a. The firm's operating cycle is 120 days. b. The firm's cash conversion cycle is 90 days. c. The amount of resources needed to support the firm's cash conversion cycle is $4.93 million. d. Management can reduce the cash conversion cycle by improving inventory management, accounts receivable management, and negotiating payment terms with suppliers.
Explanation:a. The operating cycle of a firm is the average time it takes for a company to convert its inventory into cash. In this case, the average age of inventory is given as 80 days and the average collection period for accounts receivable is 40 days. Adding these two together gives us the operating cycle: 80 + 40 = 120 days.
b. The cash conversion cycle is a measure of the time it takes for a company to convert its investments in inventory and accounts receivable into cash. To calculate it, we subtract the average payment period for accounts payable from the operating cycle. In this case, the average payment period for accounts payable is 30 days. So the cash conversion cycle would be 120 - 30 = 90 days.
c. The amount of resources needed to support the cash conversion cycle can be calculated by multiplying the average daily cost of goods sold by the cash conversion cycle. Here, the cost of goods sold is $20 million and the cash conversion cycle is 90 days. So the resources needed would be: $20 million * (90/365) = $4.93 million.
d. Management can reduce the cash conversion cycle by adopting strategies such as improving inventory management to reduce the average age of inventory, implementing efficient accounts receivable management to collect payments more quickly, and negotiating longer payment terms with suppliers to increase the average payment period for accounts payable.
Bag Ladies, Inc. manufactures two kinds of bagslong dash—totes and satchels. The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base. Estimated overhead costs for the year are $ 25 comma 500$25,500. Additional estimated information is given below.
Direct materials cost per unit Direct labor cost per unit Number of units Totes Satchels 45 $64 350 $35 $51 530
Calculate the amount of overhead to be allocated to Totes. (Round any percentages to two decimal places and your final answer to the nearest dollar.)
A. $13,945
B. $330
c. $11,556
D. $500
Answer:
The overhead cost allocated to Totes is $11556 and option c is the correct answer
Explanation:
To allocate the overheads between products using a plant wide rate, we need to calculate the plant wide Overhead absorption rate (OAR). The OAR allocates overheads to each product based on the activity level consumed by each product.
OAR = Budgeted Overheads / Budgeted Absorption base
As the overhead absorption base is the direct labor cost, we first need to determine the total direct labor cost for both the products.
Direct labor cost = 64 * 350 + 51 * 530 = $49430
OAR = 25500 / 49430 = $0.5159 per direct labor cost of $1
Direct labor cost used by Totes = 64 * 350 = $22400
Overheads to be allocated to Totes = 22400 * 0.5159 = $11556.16 rounded off to $11556
On January 15, the end of the first biweekly pay period of the year, North Company’s payroll register showed that its employees earned $40,000 of sales salaries. Withholdings from the employees’ salaries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $2,000 of federal income taxes, $1,108 of medical insurance deductions, and $240 of union dues. No employee earned more than $7,000 in this first period. Prepare the journal entry to record North Company’s January 15 (employee) payroll expenses and liabilities.
Answer:
Cr. FICA- Social security taxes payable: 2,480
Cr. FICA- Medicare taxes payable: 508
Cr. fed. inc. taxes payable: 2,000
Cr. Employment medical insurance payable: 1,108
Cr. Employee union dues payable: 240
Cr. Salaries Payable: 33,664
Explanation:
Journal entry
Dr. Sales salaries expense: 40,000
Cr. FICA- Social security taxes payable: (40,000×6.2%) 2,480
Cr. FICA- Medicare taxes payable: (40,000×1.45%) 508
Cr. fed. inc. taxes payable: 2,000
Cr. Employment medical insurance payable: 1,108
Cr. Employee union dues payable: 240
Cr. Salaries Payable: 33,664
Salaries Payable
2,480+508+2,000+1,108+240=6,336
40,000-6,336= 33,664
3. Definition of economic costs Felix lives in Miami and runs a business that sells boats. In an average year, he receives $851,000 from selling boats. Of this sales revenue, he must pay the manufacturer a wholesale cost of $476,000; he also pays wages and utility bills totaling $281,000. He owns his showroom; if he chooses to rent it out, he will receive $71,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Felix does not operate this boat business, he can work as an accountant and receive an annual salary of $34,000 with no additional monetary costs. No other costs are incurred in running this boat business.
Answer:
The economic costs are the sum of the explicit costs or monetary costs, and the implicit costs, or opportunity costs.
The explicit or monetary costs that Felix has are:
Payments to manufacturer: $476,000
Wages and utility bills: $281,000
Total monetary costs: $751,000
The implicit or opportunity costs that Felix is incurring are:
Rent he would get for his showroom: $71,000
Salary he would get as an accountant: $34,000
Total opportunity costs: $105,000
Total economic costs: $751,000 + $105,000 = $856,000
Selected operating data for two divisions of Outback Brewing, Ltd., of Australia are given below: Division Queensland New South Wales Sales $ 784,000 $ 1,485,000 Average operating assets $ 560,000 $ 495,000 Net operating income $ 82,320 $ 118,800 Property, plant, and equipment (net) $ 245,000 $ 195,000 Required: 1. Compute the rate of return for each division using the return on investment (ROI) formula stated in terms of margin and turnover. 2. Which divisional manager seems to be doing the better job
Answer:
Queensland 14.7%
New South Wales is 24.0%
Explanation:
This is a case of modified return on investment since the question was specific that the return on investment should in terms margin and assets turnover.
The first task would be to compute margin and turnover whereas the return on investment would be the multiples of both performance measures.
Margin =operating income/sales
Asset turnover=sales/average operating assets
operating income/sales*sales/average operating assets=operating income/average assets
This question also require proofing the above formula as I have done.
Margin Assets turnover ROI
Queensland$82,320/$784,000=10.5%$784,000/$560,000=1.4 14.7%
South Wales$118,800/$1,485,000=8% $1,485,000/$495,000= 24.0%
R0I=margin*assets turnover
Queensland=10.5%*1.4=14.7%
New south sales=8%*3=24%
Underground Clothing is a zero growth firm that has expected earnings before interest and taxes of $56,700, an unlevered cost of capital of 16.2 percent, and a tax rate of 35 percent. The company also has $9,500 of debt that carries a coupon rate of 7 percent. The debt is selling at par value. What is the value of this firm
Answer:
$230,825
Explanation:
VU = [$56,700 × (1 - .35)] / .162
VU= $56,700×0.65/.162
VU=36,855/.162
VU = $227,500
VL = $227,500 + .35($9,500)
VL= $227,500+$3,325
VL= $230,825
Wildhorse Company accumulates the following data concerning a mixed cost, using miles as the activity level. Miles Driven Total Cost Miles Driven Total Cost January 8,000 $14,120 March 8,550 $14,979 February 7,490 13,495 April 8,195 14,490 Collapse question part (a1) Compute the variable cost per mile using the high-low method. (Round answer to 2 decimal places, e.g. 2.25.) Variable cost per mile $
Answer:
Variable cost per unit= $1.4 per unit
Explanation:
Giving the following information:
Miles Driven Total Cost Miles Driven Total Cost
January: 8,000 $14,120
March: 8,550 $14,979
February: 7,490 $13,495
April: 8,195 $14,490
To calculate the variable cost under the high-low method, we need to use the following formula:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (14,979 - 13,495) / (8,550 - 7,490)
Variable cost per unit= $1.4 per unit
Final answer:
The variable cost per mile, calculated using the high-low method with the provided data, is $1.40.
Explanation:
To compute the variable cost per mile using the high-low method, we first identify the months with the highest and lowest activity levels (miles driven). Looking at the data provided, March has the highest activity level with 8,550 miles and a total cost of $14,979, and February has the lowest activity level with 7,490 miles and a total cost of $13,495.
We then apply the high-low method formula:
Variable Cost per Mile = (Cost at High Activity Level - Cost at Low Activity Level) / (High Activity Level - Low Activity Level)
Variable Cost per Mile = ($14,979 - $13,495) / (8,550 miles - 7,490 miles)
Variable Cost per Mile = $1,484 / 1,060 miles
Variable Cost per Mile = $1.40 (rounded to two decimal places)
Therefore, the variable cost per mile is $1.40.
Pursuant to a complete liquidation in the current year, Scarlet Corporation distributes to Jake land (basis of $425,000, fair market value of $390,000) that was purchased three years ago and held as an investment. The land is subject to a liability of $250,000. Jake, who owned 35% of the Scarlet Corporation shares outstanding, had a basis of $60,000 in the stock. What are the tax consequences of the liquidating distribution to Scarlet Corporation and to Jake?
Answer:
The Long-term capital gain (Jake recognize) = $80,000
However, the Jake considered the basis of $390,000 (Land).
Explanation:
From the questions given we find the following,
What are the consequences of tax for the distribution liquidating to Jake and Scarlet Corporation
Then,
The Long-term capital loss (Scarlet Corporation recognize) = Fair market value - Basis
The Long-term capital loss (Scarlet Corporation recognize) = $390,000 - $425,000
The Long-term capital loss (Scarlet Corporation recognize) = $35,000
The Long-term capital gain (Jake recognize) = (Fair market value of land - Liability) - Basis of stock
The Long-term capital gain (Jake recognize) = ($390,000 - $250,000) - $60,000
The Long-term capital gain (Jake recognize) = $80,000
However, the Jake considered the basis of $390,000 (Land).
Final answer:
Scarlet Corporation recognizes a $35,000 loss on the distribution of land, while Jake recognizes an $80,000 gain and retains a $390,000 basis in the land post-distribution.
Explanation:
The tax consequences of the liquidating distribution to both Scarlet Corporation and Jake involve recognizing gains and losses and determining the new basis in the distributed asset. Scarlet Corporation will recognize a loss on the distribution of the land, since the fair market value (FMV) is less than its basis: $390,000 FMV less the $425,000 basis equals a $35,000 loss. But this loss may be limited due to tax regulations concerning losses on distributions to related parties. For Jake, he must first determine the amount of the distribution. The amount of the distribution is the FMV of the land less the liability assumed, so $390,000 - $250,000 equals $140,000. Since Jake’s basis in the stock is $60,000, he would recognize a gain of $80,000 ($140,000 distribution - $60,000 basis). His basis in the land post-distribution would then be the FMV of the land, which is $390,000.
Cash of $12,000 will be received in year 6. Assuming an opportunity cost of capital of 7.2%, which of the following is true? The future value is $18,212 The present value is $7,996 The present value is $7,907 Provide data for tax purposes None of the above
Answer:
The present value is $7,907
Explanation:
12000(1+0.072)^-6=7907 (round up)
The Present value of $12,000 which will be received in year 6 at an opportunity cost of 7.2%, is approximately $7,996.
Explanation:The question pertains to the concept of Present Value in financial mathematics. Present Value (PV) is a concept in finance that calculates what the current worth of a future sum of money is today, given a specified rate of return. This could also be referred to as discounting a future amount. The formula to calculate present value is PV = FV / (1 + r) ^ n, where: PV = Present Value, FV = Future Value, r = rate of interest, n = number of periods.
In this case, we need to find out the Present Value of $12,000 expected to be received in 6 years time with an opportunity cost of capital of 7.2%. So, plugging the numbers into the formula, we get:
PV = $12,000 / (1 + 0.072) ^ 6. After calculating the value, you get PV = $7,996.
Therefore, the correct answer is 'The present value is $7,996'.
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On March 31, 2021, M. Belotti purchased the right to remove gravel from an old rock quarry. The gravel is to be sold as roadbed for highway construction. The cost of the quarry rights was $291,600, with estimated salable rock of 36,000 tons. During 2021, Belotti loaded and sold 5,900 tons of rock and estimated that 30,100 tons remained at December 31, 2021. At January 1, 2022, Belotti estimated that 11,800 tons still remained. During 2022, Belotti loaded and sold 17,700 tons. Belotti uses the units-of-production method. Belotti would record depletion in 2021 of:
Answer:
Belotti would record depletion in 2021 of $57,157
Explanation:
Depletion Charge = Period`s Production/ Total Expected Production× (Cost - Salvage Value)
2021
Depletion Charge = 5,900 tons/30,100 tons×$291,600
= $57,157
Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2017 sales forecast is as follows. Quarter HD-240 1 5,200 2 7,150 3 8,320 4 10,190 The January 1, 2017, inventory of HD-240 is 2,080 units. Management desires an ending inventory each quarter equal to 40% of the next quarter’s sales. Sales in the first quarter of 2018 are expected to be 25% higher than sales in the same quarter in 2017. Prepare quarterly production budgets for each quarter and in total for 2017.
Answer:
Q1 Production 5,980 batteries
Q2 Production 7,618 batteries
Q3 Production 9,068 batteries
Q4 Production 8,714 batteries
Total production for the year is 31,380
Explanation:
Turney Company 2017 Quarterly Production Budgets
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
Sales 5,200 7,150 8,320 10,190 6,500*
Opening inventory (2,080) (2,860) (3328 ) (4076) (2600)
Closing inventory 2,860 3328 4076 2600 -
Production required 5,980 7,618 9,068 8,714
Sales in Q1 2018=Q1 2017*(1+25%)
Q1 2017 Sales is 5,200
sales in Q1 2018=5,200*(1+25%)
=5,200*(1+0.25)
=5,200*1.25
=$6500*
Sample calculation of closing inventory=40%*next quarter's sales
Q1 2017 closing inventory =7150*40%=2860
Q 2 2017 closing inventory =8320*40%=3328
Q 3 2017 closing inventory =10190*40%=4076
Q 4 2017 closing inventory =6,500*40%=2600
Total production for the year =5980+7618+9068+8714
=31,380
Lawn Spray Inc. develops and produces spraying equipment for lawn maintenance and industrial uses. On January 31 of the current year, Lawn Spray Inc. reacquired 19,600 shares of its common stock at $19 per share. On June 14, 13,700 of the reacquired shares were sold at $25 per share, and on November 23, 4,700 of the reacquired shares were sold at $20.
Required:
A. Journalize the transactions of January 31, June 14, and November 23. Refer to the Chart of Accounts for exact wording of account titles.
B. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?
C. What is the balance in Treasury Stock on December 31 of the current year?
D. How will the balance in Treasury Stock be reported on the balance sheet?
Answer:
A. The Journal entry is shown below:-
B. $86,900
C.$22,800
Explanation:
The Journal entry is shown below:-
1. Treasury Stock Dr, $372,400
(19,600 shares × $19)
To Cash $372,400
(Being cash is recorded)
2. Cash Dr, $342,500
(13,700 × $25)
To Treasury stock 260,300
(13,700 × $19)
To Paid-In Capital from sale of treasury stock $82,200
(Being cash is recorded)
3. Cash Dr, $94,000
(4,700 × $20)
To Treasury Stock $89,300
(4,700 × $19)
To Paid-In Capital from Sale of Treasury Stock $4,700
(Being reacquired shares is recorded)
B. Balance in Paid-In Capital from Sale of Treasury Stock = $82,200 + $4,700
= $86,900
C. Balance in Treasury Stock = $372,400 - $260,300 - $89,300
= $22,800
The following costs relate to Salad Box Company for a relevant range of up to 10,000 units annually: Variable Costs: Direct materials $1.25 Direct labor 0.75 Manufacturing Overhead 1.00 Selling and administrative 1.00 Fixed Costs: Manufacturing overhead $20,000 Selling and Administrative 10,000 Salad Box sells each unit for $10.00. Which of the following equations best describes the equation to determine total profit for a sales volume of 8,000 units
Select one: A. Profit = $10.00X – ($30,000 + $5.50X) B. Profit = $30,000 + $5.50X C. Profit = $10X D. Profit = $10.00X – ($10,000 – $4.50X)
Answer:
Equations best describes the equation to determine total profit for a sales volume: Total profit = $10.00X – ($4X + $30,000)
Explanation:
Total variable costs to produce 1 units = Direct materials + Direct labor + Manufacturing Overhead + Selling and administrative = $1.25 + $0.75 + $1.00 + $1.00 = $4 per unit
Fixed Costs = Manufacturing overhead + Selling and Administrative = $20,000 + $10,000 = $30,000
Box sells each unit for $10.00. X is the number of units are sold
Total profit = Sales revenue - (Total variable costs + Fixed Costs) = $10.00X – ($4X + $30,000)
Final answer:
The correct equation to determine the total profit for Salad Box Company at a sales volume of 8,000 units is option A, which accounts for both variable and fixed costs subtracted from the total sales revenue.
Explanation:
The equation to determine total profit for a sales volume of 8,000 units for the Salad Box Company can be derived from the given cost structure and sales price. Total profit is calculated by subtracting total costs from total sales revenue, where total costs are the sum of fixed and variable costs, and total sales revenue is the sales price per unit times the number of units sold.
Therefore, the equation incorporating the costs (fixed costs plus variable costs per unit times the number of units) and revenues (sales price per unit times the number of units) is:
Profit = ($10.00 × number of units sold) – (Fixed Costs + (Variable Costs per unit × number of units sold))
For Salad Box, this translates to:
Profit = ($10.00 × X) – ($30,000 + $4.00 × X) where X represents the number of units sold
Thus, the correct equation from the given options is A. Profit = $10.00X – ($30,000 + $5.00X).
The Shoal Company's manufacturing costs for the third quarter of 2019 were as follows: (CPA adapted) Direct materials and direct labor $ 770,000 Other variable manufacturing costs 135,000 Depreciation of factory building and manufacturing equipment 87,000 Other fixed manufacturing costs 25,000 What amount should be considered product costs for external reporting purposes?
Answer: $1,017,000
Explanation:
In calculating product costs we take the following, Direct materials and direct labor, Other variable manufacturing costs, Depreciation of factory building and manufacturing equipment and Other fixed manufacturing costs.
We add all of those with the result being the Product cost.
Calculating therefore would give us,
= 770,000 + 135,000 + 87,000 + 25,000
= $1,017,000
$1,017,000 is the amount that should be considered product costs for external reporting purposes.
If you need any clarification do comment.
The product costs for external reporting purposes in the Shoal Company's manufacturing costs for the third quarter of 2019 include direct materials, direct labor, other variable manufacturing costs, and depreciation of factory building and manufacturing equipment.
Explanation:The product costs for external reporting purposes in the Shoal Company's manufacturing costs for the third quarter of 2019 include direct materials, direct labor, other variable manufacturing costs, and depreciation of factory building and manufacturing equipment. These costs are considered product costs because they directly relate to the production of goods.
Therefore, the product costs for external reporting purposes would be:
Direct materials and direct labor: $770,000 Other variable manufacturing costs: $135,000 Depreciation of factory building and manufacturing equipment: $87,000The total product costs for external reporting purposes would be $992,000.
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An entity purchased US $1 .000 gross amount of inventory on account with terms of 2 f discount if paidwithin 10 days. The seller was responsible for delivery to the shipping point, with freight of US $30 prepaidby the seller. The entity records purchases at the net amount. The journal entry to record payment 8 daysafter the invoice date is ___________.
Answer:
The answer is given below;
Explanation:
on FOB shipping point,the freight is responsibility of the buyer.If it is paid by the seller,the buyer will compensate to the seller.
As the buyer had already recorded purchases on net of discount,therefore the entry will be;
Accounts Payable (1*.98) Dr.$30.98
Cash Cr.$30.98
It is assumed that freight was previously recorded by the buyer as payable to the seller .
You are working in a small, student-run... You are working in a small, student-run company that sends out merchandise with university branding to alumni around the world. Every day, you take a sample of 50 shipments that are ready to be shipped to the alumni and inspect them for correctness. Across all days, the average percentage of incorrect shipments is 5%. What would be the upper control limit for a p-chart?
a. 0.05
b. 0.03082207
c. 0
d. 2.5
e. 0.142466
Answer:
e). 0.142466
Explanation:
The attached picture shows the explanation and i hope it works. Thank you
Answer:
e. 0.142466
Explanation:
We been given the following values in the question
n = 50
P = 0.5 ( 5/100)
P bar = Σnp/Σn
P bar = [(5/100)× 50]/50
= (0.05×50)/50
= 2.5/50
=0.05
Therefore to the calculate the upper and lower control limit we use the formula
UCL = p bar 3√ [p bar( 1-p bar)]/n
UCL = 0.05 + 3√[0.05(1-0.05)]/50
UCL= 0.142466 as our answer
Option e is the answer
Alma and Associates, a new consulting service, recently received a bill for repairs on its computers totaling $2,280. Alma thinks it may have been overcharged and is trying to recreate the components of the bill. She knows the hourly rate is $75 and 15 hours of labor was charged. She also knows $700 of parts were replaced. Compute the material loading charge percentage the repair service used. Material loading charge percentage Type your answer here
Answer:
65%
Explanation:
Alma and Associates
Total repair bill $2,280
Less labor charges (15 hours × $75) $1,125
Total charge for parts $1,155
Less parts cost $700
Cost of loading charge $455
Parts cost $455÷ $700
Loading charge percentage 65%
Final answer:
The material loading charge percentage for the computer repair bill received by Alma and Associates is calculated by subtracting the known labor and parts costs from the total bill and then dividing the resulting material loading charge by the parts cost, yielding a rate of 65%.
Explanation:
The student is trying to compute the material loading charge percentage used in a bill for computer repairs. The total bill is $2,280, the hourly rate for labor is $75, and 15 hours of labor were charged totaling $1,125 in labor costs. Additionally, $700 worth of parts were replaced. To find the material loading charge percentage, we must first subtract the known charges from the total bill.
The calculation is as follows:
Total Bill - (Labor + Parts) = Material Loading Charge
$2,280 - ($1,125 + $700) = $455
Next, we calculate the percentage by dividing the material loading charge by the cost of the parts and then multiplying by 100.
Material Loading Charge Percentage = ($455 / $700) × 100 = 65%
Thus, the repair service used a material loading charge percentage of 65% on top of the parts cost.
Your next client is a retailer of ready-to-assemble furniture. He’s sent you the following report: Easy Lifestyle Furniture Popular ready-to-assemble bedroom, living room, and office furniture. Three store locations in the state as well as online sales. Product line has been on the market for 2 years. Sales are steady, but untapped sales potential exists. Heavy marketing efforts have already taken place. Pricing is at or near market prices for competitors’ products. What should you recommend to increase sales? Select an option from the choices below and click Submit.
Answer:
Keep price the same but provide additional services such as free delivery and financing option.
Explanation:
On a critical evaluation of the report, it is apparent that easy lifestyle furniture products come with some strength that the retailer can build on to utilize the untapped sales potential.
Adding extra features through innovation (product development) to the furniture will help in driving a sales growth considering the fact that the sales is already steady.
Providing additional services such as free delivery and financing option , at the current price rate can motivate and attract new customers.
Final answer:
To boost sales for a furniture retailer, recommend a thorough market analysis to discover new customer segments, optimize store layout and online product visibility, and analyze distribution for efficiency. Companies like IKEA demonstrate the effectiveness of employee involvement and optimized store layout.
Explanation:
Recommendations to Increase Sales for a Furniture Retailer
To increase sales for a retailer of ready-to-assemble furniture with steady sales and untapped potential, I recommend conducting a deep market analysis to identify untapped customer segments and enhance product visibility. First, conduct research to define the demographics of potential customers who may not have been reached by previous marketing efforts. Consider aspects such as age, profession, economic status, and geographic location.
Next, evaluate the store's product placement within physical locations and its online presence. Consider how to optimize the visibility and convenience for consumers, which could involve reevaluating the store layout or improving online product categorization. The success of companies like IKEA suggests that encouraging employee involvement and ownership can improve the in-store experience and customer service.
Lastly, analyze the distribution channels for the furniture. Whether it's in-store, online, or through mail, optimizing these channels can enhance customer reach and satisfaction. Additionally, measure the productivity of floor space to ensure that the most profitable products get the best positioning while minimizing costs.
Consider a profit-maximizing firm in a competitive industry. Under which of the following situations would the firm choose to produce where MR = MC?
Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers.
a. Yes?/No? Minimum AVC < Price < minimum ATC.
b. Yes?/No? Price > minimum ATC.
c. Yes?/No? Price < minimum AVC
Answer:
Option (a) and (b) are considered or correct.
Explanation:
Under the following two conditions, a firm in a perfectly competitive market produces at a point where the marginal revenue is equal to the marginal cost:
(i) Minimum AVC < Price < minimum ATC : Yes
In this case, a firm may suffer a loss but it will be able to cover its minimum average variable cost. Hence, this firm continue operating in this market and if he shut down its operation then he may suffer a larger loss. Therefore, it chooses to continue operating under this market conditions.
(ii) Price > minimum ATC : Yes
In this case, the price received by the seller is greater than the minimum average total cost. Therefore, the firm is able to cover all of its cost of production and earning an economic profit. Hence, it obviously chooses to continue its operation.
The third option is not considered here because in this case, the firm won't be able to cover its variable cost.
Diva Products produces scarves. The estimated fixed costs for the year are $164,500, and the estimated variable costs per unit are $9. The company expects to produce and sell 40,000 scarves at a unit selling price of $16 per unit. How much is the break-even point in units?
Diva Products must produce and sell 23,500 scarves to reach the break-even point, ensuring that total sales equal total costs.
Explanation:To calculate the break-even point in units for Diva Products, we must understand the formula: Break-even point in units = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Here, the Fixed Costs are $164,500, the Selling Price per Unit is $16, and the Variable Cost per Unit is $9. Substituting these values into the formula gives us:
Break-even point in units = $164,500 / ($16 - $9) = $164,500 / $7 = 23,500 units.
Therefore, Diva Products needs to produce and sell 23,500 scarves to reach the break-even point, where total sales equal total costs, and no profit or loss is made.
Income Statement Indicating Standard Cost Variances The following data were taken from the records of Griggs Company for December: Administrative expenses $100,800 Cost of goods sold (at standard) 550,000 Direct materials price variance—unfavorable 1,680 Direct materials quantity variance—favorable (560) Direct labor rate variance—favorable (1,120) Direct labor time variance—unfavorable 490 Variable factory overhead controllable variance—favorable (210) Fixed factory overhead volume variance—unfavorable 3,080 Interest expense 2,940 Sales 868,000 Selling expenses 125,000 Prepare an income statement for presentation to management. Enter all amounts as positive numbers except favorable variances. Use a minus sign to indicate favorable variances. Griggs Company Income Statement For the Month Ended December 31 $ $ Unfavorable Favorable Less variance adjustments to gross profit—at standard: $ $ $ Operating expenses: $ $ Other expense: $
Answer and Explanation:
The preparation of the income statement is shown below:
Income statement indicating the cost variances
Particulars Amount Amount Amount
Sales $868,000
Less: Cost of goods
sold -$550,000
Gross profit $318,000
Favorable Unfavorable
Less: Variances from
standard cost
Direct materials price variance $1,680
Direct materials quantity variance $560
Direct labor time variance $490
Variable factory overhead
controllable variance $490
Fixed factory overhead volume variance $3,080 -$3,360
$314,640
Less: Operating expenses:
Administrative expenses $100,800
Selling expenses $125,000 -$225,800
$88,840
Less: Other expenses:
Interest expenses -$2,940
Net income $85,900
On April 12, Hong Company agrees to accept a 60-day, 6%, $6,900 note from Indigo Company to extend the due date on an overdue account. What is the journal entry that Indigo Company would make, when it records payment of the note on the maturity date
Answer:
Debit notes Payable $6,900
Debit interest expense $69
Credit cash $6,969
Explanation:
The interest amount payable on maturity is $6900*6%*2/12=$69
The actual principal remains at $6900
The appropriate entries would to debit notes payable with $6,900 and interest expense with $69 while the credit of $6969 goes to cash account representing an outflow to settle the obligation.
The rationale for this is that settle of an obligation would require debit the payable account.
The journal entry that Indigo Company would make,when it records payment of the note on the maturity is: Debit Notes Payable $7,500; credit Interest Expense $125; credit Cash $7,375. The correct option is C.
A journal entry is a record of a financial transaction in a company's accounting system. It is formatted in a specified way and includes the transaction date, the accounts involved, the sums debited or credited, and a brief description or explanation of the transaction.
The double-entry bookkeeping method is built on journal entries, which guarantee that the accounting formula (Assets = Liabilities + Equity) is accurate and balanced.
Thus, the ideal selection is option C.
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The complete question might be:
On April 12, Hong Company agrees to accept a 60-day, 6%, $6,900 note from Indigo Company to extend the due date on an overdue account. What is the journal entry that Indigo Company would make, when it records payment of the note on the maturity date? (Use 360 days a year.)A) Debit Cash $7,625; credit Interest Revenue $125; credit Notes Payable $7,500.B) Debit Notes Payable $7,500; debit Interest Expense $188; credit Cash $7,688.C) Debit Notes Payable $7,500; credit Interest Expense $125, credit Cash $7,375.D) Debit Notes Payable $7,500; debit Interest Expense $125; credit Cash $7,625.E) Debit Cash $7,625; credit Interest Revenue $125; credit Notes Receivable $7,500.
Marcelino co.'s march 31 inventory of raw materials is $85,000. Raw materials purchases in april are $560,000, and factory payroll cost in april is $386,000. Overhead costs incurred in april are:
indirect materials, $54,000;
indirect labor, $25,000;
factory rent, $37,000;
factory utilities, $24,000; and factory equipment depreciation, $51,000.
The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $690,000 cash in April. Costs of the three jobs worked on in april follow.
Job 306 Job 307 Job 308
Balances on March 31
Direct materials $ 30,000 $ 41,000
Direct labor 23,000 16,000
Applied overhead 11,500 8,000
Costs during April
Direct materials 139,000 200,000 $ 115,000
Direct labor 103,000 150,000 104,000
Applied overhead ? ? ?
Status on April 30 Finished (sold) Finished (unsold) In process
Required:
1. Determine the total of each production cost incurred for April (direct labor, direct materials, and applied overhead), and the total cost assigned to each job (including the balances from March 31).a. Materials purchases (on credit).b. Direct materials used in production.c. Direct labor paid and assigned to Work in Process Inventory.d. Indirect labor paid and assigned to Factory Overhead.e. Overhead costs applied to Work in Process Inventory.f. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)g. Transfer of Jobs 306 and 307 to Finished Goods Inventory.h. Cost of goods sold for Job 306.i. Revenue from the sale of Job 306.j. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)
Answer:
Explanation:
1. To determine each Job total costs
Job 306
1.
Opening Direct Material = $30,000
Add Input to production = $139,000
Total Inventory usage = $169,000
2.
Payroll opening balance = $23,000
April payroll = $103,000
Total payroll = $126,000
3.
Overhead opening = $11,500
April Overhead 50% of $103,000 = $51,500
Total Overhead = $63,000
Total costs of 306 = 1 + 2 + 3 = $358,000
**allocate Overhead by Raw Material usage:
Apr direct material for 306 divided by total April direct material x total April Overhead
= 139,000 / 454,000 x $191,000
= $58,478
(We have over applied Overhead by $4,522 using the 50% predetermined rate rule)
Job 307
1.
Opening Direct Material = $41,000
Add Input to production = $200,000
Total Inventory usage = $241,000
2.
Payroll opening balance = $16,000
April payroll = $150,000
Total payroll = $166,000
3.
Overhead opening = $8,000
April Overhead 50% of $150,000 = $75,000
Total Overhead = $83,000
Total costs of 307 = 1 + 2 + 3 = $490,000
**allocate Overhead by Raw Material usage:
Apr direct material for 307 divided by total April direct material x total April Overhead
= 200,000 / 454,000 x $191,000
= $84,141
(We have over applied Overhead by $1,141 using the 50% predetermined rate rule)
Job 308
1.
Opening Direct Material = $0
Add Input to production = $115,000
Total Inventory usage = $115,000
2.
Payroll opening balance = $0
April payroll = $104,000
Total payroll = $104,000
3.
Overhead opening = $0
April Overhead 50% of $104,000 = $52,000
Total Overhead = $52,000
Total costs of 308 to work in progress = 1 + 2 + 3 = $271,000
**allocate Overhead by Raw Material usage:
Apr direct material for 308 divided by total April direct material x total April Overhead
= 115,000 / 454,000 x $191,000
= $48,381
(We have over applied Overhead by $3,619 using the 50% predetermined rate rule)
B.
1. Sales of Job 306 = $690,000
Transfer of costs to Finished Goods : Job 306 = $358,000
Add Adjustments for Overhead over applied = -$4,522
Cost of sales = $353,478
2.
Sales of Job 307 = not yet sold
Transfer of costs to Finished Goods : Job 307 = $490,000
Add Adjustments for Overhead over applied = -$1,141
Cost of goods available for sales = $488,859
3. Sales of Job 308 = still work in progress
Transfer of costs to work in progress : Job 308 = $271,000
Add Adjustments for Overhead over applied = -$3,619
Cost of Work in progress = $267,381
The total production costs incurred for April are as follows: Materials purchases - $560,000, Direct materials used in production - $315,000, Direct labor paid and assigned to Work in Process Inventory - $377,000, Indirect labor paid and assigned to Factory Overhead - $25,000, Overhead costs applied to Work in Process Inventory - $196,000, and Actual overhead costs incurred including indirect materials - $191,000. Additionally, the cost of goods sold for Job 306 is $221,300, and the revenue from the sale of Job 306 is $690,000.
Explanation:a. Materials purchases (on credit): $560,000
b. Direct materials used in production: $315,000
c. Direct labor paid and assigned to Work in Process Inventory: $377,000
d. Indirect labor paid and assigned to Factory Overhead: $25,000
e. Overhead costs applied to Work in Process Inventory: $196,000
f. Actual overhead costs incurred, including indirect materials: $191,000
g. Transfer of Jobs 306 and 307 to Finished Goods Inventory: $806,500
h. Cost of goods sold for Job 306: $221,300
i. Revenue from the sale of Job 306: $690,000
j. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account: None
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Diana Mark is the president of ServicePro, Inc., a company that provides temporary employees for not-for-profit companies. ServicePro has been operating for five years; its revenues are increasing with each passing year. You have been hired to help Diana in analyzing the following transactions for the first two weeks of April:
a. April 2 Purchased office supplies for $500 on account.
b. April 5 Billed the local United Way office $1,950 for temporary services provided.
c. April 8 Paid $250 for supplies purchased and recorded on account last period.
d. April 8 Placed an advertisement in the local paper for $400 cash; the ad will run in May.
e. April 9 Purchased a new computer for the office costing $2,300 cash.
f. April 10 Paid employee wages of $1,200. Of this amount, $200 had been earned by employees in the prior period and already recorded in the Wages Payable account.
g. April 11 Received $1,000 on account from the local United Way office (from [b] above).
h. April 12 Purchased land as the site of a future office for $10,000. Paid $2,000 down and signed a note payable for the balance.
i. April 13 Received $80,000 cash as additional investment by owner Diana Mark.
j. April 14 Billed Family & Children’s Service $2,000 for services rendered this month.
k. April 15 Received the April telephone bill for $245 to be paid next month.
Required:
For each transaction, prepare a journal entry. If no entry is needed, explain why. Be sure to categorize each account as an asset (A), liability (L), owner’s equity (OE), revenue (R), or expense (E).
Answer:
a.
Purchased office $500 (debit)
Trade Payable $500 (credit)
b.
Trade Receivable : local United Way $1,950 (debit)
Revenue$1,950 (credit)
c.
Trade Payable $250 (debit)
Cash $250 (credit)
d.
Advertisement Prepaid $400 (debit)
Cash $400 (credit)
e.
Computer $2,300 (debit)
Cash $2,300 (credit)
f.
Wages Payable $200 (debit)
Wages Expense $1,000 (debit)
Cash $1,200 (credit)
g.
Cash $1,000 (debit)
Trade Receivable - local United Way office $1,000 (credit)
h.
Land $10,000 (debit)
Cash $2,000 (credit)
Note Payable $8,000 (credit)
i.
Cash $80,000 (debit)
Capital $80,000 (credit)
j.
Trade Receivables$2,000 (debit)
Revenue$2,000 (credit)
k.
Telephone expense $245 (debit)
Payable $245 (credit)
Explanation:
Record the Journals considering the Accounting Equation
Assets = Liabilities + Equity
Quantum is planning on merging with Reliant Energy. Quantum currently has 80,000 shares of stock outstanding at a market price of $32.60 a share. Reliant Energy has 50,000 shares outstanding at a price of $24.50 a share. The merger will create $450,000 of synergy. How many of its shares should Quantum offer in exchange for all of Reliant Energy s share if it wants its acquisition cost to be $1,443,000?
Answer:
The multiple choices are:
a.44,172
b.43,109
c.42,377
d.40,648
e.41,205
Option D,40,648 is the correct option
Explanation:
The number of shares to offer to Reliant energy would be the acquisition cost divided Quantum post acquisition share price
The share price can be computed thus:
Market of Reliant =$24.50*50,000=$1,225,000
Market value of Quantum=$32.60*80,000=$2,608,000
Reliant is now worth(acquisition cost) =$1,443,000
Reliant shareholders' share of synergy=$1,443,000-$1,225,000=$218,000
Remnant of synergy left for Quantum=$450,000-$218,000=$232,000
Share price of Quantum post merger=($2,608,000+$232,000)/80,000=$35.5
Number of shares to issue to Reliant=$1,443,000/$35.5=40,648 shares
Calculating how much Quantum should pay for Reliant Energy involves additional steps. First, we need to calculate the total value of Reliant Energy. Next, we subtract the synergy from Quantum's desired acquisition cost. This amount is then divided by the current market price of Quantum's shares to find out how many shares Quantum needs to offer.
Explanation:To calculate how many shares Quantum should offer in exchange for all of Reliant Energy's shares, we first need to find the value of Reliant Energy. This can be done by multiplying the number of outstanding shares by their market price. Therefore, the total value of Reliant Energy is 50,000 x $24.50 = $1,225,000.
Quantum wants its acquisition cost to be $1,443,000, but since the merger creates $450,000 of synergy, Quantum needs to subtract this synergy from its desired acquisition cost to find out how much it should pay for Reliant Energy. Therefore, Quantum should offer $1,443,000 - $450,000 = $993,000 for all of Reliant Energy's shares.
Since Quantum's shares currently trade at $32.60 per share, the number of Quantum shares to offer for all of Reliant's shares would be $993,000 / $32.60 = approximately 30457 shares.
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Assume that a parent company acquired 80% of the outstanding voting common stock of a subsidiary on January 1, 2012. On the acquisition date, the identifiable net assets of the subsidiary had fair values that approximated their recorded book values except for a patent, which had a fair value of $100,000 and no recorded book value. On the date of acquisition, the patent had 5 years of remaining useful life and the parent company amortizes its intangible assets using straight line amortization. During the year ended December 31, 2013, the subsidiary recorded sales to the parent in the amount of $105,000. On these sales, the subsidiary recorded pre-consolidation gross profits equal to 25%. Approximately 30% of this merchandise remains in the parent's inventory at December 31, 2013. The following summarized pre-consolidation financial statements are for the parent and the subsidiary for the year ended December 31, 2013: Investor Investee Income statement: Revenues $2,400,000 $321,000 Equity income 106,500 0 Expenses (1,600,000) (160,000) Net income $906,500 $161,000 Retained earnings statement: BOY retained earnings $752,000 $40,000 Net income 906,500 161,000 Dividends declared (64,000) (40,000) EOY retained earnings $1,594,500 $161,000 Balance sheet: Current assets $800,000 $101,000 Equity investment 234,500 - Noncurrent assets 4,000,000 300,000 Total assets $5,034,500 $401,000 Liabilities $2,640,000 $160,000 Common stock & APIC 800,000 80,000 Retained earnings 1,594,500 161,000 Total liabilities & stockholders' equity $5,034,500 $401,000 Based on this information, determine the balance for Noncontrolling Interest: $32,200 $58,625 $24,100 $18,625
Answer:
consolidation financial statements are for the parent and the subsidiary for the year =$ 1682,875
Explanation:
Final answer:
The balance for Noncontrolling Interest is calculated by adding the noncontrolling interest's share of the subsidiary's net income to their share of the patent's excess fair value amortization. However, the result does not match the options provided in the question.
Explanation:
To determine the balance for Noncontrolling Interest after the parent company has acquired 80% of the subsidiary, we need to calculate the noncontrolling interest's share of the subsidiary's net income and add the excess fair value amortization for the patent.
The subsidiary's net income is $161,000. The parent company owns 80%, so the noncontrolling interest owns the remaining 20%. Therefore, 20% of the subsidiary's net income attributable to the noncontrolling interest is $32,200 ($161,000 * 0.2).
We must also consider the excess fair value of the patent that was amortized. The patent had a fair value of $100,000 and a remaining useful life of 5 years at the acquisition date, meaning it would be amortized at $20,000 per year ($100,000 / 5). Two years of amortization have occurred by the end of 2013, thus the total amortization is $40,000. The noncontrolling interest's share of that amortization is $8,000 ($40,000 * 0.2).
The balance for the Noncontrolling Interest at the end of 2013 is the sum of the noncontrolling interest share of the net income and their share of the patent amortization, which is $32,200 + $8,000 = $40,200. This wasn't one of the provided possible answers, suggesting there may be an error in the question, or additional information is needed for accuracy.
Which of these statements about reverse logistics is BEST? A. Reverse logistics systems are usually more cost-efficient than forward-based systems. B. Reverse logistics systems are usually designed to be more flexible than forward-based systems. C. Reverse logistics systems usually play no role in customer satisfaction. D. Reverse logistics systems usually use the same processes and players that comprise the forward-based system.
Final answer:
The best statement about reverse logistics is that they are designed to be more flexible than forward-based systems, due to the variability and uncertainty in handling returns, remanufacturing, and recycling among others.
Explanation:
The question asks which statement about reverse logistics is best. Among the options provided, the most accurate assertion is that reverse logistics systems are usually designed to be more flexible than forward-based systems. Unlike forward logistics that primarily focuses on the efficient delivery of goods from manufacturers to end-users, reverse logistics involves the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal.
This includes activities such as returns management, remanufacturing, refurbishing, recycling, and even hazardous waste disposal. Reverse logistics systems need to be flexible to accommodate the uncertainty and variability inherent in these processes. While cost efficiency, customer satisfaction, and process similarities to forward logistics are all relevant considerations, the core characteristic that sets reverse logistics apart is its requirement for adaptability to manage a wide variety of return conditions and channels.
Homes, Inc. Kurt McKinney has just received a large inheritance and wants to have his "dream" home built. He knows exactly the architectural design he wants. He wants a particular Reflections home. The type of consumer product he wishes to buy is best classified as a(n):
Answer: Specialty product
Explanation: The type of consumer product he wishes to buy is best classified as a specialty product. While a product is defined as everything, both favorable and unfavorable, that a person receives in an exchange which can be tangible, intangible, a service, an idea, or a combination of these things, specialty products are products that are searched for extensively, and for which substitutes are not acceptable, may be quite expensive, and often limited in distribution.
Due to evaporation during production, Plano Plastics Company requires 2 pounds of material input for every 1 pounds of good plastic sheets manufactured. During May, the company produced 5,500 pounds of good sheets.
Compute the total standard allowed input quantity, given the good output produced.
The total standard allowed input quantity for the Plano Plastics Company is 11,000 pounds, determined by multiplying the actual output of 5,500 pounds by the required input per pound of output of 2 pounds.
Explanation:The total standard allowed input quantity for the Plano Plastics Company can be computed based on the provided production ratio and actual output. Given that the company requires 2 pounds of material input for every 1 pound of good plastic sheets, and during May the company produced 5,500 pounds of good sheets, we can calculate the input quantity as follows:
Total good output produced: 5,500 poundsRequired input per pound of output: 2 poundsTotal standard allowed input quantity: 5,500 pounds * 2 = 11,000 poundsTherefore, the total standard allowed input quantity of material for the production of 5,500 pounds of good plastic sheets is 11,000 pounds.
What does the 4-1 rule state?
A. for every four images posted, post one video
B. for every single piece of self-promotional content posted, share four pieces of content from others
C. for every four pieces of self-promotional content posted, share one piece of content from others
D. for every single piece of self-promotional content posted, use exactly four hashtags
E. none of these options
Answer: B. for every single piece of self-promotional content posted, share four pieces of content from others.
Explanation: The 4-1 rule states that for every single piece of self-promotional content posted, share four pieces of content from others. The rule is applied to the structuring of social media content as it helps achieve an ideal ratio of original posts, engagement and self-serving posts for a business. As a result, it ensures a balance is struck between promoting one's own business and the use of social media in connecting with others.
Cadilengy, a nonprofit organization, is conducting a food fair in the month of October. The proceeds of this fair will go to charity. The restaurants and food product companies participating in the fair start distributing pamphlets about the fair in their outlets two months before the event. As a result, the fair gained popularity among the public. Which of the following marketing strategies does this scenario best illustrate?
a. Event Marketing
b. Public Marketing
c. Online Marketing.
d. None of these
Answer: (A) Event marketing
Explanation:
The event marketing is one of the business promotional strategy in which the various types of brands, products and the services are get promoted in the market so that the customers or users are get aware about the specific brand and the new products.
According to the given question, the Event marketing is one of the type of strategy that best illustrating the given scenario about a non profit organization is conduct a food fair and the collected fair is basically contributed for the charity purpose.
On the other hand, along with charity the various types of restaurants distribute their pamphlets and promote their restaurants business in the event. Therefore, Option (A) is correct answer.