Answer:
1) 24.4%
2) 67.4%
Explanation:
The basis on which overheads are to be applied is considered under 'denominator' value.
1)
Numerator = Estimated factory $122,000
Denominator = Direct Labor $500,000
Overhead Rate = 122,000 / 500,000 = 0.244 ==> 24.4%
2)
Numerator = Estimated factory overhead $122,000
Denominator = Direct Material $181,000
Overhead Rate = 122,000 / 181,000 = 0.674 ==> 67.4%
Which of the following is true about the short-run aggregate supply curve.
Select the correct answer below:
A. It is vertical
B. It is always a horizontal line
C. It is downward sloping
D. It is upward sloping
Answer:
The correct answer is letter "D": It is upward sloping.
Explanation:
The short-run Aggregate Supply Curve is upward sloping because it establishes a directly proportional relationship between quantity supplied and prices. It means, as soon as the quantity supplied increases so will the price. Besides, it considers production has a fixed factor which in most cases is capital.
The short-run aggregate supply curve is upward sloping because of inflexible input prices, temporary supply shocks, and changes in nominal wages. Firms are willing to produce more goods and services when their selling price increases in the short term.
Explanation:In the context of macroeconomics, the correct answer to the question about the short-run aggregate supply curve is D. It is upward sloping. The Short-run Aggregate Supply (SRAS) curve is upward sloping because of three primary reasons. These reasons include inflexible input prices, temporary supply shocks, and changes in nominal wages. Inflexible input prices mean that in the short-term, costs such as wages may not change immediately in response to changes in output levels. Temporary supply shocks, such as sudden changes in the price of an essential resource, can cause the SRAS to shift. Also, changes in nominal wages can affect the position of the SRAS curve. In the short-term, firms are willing to produce more goods and services when their selling price increases. Hence, the curve is upward sloping.
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Lillie, a team leader, observes that some of her team members have a tendency to participate in teamwork much less than the others. They seemed uninterested and content to let others do their share of the work. In this scenario, the slacking nature of the team members best illustrates
A. groupthink.
B. social loafing.
C. group-hate.
D. risky shift.
Answer: B. social loafing.
Explanation:
As a college student or indeed just a student, you have probably seen this happen a lot.
This action is known as SOCIAL LOAFING. It is described as someone putting in less effort in a group as opposed to working alone. They are content with letting others do work for them and this has been known to damage the effectiveness of groups.
Lillie's team members who seem uninterested and content to let others do their share of the work are engaging in Social loafing.
Answer:
B. social loafing.
Explanation:
social loafing is the phenomenon of a person exerting less effort to achieve a goal when he or she works in a group than when working alone and is seen as one of the main reasons groups are sometimes less productive than the combined performance of their members working as individuals.
A bank run involves:
A) a failure by a bank to get the maximum return on its investments.
B) large numbers of depositors withdrawing their deposits within a short period of time.
C) a bank being forced out of business.
D) fraud on the part of a bank's managers.
Answer:
The correct answer is letter "B": large numbers of depositors withdrawing their deposits within a short period of time.
Explanation:
A bank run is a situation in which account holders massively withdraw their funds under the fear the financial institution will lose its liquidity. The situation gets to a point in which the bank is at risk of sensing all its reserves and fail to provide all its clients the money they deposited.
In the U.S. financial institutions with deposits between $16 and $122.3 million must have a minimum reserve of 3%. When the deposits exceed $122.3 million the minimum reserve increases to 10%. The rest of the money is reinvested by banks.
As it places its order for truck tires with Michelin, South Side Industrial Supply realizes that it must also place an order for valve stems and balancing weights for the truck tires. Such business products are characterized as having ____________ demand.
Answer:
The correct word for the blank space is: joint.
Explanation:
Joint demand refers to the demand for products and services that are dependent on each other. In such cases, those goods are complementary but they can be acquired separately if necessary. An example of goods with joint demand would be tea and sugar or a printer and ink.
Diaz Company owns a machine that cost $125,200 and has accumulated depreciation of $93,100. Prepare the entry to record the disposal of the machine on January 1 in each seperate situation. The machine needed extensive repairs and was not worth repairing. Diaz disposed of the machine, receiving nothing in return. Diaz sold the machine for $16,400 cash. Diaz sold the machine for $32,100 cash. Diaz sold the machine for $41,300 cash.
Answer:
1. Loss on sale of machine = $15,700
2. No Loss or Gain
3. Gain = $9,200
Explanation:
Requirement 1
If Diaz Company disposed the machine with a cash of $16,400, the journal entry to record the transaction of disposal of machine will be as follows:
January 1 Cash Debit $16,400
Accumulated depreciation Debit $93,100
Loss on sale of machine Debit $15,700
Machine Credit $125,200
Calculation:
Book value of the machine = Purchase price - Accumulated depreciation = $(125,200 - 93,100) = $32,100
We know, loss on sale of machine = Book value of the machine - Sale price = $(32,100 - 16,400) = $15,700. Loss is a debit as it is an expense.
Requirement 2
If Diaz Company disposed the machine with a cash of $32,100, the journal entry to record the transaction of disposal of machine will be as follows:
January 1 Cash Debit $32,100
Accumulated depreciation Debit $93,100
Machine Credit $125,200
Calculation:
Book value of the machine = Purchase price - Accumulated depreciation = $(125,200 - 93,100) = $32,100
We know, Gain (Loss) on sale of machine = Book value of the machine - Sale price = $(32,100 - 32,100) = $0. As the book value and the disposal value are same, there is no loss and no gain.
Requirement 3
If Diaz Company disposed the machine with a cash of $41,300, the journal entry to record the transaction of disposal of machine will be as follows:
January 1 Cash Debit $41,300
Accumulated depreciation Debit $93,100
Gain on sale of machine Credit $9,200
Machine Credit $125,200
Calculation:
Book value of the machine = Purchase price - Accumulated depreciation = $(125,200 - 93,100) = $32,100
We know, Gain on sale of machine = Sale price - Book value of the machine = $(41,300 - 32,100) = $9,200. Gain is a credit as it shows as the income.
The amount of loss on disposal is $32100, the amount of accumulated depreciation of $93,100 while the gain on disposal is $9200.
Depreciation that has accrued up until a particular point in the life of an asset is referred to as accumulated depreciation.
Accumulated depreciation is a counter-asset account, which means that its natural balance is a credit that decreases the asset's overall value.
Here,
Calculate the Book value of the machine as follows:
Book value of machine = Cost of the machine - Accumulated depreciation
Book value of machine = $125,200 - 93,100 = $32,100
Prepare the journal entries as follows:
Date Particulars Debit Credit
(1) Accumulated depreciation $93100
Loss on disposal $32100
Machine $125200
(2) Cash $16400
Accumulated depreciation $93100
Loss on disposal $15700
Machine $125200
(3) Cash $32100
Accumulated depreciation $93100
Machine $125200
(4) Cash $41300
Accumulated depreciation $93100
Machine $125200
Gain on disposal $9200
Therefore, the loss on disposal is $32100, the cumulative depreciation is $93,100, and the gain on disposal is $9200.
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Brief Exercise 9-13
Information related to plant assets, natural resources, and intangibles at the end of 2019 for Dent Company is as follows: buildings $1,100,000, accumulated depreciation—buildings $600,000, goodwill $410,000, coal mine $500,000, and accumulated depletion—coal mine $108,000.
Prepare a partial balance sheet of Dent Company for these items. (List Property, Plant and Equipment in order of Coal Mine and Buildings.)
Dent Company
Balance Sheet (partial)
___________________________
_______________________________________ $________
_____
_______________________________________ ________ $________
_______________________________________ ________
______
_______________________________________ _______ _________
_______________________________________________ $ ______________
_______________________________________________
_______________________________________________ $___________
Answer:
$1,302,000
Explanation:
Dent Company
Balance Sheet (partial)
As at December 31, 2019
Property, Plant, & Equipment
Buildings $1,100,000
Less: accumulated depreciation—buildings $(600,000)
Net book value of Buildings $500,000
Coal mine $500,000
Less: accumulated depletion—coal mine $(108,000)
Net Book value of Coal Mine $392,000
Total property, plant, and equipment $892,000
Intangible Assets
Goodwill $410,000
Total assets (Long-term Assets) $1,302,000
Here, we are going to prepare a partial balance sheet of Dent Company by using information given in the question.
DENT COMPANY
PARTIAL BALANCE SHEET
Property,plant and equipment
Coal Mine $500,000
Less: Accumulated depletion $108,000 $392,000
Buildings $1,100,000
Less: Accumulated depreciation $600,000 $500,000
Total Property, plant and equipment $892,000
Intangible assets
Goodwill $410,000
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The partnership agreement of Jones, King, and Lane provides for the annual allocation of the business's profit or loss in the following sequence: Jones, the managing partner, receives a bonus equal to 25 percent of the business’s profit. Each partner receives 20 percent interest on average capital investment. Any residual profit or loss is divided equally. The average capital investments for 2018 were as follows: Jones $ 185,000 King 370,000 Lane 555,000 How much of the $82,000 partnership profit for 2018 should be assigned to each partner?
Answer:
Mr J = $4,000
Mr. K = $20,500
Mr L = $57,500
Explanation:
The computation of partnership profit is shown below:-
Partnership profit for the year 2018 $82,000
Less: Bonus to Mr Jones $20,500
($82,000 × 25%)
Less: Interest on average capital investment
Mr J (20% × $185,000) $37,000
Mr K (20% × $370,000) $74,000
Mr L (20% × $555,000) $111,000
Profit/Loss to be distributed ($160,500)
Loss to be allocated to each partner ($53,500)
($160,500) ÷ 3
Mr J $4,000
$20,500 + $37,000 + ($53,500)
Mr. K $20,500
$74,000 + ($53,500)
Mr L $57,500
$111,000 + ($53,500)
Suppose that a profit-maximizing monopoly firm undergoes a substantial technological change that reduces its marginal and average total costs by $40. If in response to its reduction in cost the firm changes its price in a profit-maximizing way, then we can predict that its total economic profit will:rise.It is not possible to make a determination from the information given.remain unchanged.fall.
Answer:
Rise
Explanation:
A monopoly is defined as a market situation where only one seller determines the supply and price of a product, because they are the only ones that produce it.
When forms make technological advancements, they are able to make processes cheaper. So there is more money saved that can be used to increase production.
In this scenario for every product manufactured there is a $40 saved. This excess cash can be put back into the production to increase the output and profit.
Finkel sold merchandise to a customer in exchange for a four-year, noninterest-bearing note for $10,000. An equivalent loan would have a 10% interest rate. Finkel would record sales revenue on the date of sale equal to:
a. $0
b. $10,000
c. The present value of $10,000, discounted at a 10% discount rate for four years
d. $9,000, equal to $10,000 â (10% Ã $10,000)
Questions:
a. What is the present value amount?
b. What is the journal entry for the sale?
c. Assume that the transaction took place on the last day of the year, what is the journal entry on the last day of the following year?
Answer:
Correct answer is
c. The present value of $10,000, discounted at a 10% discount rate for four years
Question
a. Present value
$6,830
b. Journal Entry for sale
Dr. Note Receivable $10,000
Cr. Discount on Note $3,170
Cr. Sales $6,830
c. Journal Entry on last day of following year
Dr. Discount on Note $792.5
Cr. Interest revenue $792.5
Explanation:
a.
As there is no Interest will be received on this note, Only face value will be received after 4 years.
Use Following present value form
PV = FV / (1 + i%)^n
PV = $10,000 / ( 1 + 10%)^4
PV = $6,830
b.
Amount of Sale Is calculated by taking present value of the future cash flows associated with the note. Receivable of $10,000 will be recorded and the difference will be recorded as unearned revenue, which will be recognized every year until the maturity.
c.
The interest revenue is recognized against the discount on note value recorded earlier.
The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 17 percent a year for the next 4 years and then decreasing the growth rate to 4 percent per year. The company just paid its annual dividend in the amount of $3.10 per share. What is the current value of one share of this stock if the required rate of return is 8.60 percent
Answer:
Using 8.60% ROR,we will have current stock of $156.51,option D is correct.
Answer:
The stock price will be: $109.39
Explanation:
* The stock price will be equal to the sum of present value of:
+ Positive Growth annuity in the next four years;
+ Positive growth perpetuity starting in year 5.
- Calculation of positive Growth annuity in the next four years:
+ Dividend in year 1 = 3.1 x 1.17 = $3.627
+ Present value of the annuity = [ 3.627 / ( 8.6% - 17%) ] x [ 1 - [ (1+17%) / (1+8.6%)]^4 ] = $14.99.
- Calculation of positive growth perpetuity starting in year 5:
+ Dividend in year 5 = 3.1 x 1.17^4 x 1.04 = $6.04;
+ Present value of the perpetuity = [ 6.04 / (8.6% - 4%) ] / 1.086^4 = $94.40
=> Share price = 14.99 + 94.40 = $109.39
Calvin and Hobbes run a company that sells wallet chains and wallet decals. Calvin is faster at making decals than chains, and Hobbes is faster at making chains than decals. Which statements accurately describe the situation?
Answer:
Company output will be maximized if Calvin makes all the decals and Hobbes makes all the chains.
-Calvin has a comparative advantage for making decals.
-Hobbes has a higher opportunity cost for making decals than Calvin.
Explanation: Each partner should focus on the task where he has a comparative advantage.
In the situation of Calvins: if someone has a comparative advantage in producing something, that means he also has a lower opportunity cost in practicing that object.
In the situation of Hobbes: if he has a higher opportunity cost for making decals, then Calvin has a lower opportunity cost for making decals.
Answer:
The correct answers are letters "A", "B", and "C".
Explanation:
Comparative advantage is the advantage an individual, company or country has that allows them to produce at lower opportunity cost compared to rivals. It does not necessarily mean that they have an absolute advantage. Due to lower opportunity costs, a company can offer its products at lower prices generating more revenue.
In the case, as Hobbes is faster at making chains, Hobbes has a comparative advantage on chains over Calvin. Though, as Hobbes is slower in making decals, Hobbes has higher opportunity costs than Calvin on decals. In such a way, Calvin has a comparative advantage in making decals.
Therefore, the chains and decals output would be maximized if Calvin makes decals only and Hobbes makes chains only.
Nutty Productions Inc. generated service revenue of $56,000 and income from operations of $23,000. The company estimates that, had it extended credit it would have instead generated $99,000 of service revenue, but it would have incurred $38,000 of additional expenses for wages and bad debts. 1-a. Using these estimates, calculate the amount by which Income from Operations would increase By___________
Answer:
Net income from operations would increase by $5,000
Explanation:
According to the given data we have the following:
generated service revenue=$56,000
service revenue if had extended credit=$99,000
Incremental cost = $ 38000
Therefore, first in order to calculate the amount by which Income from Operations would increase By, we have to calculate first the Incremental revenue if credit is extended
Incremental revenue if credit is extended = $99,000 - $56,000 = $43,000
Therefore, Net income from operations would increase by = $43,000 - $38,000 = $ 5,000
Answer:
$5,000
Explanation:
Income from operations is the difference between the revenue from operations and the expenses incurred in the process of generating this revenue.
Given that extending credits would have resulted in sales being $99,000 and an additional expense of $38,000, net income from operations would be
= $99,000 - $38,000 - $23,000
= $38,000
Income from operations without credit extension
= $56,000 - $23,000
= $33,000
Increase in operating income
=$38,000 - $33,000
= $5,000
Ekmark Corporation uses the following activity rates from its activity based costing to assign overhead costs to products: Activity Cost Pools Activity Rate Assembling products $6.56 per assembly hour Processing customer orders $65.38 per customer order Setting up batches $82.84 per batch Data for one of the company's products follow: Product P59G Number of assembly hours 240 Number of customer orders 48 Number of batches 64 How much overhead cost would be assigned to Product P59G using the activity based costing system
Answer:
The correct answer is $10,014.40.
Explanation:
According to the scenario, computation of the given data are as follows:
Total cost of assembling = $6.56 × 240 = $1,574.40
Total cost of processing customer order = $65.38 × 48 = $3,138.24
Total cost of setting up batches = $82.84 × 64 = $5,301.76
So, we can calculate the total overhead cost by using following formula:
Total Overhead = $1,574.40 + $3,138.24 + $5,301.76
= $10,014.40
Bohemian Company has 500,000 shares of no par common stock with a stated value of $8 per share issued and outstanding as of January 1, originally issued for $14 per share. During 2018, Bohemian Company had the following transactions involving its own stock: On March 6, acquired 27,965 shares of treasury stock at a cost of $12 per share On April 18, resold 5,280 shares of treasury stock at $19 per share. On June 11, resold an additional 2,210 shares of treasury stock at $10 per share If Bohemian uses the cost method of accounting for treasury stock, what will be the balance in additional paid in capital from treasury stock as a result of these transactions?
Answer:
$32540
Explanation:
The balance in additional paid in capital treasury stock as a result of the transactions is $32540.
The beginning balance was set at 0.
March 6 Acquisition in the treasury stock = 27965 shares × $12
In additional paid capital it is 0.
April 6 Reissued in treasury stock = 5280 shares × $12 while in additional paid capital = 5280 shares × $7 (19-12).
Please kindly see attachment to see the step by step working and the answer.
Answer:
Amount paid for the treasury stock on March 6 = $12*27,965 = $335,580
Total Amount realized on the resale of Treasury stock
April 18 = 5280*$19 = $100,320
June 11 = 2210*$10 = $ 22,100
$122,420
cost of treasury stock sold
( $12 * 7,490) (89,880)
Balance in additional paid in capital from treasury stock $32,540
Explanation:
Consider the data in the Excel file Consumer Price Index. Use simple linear regression to forecast the data. What would be the forecasts for the next two months? (Your regression equation should be look like CPI = a + b T. The T is year and 1990=1; 1991=2; 1992=3; 1993=4; 1994=5; 1995=6; 1996=7; 1997=8; 1998=9; 1999=10) Year CPI 1990 169.3 1991 170.0 1992 172.4 1993 175.3 1994 177.2 1995 176.8 1996 179.1 1997 180.1 1998 ? 1999 ?
Answer:
CPI(1998) = 182.32
CPI(1999) = 183.94
Explanation:
1.
Using excel regression analysis, the regression results are below:
This gives regression equation as: CPI = 167.73 + 1.62T
Kindly check the attached image below for the step by step explanation.
In order to find CPI values for 1998 and 1999, substitute value of T = 9 and 10 respectively
This gives:
CPI(1998) = 182.32
CPI(1999) = 183.94
To forecast the data using simple linear regression, we can calculate the regression equation and use it to predict the CPI for the next two months. The equation is CPI = 104.176 + 2.729T, where T represents the year. The forecast for 1998 is CPI = 134.215, and the forecast for 1999 is CPI = 136.944.
Explanation:To forecast the data using simple linear regression, we need to calculate the regression equation and then use it to predict the CPI for the next two months. Using the given data, we can calculate the regression equation using the formula: CPI = a + bT, where T represents the year. Using the data points provided, we calculate the equation to be CPI = 104.176 + 2.729T. To find the forecast for the next two months, we substitute T = 11 for 1998 and T = 12 for 1999 into the equation. Therefore, the forecast for 1998 is CPI = 104.176 + 2.729(11) = 134.215, and the forecast for 1999 is CPI = 104.176 + 2.729(12) = 136.944.
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1. Almost all dissatisfied guests complain. Group of answer choices True False
2. About 13 to 16 guests out of every 100 are purposefully out to scam us and get something for free. True or False
3. If you solve a guest problem efficiently, quickly, and delightfully...that guest may be even more likely to use your product or service again than if he or she ever had a problem in the first place. True or False
4. Dr. Ricci gave two examples of excellence in guest service from which organizations? A. Walt Disney World, Universal Studios B. Publix, Pet Supermarket C.Publix, JetBlue D.Marriott, Hilton
5. It is only likely for a guest to receive outstanding service at luxury brands. That's why Ritz-Carlton, Mandarin Oriental, Four Seasons, and others are the best at what they do. True or False
WILL GIVE 10 STARS
Answer:
1. Almost all dissatisfied guests complain.
FALSE, ONLY ABOUT 5-10% OF DISSATISFIED CUSTOMERS ACTUALLY COMPLAIN. SOMETIMES THAT RATIO IS EVEN LOWER DEPENDING ON THE INDUSTRY.
2. About 13 to 16 guests out of every 100 are purposefully out to scam us and get something for free.
FALSE
3. If you solve a guest problem efficiently, quickly, and delightfully...that guest may be even more likely to use your product or service again than if he or she ever had a problem in the first place.
TRUE, ABOUT 95% OF THE GUESTS WHOSE PROBLEMS WERE SOLVED IMMEDIATELY AND DELIGHTFULLY GENERALLY RETURN OR HAVE A VERY POSITIVE OPINION ABOUT THE HOTEL.
4. Dr. Ricci gave two examples of excellence in guest service from which organizations?
C) Publix, JetBlue
5. It is only likely for a guest to receive outstanding service at luxury brands. That's why Ritz-Carlton, Mandarin Oriental, Four Seasons, and others are the best at what they do.
FALSE
The following data are available for two divisions of Solomons Company. North Division South Division Division operating profit $ 6,000,000 $ 40,000,000 Division investment 30,000,000 320,000,000 The cost of capital for the company is 8 percent. Ignore taxes. Required: a-1. Calculate the ROI for both North and South divisions. a-2. If Solomons measures performance using ROI, which division had the better performance? b-1. Calculate the EVA for both North and South divisions. (The divisions have no current liabilities.) b-2. If Solomons measures performance using economic value added, which division had the better performance? c. Would your evaluation change if the company’s cost of capital was 16 percent? 1. When evaluated by ROI? 2. When evaluated by EVA?
Answer:
a-1. Calculate the ROI for both North and South divisions.
ROI North Division = net profit / cost of investment = $6,000,000 / $30,000,000 = 20%ROI South Division = net profit / cost of investment = $30,000,000 / $320,000,000 = 9.38%a-2. If Solomons measures performance using ROI, which division had the better performance?
North Division, since its ROI is much higherb-1. Calculate the EVA for both North and South divisions. (The divisions have no current liabilities.)
North Division EVA = (net investment) x (actual return on investment – percentage cost of capital) = $30,000,000 x (20% - 8%) = $3,600,000South Division EVA = (net investment) x (actual return on investment – percentage cost of capital) = $320,000,000 x (9.38% - 8%) = $4,416,000b-2. If Solomons measures performance using economic value added, which division had the better performance?
It should choose South Division because its EVA is higher.c. Would your evaluation change if the company’s cost of capital was 16 percent?
1. When evaluated by ROI?
No it would not change because ROI doesn't consider cost of capital.2. When evaluated by EVA?
Yes it would change because South Division's EVA would be negative, while North Division's will decrease but remain positive.North Division EVA = (net investment) x (actual return on investment – percentage cost of capital) = $30,000,000 x (20% - 16%) = $1,200,000
South Division EVA = (net investment) x (actual return on investment – percentage cost of capital) = $320,000,000 x (9.38% - 16%) = -21,184,000
Answer:
Solomons Company
North and South Divisions
North/South Divisions:
Operating Profit = $6,000,000/$40,000,000
Investment = $30,000,000/$320,000,000
Cost of Capital (WACC) = 8%
a-1) ROI for both North and South Divisions:
ROI = Return on Investment
= Operating Profit/Investment x 100
North's ROI = 6/30 x 100 = 20%
South's ROI = 40/320 x 100 = 12%
a-2) If Solomons measures performance using ROI, the North division had the better performance.
b-1) Calculation of EVA for both North and South divisions:
EVA = Economic Value Added.
EVA = Net Operating Profit After Taxes minus (Invested Capital x WACC)
North's EVA = $6,000,000 - ($30,000,000 x 8%) =6m - 2.4m = $3,600,000
South's EVA = $40,000,000 - ($320,000,000 x 8%) = 40m - 25.6m = $14,400,000
b-2) If Solomons measures performance using economic value added, the South division had the better performance.
c) 1. When ROI is evaluated using 16% cost of capital, the North division had a better performance. So the evaluation changes based on the 16% cost of capital. Whereas, North makes 20% ROI as against 16% cost of capital, the South manages 12% ROI as against 16% cost of capital.
c) 2. When performances are evaluated by EVA with 16% cost of capital:
North's EVA = $6,000,000 - ($30,000,000 x 16%) = 6m - 4.8m = $1,200,000
South's EVA = $40,000,000 - ($320,000,000 x 16%) = $40m - $51.2m = ($11,200,000)
When evaluated by EVA using 16% cost of capital, my evaluation would favour the North instead of the South.
Explanation:
ROI or Return on Investment is a financial performance measure which measures the profitability of an investment in a simple way. It compares the return on an investment relative to its cost. It is expressed as a percentage.
EVA or Economic Value Added is also a financial performance measure which subtracts the cost of capital from the operating profit in order to gauge in dollars terms the value created by the firm.
Rome Inc. owns 30% of Amber Co. and applies the equity method. During the current year, Rome bought inventory costing $66,000 and then sold it to Amber for $120,000. At year-end, only $24,000 of merchandise was still being held by Amber. What amount of intercompany inventory profit must be deferred by Rome
Answer:
Amount of intercompany inventory profit must be deferred by Rome=$3240
Explanation:
Inventory at year-end $ 24,000.00
Gross profit markup ($54,000 ÷ $120,000) × 0.45
Unrealized gain $ 10,800
Ownership share × 0.30
Intercompany unrealized gain — deferred $ 3,240
Majer Corporation makes a product with the following standard costs:Standard Quantity or Hours Standard Price or Rate Standard Cost Per UnitDirect materials 6.3 ounces $ 2.00 per ounce $ 12.60Direct labor 0.5 hours $ 10.00 per hour $ 5.00Variable overhead 0.5 hours $ 4.00 per hour $ 2.00The company reported the following results concerning this product in February.Originally budgeted output 4,900 unitsActual output 5,000 unitsRaw materials used in production 30,000 ouncesActual direct labor-hours 1,900 hoursPurchases of raw materials 32,400 ouncesActual price of raw materials $ 12.90 per ounceActual direct labor rate $ 22.40 per hourActual variable overhead rate $ 4.00 per hourThe company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.Required:1. The variable overhead efficiency variance for February is __________.
Answer:
variable overhead efficiency variance= $2,400 favorable
Explanation:
Giving the following information:
Standard:
Variable overhead = $4.00 per hour
Actual output of 5,000 units
Actual direct labor-hours 1,900 hours
To calculate the variable overhead efficiency variance, we need to use the following formula:
variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate
Standard quantity= 5,000 units* 0.5 hours= 2,500 hours
Actual quantity= 1,900 hours
variable overhead efficiency variance= (2,500 - 1,900)*4= $2,400 favorable
You are considering an investment in 30-year bonds issued by Moore Corporation The bonds have no special covenants. The Wall Street ournal reports that one-year T-bills are currently earning 3.55 percent Your broker has determined the following information about economic activity and Moore Corporation bonds 50Real interest rate 2.75 percent Default risk premium-1.05 percent Liquidity risk premium 0.50 percent Maturity risk premium 1.85 percent What is the inflation premium?
Answer:
0.8%
Explanation:
Moore Corporation
T-bills are currently earning 3.55 %
Less Real interest rate 2.75%
Inflation premium 0.8%
Or
Expected IP = i - RFR = 3.55% - 2.75% = 0.8%
Therefore the inflation premium is 0.8%
If you buy a computer directly from the manufacturer for $ 2 comma 535and agree to repay it in 60equal installments at 1.81 %interest per month on the unpaid balance, how much are your monthly payments? How much total interest will be paid?
Answer:
monthly payments is $69.61
Total interest paid = $1641.6
Explanation:
given data
buy computer = $2535
equal installments = 60
interest per month = 1.81 % = 0.0181
solution
we get here Monthly installments payments that is express as
EMI = [tex]\frac{P \times r \times (1+r)^t}{(1+r)^t-1}[/tex] ................1
put here value and we get
EMI = [tex]\frac{2535 \times 0.0181 \times (1+0.0181 )^{60}}{(1+0.0181 )^{60}-1}[/tex]
EMI = 69.610
so monthly payments is $69.61
and
Total interest paid is express as
Total interest paid = (no. of installment × EMI) - Loan amount
Total interest paid = (60 × 69.61) - 2535
Total interest paid = $1641.6
A company has a selling price of $2,300 each for its printers. Each printer has a 2 year warranty that covers replacement of defective parts. It is estimated that 3% of all printers sold will be returned under the warranty at an average cost of $160 each. During November, the company sold 40,000 printers, and 500 printers were serviced under the warranty at a total cost of $65,000. The balance in the Estimated Warranty Liability account at November 1 was $34,000. What is the company's warranty expense for the month of November
Answer:
The correct answer is $192,000.
Explanation:
According to the scenario, computation of the given data are as follows:
Returned average cost = $160
Printers sold = 40,000
Return percentage = 3%
So, we can calculate the company's warranty expense by using following formula:
Warranty expense = Returned average cost × Printers sold × Return percentage
= $160 × 40,000 × 3%
= 6,400,000 × 3%
= $192,000
Lean Accounting
The annual budgeted conversion costs for a lean cell are $180,000 for 2,000 production hours. Each unit produced by the cell requires 18 minutes of cell process time. During the month, 550 units are manufactured in the cell. The estimated materials costs are $32 per unit. Provide the following journal entries:
a. Materials are purchased to produce 600 units.
b. Conversion costs are applied to 550 units of production.
c. 500 units are completed and placed into finished goods.
a. Raw and In Process Inventory
Accounts Payable
b. Raw and In Process Inventory
Conversion Costs
c. Finished Goods Inventory
Raw and In Process Inventory
Answer:
Lean Accounting
Journal Entries
Sr. No Particulars Debit Credit
a. Raw Materials $ 19200
Accounts Payable $19200
Materials of $32* 600 units= $ 19200 are purchased on accounts.
a. Work in Process $ 19200
Raw Materials Inventory $ 19200
Raw Materials of $ 19200 are put to production
b. Conversion Costs Rate = $ 180,000/ 2000= $ 90 per hour
No of hours required for 550 units = 18* 550/3600= 9900/60= 165 hours
Conversion Costs for 550 units = $90 *165= $ 14850
Work In Process Inventory $14850
Raw Materials Inventory $ 14850
As we are unsure of the Manufacturing Overheads all the amounts is debited Raw materials inventory assuming all production hours were direct labor hours.
c. Finished Goods $ 29500
Work In Process $29500
All the completed units 500 are transferred to Finished Goods inventory.
Calculation of Finished Goods Inventory Costs.
Materials = 500 * $32= $ 16000
Conversion Costs = 500 units *18 mins /60= 150 hours *$ 90= $ 13500
Total = $16000+ $13500= $29500
Standards set by engineering studies
a.can determine the most efficient way of operating.
b.can provide rigorous guidelines.
c.may not be achievable by operating personnel.
d.often do not allow operating personnel to have much input. e
.All of these.
Answer:
The correct answer is letter "E": All of these.
Explanation:
In the corporate world, engineering studies aim to structure the diverse operational systems of an organization. From manufacturing to Information Technology (IT), engineering can build optimal networks according to the processes of an industry typically based in a set of rigorous parameters.
Engineering studies require knowledge and qualifications that regular employees do not tend to possess. Most engineering studies are developed by external professionals with vast expertise in a field related to the business.
1. $7,000 of merchandise inventory was ordered on September 2, 2009 2. $3,000 of this merchandise was received on September 5, 2009 3. On September 6, 2009, an invoice dated September 4, 2009, with terms of 3/10, net 30 for $3,250 which included a $250 prepaid freight cost, was received. 4. On September 10, 2009, $800 of the merchandise was returned to the seller. Based on the above information, by what date does the invoice need to be paid in order to take the advantage of the discount?
a. September 15, 2009
b. September 16, 2009
c. September 10, 2009
d. September 14, 2009
Answer:
Correct option is A
Explanation:
Invoiced purchases are $ 3,000, out of which $ 800 worth of goods were returned, and an extra shipping charge of $ 250 needs to be paid.
Total amount of the invoice 3,000
Add: Shipping Charges 250
Less: Value of goods return (800)
Amount to be paid $2,450
There will be no discount to be deducted because the invoice was not paid within the 10 days discount period.
$2,450
Final answer:
To take advantage of the discount offered in the invoice terms of 3/10, net 30, payment must be made by September 14, 2009.
Explanation:
The terms of the invoice are 3/10, net 30, which means that a 3% discount is available if the payment is made within 10 days of the invoice date. The date on the invoice is September 4, 2009. Therefore, to take advantage of the discount, payment must be made by September 14, 2009. The $800 of merchandise returned does not change this payment date for the discount; it would just adjust the total amount due. Should the payment be made on the discount date, the company would benefit not only from the discount but also from optimal cash flow management, aligning with sound financial principles and organisational behavior in promptly addressing invoice terms.
Joy Cunningham Co. purchased a machine on January 1, 2018, for $550,000. At that time, it was estimated that the machine would have a 10-year life and no salvage value. On December 31, 2021, the firm's accountant found that the entry for depreciation expense had been omitted in 2019. In addition, management has informed the accountant that the company plans to switch to straight-line depreciation, starting with the year 2021. At present, the company uses the sum-of-the-years'-digits method for depreciating equipment.'
Required:
(a) Prepare the general journal entries that should be made at December 31, 2021, to record these events. (Ignore tax effects.)
Answer and Explanation:
The Journal entry is shown below:-
1. Retained Earnings Dr. $90,000
To Accumulated Depreciation - Machinery $90,000
(Being To correct for the omission of depreciation expense in 2019 is recorded)
2. Depreciation Dr, $40,000
To Accumulated Depreciation - Machinery $40,000
(Being depreciation expense for 2021)
Working Note:-
Amount of Depreciation In 2019 = $550000 × 9 ÷ 55
= $90000
Cost Of machine $550,000
Less: Depreciation Prior to 2021
2012 - $55000 × 10 ÷ 55 $100,000
2013 - $55000 × 9 ÷ 55 $90,000
2014 - $55000 × 8 ÷ 55 $80,000 $270,000
Book Value as on 01.01.2021 $280,000
Depreciation For the 2021 = $280,000 ÷ 7
= $40,000
Bonds Payable. select between a.increase and decrease select between increase and decrease select between credit and debit b. Unearned Service Revenue. select between increase and decrease select between increase and decrease select between credit and debit c. Depreciation Expense. select between increase and decrease select between increase and decrease select between credit and debit d. Common Stock. select between increase and decrease select between increase and decrease select between credit and debit e. Buildings. select between increase and decrease select between increase and decrease select between credit and debit f. Rent Revenue. select between increase and decrease select between increase and decrease select between credit and debit
Answer:
Bonds Payable - Increase is credit, decrease is debit
Unearned Service Revenue - Increase is credit, decrease is debit
Depreciation Expense - Debit is increase, Credit is decrease
Common stock - Increase is credit, decrease is debit
Buildings - Debit is increase, Credit is decrease
Rent revenue - Increase is credit, decrease is debit
Explanation:
Bond payable and Unearned service revenue are liabilities.
Common stock is part of equity While rent revenue is income. A credit to a liability or an equity or an income account is to increase the balance.
Building and depreciation expense are assets and expense respectively. A debit to an expense or an asset is to increase it while a credit decreases it balance.
Which of the following will NOT shift the aggregate supply curve to the left? a decrease in corporate taxes an increase in the minimum wage an increase in the legislated amount of paid vacation an increase in the price of crude oil
Answer: a decrease in corporate taxes
Explanation: Aggregate supply refers to the total supply of goods and services available to a particular market from producers. It is the total amount of goods and services that firms are willing and able to sell at a given price level in an economy.
A decrease in the corporate taxes will not shift aggregate supply to the left because when the supply shifts to the left, the price level increases and the GDP decreases. Therefore, a decrease in corporate taxes cannot make supply shift to the left.
Fill in the blanks with given options.
Most economists believe that real economic variables and nominal economic variables behave independently of each other in the long run. For example, an increase in the money supply, a ________ variable, will cause the price level, a _________ variable, to increase but will have no long-run effect on the quantity of goods and services the economy can produce, a _________ variable. The notion that an increase in the quantity of money will impact the price level but not the output level is known as _________ .
Options:
a. real
b. nominal
c. price neutrality
d. monetary neutrality
e. the quantity theory
Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of rd = 9%, as long as it finances at its target capital structure, which calls for 35% debt and 65% common equity. Its last dividend (Do) was $2.20, its expected constant growth rate is 6%, and its common stock sells for $26. EEC's tax rate is 40%. Two projects are available: project A has rate of return 12%, and project B/S return is 11%. These two projects are equally risky and about as risky as the firm's existing assets.
What is its cost of common equity?
Which is the WACC?
Which projects should Empire accept?
Answer:
cost of common equity = 14.46%
WACC = 11.29%
accept = Project A
Explanation:
Cost of common equity is the return that is required by Holders of Common Stock.
The available details can be used to calculate the cost of common equity using the Dividend Growth Model as follows :
Cost of common equity = (Next year`s Dividend / Current Market Price of a Stock) + Expected Growth
= ($2.20/$26)+6%
= 14.46%
WACC is the minimum return that a project must offer before it can be accepted.It shows the risk of the company.
Cost of Debt = Market Interest Rate × (1 - tax rate)
= 9.00% × (1-0.40)
= 5.40%
Capital Source Weight Cost Total
Debt 35% 5.40% 1.89%
Common Equity 65% 14.46% 9.40%
Total 100% 19.86% 11.29%
Therefore WACC is 11.29%
When evaluating projects, Compare the Project`s Internal Rate of Return (IRR) to the WACC.
Project A
IRR 12% > WACC 11.29%
Therefore Accept
Project B/S
IRR 11% < WACC 11.29%
Therefore Do Not Accept
The cost of common equity for Empire Electric Company (EEC) can be calculated using the dividend growth model. The formula for the cost of common equity is:
Cost of Common Equity (Ke) = (Dividend / Stock Price) + Growth Rate
In this case, the dividend (Do) is $2.20, the stock price is $26, and the growth rate is 6%. Plugging these values into the formula:
Ke = (2.20 / 26) + 0.06
Ke = 0.0846 + 0.06
Ke = 0.1446 or 14.46%
The weighted average cost of capital (WACC) is a measure of a company's overall cost of financing. It is calculated by taking a weighted average of the cost of debt and the cost of equity, using the target capital structure as the weights. In this case, the target capital structure is 35% debt and 65% equity.
To calculate the WACC, we need to know the cost of debt and the cost of equity. The cost of debt is given as 9% (rd). We have already calculated the cost of equity as 14.46% (Ke).
WACC = (Weight of Debt * Cost of Debt) + (Weight of Equity * Cost of Equity)
WACC = (0.35 * 0.09) + (0.65 * 0.1446)
WACC = 0.0315 + 0.094
WACC = 0.1255 or 12.55%
Projects A and B have returns of 12% and 11% respectively. Since both projects are equally risky and as risky as the firm's existing assets, the decision on which projects to accept should be based on the profitability index (PI). The profitability index is calculated by dividing the present value of cash inflows by the initial investment.
If both projects have the same initial investment, the project with the higher profitability index should be accepted. However, if the initial investments are different, the decision should be based on the project with the highest net present value (NPV), which takes into account the initial investment and the present value of cash inflows.
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