Answer:
The conventional B/C ratio is 1.0868.
Explanation:
Here B / C ratio means the benefit by cost ratio, so here we will first individually calculate the benefit and cost which the parks and recreation department will receive.
BENEFIT RECEIVED =
$24,000(people that will come) x 2 (average hour ) x $.50 ( rate per hour )
= $24,000
calculating present value, where i = interest and n = number of years
$24,000 / (1+i)^1 + $24,000 / (1+i)^2 + _ __ _ + $24,000 / (1+i)^20
= $24,000 x [ 1 - 1 / (1+.03)^20 ] / .03 ( given i = 3% )
= $357,060
PRESENT VALUE OF COST INCURRED =
$150,000 + $12,000 / (1+i)^1 + $12,000 / (1+i)^2 + _ _ + $12,000 / (1+i)^20
= $150,000 + $12,000 x [ 1 - 1 / (1+.03)^20 ] / .03
= $328,530
B / C RATIO = $357,060 / $328,530
= 1.0868
Common stock value: Constant growth The common stock of Barr Labs Inc., trades for $120 per share. Investors expect the company to pay a(n) $1.37 dividend next year, and they expect that dividend to grow at a constant rate forever. If investors require a(n) 15.8% return on this stock, what is the dividend growth rate that they are anticipating?
Answer:
Dividend growth rate anticipated = 14.66%
Explanation:
Using dividend growth model we have
P[tex]{_0}[/tex] = [tex]\frac{D{_1}}{K{_e} - g}[/tex]
Where P[tex]{_0}[/tex] = Current market price = $120
D[tex]{_1}[/tex] = Dividend to be paid at year end or next year = $1.37
K[tex]{_e}[/tex] = Expected return on equity = 15.8%
g = Expected growth rate
Now putting values we have
$120 = [tex]\frac{1.37}{0.158 - g}[/tex]
0.158 - g = [tex]\frac{1.37}{120} = 0.0114[/tex]
0.158 - 0.0114 = g
0.1466 = g = 14.66%
Final answer:
Using the Gordon Growth Model, investors are anticipating a dividend growth rate of approximately 14.66% for Barr Labs Inc., based on a current stock price of $120, a dividend expected next year of $1.37, and a required rate of return of 15.8%.
Explanation:
To determine the anticipated dividend growth rate for Barr Labs Inc., we will use the Gordon Growth Model, which is given by the formula P = D1 / (r - g), where P is the current stock price, D1 is the dividend expected next year, r is the required rate of return, and g is the growth rate. Plugging in the values provided:
P = $120
D1 = $1.37
r = 15.8%
We can rearrange the formula to solve for the growth rate g:
g = r - (D1 / P)
Substituting the values into the equation, we get:
g = 0.158 - ($1.37 / $120)
g = 0.158 - 0.0114167
g = 0.1465833 or 14.65833% (rounded to five decimal places)
Therefore, investors are anticipating a dividend growth rate of approximately 14.66% for Barr Labs Inc.
Mickey Tire Company makes a special kind of racing tire. Variable costs are $ 240 per unit, and fixed costs are $ 25 comma 000 per month. Mickey sells 400 units per month at a sales price of $ 315. If the quality of the tire is upgraded, the company believes it can increase the sales price to $ 400. If so, the variable cost will increase to $ 300 per unit, and the fixed costs will rise by 40%. If Mickey decides to upgrade, how will operating income be affected? A. Operating income will decrease by $ 10 comma 000. B. Operating income will decrease by $ 24 comma 000. C. Operating income will increase by $ 24 comma 000. D. Operating income will remain the same.
Answer:
D. Operating Income will remain the same.
Explanation:
Change in Operating Income = Current Operating Income - Revised Operating Income
Current Operating Income = Sales - Variable Cost - Fixed Cost
Current Sales = $315 X 400 units = $126,000
Variable Cost = $240 X 400 units = $96,000
Fixed Cost = $25,000
Current Operating Income = $126,000 - $96,000 - $25,000 = $5,000
Revised Operating Income = Revised Sales - Revised Variable Cost - Revised Fixed Cost
Revised Sales = $400 X 400 units = $160,000
Revised Variable Costs = $300 X 400 units = $120,000
Revised Fixed Cost = $25,000 + 40% of $25,000 = $25,000 + $10,000
= $35,000
Revised Operating Income = $160,000 - $120,000 - $35,000 = $5,000
Change in operating Income = $5000 - $5000 = $0
Correct option is D. Operating Income will remain the same.
After calculating the current and projected operating incomes, the result shows that Mickey Tire Company's operating income will remain the same at $5,000 after the upgrade.
To calculate the impact on operating income if Mickey Tire Company upgrades its tires, we need to assess both the current and projected financial performance. The current operating income is calculated by taking the difference between current total revenue and total costs (fixed plus variable).
Current total revenue: 400 units × $315 = $126,000
Current total variable costs: 400 units × $240 = $96,000
Current operating income: $126,000 - $96,000 - $25,000 (fixed costs) = $5,000
If Mickey upgrades:
New fixed costs: $25,000 × 140% = $35,000
New total variable costs: 400 units × $300 = $120,000
New total revenue: 400 units × $400 = $160,000
New operating income: $160,000 - $120,000 - $35,000 = $5,000
The operating income will remain the same at $5,000 after considering the changes in sales price, variable costs, and fixed costs associated with the tire quality upgrade.
Tyler has a 28 percent marginal tax rate. His employer is willing to provide health insurance coverage for Tyler if he will agree to a salary reduction. The insurance will cost the employer $5,040. If Tyler pays that same amount for health insurance premiums, he will need $7,000 in order to pay the premiums and the taxes on the compensation. How much of a cash flow savings is available to the company if it pays $5,040 for Tyler's health insurance, rather than $7,000 in compensation assuming the company has a 35 percent tax rate?
Answer:
The cash flow saving will be of $1,274 considering the taxes
Explanation:
Company pays 5040 with income tax saving = 1764 total = 3276
instead of:
7,000 in compensation with income tax saving = 2450 total = 4,550
4,550 - 3,276 = 1,274
The following information is from ABC Company’s general ledger: Beginning and ending inventories, respectively, for raw materials were $9,600 and $11,600 and for work in process were $21,600 and $23,600. Raw material purchases and direct labor costs incurred were $37,600 each, and manufacturing overhead applied amounted to $21,600. Required: Prepare a statement of cost of goods manufactured for ABC Company
The statement of cost of goods manufactured for ABC Company is prepared by calculating the total raw materials used, adding direct labor and manufacturing overhead, and then adjusting for work in process inventory changes.
Statement of Cost of Goods Manufactured
To prepare the statement of cost of goods manufactured for ABC Company, we need to follow certain steps involving various components such as raw materials, direct labor, and manufacturing overhead. We start by calculating the total raw materials available for use, then we add direct labor and manufacturing overhead to get the total manufacturing costs, which is then adjusted by the change in work in process inventory to arrive at the cost of goods manufactured.
Calculation Breakdown:
Beginning Raw Materials Inventory: $9,600
Purchases of Raw Materials: $37,600
Ending Raw Materials Inventory: $11,600
Beginning Work in Process Inventory: $21,600
Direct Labor: $37,600
Manufacturing Overhead: $21,600
Ending Work in Process Inventory: $23,600
Statement of Cost of Goods Manufactured
Raw Materials Used in Production = Beginning Raw Materials Inventory + Purchases of Raw Materials - Ending Raw Materials Inventory
Total Manufacturing Costs = Raw Materials Used + Direct Labor + Manufacturing Overhead
Total Cost of Work in Process = Total Manufacturing Costs + Beginning Work in Process Inventory - Ending Work in Process Inventory
Cost of Goods Manufactured = Total Cost of Work in Process
Tresnan Brothers is expected to pay a $4.00 per share dividend at the end of the year (i.e., D1 = $4.00). The dividend is expected to grow at a constant rate of 3% a year. The required rate of return on the stock, rs, is 9%. What is the stock's current value per share? Round your answer to the nearest cent.
Answer:
$66.67
Explanation:
Using dividend growth model
P0 = [tex]\frac{D1}{Ke-g}[/tex]
Where P0 = Current market price of share
D1 = Dividend at year end
Ke = Expected return
g = growth percentage
Since D1 has been provided we will take D1 else formula is D0 + g for calculating D1
Putting the values as provided we have
P0 = [tex]\frac{4}{0.09-0.03}[/tex]
=[tex]\frac{4}{0.06}[/tex] = $66.67
noted the following: Units Work-in-process, August 1 (50% complete) 4,000 Units started during the month of August 20,500 Work-in-process, August 31 8,000 Materials are added at the beginning of the process. Tukka Toy uses the weighted average method; equivalent units of production for August were 19,500. Therefore, the percent complete of the work-in-process at August 31 was ________.
Answer:
Percent complete of work in process at August 31 was 60%
Explanation:
In this case opening WIP = 4,000 units which were 50 % complete
During the month we created additional 20,500 units of Work In Process
Additional 8,000 units of raw material were added.
Total units = 4,000 + 20,500 +8,000 = 32,500
Equivalent units completed = 19,500
Percentage of complete work in process at month end = ( 19,500/32,500 )[tex]\times[/tex] 100 = 60%
Final answer:
The percent complete of the work-in-process at August 31 was 25%, calculated by determining the equivalent units of production, subtracting the units completed, and dividing by the ending work-in-process.
Explanation:
The student's question is asking how to calculate the percent completion of work-in-process (WIP) for the month of August using the weighted average method. We're given the number of units in WIP at the start of August (4,000 units at 50% complete), the units started during the month (20,500), and the units in WIP at the end of August (8,000). Additionally, the equivalent units of production for August were 19,500. Equivalent units of production take into account both the completed units and the percentage of completion for the units still in process at the end of the period.
Step-by-Step Calculation
As materials are added at the beginning of the process, the 8,000 units in WIP at August 31 are 100% complete concerning materials.
To find the percentage of completion for conversion costs, we need to calculate how many units were completed and transferred out. This can be found by taking the total equivalent units (19,500) and subtracting the equivalent units for the units in beginning WIP (2,000 equivalent units, because they were 50% complete). The remaining equivalent units represent the work done in August, including the completed units and the percentage completion of the ending WIP.
Using the information from step 2, calculate the completed units: 19,500 equivalent units - 2,000 equivalent units from beginning WIP = 17,500 units completed and transferred out during August.
The number of units started and completed in August equals completed units minus beginning WIP plus ending WIP:
17,500 units completed - 4,000 units beginning WIP + 8,000 units ending WIP = 21,500 units started and completed.
To find the percentage completion of the ending WIP, we use the formula:
(Equivalent units of production - Units completed)/Ending WIP = Completion percentage for the ending WIP:
(19,500 - 17,500)/8,000 = 25%
Therefore, the percent complete of the work-in-process at August 31 was 25%.
Central University uses $123,000 of a particular toner cartridge for laser printers in the student computer labs each year. The purchasing director of the university estimates the ordering cost at $45 and thinks that the university can hold this type of inventory at an annual storage cost of 22% of the purchase price. How many months' supply should the purchasing director order at one time to minimize the total annual cost of purchasing and carrying?
Answer:
Explanation:
We have to calculate the Economic Order Quantity (EOQ). In this case, the "units" are dollars, and the "price" of each is 1.
One month's usage is 123000/12 = $10,250.
EOQ = 7094.
Month’s usage = 7094/10250 = 0.69
Data
Demand rate, D 123000
Setup cost, S 45
Holding cost, H 22.00%
Unit Price, P 1
Results
Optimal Order Quantity, Q* 7093.530984
Maximum Inventory 7093.530984
Average Inventory 3546.765492
Number of Setups 17.3397424
Holding cost $780.29
Setup cost $780.29
Unit costs $123,000.00
Transfer prices are _____. A. costs of the segment producing the product or service B. revenues of the segment acquiring the product or service C. revenues of the segment producing the product or service D. none of these answers is correct
Answer: the correct answer is D. none of these answers is correct.
Explanation: A transfer price exists for accounting purposes when diverse divisions on a multy entity company are in charge of their own revenues.
Tech Solutions is a consulting firm that uses a job-order costing system. Its direct materials consist of hardware and software that it purchases and installs on behalf of its clients. The firm’s direct labor includes salaries of consultants that work at the client’s job site, and its overhead consists of costs such as depreciation, utilities, and insurance related to the office headquarters as well as the office supplies that are consumed serving clients. Tech Solutions computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 60,000 direct labor-hours would be required for the period’s estimated level of client service. The company also estimated $390,000 of fixed overhead cost for the coming period and variable overhead of $0.50 per direct labor-hour. The firm’s actual overhead cost for the year was $409,300 and its actual total direct labor was 67,450 hours. Required: 1. Compute the predetermined overhead rate. 2. During the year, Tech Solutions started and completed the Xavier Company engagement. The following information was available with respect to this job:
Answer:
(A) $7 overhead rate per labor hour
Explanation:
[tex]\frac{Cost\: Of \:Manufacturing \:Overhead}{Cost \:Driver}= Overhead \:Rate[/tex]
We have to distribute the fixed overhead over the cost drivr
390,000/60,000 = 6.5 fixed overhead rate
then 6.5 + 0.5 variable = 7 overhead rate per labor hour
Pre-determined overhead rate is the rate that is calculated based on the activity base. This rate is used to allocate manufacturing overheads. The predetermined overhead rate is $9 per direct labor hour.
Job cost sheet: The job cost sheet records the details about direct materials cost, direct labor cost, and manufacturing overheads. It shows the total cost of the job work and completion details.
Variable overhead costs: These costs are directly proportional to the level of activity. If there is a change in the activity level by 10% then there would be a change in the variable cost by 10% in either direction. Variable cost is directly proportional to the volume of the production. Variable cost per unit remains constant.
Fixed overhead costs: These costs do not vary with changes in the level of activity. Fixed cost remains the same for the period. If there is an increase in the activity level, then the fixed cost per unit decreases, and if there is a decrease in the activity level then the fixed cost per unit increases. Fixed cost per unit changes with the change in the activity level.
Pre-determined overhead rate: It is the rate that is calculated based on the activity base. This rate is used to allocate manufacturing overheads.
The predetermined overhead rate as follows:
overhead rate = expected annual overhead cost ÷ expected annual operating activity
Total job cost is calculated by adding all cost incurred for the completion of the job i.e. direct materials cost, direct labor cost, and overheads cost.
1. Variable overhead rate is $0.50 per direct labor hour, the total estimated fixed overhead is $680,000, and the estimated direct labor hour is 80,000.
The predetermined overhead rate as follows: -
pre-determined overhead rate = variable overhead rate + fixed overhead rate
$0.50 + ($680,000 ÷ 80,000)
=$9.00
Therefore, the predetermined overhead rate is $9 per direct labor hour.
The variable overhead rate and fixed overhead have been added together to find the predetermined overhead rate as $9 per direct labor hour. The predetermined overhead rate is the sum of the variable overhead rate and fixed overhead. Fixed overhead per direct labor hour has been found out by dividing the total estimated fixed overhead by the estimated direct labor hour.
2. Variable overhead rate is $0.50 per direct labor hour, the total actual fixed overhead is $692,000, and the estimated direct labor hour is 83,000.
Determine the total job cost as follows: -
Total job cost + Direct materials + direct labour + overhead cost
= $38,000+$21,000+ ($9 × 280)
=$61,520
Therefore, the total job cost is $61,520.
The total job cost has been found out by adding the direct materials cost, direct labor cost, and the overheads cost. The overhead cost has been allocated based on the estimated overhead expenses.
Therefore, The predetermined overhead rate is $9 per direct labor hour.
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When Julius hears that there are going to be cutbacks in his department, he immediately calls his supervisor and asks for an appointment. During that meeting he presents a very straightforward list of the ways in which he has been an asset to the company, proposes ways that he can help the company overcome its economic difficulties, and emphasizes his dedication and loyalty to the company. Julius is using ____-focused coping to deal with his employment uncertainty.
Answer:
maladaptive coping
Explanation:
A data safety monitoring board report for an investigator-initiated investigational drug study indicates a significantly higher than anticipated rate of an expected adverse event. This event required revision of the informed consent form to disclose the higher rate. A change in the eligibility criteria of the protocol to reduce the risk was implemented. Current subjects would be reconsented. What type of problem does this present
Answer:
This can be classified as an unanticipated problem.
Explanation:
During an investigational drug study the rate of risk of expected adverse events is indicated to be greater than what was initially expected. The current subjects need to be reconsented and the consent form needs to be updated to include this higher rate
Since the rate of an expected adverse event is greater than what was anticipated in the beginning and puts subjects and others at risk, this poses an unanticipated problem.
The scenario presents a research ethics problem requiring revisions to the informed consent form and eligibility criteria to reflect an unexpected increase in the rate of an adverse event, guaranteeing that current and future participants can make an informed decision about their involvement.
Explanation:The situation described presents a research ethics problem specifically related to informed consent and participant safety in clinical trials. When adverse events occur at higher rates than expected, it's imperative to revise the informed consent documentation to accurately reflect new risk information and reconsent current subjects. This ensures they are making an informed choice about their continued participation. Additionally, adjusting the eligibility criteria is a prudent step to mitigate risk for future participants.
The informed consent form is essential in communicating the risks, benefits, and other important information about a study. Institutional Review Boards (IRBs) are responsible for overseeing the ethical aspects of clinical trials, including the informed consent process, to protect the rights and welfare of participants. Amendments to the study protocol, like changes in risk profile and eligibility criteria, need to be updated in the Investigational New Drug (IND) application and reviewed and approved by the IRB.
Post-approval, the drug must continue to be monitored for safety through a robust pharmacovigilance system. Any new findings during this phase may lead to further amendments, restrictions, or additional clinical trials (Phase IV) to ensure the continued safety of the drug users.
Suppose a farmer in Georgia begins to grow peaches. He uses $1,000,000 in savings to purchase land, he rents equipment for $90,000 a year, and he pays workers $150,000 in wages. In return, he produces 200,000 baskets of peaches per year, which sell for $3.00 each. Suppose the interest rate on savings is 5 percent and that the farmer could otherwise have earned $35,000 as a shoe salesman. What is the farmer's economic profit? The peach farmer earns economic profit of
Answer: The farmer's economic profit is $2,75,000.
Explanation:
Cost Incurred for Growing peaches (Explicit Cost) :
Rents equipment = $90,000 a year
Paid Wages = $1,50,000
Total Explicit cost = $2,40,000
Total Revenue(TR) Earned:
TR = Number of baskets of peaches produced per year × selling price of each peaches
= 2,00,000 × $3.00
= $6,00,000
Opportunity Cost (Implicit Cost):
Interest rate on savings ( 5 %) = 5% of $1,000,000
= $50,000
Farmer earn as a shoe salesman = $35,000
Total implicit cost = $85,000
Economic Profit:
Economic Profit = Total Revenue - Implicit cost - Explicit cost
= $6,00,000 - $85000 - $2,40,000
= $2,75,000
Your order is supposed to be delivered between 5PM-6PM, and it’s now 5:45PM. You’re stuck in a long line waiting to check out. In this situation, you will be late delivering the order. Provide an example of the text message you would send to the member.
Explanation:
If I am stuck in a long line waiting to check out and I was supposed to deliver the parcel between 5 PM to 6 PM, then I will text the receiver telling him about my problem and tell him that his order will be delivered late and will give him a time boundary. My text message to him will look like the following:
Hi Sir/Madam,
This is abc from xyz company. Your parcel was scheduled to deliver between 5 PM to 6 PM, but due to some uncertain situation, there is a short delay in the delivery. Your parcel is hoped to deliver within the next one hour.
Your patience will be highly appreciated, and apologies for the delay.
Best Regards.
A sample of the text message sent to apologize for the delay would look like this:
This is ABC from XYZ company. Your parcel was scheduled to deliver between 5 PM to 6 PM, but due to some unforeseen delays, we would deliver within the next hour.
Your patience will be highly appreciated, and apologies for the delay.
What is an Apology?This is a statement that shows that a person is sorry for the action and would want to rectify the situation.
Hence, we can see that based on the hypothetical situation about sending a parcel and not delivering on time, an apology text needs to be sent and it is shown above.
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A new manager has just arrived at your firm, and she has just finished taking an operations management class. Your company produces widgets on a moving assembly line. Most of the employees have specialized on one specific task on the assembly line, and they are good at performing their assigned task. However, as she walks around the production floor, she notices that many of the employees do not seem to be very satisfied with their job. She has a great idea on how to improve the quality of work life and thinks that the employees should be allowed to move from one specialized job to another.What type of job expansion would this be considered? __________
Answer:
In this situation job rotation is the kind of job expansion that should be considered.
Explanation:
Job rotation can be defined as a management approach in which employees at regular intervals are shifted between two or more jobs. It has a number of advantages.
This eliminates boredom and monotony from work. It helps employers in realizing what an employee is best at.It also helps in improving the skill set of employees. They become aware of different operations and it widens their work experience.Job rotation is the type of job expansion where a new manager wants to allow employees to move between different specialized tasks to improve job satisfaction and skill variety. This approach can reduce boredom and monotony on the production line and has been successfully used in various industries and organizational levels.
Job rotation is an early alternative to job specialization, involving the periodic movement of employees between different jobs to relieve the monotony associated with specialized tasks. This approach to job design has been shown to have multiple benefits, including reduced employee boredom and stress levels, improved job satisfaction, and the acquisition of a broader range of skills among employees.
Organizations that have implemented job rotation can also experience greater flexibility in task assignments, knowledge transfer between departments, and increased innovation. It's important to note that job rotation is used not only for lower-level positions but across various tiers in an organization, contributing to managerial training and bringing fresh perspectives to different areas.
The Assembly Department started the month with 24,900 units in its beginning work in process inventory. An additional 309,900 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 29,900 units in the ending work in process inventory of the Assembly Department. How many units were transferred to the next processing department during the month
Answer:
304900 units should be transferred to the next processing department during the month.
Explanation:
Work in process : As a name suggest, the Work in process (WIP) is a process in which the work is in under processing or we can say it is not 100 % completed. It can be incomplete in any cycle .
It includes various cost like - direct material , direct labor, overhead, etc.
To find out how much units is to be transferred, the following equation is used which is shown below.
= Opening Work in process inventory + Purchase of inventory - closing work in progress inventory
= 24,900 units + 309,900 units - 29,900 units
= 304900 units
Thus, 304900 units should be transferred to the next processing department during the month.
Final answer:
The number of units transferred to the next processing department is calculated by adding the beginning work in process inventory and the units transferred in, then subtracting the ending work in process inventory. In this scenario, 304,900 units were transferred to the next department.
Explanation:
The student's question is about calculating the number of units transferred to the next processing department in the context of production and inventory management. To find the number of units transferred, we need to consider the total number of units available for processing and subtract the ending work in process inventory.
Here is the calculation:
Beginning work in process inventory: 24,900 unitsUnits transferred in: 309,900 unitsEnding work in process inventory: 29,900 unitsUnits transferred to the next process = (Beginning inventory + Transferred in) - Ending inventoryUnits transferred to the next process = (24,900 + 309,900) - 29,900Units transferred to the next process = 304,900 unitsTherefore, 304,900 units were transferred to the next processing department during the month.
With only a part-time job and the need for a professional wardrobe, Rachel quickly maxed out her credit card the summer after graduation. With her first full-time paycheck in August, she vowed to pay $270 each month toward paying down her $8 comma 368 outstanding balance and not to use the card. The card has an annual interest rate of 18 percent. How long will it take Rachel to pay for her wardrobe? Should she shop for a new card? Why or why not?
Final answer:
To determine the time to pay off an $8,368 credit card balance at 18% interest with $270 monthly payments, a financial calculator or specific formula is needed due to compounding interest. Additionally, considering a new card with a lower interest rate could save money.
Explanation:
Rachel needs to figure out how long it will take to pay off her outstanding credit card balance of $8,368 with an annual interest rate of 18%. The problem can be solved by calculating the amortization of the credit card debt, considering she's making a fixed payment of $270 every month. However, to do this, we need a more complex mathematical formula or a financial calculator since credit card interest is compounded monthly, and the balance changes every month after each payment and the application of interest.
Given the high interest rate of 18%, it would also be wise for Rachel to consider shopping for a new credit card with a lower interest rate. This could potentially save her a lot of money by reducing the amount of interest she pays over time. Financial institutions often offer balance transfer options with lower interest rates, sometimes even with introductory rates of 0% for a certain period, which could be greatly beneficial.
Final answer:
Rachel should consider transferring her balance to a new card with a lower interest rate to pay off her debt faster. With her current card's 18% interest and a $270 monthly payment, much of her payments will initially cover interest rather than the principal. The exact time to pay off the debt depends on the calculation using the amortization formula.
Explanation:
Calculating Credit Card Debt Payoff Time-
Rachel has an outstanding credit card balance of $8,368, with an annual interest rate of 18%. She plans to pay $270 each month to pay down her debt. To calculate the time it will take to pay off the debt, we need to use the amortization formula, which takes into account the principal amount, the monthly payment amount, and the monthly interest rate.
The monthly interest rate is 18% per year, which is 1.5% per month (18% divided by 12 months). Applying this to her balance monthly means her payments need to cover the interest before paying off the principal. This situation is not ideal, as most of her initial payments will go towards interest rather than decreasing the principal balance significantly.
To answer the second part of the question: Yes, she should shop for a new card. If Rachel were to transfer her balance to a card with a lower interest rate, she would pay less in interest, and more of her payment would go towards the principal. This could help her pay off the debt faster. A typical credit card interest rate ranges from 12% to 18% per year. Shopping for a credit card with an interest rate at the lower end of this spectrum or finding a card with a 0% introductory rate for balance transfers would be beneficial.
Given that Americans pay tens of billions of dollars every year in credit card interest, reducing the interest rate can provide significant savings and should be a priority for anyone carrying a balance. However, without the exact amortization formula and a calculator or spreadsheet to do the computations, we cannot provide a precise number of months it will take for Rachel to pay off her professional wardrobe.
At year-end (December 31), Chan Company estimates its bad debts as 1.00% of its annual credit sales of $794,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the $397 account of P. Park is uncollectible and writes it off as a bad debt. On June 5, Park unexpectedly pays the amount previously written off.
Prepare the journal entries for these transactions.1. Record the estimated bad debts expense.2. Record the entry to write off P. Park's account as uncollectible.3. Record the reinstatement of Park's previously written off account.4. Record the cash received on account.
Answer:
1. bad debt expense debit 7940
allowance for bad debt credit 7940
2. allowance for bad debt debit 397
account receivable credit 397
3. account receivable debit 397
allowance for bad credit 397
4. cash debit 397
account receivable credit 397
Explanation:
the allowance will be the 1% of 794,000
then recognize the allowance for that ammount along with the bad debt expense
total write-off an account we decrease both, the allowance and account receivable
total reinstate the Parks account we do the previous entry backwards
lastly we post like any other collection from Account Receivable
For its top managers, Goldberg Industries formats its income statement as follows: GoldBerg Industries Contribution Margin Income Statement Three Months Ended October 31, 2019 Net Sales Revenue $ 490,200 Variable Costs 294,120 Contribution Margin 196,080 Fixed Costs 173,000 Operating Income $ 23,080 What would be the outcome if this contribution margin income statement were prepared at the $377,000 sales level? (*The proportion of each sales dollar that goes toward variable costs is consistent within the relevant range.)
Answer:
The outcome will be a net loss for 22,200
Explanation:
[tex]\left[\begin{array}{ccc}Sales&490,200&377,000\\variable \: cost&-294,120&-226,200\\contibution&196,080&150,800\\fixed \:cost&-173,000&-173,000\\net \: income&23,080&-22,200\\\end{array}\right][/tex]
284120/490200 = 0.6 variable cost weight
377,000 x 0.6 = 226,200 variable cost
Cass Corporation reported pretax book income of $10,600,000. During the current year, the reserve for bad debts increased by $172,500. In addition, tax depreciation exceeded book depreciation by $227,500. Cass Corporation sold a fixed asset and reported book gain of $87,000 and tax gain of $114,500. Finally, the company received $270,000 of tax-exempt life insurance proceeds from the death of one of its officers. Compute the company’s current income tax expense or benefit.
Answer:
Tax Income Expense 10,600,000
Tax income payable 10,302,500
deffered tax liability 297,500
Explanation:
pretax book income 10,600,000
reverse bad debt 172,500
additional dep -227,500
book asset sale gain -87,000
taxable asset sale gain 114,500
tax expemt insurance proceed -270,000
Taxable income 10,302,500
Thirty percent of households say they would feel secure if they had $50,000 in savings. You randomly select 8 households and ask them if they would feel secure if they had $50,000 in savings. Find the probability that the number that say they would feel secure is (a) exactly five, (b) more than five, and (c) at most five
Answer: a) 0.04667544
b) 0.01129221
c) 0.98870779
Explanation:
Binomial probability formula :-
[tex]P(x)=^nC_xp^x(1-p)^x[/tex], where P(x) is the probability of getting success in x trials, n is the total number of trials and p is the probability of getting success in each trial.
Given : The probability of households say they would feel secure if they had $50,000 in savings = 0.30
Total number of households selected = 8
a) The probability that the number that say they would feel secure is exactly five will be :-
[tex]P(5)=^8C_{5}(0.30)^5(0.70)^3\\\\=56(0.3)^5(0.7)^3=0.04667544[/tex]
b) The probability that the number that say they would feel secure is more than five :-
[tex]P(x>5)=P(6)+P(7)+P(8)\\\\=^8C_{6}(0.30)^6(0.70)^2+^8C_{7}(0.30)^7(0.70)^1+^8C_{0}(0.30)^8(0.70)^0\\\\=28(0.30)^6(0.70)^2+8(0.30)^7(0.70)^1+(0.30)^8\\\\=0.01129221[/tex]
c) The probability that the number that say they would feel secure is at most five :-
[tex]P(x\leq5)=1-P(x>5)\\\\=1-0.01129221=0.98870779[/tex]
The solution relies on understanding and applying the binomial probability formula, which involves identifying number of trials (n), success probability (p), and number of successes (x). Probabilities can be calculated for specific counts, and for ranges of counts, e.g. 'at most' or 'more than'.
Explanation:This question is about calculating probabilities using the binomial distribution. The binomial probability formula is There are 8 households, hence n=8 and the given probability of success (a household feeling secure with $50,000 in savings) is 0.3, hence p=0.3.
(a) To find the probability that exactly five households would feel secure, use the binomial formula with x=5, p=0.3, and n=8.
(b) The probability that more than five households would feel secure is found by 1 minus the probability of at most five households feeling secure.
(c) To find the probability that at most five households would feel secure, calculate the sum of probabilities that 0,1,2,3,4 or 5 households would feel secure.
Remember, all these probabilities can be calculated using the binomial distribution equation.
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Renault has created a way to generate high profits on low-priced automobiles by using simple designs that incorporate components from older car designs and a no-discount retail policy. They are using a(n) ______________ strategy.
Answer:
The correct answer is overall cost leadership.
Explanation:
Companies usually use the strategy of overall cost leadership to be more competitive and get some advantage by creating a low-cost-position among its competitors. In other words, the strategy tends to give the company the ability to keep lower prices than its competitors by increasing productivity and efficiency, eliminating waste, or controlling costs.
The ending inventory of finished goods has a total cost of $9,500 and consists of 600 units. If the overhead applied to these goods is $3,600, and the overhead rate is 80% of direct labor, how much direct materials cost was incurred in producing these units?
Answer:
Direct Materials = 1,400
Explanation:
Using the total cost formula we will solve for materials
total cost = materials + labor + MOH
the total cost is a given.
MHO is a given also.
The labor can be expressed as a percent or MOH using the rate
If MHO = 80% LABOR THEN
MHO/80% = LABOR
3600/0.80 = 4500
now posting the know values un the formula:
9,500 = DM + 4,500 + 3,600
DM = 9,500 - 4,500 - 3,600
DM = 1,400
______ reduces theoretical capacity for unavoidable operating interruptions.Practical capacityTheoretical capacityMaster-budget capacity utilizationNormal capacity utilization
Answer:
Practical capacity
Explanation:
Practical capacity reduces theoretical capacity for unavoidable operating interruptions.
Martinez Corp. has 2,800 shares of 9%, $103 par value preferred stock outstanding at December 31, 2017. At December 31, 2017, the company declared a $121,000 cash dividend. Determine the dividend paid to preferred stockholders and common stockholders under each of the following scenarios. 1. The preferred stock is noncumulative, and the company has not missed any dividends in previous years.
Answer:
dividend for preference shareholder is $25,956 and for common shareholder is $95,044
Explanation:
Preference stock and common stock are almost same but with difference that when a company issues preferential shares to some investors, they give those preference shareholders some preferential rights , such as when a company is declaring dividend , they will give dividends first to preference shareholders first and then common stockholders.
Here it is given that the preference stock are non cumulative which means that if company has given some dividends in the past and some preference shareholders haven't got those dividends , these shareholders don't have any right to ask company for those unpaid dividends.
For calculating the dividend for preference shareholder we will use =
Par value of stock x Rate of interest x Number of preference stock
= $103 x 9% x 2800
= $103 x .09 x 2800
= $25,956
Therefore the value of dividends given to preference shareholders is $25,956,
Given amount dividends by company - $121,000
which means the rest of the dividend is for common shareholders,
dividend for common shareholder = $121,000 - $25,956
= $95,044
In the scenario given, preferred stockholders will receive $25,956 worth of dividends and common stockholders will receive $95,044, assuming the company's preferred stock is noncumulative and the company has not missed any dividends in previous years.
Explanation:Under the given scenario, we first need to calculate the dividends for the preferred stockholders. Martinez Corp. has 2,800 shares of 9%, $103 par value preferred stock. The dividend per preferred stock is calculated by multiplying the par value with the dividend rate, which would be $103 * 0.09 = $9.27 per share. Total preferred dividends would therefore be $9.27 * 2800 = $25,956.
Now, since in the scenario, the preferred stocks are noncumulative (which means they do not accumulate unpaid dividends), and the company has not missed any dividends in the past years, the preferred stockholders will be paid first. This means, out of the total cash dividend of $121,000 declared, preferred stockholders will receive their full share of $25,956. The rest will go to the common stockholders.
The dividend for the common stockholders will then be the total dividend minus the dividend for preferred stockholders. So, common stockholders would receive $121,000 - $25,956 = $95,044. Thus, in this scenario, preferred stockholders receive $25,956 and common stockholders receive $95,044.
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Suppose that the U.S. government decides to charge wine consumers a tax. Before the tax, 20 million bottles of wine were sold every month at a price of $5 per bottle. After the tax, 14 million bottles of wine are sold every month; consumers pay $8 per bottle (including the tax), and producers receive $2 per bottle. The amount of the tax on a bottle of wine is $ per bottle. Of this amount, the burden that falls on consumers is $ per bottle, and the burden that falls on producers is $ per bottle. True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on producers. True False
Answer: The answer is as follows:
Explanation:
Before the tax,
20 million bottles of wine were sold every month at a price of $5 per bottle
After the tax,
14 million bottles of wine are sold every month; consumers pay $8 per bottle (including the tax), and producers receive $2 per bottle.
The amount paid by consumers after tax is $8 per bottle and amount paid by producers is $2 per bottle.
∴ The amount of tax on wine = $8 - $2 = $6 per bottle
Tax burden on consumers = Price paid after tax - price paid before tax
= 8 - 5
=$3 per bottle
Tax burden on Producers = Price received before tax - price received after tax
= 5 - 2
=$3 per bottle
∴ The burden of tax falls equally on both consumers and producers of $3 per bottle each.
The statement is true. Whether the tax is levied on consumer or producer, the effect of the tax on the quantity sold is the same.
The effect of tax on quantity sold is dependent on the elasticity of demand and supply. While the tax was levied on consumers, both consumers and producers shared the burden. The incidence of tax and its effect would likely be different if it was levied on producers depending on elasticity conditions.
Explanation:In this scenario, the U.S. government imposed a tax on wine consumers. Before the tax, consumers were buying 20 million bottles of wine every month at a price of $5 per bottle. After the tax was imposed, this quantity reduced to 14 million bottles sold per month, and the price paid by consumers rose to $8, implying a $6 tax on each bottle of wine. The burden of this tax was shared by both consumers and producers; consumers paid $3 more per bottle, and producers received $3 less per bottle. The effect of this tax effectively reduced the quantity of wine sold.
With regard to whether the effect would be the same if the tax had been levied on producers, this is largely dependent on the elasticity of demand and supply. If the demand for wine is more elastic than supply, consumers would bear less of the tax burden and a larger proportion of the tax would be borne by producers, which could have led to a more significant reduction in quantity. However, if supply is more elastic than demand, a tax on producers might not result in the same reduction in quantity, as producers could more easily absorb the cost of the tax.
In this case, it's crucial to understand that both demand elasticity and supply elasticity determine who actually pays the tax or the ultimate incidence of the tax. While the government can dictate who hands over the tax, market forces determine who really pays.
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Adam Kane wants to sell office supplies to as many customers as possible, in as many markets as possible. His plan is
A. a proven way to maximize his profit margin. B. a poor market strategy. C. the best way to succeed. D. a time-consuming way to find 4.
Answer:
A. a proven way to maximize his profit margin.
Explanation:
A is the only answer that makes sense in this scenario. If there is a proven way to maximize profit margin, it would mostly have a profit, yet the price would be low enough for their to be a large customer base. As many people like to join the 'bandwagon', a large customer base with high rating would potentially draw more customers, regardless if they need it or not.
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The City of San Antonio is considering various options for providing water in its 50-year plan, including desalting. One brackish aquifer is expected to yield desalted water that will generate revenue of $4.1 million per year for the first 5 years, after which less production will decrease revenue by 10% per year each year. If the aquifer will be totally depleted in 24 years, what is the present worth of the desalting option revenue at an interest rate of 8% per year? The present worth of the desalting option revenue at an interest rate of 8% per year is determined to be $
Answer:
The present worth of desalting option is $28,238,084.2
Explanation:
For this question we have to calculate the present value of the desalting option revenue for all the 24 years , where
for first 5 years the payment would remain $4.1 million, and after that it will keep on decreasing for the rest of the years .
The rate of interest here given is 9% and with this interest we will calculate the present value of the option, for which we will use the formula of present value factor.
PRESENT VALUE FACTOR = \frac{1}{ ( 1 + I )^{N} }
Where I is the interest rate and the N is the number of year, so
Year Payment Present value factor Present value of cash flow
(\frac{1}{ ( 1 + I )^{N} })
1 $ 4100000 .917 $ 3761468
2 $4100000 .842 $3450888
3 $ 4100000 .772 $3165952
4 $ 4100000 .708 $2904543
5 $4100000 .650 $2664719
6 $3690000 .596 $2200226
7 $ 3321000 .547 $1816701
8 $2988900 .502 $1500028
9 $2690010 .460 $1238555
10 $2421009 .422 $1022660
11 $2178908 .388 $844398.5
12 $1961017 .356 $ 697209.7
13 $1764916 .326 $575677.8
14 $1588424 .299 $475330.3
15 $1429582 .275 $392474.5
16 $1286623 .252 $324061.5
17 $1157961 .231 $267573.7
18 $1042165 .212 $220932.5
19 $937948.5 .194 $182421.3
20 $844153.6 .178 $150623.1
21 $759738.3 .164 $124367.7
22 $683764.5 .150 $102564.7
23 $615388 .138 $84923.5
24 $553849.2 .126 $69785
TOTAL PRESENT VALUE OF CASH FLOW = $28,238,084.2
Astro Co. sold 20,500 units of its only product and incurred a $67,750 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2018’s activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $155,000. The maximum output capacity of the company is 40,000 units per year. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, 2017 Sales $ 779,000 Variable costs 584,250 Contribution margin 194,750 Fixed costs 262,500 Net loss $ (67,750 ) Required: 1. Compute the break-even point in dollar sales for year 2017. (Round your answers to 2 decimal places.)
To calculate the break-even point in dollar sales for Astro Co. for 2017, the fixed costs are divided by the contribution margin ratio, which gives us a break-even point of $1,050,000.
Explanation:To find the break-even point in dollar sales for Astro Co. for the year 2017, we need to employ the contribution margin approach. The formula to compute the break-even point in dollars is:
Break-even point (in dollars) = Fixed Costs ÷ Contribution Margin Ratio
The Contribution Margin Ratio is calculated as follows:
Contribution Margin Ratio = Contribution Margin ÷ Sales
From the data provided:
Fixed Costs = $262,500Contribution Margin = $194,750Sales = $779,000Hence, the Contribution Margin Ratio is:
Contribution Margin Ratio = $194,750 ÷ $779,000
Contribution Margin Ratio = 0.25 (rounded to two decimal places)
Now, we calculate the Break-even point:
Break-even point (in dollars) = $262,500 ÷ 0.25
Break-even point (in dollars) = $1,050,000
This means that Astro Co. must generate sales of $1,050,000 to break even in 2017.
Bonita Industries wants to sell a sufficient quantity of products to earn a profit of $200000. If the unit sales price is $9, unit variable cost is $8, and total fixed costs are $200000, how many units must be sold to earn income of $200000?
Answer:
400,000 units
Explanation:
we are going to add in the dividend of the BEPunits formula the target profit.
[tex] \frac{fixed \: cost + target \: profit}{cotribution \: margin \: per \: unit} = units \: to \: achieve \: target \: profit[/tex]
[tex] \frac{200000 + 200000}{9 - 8} = 400000[/tex]
contribution per unit = sales - variable
9 -8 = 1
fixed cost + target profit
200,000+200,000 = 400,000
400,000/1 =400,000
Ricky's Repair Shop has a monthly target profit of $ 28,000. Variable costs are 80 % of sales, and monthly fixed costs are $ 12,000. Requirements 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal. 2. Express Ricky's margin of safety as a percentage of target sales.
Answer: Margin of Safety(MOS) in dollars= $1,40,000
Margin of Safety(MOS) as a percentage of target sales = 70%
Explanation:
Given:
Target profit = $28000
Variable costs = 80 % of sales
Contribution = 20 % of sales
Fixed Costs = $12000
Required sales in units = [tex]\frac{Fixed Costs +Target profit }{Contribution margin per unit}[/tex]
Using the given in above formula;
Required sales in dollars = [tex]\frac{12000+0}{20}[/tex]
=$60000
Target sales = [tex]\frac{(Fixed Costs + Target profit)}{Contribution}[/tex]
Target sales = $200000
Margin of Safety(MOS) in dollars = Target Sales - Break-even point sales
Margin of Safety(MOS) in dollars = $200000 - $60000 = $140000
Margin of Safety(MOS) as a percentage of target sales = [tex](\frac{140000}{200000})\times 100[/tex]
=70%
Final answer:
To answer the student's question, we first calculate the sales needed to meet the profit target. However, due to the lack of actual sales data, we are unable to compute the margin of safety in dollars or as a percentage of target sales.
Explanation:
The student is asking how to compute the margin of safety in dollars and express it as a percentage of target sales for Ricky's Repair Shop. First, we need to determine the sales required to achieve the target profit. Since variable costs are 80% of sales, the contribution margin is 100% - 80% = 20% of sales. To reach the $28,000 profit target, we need to cover the $12,000 fixed costs and the $28,000 profit, which is a total of $40,000. We divide this by the contribution margin percentage to get the required sales: $40,000 / 20% = $200,000.
Now, we calculate the margin of safety by subtracting the target sales from the actual sales. Since we don't have the actual sales amount in the question, we can't complete this step. If we were given actual sales, we would use: Margin of Safety in dollars = Actual Sales - Target Sales.
Finally, the margin of safety as a percentage of target sales is calculated by: Margin of Safety percentage = (Margin of Safety in dollars / Actual Sales) × 100. Again, since we don't have the actual sales figure, we can't compute this percentage. Without additional data, the student's question cannot be fully answered.