Answer: Anchoring bias
Explanation: Anchoring bias is described as the tendency to focus on one value or idea known as the “anchor” and not adjust away from it sufficiently (the simple act of thinking of the first number strongly influences the second, even though there is no logical connection between them); It is also defined as the tendency of people to place subsequently refined answers to a given question close to the initially estimated answer, giving unduly weight to the initial answer, such as adjusting the initial estimate of 10% to 20% when 90% would have been more appropriate.
Some examples of anchors might include: real estate listing prices, initial cost estimates for development projects, salary of your last job etc.
Multiple Choice Question 115 Sunland Company sells MP3 players for $50 each. Variable costs are $40 per unit, and fixed costs total $120000. What sales are needed by Sunland to break even?
Answer:
The amount of $600,000 sales require to be at break -even
Explanation:
The amount sales require to be at break -even is computed as:
Units × Price = Variable cost × Units + Fixed Cost
where
Units be X
Price is $50
Variable cost os $40 per unit
Fixed cost amounts to $120,000
So, putting the values above:
X × $50 = $40 × X + $120,000
$50 X = $40X + $120,0000
$50X - $40X = $120,000
$10X = $120,000
X = $120,000 / $10
X = 12,000
So, the sales amounts to as:
Sales = Units × $50
Sales = $12,000 × $50
Sales = $600,000
A. Given the historical cost of product Z is $20, the selling price of product Z is $25, costs to sell product Z are $3, the replacement cost for product Z is $21, and the normal profit margin is 40% of sales price, what is the market value that should be used in the lower-of-cost-or-market comparison?
a. $18.b. $20.c. $21.d. $22.
Answer:
j
Explanation:
Suppose payments will be made for 9 1 4 years at the end of each month from an ordinary annuity earning interest at the rate of 3.75%/year compounded monthly. If the present value of the annuity is $46,000, what should be the size of each payment from the annuity
To calculate the size of each payment from the annuity, use the present value formula. The size of each payment from the annuity should be approximately $388.88.
Explanation:To calculate the size of each payment from the annuity, we need to use the present value formula. The present value of the annuity is given as $46,000. The interest rate is 3.75% per year, compounded monthly. The annuity will be paid for 9 1/4 years, which is a total of 111 months.
Using the present value formula:
Present Value = Payment * (1 - (1 + interest rate/number of periods)^(-number of periods))) / (interest rate/number of periods)Plugging in the values, we have: 46000 = Payment * (1 - (1 + 0.0375/12)^(-111))) / (0.0375/12)Solving for Payment, we find that the size of each payment from the annuity should be approximately $388.88.
The size of each payment should be approximately [tex]\$144.81.[/tex]
The correct size of each payment from the annuity is given by the formula for the present value of an ordinary annuity:
[tex]\[ P = \frac{PV}{\frac{1 - (1 + r)^{-n}}{r}} \][/tex]
where:
[tex]\( P \)[/tex] is the size of each payment,
[tex]\( PV \)[/tex] is the present value of the annuity,
[tex]\( r \)[/tex] is the monthly interest rate, and
[tex]\( n \)[/tex] is the total number of payments.
Given:
[tex]\( PV = \$46,000 \)[/tex]
The annual interest rate is [tex]\( 3.75\% \)[/tex],
Interest is compounded monthly, so the monthly interest rate [tex]\( r \)[/tex] is [tex]\( \frac{3.75\%}{12} \)[/tex],
The annuity makes payments for [tex]\( 9\frac{1}{4} \)[/tex] years, which is [tex]\( 9 + \frac{1}{4} = 9.25 \) years,[/tex]
There are [tex]12[/tex] payments per year, so the total number of payments [tex]\( n \)[/tex] is [tex]\( 9.25 \times 12 \).[/tex]
First, we calculate the monthly interest rate:
[tex]\[ r = \frac{3.75\%}{12} = \frac{0.0375}{12} = 0.003125 \][/tex]
Next, we calculate the total number of payments:
[tex]\[ n = 9.25 \times 12 = 111 \][/tex]
Now we can plug these values into the annuity formula:
[tex]\[ P = \frac{46000}{\frac{1 - (1 + 0.003125)^{-111}}{0.003125}} \][/tex]
Solving this equation:
[tex]\[ P = \frac{46000}{\frac{1 - (1 + 0.003125)^{-111}}{0.003125}} \][/tex]
[tex]\[ P = \frac{46000}{\frac{1 - (1.003125)^{-111}}{0.003125}} \][/tex]
[tex]\[ P = \frac{46000}{317.6051} \][/tex]
[tex]\[ P = 144.81 \][/tex]
Stopher Incorporated makes a single product. The company has a standard cost system in which it applies overhead to this product based on machine-hours. Data for last year appear below: budgeted variable overhead $ 45,220 budgeted production 20,000 units standard machine-hours per unit 1.90 machine-hours actual production 21,000 units actual variable overhead $66,789 actual machine-hours 36,900 machine-hours The variable component of the predetermined overhead rate is closest to:
Answer:
$1.19 per machine-hour
Explanation:
Variable component of the predetermined overhead rate =
Budgeted variable overhead $ 45,220
÷
Budgeted production 20,000 units ×Standard machine-hours per unit 1.90 machine-hours =38,000
Hence:
$45,220/38,000 machine-hours
= $1.19 per machine-hour
Therefore the variable component of the predetermined overhead rate is closest to: $1.19 per machine-hour
Hank has a 32% marginal tax rate and has already recognized a STCL of $8,000 and a L TCG of $5,000, both due to the sale of stock. He is considering the sale of an antique clock held for investment that would result in a $7,000 L TCG. What is the increase in his tax liability if he goes ahead with the proposed transaction this year
Answer:
The increase in his tax liability is $1,120
Explanation:
STCL due to sale of stock = $8,000
LTCG due to sale of stock = $5,000
∴Net STCL = $8,000 - $5,000
Net STCL = $3,000
LTCG on sale of antique clock = $7,000
∴Net LTCG on sale of antique = $7,000 - $3,000 = $4,000
LTCG on sale of antiques is taxed at the rate of 28%
∴ Tax liability = $4,000 * 28%
Tax liability = $4,000 * 0.28
Tax liability = $1,120
Tenet Engineering, Inc. operates two user divisions as separate cost objects. To determine the costs of each division, the company allocates common costs to the divisions. During the past month, the following common costs were incurred: Computer services (85% fixed) $260,000 Building occupancy 600,000 Personnel costs 110,000 Total common costs $970,000 The following information is available concerning various activity measures and service usages by each of the divisions: Division A Division B Area occupied (square feet) 20,000 40,000 Payroll $380,000 $180,000 Computer time (hours) 200 220 Computer storage (megabytes) 4,050 -0- Equipment value $200,000 $250,000 Operating profit (pre-allocations) $555,000 $495,000 If common computer service costs are allocated using computer time as the allocation basis, what is the computer cost allocated to Division B
Answer:
$136,190
Explanation:
The computation of computer cost allocated to Division B is shown below:-
Computer cost allocated to Division B = Computer service cost × Computer time of Division B ÷ Total computer time.
= $260,000 × 220 ÷ (200 + 220)
= $260,000 × 220 ÷ 420
= $260,000 × 0.5238
= $136,190
Therefore for computing the computer cost allocated to Division B we simply applied the above formula.
Final answer:
The computer cost allocated to Division B, based on the use of computer time, amounts to approximately $136,190.48, which is derived by taking Division B's computer time as a proportion of the total computer time used by both divisions and applying it to the total computer service costs.
Explanation:
To determine the computer cost allocated to Division B using computer time as the allocation basis, we first need to consider the total computer service costs. The costs given for computer services are $260,000, of which 85% is fixed. However, since the allocation is based on computer time, the entire $260,000 should be considered, irrespective of whether it is fixed or variable.
Next, we have to calculate the total computer time used by both divisions:
Division A: 200 hours Division B: 220 hours
The total computer time used is 200 hours + 220 hours = 420 hours.
Now, we can determine the proportion of the total computer service costs attributable to Division B:
(Computer service costs) x (Division B computer time / Total computer time)
Which is:
($260,000) x (220 hours / 420 hours) = $260,000 x (0.52381)
Therefore, the cost of technology allocated to Division B for computer services is approximately $136,190.48.
Which of the following is the location where notes can be added?
The location to add notes depends on the context. In software like Microsoft Word, notes can be added under 'New Comment' in the 'Review' tab. Similarly, in a PowerPoint presentation, notes can be added in the 'Notes' pane, and in many email clients and physical notebooks or sticky-notes.
Explanation:There are several places where you can add notes depending on the context. If you are using a computer software like Microsoft Word, notes can be added in the 'Review' tab under 'New Comment'. Similarly, in a PowerPoint presentation, you can add notes in the 'Notes' pane at the bottom of each slide.
In many email clients, you can also add notes to emails or contacts. In a physical context, notes can be added in notebooks or on sticky-notes. Thus, the specific location to add notes will depend largely on the platform or context in which you are working.
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Georgia Movie Company has a capital structure with 40.00% debt and 60.00% equity. The cost of debt for the firm is 8.00%, while the cost of equity is 14.00%. The tax rate facing the firm is 40.00%. The firm is considering opening a new theater chain in a local college town. The project is expected to cost $12.00 million to initiate in year 0. Georgia Movie expects cash flows in the first year to be $2.60 million, and it also expects cash flows from the movie operation to increase by 4.00% each year going forward. The company wants to examine the project over a 10.00-year period. What is the WACC for this project
Answer:
10.32%
Explanation:
The computation of the weighted average cost of capital is shown below:
= Weightage of debt × cost of debt × ( 1- tax rate)+ (Weightage of common stock) × (cost of common stock)
= (0.40 × 8%) × ( 1 - 40%) + (0.60 × 14%)
= 1.92% + 8.4%
= 10.32%
We simply multiplied the weight with its cost i.e weight of debt with the weightage of debt and weight of equity with the weightage of equity
Exercise 7-11A Accounting for notes receivable LO 7-5Rainey Enterprises loaned $50,000 to Small Co. on June 1, Year 1, for one year at 7 percent interest. Requireda. Record these general journal entries for Rainey Enterprises: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to the nearest whole dollar.)(1) The loan to Small Co.(2) The adjusting entry at December 31, Year 1.(3) The adjusting entry and collection of the note on June 1, Year 2.
Answer:
Notes receivable:
Dr Notes receivable $50,000
Cr Cash $50,000
December Year 1:
Dr interest receivable $1,750
Cr Interest revenue $1750
June 1 Year 2:
Dr interest receivable $1,750
Cr Interest revenue $1750
The collection of cash from Small co:
Dr cash ($50,000+$1750+$1750) $53,500
Cr Interest receivable($1750+$1750) $3,500
Cr Notes receivable $50,000
Explanation:
Upon the lending of $50,000 to Small Co,the cash account is credited with $50,000 since it is an outflow of cash and the notes receivable account debited with the same amount.
However,at year end year 1, interest is due on the notes receivable,which is computed thus:
interest receivable December Year 1=$50,000*7%*6/12=$1,750
The interest due on 31st December year 1 would be debited to interest receivable and credited interest revenue.
Interest due on 1 june year 2=$50,000*7%*6/12=$1,750
Final answer:
Rainey Enterprises would record the loan to Small Co. with a debit to Notes Receivable and a credit to Cash. By Year End, Rainey would adjust for accrued interest, and upon collection, both the principal and remaining interest are recognized and the cash account is increased.
Explanation:
The student has asked how to record the general journal entries for Rainey Enterprises concerning a loan given to Small Co. The entries include the initial loan disbursement, the adjusting entries at the end of Year 1 and the collection of the note along with the final interest at Year 2.
Here is how Rainey Enterprises would record these transactions:
Loan to Small Co on June 1, Year 1:
Debit Notes Receivable $50,000
Credit Cash $50,000
Adjusting Entry at December 31, Year 1:
Debit Interest Receivable $1,750 ($50,000 x 7% x 6/12)
Credit Interest Income $1,750
Adjusting Entry and Collection on June 1, Year 2:
Debit Cash $53,500 ($50,000 principal + $3,500 full year interest)
Credit Notes Receivable $50,000
Credit Interest Income $1,750 (interest already recognized)
Credit Interest Receivable $1,750
The following events took place at a manufacturing company for the current year:(1) Purchased $95,000 in direct materials.(2) Incurred labor costs as follows: (a) direct, $56,000 and (b) indirect, $13,600.(3) Other manufacturing overhead was $107,000, excluding indirect labor.(4) Transferred 80% of the materials to the manufacturing assembly line.(5) Completed 65% of the Work-in-Process during the year.(6) Sold 85% of the completed goods.(7) There were no beginning inventories.What is the value of the ending Work-in-Process Inventory?a. $95,060.50.b. $13,261.50.c. $14,259.00.d. $88,410.00.
Answer:
D $88410
Explanation:
Work in progress includes all the raw materials, direct labour and conversion costs incurred so far excluding cost of goods sold .
WIP= Intial WIP +Manufacturing costs incurred- Cost of goods sold.
The WIP inventory at the begining of the period is given as nil.
WIP during the period = (95000*80%)+56000+13600+107000
=252600(but it was given that 65% of the Process was completedi.e., finished goodswhich are not the part of the WIP inventory ; hence the remaining 35% is the Work in process inventory)
=$ 88410.
Further the remaining raw material 20% = 95000*20% shall not comprise a part of the WIP as it has not been brought into process itself , it shall lie in raw materials inventory itself.It shall be counted into the WIP once it is brought into the manufacturing assembly line.
Answer:
the value of the ending Work-in-Process Inventory is d. $88,410.00.
Explanation:
Materials utilized in Production Process
Materials Cost=$95,000×80%
= $76,000
Cost of Goods Manufactured Schedule
Direct Materials $76,000
Direct Labor $56,000
Indirect Labor $13,600
Other manufacturing overhead $107,000
Total Manufacturing Costs $252,600
Completed = 65%
Incomplete = 35%
Opening Work In Process Inventory = Nill
Therefore, ending Work-in-Process Inventory = $252,600 × 35%
= $88,410
Production information for month was: Number of units produced 30, 000 Number of units sold 28,000 Selling price $20 Beginning inventory 0 Fixed selling and administrative costs $ 20,000 Fixed manufacturing overhead $ 150,000 Direct materials cost per unit 2 Direct manufacturing labor 6 Variable manufacturing overhead per unit 4 Variable selling expenses per unit 2 FMOH per unit 5 ($150,000 : 30,000 =$5) What is cost per unit under Absorption costing method?
Answer:
$17
Explanation:
The computation of the cost per under Absorption costing method is shown below:
= direct labor per unit+ direct materials per unit + variable manufacturing overhead per unit + fixed manufacturing overhead per unit
where,
= $2 + $6 + $4 + $5
= $17
We do not considered the selling and admin expenses and the same is ignored
Final answer:
The cost per unit under Absorption costing is $17, calculated by summing the direct materials, direct manufacturing labor, variable manufacturing overhead, and fixed manufacturing overhead per unit.
Explanation:
The student asked what the cost per unit under Absorption costing method is. Absorption costing includes all manufacturing costs, both fixed and variable, in the cost of a product. To calculate the cost per unit under absorption costing, we add up the direct materials cost per unit, direct manufacturing labor, variable manufacturing overhead per unit, and fixed manufacturing overhead (FMOH) per unit.
Direct materials cost per unit: $2
Direct manufacturing labor: $6
Variable manufacturing overhead per unit: $4
FMOH per unit: $5
Adding these costs together gives us the total cost per unit under absorption costing:
Total Cost per Unit = $2 (Direct Materials Cost) + $6 (Direct Manufacturing Labor) + $4 (Variable Manufacturing Overhead) + $5 (FMOH) = $17 per unit.
Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that at the optimal quantity for each firm. Furthermore, the quantity the firm produces in long-run equilibrium is the efficient scale. True or False: This indicates that there is a markup on marginal cost in the market for jackets. True False Monopolistic competition may also be socially inefficient because there are too many or too few firms in the market. The presence of the externality implies that there is too little entry of new firms in the market.
Monopolistically competitive market in a long run detailed description is given below.
Explanation:
The difference between the short‐run and the long‐run in a monopolistically competitive market is that in the long‐run new firms can enter the market, which is especially likely if firms are earning positive economic profits in the short‐run. New firms will be attracted to these profit opportunities and will choose to enter the market in the long‐run. In contrast to a monopolistic market, no barriers to entry exist in a monopolistically competitive market; hence, it is quite easy for new firms to enter the market in the long‐run.The entry of new firms leads to an increase in the supply of differentiated products, which causes the firm's market demand curve to shift to the left. As entry into the market increases, the firm's demand curve will continue shifting to the left until it is just tangent to the average total cost curve at the profit maximizing level of output, At this point, the firm's economic profits are zero, and there is no longer any incentive for new firms to enter the market. Thus, in the long‐run, the competition brought about by the entry of new firms will cause each firm in a monopolistically competitive market to earn normal profits, just like a perfectly competitive firm.
Excess capacity. a monopolistically competitive firm ends up choosing a level of output that is below its minimum efficient scale,When the firm produces below its minimum efficient scale, it is under‐utilizing its available resources. In this situation, the firm is said to have excess capacity because it can easily accommodate an increase in production. This excess capacity is the major social cost of a monopolistically competitive market structure.
Monopolistic competition has exclusive control over the means of production and prices. The frequency arises from the govt support.
In the long run, the monopolistically competition will make the market for the good where the long-run curve intersects the marginal revenue. This will lead to breakeven in in the longer run. Hence the option is true. The monopolistic competition may also create social inefficiencies as there too many firms.Learn more about the market as a monopolistically competitive market.
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Exercise 16-05 a-b (Video) In Waterway Company, materials are entered at the beginning of each process. Work in process inventories, with the percentage of work done on conversion costs, and production data for its Sterilizing Department in selected months during 2020 are as follows. Beginning Work in Process Ending Work in Process Month Units Conversion Cost% Units Transferred Out Units Conversion Cost% January 0 — 11,100 3,100 63 March 0 — 12,300 3,400 40 May 0 — 15,400 7,860 80 July 0 — 10,200 2,200 46 Compute the physical units for January and May. January May Units to be accounted for Beginning work in process Started into production Total units Units accounted for Transferred out Ending work in process Total units Compute the equivalent units of production for (1) materials and (2) conversion costs for each month. Materials Conversion Costs January March May July
Answer:
(a) Total units for January = 14,200
Total units for May = 23,260
(b). Conversion cost for :
January = 13,053
March = 13,660
May = 21,688
July = 11,212
Explanation:
As per the data given in the question,
1)
Jan. May
Units to be accounted for
Beginning WIP 0 0
Started into production 14,200 23,260
Total number units 14,200 23,260
Units accounted for
Transferred out 11,100 15,400
Ending WIP 3,100 7,860
Total units 14200 15400
2)
We can calculate the conversion cost by using following formula:
Conversion cost = Transferred out unit + (Work in process unit × conversion cost)
Material Conversion cost
Jan. 14,200 13,053 (11,100 + 3,100 × 63%)
Mar. 15,700 13,660 (12,300 + 3,400 × 40%)
May 23,260 21,688 (15,400 + 7,860 × 80%)
July 12,400 11,212 (10,200 + 2,200 × 46%)
Sunland Company manufactures and sells high-priced motorcycles. The Engine Division produces and sells engines to other motorcycle companies and internally to the Production Division. It has been decided that the Engine Division will sell 26000 units to the Production Division at 1050 a unit. The Engine Division, currently operating at capacity, has a unit sales price of $3150 and unit variable costs and fixed costs of $1050 and $2100, respectively. The Production Division is currently paying $3000 per unit to an outside supplier. $90 per unit can be saved on internal sales from reduced selling expenses. What is the increase/decrease in overall company profits if this transfer takes place?
a. Decrease $1,200,000
b. Increase $2,520,000
c. Decrease $3,000,000
d. Increase $27,000,000
Final answer:
The transfer of engine units from the Engine Division to the Production Division results in a loss of $2100 per unit. With 26000 units, this equates to a $54,600,000 decrease in revenue for the Engine Division. After accounting for the Production Division's savings, the overall company profit decreases by $6,240,000; however, this result does not match any provided options.
Explanation:
To calculate the change in overall company profits resulting from the internal transfer of engine units, we must analyze the costs and savings associated with the transfer. The engine division sells externally at $3150 per unit. For internal sales, the transfer price is $1050. The production division currently buys externally at $3000 per unit. Then, we need to account for the saving on reduced selling expenses of $90 per unit for internal transactions.
First, we calculate the lost revenue for the Engine Division for each unit transferred to the Production Division: $3150 (external sale price) - $1050 (internal transfer price) = $2100 lost per unit. For 26000 units, that's a total loss of $54,600,000. However, this is not the final profit impact on the company, as we have to account for the savings made by the Production Division.
Next, we find the savings per unit for the Production Division: $3000 (external purchase price) - $1050 (internal transfer price) - $90 (savings on selling expenses) = $1860 savings per unit. For 26000 units, the Production Division saves $48,360,000.
Subtracting the loss from the Engine Division from the savings of the Production Division, we get the total change in company profit: $48,360,000 (savings) - $54,600,000 (loss) = decrease of $6,240,000. Hence, the overall company profits will decrease, but this is not one of the provided options, which highlights an inconsistency in the question or provided options.
B&B has a new baby powder ready to market. If the firm goes directly to the market with the product, there is only a 55 percent chance of success. However, the firm can conduct customer segment research, which will take a year and cost $1.29 million. By going through research, B&B will be able to better target potential customers and will increase the probability of success to 70 percent. If successful, the baby powder will bring a present value profit (at time of initial selling) of $19.9 million. If unsuccessful, the present value payoff is $6.9 million. The appropriate discount rate is 15 percent.Calculate the NPV for the firm if it conducts customer segment research and if it goes to market immediately
The answer & explanation for this question is given in the attachment below.
Conducting customer segment research results in a higher NPV of $4.27 million compared to going to market immediately.
1. Calculate the NPV without research:
NPV without research = (Probability of success * PV of success) + (Probability of failure × PV of failure)
NPV without research = (0.55 × $19.9 million) + (0.45 × $6.9 million)
NPV without research = $10.945 million + $3.105 million
NPV without research = $14.05 million
2. Calculate the NPV with research:
NPV with research = (Probability of success × PV of success) + (Probability of failure × PV of failure) - Cost of research
NPV with research = (0.70 × $19.9 million) + (0.30 × $6.9 million) - $1.29 million
NPV with research = $13.93 million + $2.07 million - $1.29 million
NPV with research = $14.71 million - $1.29 million
NPV with research = $13.42 million
3. Calculate the NPV difference:
NPV difference = NPV with research - NPV without research
NPV difference = $13.42 million - $14.05 million
NPV difference = -$0.63 million
Based on these calculations, conducting customer segment research results in a higher NPV of $4.27 million ($13.42 million - $9.15 million) compared to going to market immediately.
Thrope, Inc. purchased 2,400 pounds of direct material at a price of $1.30 per pound. The standard price of the material is $1.40 per pound. Thrope used 1,200 pounds in production while the standard pounds allowed for actual production was 900. Calculate the direct materials price and quantity variances and indicate whether the variances are favorable or unfavorable. Direct material price variance $ Direct material quantity variance $
Answer:
Instructions are below.
Explanation:
Giving the following information:
Standard price= $1.4 per pound
Thrope, Inc. purchased 2,400 pounds of direct material for $1.30 per pound.
Thrope used 1,200 pounds in production while the standard pounds allowed for actual production was 900.
To calculate the direct material price and quantity variance, we need to use the following formulas:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (1.4 - 1.3)*2,400= $240 favorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (900 - 1,200)*1.4= $420 favorable
Answer:
Price variance $240 Favorable
Quantity variance $ 420 unfavourable
Explanation:
A material price variance occurs where materials are purchased at a price either lower or higher than the standard price. A favorable variance is recorded where the actual total cost of materials is lower that the standard cost. While an adverse variance implies the opposite.
$
2,400 pounds should have cost (2400×$1.40) = 3360
but did cost (actual cost ) = (2400×$1.30) = 3120
Price variance 240 Favorable
Quantity variance
It is determined by the difference between the actual and standard quantity of material for the actual level of output multiplied by the the standard price
Pounds
standard allowed production 900
Actual quantity used 1,200
Difference 300
Standard price × $1.40
Quantity variance $420 unfavourable
Taggart Transcontinental has a divided yield of 3.5%. Taggart's equity cost of capital is 10%, and its dividends are expected to grow at a constant rate. Based on this information, Taggart's constant growth rate in dividends is closest to:
Taggart's constant growth rate in dividends is closest to: 6.5%
Solution:
Given,
Taggart Transcontinental has a divided yield of 3.5%
Equity cost of capital = 10%
To Find: Taggart's constant growth rate in dividends
So , we need to calculate :
= > 10% - 3.5%= 6.5%
Taggart's constant growth rate in dividends is closest to: 6.5%
Final answer:
Taggart Transcontinental's constant growth rate in dividends is calculated to be 6.5% using the Gordon Growth Model and the given equity cost of capital of 10% with a dividend yield of 3.5%.
Explanation:
We can use the Gordon Growth Model (also known as the Dividend Discount Model) to calculate Taggart's constant growth rate in dividends. This model is represented by the equation P = D / (r - g), where P is the current stock price, D is the dividend per share, r is the equity cost of capital, and g is the constant growth rate.
To solve for g, we can rearrange the formula to g = r - (D/P). Given Taggart's divided yield of 3.5%, if we assume a stock price of $1, the dividend per share is equal to 0.035 (3.5% of $1). Taggart's equity cost of capital is given as 10%, or 0.10. Plugging these values into the formula, we get g = 0.10 - 0.035, so the constant growth rate in dividends is 0.065, or 6.5%.
Parkway Distributors is a wholesale firm that employs several outside salespersons. Emily, a salesperson employed by Parkway Distributors, was involved in an accident with another motorist while she was using her car to make regular sales calls for Parkway Distributors. Emily and the motorist are seriously injured in the accident. The motorist sues both Emily and Parkway Distributors for the injury based on negligence.
1. Describe the requirements that the motorist must establish to show that Emily is guilty of negligence.
2. On what legal basis might Parkway Distributors be held legally liable for the injury to the motorist? Explain your answer.
b. Tom asks his girlfriend, Megan, to go to a supermarket and purchase some steaks for dinner. While driving Tom’s car to the supermarket, Megan failed to stop at a red light and seriously injured a pedestrian. Does Tom have any legal liability for the injury? Explain your answer.
Answer:
Legal obligation will arise from inadvertence of one thing or a deliberate act. There are 3 categories of erroneous conduct lawfully. Its fissure of agreement, corruption and one who is pretentious or abraded thanks to the act of additional person.
(1)
The necessities that the automobile should demonstrate to carry mister. Embarrassed of carelessness are as per RES IPSA LOQUITUR belief. The belief RES IPSA LOQUITUR suggests that "the factor expresses for himself". In keeping with this opinion, the broken or damage himself is that the resistant and it expresses for the performance of the inattention. This belief needs the subsequent things:
The affair or act ought to happen thanks to the carelessness the carelessness ought to cause some injury or damage the litigant ought to have fashionable management over the device or instrumentality. The casualty shouldn't have underwrote something to the carelessness.
(2)
Permitting to the law of carelessness, underneath request of householders and operatives of vehicles, P. Suppliers are control lawfully chargeable for the grievance to the automobile. In keeping with this, the vendor of vehicle United Nations agency energies sloppily and origins grievance is liable for the obligation produced to the broken individual. The proprietor will have the instruction of last vibrant probability. Enclose if the worker of the car isn't the proprietor then the possessor is not liable for the act of the carelessness of the worker delivered if there's associate deficiency of agency association. During this case, agency association exists. Thus, P Distributors are control chargeable for the injury to the celebration.
(b)
The possessor of vehicle United Nations agency drives inaccurately and causes grievance is liable for the liability produced to the broken individual. The possessor will have the instruction of last vibrant probability. In case, if the worker of the car isn't the possessor then the proprietor is not liable for the performance of the carelessness of the worker delivered if there's associate deficiency of agency association. During this case each belief of RES IPSA LOQUITUR and regulation of carelessness are pertinent. Thus, the Mr. Tom is control chargeable for the performance of his partner.
The motorist must show that Emily owed a duty of care, breached that duty, the breach caused an accident, and that actual damages occurred to prove negligence. Parkway Distributors may face vicarious liability for Emily's actions during her employment. Tom could be liable for Megan's accident under 'permissive use' doctrine if she had his permission to drive the vehicle.
In order for the motorist to establish that Emily is guilty of negligence, several elements must be proven. Firstly, there must be a duty of care owed by Emily to the motorist. Secondly, it must be shown that Emily breached that duty by failing to act as a reasonable person would under similar circumstances. Thirdly, this breach of duty must have directly caused the accident, and finally, the accident must have resulted in actual damages or injury to the motorist.
Regarding the legal liability of Parkway Distributors, they could be held responsible based on the legal doctrine of vicarious liability. Since Emily was acting in the scope of her employment at the time of the accident, Parkway Distributors might be liable for her actions. However, further details such as whether Emily was an independent contractor, or if she was undertaking a personal errand at the time of the accident, could influence this outcome.
As for Tom's potential legal liability for the injuries caused by Megan, various factors must be considered. If Megan was using Tom's car with his permission, Tom could be held liable under the 'permissive use' doctrine which many jurisdictions follow. This doctrine holds the car owner liable for negligent driving by those they have allowed to use their vehicle. However, specifics such as whether Megan was fulfilling a task at Tom's request, and insurance coverage might affect this situation.
Use the following data to compute the present value of the terminal period ROPI for each of the four firms A through D. Assume a forecast horizon of four years. A B C D Terminal period ROPI $189,122 $27,878 $74,785 $105,733 Weighted average cost of capital (WACC) 7.9% 11.7% 9.5% 13.7% Terminal growth period rate 2.0% 1.0% 2.5% 2.0% Do not round until your final answers. Round your answers to the nearest whole number. A B C D PV of terminal period ROPI Answer 0 Answer 0 Answer 0 Answer 0
Answer:
Firm A $ 2,412,150.68
Firm B $169,038.85
Firm C $761,699.81
Firm D $614,813.36
Explanation:
The present value of terminal value is the terminal value multiplied by the discounted factor as shown by the formula below:
=ROPI*(1+growth rate)/(WACC-growth rate)*(1/(1+WACC)^n
n is the time horizon for the forecast
Firm A terminal value=$189,122*(1+2%)/(7.9%-2%)*1/(1+7.9%)^4
=3,269,566.78*0.737758499 =$ 2,412,150.68
Firm B terminal value=$27,878*(1+1%)/(11.7%-1%)*1/(1+11.7%)^4
=$ 263,147.48*0.642373043 =$169,038.85
Firm C terminal value=$74,785*(1+2.5%)/(9.5%-2.5%)*1/(1+9.5%)^4
=$ 1,095,066.07*0.695574293 =$761,699.81
Firm D terminal value=$105,733*(1+13.7%)/(13.7%-2%)*1/(1+13.7%)^4
=$ 1,027,507.87*0.598353921 =$614,813.36
Geoff hesitated as he read the fast food menu, unsure whether he should supersize his order of delicious golden French fries. Doing so would increase his cost from $0.99 to $1.59 and just might provide him the nutrition he needed to make it through the second half of his day at the office. Of course, if he finished his hamburger and the usual amount of fries, he would simply throw the extra ones away. However, if he failed to supersize his order, he would have to take a candy bar break mid-afternoon and they weren't exactly giving them away in the break room vending machines. He would likely need two candy bars, which sold for $0.95 each. What is Geoff's target service level
Answer:
Geoff's target service level is 0.76
Explanation:
Doing so would expand his expense from $0.99 to $1.59 and could very well give him the sustenance he expected to endure the second 50% of his day at the workplace. Obviously, in the event that he completed his cheeseburger and the typical measure of fries, he would essentially discard the additional ones. In any case, on the off chance that he neglected to supersize his request, he would need to take a confection break mid-evening and they weren't actually offering them away in the reprieve room candy machines. He would probably require two pieces of candy, which sold for $0.95 each.
Answer:
0.76
Explanation:
Doing so would expand his expense from $0.99 to $1.59 and very well might give him the nourishment he expected to endure the second 50% of his day at the workplace. Obviously, in the event that he completed his burger and the standard measure of fries, he would essentially discard the additional ones. Nonetheless, in the event that he neglected to supersize his request, he would need to take a confection break mid-evening and they weren't actually offering them away in the reprieve room candy machines. He would almost certainly require two pieces of candy, which sold for $0.95 each.
What is a good definition for the Micro and Macro Analytic view ( Communication Studies)?
Answer:
A pair of good definitions for the Micro and Macro Analytic view are:
Macro is the study of large-scale social processes like a society's ability to adapt to new conditions or a society's perception.
Mico: is the study and analysis of small-scale interactions like the dynamics of a group, the perceptions of a person, or the conflict between two persons.
Explanation:
A macro analytic point of view is used to analyze and study large-scale social processes. It is call macro because the term comes from the greek term of large scale. While micro omes from the greek term of small. They are both used in a bast range of disciplines to describe the different perspectives they have to study phenomenoms from different sizes.
Borges Machine Shop, Inc., has a 1-year contract for the production of 200,000 gear housings for a new off-road vehicle. Owner Luis Borges hopes the contract will be extended and the volume increased next year. Borges has developed costs for three alternatives. They aregeneral-purpose equipment (GPE), flexible manufacturing system(FMS), and expensive, but efficient, dedicated machine (DM). The cost data follow:
General-Purpose Equipment (GPE)
Flexible Manufacturing System (FMS)
Dedicated Machine (DM)
Annual contracted units
200,000
200,000
200,000
Annual fixed cost
$100,000
$200,000
$500,000
Per unit variable cost
$15.00
$14.00
$13.00
The option GPE is best when the contracted volume is below nothing units (enter your response as a whole number).
The option FMS is best when the contracted volume is between nothing and nothing units (enter your responses as whole numbers).
The option DM is best when the contracted volume is overunits (enter your response as a whole number).
Answer:
Task 1:
GPE is best when the contracted volume is below 25,000 units.
Task 2:
FMS is best when the contracted volume is between 25,000 and 300,000 units.
Task 3:
DM is best when the contracted volume is over 300,000 units.
Explanation:
The schedule for total cost is attached.
Task 1:The option GPE is best when the contracted volume is below nothing units (enter your response as a whole number).
Answer:GPE is best when the contracted volume is below 25,000 units.
Working:GPE is best when cost for GPE is less than other two.
Difference between the variable cost per unit of GPE and FMS = $18 per unit - $14 per unit = $4 per unit.
Difference between the fixed cost of GPE and FMS = $200,000 - $100,000 = $100,000
The difference of cost between GPE and FMS can be found by (assuming n units produced)
GPE-FMS: 4n – $100,000
The cost difference has to be zero in order to lower the cost for GPE
Hence 4n-$100,000=0
Hence n = 25,000
GPE is best when the contracted volume is below 25,000 units.
Task 2:
The option FMS is best when the contracted volume is between nothing and nothing units (enter your responses as whole numbers).
Answer:FMS is best when the contracted volume is between 25,000 and 300,000 units.
Working:To compare FMS:
The cost has to be in between GPE and FMS
Considering difference between GPE and FMS
n = 25,000 (from above calculation)
Considering FMS and DM:
Difference in variable cost per unit of FMS and DM = $14 - $13 = $1 per unit
Difference in fixed cost of FMS and DM = $500,000 - $200,000 = $300,000
Difference = n – $300,000
n-300,000=0
n = 300,000
Hence FMS is best when the contracted volume is between 25,000 and 300,000 units.
Task 3:The option DM is best when the contracted volume is over units (enter your response as a whole number).
Solution:DM is best when the contracted volume is over 300,000 units.
Final answer:
To find the best manufacturing option, it's necessary to calculate the total cost per option and identify the break-even points by comparing the total cost equations. This analysis will provide the production volume ranges for when each option (GPE, FMS, DM) is most cost-effective.
Explanation:
To determine which manufacturing option is best for Borges Machine Shop at various production volumes, we need to calculate the total cost for each option at different volumes and compare them. The total cost is calculated by adding the fixed cost to the product of the variable cost per unit and the number of units produced.
For the General-Purpose Equipment (GPE), the total cost (TC) formula is:
TC = $100,000 + ($15 × number of units).
For the Flexible Manufacturing System (FMS), the total cost (TC) formula is:
TC = $200,000 + ($14 × number of units).
For the Dedicated Machine (DM), the total cost (TC) formula is:
TC = $500,000 + ($13 × number of units).
The point at which two options have the same total cost is where they break even, and this point can be calculated by setting the total cost equations of two options equal to each other.
Let's calculate the break-even points:
For GPE and FMS: $100,000 + $15n = $200,000 + $14nFor FMS and DM: $200,000 + $14n = $500,000 + $13nSolving these equations will give us the range of units where each option is best.
Headland Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $5,040,900 on January 1, 2017. Headland expected to complete the building by December 31, 2017. Headland has the following debt obligations outstanding during the construction period.
Construction loan-12% interest, payable semiannually, issued December 31, 2016 $2,017,900
Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2018 1,586,200
Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2021 995,900
a. Assume that Headland completed the office and warehouse building on December 31, 2017, as planned at a total cost of $5,197,700, and the weighted-average amount of accumulated expenditures was $3,781,600. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers to 0 decimal places, e.g. 5,275.)
Avoidable Interest $
b. Compute the depreciation expense for the year ended December 31, 2018. Headland elected to depreciate the building on a straight-line basis and determined that the asset has a useful life of 30 years and a salvage value of $298,200. (Round answer to 0 decimal places, e.g. 5,275.)
Depreciation Expense $
Answer:
a) $425,320,48
b) $177,494,02
Explanation:
The avoidable interest = $425,320,48
The Depreciation Expense= $177,494,02.
Kindly go through the attached file to see the step by step approach that yielded the answers from the question.
Big City provides a defined benefit pension plan for employees of the city water department, an enterprise fund. Assume that the service cost component is $420,000, and interest on the pension liability is $380,000 for the year. Actual returns on plan assets for the year were $300,000 while the projected level of earnings on plan investments was $360,000. This difference is to be amortized over a 5 year period, beginning this year. Finally assume the City is amortizing a deferred inflow resulting from a change in plan assumptions from a prior year in the amount of $10,000 per year. Prepare journal entries to record annual pension expense for the enterprise fund.
Solution:
Journal entries to record annual pension expense for the enterprise fund :
Service cost $420,000
Interest $380,000
Cash 800,000
Plan assets - pension 800,000
Service cost 420,000
Interest 380,000
Powder Ski Shop reports inventory using lower-of-cost-or-market. Below is information related to its year-end inventory. Inventory Quantity Cost Market Ski jackets 10 $ 117 $ 97 Skis 15 320 370 Calculate the amount to be reported for ending inventory.
Answer:
$5,770
Explanation:
The computation of ending inventory is shown below:-
Inventory Quantity Lower of cost Ending inventory
Net realizable value
Ski Jackets 10 $97 $970
Skis 15 $320 $4,800
Total $5,770
The amount to be reported for ending inventory is calculated using the lower-of-cost-or-market method.
Explanation:The amount to be reported for ending inventory is calculated using the lower-of-cost-or-market (LCM) method. Under this method, the inventory value is reported at the lower of its cost or its market value. In this case, for the Ski jackets, the cost is $117 and the market value is $97. Since the market value is lower, the ending inventory value for Ski jackets would be 10 x $97 = $970. For the Skis, the cost is $320 and the market value is $370. Since the cost is lower, the ending inventory value for Skis would be 15 x $320 = $4800.
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At April 30, Pina Colada Corp. has the following bank information: Cash balance per bank $7600 Outstanding checks $460 Deposits in transit $900 Credit memo for interest $15 Bank service charge $30 What is Pina adjusted cash balance on April 30?
Pina Colada Corp.'s adjusted cash balance on April 30 is $7025, calculated by reconciling the cash balance per bank with outstanding checks, deposits in transit, a credit memo for interest, and bank service charges.
To calculate Pina Colada Corp.
adjusted cash balance on April 30 We use the following information:
To calculate the adjusted cash balance, follow these steps:
Start with the cash balance per bank.Subtract any outstanding checks.Add any deposits in transit.Add any credits (such as interest earned).Subtract any bank service charges.The calculation would be:
$7600 (balance per bank) - $460 (outstanding checks) + $900 (deposits in transit) + $15 (interest credit) - $30 (service charge) = $7025.
Therefore, Pina Colada Corp.'s adjusted cash balance on April 30 is $7025.
Stan read an ad in the newspaper which said that the jackpot for picking the six winners in the dog race on the last night of the season was $825,000. Stan went that night and correctly picked the winners. However, it turned out that the newspaper had made a mistake. The jackpot was $25,000, not $825,000. Therefore the track owners refused to pay the latter amount. If this ad is treated like offers of reward, can Stan collect the $825,000?
Find the given attachment
If a company offers many opportunities for career advancement and expects its jobs to change a lot in the next five years, then according to , an ambitious employee who is enthusiastic about learning new skills might be a good fit for that company.A. EMPLOYER BRAND
B. SOCIAL CONTRACT
C. MATCHING MODEL
D. CONTIGENT WORKFORCE
Option C
According to matching model , an ambitious employee who is enthusiastic about learning new skills might be a good fit for that company
Explanation:‘Matching model’, which intimated that HR practices and the organization composition should be handled in a design that is corresponding with organizational strategy. The matching model justifies praise for implementing an fundamental framework for subsequent theory improvement in the area of strategic Human Resource Management (HRM).
Some sorts of rewards have to be granted based on outcomes of appraisal and the acts of employees. According to matching model this manner is subordinate on the HRD modes and plans of the organization.
The best fit for a company offering career advancement and expecting job changes is an ambitious employee enthusiastic about learning, as per the MATCHING MODEL. This model compares employee attributes with job demands and organizational culture to ensure compatibility. Transferable skills, a proactive approach, and adaptability are key strengths in such dynamic work environments.
If a company offers many opportunities for career advancement and expects its jobs to change a lot in the next five years, then according to C. MATCHING MODEL, an ambitious employee who is enthusiastic about learning new skills might be a good fit for that company. The matching model is an HR approach where the suitability of a candidate is assessed based on whether their skills, knowledge, and personality match the job demands and organizational culture.
Considering the dynamic nature of the job role, someone who possesses a proactive personality, the desire for lifelong learning, and adaptability would be particularly suited to this work environment. Such individuals would be able to adjust and grow with the company, continuously realigning their career goals and capabilities with the evolving needs of the organization.
Employees are indeed a company's greatest asset, and those with transferable skills, a positive attitude, and a readiness to embrace change will find this type of company culture conducive to their career advancement.
a-1. Based on the preceding information, recommend whether to eliminate Division B. a-2. Prepare companywide income statements before and after eliminating Division B. b. During 2017, Division B produced and sold 24,000 units of hand tools. Calculate the contribution to profit if sales and production increase to 39,000 units in 2018? c. Suppose that Solomon could sublease Division B's manufacturing facility for $425,000. Assuming that Division B currently has a production and sales volume of 39,000 units, determine whether Solomon should accept the opportunity to sublease the facility or continue production at Division B.
Answer:
solomon is supposed to continue production at Division B because of the increase in the production volume and sales volume that has increased.
Explanation:
Solomon should take the risk of continuing in the business for like a certian period so that he can be able to asses the production fully before making a decision of probably Subleasing the facility.
Sublease: this is the act of leasing a property by a tenant to a subtenant
Pension data for Millington Enterprises include the following: ($ in millions) Discount rate, 10% Projected benefit obligation, January 1$370 Projected benefit obligation, December 31 475 Accumulated benefit obligation, January 1 310 Accumulated benefit obligation, December 31 425 Cash contributions to pension fund, December 31 160 Benefit payments to retirees, December 31 56 Required: Assuming no change in actuarial assumptions and estimates, determine the service cost component of pension expense for the year ended December 31.
Answer:
The service cost component of pension expense for the year ended December 31 is $124 million
Explanation:
Projected benefit obligation, December 31 $475
Less: Projected benefit obligation, January 1 -$370
Less: Interest cost = -37 =370*10%
Add: Benefit payments to retirees $56
Service cost $124 million