Answer:
$0.0824
Explanation:
Calculating the gain on the collar, we have:
Gain= (delta of stock)- (delta of call) + (delta of put)
Where,
Delta of call = N(d1) short call=0.7411
Delta of put = (N(d1) long put - 1) =
0.8235 - 1 = -0.1765
Therefore gain will be:
Gain = $1 - 0.7411 - 0.1765
= 0.0824
The gain on the collar by an increase of $1 in stock price is 0.0824
Gonzalez Company acquired $200,000 of Walker Co., 6% bonds on May 1 at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, Gonzalez Company sold $70,000 of the bonds for 97. Journalize entries to record the following in Year 1: For a compound transaction, if an amount box does not require an entry, leave it blank.
Answer and Explanation:
The journal entries are shown below:
a. Investment Dr $200,000
To Cash $200,000
(Being the acquirement is recorded)
b. Cash Dr $6,000
To Interest revenue $6,000
(Being the cash is recorded)
The computation is shown below:
= $200,000 × 6% × 6 months ÷ 12 months
= $6,000
c. Cash $67,900 ($70,000 × 97%)
Loss on sale of investment $2,100
To Investment $70,000
(Being the cash is recorded)
d. Interest receivable $1,300
To Interest revenue $1,300
(Being the interest receivable is recorded)
= ($200,000 - $70,000) × 6% × 6 months ÷ 12 months
= $1,300
Stein Co. issued 17-year bonds two years ago at a coupon rate of 9.1 percent. The bonds make semiannual payments. If these bonds currently sell for 115 percent of par value, what is the YTM
Answer:
YTM is 7.43%
Explanation:
The yield to maturity of a bond can be computed using the rate formula in excel,which is given below:
=rate(nper,pmt,-pv,fv)
the nper is the number of coupon interest the bond would pay before it is redeemed at maturity starting from ,which is 15 years multiplied by 2=30
the pmt is the semiannual coupon payable by the bond,which is $1000*9.1%/2=$45.5
the pv is the price of the bond which is 115%*$1000=$1150
the fv is the face value of the bond at $1000
=rate(30,45.5,-1150,1000)=3.715%
The rate of 3.715% is a semi annual rate
annual rate 7.43%(3.715%*2)
Suppose that the federal administration plans to fight a deep, ongoing recession with a nationwide plan of increasing infrastructure. Congress approves it and adjusts the budget accordingly to put the plan in motion immediately. Aggregate demand spending components include consumption (C), investment (I), government (G), and exports (X) minus imports (M). Analyze what the aggregate demand and aggregate supply model predicts about the infrastructure plan to answer three questions.
Complete Questions:
Suppose that the federal administration plans to fight a deep ongoing recession with a nationwide plan of increasing infrastructure. Congress approves it and adjusts the budget accordingly to put the plan in motion immediately. Aggregate demand spending components include consumption (C), investment (I), government (G), and exports (X) minus imports (M). Analyze what the aggregate demand and aggregate supply model predicts about the infrastructure plan to answer the following three questions.
1. What happens to the level of G
(a. it can increase (+), b. decrease (-) or c. stay constant (0)).
2. What likely happens to the aggregate demand curve?
a. The curve shifts to the left (A decrease in AD)
b. The curve shifts to the right (An increase in AD)
c. The curve remains in the same spot
3. What likely happens to the level of unemployment?
a. unemployment decreases
b. unemployment remains the same
c. unemployment increases
Answer:
1. option a
2. option b
3. option a
Explanation:
1. Level of government spending will increase.Option A.
2. It will shift to the right. Option B.
3. Unemployment will decrease. Option A. This is because as AD increases firms will employ more workers to produce more output. Thus, unemployment will decrease.
Final answer:
Increasing government infrastructure spending boosts the government spending component of aggregate demand, expected to shift the aggregate demand curve rightward and stimulate the economy. This can alleviate unemployment and possibly lead to increased productivity and lower costs for businesses.
Explanation:
When the federal administration decides to combat a deep, ongoing recession by increasing infrastructure spending, we are discussing changes within the realm of macroeconomics, specifically looking at the aggregate demand and aggregate supply (AD-AS) model.
According to the AD-AS model, government spending (G) is a crucial component of aggregate demand, which also includes consumption (C), investment (I), and net exports (X-M, which is exports (X) minus imports (M)).
An increase in government spending, in an effort to improve infrastructure, directly increases the G component of aggregate demand. This is expected to shift the aggregate demand curve to the right, indicating a higher total planned expenditure in the economy at every price level.
This shift to the right suggests a stimulation in total spending, which includes higher employment and production levels, potentially helping to alleviate unemployment and lift the economy out of recession.
Moreover, this additional spending typically results in a multiplier effect, as the initial government spending leads to increased incomes for businesses and workers involved in infrastructure projects, who then increase their consumption spending, possibly leading to further increases in aggregate demand.
The impact on aggregate supply might be less immediate, but over the long term, improved infrastructure can reduce costs for businesses and improve productivity, which can shift the aggregate supply curve to the right as well.
Data on Gantry Company's direct labor costs are given below: Standard direct-labor hours 46,000 Actual direct-labor hours 45,000 Direct-labor efficiency variance-favorable$4,800 Direct-labor rate variance-favorable$9,000 Total direct labor payroll$207,000 What was Gantry's standard direct labor rate
Answer
Standard labour rate per = $4.8 per hour
Explanation
Labour efficiency variance is the difference between the actual time taken to achieve a given production output less the standard hours allowed for same multiplied by the standard labour rate
Standard labour rate = Efficiency variance/ Difference in hours
Difference in hours = Standard hour - Actual hours
= 46,000 - 45,000
= 1000 hours
Standard rate = 4,800/100o hours
= $4.8 per hour
Rocky Mountain Camping Equipment, Inc. has established the following direct-material standards for its two products.
Standard Quantity Standard Price
Standard camping tent 21 yards $9.50 per yard
Deluxe backpacking tent 16 yards $7.60 per yard
During March, the company purchased 5,900 yards of tent fabric for its standard model at a cost of $22,420. The actual March production of the standard tent was 290 tents, and 2,670 yards of fabric were used. Also during March, the company purchased 2,900 yards of the same tent fabric for its deluxe backpacking tent at a cost of $14,500. The firm used 1,480 yards of the fabric during March in the production of 370 deluxe tents.
Required:
1. Compute the direct-material purchase price variance and quantity variance for March.
2. Prepare journal entries to record the purchase of material, use of material, and incurrence of variances in March.
Answer: Please see explanation column for answer
Explanation:
TENT TYPE---STANDARD CAMPING TENT
Standard camping tent 21 yards $9.50 per yard
Actual qty purchased in yards = 5900
Actual qty used= 2670
Standard Price= $9.50
Standard quantity yards =290x21= 6090 yards
Actual price per yard= $22,420/5900=$3.8
TENT TYPE---DELUXE BACKPACKING TENT
Deluxe backpacking tent 16 yards $7.60 per yard
Actual qty purchased in yards =2900
Actual qty used= 1480
Standard quantity yards =370X 16= 5920 Yards
Actual price per yard= $14,500/ 2900= $5
Standard price= $7.60
A) To find Direct Material Price Variance
For Standard Model
Actual quantity purchased x Actual price=5900x3.8=$22,420
Actual quantity x Standard price=5900x9.50= $56,050
Direct Material Price Variance which is favourable is given by $56,050 - $22,420= $33, 630
For Deluxe
Actual quantity purchased x Actual price= 2900x 5.0= 14,500
Actual quantity x Standard price=2900x7.60=$22,040
Direct Material Price Variance which is favourable is given by = $22,040-14500=$7540
TOTAL DIRECT MATERIAL PURCHASE PRICE VARIANCE = $33,630-$7,540=$26,090
B) To find Direct Material Quantity Variance
For Standard
Actual quantity x standard price= 2,670x $9.50=$25,365
Standard quantity x Standard price=6090x9.50= $57, 855
Direct Material Quantity Variance which is Favorable is given by $57,855-$25,365= $32,490
For Deluxe
Actual quantity x standard price= 1480 x $7.60=$11,248
Standard quantity x Standard price= 5920 x $7.60= $44,992
Direct Material Price Variance which is Favorable is given by $44,992 -$11,248= $33,744
TOTAL DIRECT MATERIAL QUANTITY VARIANCE = $33,744-$32,490 =$1254
Journal to record purchase of materials and incurred price variance
March
Raw materials inventory ----Debit 78,090……….(5900x9.50 + 2900x7.60)
Direct Materials price variance-----Debit $26,090
Accounts Payable----------------Credit $36, 920……..($=$22,420+14,500 )
Journal to record use of direct materials and Incurred price variance
March
Work in progress inventory ----Debit 102,847 ……….(6090 x$9.5 + 5920 x 7.60)
Direct Materials quantity variance-----Debit $1254
Accounts Payable----------------Credit $36,613……. .....(2670 x 9.5+ 1480 x 7.60)
The direct-material purchase price variance and quantity variance for March is :
For Standard Model= $33, 630 , $32,490
For Deluxe Model= $26,090 , $1254
Rocky Mountain Camping EquipmentWhat all information we have ?
Standard camping tent 21 yards $9.50 per yard
Actual qty purchased in yards = 5900
Actual qty used= 2670
Standard Price= $9.50
Standard quantity yards =290x21= 6090 yards
Actual price per yard= $22,420/5900=$3.8
Deluxe backpacking tent 16 yards $7.60 per yard
Actual qty purchased in yards =2900
Actual qty used= 1480
Standard quantity yards =370X 16= 5920 Yards
Actual price per yard= $14,500/ 2900= $5
Standard price= 0$7.60
Part A) To find Direct Material Price Variance is :
For Standard Model
Direct Material Variance=Actual quantity purchased x Actual price
Direct Material Variance=5900x3.8
Direct Material Price Variance=$22,420
Actual quantity x Standard price=5900x9.50= $56,050
Direct Material Price Variance which is favourable is given by $56,050 - $22,420
Direct Material Price Variance = $33, 630
For Deluxe
Actual quantity purchased x Actual price= 2900x 5.0= 14,500
Actual quantity x Standard price=2900x7.60=$22,040
Direct Material Price Variance which is favourable is given by = $22,040-14500=$7540
Total Direct Material = $33,630-$7,540
Total Direct Material =$26,090
Part B) To find Direct Material Quantity Variance
For Standard
Actual quantity x standard price= 2,670x $9.50=$25,365
Standard quantity x Standard price=6090x9.50= $57, 855
Direct Material Quantity Variance which is Favorable is given by =$57,855-$25,365
= $32,490
For Deluxe
Actual quantity x standard price= 1480 x $7.60=$11,248
Standard quantity x Standard price= 5920 x $7.60= $44,992
Direct Material Price Variance which is Favorable is given by :
=$44,992 -$11,248
= $33,744
Total direct material quality variance = $33,744-$32,490
Total direct material quality variance=$1254
2. The Journal to record purchase of materials and incurred price variance is :
March
Raw materials inventory Dr. 78,090
Direct Materials price variance Dr. $26,090
Accounts Payable Cr. $36, 920
(Journal to record use of direct materials and Incurred price variance)
March
Work in progress inventory Dr. $ 102,847
Direct Materials quantity variance Dr. $1254
Accounts Payable Cr. $36,613
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Suppose that you currently have $250,000 invested in a portfolio with an expected return of 12% and a volatility of 9%. The efficient (tangent) portfolio has an expected return of 12% and a volatility of 12%. The risk-free rate of interest is 3%. You want to maximize your expected return without increasing your risk. Without increasing your volatility beyond its current 9%, the maximum expected return you could earn is closest to:
Answer:
9.75%
Explanation:
The capital asset pricing model is used to calculate required rate of return for a certain project. The rate of return is calculated based on risk free rate and rate of return with the volatility. In the given scenario the maximum expected return will be calculated using the CAPM model,
E Rp = Rf + volatility p (E [Rm] - Rf) / volatility m
0.03 + 0.09 (0.12 -0.03) / 0.12
= 9.75%
To maximize your expected return without increasing your risk. Then The maximum expected return is = 9.75%
What is the Capital asset?
When The capital asset pricing model is used to Computation the required rate of return for a certain project. Then The rate of return is calculated based on the risk-free rate and also the rate of return with the volatility. In the given as per question is the scenario the maximum expected return will be calculated using the CAPM model is:
Then E Rp = Rf + volatility p (E [Rm] - Rf) / volatility m
After that add 0.03 + 0.09 (0.12 -0.03) / 0.12
Therefore, = 9.75%
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Symon's Suppers Co. has announced that it will pay a dividend of $4.19 per share one year from today. Additionally, the company expects to increase its dividend by 4.2 percent annually. The required return on the company's stock is 10.4 percent. What is the current share price?
Answer:
$67.6
Explanation:
MV=D1/(Ke-g)
D1=4.19
g=4.2%
Ke=10.4%
MV=4.19/(10.4%-4.2%)
MV=$67.6
A retail store's Sales Account totals $223,000 which includes both the sales revenue and the sales tax on the sales. If the sales tax rate is 5%, what is the amount of the sales taxes owed to the taxing agency?
Answer:
$10,619.05
Explanation:
When sales is made at a tax rate of 5%, the entries to be posted in the proportion of the transaction amount
Dr Cash/ Accounts receivable 105%
Cr Sales revenue 100%
Cr Sales tax 5%
As such, if Sales Account totals $223,000 which includes both the sales revenue and the sales tax on the sales, it means that the accounts contains 105%, as such, the sales tax which is the amount owed the taxing agency
= 5/105 * $223,000
= $10,619.05
Answer:
10619.05
Explanation:
Sales without tax x (100%+sales tax rate) = sales with sales tax
sales without tax x 1.05 (100+5%) =223000
sales without tax = 223000/1.05
sales without tax = 212380.95
sales with sales tax - sales without sales tax = sales tax
223000-212380.95=10619.05
Materials are added at the beginning of the production process at Campo Company. The following information on the physical flow of units is available for the month of November. Beginning work in process (70% complete) 90,000 Started in November 1,020,000 Completed in November and transferred out 960,000 Ending work in process (40% complete) 150,000 Cost data for November show the following. Beginning WIP inventory Direct materials costs $ 35,670 Conversion costs 110,630 Current period costs Direct materials costs $ 408,330 Conversion costs 1,521,370 Required: a. Compute the cost equivalent units for the conversion cost calculation assuming Campo uses the weighted-average method. b. Compute the cost per equivalent unit for materials and conversion costs for November.
The cost equivalent units for conversion costs using the weighted-average method in November were 1,020,000. The cost per equivalent unit for materials was $0.40, and for conversion costs was $1.49.
Explanation:To calculate the cost equivalent units for conversion costs using the weighted-average method, we need to consider the units that were started and completed in November, as well as the units still in process at the end of November.
For the units completed: 960,000 units x 100% = 960,000 equivalent units
For the units in ending work in process: 150,000 units x 40% = 60,000 equivalent units
The total cost equivalent units for conversion costs would be 960,000 + 60,000 = 1,020,000 equivalent units.
The cost per equivalent unit for materials can be calculated by dividing the total materials costs by the cost equivalent units.
For November: $408,330 / 1,020,000 = $0.40 per equivalent unit for materials.
The cost per equivalent unit for conversion costs can be calculated by dividing the total conversion costs by the cost equivalent units.
For November: $1,521,370 / 1,020,000 = $1.49 per equivalent unit for conversion costs.
Zoe's Bakery operates in a perfectly competitive industry. The variable costs at Zoe's Bakery increase, so all of the cost curves (with the exception of fixed cost) shift leftward. The demand for Zoe's pastries does not change, nor does the firm shut down. To maximize profits after the variable cost increase, Zoe's Bakery will ________ its price and ________ its level of production.
Answer:
Not change
Decrease
Explanation:
A perfect competition is characterised by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply.
The bakery cannot change its price because it operates in a perfectly competitive market.
Instead the bakery would reduce cost by decreasing its level of production.
I hope my answer helps you
Zoe's Bakery will increase its price and decrease its level of production, as the short-term response in a perfectly competitive market leads to only a partial offset of the higher costs.
Zoe's Bakery operates in a perfectly competitive industry where an increase in variable costs leads to a leftward shift in the cost curves, which includes the average total cost, average variable cost, and marginal cost curves. In response to increased costs, to maximize profits, Zoe's Bakery will increase its price and decrease its level of production. This is because, in the short run, firms in perfectly competitive markets can only increase prices to partially offset the higher costs—prices rise, but by less than the increase in cost per unit. This could result in economic losses, potentially causing firms to exit the market in the long run. As a consequence, the price may eventually increase by the full amount of the increase in production cost to reach a new equilibrium.
On January 2, Yorkshire Company acquired 40% of the outstanding stock of Fain Company for $600,000. For the year ended December 31, Fain Company earned income of $140,000 and paid dividends of $50,000. Prepare the entries for Yorkshire Company for the purchase of the stock, the share of Fain income, and the dividends received from Fain Company.
Answer: Please refer to Explanation
Explanation:
We shall do the accounting entries as follows,
Purchase of the stock
January 2
DR Investment in Fain Stock $600,000
CR Cash $600,000
The share of Fain income
December 31
DR Investment in Fain Stock $56,000
CR Revenue from Investment (40% * $140,000 income) $56,000
The dividends received from Fain Company.
December 31
DR Cash (40% * $50,000 dividend payout) $20,000
CR Investment in Fain Stock $20,000
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The UJava espresso stand needs two inputs, labor and coffee beans, to produce its only output, espresso. Producing an espresso always requires the same amount of coffee beans and the same amount of time. What type of production function will appropriately describe the production process at UJava, where B represents ounces of coffee beans, and L represents hours of labor? Write down the functional form of the production function.
Answer:
Q = min[3B; 40L]
Explanation:
This is an example of Leontief production function in which factors of production, in this case B and L, are used in fixed proportion that is determined by the production technology which makes substitutability between factors impossible.
If we assume that 3 ounces of B and 40 minutes of L are always required to produce one unit of espresso represented by Q, the functional form of the production function can be written as follows:
Q = min[3B; 40L].
UJava's production process can be illustrated with the Cobb-Douglas production function, represented as Q = BL. Here, Q denotes the number of espressos produced, B is the amount of coffee beans used and L signifies the hours of labour utilised.
Explanation:The question is asking about the production function of UJava, a notional stand selling espresso, for which the input variables are labour (L) and coffee beans (B). Given the usage of beans and labour is fixed per unit of espresso, the appropriate production function would be the Cobb-Douglas production function.
The functional form of the production function would be expressed as: Q = BL, where Q represents the number of espressos produced. In this case, the output (Q - number of espressos made) is dependent on the labor employed (L - hours worked) and the amount of coffee beans used (B - ounces).
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Harold Manufacturing produces denim clothing. This year, it produced 5,120 denim jackets at a manufacturing cost of $41.00 each. These jackets were damaged in the warehouse during storage. Management investigated the matter and identified three alternatives for these jackets. Jackets can be sold as is to a secondhand clothing shop for $8.00 each. Jackets can be disassembled at a cost of $32,200 and sold to a recycler for $12.00 each. Jackets can be reworked and turned into good jackets. However, with the damage, management estimates it will be able to assemble the good parts of the 5,120 jackets into only 2,900 jackets. The remaining pieces of fabric will be discarded. The cost of reworking the jackets will be $101,700, but the jackets can then be sold for their regular price of $45.00 each.
Answer:
the best option is number 1, sell the jackets to a secondhand store at $8 will yield $40,960 in profits
Explanation:
the previous manufacturing costs can be considered sunk costs because they cannot be recovered, so we must analyze the options to determine which one yields the highest profit.
option 1
sell 5,120 jackets to secondhand stores at $8 each, profit = $40,960
option 2
disassemble the jackets and sell them at $12 each, profit = $61,440 - $32,200 (disassembling costs) = $29,240
option 3
rework the jackets, profit = ($45 x 2,900) - $101,700 = $28,800
the best option is number 1, sell the jackets to a secondhand store at $8 will yield $40,960 in profits
Winthrop Enterprises is a holding company (a firm that owns all or most of some other companies' outstanding stock). Winthrop has four subsidiaries. Each subsidiary borrows capital from the parent company for projects. Ervin Company is successful with its projects 93% of the time, Morten Company 76% of the time, Richmond Company 95 % of the time, and Garfield Company 82% of the time. What loan rates should Winthrop Enterprises charge each subsidiary for loans?
Answer:
Ervin loan rate is 10.8%
Morten loan rate is 8.80%
Richmond loan rate is 11.00%
Garfield loan rate is 9.50%
Explanation:
The amount to charge to each subsidiary is the weighting of each subsidiary project success rate multiplied by aggregate loan rate.
Ervin subsidiary project success weighting=(93%*4)/(93%+76%+95%+82%)
=1.08
the figure 4 represents 4 subsidiaries
Morten subsidiary project success weighting=(76%*4)/(93%+76%+95%+82%)
=0.88
Richmond subsidiary project success weighting=(95%*4)/(93%+76%+95%+82%)
=1.10
Garfield subsidiary project success weighting=(82%*4)/(93%+76%+95%+82%)
=0.95
Assuming the aggregate loan rate is 10%
Ervin loan rate=10%*1.08
=10.8%
Morten loan rate=10%*0.88
=8.80%
Richmond loan rate=10%*1.10
=11.00%
Garfield loan rate=10%*0.95
=9.5%
In the course reading this week there was a focus on ‘noise’ preventing effective communication. Explain the different types of noise introduced and provide workplace scenarios describing situation where the noise could exist. Explain why change is hard for your employees. Describe how a Change Agent can help an organization navigate through difficulties.
Answer:
Explanation:
Base on the scenario been described in the, we have several types of noise, but we will be discussing on only two types
There little things that
interrupt the free flow of communication and interfere with receiving of messages from the sender, this interruption are been called noise. There are different types of noise which prevent efficient communication.
1. Physical Conditions: Physical communication such as room temperature , background noise, and outside environment can interfere with the communication between the receiver and the sender. The case where this type of noise can exist is when there is any construction going on within the building, and it is considered as background noise. The machine sound can disturb the important meetings where things are discussed.
2. Filtering happens when a sender of a message has a particular set of values and experiences, the receiver has a another set of values and experience. They two see the world in a different perspective, this forms a communication barrier as the message is not received as it is supposed to. The case where this type of noise occurs, is when a manager and an employee do not have the same view on a certain case.
An individual has $ 30,000 invested in a stock with a beta of 0.6 and another $30,000 invested in a stock with a beta of 1.2. if these are the only two investments in her portfolio, what is her portfolio’s beta?
Answer:
Portfolio beta = 0.9
Explanation:
The portfolio beta is the weighted average of the two beta using tge amount invested as the weight.
Total amount invested = 30,000 + 30,000 = 60,000
Portfolio beta =
=(30,000/60,000)× 0.6 + (30,000/600000)× 1.2
Portfolio beta= 0.9
On November 1, 2014, Archangel Services issued $300,000 of 8-year bonds with a stated rate of 9% at par. The bonds make semiannual payments on April 30 and October 31. At December 31, 2014, Archangel made an adjusting entry to accrue interest a year-end. How much Interest Expense will be recorded at December 31, 2014?
Answer:
$4,500
Explanation:
The computation of the interest expense is shown below:
= Bond amount × rate of interest × number of months ÷ total number of months in a year
= $300,000 × 9% × 2 months ÷ 12 months
= $4,500
We simply multiplied with the bond amount, interest rate, and the given number of months to find out the accrued interest
And, the two month is calculated from November 1 to December 31
Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout South East Asia. Three cubic centimeters (cc) of solvent H300 are required to manufacture each unit of Supermix, one of the company’s products. The company is now planning raw materials needs for the third quarter, the quarter in which peak sales of Supermix occur. To keep production and sales moving smoothly, the company has the following inventory requirements:a. The finished goods inventory on hand at the end of each month must be equal to 4,000 units of Supermix plus 20% of the next month’s sales. The finished goods inventory on June 30 is budgeted to be 16,600 units.b. The raw materials inventory on hand at the end of each month must be equal to one-half of the following month’s production needs for raw materials. The raw materials inventory on June 30 is budgeted to be 82,000 cc of solvent H300.c. The company maintains no work in process inventories. A sales budget for Supermix for the last six months of the year follows.Budgeted Sales in Units July 63,000 August 68,000 September 78,000 October 58,000 November 48,000 December 38,000Required: 1. Prepare a production budget for Supermix for the months July, August, September, and October.Budgeted unit sales July August September and OctoberTotal NeedsLess beginning inventoryRequired production3. Prepare a direct materials budget showing the quantity of solvent H300 to be purchased for July, August, and September, and for the quarter in total.Units of raw materials needed to meet production July August September Third QuarterDesired units of ending raw materials inventoryTotal units of raw materialsLess units of beginning raw materials inventoryUnits of raw materials to be purchased
Answer:
The production plan for Q3 is 208,000 units of supermix.
July 64,000
August 70,000
September 74,000
The Raw materials requirement for Q3 is 218 cc of solvent H300
July 23,000
August 111,000
September 84,000
The detailed presentation is in the attached document
After the amount due on a sale of $28,000, terms 2/10, n/eom, is received from a customer within the discount period, the seller consents to the return of the entire shipment. The cost of the merchandise returned was $ 16,800.
What is the amount of the refund owed to the customer? $ _____
Journalize the entries made by the seller to record (A) the refund and ( B) the return of merchandise.
A. Sales Returned and Allowances _____ Sales Discounts _____ Cash _____
B. Merchandise Inventory _____ Cost of Merchandise Sold _____
Answer: Please see explanation column for answers
Explanation:
A) Amount refund owed to customer=
Sale of item - discount on item
=$28000- ($28000 x 2%) = $27,440
B)Journal of the entries made by the seller to record refund
Dr Sales Returned and allowances - $28,000
Cr Sales Discount $560
Cr Cash $27,440
c) Journal of the entries made by the seller to record return of merchandise
Cr Merchandise Inventory-$16,800
Dr Cost of Merchandise Sold -$16,800
Answer:
The amount of refund owed to customer is the amount of cash $27,440 received from the customer.
Dr sales returned and allowances $28,000
Cr Cash $27,440
Cr sales discount $560
Return of merchandise:
Dr merchandise inventory $16,800
Cr Cost of merchandise sold $16,800
Explanation:
The entries passed initially that need to be reversed now are:
The discount on the sale is 2% of $28,000=$560 debit to sales discount
Cash received from the customer =$28000-$560=$27,440 debit to cash account
Actual amount debited to sales is $28,000 credit to sales account
Upon return of the merchandise,the merchandise inventory is debited and cost of merchandise sold is credited with cost of merchandise at $16,800
Accounts receivable written-off as uncollectible during the year amounted to $11,500. The accounts receivable balance at the beginning of the year was $150,000. The accounts receivable balance at the end of the year was $210,000. The allowance for doubtful accounts balance at the beginning of the year was $14,000. The allowance for doubtful accounts balance at the end of the year after the recording of bad debt expense was $12,900. Credit sales during the year totaled $900,000. How much cash did XT receive from collections of accounts receivable
Answer:
TX received cash of $828,500 from collections of accounts receivable.
Explanation:
To arrive at the cash collections on accounts receivable, we need to do a movement of accounts receivable as follows:
Opening balance $150,000
Write-off during the year ($11,500)
Credit sales $900,000
Collections X
Closing balance $210,000
$1,038,500 - X = $210,000
X = $828,500; therefore, the collections is $828,500.
The allowance for doubtful accounts of $12,900 is only necessary to arrive at the net cash realizable of the accounts receivable as $828,500 - $12,900 = $815,600
Under IFRS, receivables are generally reported in the current assets section of the statement of financial position. cash and receivables are reported as the last items in the current assets section of the statement of financial position. bank overdrafts are generally reported as cash. All of these answer choices are correct.
Answer:
Cash and Receivables are reported as the last items in the current assets section of the statement of financial position.
Explanation:
In IFRS Cash and receivable are reported as the last items in the current assets section of the statement of financial position whereas under GAAP, these items would be reported in the order of their liquidity.
Hope this clear things up.
Thank You.
Smashed Pumpkins Co. paid $184 in dividends and $610 in interest over the past year. The company increased retained earnings by $510 and had accounts payable of $666. Sales for the year were $16,475 and depreciation was $744. The tax rate was 40 percent.
Required:
1. What was the company's EBIT?
Answer: $1,766.67
Explanation:
Alright then.
First we will calculate the Earnings after tax by using the retained earnings and dividends as dividends are shared after tax.
After tax profit = Retained Earnings + Dividends.
= 510 + 184
= $694
Now we add the tax back. That looks something like,
694 = (1 - T) * x
x = 694/1 - T
x = 694 / 1 - 0.4
x = 1156.66666667
Earnings before tax was $1,156.67
Now we add the Interest back to get EBIT
= 1,156.67 + 610
= $1,766.67
$1,766.67 was the company's EBIT.
If you need any clarification do react or comment.
The company's EBIT (Earnings Before Interest and Taxes) for Smashed Pumpkins Co. is $1766.67.
To calculate the company's EBIT (Earnings Before Interest and Taxes), we need to consider the dividends, interest, increase in retained earnings, and the tax rate provided.
First, we calculate the net income after taxes by adding the increase in retained earnings ($510) to the dividends paid ($184), giving us $694.
Next, to find the pre-tax income, we divide the net income after taxes by (1 - tax rate). With a tax rate of 40%, this gives us a pre-tax income of $694 / (1 - 0.4) = $1156.67.
Finally, we can determine the EBIT by adding the interest incurred ($610) to the pre-tax income, which results in an EBIT of $1156.67 + $610 = $1766.67.
This calculation assumes all other operating expenses are already included in the sales and depreciation figures and that there are no other income or expenses to consider.
Here is the deal: You can pay your college tuition at the beginning of the academic year or the same amount at the end of the academic year. You either already have the money in an interest-bearing account or will have to borrow it. Deal, or no deal? Explain your financial reasoning. Relate your answer to the time-value of money, present value, and future value.
Answer:
Deal, and the best option is to pay the same amount at the end of the academic year.
The reason for this is that if you have that amount in an interest bearing account, the money will earn interest, meaning that after paying the tuition at the end of the year, you will have the interest earned for yourself.
In other words, the present value of your money is the full value of your tuition, while the future value of your money is the value of the tuition plus the interest earned.
Besides, because the time value of money decreases as time passes, the amount you pay in tuition will represent less of your total income at then end of the academic year, than at the beginning.
Fixed costs remain constant at $450,000 per month. During high-output months variable costs are $300,000, and during low-output months variable costs are $125,000. What are the respective high and low indirect-cost rates if budgeted professional labor-hours are 24,000 for high-output months and 5,000 for low-output months?
Answer:
High indirect-cost rate is $31.25
Low indirect-cost rate is $115
Explanation:
It is noteworthy that the indirect cost-rate refers to the sum of variable cost per hour+fixed cost per hour
High indirect-cost rate=variable cost per hour+fixed cost per hour
High output:
variable cost per hour=total variable costs/number of hours
fixed cost per hour=Fixed costs/number of hours
variable cost per hour=($300,000/24,000)=$12.5
fixed cost per hour =($450,000/24000)=$18.75
high indirect cost-rate=$12.5+$18.75=$31.25
Low output:
variable cost per hour=total variable costs/number of hours
fixed cost per hour=Fixed costs/number of hours
variable cost per hour=($125,000/5,000)=$25.00
fixed cost per hour =($450,000/5,000)=$90
low indirect cost-rate=$25+$90=$115
Han Products manufactures 25,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is: Direct materials $ 3.90 Direct labor 8.00 Variable manufacturing overhead 2.10 Fixed manufacturing overhead 6.00 Total cost per part $ 20.00 An outside supplier has offered to sell 25,000 units of part S-6 each year to Han Products for $18 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $75,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier. Required: What is the financial advantage (disadvantage) of accepting the outside supplier’s offer?
Answer:
$25,000
Explanation:
The computation of the financial advantage or disadvantage of accepting the outside supplier’s offer is shown below:
But before that first we have to compute the relevant cost for 25,000 units which is given below:
= (Direct material per unit + Direct labor per unit + Variable manufacturing overhead per unit × number of units manufactured) + (Fixed manufacturing overhead × number of units manufactured × remaining portion applied)
= ($3.9 + $8 + $2.10) × 25,000 units + ($6 × 25,000 units × 1 ÷3)
= $400,000
Now
Financial Advantage (disadvantage) of accepting the outside offer is
= (Relevant cost at 25,000 units - per part price × number of units manufactured) + (Annual rental amount)
= ($400,000 - $18 × 25,000 units) + $75,000
= $25,000
Since this amount comes in positive which signifies the financial advantage
Accepting the supplier's offer would save Han Products $25,000 annually, considering the cost of outsourcing, the continued overheads, and the potential income from renting the manufacturing facilities.
Explanation:To evaluate the financial advantage or disadvantage of Han Products accepting the external supplier's offer, we need to compare the current total cost of production with the cost of buying from the supplier and the potential income from renting the facilities.
Currently, the total annual cost for producing 25,000 units of part S-6 is $20 per unit, which equates to $500,000. If Han Products accepts the outside supplier's offer, the cost would be $18 per unit, or $450,000 annually. However, two-thirds of the fixed manufacturing overhead would still continue, amounting to $100,000 (2/3 ×$6×25,000).
So, the total cost if Han Products accepts the supplier's offer would then be $550,000 ($450,000 purchase cost + $100,000 continuing overhead). However, they could potentially earn $75,000 from renting the facilities, taking the total down to $475,000.
Therefore, by accepting the supplier's offer, Han Products would save $25,000 annually ($500,000 previous cost - $475,000 new cost).
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Although Brenda previously used the US Postal Service because it offered better prices on package shipping, she now uses only FedEx, because it gives her the facility of shipping from any FedEx location 24 hours a day.
(a) Which of the following factors led to Brenda's customer switching behavior?
O inconvenience
O pricing
O response to service failure
O ethical problems
O involuntary switching
Answer:
The correct answer is letter "A": inconvenience.
Explanation:
Customer inconvenience refers to the state in which the usefulness of the good or service does not meet the customers' needs. Under this scenario, clients prefer to look for a substitute that better matches their expectations. Companies must constantly gauge consumers' perceptions through different mediums such as surveys to identify improvement areas.
The company applies overhead cost to jobs on the basis of direct labor-hours. For the current year, the company’s predetermined overhead rate of $14.25 per direct labor-hour was based on a cost formula that estimated $570,000 of total manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions were recorded for the year:
Raw materials were purchased on account, $634,000.
Raw materials use in production, $598,400. All of of the raw materials were used as direct materials.
The following costs were accrued for employee services: direct labor, $520,000; indirect labor, $150,000; selling and administrative salaries, $337,000.
Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $461,000.
Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $420,000.
Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year.
Jobs costing $1,645,750 to manufacture according to their job cost sheets were completed during the year.
Jobs were sold on account to customers during the year for a total of $3,360,000. The jobs cost $1,655,750 to manufacture according to their job cost sheets.
What is the total manufacturing cost added to Work in Process during the year?
Answer:
$1,702,650
Explanation:
The computation of the total manufacturing cost added to work in process is shown below:
Total manufacturing cost added to work in process
= Direct Materials + Direct Labor + Manufacturing Overhead applied
where,
Direct material $598,400
Direct labor is $520,000
And, the manufacturing overhead applied is
= Actual direct labor hours × predetermined overhead rate
= 41,000 hours × $14.25
= $584,250
So, the total manufacturing cost is
= $598,400 + $520,000 + $584,250
= $1,702,650
We simply applied the above formula
Final answer:
The total manufacturing cost added to Work in Process for the year is $1,702,650, calculated by adding the direct materials used ($598,400), the direct labor cost ($520,000), and the applied manufacturing overhead ($584,250).
Explanation:
To calculate the total manufacturing cost added to Work in Process during the year, we need to sum the direct materials used, direct labor cost, and applied manufacturing overhead. Here are the details for the calculation:
Direct materials used: $598,400Direct labor: $520,000Applied manufacturing overhead (41,000 hours × $14.25 per hour): $584,250Total manufacturing cost added to Work in Process = $598,400 + $520,000 + $584,250 = $1,702,650. This calculation provides the cost that the company has registered as the manufacturing cost for products that are still in the production process by the end of the accounting period.
1. Suppose the own price elasticity of demand for good X is -3, it's income elasticity is 1, its advertising elasticity is 2, and the cross-price elasticity of demand between it and good Y is -4, determine how much the consumption if this good will change if:
a) The price of good X decreased by 5%
b) The price of good Y increased by 8%
c) Advertising decreased by 4%
d) Income Increased by 4%
2. Suppose the cross price elasticity of demand between X and Y is 4, how much would the price of good Y have to change in order to increase the consumption of good X by 20%?
Answer:
A) X Demand fall 15% ; B) X Demand fall 32% ; C) X Demand fall 8% ; D) X Demand rise 4% . 2] Price (Y) rise 5%
Explanation:
Elasticity is the responsive change in demand of a good, due to any factor affecting it.
Elasticity = % change in demand / % change in factor affecting demand So, % change in demand = % change in factor x Elasticity
Given : Price Elasticity = -3 , Income Elasticity = 1 , Advertising Elasticity = 2 , Cross Price Elasticity = -4
A) Price of good decrease by 5% : So, Demand would change by 5 x price elasticity, 5 x -3 i.e - 15% (demand fall)
B) Price of good Y increase by 8% : So, X's Demand would change by 8 x -4 i.e - 32 % (demand fall)
C) Advertising decreased by 4% : So, X's demand would change by -4 x 2 i.e - 8% (demand fall)
D) Income increase by 4% : So, X's demand would change increase by 4 x 1 i.e 4% (demand rise)
2. Cross Price Elasticity = 4 ; Desired change in quantity = 20% increase
Elasticity ( 4 ) = desired % change in demand (20%) / % change in Y price
% change in Y price = 20 / 4 = 5 % (price rise)
If the elasticity is 1.4, advise lowering the price; if it is 0.6, raise the price; if it is 1, maintain the price. Gasoline price elasticity of supply affects UPS and FedEx. The income elasticity of bread consumption is -0.307, making bread an inferior good.
Explanation:If the elasticity of demand for the company's product is 1.4, the company should lower the price. This is because the decrease in price will be offset by the increase in the amount of the product sold, resulting in higher total revenue. If the elasticity were 0.6, the company should raise the price. Increasing the price will offset the decrease in the number of units sold, leading to higher total revenue. If the elasticity is 1, the total revenue is already maximized, and the company should maintain its current price level.
The gasoline price elasticity of supply refers to the percentage change in quantity supplied as a result of a given percentage change in the price of gasoline. For a company like UPS or FedEx, this means that if the price of gasoline increases, the company's supply of transportation services will become less elastic. This could lead to higher costs for the company and possibly a decrease in their ability to meet customer demand.
To calculate the income elasticity of bread consumption, we use the formula: (Change in Quantity / Average Quantity) / (Change in Income / Average Income). In this case, the change in quantity consumed is -8 (30 - 22), the average quantity is 26 (30 + 22 / 2), the change in income is 13000 (38000 - 25000), and the average income is 31500 (25000 + 38000 / 2). Plugging these values into the formula, we get (-8 / 26) / (13000 / 31500) = -0.307. Since the income elasticity is negative, bread is an inferior good.
Oak Mart, a producer of solid oak tables, reports the following data from its second year of business. Sales price per unit $ 320 per unit Units produced this year 115,000 units Units sold this year 118,000 units Units in beginning-year inventory 3,000 units Beginning inventory costs Variable (3,000 units × $135) $ 405,000 Fixed (3,000 units × $80) 240,000 Total $ 645,000 Manufacturing costs this year Direct materials $ 40 per unit Direct labor $ 62 per unit Overhead costs this year Variable overhead $ 3,220,000 Fixed overhead $ 7,400,000 Selling and adminstrative costs this year Variable $ 1,416,000 Fixed 4,600,000 6.value: 5.55 pointsRequired information 1. Prepare the current year income statement for the company using variable costing.
Answer:
Sales ( 118,000 × $ 320) 37,760,000
Less Cost of Goods Sold : (14,909,500)
Opening Stock (3,000 units × $135) 40,500
Add Cost of Goods Manufactured
Direct materials ($ 40 × 118,000 units) 4,720,000
Direct labor ($ 62 × 118,000 units) 7,316,000
Variable overhead 3,220,000
Less Closing Stock (3,000 × ($ 40+$ 62+$27)) (387,000)
Contribution 22,850,500
Less Operating Expenses :
Fixed overhead (7,400,000)
Selling and administrative costs :
Variable ( 1,416,000)
Fixed (4,600,000)
Net Income 9,434,500
Explanation:
Variable Product Cost = Direct Materials + Direct Labor + Variable Overheads
Variable Costing - Period Cost = Fixed Overheads + All Non- Manufacturing Expenses
Answer:
Income Statement - Oak Marttotal sales $320 x 118,000 units sold = $37,760,000
variable COGS ($15,355,000)
variable beginning inventory = ($405,000)
variable direct costs ($40 + $62) x 115,000 = ($11,730,000)
variable overhead = ($3,220,000)
manufacturing margin $22,405,000
variable administrative and selling costs ($1,416,000)
contribution margin $20,989,000
fixed costs ($12,000,000)
fixed overhead = ($7,400,000)
administrative and selling = ($4,600,000)
net income $8,989,000
When you are calculating variable costing, COGS only includes variable costs. All fixed costs are included as period costs at the end. Fixed costs are not carried forward either.
Newcastle Coal Company is considering a project that requires an investment in new equipment of $3,200,000, with an additional $160,000 in shipping and installation costs. Newcastle estimates that its accounts receivable and inventories need to increase by $640,000 to support the new project, some of which is financed by a $256,000 increase in spontaneous liabilities (accounts payable and accruals).
The total cost of New castle's new equpment is _________ and consists of the price of the new equipment plus the _____________.
In contrast, Newcastle's initial investment outlay is _______.
Answer:
The total cost of New castle's new equipment is $3,360,0000 and consists of the price of the new equipment plus the additional $160,000 in shipping and installation costs.
In contrast, Newcastle's initial investment outlay is $ 3,744,000
Explanation:
The total cost of New Castle's new equipment consists of purchase price of the equipment plus any costs incurred to bring the asset to its present working condition(installation costs) and location(shipping and logistics costs).
The total costs of the equipment=$3,360,000
However, the initial outlay of the project=total cost of equipment+net increase in working capital
net increase in working capital =increase in accounts receivable and inventory-increase in accounts payable
net increase in working capital=$640,000-$256,000=$384,000.00
initial outlay of the project=$3,360,000+$384,000 =$ 3,744,000.00