This detailed answer provides calculations for materials, labor, and variable overhead variances along with recommendations based on the results.
1. For direct materials:
a. The total materials price variance is $700 U and the total materials quantity variance is $3,450 F.b. Considering the variances, the company should analyze the quality of materials provided by the new supplier before signing a long-term contract.2. For direct labor:
a. The total labor rate variance is $360 U and the total labor efficiency variance is $780 F.b. The company should carefully evaluate the impact of changing the labor mix to decide if it should continue.3. Variable overhead:
The total variable overhead rate variance is $800 F, and the total variable overhead efficiency variance is $300 U.
The BobCat Inc. reported gross sales of $100,000, sales returns and allowances of $5,000, and sales discounts of $2,000. The company has $25,000 in tangible assets and $120,000 in average total assets. What is the company's asset turnover ratio
Answer:0.775 times
Explanation:
Given
Gross sales 100000
Sales returns 5000
Sales discounts 2000
Tangible assets 25000
Average total assets 120000
Calculation of assets turn over ratio
Assets turnover ratio = Net sales / Average total assets
=(100000-5000-2000)/120000
=0.775 times
Assets turnover ratio is 0.775 times
Gross sales is the sales made by the company but net sales is where the actual value of sales has happened after the rebates, allowances and discounts. Assets turn over ratio is used to measure the company's abilities to utilize its assets efficiently in generating sales income to the company.
During its first year of operations, White Company bills credit customers $15,100 for services rendered. During the year, White receives $10,500 from all customers, $2,500 of which is received from cash customers. Required: What amount of revenue should be shown on the income statement for the year
Answer:
Total revenue = $17,600
Explanation:
Given:
Bills credit to customers during the year = $15,100
Receive amount from customer = $10,500
Amount received in cash = $2,500
Total revenue during the year =?
Computation of total revenue during the year:
According to the accrual basis of accounting, total revenue includes the sum of credit and cash sales.
Total revenue = Cash sales + Credit sales
Total revenue = $2,500 + $15,100
Total revenue = $17,600
White Company should show $15,100 as revenue on the income statement, which represents the total amount billed to customers for services during the year.
Explanation:The revenue to be shown on the income statement for White Company should reflect the amount billed to customers for services rendered, regardless of when cash is received. Since White Company billed credit customers $15,100 for services, this is the amount that should be reported as revenue on the income statement for the year. The actual cash received, including from cash customers, is relevant to the cash flow statement but does not alter the revenue figure on the income statement.
A person who decides to buy or sell securities based on publicly available information and analysis is called a(n) ______ trader. 1. public 2. inside 3. normal 4. informed 5. block
Answer:
4. informed
Explanation:
An Informed trader only makes his buying or selling decision based on publicly available information.
The W3C advisory committee must review every proposal for a(n) ______ made up of representatives of the W3C membership group, invite experts, and W3C team members to work on the ________, which may involve writing one or more ______. These go through an extensive review process that includes Requests For Comments (RFC). At any point in the process, a(n) _______ may be terminated.
Answer:
The W3C advisory committee must review every proposal for a meeting made up of representatives of the W3C membership group, invite experts, and W3C team members to work on the activity , which may involve writing one or more proposals . These go through an extensive review process that includes requests for comments(RFC). At any point in the process, a request may be terminated.
Good luck buddy.
Suppose that your firm's current unlevered value, V*, is $800,000, and its marginal corporate tax rate is 35 percent. Also, you model the firm's PV of financial distress as a function of its debt level according to the relation: PV of financial distress = 800,000 × ((D/V*)^2). What is the firm's levered value if it issues $200,000 of perpetual debt to buy back stock?
Final answer:
The firm's levered value after issuing $200,000 of perpetual debt and considering the tax shield and PV of financial distress is $820,000.
Explanation:
Calculation of Firm's Levered Value
To calculate the firm's levered value, we must consider both the tax shield from debt and the present value (PV) of financial distress costs. The firm's unlevered value (V*) is $800,000 and it plans to issue $200,000 of perpetual debt. The corporate tax rate is 35%, creating a tax shield on the debt. Additionally, the PV of financial distress as a function of the debt ratio (D/V*) is given by the formula: 800,000 × ([tex](D/V*)^2[/tex]).
First, we calculate the tax shield as follows:
Tax Shield = Debt × Tax Rate = $200,000 × 35% = $70,000.
Next, we calculate the PV of financial distress:
PV of Financial Distress = 800,000 × ([tex]($200,000/$800,000)^2[/tex]) = 800,000 × ([tex]0.25^2[/tex]) = 800,000 × 0.0625 = $50,000.
Finally, we determine the levered value (V) by adding the tax shield to the unlevered value and then subtracting the PV of financial distress:
Levered Value = V* + Tax Shield - PV of Financial Distress = $800,000 + $70,000 - $50,000 = $820,000.
The firm's levered value after issuing $200,000 of debt to buy back stock is $820,000.
A friend of yours trades stocks based on confidential information he overhears at his work. He even told you once that this information is not available to the general public. However, he keeps complaining to you that he can never make any profit on his stock trades. Based on this, you can argue that the stock market is ___ form efficient.
Answer:
The correct answer is letter "B": either weak, semi-strong, or strong.
Explanation:
The Efficient Market Hypothesis (EMH) is a theory that states that stocks reflect all the information there is so there is no form investors can beat the market even if having insider information. The EMH establishes then, that technical or fundamental analysis is useless at the moment of "predicting" stock prices.
There are three (3) forms of EMH: weak, semi-strong, and strong. Therefore, if a friend of ours mentions that he cannot beat the market even when having insider information, it implies the market he is trading at is either weak, semi-strong, or strong.
Which step in project management requires project managers to consider the types of records and reports they and their clients will require at the completion of the project?
Project closeout
Completion phase
Planning
Reporting
Answer:
The correct answer is letter "C": Planning.
Explanation:
The project management plan is a process that involves all the steps necessary to create and put into practice a project within a firm. It is composed of five (5) stages: initializing, planning, executing, monitoring and controlling, and closing.
In the planning stage, firms generate a budget, establish the teams of work and assign them the responsibilities they will be in charge following the project, develop a schedule, and determine the reports that will measure the project's success by the end of the project.
The C) planning phase in project management involves considering the types of records and reports needed at project completion. This ensures adequate documentation and evaluation later. Key elements include defining scope, objectives, and establishing communication plans.
The step in project management that requires project managers to consider the types of records and reports they and their clients will require at the completion of the project is the planning phase.
During the planning phase, project managers identify all necessary reports and records to ensure adequate follow-up and control processes. This phase involves:
Defining the scope and objectives of the projectEstablishing project deliverables and milestonesDeveloping communication plans to outline the progress reports requiredSetting up systems for documenting financial, resource, and progress dataConsidering these elements during the planning phase ensures accurate and appropriate evaluation of the project upon completion.
Which step in project management requires project managers to consider the types of records and reports they and their clients will require at the completion of the project?
A) Project closeout
B) Completion phase
C) Planning
D) Reporting
Horton Consulting is considering investing in a video conferencing system. How would the firm primarily benefit from such a system? providing variety to employees through job rotation minimizing the time it takes to train employees eliminating the need for costly software upgrades saving time and money traveling to meetings
Answer:
The correct answer is *saving time and money traveling to meetings
Explanation:
Through video conferencing, travelling time.and the costs of travelling, including costly over seas travelling can be minimised and the meetings will be more effecient as well. Moreover, this will help employees to manage their work life balance a well.
A restaurant is considering adding fresh brook trout to its menu. Customers would have the choice of catching their own trout from a simulated mountain stream or simply asking the waiter to net the trout for them. Operating the stream would require $10,600 in fixed costs per year. Variable costs are estimated to be $6.70 per trout. The firm wants to break even if 800 trout dinners are sold per year. What should be the price of the new item
Answer:
Selling price = $19.95
Explanation:
The break-even point is the level of activity where a business makes no profit or loss. At this level of activity, the total contribution equals the total fixed costs.
To calculate the break even point in a multi product scenario, we use the formula below:
Break-even point (units)= Fixed cost for the period / contribution per unit
800 = 10,600/ y
Cross multiplying
800y = 10,600
800y = 10,600
800 y = 10,600
y = 10,600/800
y= 13.25
Selling price = contribution + variable cost
= 13.25 + 6.70 = $19.95
The restaurant should set the price of the trout meal at $19.95 in order to break even taking into account their annual fixed costs and per meal variable cost based on an estimated sale of 800 meals a year.
Explanation:The challenge brought forward in this problem is determining the break-even price for the restaurant's proposed new dish: the brook trout. To calculate this, we need to take into account both fixed and variable costs. Fixed costs are costs that do not change with the level of output - in this case, the $10,600 per year for operating the stream. Variable costs, on the other hand, change according to the level of output, which in this instance is $6.70 per trout. The restaurant anticipates selling 800 trout dinners a year.
To break even, the total revenue must equal total costs. Total cost is the sum of fixed and variable costs.
Variable cost for 800 trout will be $6.70 * 800 = $5,360,
The total costs will be $10,600 + $5,360 = $15,960.
Therefore, the break-even price per meal should be the total costs divided by the number of meals sold, i.e $15,960 / 800 = $19.95. So, the restaurant should price the trout meal at $19.95 to break even.
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The following order book exists for a particular stock. The last trade on the stock was at $58.34. Buy Orders Sell Orders Shares Price Shares Price 250 $58.33 250 $58.36 200 58.32 800 58.37 900 58.31 1,000 58.39 175 58.29 600 58.40 350 58.41 a. If you place a market buy order for 200 shares, at what price will it be filled?
a) Price of a buy order of 200 shares is $58.36.Because there was an offer of sale that is 250 shares at $58.36 per share, so the price would remain constant at 200 Shares.
Zira Co. reports the following production budget for the next four months. April May June July Production (units) 582 610 616 596 Each finished unit requires four pounds of raw materials and the company wants to end each month with raw materials inventory equal to 40% of next month’s production needs. Beginning raw materials inventory for April was 931 pounds. Assume direct materials cost $5 per pound. Prepare a direct materials budget for April, May, and June.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Production (units):
April= 582
May= 610
June= 616
July= 596
Each finished unit requires four pounds of raw materials.
Desired ending inventory= 40% of next month’s production needs. Beginning raw materials inventory for April was 931 pounds.
Assume direct materials cost $5 per pound.
To calculate the purchases of raw material, we need to use the following formula for each month:
Purchases= sales + desired ending inventory - beginning inventory
April (in pounds):
Production= (582*4)= 2,328
Desired ending inventory= (610*4)*0.4= 976
Beginning inventory= (931)
Total pounds= 2,373
Total cost= 2,373*5= $11,865
May (in pounds):
Production= (610*4)= 2,440
Desired ending inventory= (616*4)*0.4= 986
Beginning inventory= (976)
Total pounds= 2,450
Total cost= 2,450*5= $12,250
June (in pounds):
Production= (616*4)= 2,464
Desired ending inventory= (596*4)*0.4= 954
Beginning inventory= (986)
Total pounds= 2,450
Total cost= 2,432*5= $12,160
What does the principle of horizontal equity state? Taxpayers with a greater ability to pay taxes should pay larger amounts. People should pay taxes based on the benefits they receive from government services. Taxpayers with a similar ability to pay taxes should pay the same amount. Taxpayers with a lesser ability to pay taxes should pay larger amounts.
Answer:
The correct answer is letter "C": Taxpayers with a similar ability to pay taxes should pay the same amount.
Explanation:
Horizontal equity is considered the fairest taxation system because it proposes that individuals with a relatively similar income should pay the same amount of taxes. Therefore, those people will be subject to the same deductions and tax credits. This approach opposes the vertical equity theory that states individuals who perceive more income should pay more taxes.
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 20,000 Variable expenses 13,000 Contribution margin 7,000 Fixed expenses 3,780 Net operating income $ 3,220 Required: 1. What is the contribution margin per unit
Answer:
$7
Explanation:
Given: Sales volume= 1000 units.
Sales= $20000.
Variable expense= $13000.
Contribution margin= $7000.
Fixed expense= $3780
Net operating income= $3220.
Now, finding the contribution margin per unit.
Formula; Contribution margin per unit= [tex]\frac{(sales- variable\ expense)}{Number\ of\ sales\ units}[/tex]
⇒ Contribution margin per unit= [tex]\frac{(20000-13000)}{1000}[/tex]
⇒ Contribution margin per unit= [tex]\frac{7000}{1000}[/tex]
∴ Contribution margin per unit= [tex]\$ 7[/tex]
Hence, $7 is the contribution margin per unit.
The following transactions occurred during May, the first month of operations for Hunter Products, Inc: * Issued 55,000 shares of capital stock to the owners of the corporation in exchange for $660,000 cash. * Purchased a piece of land for $450,000, making a $175,000 cash down payment and signing a note payable for the balance. * Made a $65,000 cash payment on the note payable from the purchase of land. * Purchased equipment on credit from BBW, Inc. for $68,000.
Answer:
$420,000
Explanation:
Data provided as per the question
Issuance of capital stock = $660,000
Cash down payment = $175,000
Cash payment on the note payable = $65,000
The computation of balance of cash account is shown below:-
Cash balance = Issuance of capital stock - Cash down payment - Cash payment on the note payable
= $660,000 - $175,000 - $65,000
= $420,000
This question pertains to financial accounting in Business at a College level. It involves understanding the impact of different business transactions on the financial position and accounting books of a company. The transactions are indicative of the company's financial activities and can be used to prepare their financial statements.
Explanation:The subject of the question is related to the field of Business, specifically to financial accounting. During May, Hunter Products, Inc. conducted several operations, all of which influence their financial position. They issued shares of capital stock worth $660,000, made a cash down payment on the purchase of a land property, and committed to a loan for the outstanding balance. Additionally, they also repaid a part on the issued note payable, and made credit purchases for business equipment.
The impact of these actions on the company's financial books would vary. The issuance of capital stock increases owners equity, land purchase either decreases cash holdings or increases liabilities depending on the mode of purchase, payment on note payable decreases liabilities, and purchase of equipment on credit increases assets and liabilities.
The transaction details provided give a snapshot of the company's financial activities in the month of May. This information can be used to prepare a balance sheet, income statement, or cash flow statement.
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The Museum of Modern Art (MOMA) charges a general admission of $25. For seniors, admission is $15. (b) Barnes & Noble offers a "Buy Two, Get the Third Free" deal for paperbacks. (c) Subscription to The Wall Street Journal costs $4.25 per week for a one-year subscription, $4.00 per week for a two-year subscription and $3.75 per week for a three-year subscription. (d) On February 28, 2019, Disneyland introduced three different prices based on the calendar. A "value" ticket (for Mondays through Thursdays during weeks when most schools are in session) now costs $97. A "regular" ticket (most weekends and many summertime weeks) costs $117. A "peak" ticket (most of December, spring break weeks, July weekends) costs $135.
Answer:
a) This is third degree value separation. In this various costs are being charged to various purchaser groups.in this case segregation is done based on age.General affirmation charges are $25 while seniors are charged at $15.
b) This is second degree value separation. In this various costs are being charged for various amounts. Amount limits are given on mass purchases. Here offer is given i.e Buy two get third free.
c) This is second degree value separation. As the length of membership is expanded the cost is diminished or we can say that markdown is offered if higher amount is purchased.For multi year membership $3.75 is charged and for multi year $4 is charged and most elevated is for 1 year which is $4.25
d) This is third degree value separation. In this market is part based on top and off pinnacle season. Here various costs are being charged relying upon a specific market fragment, for example age profile, salary gathering, time of use.When most schools are in meeting least cost of $97 is charged as kids will less inclined to come to Disneyland since they and their folks won't be keen on missing the school. Most significant expense of $135 is charged in December when there is spring breaks as kids will get a kick out of the chance to appreciate the excursions by visiting Disneyland and in this manner, proprietors can procure greatest income. On ends of the week the ticket cost is kept at $117. This will be time when understudies are free and can decide to visit Disneyland or they can remain at home at complete the school assignments.
Suppose a basket of goods and services has been selected to calculate the consumer price index. In 2005, the basket of goods cost $108.00; in 2006, it cost $135.00; and in 2007, it cost $168.75. Which of the following statements is correct?
a. Using 2005 as the base year, the economy's inflation rate was higher in 2007 than it was in 2006.
b. If 2007 is the base year, then the CPl is 33.75 in 2006.
c. If the CPI is 156.25 in 2007, then 2005 is the base year.
d. Using 2005 as the base year, the economy's inflation rate for 2006 was 27 percents of Eoo milion and Tas rotained 30 nercent of
Answer:
Correct option is C.
If the CPI is 156.25 in 2007, then 2005 is the base year.
Explanation:
The CPI js given by the formula:
Current year prices/base year prices x 100
Given the values in years 2005,2006 and 2007, of all the given options, option (c) if the CPI is 156.25 in 2007, then 2005 is the base year is corrrect. This is because calculating CPI for 2007 using the above formula and 2005 as base year gives us CPI as 156.25.
Sloan Transmissions, Inc., has the following estimates for its new gear assembly project: price = $2,900 per unit; variable costs = $580 per unit; fixed costs = $5.2 million; quantity = 88,000 units. Suppose the company believes all of its estimates are accurate only to within ±15 percent. What values should the company use for the four variables given here when it performs its best-case scenario analysis? What about the worst-case scenario?
Answer:
in its best case scenario:
selling price = $2,900 + 15% = $3,335 per unit
variable costs = $580 - 15% = $493 per unit
fixed costs = $5.2 million - 15% = $4.42 million
quantity = 88,000 + 15% = 101,200 units
estimated profits in best case scenario = $337,502,000 - $49,891,600 - $4,420,000 = $283,190,400
in its worst case scenario:
selling price = $2,900 - 15% = $2,465 per unit
variable costs = $580 + 15% = $667 per unit
fixed costs = $5.2 million + 15% = $5.98 million
quantity = 88,000 - 15% = 74,800 units
estimated profits in best case scenario = $184,382,000 - $49,891,600 - $5,980,000 = $128,510,400
The firm is still profitable because the contribution margin is huge even in the worst case scenario. In he best case scenario the break even point is 1,556 units, while the break even point in the worst case scenario is 3,326 units. It's a very low break even point considering total expected sales.
Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000 units of each product. Its average cost per unit for each product at this level of activity are given below: AlphaBeta Direct materials $24 $12 Direct labor 23 26 Variable manufacturing overhead 22 12 Traceable fixed manufacturing overhead 23 25 Variable selling expenses 19 15 Common fixed expenses 22 17 Total cost per unit $133 $107 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 6. Assume that Cane normally produces and sells 97,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line
Answer:
-$2,100,000
Explanation:
The computation of the financial advantage or disadvantage is shown below
= Fixed costs avoided - contribution margin lost
where,
Fixed cost avoided is
= 110,000 units × $25
= $2,750,000
And, the contribution margin lost is
= (Selling price per unit - direct material per unit - direct labor per unit - variable manufacturing overhead per unit - Variable selling expenses per unit) × normally production & sales units
= ($115 - $12 - $26 - $12 - $15) × 97,000
= $4,850,000
So, the financial disadvantage is
= $2,750,000 - $4,850,000
= -$2,100,000
Cane Company would have a financial advantage of $2,425,000 by discontinuing the Beta product line, calculated by subtracting the total avoidable costs from the revenue generated by selling 97,000 units.
Explanation:To evaluate the financial advantage or disadvantage of discontinuing the Beta product line at Cane Company, we need to consider the avoidable costs associated with the product, including direct materials, direct labor, variable manufacturing overhead, traceable fixed manufacturing overhead, and variable selling expenses. Since common fixed expenses are unavoidable and allocated, we will not consider them in this calculation.
The total cost to produce and sell 97,000 units of Beta is:
Direct materials: 97,000 units x $12 = $1,164,000Direct labor: 97,000 units x $26 = $2,522,000Variable manufacturing overhead: 97,000 units x $12 = $1,164,000Traceable fixed manufacturing overhead: 97,000 units x $25 = $2,425,000Variable selling expenses: 97,000 units x $15 = $1,455,000The total avoidable cost is therefore $8,730,000.The total revenue from selling 97,000 units of Beta is: 97,000 units x $115 = $11,155,000.The net financial advantage of discontinuing Beta, therefore, would be the total revenue minus the avoidable costs:
$11,155,000 - $8,730,000 = $2,425,000.
Cane Company would have a financial advantage of $2,425,000 if it discontinues the Beta product line.
Steve has estimated the cash inflows and outflows for his dental firm for next year. The report that he has prepared summarizing these cash flows is called a: A. pro forma income statement. B. sales projection. C. cash budget. D. receivables analysis. E. credit analysis.
Answer:
C. cash budget.
Explanation:
As we know that
The cash budget refers to the inflow and outflow of cash in which inflow refers to the receipts of the service rendered while the outflow could be in terms of purchase of long term assets in cash, expenses incurred in cash, etc
So while estimated the cash inflows and cash outflows, the cash budget is to prepared so that the firm get to know its cash position
Which one of the following statements concerning capital budgeting is not true? Multiple Choice Capital budgeting uses after-tax cash flows in the analysis of proposed investments. A basic objective underlying capital budgeting is to select assets that will earn a satisfactory return. Because of the existence of advanced forecasting techniques, capital budgeting is based on precise estimates of future events. Capital budgeting is the process of identifying, evaluating, selecting, and controlling long-term investment projects. Capital budgeting involves estimating the revenues and costs of each proposed project, evaluating their merits, and choosing those worthy of investment.
Answer:
Because of the existence of advanced forecasting techniques, capital budgeting is based on precise estimates of future events.
Explanation:
Capital budgeting is the process of identifying, evaluating, selecting, and controlling long-term investment projects and it involves estimating the revenues and costs of each proposed project, evaluating their merits, and choosing those worthy of investment.
Capital budgeting uses after-tax cash flows in the analysis of proposed investments.
Thus, the basic objective underlying capital budgeting is to select assets that will earn a satisfactory return.
14. A company that has a profit can increase its return on investment by: A. increasing sales revenue and operating expenses by the same dollar amount. B. increasing average operating assets and operating expenses by the same dollar amount. C. increasing sales revenue and operating expenses by the same percentage. D. decreasing average operating assets and sales by the same percentage.
Answer:
increasing sales revenue and operating expenses by the same percentage.
Explanation:
Return of investment is defined as the profit that is gained on a certain amount of invested capital in a business.
A business ensures it has a high return on investments to satisfy customer need for profit. It is a ratio of net profit to invested capital.
This also boosts confidence to invest more.
To increase ROI a firm will need to increase profit and operating expense by the same percentage.
For example if profit in a business is $100 and operating expense is $80, the net profit will be $20
However if we increase both sales revenue and operating expense by 10%, we will have profit of $110 and a operating expense of $88. The net profit will now be $22 resulting in a higher ROI.
Answer:
C. Increasing sales revenue and operating expenses by the same dollar amount.
Explanation:
ROI or return on Investment is the amount the which is received as a return on your capital invested. Hence the more the better for business.
For example,
The Sales revenue is $200 and the operating expenses are $100, so the net profit will be => 200-100 = $100.
Now if we increase the sales revenue and operating expenses by the same percentage let say 10%.
The NEW sales revenue will be = 200*1.1 = $220.
The NEW operating costs will be = 100*1.1 = $110.
Hence, the new profit will be = 220-110 = $110.
Therefore, increasing sales revenue and operating costs by the same percentage would increase ROI by $10.
Hope this helps.
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You are thinking about a project to expand your business. In order to start the project, you have to invest $200,000 in new equipment and $50,000 in working capital. You have to spend $15,000 for installation and $5,000 for shipping of the equipment. A few months ago, you spend $7,000 on consulting. The marginal tax rate of your company is 34%. What is the initial outlay of this project
Answer:
The initial outlay of this project is $270,000
Explanation:
According to the given data we have the following:
cost of new machine= $200,000
shipping cost=$5,000
installation cost=$15,000
working capital=$50,000
Therefore, in order to calculate the initial outlay of this project we would have to make the following calculation:
initial outlay of this project=cost of new machine+shipping cost+installation cost+working capital
initial outlay of this project= $200,000+$5,000+$15,000+$50,000
initial outlay of this project= $270,000
The 2012 financial statements of Marker Co. contain the following selected data (in millions).
Current Assets $ 75
Total Assets 140
Current Liabilities 40
Total Liabilities 95
Cash 8
The debt to total assets ratio is:
a.67.9%.
b.96.4%.
c.28.6%.
d.256%
Answer:
a.67.9%.
Explanation:
Debt to Total Assets Ratio = Total Liabilities / Total Assets x 100
Total Liabilities = $95,000,000
Total Assets = $140,000,000
Debt to Total Assets Ratio = $95,000,000 / $140,000,000 x 100
Debt to Total Assets Ratio = 0.679 x 100
or
Debt to Total Assets Ratio = 67.9%
Hence, The Assets of Marker Co. are 67.9% funded by creditors.
A piece of equipment costs $2,500. If this asset depreciates on a 5-year schedule, the Net Fixed Asset value on the Balance sheet in year 2 will be more or less than this same asset depreciating on a 3-year schedule?
Answer:
More
Explanation:
The computation of balance sheet after 2 will be more or less is shown below:-
After 2 years
Net fixed value after 2 years
For 5 years schedule
$2,500 - (($2,500 ÷ 5) × 2)
= $1,500
For 2 year schedule
$2,500 - (($2,500 ÷ 3) × 2)
= $833.33
After 2 year Net fixed assets will be higher for 5 year schedule at schedule of 2 year.
The Net Fixed Asset value of a $2,500 asset on the Balance Sheet in year 2 will be higher when depreciating over a 5-year schedule compared to a 3-year schedule, due to less accumulated depreciation.
Explanation:If a piece of equipment costs $2,500 and depreciates on a 5-year schedule, to determine the Net Fixed Asset value on the Balance Sheet in year 2 and compare it to the same asset depreciating on a 3-year schedule, we use the straight-line depreciation method. This method equally spreads the cost of the asset over its useful life. The annual depreciation for a 5-year schedule is $2,500 / 5 = $500, and for a 3-year schedule, it's $2,500 / 3 = $833.33. After 2 years, the accumulated depreciation for the 5-year schedule is 2 * $500 = $1,000, and for the 3-year schedule, it's 2 * $833.33 = $1,666.66. Therefore, the Net Fixed Asset value on the Balance Sheet after 2 years would be $1,500 for the 5-year schedule and $833.34 for the 3-year schedule. This means the Net Fixed Asset value will be more when depreciating over 5 years compared to 3 years.
5. You want to buy a new sports car 3 years from now, and you plan to save $6,700 per year, beginning one year from today. You will deposit your savings in an account that pays 5.2% interest. How much will you have just after you make the 3rd deposit, 3 years from now?
The amount that i will have is $21,163.32
Let understand that we will employ the use of Future value of annuity (FVA) formulae here.
I am planning to save $6,700 per year beginning one year todayThe savings will be an account that pays 5.2% interest.
The solution for the amount goes as follows
[tex]Future value of annuity = Annuity * [(1+rate)^{time} - 1] / rate\\Future value of annuity = $6,700 * [(1.052)^3 - 1] / 0.052\\Future value of annuity = $6,700 * 3.158704\\Future value of annuity = $21,163.3168\\Future value of annuity = $21,163.32[/tex]
In conclusion, the amount that i will have after making the 3rd deposit, 3 years from now is $21,163.32.
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Final answer:
To calculate the total amount just after the 3rd deposit 3 years from now, we use the future value of an annuity formula considering an annual deposit of $6,700 at a 5.2% interest rate. The calculation involves understanding the compound interest for each deposit over 3 years.
Explanation:
The question involves calculating the future value of a series of savings deposited annually at a given interest rate. To find out how much you will have just after making the 3rd deposit, 3 years from now, with an annual deposit of $6,700 at an interest rate of 5.2%, we use the future value of an annuity formula: FV = P × [ (a + i)⁾ⁿ - 1 ) / i ], where P is the annual deposit, i is the annual interest rate, and n is the number of deposits.
For this scenario:
P = $6,700i = 5.2% or 0.052 (as a decimal)n = 3Inserting these values into the formula gives us the future value just after the 3rd deposit. Each deposit compounds over different periods: the first for 2 years, the second for 1 year, and the third does not compound at the time of the final calculation.
The detailed step-by-step calculation includes computing compound interest for each deposit individually and then summing these amounts to get the total value just after the 3rd deposit.
On January 1, 2021, Splash City issues $460,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Required: Assuming the market interest rate on the issue date is 8%, the bonds will issue at $460,000. Record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
The journal entry is shown below:
Explanation:
Journal Entry.
Jan.1 Cash A/c Dr $460,000
To Bonds payable A/c $460,000
(Bond issue is being recorded)
Jun.30 Interest Expense A/c Dr $18,400
To Cash A/c $18,400 ($460,000×4% = $18,400)
(Interest is being recorded)
Dec.31 Interest Expense A/c Dr $18,400
To Cash A/c $18,400 ($460,000×4% = $18,400)
(Interest is being recorded)
The appropriate journal entries to record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021 are:
Splash City Journal entries
January 01, 2021
Debit Cash $460,000
Credit Bonds payable $460,000
(To record Issuance of bonds )
June 30, 2021
Debit Bond interest expense $18,400
Credit Cash $18,400
(8%/2×$460,000 )
(To record Interest on bond paid)
December 31, 2021
Debit Bond interest expense $18,400
Credit Cash $18,400
(To record Interest on bond paid)
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Bingerton Industries uses a perpetual inventory system. The company began the year with inventory of $77,000. Purchases of inventory on account during the year totaled $302,000. Inventory costing $327,000 was sold on account for $504,000. Required: Record transactions for the purchase and sale of inventory. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
Refer explanation
Explanation:
1. Purchase of Inventory ($302000)
This transaction has occurred on account which means that payment was not made immediately but would be made at a future date, thus a creditor to the business.
Debit : Purchases account : $302000
Credit : Accounts Payables account : $302000
2. Sale of inventory ($504000)
The sale of inventory requires two separate transactions. The sale is accounted and along with this, the amount of inventory sold would also have to be accounted as an asset reduction.
A. To reduce inventory:
Debit : Cost of Sales account : $327000
Credit : Inventory account : $327000
B. Record the sale:
Debit : Accounts Receivables account : $504000
Credit : Sales account : $504000
This too is a sale on account which means that a debtor has been incurred who will pay for the sale at a later date.
Mary Willis is the advertising manager for Sheffield Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will add $24,600 in fixed costs to the $128,000 currently spent. In addition, Mary is proposing that a 5% price decrease ($20 to $19) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $12 per pair of shoes. Management is impressed with Mary’s ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety. Collapse question part (a) Compute the current break-even point in units, and compare it to the break-even point in units if Mary’s ideas are used. (Round answers to 0 decimal places, e.g. 1,225.) Current break-even point pairs of shoes New break-even point pairs of shoes
Answer:
If Mary's idea is implemented the break-even point would increase from 16,000 units to 21,800 units
Explanation:
The break-even point is the level of activity where a business makes no profit or loss. At this level of activity, the total contribution equals the total fixed costs.
To calculate the break even point in units, we use the formula below:
Break-even point = Fixed cost for the period / selling price - variable cost
Current break-even point = 128,000/(20-12)
= 16,000 units
With Mary's idea, the break-even point will be
New break-even point = ( 128,000+ 24600)/(19-12)
= 21,800 units
If Mary's idea is implemented the break-even point would increase from 16,000 units to 21,800 units
A firm is considering moving its manufacturing plant from Chicago to a new location. The industrial engineering department was asked to identify the various alternatives together with the costs to relocate the plant and the benefits. The engineers examined six likely sites, together with the do-nothing alternatives of keeping the plant at its present location. Their findings are summarized as follows: Plant Location First Cost ($000s) Uniform Annual Benefit($000s) Denver $300 $52 Dallas 550 137 San Antonio 450 117 Los Angeles 750 167Cleveland 150 18Atlanta 200 49Chicago 0 0The annual benefits are expected to be constant over the 8-year analysis period.Required:(a) Construct a choice table for interest rates from 0% to 100%.(b) IT the firm uses a 10% annual interest in its economic analysis, where should the manufacturing plant be located.Use MARR=15%, and only use Excel to check your results.
Answer:
City 2% 10% 20% 30% 50% 100%
Denver 80.93 -22.58 -100.47 -147.92 -200.06 -248.20
Dallas 453.59 180.88 -24.31 -149.32 -286.69 -413.54
SanAntonio 407.08 174.19 -1.05 -107.81 -225.13 -333.46
LosAngeles 473.36 140.93 -109.19 -261.57 -429.03 -583.65
Cleveland -18.14 -53.97 -80.93 -97.36 -115.40 -132.07
Atlanta 158.95 61.41 -11.98 -56.69 -105.82 -151.19
Chicago 0.00 0.00 0.00 0.00 0.00 0.00
b) The manufacturing plant should be located in Dallas (IRR=19%).
Explanation:
We have the cost and uniform annual benefits for each city:
Plant Location First Cost ($000s) Uniform Annual Benefit($000s)
Denver 300 52
Dallas 550 137
San Antonio 450 117
Los Angeles 750 167
Cleveland 150 18
Atlanta 200 49
Chicago 0 0
The cash flow can be written as:
[tex]NPV=-I_0+CF[\frac{1-(1+i)^{-8})}{i}]=-I_0+CF\cdot A[/tex]
where:
I0: first cost.
CF: uniform annual benefit
i: discount rate
A: annuity factor
The annuity factor that multiplies the CF is equal for every city, so it can be calculated beforehand:
[tex]A=\frac{1-(1+i)^{-8})}{i}[/tex]
For some rate of returns, we have:
r=2% A=7.33
r=10% A=5.33
r=20% A=3.84
r=30% A=2.92
r=50% A=1.92
r=100% A=1.00
a) Then, for each city, we have this NPV, in function of differents discount rates:
City 2% 10% 20% 30% 50% 100%
Denver 80.93 -22.58 -100.47 -147.92 -200.06 -248.20
Dallas 453.59 180.88 -24.31 -149.32 -286.69 -413.54
SanAntonio 407.08 174.19 -1.05 -107.81 -225.13 -333.46
LosAngeles 473.36 140.93 -109.19 -261.57 -429.03 -583.65
Cleveland -18.14 -53.97 -80.93 -97.36 -115.40 -132.07
Atlanta 158.95 61.41 -11.98 -56.69 -105.82 -151.19
Chicago 0.00 0.00 0.00 0.00 0.00 0.00
b) The firm uses a 10% annual interest. For this situation, we can look up in the table from the previos question and see that Dallas has the higher NPV at this discount rate.
So the manufacturing plant should be located in Dallas.
(NOTE: the IRR of the project relocating to Dallas is 19%)
Firms consider many factors when deciding on plant locations, with labor costs, supplier proximity, taxes, and local governance being key. Environmental regulation costs are minor compared to these factors. When facing higher labor costs, firms may choose to invest in capital-intensive production to increase labor productivity.
Explanation:When deciding on the relocation of its manufacturing plant, a firm must consider various factors, including but not limited to the costs of labor and financial capital, proximity to reliable suppliers and customers, the quality of the local infrastructure such as transportation, communications, and electrical power, the level of taxes, and the competence and honesty of the local government. While the cost of complying with environmental regulations is a factor, it usually accounts for a mere 1 to 2% of the total costs faced by large industrial plants, making it much less significant than the other factors.
The selection of a plant location involves a careful analysis of long-run costs, including both fixed and variable costs. For example, an automobile designer like Kitt has to choose between a labor-intensive or a robot-intensive assembly plant, with the decision hinging upon the anticipated production volume. High fixed costs could be justified if the variable costs per unit decrease significantly with increased production.
In response to increased labor costs, such as those resulting from union negotiations, firms might opt for production methods that favor capital over labor to increase labor productivity. This decision can affect the total cost of production and must be strategically considered by firms.
Keyboard uses activity-based costing. Two of Keyboard's production activities are kitting (assembling the raw materials needed for each computer in one kit) and boxing the completed products for shipment to customers. Assume that Keyboard spends $9,000,000 per month on kitting and $21,000,000 per month on boxing. Keyboard allocates the following:
Kitting costs based on the number of parts used in the computer
Boxing costs based on the cubic feet of space the computer requires
Suppose Keyboard estimates it will use 300,000,000 parts per month and ship products with a total volume of 35,000,000 cubic feet per month. Assume that each desktop computer requires 175 parts and has a volume of 5 cubic feet. The predetermined overhead allocation rate for kitting is $0.03 per part and the predetermined overhead allocation rate for boxing is $0.60 per cubic foot.
What are the kitting and boxing costs assigned to one desktopcomputer?
Answer:
$5.25 per desktop computer and $3 per desktop computer
Explanation:
The computation of the assigned cost to the kitting and boxing costs is shown below:
The formula is
= Predetermined overhead rate × required units
For kitting, it is
= $0.03 × 175 parts
= $5.25 per desktop computer
For boxing, it is
= $0.60 × 5 cubic feet
= $3 per desktop computer
We simply applied the above formulas