Answer:
The company should sell product XY
Explanation:
The computation of given question is shown below:-
Particulars Sell as is Process Further Incremental Amount
Selling Price
Per unit $27 $31 -$4
Additional processing
Cost per unit $11 $11
Total $27 $20 -$7
Therefore, as we can see that the negative amount came so we sell and if we proceed the company will go to the loss.
Sub Station and Planet Sub reported the following selected financial data ($ in thousands). Sub Station's business strategy is to sell the best tasting sandwich with the highest quality ingredients. Planet Sub's business strategy is to sell the lowest cost sub on the planet.
Sub Station Planet Sub
Net sales $108,249 $62,071
Net Income 25,922 3.492
Total assets, beginning 75,183 38,599
Total assets, ending 116,371 44,533
Required:
1. Calculate Sub Station's return on assets, profit margin, and asset turnover ratio.
Answer:
The computations are shown below:
Explanation:
Return On Assets = Net income ÷ Average Total Assets × 100
where,
Average of Assets = (Beginning Total Assets + Ending Total Assets) ÷ 2
= ($75,183 + $116,371) ÷ 2
= $191,554 ÷ 2
= $95,777
So, the return on investment is
=$25,922 ÷ $95,777 × 100
= 27.06%
Profit Margin = Net income ÷ Sales × 100
= $25,922 ÷ $108,249 × 100
= 23.95%
Assets Turnover = Sales ÷ Average of Total Assets
= $108,249 ÷$95,777
= 1.13
To calculate Sub Station's financial ratios, we found its return on assets to be 27.07%, profit margin to be 23.94%, and asset turnover ratio to be 1.13.
Here’s a step-by-step explanation:
1. Return on Assets (ROA)
Return on Assets measures how efficiently a company uses its assets to generate profit.
ROA = (Net Income / Average Total Assets) x 100
Average Total Assets = (Total assets, beginning + Total assets, ending) / 2
For Sub Station:
Average Total Assets = ($75,183 + $116,371) / 2 = $95,777
ROA = ($25,922 / $95,777) x 100 = 27.07%
2. Profit Margin
The Profit Margin indicates the percentage of revenue that has turned into profit.
Profit Margin = (Net Income / Net Sales) x 100
For Sub Station:
Profit Margin = ($25,922 / $108,249) x 100 = 23.94%
3. Asset Turnover Ratio
The Asset Turnover Ratio measures the efficiency of a company's use of its assets to generate sales.
Asset Turnover Ratio = Net Sales / Average Total Assets
For Sub Station:
Asset Turnover Ratio = $108,249 / $95,777 = 1.13
A(n) ____________ new entry is used by entrepreneurs who see products or business concepts that have been successful in one market niche and introduce the same product in another segment of the market.
Answer:
imitative new entry
Explanation:
Imitative new entry strategy is used by entrepreneur to copy any existing successful business model and implement it in the other market. When any resourceful business entity sees that any product or service is successful in one of the markets then they try to imitate the success of same product in by introducing other market segment.
This helps the business to save finances in research and development, marketing and consumer awareness of product. Moreover, this strategy ensures that there is less scope of failure as the success of product is proven in one segment. It also helps them to improve upon the existing product to make it more consumer attractive.
Since in the problem stated one successful business concept is being introduced in other segment of market. It clearly suggest that it is an imitative new entry strategy.
Which of the following scenarios makes Tim liable for undue influence? a. He uses a false identity, borrows $10,000 from Kelly, and disappears with the money. b. He threatens to kill Carlos if Carlos does not sign a contract that transfers all his property to Tim. c. He takes advantage of his grandmother's illness and persuades her to sign a will leaving all her property to him. d. He threatens to bring a lawsuit against Carlos if Carlos does not make him a partner in his firm.
Option C , Tim takes advantage of his grandmother's illness and persuades her to sign a will leaving all her property to him.
Explanation:
A individual who demonstrates excessive control may always be someone who has a special connection with the testator who has had the ability to render the testator vulnerable who affected by terms of danger, difficulty, manipulation.
Undue interference occurs mainly in areas of probate, trust and properties, power of attorney and custody.
Indecent influence is not usually a crime in itself, but it can be a means of committing a crime, including exploitation, fraud, domestic abuse and sexual assault.
Regan runs her own hot dog stand on the U of A campus. The monthly cost of the cart rental and business permit is $200. Regan's contribution margin per unit is $2.00 and contribution margin ratio is 50%. 1. How many hot dogs does Regan need to sell each month to earn a target profit of $ 900 a month? 2. How much sales revenue does Regan need to generate each month to break even each month to earn a target profit of $ 900 a month?
Answer:
1. 550 units of hot dogs
2. $2200
Explanation:
1. Computation of Number of hot dogs need to sell each month to earn a target profit of $900 is shown below:-
Monthly fixed cost = $200 (Cart rental and business permit)
Sale price per unit = Contribution margin per unit ÷ Contribution margin ratio
= $2 ÷ 50%
= $4
Variable cost per unit = $2 × (4 × 50%)
Number of units to be sold = Fixed cost + Target profit ÷ Contribution margin
= $200 + $900 ÷ 2
= 550 units of hot dogs
2. Calculation of sales revenue to earn a target profit of $900 :
Break even sales revenue = Fixed cost ÷ Contribution margin ratio
= $200 ÷ 50%
= $400
Sales revenue to be generated = Fixed cost + Target profit ÷ Contribution margin ratio
= $200 + $900 ÷ 50%
= $2,200
Final answer:
Regan needs to sell 450 hot dogs each month to earn a target profit of $900. Regan needs to generate $2000 in sales revenue each month to break even and earn a target profit of $900.
Explanation:
To calculate the number of hot dogs Regan needs to sell each month to earn a target profit of $ 900, we can use the formula:
Target Profit = (Number of Hot Dogs Sold) x (Contribution Margin per Unit)
We know that the contribution margin per unit is $2.00, so we can rearrange the formula to find the number of hot dogs:
Number of Hot Dogs = Target Profit / Contribution Margin per Unit
Number of Hot Dogs = $900 / $2.00 = 450 hot dogs
Therefore, Regan needs to sell 450 hot dogs each month to earn a target profit of $900.
To calculate the sales revenue Regan needs to generate each month to break even and earn a target profit of $900, we can use the formula:
Sales Revenue = Fixed Costs + (Target Profit / Contribution Margin Ratio)
We know that the fixed costs are $200 and the contribution margin ratio is 50%, so we can substitute these values into
the formula:
Sales Revenue = $200 + ($900 / 0.50) = $200 + $1800 = $2000
Therefore, Regan needs to generate $2000 in sales revenue each month to break even and earn a target profit of $900.
The next dividend payment by Hoffman, Inc., will be $2.65 per share. The dividends are anticipated to maintain a growth rate of 4.5 percent forever. If the stock currently sells for $43.15 per share, what is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Hoffman, Inc. will distribute $2.65 per share as its subsequent dividend. It is expected that the dividend growth rate would always be 4.5 percent. The needed return per share is 10.64% if the company now trades for $43.15 per share.
R=(D1/P0)+g R=(2.65/43.15)+.045 R=.1064, or 10.64%
What is meant by dividend payment?A dividend payment made by a company to its shareholders out of its profits. A corporation is allowed to pay shareholders a portion of its profit as a dividend when it has a profit or surplus dividend payment.
Any unused funds are retained and reinvested back into the company (called retained earnings). Both the profit from the current year and the retained earnings from prior years are available for distribution; a corporation is typically not allowed to pay a dividend out of its capital.
The sum that is distributed to shareholders may be paid in cash (often a deposit into a bank account) or, if the company has a dividend reinvestment plan
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In Draco Corporation’s first year of business, the following transactions affected its equity accounts. Issued 6,800 shares of $2 par value common stock for $46. It authorized 20,000 shares. Issued 1,700 shares of 12%, $10 par value preferred stock for $51. It authorized 3,000 shares. Reacquired 340 shares of common stock for $58 each. Retained earnings is impacted by reported net income of $78,000 and cash dividends of $29,000. Prepare the stockholders’ equity section of Draco’s balance sheet as of December 31.
Answer:
$428,780
Explanation:
DRACO CORPORATION
Stockholders' Equity Section of the Balance Sheet as at December 31
Preferred stock- $10 par value
($6,800×$2) $13,600
Paid in capital in excess of par- Preferred stock ($6,800 ×$44) $299,200
($46-$2)
Preferred stock- $10 par value
($1,700×$10) $17,000
Paid in capital in excess of par- Common stock ($1,700×$41) $69,700
($51-$10)
Retained earnings($78,000-$29,000) $49,000
Less: Treasury stock($340×$58) ($19,720)
Total stockholders' equity $428,780
($448,500-$19,720)
The stockholders’ equity section of Draco’s balance sheet as of December 31 is $428,780.
Preferred stock = $6800 × 2 = $13600Add: Paid on capital = ($6800 × 44) = $299200Add preferred stock par value = ($1700 × 10) = $17000Add: Paid in capital excess of par = $1700 × $41 = $69700Add: Retained earnings = $78000 - $29000 = $49000Less: Treasury stock = $340 × $58 = $19720Total stockholders equity = $428780Therefore, the stockholders equity is $428780.
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Graphically illustrate (using the WS and PS relations) and explain the effects of an increase in the markup on the equilibrium real wage, the natural rate of unemployment, the natural level of employment, and the natural level of output
Answer:
When the markup increases, real wage decreases and because of the decrease or the now low real wage the demand for labor at a low cost decreases which leads to a increase in the natural rate of unemployment. In addition the natural rate of unemployment has an inverse relationship with the natural level of employment, therefore, the natural rate of employment will decrease. And the output level will decrease.
Explanation:
See attached picture:
The decrease in real wage is shown by the movement from W/P to W/P'.
The increase in the natural rate of unemployment is shown by the movement from Un to Un' and the new equilibrium is at B.
Final answer:
An increase in markup in a labor market with sticky wages causes the PS curve to shift upward, leading to higher natural unemployment and lower natural levels of employment and output. Over time, wages may adjust downwards, aligning with the natural rate of unemployment influenced by frictional and structural factors. Public policy can impact these natural levels and potential real GDP as well.
Explanation:
When discussing labor markets and output levels, an increase in the markup, assuming wages are sticky, can result in various effects. Initially, the equilibrium real wage is determined by the intersection of the Wage Setting (WS) curve, which represents the relation between the wage set by firms and the level of employment, and the Price Setting (PS) curve, indicative of prices set by firms as a markup over costs.
As the markup increases, firms will set higher prices to increase their profits while wages are sticky downwards and do not adjust immediately. The PS curve shifts upward leading to an increased equilibrium wage if wages were flexible. However, with sticky wages, the real wage remains the same while the number of individuals employed decreases. This leads to a higher natural rate of unemployment and a lower natural level of employment. Consequently, the natural level of output, which is the potential real GDP the economy can produce when it is at full employment, will also decrease.
Over time, increased unemployment pressures wages to fall, adjusting to a new, lower natural rate of employment. This adjustment acknowledges the concepts of frictional and structural unemployment, which relate to the time it takes for individuals to find new jobs or to the mismatch between the skills workers possess and those demanded by employers. These types of unemployment can alter the natural rate of employment and, by extension, potential real GDP.
Fiscal and monetary public policies can affect the natural levels as well; for example, training programs can decrease structural unemployment and shift the natural rate of employment and potential real GDP back towards equilibrium.
Exercise 15-19 (LO. 3,4) Henry, a freelance driver, finds passengers using various platforms such as Uber and Grubhub. He is single and has no other sources of income. In 2018, Henry's net income from driving is $61,000. Assume Henry takes the standard deduction of $12,000 Click here to access the 2018 individual tax rate schedule to use for this problem. Compute Henry's QBI deduction and his tax liability. Bl deduction: 12,200 x Tax liability (round to the nearest dollar): 10,736X Feedback Check My Work With the reduction in the corporate income tax rate to 21 percent in 2018, Congress needed to provide a means of reducing the taxes on businesses that operate in different business forms (e.g., sole proprietors, partnerships, and S corporations). Congress accomplished this with the creation of the deduction for qualified business income (§ 199A), which applies to noncorporate taxpayers. To determine the "qualified business income deduction," one has to understand the definition of a "qualified trade or business" and "qualified business income."
Answer:
Qualified Business Income Deduction is $9,800
Tax liability = $4,564
Explanation:
Qualified business income is calculated by subtracting an individual's ordinary deduction from a qualified business or trade from the individual's ordinary income.
Net income = $61,000
Standard deduction = $12,000
Modified taxable income;
$61,000 - $12,000 = $49,000
QBI Deduction (Sec 199A) is the lesser of:
[0.2 × 49,000 < 0.2 × 61,000]
$9,800 < $12,200
Therefore Qualified Business Income Deduction is $9,800
Taxable income = $(49,000 - 9800) =$39,200
Answer:
henry grubs what he loves
4. Some economists have suggested that someday we will live in a "cashless society" in which all businesses (including stores) and banks will be linked to a centralized accounting system. In this system you will be able to pay for purchases directly from your bank account without using cash. What are the costs of anticipated inflation in a cashless society
Answer:
Anticipated inflation would cause menu costs but not shoe-leather costs.
Explanation:
Final answer:
In a cashless society, anticipated inflation may arise due to potential overexpansion of the money supply without the physical constraints of cash, leading to a decrease in purchasing power.
Explanation:
The concerns about anticipated inflation in a cashless society include the possibility that without the physical constraint of having to print and circulate cash, there might be less restraint in the creation of money, which could lead to inflation. Inflation erodes the purchasing power of money, meaning consumers can buy less with the same amount of money in their bank account. In a cashless society, this could happen more rapidly since the constraint of printing money is removed, potentially allowing for a more quick and less visible expansion of the money supply.
Banks play a crucial role in the economy by facilitating transactions and making it easier for businesses to operate without large stockpiles of cash. However, too much money in circulation, which can occur if money creation is not managed well, can lead to inflation, as seen in extreme conditions like hyperinflation.
In summary, while a cashless society can enhance efficiency and security in economic transactions, it also carries the risk of creating an environment where inflation can rapidly erode the value of money if monetary policy is not managed with great care.
Chavez Corporation reported the following data for the month of July: Inventories: Beginning Ending Raw materials $ 31,000 $ 32,000 Work in process $ 18,000 $ 21,000 Finished goods $ 34,000 $ 49,000 Additional information: Raw materials purchases $ 68,000 Direct labor cost $ 93,000 Manufacturing overhead cost incurred $ 61,000 Indirect materials included in manufacturing overhead cost incurred $ 8,800 Manufacturing overhead cost applied to Work in Process $ 60,000 Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold. The cost of goods manufactured for July is:
Answer:
cost of goods manufactured= $217,000
Explanation:
Giving the following information:
Inventories:
Beginning Ending
Raw materials $ 31,000 $ 32,000
Work in process $ 18,000 $ 21,000
Additional information:
Raw materials purchases $68,000
Direct labor cost $ 93,000
Manufacturing overhead cost applied to Work in Process $ 60,000
To calculate the cost of goods manufactured, we need to use the following formula:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
First, we need to calculate the direct material used in production.
Direct material used= beginning inventory + purchases - ending inventory
Direct material used= 31,000 + 68,000 - 32,000= 67,000
Now, we can calculate the cost of goods manufactured:
cost of goods manufactured= 18,000 + 67,000 + 93,000 + 60,000 - 21,000
cost of goods manufactured= $217,000
The specific identification method of inventory costing may enable management to manipulate net income. always minimizes a company's net income. has no effect on a company's net income. always maximizes a company's net income.
Answer: May enable management to manipulate net income
Explanation:
The Specific Identification method does in fact allow for some manipulation most especially when there are items that are identical but yet are not of the same cost.
To most customers, the items will be the same and therefore the retailer or management could just report selling an item of higher cost in order to lower paper profit and by extension net income.
If you need further clarification do react or comment.
Specific Identification method in inventory costing can influence a company's net income by allowing executives to selectively assign values to inventory items and therefore affecting reported profits.
Inventory costing methods like Specific Identification can impact a company's net income as it involves assigning values to inventory assets. The specific identification method entails identifying and valuing each individual item in the inventory.
Executives can potentially use this method to manipulate net income by choosing which items to value higher or lower, affecting the reported profits. Therefore, it allows for discretion in valuing inventory which can impact the company's bottom line.
Suppose you invest a sum of $ 1500 in an interest-bearing account at the rate of 12% per year. What will the investment be worth six years from now? (Round your answer to the nearest whole dollar.) In six years the investment will be worth $ .
After six years, the investment will be worth approximately $2925.
To calculate the value of the investment after six years, we can use the formula for compound interest:
[tex]A = P(1 + r/n)^{(nt)}[/tex]
Where:
A = future value
P = the initial principal amount ($1500 in this case)
r = the annual interest rate (12% or 0.12 in decimal form)
n = the number of times the interest is compounded per year (assuming it is compounded annually, n would be 1)
t = the number of years the money is invested for (6 years in this case)
we get:
[tex]A = 1500(1 + 0.12/1)^{(1*6)}\\A = 1500(1 + 0.12)^6\\A = 1500(1.12)^6[/tex]
Calculating the value inside the parentheses first:
[tex](1.12)^6[/tex] = 1.95 (rounded to two decimal places)
A = 1500 * 1.95
A ≈ 2925
Therefore, after six years, the investment will be worth approximately $2925.
Prepare the journal entry to record bad debt expense assuming Novak Company estimates bad debts at (a) 4% of accounts receivable and (b) 4% of accounts receivable but Allowance for Doubtful Accounts had a $1,470 debit balance. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Additional information:
Novak Company reports the following financial information before adjustments. Dr. Cr. Accounts Receivable $155,400 Allowance for Doubtful Accounts $3,890 Sales Revenue (all on credit) 800,700 Sales Returns and Allowances 50,330
Answer:
net credit sales = total sales revenue - sales returns and allowances = $800,700 - $50,330 = $750,370
accounts receivables = $155,400
allowance for doubtful accounts = $3,890 (credit balance)
A) estimated bad debts = 4% of accounts receivables = 4% x $155,400 = $6,216
since the current balance of allowance for doubtful accounts is $3,890, then the adjusting entry should be = $6,216 - $3,890 = $2,326:
Dr Bad debt expense 2,326
Cr Allowance for doubtful accounts 2,326
B) estimated bad debts = 4% of accounts receivables = 4% x $155,400 = $6,216
since the current debit balance of allowance for doubtful accounts is $1,470, then the adjusting entry should be = $6,216 + $1,470 = $7,686:
Dr Bad debt expense 7,686
Cr Allowance for doubtful accounts 7,686
Suppose that the market equilibrium price for a basic medical check-up is $50, in a market in which there is no health insurance. To encourage more people to get a check-up, the local government mandates that the price of a check-up cannot be more than $40. Would the number of check-ups in this market, increase, decrease, or remain unchanged, relative to the market equilibrium
Answer:
The number of check-ups in this market would decrease.
Explanation:
This is an example of price ceiling.
Price ceiling refers to a legal maximum price that is set by the government for a commodity to be sold.
Price ceiling set below the equilibrium price will result in a supply shortage as it will be effective and binding, while price ceiling set above the equilibrium price will not affect quantity supplied in the market as it will not be effective and binding.
Since the $40 price of heck-up is below $50 equilibrium price, it will result in shortage supply and the number of check-ups in this market would decrease.
Company X has net sales revenue of $1,259,000, cost of goods sold of $776,500, and all other expenses of $301,000. The beginning balance of stockholders' equity is $510,000 and the beginning balance of fixed assets is $372,000. The ending balance of stockholders' equity is $875,000 and the ending balance of fixed assets is $400,000. Required: Compute the return on equity (ROE) ratio.
Answer:
The answer is 0,5739.
Explanation:
If we subtract the cost of goods and other expenses from the net sales revenue, we get $181,500.
The balance of fixed assets at the end is $400,000 and the stockholders' equity is $875,000.
The difference in the balance of fixed assets is $28,000 and the difference in the stockholders' equity is $365,000.
So the return on equity ratio can be computed as follows;
(181,500+28,000) / 365,000 = 0,5739.
I hope this answer helps.
During 2020, the Beach Restaurant had sales revenues and food costs of $700,000 and $500,000, respectively. During 2021, Beach plans to introduce a new menu item that is expected to increase sales revenues by $90,000 and food costs by $41,000. Assuming no changes are expected for the other food items, operating profits for 2021 are expected to increase by:
Answer:
$49,000
Explanation:
Operating profit is the difference between the sales revenue from regular business activities and the operating cost incurred in the process of generating such sales.
Given that the introduction of a new menu is expected to increase sales revenues by $90,000 and food costs by $41,000, the effect on operating profit is
= $90,000 - $41,000
= $49,000
The operating profits for 2021 are expected to increase by $49,000
Answer:
49,000 DOLLARS
Explanation:
Operating profit is a financial metric used to calculate the profits a company make from core businesses which excludes other side investments, taxes and interests.
The formula for calculating operating profit is;
Operating profit = operating revenue - cost of goods
increase in operating profit for the year 2021 = increase in sales revenue - increase in food costs
increase in OP (2021) = 90,000 - 41,000 = 49,000 dollars.
Although ultimate responsibility for implementing and executing strategy falls upon the shoulders of senior executives,
a. the success or failure of the implementation/execution effort hinges chiefly on a company's reward system and whether its policies and procedures are strategy-supportive.
b. top-level managers still have to rely on the active support and cooperation of middle and lower-level managers in pushing needed changes in functional areas and operating units.
c. the pivotal and most decisive strategy-implementing actions are carried out by frontline supervisors who have the day-to-day responsibility of seeing that key activities are done properly.
d. the success or failure of the implementation/execution effort hinges chiefly on doing an effective job of empowering employees to make day-to-day operating decisions that support good strategy execution.
e. it is a company's employees who most determine whether the drive for good strategy execution will succeed or fail.
Answer: top-level managers still have to rely on the active support and cooperation of middle and lower-level managers in pushing needed changes in functional areas and operating units
Explanation:
The senior executives in organizations are responsible for the implementation and execution of directives to achieve organizational goals. For them to achieve this, top-level managers have to rely on the cooperation and active support of the middle and lower-level managers for organizational success.
The top level managers are in charge of planning and directing the group of individuals as they monitor their work and implement needed changes.
Fruit First produces and sells baskets of dried fruit for $20 each. It receives a special order from Carol Costellano for 150 fruit baskets at a special price of $16. The company incurs a variable cost of $11 and a fixed manufacturing overhead of $6 per unit of fruit basket. The company is operating at full capacity and will have to cancel its existing orders to fill this special order. What will be the total opportunity cost that must be considered in the incremental analysis for this decision?
Answer:
$600
Explanation:
Normal selling price for baskets of dried fruits = $20
No. of baskets ordered = 150
At this price, the total selling revenue will be =$20*150 =$3000
Variable cost = $11*150 =$1650
Manufacturing overhead cost = $6*150 =$900
Income at a selling price of $20 = $3000-$(1650+900)=$450
For the special order
Selling price= $20
Total selling revenue =$16*150=$2400
Income at a selling price of $16 = $2400-$2550 = -$150 loss
The opportunity cost of this decision will be leaving a profit of $450 and obtaining a loss of $150
Total opportunity cost that must be considered in the incremental analysis for this decision =$450 +$150 =$600
The total opportunity cost for Fruit First is the lost profit on the displaced orders, which is 150 baskets x $9 lost contribution margin per basket, amounting to $1350.
The total opportunity cost for Fruit First in accepting Carol Costellano's special order at a special price involves calculating the loss from the reduced price per unit and the cost of cancelling existing orders. To fill the special order at $16 per unit instead of the regular $20, the company already incurs a lost contribution margin of $4 per unit (the difference between the usual selling price and the special order price). Since the variable cost is $11 per unit, the contribution margin on the regular orders would have been $9 per unit ($20 - $11). However, because the company is operating at full capacity, the opportunity cost also includes the profit forgone from the orders that must be canceled to accommodate this special order. If the fixed manufacturing overhead is $6 per unit and is unrecoverable, this cost should not figure into the incremental analysis for the special order as it is a sunk cost, assuming the fixed overhead does not increase because of the special order.
For 150 baskets, the total opportunity cost would therefore involve the lost profit on the displaced regular orders: 150 baskets imes $9 lost contribution margin per basket = $1350. The opportunity cost is the foregone profit from the orders that are cancelled to take on the special order.
The Draper Corporation is considering dropping its Doombug toy due to continuing losses. Data on the toy for the past year follow:
Sales of 15,000 units $ 150,000 Variable expenses 120,000 Contribution margin 30,000 Fixed expenses 40,000 Net operating loss $ (10,000 ) If the toy were discontinued, Draper could avoid $8,000 per year in fixed costs. The remainder of the fixed costs are not avoidable. Assuming all other conditions stay the same, at what level of annual sales of Doombugs (in units) should Draper be indifferent between discontinuing Doombugs or continuing the production and sale of Doombugs?
To find the break-even point for continuing the Doombug toy line, Draper Corporation needs to equate the unavoidable fixed costs with the contribution margin per unit. They would need to sell 16,000 units after dropping the avoidable fixed costs to break even.
The question from the Draper Corporation case relates to the analysis of whether to continue or discontinue the Doombug toy line. This situation can be evaluated using break-even analysis in a managerial accounting context. The calculation must factor in the unavoidable fixed costs that Draper Corporation would continue to incur and the avoidable fixed costs saved if the production ceases.
To find the sales level at which the company should be indifferent between continuing or discontinuing the Doombug, we need the contribution margin per unit and the avoidable fixed costs. The contribution margin per unit is calculated by taking the total contribution margin ($30,000) and dividing it by the number of units sold (15,000 units), giving $2 per unit. To cover the remaining fixed costs ($32,000, which is $40,000 total fixed costs minus $8,000 avoidable costs), divide these costs by the contribution margin per unit:
Breakeven Units = [tex]\frac{Total Fixed Costs - Avoidable Fixed Costs}{Contribution Margin per Unit}[/tex] =[tex]\frac{\$32,000}{\$2}[/tex] = 16,000 units $$
Thus, the Draper Corporation would need to sell 16,000 units of the Doombug after dropping the avoidable fixed costs to break even and be indifferent to the decision to stop production.
During the year, Wright Company sells 470 remote-control airplanes for $110 each. The company has the following inventory purchase transactions for the year. Date Transaction Number of Units Unit Cost Total Cost Jan. 1 Beginning inventory 60 $ 82 $ 4,920 May. 5 Purchase 250 85 21,250 Nov. 3 Purchase 200 90 18,000 510 $ 44,170 Calculate ending inventory and cost of goods sold for the year, assuming the company uses weighted-average cost.
Answer:
Units of inventory = 40 units
Value the closing inventory = $ 3,464.31
Cost of goods sold = $40,705.69
Explanation:
To value inventory, The weighted average inventory method uses the value of weighted average price of all the batches purchased till date. The weighted average price is re-computed whenever a new batch of stock is received.
Weighted average cost = Total value of stock/ Total units
Step 1
Calculate the weighted average price
For Wright, we can work out the weighted average price as follows:
Weighted average cost = Total value of stock/ Total units
The total quantity purchased plus opening inventory before sales is 510 units
step 1
Weighted average price
= $44,170/ 510 units
= $86.607
Step 2
Calculate the closing inventory units
Closing inventory = opening inventory + purchases - sales
=510-470
= 40 units
Step 3
Value the closing inventory
= 40 × $86.60784314
= $ 3,464.31
step 4
Cost of goods sold
= 470 × $86.60
= $40,705.69
Units of inventory = 40 units
Value the closing inventory = $ 3,464.31
Cost of goods sold = $40,705.69
The weighted-average cost per unit for the Wight Company is around $86.61. With 40 unsold units, the ending inventory is valued at about $3,464.4. The cost of goods sold for the year is approximately $40,705.7.
Explanation:The Wright Company's financial year includes three inventory purchase transactions dating from January to November. With a total inventory of 510 units and a total cost of $44,170, you can calculate the weighted-average cost per unit by dividing the total cost by the total number of units. This results in a cost of approximately $86.61 per unit.
To determine the ending inventory, multiply the number of unsold units (510 units bought - 470 units sold = 40 units) by the weighted-average cost per unit (40 units * $86.61 = approximately $3,464.4). Hence, the ending inventory is valued at around $3,464.4.
The cost of goods sold (COGS) is then determined by multiplying the number of units sold by the weighted-average cost per unit (470 units * $86.61 = approximately $40,705.7). Hence, for that financial year, the COGS is around $40,705.7.
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The money supply increases when the Fed a. lowers the discount rate. The increase will be larger the larger the reserve ratio is. b. raises the discount rate. The increase will be larger the smaller the reserve ratio is. c. raises the discount rate. The increase will be larger the larger the reserve ratio is. d. lowers the discount rate. The increase will be larger the smaller the reserve ratio is.
Answer: d. lowers the discount rate. The increase will be larger the smaller the reserve ratio is
Explanation: The money supply is given as the total amount of money (bills, coins, loans, credit, and other liquid instruments) in a particular economy (in circulation or in existence).
The Fed has a number of tools for managing the money supply which include: changing the discount rate, changing the reserve requirement, conducting open market operations and redeeming Federal Reserve notes.
Using the discount rate, which is the interest rate the Federal Reserve charges on loans from the Federal Reserve, to increase money supply, the Fed lowers the discount rate which basically increases excess reserves in commercial banks across the economy thus increasing the money supply. The increase in the money supply will be significantly larger the smaller the reserve ratio is.
Sun Industries' budgeted sales and direct materials purchases are as follows: Budgeted Sales Budgeted DM Purchases January $200,000 $30,000 February $220,000 $36,000 March $250,000 $38,000 Sales are 30% cash and 70% credit. Credit sales are collected in the month following sale. Direct materials purchases are paid 40% cash in the month of purchase and 60% in the month following purchase. What are budgeted cash payments for DM purchases for the month of February?
Answer:
Total cash payments in February : $32400
Explanation:
Purchases on cash are generally collected immediately, hence if the purchase occurs in February, it would be collected in February itself. Purchases on credit on the other hand, is where the debtor can pay for the goods or services on a later date. In this case, part is paid at the time of purchase and another part is paid in the next month after the sale.
According to the information, in February $36,000 worth of purchase were made. Of this, 40% would be paid in February itself. 60% in March. At the same time, the business would also have to pay for the remainder of the $30,000 of purchases made in January in February. Hence, total cash payments in February are:
$36000 x 40% = $14400
$30000 x 60% = $18000
Total cash payments in February: $14400 + $18000 = $32400
A manager doing performance appraisals gives more weight to recent employee behaviors than to behaviors of 6 or 9 months earlier. This shows that the manager's perception is affected by a(n) ________ bias.
Answer:
The correct answer is letter "B": availability.
Explanation:
Availability bias or availability heuristic refers to individuals tending to relate the easiest judgment they can recall about a certain matter as its most suitable metric and even a metric that could predict future behavior on that topic. This happens because those people make assumptions based on what they can remember of that matter which might not be necessarily the most accurate input about it.
Therefore, if a manager is measuring performance only placing focus on employees' recent and not past behavior, the manager is implementing availability bias.
Identify the three criteria you consider to be most important in determining whether or not a system is a quality system. Briefly discuss your rationale for selecting these criteria.
Answer:
Quality Management 3 criterias : Comprehensiveness, Simplicity, Risk Management
Explanation:
Quality Management is very good for fulfilling quality management needs of organisation.
Important criterions of determining quality system ; is that it adds value in under mentioned ways :
Complete, comprehensive solution : The tool should not be in broken parts for various functions. It should have good degree of integration for comprehending various business tasks , for complete development Simple use : The user experience should be very clear & simple, free from any chaos. This will ensure proper process visibilityRisk Management : Businesses have to face many uncertainties, so risk management is very important part, to ensure sustainable developmentA system is said to be quality if its high accuracy in its operations, Compliance with applicable standards of procedures and has high customer satisfaction.
Criteria of a Quality BuisnessIn business, A system is regarded as being Quality if it has these 3 criteria:
high accuracy in its operations Compliance with applicable standards of procedures high customer satisfaction. Accuracy in its operations:When a business is accurate and precise in its operations whether in production or in service, it makes such a business to save time( reduces repetition) , function efficiently and increase profit. Accuracy in business helps a company have good and proper estimations for projections in revenue.For example, any data provided must be accurate, This gives credibility. These data values must be accurate and provided in an unambiguous and consistent form.
Compliance with applicable standards of procedures:A quality business adheres to standards of procedures to operate and does not rigmarole to the end product or service. It follows step by step procedures or guidelines understanding that once there is a meander from the procedures, a problem results causing non-uniformity, a red flag.
High customer satisfaction.:A quality business leads to a growing one are more likely to be prioritize by customers. Customer satisfaction is key for every business cause it leads to more recommendation and therefore improved revenue.
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You need to have $34,000 in 11 years. You can earn an annual interest rate of 3 percent for the first 6 years, and 3.6 percent for the next 5 years. How much do you have to deposit today?
Answer:
$23,859.25
Explanation:
As we know that
Future value = Present value × (1 + interest rate)^number of years
where,
Future value = $34,000
Interest rate and the number of years are different to each other
So, the present value is
$34,000 = Present value × (1.03)^6 × (1.036)^5
$34,000 = Present value × 1.4250238247
So, the present value is $23,859.25
We simply applied the above formula so that the approximate today deposited value or present value could come
To determine the present value required to meet the future goal of $34,000 in 11 years at two different interest rates, you must perform a two-step calculation involving the compound interest formula. First, calculate the amount $34,000 would be equivalent to after 5 years at 3.6% interest, and then determine its equivalent after another 6 years at 3% interest, thereby revealing the initial deposit needed today.
To calculate how much you would need to deposit today to have $34,000 in 11 years with different interest rates for different periods, you would use the compound interest formula and present value calculations. Let's first find the future value of the deposit after the first 6 years using the first interest rate of 3 percent. Then, we'll need to grow that amount for the next 5 years at the 3.6 percent rate.
The compound interest formula is A = P(1 + r/n)nt, where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or borrowed for
For the first 6 years at 3 percent:
P = unknown
r = 0.03
n = 1 (compounded annually)
t = 6
Then, for the next 5 years at 3.6 percent:
r = 0.036
t = 5
First, calculate the amount after 6 years.
P(1 + 0.03)6 = X, where X is the amount we'll have after 6 years.
Next, we will grow X for another 5 years at 3.6%
X(1 + 0.036)5 = $34,000
Now, we must work backwards to find X and then P using the reverse of the compound interest formula (in this case considering it as the present value), which ultimately needs to be solved for P.
Ultimately, to find out how much to deposit today, we calculate the present value of $34,000 discounted back 5 years at 3.6%, and then the result further discounted back 6 years at 3%.
Debbie works as a floor representative at a cellular phone company. Her job is to receive information from potential customers about their needs and interests and enter it into a computer system that passes the information on to the appropriate specialized technician in order to meet customer needs. The computer system is the metaphorical _____ of the firm.
Answer:
The correct answer is letter "D": nucleus.
Explanation:
In neurology, the nucleus is the part of the neuron that contains the genetic material in the form of chromosomes. Neurons need to produce a great number of proteins and most of the neuronal proteins are synthesized in the nucleus. The nucleus is usually in the center of a neuron and is the most visible part of it.
Therefore, in the metaphor of the example the computer system that stores the information of prospective clients will act as the nucleus of a neuron.
The computer system used by Debbie in her role of linking customers to specialized technicians is analogous to a nerve center, a term used in business to represent a hub that receives, processes, and directs information.
Explanation:In the context of this scenario, the computer system that Debbie uses in her job as a floor representative at the cellular phone company can be considered the metaphorical
nerve center
of the firm. This term is often used in business to describe a centralized point in an organization where information is received, processed, and then directed to the proper channels. In this case, Debbie collects information from potential customers, which is then processed by the computer system and passed on for further action by the appropriate specialized technicians.
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On January 1, 2017, Flying High Airlines leased a new airplane for a term of 10 years The expected life of the airplane is 20 years. There are no rights to purchase the asset at the end of the term, no bargain purchase option, and no residual value guarantee. The lease stipulates that Flying High makes annual payments of S650,000 beginning at the end of the first year (December 31, 2017). Flying High has an incremental borrowing rate of 4.5% and the fair market value ofthe airplane on January 1, 2017 is $6,250,000 (for simplicity, assume the lessors implicit rate is greater than 45%) a. What journal entries related to thelease arrangement should be recorded during 2017 (assume Flying High's fiscal year end is December 31) b. Identify any effects the lease arrangement and the associated reporting would have on the balance sheet, income statement, and statement of cash flows for 2017 c. What is the annual lease payment that results in a present value ofminimum lease payments equal to 90% of the fair market value of the airplane ($6,250,000)?
Answer:
a. The journal entry would be as follows:
Debit Credit
December 31, 2017 Lease Rent Expense $650,000
Cash $650,000
b. The Lease rent expense of $ 650,000 will be reported on the 2017 income statement as an operating expense for computation of net operating income.
c. The annual lease payment that results in a present value ofminimum lease payments equal to 90% of the fair market value of the airplane is $710,883
Regarding The cash outflow of $ 650,000 will be reported in the Operating Activities section of the Statement of Cash Flows for the year ended December 31, 2017.
Explanation:
In order to know what journal entries related to thelease arrangement should be recorded during 2017, first we need to calculate the Present Value Annuity as follows:
Present Value Annuity = [1-(1+r)^-n]/r
=[1-(1+.045)^-10]/0.045 = $7.9127
Hence, Present value of the minimum lease payments = $ 650,000 x 7.9127 = $ 5,143,255
a. The journal entry would be as follows:
Debit Credit
December 31, 2017 Lease Rent Expense $650,000
Cash $650,000
b. The Lease rent expense of $ 650,000 will be reported on the 2017 income statement as an operating expense for computation of net operating income.
Regarding The cash outflow of $ 650,000 will be reported in the Operating Activities section of the Statement of Cash Flows for the year ended December 31, 2017.
c. In order to calculate the annual lease payment that results in a present value ofminimum lease payments equal to 90% of the fair market value of the airplane we would have to use the following formula:
Annual lease payments that would result in present value of minimum lease payments of 90 % of the fair market value of the airplane = $ (6,250,000 x 90% ) / 7.9127 = $ 710,883
. Use a business directory to identify several
nonprofit corporations in your area. What public service is each providing? Why do you
think each is a public rather than a private
corporation?
Nonprofit organizations are businesses that aim to provide charitable, religious, or educational purposes rather than making a profit. They may provide public services such as healthcare, education, or social support. These organizations are considered public corporations because they serve the public good and rely on funding or donations to fulfill their mission.
Explanation:A nonprofit organization is a business entity that has a primary mission of providing charitable, religious, or educational purposes, rather than making a profit.
Some examples of nonprofit corporations in your area might include a nonprofit health organization, a private hospital, or a governmental agency like Health and Social Services.
A nonprofit health organization, for example, provides public health services such as medical research, health education, or access to affordable healthcare for disadvantaged populations.
These organizations are considered public rather than private corporations because their main goal is to serve the public good rather than generating profit for shareholders or owners. They may receive government funding, rely on donations, or operate using volunteer labor to fulfill their mission.
Flex Co. just paid total dividends of $1,100,000 and reported additions to retained earnings of $3,300,000. The company has 725,000 shares of stock outstanding and a benchmark PE of 17.4 times. What stock price would you consider appropriate
Answer:
$105.60
Explanation:
Given: Total dividend paid= $1100000.
Retained earning= $3300000.
Number of outstanding shares= 725000.
PE ratio= 17.4 times.
First finding earning per share.
Formula; [tex]EPS= \frac{(paid\ dividend+ additional\ retained\ earning)}{number\ of\ outstanding\ shares}[/tex]
⇒ [tex]EPS= \frac{(1100000+3300000)}{725000}[/tex]
⇒ [tex]EPS= \frac{4400000}{725000}[/tex]
∴ [tex]EPS= \$ 6.0689 \approx \$ 6.07[/tex]
Hence, earning per share (EPS)= $6.07.
Now, finding the appropriate stock price.
Price of stock= [tex]EPS\times PE[/tex]
⇒ Price of stock= [tex]\$ 6.07\times 17.4[/tex]
∴ Price of stock= [tex]\$ 105.60[/tex]
Hence, $105.60 would be the appropriate price of stock.
Final answer:
The appropriate stock price for Flex Co., using the benchmark P/E ratio and the company's total earnings divided by the number of shares, is approximately $105.62.
Explanation:
To determine an appropriate stock price for Flex Co., we must first calculate the company's earnings per share (EPS). To do this, we use the total dividends paid and the reported additions to retained earnings. The total earnings can be found by adding the dividends and retained earnings together, which is $1,100,000 + $3,300,000 = $4,400,000. Now, we can find the EPS by dividing the total earnings by the number of shares outstanding:
$4,400,000 / 725,000 shares = $6.07 per share.Next, we use the benchmark P/E ratio to determine the stock price. If the P/E ratio is 17.4 times, then we multiply the EPS by this ratio to find the stock price:
$6.07 per share * 17.4 = $105.62.Therefore, based on the provided information, we would consider an appropriate stock price for Flex Co. to be approximately $105.62.
Wendell’s Donut Shoppe is investigating the purchase of a new $18,600 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $3,800 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 1,000 dozen more donuts each year. The company realizes a contribution margin of $1.20 per dozen donuts sold. The new machine would have a six-year useful life. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes? (Round your final answer to the nearest whole dollar amount.) 2. What discount factor should be used to compute the new machine’s internal rate of return? (Round your answers to 3 decimal places.) 3. What is the new machine’s internal rate of return? (Round your final answer to the nearest whole percentage.) 4. In addition to the data given previously, assume that the machine will have a $9,125 salvage value at the end of six years. Under these conditions, what is the internal rate of return? (Hint: You may find it helpful to use the net present value approach; find the discount rate that will cause the net present value to be closest to zero.) (Round your final answer to the nearest whole percentage.)
Answer:
1. Total Annual Cash Inflows = 5000
2. Discount Factor = 3.72
3. New Machine's internal rate of return = 16%
Explanation:
Note: the question is incomplete and it lacks essential data to be used in part 4. Without the exhibits mentioned in the questions, it is not possible to solve this question completely. We will be solving it till part 3.
1) What would be the total annual cash inflows associated with the new machine for capital budgeting purposes?
Answer:
In this we have to calculate the total annual cash inflows and the formula to calculate it is mentioned below:
Total Annual Cash Inflows = Savings in Part Time help annually + Additional contribution Margin from Expected Sales.
Total Annual Cash Inflows = 3800 + ( 1000 x 1.20)
Total Annual Cash Inflows = 3800 + 1200
Total Annual Cash Inflows = 5000
2. What discount factor should be used to compute the new machine’s internal rate of return?
Answer:
Formula to calculate the Discount factor:
Discount Factor = Price of new machine/ annual cash inflow
Price of new machine = 18600 USD
Annual cash inflow = 5000
Discount Factor = 18600 /5000
Discount Factor = 3.72
3. What is the new machine’s internal rate of return?
Answer:
As, it can be seen from the exhibits (which are missing from this question) that the discount factor for 6 years is nearly closest to 16%, hence the new machine's internal rate of return = 16%
Note: the question is incomplete and it lacks essential data to be used in part 4. without the exhibits mentioned in the questions. It is impossible to solve further.
The total annual cash inflow is $5,000. There isn't enough information provided to calculate the discount factor and the Internal Rate of Return (IRR). The salvage value will also change the calculation.
Explanation:1. To calculate the total annual cash inflows, we add the cost savings from reducing part-time help and the additional contribution from the sale of new donuts. The cost saving is $3,800. The additional contribution is the number of dozens of new donuts (1,000) times the contribution margin per dozen ($1.20), which is $1,200. So, the total annual cash inflows are $3,800+$1,200=$5,000.
2. The question does not provide enough information to determine the discount factor. Normally, it would either be provided or calculated based on a given discount rate (interest rate).
3. The Internal Rate of Return (IRR) also cannot be determined without either the net present value at a specific discount rate or the cash inflows for each year given. The IRR is the discount rate that makes the Net Present Value (NPV) of a project zero.
4. With a salvage value, the calculation would change, as the salvage value is a one-time cash inflow at the end of the machine’s life. Again, without specific annual cash inflows, it is impossible to accurately calculate the IRR.
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