of 41,000, and actual machine hours of 11,000.We can calculate the to apply .
The estimated rate based on labour hour=240000/40000=6
The actual rate based on labour hour=249280/41000=6.08
The rate based on machine hour=240000/10000=24
The rate based on machine hour=249280/11000=22.66
On January 1, Eagle, Inc., issued $800,000 of ten percent, 20-year bonds for $958,342, yielding an effective interest rate of eight percent. Semiannual interest is payable on June 30 and December 31 each year. The firm uses the effective interest method to amortize the premium. Required
Prepare an amortization schedule showing the necessary information for the first two interest periods. Round amounts to the nearest dollar.
Answer
The answer and procedures of the exercise are attached in the two images below.
Explanation
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On January 1, 2017, Bensen Company leased equipment to Flynn Corporation. The following information pertains to this lease.
The term of the non-cancelable lease is 6 years. At the end of the lease term, Flynn has the option to purchase the equipment for $1,000, while the expected residual value at the end of the lease is $5,000.
Equal rental payments are due on January 1 of each year, beginning in 2017.
The fair value of the equipment on January 1, 2017, is $150,000, and its cost is $120,000.
The equipment has an economic life of 8 years. Flynn depreciates all of its equipment on a straight-line basis.
Bensen set the annual rental to ensure a 5% rate of return. Flynn's incremental borrowing rate is 6%, and the implicit rate of the lessor is unknown.
Collectibility of lease payments by the lessor is probable. (Both the lessor and the lessee's accounting periods end on December 31.)
(a) Discuss the nature of this lease to Bensen and Flynn.
(b) Calculate the amount of the annual rental payment.
(c) Prepare all the necessary journal entries for Bensen for 2017.
(d) Suppose the collectibility of the lease payments was not probable for Bensen. Prepare all necessary journal entries for the company in 2017.
(e) Prepare all the necessary journal entries for Flynn for 2017.
(f) Discuss the effect on the journal entry for Flynn at lease commencement, assuming initial direct costs of $2,000 are incurred by Flynn to negotiate the lease.
This lease is a capital lease for Flynn and a sales-type lease for Bensen, due to the specific conditions of the lease. The annual rental payment comes out to be $29,841 using the formula PMT = PVOA / [(1 - (1 + r) ^ -n ) / r ]. Bensen and Flynn's journal entries differ based on their respective roles and if collectibility is not probable, Bensen would account for possible bad debts.
Explanation:The nature of this lease indicates that it's a capital lease for Flynn and a sales-type lease for Bensen, since the lease term is lesser than 75% of the economic life of the equipment and Flynn has an option to purchase the equipment below its expected residual value at the end of the lease term. In this situation, Flynn is effectively financing the acquisition of the equipment, while Bensen is playing the role of a financiers.
To calculate the annual rental payment, we need to use Bensen's rate of return (5%). This would equate to the present value of an annuity formula. The present value of an annuity formula is PVOA = PMT [(1 - (1 + r) ^ -n ) / r], where PMT is the annual payment, r is the interest rate, and n is the number of periods. Rearranging to solve for PMT, we get PMT = PVOA / [(1 - (1 + r) ^ -n ) / r ]. Here, PVOA is the fair value of the equipment, which is $150,000, r is 5% or 0.05, and n is the lease term, which is 6 years. Hence, the annual rental payment comes out to be around $29,840.90.
The journal entries in 2017 for Bensen would be: 1) Debit Lease Receivable for $150,000 and Credit Equipment for $120,000 and Gain on Sale for $30,000 (to record the lease agreement) 2) Debit Cash for $29,841 and Credit Lease Receivable for $29,841 (to record the collection of the lease payment) 3) Debit Interest Receivable ($120,159*0.05) and Credit Interest Revenue for the same amount (to record the recognition of interest).
If the collectibility of the lease payments wasn't probable, Bensen would have recorded a Allowance for Doubtful Accounts and would have made additional entries to record bad debt expenses. Flynn's 2017 journal entries would be: 1) Debit Leased Equipment for $150,000 and Credit Lease Obligation for the same amount (to record the lease) 2) Debit Lease Obligation for $29,841 and Credit Cash for the same amount (to make the lease payment) 3) Debit Interest Expense for $(120,159 - 29,841)*0.06) and Credit Lease Obligation for the same amount (to record interest).
If there were initial direct costs, Flynn would have included these costs in the initial measurement of the lease liability. Therefore, the journal entry would be: Debit Leased Equipment for $152,000 and Credit Lease Obligation for the same amount.
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On January 1, 2017, Seven Wonders Inc. signed a five-year noncancelable lease with Moss Company. The lease calls for five payments of $277,409.44 to be made at the end of each year. The leased asset has a fair value of $1,200,000 on January 1, 2017. Seven Wonders cannot renew the lease, there is no bargain purchase option, and ownership of the leased asset reverts to Moss at the lease end. The leased asset has an expected useful life of six years, and Seven Wonders uses straight-line depreciation for financial reporting purposes. Its incremental borrowing rate is 12%. Moss’s implicit rate of return on the lease is unknown. Seven Wonders uses a calendar year for financial reporting purposes. Both companies use ASC 840 to account for leases.
The question relates to Business, encompassing accounting and financial reporting under ASC 840, with a focus on leases, asset depreciation, and financial decision-making.
Explanation:The subject of this question is Business, specifically focused on accounting and financial reporting as per ASC 840. The question involves scenarios that include leasing agreements, purchase of assets, interest expenses, principal payments, and depreciation expenses related to business operations and financial decisions. These scenarios require an understanding of concepts such as present value calculations, depreciation methods, and lease accounting.
An example given within the context of the question is that of Treehouse, which purchased office furniture for $20,000 with a useful life of 10 years and a salvage value of $2,500. To calculate the annual depreciation expense using the straight-line method, we would subtract the salvage value from the cost of the furniture and divide by its useful life, resulting in ($20,000 \'96 $2,500) / 10 = $1,750 per year.
In finance and accounting, accurate recording and reporting are crucial for decision-making. Depreciation affects net income and therefore can impact financial decisions, such as whether Ms. Stein should purchase a tractor, based on projected returns and an interest rate of 7%.
Complete the following sentences.
1. establish goals for the company’s sales and production personnel.
2. The is a set of interrelated budgets that constitutes a plan of action for a specified time period.
3. reduces the risk of having unrealistic budgets.
4. include the cash budget and the budgeted balance sheet.
5. The budget is formed within the framework of a .
6. contain considerably less detail than budgets.
Answer
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Explanation
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The following sentences are completed.
helps align their efforts and focus toward achieving specific targets and objectives.The master budget is a set of interrelated budgets that constitutes a plan of action for a specified time period. The risk of having unrealistic budgets can be decreased through regular reviews of actual performance against the budget and ongoing monitoring.The financial budgets typically include the cash budget, which outlines the expected cash inflows and outflows, and the budgeted balance sheet.The budget is created under the constraints of a budgeting period, which is typically a predetermined time frame like a fiscal year or a particular quarter. Budgets that are extended into future periods and are continuously updated are called rolling budgets or continuous budgets.1. Establishing goals for the company's sales and production personnel helps align their efforts and focus toward achieving specific targets and objectives.
2. The master budget is a set of interrelated budgets that constitutes a plan of action for a specified time period. It typically includes individual budgets for sales, production, operations, marketing, and other relevant departments, all consolidated into a comprehensive plan.
3. The risk of having unrealistic budgets can be decreased through regular reviews of actual performance against the budget and ongoing monitoring. In order to keep the budget realistic and in line with shifting conditions, this enables the required changes and corrective actions to be performed.
4. The financial budgets typically include the cash budget, which outlines the expected cash inflows and outflows, and the budgeted balance sheet, which projects the financial position of the company at a specific point in time based on the budgeted activities and transactions.
5. The budget is created under the constraints of a budgeting period, which is typically a predetermined time frame like a fiscal year or a particular quarter. Planning, carrying out, and assessing the budgeted actions and outcomes have a time frame thanks to the budgeting period.
6. Budgets that are extended into future periods and are continuously updated are called rolling budgets or continuous budgets. The amount of information in these budgets is often far smaller than annual budgets, and they are regularly amended and altered to reflect shifting conditions, providing for greater adaptability and responsiveness in financial planning and control.
Thus, the mentioned above sentences are complete.
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McCoy paid a one-time special dividend of $3.40 on October 18, 2010. Suppose you bought
McCoy stock for $47.00 on July 18, 2010, and sold it immediately after the dividend was paid for
$63.52 . What was your realized return from holding McCoy?
A) 4.24%
B) 6.36%
C) 33.91%
D) 42.38%
Answer:
option (D) 42.38%
Explanation:
Data provided in the question:
Dividend paid = $3.40
Purchase price of stock = $47.00
Selling price = $63.52
Now,
Realized Return
= [ Selling price - Purchase Price + dividend ] ÷ Purchase Price
= [ $63.52 - $47.00 + $3.40 ] ÷ $47.00
= [ $16.52 + $3.40 ] ÷ $47.00
= $19.92 ÷ $47
= 0.4238
or
= 0.4238 × 100%
= 42.38%
Hence,
The correct answer is option (D) 42.38%
The average annual return over the period 1926-2009 for small stocks is 21.2%, and the standard
deviation of returns is 21.2%. Based on these numbers, what is a 95% confidence interval for
2010 returns?
A) -10.6%, 31.8%
B) 0%, 42.4%
C) -21.2%, 42.4%
D) -21.2%, 63.6%
Answer:
The 95% confidence interval is between -21.2% and 63.6% (option D).
Explanation:
Hi, the empirical rule dictates that 95% of the data is found within +/- 2 standard deviations from the mean, therefore our interval can be found doing the following calculations.
[tex]L.Limit=Mean-2(S.D)[/tex]
That is:
[tex]L.Limit=0.212-2(0.212)=-0.212[/tex]
Now, the higher limit.
[tex]H.Limit=Mean+2(S.D)[/tex]
[tex]H.Limit=0.212+2*(0.212)=0.636[/tex]
So, the answer is D) -21.2%, 63.6%
Best of luck.
Dextra Computing sells merchandise for $17,000 cash on September 30 (cost of merchandise is $11,900). Dextra collects 3% sales tax. Record the entry for the $17,000 sale and its sales tax. Also record the entry that shows Dextra sending the sales tax on this sale to the government on October 15.
A. Record the cash sales and 3% sales tax.
B. record the cost of sept. 30th sales.
C. record the entry that shows the remittance of the 3% tax on this sale to the state government on october 15.
D. please show the calculations as well.
Answer:
Explanation:
The journal entries are shown below:
A. On September 30
Cash A/c Dr $17,510
To Sales $17,000
To Sales tax payable $510 ($17,000 × 3%)
(Being goods are sold on credit with sales tax)
B. On September 30
Cost of goods sold A/c Dr $11,600
To Inventory A/c $11,600
(Being goods are sold at cost)
C. On October 15
Sales tax payable $510
To Cash A/c
(Being sale tax is recorded)
Each unit of A is composed of one unit of B, two units of C, and one unit of D. C is composed of two units of D and three units of E. Items A, C, D, and E have on-hand inventories of 20, 10, 20, and 15 units, respectively. Item B has a scheduled receipt of 10 units in Period 1, and C has a scheduled receipt of 50 units in Period 1. Lot-for-lot (L4L) is used for Items A and B. Item C requires a minimum lot size of 50 units. D and E are required to be purchased in multiples of 95 and 55, respectively. Lead times are one period for Items A, B, and C, and two periods for Items D and E. The gross requirements for A are 30 in Period 2, 30 in Period 5, and 40 in Period 8. Note: To simplify data handling to include the receipt of orders that have actually been placed in previous periods, the following five-level scheme can be used. (A number of different techniques are used in practice, but the important issue is to keep track of what is on hand, what is expected to arrive, what is needed, and what size orders should be placed.) Find the planned order releases for all items. (Leave no cells blank - be certain to enter "0" wherever required.) Period 1 2 3 4 5 6 7 8 Item A OH = 20 LT = 1 SS = 0 Q = L4L Gross requirements Scheduled receipts Projected available balance Net requirements Planned order receipts Planned order releases Item B OH = 0 LT = 1 SS = 0 Q = L4L Gross requirements Scheduled receipts Projected available balance Net requirements Planned order receipts Planned order releases Item C OH = 10 LT = 1 SS = 0 Q = 50 Gross requirements Scheduled receipts Projected available balance Net requirements Planned order receipts Planned order releases Item D OH = 20 LT = 2 SS = 0 Q = 95 Gross requirements Scheduled receipts Projected available balance Net requirements Planned order receipts Planned order releases Item E OH = 15 LT = 2 SS = 0 Q = 55 Gross requirements Scheduled receipts Projected available balance Net requirements Planned order receipts Planned order releases
This question is about the computation of planned order releases for an inventory system using Materials Requirements Planning (MRP). Starting from Item A, A's order releases are calculated based on the given gross requirements and the on-hand inventory. Items B, C, D, and E's order releases are accordingly calculated considering their compositions in A or C and existing inventories.
Explanation:This question involves the principles of inventory management, particularly in the areas of Materials Requirements Planning (MRP) and lot sizing methods. To solve this, we need to start off with Item A, as its gross requirements are given, and follow the bill of materials structure to determine the requirements, receipts, available balance, and planned order releases of the other items.
For Item A, the gross requirements given for period 2, 5, 8 are 30, 30, 40 respectively. Given that the on-hand inventory for A is 20, and considering the lead time of 1 period, the planned order release in period 1 would be 10 (30 requirements in period 2 - 20 on-hand inventory). Proceeding in a similar manner, the planned order releases for periods 4 and 7 would be 30 and 40 respectively.
Next, for Item B, since each unit of A requires one unit of B, the gross requirements for B would be the same as A's planned order releases i.e., 10 in period 1, 30 in period 4, and 40 in period 7.
For Item C, considering the composition of A and the scheduled receipt of 50 units in period 1, the planned order release of C would be the difference between the multiplied A's order releases and the on-hand inventory and the already scheduled receipts.
For Items D and E, considering their compositions in A and C and following a similar pattern of reasoning, their planned order releases could be calculated.
This is a simplified explanation and the real calculations could be more complex, involving consideration for safety stock and other factors.
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Treasury stock shares are________________.a. unissued shares that are held by the treasurer of the corporation.b. part of the total outstanding shares but not part of the total issued shares of a corporation.c. shares held by the U.S. Treasury Department.d. issued shares that have been reacquired by a corporation.
Answer:
The correct answer is letter "D": issued shares that have been reacquired by a corporation.
Explanation:
Treasury stock is a company's own stock that is held in its treasury for later years. Often, a company purchases its treasury stocks on the open market. Treasury stocks may also exist because the issuing company did not sell all of its outstanding shares. Some were held back for later years to raise additional cash or to prevent a hostile takeover.
Hector's wealth is zero, he expects to work for another 45 years at a constant salary of $80,000 and live for another 60 years. If Hector receives a $20,000 bonus during his first year of work and he completely smooths consumption over his lifetime, his marginal propensity to consume out of a transitory increase in income is
A. $67,500.
B. $75,000.
C. $80,000.
D. $111,111.
His marginal propensity to consume out of a transitory increase in income is [tex]\$67,500[/tex].
Explanation:
In financial aspects, the minimal penchant to expend (MPC) is a metric that measures actuated utilization, the idea that the expansion in close to home shopper spending (utilization) happens with an increment in discretionary cash flow (pay after expenses and moves).
The extent of extra cash which people spend on utilization is known as penchant to expend. MPC is the extent of extra pay that an individual expends.
For instance, if a family unit procures one additional dollar of discretionary cashflow, and the minor affinity to expend is 0.65, at that point of that dollar, the family unit will burn through 65 pennies and spare 35 pennies. Clearly, the family unit can't spend more than the additional dollar (without getting).
As indicated by John Maynard Keynes, minimal affinity to devour is short of what one.
Waterway Toothpaste Company initiates a defined benefit pension plan for its 50 employees on January 1, 2017. The insurance company which administers the pension plan provided the following selected information for the years 2017, 2018, and 2019.
Col1 Plan Assets (Fair Value $51000 $87300 $183130
Col2 Accumulated benefit obligation 45100 163400 290800
Col3 Projected benefit obligation 61000 203910 323900
Co4 lNet (gain) loss (for purposes of corridor calculation) 0 78700 81518
Col5 Employer’s funding contribution (made at end of year) 51000 61000 105800
There were no balances as of January 1, 2017, when the plan was initiated. The actual and expected return on plan assets was 10% over the 3-year period, but the settlement rate used to discount the company’s pension obligation was 13% in 2017, 11% in 2018, and 8% in 2019. The service cost component of net periodic pension expense amounted to the following: 2017, $61,000; 2018, $87,300; and 2019, $114,700. The average remaining service life per employee is 12 years. No benefits were paid in 2017, $29,800 of benefits were paid in 2018, and $18,700 of benefits were paid in 2019 (all benefits paid at end of year).Calculate the amount of net periodic pension expense that the company would recognize in 2017, 2018, and 2019.Pension Expense for 2017?Pension Expense for 2018?Pension Expense for 2019?Prepare the journal entries to record net periodic pension expense, employer’s funding contribution, and related pension amounts for the years 2017, 2018, and 2019.
Answer
The answer and procedures of the exercise are attached in the following 4 images.
Explanation
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Perit Industries has $190,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A Project B Cost of equipment required $ 190,000 $ 0 Working capital investment required $ 0 $ 190,000 Annual cash inflows $ 28,000 $ 48,000 Salvage value of equipment in six years $ 8,900 $ 0 Life of the project 6 years 6 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries’ discount rate is 15%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables.
Required:
1. Compute the net present value of Project A. (Enter negative value with a minus sign. Round your final answer to the nearest whole dollar amount.)
2. Compute the net present value of Project B. (Enter negative value with a minus sign. Round your final answer to the nearest whole dollar amount.)
3. Which investment alternative (if either) would you recommend that the company accept?
Answer:
Please see attachment
Explanation:
Please see attachment
The Net Present Value (NPV) of each project is calculated using the given cash inflows, discount rates, and initial investments. The project with the higher NPV should be selected as it will generate the highest return for the company.
Explanation:The Net Present Value (NPV) is a formula that calculates the present value of cash inflows and outflows of an investment using a given discount rate. To calculate the NPV for Projects A and B, we multiply respective cash inflows by the discount factor and subtract the initial investment.
For Project A, the equation will be NPV = [($28,000*PVIFA 15%, 6)] - $190,000 + ($8,900*PVIF 15%,6). Using the provided tables for the Present Value Interest Factor for Annuity (PVIFA) and the Present Value Interest Factor (PVIF), we calculate the NPV.
For Project B, the formula is NPV = [($48,000*PVIFA 15%, 6)] - $190,000 + ($190,000*PVIF 15%,6). We populate the variables in the same way as Project A.
To decide which project to choose, Perit Industries should favor the one with the highest NPV, as this represents the project that promises the most wealth for the company. If both NPVs are negative, it means the projects will not provide an adequate return, and the funds should be allocated elsewhere.
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On January 1, 2021, Canseco Plumbing Fixtures purchased equipment for $44,000. Residual value at the end of an estimated four-year service life is expected to be $8,000. The company expects the equipment to operate for 20,000 hours. The equipment operated for 2,900 and 3,700 hours in 2021 and 2022, respectively.Required:a. Calculate depreciation expense for 2021 and 2022 using straight line method.b. Calculate depreciation expense for 2021 and 2022 using double-declining balance method.c. Calculate depreciation expense for 2021 and 2022 using units-of-production using hours operated.
Answer:
a.
Depreciation expense for 2021: $9,000
Depreciation expense for 2022: $9,000
b.
Depreciation expense for 2021: $18,000
Depreciation expense for 2022: $9,000
c.
Depreciation expense for 2021: $5,220
Depreciation expense for 2022: $6,660
Explanation:
a. Canseco Plumbing Fixtures uses Straight-line method
Annual Depreciation Expense = (Cost of asset − Residual value Value)/Useful Life = ($44,000 - $8,000)/4 = $9,000
Depreciation expense for 2021: $9,000
Depreciation expense for 2022: $9,000
b. Canseco Plumbing Fixtures uses Double-declining-balance method
Under the straight-line method, useful life is 4 years, so the equipment's annual depreciation will be 25% of the Depreciable cost.
Depreciable cost = Total asset cost - Residual value = $44,000-$8,000 = $36,000
Under the double-declining-balance method the 25% straight line rate is doubled to 50% - multiplied times the Depreciable cost's book value at the beginning of the year.
In 2021, depreciation expense = 50% x $36,000 = $18,000
At the beginning 2022, the Depreciable cost's book value is $36,000-$18,000 = $18,000
Depreciation expense in 2022 = 50% x $18,000 = $9,000
c. Canseco Plumbing Fixtures uses Units-of-activity method
The Units-of-activity depreciation method is calculated by using the following formula:
Depreciation Expense = [(Cost of asset − Residual value)/Life in Number of hours Operated]x Number of hours Operated] = Depreciation Expense per hour x Number of hours Operated
Depreciation Expense per hour = ($44,000-$8,000)/20,000 = $1.8
Depreciation expense each year = Actual hours Operated x Depreciation Expense per hour.
Depreciation expense for 2021 = 2,900 x $1.8 = $5,220
Depreciation expense for 2022 = 3,700 x $1.8 = $6,660
Using different methods - straight line, double declining, and units of production, the depreciation for Canseco Plumbing Fixtures' equipment was calculated for the years 2021 and 2022. Each method uses different calculations and factors thereby providing differing amounts of depreciation.
Explanation:
This question revolves around the concept of depreciation. Depreciation allows companies to reduce the value of an asset over time due to its usage, wear and tear.
For calculating the depreciation expense for 2021 and 2022, we would use three different methods as per the request.
Straight-Line MethodThe formula for Straight-Line Depreciation is (Cost - Residual Value) / Useful life. Plugging the values in, we get ($44,000 - $8,000) / 4 years = $9,000 per year. Hence, depreciation expense for both 2021 and 2022 is $9,000 per year.
Double Declining BalanceIn Double Declining Balance method, the depreciation rate is double the rate of straight line method. So the rate is 2 x 25% = 50%. For 2021, the depreciation is $44,000 x 50% = $22,000. For 2022, we depreciate the remaining book value, so the depreciation is ($44,000 - $22,000) x 50% = $11,000.
Units-of-ProductionIn Units of Production method, depreciation is based on the actual usage of the asset. First, calculate the depreciation per hour: ($44,000 - $8,000) / 20,000 hours = $1.80 per hour. For 2021, the depreciation is $1.80 x 2,900 hours = $5,220. For 2022, depreciation is $1.80 x 3,700 hours = $6,660.
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On July 1, 2013, Farm Fresh Industries purchased a specialized delivery truck for $126,000. At the time, Farm Fresh estimated the truck to have a useful life of eight years and a residual value of $30,000.
On March 1, 2018, the truck was sold for $58,000.
Farm Fresh uses the straight-line depreciation method for all of its plant and equipment.
Partial-year depreciation is calculated based on the number of months the asset is in service.
Required:
1. Prepare the journal entry to update depreciation in 2018.
2. Prepare the journal entry to record the sale of the truck.
3. Assuming that the truck was sold for $80,000, prepare the journal entry to record the sale.
Answer:
I think last option
Answer:
1.
Debit Depreciation Expense $2,000
Credit Accumulated depreciation $2,000
2.
Debit Cash $58,000
Debit Accumulated depreciation account $56,000
Debit Loss on asset disposal $12,000
Credit Delivery truck asset $126,000
3.
Debit Cash $80,000
Debit Accumulated depreciation account $56,000
Credit Gain on asset disposal $10,000
Credit Delivery truck asset $126,000
Explanation:
Farm Fresh uses straight-line depreciation, Depreciation Expense each year is calculated by following formula:
Annual Depreciation Expense = (Cost of asset − Residual Value )/Useful Life = ($126,000-$30,000)/8 = $12,000
Depreciation Expense in 2013 = ($12,000/12)x6 = $6,000
1. From January 1, 2018 to March 1, 2018, the truck was in service for 2 months
Depreciation Expense in 2018 = ($12,000/12)x2 = $2,000
The entry:
Debit Depreciation Expense $2,000
Credit Accumulated depreciation $2,000
2.
From July 1, 2013 to March 1, 2018, the truck was in service for 4years and 8 months
Accumulated depreciation = $6,000 + $12,000 x 4 + $2,000 = $56,000
Carrying amount of the asset = Cost of asset - Accumulated depreciation = $126,000 - $56,000 = $70,000
Sale price - Carrying amount of the asset = $58,000-$70,000 = -$12,000
The company recognized loss on the sale $12,000.
The entry:
Debit Cash $58,000
Debit Accumulated depreciation account $56,000
Debit Loss on asset disposal $12,000
Credit Delivery truck asset $126,000
3.
Sale price - Carrying amount of the asset = $80,000-$70,000 = $10,000
The company recognized gain on the sale $10,000
The entry:
Debit Cash $80,000
Debit Accumulated depreciation account $56,000
Credit Gain on asset disposal $10,000
Credit Delivery truck asset $126,000
For the past 50 days, daily sales of a specialty product in a large grocery store have been recorded:Units Sold Number of Times10 820 1830 1040 850 61.What is the average number of units sold?2.What is the standard deviation?3.What is a 68.26% confidence interval? Please interpret.4.Suppose that the following random numbers were obtained:.86 .23 .73 .40 .95 Use these random numbers to simulate 5 days of sales.a.What is the average number of units sold?b.Can we conclude that the sales are random? Discuss.
Answer:
(A) what is the average number of units sold for 50 days: 820, 1830, 1040, 850, 6
(B) what is the standard deviation
(C) what is the average number of units sold for 5 days: 86, 23, 73, 40, 95
(D) can we conclude that the sales are random?
Explanation:
(A)
(820×10) + (1830×10) + (1040×10) + (850×10) + (6×10) = 45,460
45,460÷50 = 909.2units
(B)
(909.2-820)^2 × 10 = total squared mean deviation of the first 10 sales or 10days - sales of 820 per day
Doing same for the other 4 values, the total of squared mean deviation for the 5 days is
16922128÷50 = 338442.56 = Variance of the set of sales values
Standard Deviation is the square root of Variance so it is 581.758
(C) Mean of random units sold in 5 days: 317÷5 = 63.4
(D) for 50 days, mean sale was 909.2 units
For 5 days, random mean sale was 63.4
50÷5=10
909.2÷63.4=14.34
Yes, we can conclude that the sales are random
Suppose that demand for a product is Q = 1200 − 4P and supply is Q = −240 + 2P. Furthermore, suppose that the marginal external damage of this product is $12 per unit. How many more units of this product will the free market produce than is socially optimal? Calculate the deadweight loss associated with the externality.
Answer: 16 units more than social optimum.
DWL = dead weight loss = (1/2)*(Q* - Q°) 12 =96
Explanation:
Q=1200 - 4P and Q=-240 + 2P
In a free market quantity demand =quantity supplied
1200 -4P = -240 +2P
P =240
Sub P
Q* = 240
Socially optimal quantity is
Marginal social benefit (MSC)= marginal social cost(MSC), including external damage =MEC
MPC= marginal private cost =inverse of supply function
MPC = (1/2)*Q + 120
MEC=12
MSC =(MPC +MEC) = (1/2)Q +120 +12
MSC= MPB where MPB is marginal private benefit = inverse of demand functn
MPB = 300 -(1/4)Q
(1/2)Q + 132 =300 - (1/4)Q
Q° = 224
Difference btw Q* & Q° = 16 units more than social optimum.
DWL = dead weight loss = (1/2)*(Q* - Q°) 12 =96
The original market equilibrium occurs at a quantity of 440 and a price of $15. However, when considering an external damage cost of $12 per unit, the supply curve shifts upwards leading to a new equilibrium at a price of $30 and quantity of 410. Thus, the market would produce 30 more units than is socially optimal, creating a deadweight loss.
Explanation:In this case, the demand for a product is represented by Q = 1200 − 4P and the supply by Q = −240 + 2P. The original equilibrium (before considering the external social costs of production) is found where the private supply curve intersects the demand curve. In this example, the original equilibrium occurs at a price of $15 and a quantity of 440.
When the marginal external damage of $12 per unit (possibly due to environmental impacts) is considered, the costs of production go up. Consequently, the supply curve shifts upwards, resulting in a new equilibrium at a higher price ($30) but lower quantity (410). The difference in quantities (440-410 = 30 units) represents the additional units that the free market would produce compared to the socially optimal level.
To calculate the deadweight loss associated with the externality, you would look at the discrepancy between the total costs and benefits to society and the private costs and benefits. Given the information provided, a specific calculation cannot be made, but the deadweight loss would be represented by the triangular area on a supply and demand graph that encompasses the quantity difference between the socially optimal level and the free market level.
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The Cats and Dogs League was organized as a nongovernmental not-for-profit organization. The League received a pledge of $10,000 to be used to build an addition to the kennel. This donation will not be received for three years. How should this pledge be recorded?
Answer:It should be only be disclose in their financial statement.
Explanation:
This is the case of a contingent asset in which it's probable that a presently determined future benefits will be available to a firm as a result of the occurrence or non occurence of certain future actions which are beyond the control of the firm.
The duty to donate is not binding on the donor though the amount is specified and neither is with whiting the power of league to command donation but it's only probable they will get the donation.
On January 1, Year 3, Boxwood, Inc. issues 1,000 shares of $1 par value common stock for $30 per share. Later that year, the company issues 1,000 shares of $10 par value preferred stock for $80 per share. The company’s balance sheet as of December 31, Year 3, will show total paid-in capital of:
Answer:
total paid-in capital = $110,000
Explanation:
When investors or shareholders pay a lump sum money to a company to get the stock of the that company, it is called paid-in capital.
Here, the par value = $1, therefore, additional capital per stock = $30 - $1 = $29
For preferred stock,
Par value = $10, and additional paid-in capital per stock = $(80 - 10) = $70.
See images to get the explanation:
A situation in which the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect material misstatements on a timely basis is referred to as a:A. Control deficiency.B. Material weakness.C. Reportable condition.D. Significant deficiency.
Answer: (A) Control deficiency
Explanation:
The control deficiency is the type of situation in which the operation and the designing of the control are not allowing the management and an employee performing the various type of assigned function.
The control deficiency process occur when the person are involving with the authority in the transaction cycle.
This situation is usually occur in an larger type of an organization. The deficiency may be on the financial report that control internally.
Therefore, Option (A) is correct.
A department has budgeted monthly manufacturing overhead cost of $540,000 plus $3 per direct labor hour. If a flexible budget report reflects $1,044,000 for total budgeted manufacturing cost for the month, the actual level of activity achieved during the month was: a) 348,000 direct labor hours b) 168,000 direct labor hours c) 528,000 direct labor hours d) Cannot be determined from the information provided
Answer:
b) 168,000 direct labor hours
Explanation:
The computation of the actual level of activity achieved is shown below:
= (Total budgeted manufacturing cost - budgeted monthly manufacturing overhead cost) ÷ (Rate per direct labor hour)
= ($1,044,000 - $540,000) ÷ ($3)
= $504,000 ÷ $3
= 168,000 direct labor hours
Simply we deduct the budgeted monthly manufacturing overhead cost from the total budgeted manufacturing cost and then divide it by the rate per direct labor hour so that the accurate direct labor hours could be computed
Suppose an investment will have an initial positive cash flow of $100,000 in year 0, followed by a negative cash flow of $110,000 in period 1. Thus, the IRR of the project is 10%. Should we accept or reject the project if the required return is 15%?
Answer: Reject the Project
Explanation:
If the required return (also known as hurdle rate) is 15% (which is above the Internal Rate of Return of 10%) then the project or investment is less profitable.
The required return is the minimum return that will repay initial investment and other input.
Since the actual or eventual rate of return (IRR) is less than this required minimum, the project should be rejected.
On the other hand, if the investor has no alternative project to invest in or if the investor no time constraints, he or she can wait to see the Internal Rate of Return in succeeding periods or years like Period 2, Period 3, etcetera.
Which of the following is a disadvantage of establishing a wholly owned subsidiary?
a. Establishing a wholly owned subsidiary is generally the most costly method.
b. Firms will typically lose control over any technological competence.
c. A firm engaging in this strategy will have little control over operations in the foreign country.
d. Firms will face difficulties in building a certain organizational culture in greenfield ventures.
Answer:
The answer is letter A
Explanation:
Establishing a wholly owned subsidiary is generally the most costly method.
Gilberto lives in San Francisco and runs a business that sells guitars. In an average year, he receives $842,000 from selling guitars. Of this sales revenue, he must pay the manufacturer a wholesale cost of $452,000; he also pays wages and utility bills totaling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $38,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Gilberto does not operate this guitar business, he can work as an accountant, receive an annual salary of $48,000 with no additional monetary costs, and rent out his showroom at the $38,000 per year rate. No other costs are incurred in running this guitar business.
Answer:
Gilberto is NOT earning a normal profit
Explanation:
Salary Gilberto could earn = implicit.
Wholesale cost = explicit
wages and bills = explicit
rental income = implicit
Explicit cost = 45.200 + 301.000 = 753.000
Implicit cost = 38.000 + 48.000 = 86.000
revenue = 842.000
accounting profit = 842.000 -753.000 = 89.000
Economic profit = 89.000 - 86.000 = 3.000