Answer:
Letter A is correct. Formation of a focus group to make sure the products meets user expectations.
Explanation:
Using a focus group is an essential tool for an organization developing a new product that needs market research. The focus group is made up of a group of participants who come together for the purpose of analyzing a product or service marketing campaign and providing feedback on it.
There is a moderator responsible for listing questions about what is being reviewed, and ensuring that everyone contributes ideas and opinions. Companies typically use a variety of focus groups in different locations to ensure diversification of demographics, consumer behavior, purchasing history, and other relevant variables.
The biggest benefits seen from the focus group are: digital marketing tactics and rebranding.
Final answer:
After Beta Cleaning Equipment Corp. has designed and developed a new floor buffing machine, the next stage in the stage-gate process is the verification and validation of the product, which includes extensive testing and refinement.
Explanation:
The stage-gate process in product development involves several key steps that lead from the initial concept to the final launch of the product. Once Beta Cleaning Equipment Corp. has completed the actual design and development of a new floor buffing machine, including manufacturing, marketing, and operations details, the next stage in the stage-gate process would typically involve d. verification and validation of the product alongside its marketing and production strategies.
At this point, the new design should undergo thorough testing to identify any weaknesses or potential improvements, and to ensure it meets user expectations and adheres to market standards before proceeding to commercial launch.
Consider the following account balances of Evan McGruder, Inc., as of December 31, Year 3:
Accounts Payable $ 112,500
Retained Earnings 56,200
Equipment 423,100
Notes Payable, due Year 5 344,700
Common Stock 207,500
Accounts Receivable 204,000
Income Tax Payable 4,050
Cash 97,850
Required:
Prepare a classified balance sheet at June 30, Year 3.
Answer:
Explanation:
In the classified balance sheet, we summarize the asset and liabilities into various types
Like assets are divided into fixed assets, current assets, and intangible assets.
Likewise, liabilities are also divided into current liabilities, long term liabilities
In every balance sheet, the accounting equation is used that means
Total assets = Total liabilities + Shareholder equity
The preparation of the classified balance sheet for Evan McGruder, Inc. on June 30, Year 3 is presented in the spreadsheet. Kindly find the attachment below:
A T-account balance sheet for a bank lists assets on one side and liabilities and equity on the other. With reserves of $50, government bonds worth $70, and loans of $500, the total assets of the bank are $620. Deducting the deposits of $400 from total assets gives a net worth or equity of $220.
Explanation:To prepare a T-account balance sheet for a bank, we need to list assets on the left side and liabilities (plus equity) on the right side of the T-account. From the provided information, we can organize the bank's financials as follows:
Assets
Reserves: $50
Government Bonds: $70
Loans: $500
Liabilities
Deposits: $400
The equity of the bank is the difference between total assets and total liabilities. To calculate this, first, add up all the assets:
Reserves + Government Bonds + Loans = $50 + $70 + $500 = $620 in total assets.
Then, subtract the total liabilities from the total assets to get the equity:
Total Assets - Deposits = $620 - $400 = $220 in equity (net worth).
The T-account balance sheet would visually represent these numbers, listing the assets on one side and the liabilities and equity on the other side, ensuring they balance out.
Offenbach & Son has just made its sales forecasts and its marketing department estimates that the company will sell 237,000 units during the coming year. In the past, management has maintained inventories of finished goods at approximately one month’s sales. The inventory at the start of the budget period is 16,000 units. Sales occur evenly throughout the year. Required: Estimate the production level required for the coming year to meet these objectives. (Do not round intermediate calculations.)
Answer:
240,750 units
Explanation:
For computing the production level, first we have to determine the required inventory at the end of the year which is shown below:
Required inventory = Estimated sales ÷ total number of months in a year
= 237,000 units ÷ 12 months
= 19,750 units
Now the total units would be
= 237,000 units + 19,750 units
= 256,750 units
And the inventory at the beginning of the period is $16,000 units
So, the production level would be
= 256,750 units - 16,000 units
= 240,750 units
Aviation Systems is involved in a $10 million lawsuit filed against one of its suppliers, Electronic Innovators. The litigation is in final appeal, and legal counsel advises that it is probable that Aviation Systems will win the lawsuit and be awarded somewhere between $6 and $10 million. Which of the following statement is true?
Answer:
Gain contingencies are not recorded
Explanation:
Aviation Systems must take into account that it is an uncertain situation that MAY result in a gain but is not garanteed.
Universal Electronics, Inc. (UEI), which started operations one year ago, has two divisions: Consumer and Commercial. Both divisions invest heavily in R&D, which is assumed to benefit five years. R&D spending is made uniformly throughout the year. UEI has a cost of capital of 11 percent. Selected financial information for the two divisions (in thousands of dollars) for the year just completed follows. Consumer Commercial Sales revenue $ 54,000 $ 85,000 Divisional income 11,500 11,925 Divisional investment 35,500 39,750 Current liabilities 4,200 4,000 R&D 4,200 4,200 Required: Evaluate the performance of the two divisions assuming UEI uses economic value added (EVA)
To evaluate the performance of UEI's divisions, we calculate the EVA for both divisions. The Commercial division had a higher EVA of $12,658 compared to the Consumer division which had an EVA of $11,857, thus it is performing better financially.
Explanation:The performance of Universal Electronics Inc. (UEI)'s divisions can be evaluated using Economic Value Added (EVA). The EVA of a division is calculated as the net operating profit after tax (NOPAT) minus the weighted average cost of capital (WACC) multiplied by the total capital employed. The capital employed is divisional investment minus current liabilities. The NOPAT can be calculated as the divisional income plus R&D costs.
For the Consumer Division:
NOPAT = $11,500 + $4,200 = $15,700
Capital Employed = $35,500 - $4,200 = $31,300
EVA = $15,700 - (0.11 * $31,300) = $11,857
For the Commercial Division:
NOPAT = $11,925 + $4,200 = $16,125
Capital Employed = $39,750 - $4,000 = $35,750
EVA = $16,125 - (0.11 * $35,750) = $12,658
The division with the higher EVA, in this case the Commercial division, is performing better financially.
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A company wants to set up their headquarters in Spain where the corporate tax rates are as follows: 11% of first $40,000 profits, 22% of next $26,000, 39% of next $29,000, and 42% of everything over $95,000. Consultants estimate that they will have gross revenues of $380,000, total costs of $120,000, and $15,000 in allowable tax deductions.
What is taxable income for the first year and how much should the company expect to pay in taxes?
Answer:
Total taxable income = $245,000
Total Tax = $84430
Explanation:
given data
11% of first = $40,000 profits
22% of next = $26,000
39% of next = $29,000
42% of over = $95,000
gross revenues = $380,000
total costs = $120,000
allowable tax deductions = $15,000
to find out
taxable income for the first year and how much should the company expect to pay in taxes
solution
we get here first Total taxable income that is
Total taxable income = Total revenue - (Total cost + Tax deductions ) .......................1
put here value we get
Total taxable income = $380,000 - ($120,000 + $15,000 )
Total taxable income = $380000 - $135000 = $245,000
so total tax will be
Total Tax = [0.11 × 40000 + 0.22 × 26000 + 0.39 × 29000 + 0.42 × (245000 95000) ]
Total Tax = 4400 + 5720 +11310 +63000
Total Tax = $84430
An oligopolistic market structure is distinguished by several characteristics, one of which is either similar or identical products. Which of the following are other characteristics of this market structure? Check all that apply.
A) Market control by many small firmsB) Difficult entryC) Mutual interdependenceD) Market control by a few large firmsE) Mutual dependence
Answer: Option B and C
Explanation: In simple words, oligopoly refers to the market structure in which there are few firms operating at a huge level and selling products that are close but not absolute substitutes of each other.
The high level of investment and too much of legal formalities makes it difficult to entry in such industries. Firms in such industries produce identical goods thus they do not compete in the amaretto with respect to price.
the firms operate their market on the basis of non price factors such as advertisements but still are mutually interdependent on each other as a minor decrease in price of other can deregulate the demand in the whole industry. Automobile sector is one the primary examples of oligopoly.
What is the present value of: Use Appendix B as an approximate answer, but calculate your final answer using the formula and financial calculator methods.
a. $8,200 in 12 years at 8 percent?
b. $18,500 in 7 years at 11 percent?
c. $28,000 in 16 years at 9 percent?
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
What is the present value of:
PV= FV/(1+i)^n
a. $8,200 in 12 years at 8 percent
PV= 8,200/(1.08)^12= 3,256.33
b. $18,500 in 7 years at 11 percent?
PV= 8,910.68
c. $28,000 in 16 years at 9 percent?
PV= 7,052.35
Final answer:
The present value of a future sum of money can be calculated using the formula PV = FV / (1 + r)^n, where FV is the future value, r is the interest rate, and n is the number of periods. Financial calculators can also be used to compute these present values by entering the relevant information.
Explanation:
The question deals with calculating the present value of future amounts of money given specific interest rates and time periods. The present value (PV) represents the current value of an amount that is to be received in the future, discounted back to the present using a particular interest rate. The formula used for calculating present value is PV = FV / (1 + r)^n, where PV is the present value, FV is the future value, r is the interest rate (expressed as a decimal), and n is the number of periods.
Here are the present value calculations for each described scenario:
For $8,200 in 12 years at 8 percent, the calculation would be PV = $8,200 / (1 + 0.08)^12.For $18,500 in 7 years at 11 percent, the calculation would be PV = $18,500 / (1 + 0.11)^7.For $28,000 in 16 years at 9 percent, the calculation would be PV = $28,000 / (1 + 0.09)^16.
These calculations can be made using a financial calculator by entering the future value, the interest rate, and the number of periods to compute the present value.
$5,000,000, 12% bonds for $5,325,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Martinez uses the effective-interest method of amortizing bond premium. At the end of the first year, Cardenas should report unamortized bond premium of:
Answer:
$307,500 .
Explanation:
Please see attachment
Ryngard Corp's sales last year were $38,000, and its total assets were $16,000. What was its total assets turnover ratio (TATO)?
2.04
2.14
2.26
2.38
2.49
Answer:
Total assets turnover ratio (TATO): 2.38
Explanation:
Total assets turnover ratio (TATO) helps investors understand how effectively companies are using their assets to generate sales. Total assets turnover ratio is calculated by using following formula:
Total assets turnover = Total Sales or Revenue/ Average Total Assets
where:
Total Sales= Annual net sales
Average Total Assets = (Assets at the beginning of year +Assets at the end of year )/2
In Ryngard Corp:
Total Sales: $38,000
Total assets: $16,000
Total assets turnover = $38,000/$16,000 = 2.38
A firm has a profit margin of 6% and an equity multiplier of 1.5. Its sales are $230 million, and it has total assets of $115 million. What is its ROE? Do not round intermediate calculations. Round your answer to two decimal places.
Answer:
18%
Explanation:
In this question, we use the DuPont Analysis which is shown below:
ROE = Profit margin × Total assets turnover × Equity multiplier
ROE = 6% × 2 × 1.5
= 18%
The total assets turnover is shown below:
= Sales ÷ total assets
= $230 million ÷ $115 million
= 2
Simply we apply the ROE formula in which the profit margin is multiplied with the total assets turnover and the equity multiplier
On December 31, 2017, a company sells a plant asset that originally cost $375,000, receiving cash of $125,000. The accumulated depreciation account had a balance of $150,000 after the current year's depreciation of $37,500 had been recorded. The company should recognize a: ___________?
Answer:
$100,000 loss on disposal
Explanation:
The current value (V) of the plant asset is the original $375,000 subtracted by the accumulated depreciation until the end of the current year, $150,000:
[tex]V=\$375,000 -\$150,000 =\$225,000[/tex]
The gain or loss from this transaction is measured by the amount received in cash subtracted by the current value of the plant asset:
[tex]\$125,000-\$225,000 = -\$100,000[/tex]
Therefore, the company should recognize a $100,000 loss on disposal.
Aquatic Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Aquatic uses standard costs to prepare its flexible budget. For the first quarter of the year, direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 3 pounds per unit; $ 4 per pound Direct labor: 4 hours per unit; $ 19 per hour During the first quarter, Aquatic produced 5 comma 000 units of this product. Actual direct materials and direct labor costs were $ 66 comma 000 and $ 325 comma 000, respectively. For the purpose of preparing the flexible budget, calculate the total standard direct materials cost at a production volume of 5 comma 000 units.
Answer:
Please see attachment
Explanation:
Please see attachment
In December, General Motors produced 7,500 customized vans at its plant in Detroit. The labor productivity at this plant is known to have been 0.10 vans per labor hour during that month. 300 laborers were employed at the plant that month.
A) How many hours did the average laborer work that month ?
B) If productivity can be increased to 0.12 vans per hour, how many hours would the average laborer work that month ?
Final answer:
To find the average laborer work hours at General Motors with a known productivity, divide the total vans produced by the labor productivity rate and then by the number of laborers. With a productivity of 0.10 vans/hour, the average laborer worked 250 hours. If productivity increased to 0.12 vans/hour, the average would decrease to 208.33 hours.
Explanation:
In December, General Motors produced 7,500 customized vans with a labor productivity of 0.10 vans per labor hour and employed 300 laborers. To find how many hours the average laborer worked that month, we use the total production and productivity rate. The calculation is 7,500 vans divided by (0.10 vans/hour) to get the total labor hours, and then we divide that by the number of laborers (300) to find the average labor hours.
A) The total labor hours are 7,500 vans / 0.10 vans per hour = 75,000 labor hours. Divided by 300 laborers, the average laborer worked 75,000 / 300 = 250 hours that month.B) If labor productivity increased to 0.12 vans per hour, the calculation would change. We divide the total vans produced by the new productivity rate (7,500 / 0.12 vans per hour) to get the total labor hours, then divide by 300. With increased productivity, the total labor hours are now 62,500, and the average laborer would work 62,500 / 300 = 208.33 hours that month.Springfield National Bank organizes its loan operations based on the market served, such as consumer, small business, and nonprofit organizations. Departmentalization based on ________ allows Springfield to better serve borrowers with different needs.
Answer: Customer group
Explanation:
The main role and responsibility of the customer group is that it aggregate the customers and this type of group basically interact with the customers about the requirement of the specific customer and tell them about the best deal that is available.
They usually help the customer and solve their all the doubt regarding the issue. The customer group is basically refers to the coupon group of members. It is also sometimes known as the customer group.
According to the question, the customer group basically allow the spring filed for serving the borrowers the best loan deal available in the market according the customer requirement.
The Chris Beehner Company manufactures two lines of designer yard gates, called model A and model B. Every gate requires blending a certain amount of steel and zinc; the company has available a total of 25,000 lb of steel and 6,000 lb of zinc. Each model A gate requires a mixture of 125 lb of steel and 20 lb of zinc, and each yields a profit of $65. Each model B gate requires 100 lb of steel and 30 lb of zinc and can be sold for a profit of $60. The aim of the objective function for Chris Beehner Company should be to (Minimize or Maximize)_____ the objective value?
Answer:
Maximize
Explanation:
The objective in the linear equation is determined by the situation. When there is cost associated then the equation is made in order to minimize the cost objective.
And when profit or sales value is given then the objective is to maximize the sales value or the profit as the case may be.
In the given case also the profit for each model is given with the quantity of raw material used.
Thus, the objective function will maximize the profit.
Annual cash inflows that will arise from two competing investment projects are given below: Year Investment A Investment B 1 $ 7,000 $10,000 2 8,000 9,000 3 9,000 8,000 4 10,000 7,000 Total $34,000 $34,000 The discount rate is 7%. Use Excel or a financial calculator to solve the homework. Round answers to the nearest dollar. Required: Compute the present value of the cash inflows for each investment. Each investment opportunity will require the same initial investment.
Answer:
Please see attachment
Explanation:
Please see attachment
Answer:
Project A = $28,505
Project B = $29,077
Explanation:
See narrative computation in the attached document.
Suppose that Eleanor receives higher pay at her workplace than her colleagues do, even though they perform essentially the same type of work. If Eleanor's productivity is about 25% higher than that of each of her colleagues, which of the following wage concepts can explain this wage disparity? Check all that apply.
(A) Discrimination
(B) Natural ability
(C) The superstar phenomenon
(D) Effort
(E) Human capital
Answer:
The answers are letters D and E
Explanation:
The effort and the human capital can explain this wage disparity.
Answer:
(D) Effort
(E) Human capital
Explanation:
-Discrimination is when there is an unfair treatment based on race, age, sex or being part of a group.
-Natural ability refers to a talent that we are born with.
-The superstar phenomenon refers to the fact that the differences in talent people have generate disproportionate levels of success.
-Effort means a serious attempt to do something.
-Human capital refers to the attributes and knowledge someone has to do a job and create value.
According to this, the answer is that the options that can explain this wage disparity is effort and human capital as she performs the same type of work as her colleagues but her productivity is about 25% higher which is an effort to perform well and indicates that she has abilities that allow her to do a better job.
Consumers today receive commercial messages from a broad range of sources.
However, consumers ________ the way marketers do.
A) don't distinguish between message sources
B) never pay attention to sales promotions
C) don't care about buzz marketing
D) are not able to block out messages
E) block out all media messages
Answer:
Letter A is correct. Don't distinguish between message sources.
Explanation:
Integrated marketing communication is a relevant tool whose primary objective is to ensure that there is compliance in corporate marketing communication across all media channels used by the organization, ie all communication of promotions and dissemination of company products and services is organized and consistent to create reliability and customer experience.
There are many benefits to ensuring that integrated marketing communication is well developed, some of which are brand awareness according to their individual exposed elements, cost savings and less waste with inconsistent messages, the consumer experience that assists continuous improvement. communication and focus on results, achieved most effectively when there is synchronization between internal and external communication in the company.
Which major promotion category uses catalogs, direct mail, e-mail, mobile marketing and social media?
A) sales promotion
B) direct and digital marketing
C) horizontal diversification
D) public relations
E) advertising
Answer: Option B
Explanation: In simple words, direct marketing refers to a marketing strategy in which a company directly interact with its customers in regard for making its marketing efforts.
On the other hand, using digital means for the process of marketing is called digital marketing strategy. It is done as it is fast and has a wider reach than other mediums.
In both the cases, the sources of marketing are same such as email and social media etc as these are digital and only through these an organisation can easily connect with their customers without any marketing intermediary.
A fall in the value of the dollar againstother currencies makes U.S. final goods and services cheaper toforeigners even though the U.S. aggregate price level stays thesame. As a result, foreigners demand more American aggregateoutput. Your study partner says that this represents a movementdown the aggregate demand curve because foreigners are demandingmore in response to a lower price. You, however, insist that thisrepresents a rightward shift of the aggregate demand curve. Who isright? Explain.
Answer: I am right, the increased demand represents a rightward shift of the aggregate demand curve.
Explanation:
The increase in aggregate demand by foreigners occurred as a result of a fall in the value of the US dollars and aggreagrate price level stayed the same. Therefore, the change in aggregate demand didn't occur as a result of a change in price.
If agregrate demand changed as a result of a change in the aggregate price levels, there would be a change in quantity demanded and a movement along the demand curve.
It's only a change in price that result results in a movement along the aggregate demand curve.
Other factors that leads to a change in demand either shifts the aggregate demand curve to the left or to the right.
Therefore, an increase in aggregate demand as a result of the fall in value of US dollars causes the aggregate demand curve to shift to the right.
The shift in the aggregate demand curve to the right shows that demand has increased but aggregate price hasn't changed.
A manager would like to compare four methods for completing a task. Ten employees are randomly assigned to each of the four methods, and the time taken to complete the task is recorded. What is the factor in this study? a. The factor is the manager. b. The factor is the time to complete the task. c. The factor is the method used. d. The factor is the 10 employees.
The factor in the study is the method used.
Option c
Explanation:
Method analysis, a periodical process is the process of studying or understanding how a task or job assigned is done. It details the job or the task.
Here in the given scenario, the manager compares four different methods to do a task. For this, he assigns all the four methods randomly to ten employees thereby he tries to understand the various aspects of all the four methods and the time taken to finish the task using those methods.
This study will help him in figuring out the best method that can be implemented in the job for better results or productivity. Method analysis is basically done for improving or upgrading the efficiency of the method that is used currently.
Several years ago Brant, Inc., sold $900,000 in bonds to the public. Annual cash interest of 9 percent ($81,000) was to be paid on this debt. The bonds were issued at a discount to yield 12 percent. At the beginning of 2016, Zack Corporation (a wholly owned subsidiary of Brant) purchased $180,000 of these bonds on the open market for $201,000, a price based on an effective interest rate of 7 percent. The bond liability had a carrying amount on that date of $760,000. Assume Brant uses the equity method to account internally for its investment in Zack.
1. What consolidation entry would be required for these bonds on December 31, 2016?
2. What consolidation entry would be required for these bonds on December 31, 2018?
Answer:
The Journal entries are as follows:
(1) On December 31, 2016
Bonds payable A/c Dr. $154,040
Interest income A/c Dr. $14,070
Loss on retirement of debt A/c Dr. $49,000
To investment in bonds $198,870
To Interest expense $18,240
(To record consolidation entry)
(2) On December 31, 2018
Bonds payable A/c Dr. $158,884
Interest income A/c Dr. $13,761
Investment in Zack A/c Dr. $40,266
To investment in bonds $194,152
To Interest expense $18,759
(To record consolidation entry)
Workings:
Interest expense for December 31, 2016:
Book value = 20% of Bond liability (as per equity method)
= 0.2 × $760,000
= $152,000
Interest expense = 12% of Book value
= 0.12 × $152,000
= $18,240
Interest expense for December 31, 2016:
= 12% of Book value
= 0.12 × $156,325
= $18,759
The consolidation entry required for the bonds on December 31, 2016, would involve eliminating the intercompany bond transaction and the discount on the bonds. This would also be the case for the consolidation entry on December 31, 2018, if the bonds have not been retired or repurchased.
Explanation:1. On December 31, 2016, the consolidation entry required for these bonds would involve eliminating the intercompany bond transaction. Since Brant owns Zack, the $81,000 cash interest payment made by Zack to the public on the bonds would be eliminated from the consolidated financial statements. In addition, the discount on the bonds ($41,000) would also need to be eliminated.
2. On December 31, 2018, if the bonds have not been retired or repurchased, the consolidation entry would be the same as in 2016. The cash interest payment made by Zack and the discount on the bonds would still need to be eliminated from the consolidated financial statements.
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In December 2016, Infodeo established its predetermined overhead rate for movies produced during 2017 by using the following cost predictions: overhead costs, $1,584,000,and direct labor costs, $440,000. At year-end 2017, the company’s records show that actual overhead costs for the year are $1,233,900. Actual direct labor cost had been assigned to jobs as follows. Movies completed and released $ 300,000 Movies still in production 46,000 Total actual direct labor cost $ 346,000 1. Determine the predetermined overhead rate for 2017. 2
Answer:
$3.6
Explanation:
The computation of the predetermined overhead rate is shown below:
Predetermined overhead rate = (Total estimated manufacturing overhead) ÷ (estimated direct labor costs)
= $1,584,000 ÷ $440,000
= $3.6
It shows a relationship between the estimated manufacturing overhead cost and the estimated direct labor cost so that the correct overhead rate can be computed
Horner Construction Co. uses the percentage-of-completion method. In 2014, Horner began work on a contract for $16,500,000; it was completed in 2015. The following cost data pertain to this contract :
Year ended December 31
2014 2015
Costs incurred during the year $5,850,000 $4,200,000
Estimated costs to complete at the end of year 3,900,000 —
If the completed-contract method of accounting was used, the amount of gross profit to be recognized for years 2014 and 2015 would be ____________?
Answer:
2014 = zero
2015 = $6,450
Explanation:
2014
Under the completed-contract method of accounting, revenue, expenses, and gross profit is deferred until the completion of the contract. If at the end of the business fiscal year of a company work on a contract remains incomplete, no revenue, expenses, and profit on that contract is recognized in the current year on the income statement; all costs and billings are accumulated in respective balance sheet accounts.
2015
This year, the construction is completed so Horner Construction Co. will now recognize its Revenue and gross profit in relation to the project.
Contract price $16,500,000
Less: constructions costs 10,050,000
Gross profit $6,450,000
* construction cost = ($5,850,000 + $4,200,000)
Carney Company manufactures cappuccino makers. For the first eight months of 2019, the company reported the following operating results while operating at 80% of plant capacity: Sales (500,000 units) $90,000,000 Cost of goods sold 54,000,000 Gross profit 36,000,000 Operating expenses 24,000,000 Net income $12,000,000 An analysis of costs and expenses reveals that variable cost of goods sold is $95 per unit and variable operating expenses are $35 per unit. In September, Carney Company receives a special order for 40,000 machines at $135 each from a major coffee shop franchise. Acceptance of the order would result in $10,000 of shipping costs but no increase in fixed expenses. Collapse question part (a) Prepare an incremental analysis for the special order.
Answer:
Total effect on income= $190,000
Explanation:
Giving the following information:
Sales (500,000 units) $90,000,000
Cost of goods sold 54,000,000
Gross profit 36,000,000
Operating expenses 24,000,000
Net income $12,000,000
An analysis of costs and expenses reveals that the variable cost of goods sold is $95 per unit and variable operating expenses are $35 per unit. In September, Carney Company receives a special order for 40,000 machines at $135 each from a major coffee shop franchise. Acceptance of the order would result in $10,000 of shipping costs but no increase in fixed expenses
Because it is a special offer and there is unused capacity, we will not have into account the fixed costs.
Total unitary cost= 95 + 35 + (10,000/40,000)= 130.25
Contribution margin= 135 - 130.25= 4.75
Total effect on income= 4.75*40,000= $190,000
Final answer:
The incremental analysis for Carney Company's special order reveals that accepting the order would lead to an additional net income of $190,000, by generating $5,400,000 in revenue against $5,210,000 in total variable and shipping costs.
Explanation:
To conduct an incremental analysis for the special order that Carney Company received, we need to calculate the additional revenue and the additional costs that accepting this order would entail. The special order consists of 40,000 cappuccino makers at a price of $135 each. Variable costs are given as $95 per unit for cost of goods sold and $35 per unit for variable operating expenses, totaling $130 per unit.
Additional Revenue: 40,000 units * $135 = $5,400,000Additional Variable Costs: ($95 + $35) * 40,000 units = $5,200,000Shipping Costs: $10,000To calculate the incremental net income, we subtract the additional variable costs and shipping costs from the additional revenue.
Incremental Net Income = Additional Revenue - Additional Variable Costs - Shipping Costs = $5,400,000 - $5,200,000 - $10,000 = $190,000
Accepting the special order would result in an incremental net income of $190,000 for Carney Company, assuming no increase in fixed expenses.
Calculating Average Operating Assets, Margin, Turnover, and Return on InvestmentEast Mullett Manufacturing earned operating income last year as shown in the following income statement:Sales $531,250Cost of goods sold 280,000Gross margin $251,250Selling and administrative expense 194,000Operating income $57,250Less: Income taxes (@ 40%) 22,900 Net income $34,350At the beginning of the year, the value of operating assets was $390,000. At the end of the year, the value of operating assets was $460,000.Required:For East Mullett Manufacturing, calculate the following:1. Average operating assets $ 2. Margin (round to two decimal places) %3. Turnover (round to two decimal places) 4. Return on investment (round to one decimal place) %
Answer:
1. $425,000
2. 10.78%
3. 1.25
4. 13.5%
Explanation:
The computations are shown below:
1. For Average Operating Assets
Average operating assets = (Beginning Operating Assets + Ending Operating Assets) ÷ 2
= ($390,000 + $460,000) ÷ 2
= $425,000
2. For margin
Margin = Operating Income ÷ Sales × 100
= $57,250 ÷ $531,250 × 100
= 10.78%
3. For turnover:
Turnover = Sales ÷ Average Operating Assets
= $531,250 ÷ $425,000
= 1.25
4. For Return on investment:
Return on investment = Operating Income ÷ Average Operating Assets
= $57,250 ÷ $425,000
= 13.5%
A profit-maximizing monopolist has the cost schedule c(y) = 20y. The demand for her product is given by y = 600/p^4, where p is her price. Suppose that the government tries to get her to increase her output by giving her a subsidy of $15 for every unit that she sells. Giving her the subsidy would make her
answer. decrease her price by $20.
Answer:
Decrease her price by $20
Explanation:
Please see attachment for working notes and explanation
Suppose there is free entry in the market for microphones. The demand for microphones is given by: QD= 176-7P. All firms that produce microphones have identical long run average total cost functions given by: ATC = 32/q + 4 + 2q.
Calculate the long run number of firms in this market.
Answer:
The number of firms in the long run is 9.
Explanation:
Demand function: QD = 176 - 7P
Average total cost functions: ATC = 32/q + 4 + 2q
The long-run price of a perfectly competitive market is equal to the minimum average total cost.
The output at minimum average total cost is found by differentiating ATC and equating to zero.
[tex]\frac{dATC}{dq}=\frac{-32}{q^{2} }+2=0[/tex]
[tex]q^{2}=\frac{32}{2}[/tex]
[tex]q^{2}=16[/tex]
[tex]q=\sqrt{16}[/tex]
q = 4
Price = ATC = (32/4) + 4 + (2 × 4)
= 8 + 4 + 8
= 20
The market quantity is
QD = 176 - 7P
Q = 176 - (7 × 20)
Q = 176 - 140
Q = 36
Number of firms = Q ÷ q
= 36 ÷ 4
= 9
Therefore, the number of firms in the long run is 9.
Paddle Paradise, Inc. sells 2,000 canoes per year at a sales price of $ 460 per unit. It sells in a highly competitive market and uses target pricing. The company has calculated its target full product cost at $ 810,000 per year. Fixed costs are $ 320,000 per year and cannot be reduced. What is the target variable cost per unit assuming units sold are equal to units produced?
Answer:
Target variable cost per unit of Paddle Paradise, Inc. is $245 per canoe
Explanation:
From the question, we have the following information:
Projected Units sold = Projected Units produced = 2,000 canoes;
Targeted total costs of production = $810,000;
Total fixed cost = $320,000;
To compute the targeted total variable costs of 2,000 canoes:
Targeted total variable cost = Targeted total production cost - Total fixed cost = $810,000 - $320,000 = $490,000;
To compute the targeted variable cost per canoe as followed:
Targeted variable cost per canoe = total variable cost/ number of canoe produced = $490,000 / 2,000 = $245 per canoe.
Thus, Paddle Paradise, Inc.'s targeted variable cost per canoe is $245.
Yan Yan Corp. has a $2,000 par value bond outstanding with a coupon rate of 4.4 percent paid semiannually and 13 years to maturity. The yield to maturity of the bond is 4.8 percent. What is the price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
$1,923.29
Explanation:
Price of the bond is its PV. Using financial calculator, key in the following inputs;
FV; Face value of a bond = 2,000
PMT; semi-annual coupon payment = (4.4%/2) *2,000 = 44
N; Total duration of investment = 13*2 = 26
I/Y; Semiannual interest rate in this case = 4.8% /2 = 2.4%
then CPT PV = 1,923.29
Therefore, the price of this bond is $1,923.29
The price of the bond can be calculated by discounting the bond's future cash flows to the present using the yield to maturity. Using this method, the price of the bond is $1981.44.
Explanation:The price of a bond is calculated by discounting the bond's future cash flows to the present using the yield to maturity. The bond's cash flows include its semiannual interest payments and the principal repayment at maturity.
The semiannual interest payment is $2,000 * (4.4% / 2) = $44. The principal repayment is the par value of $2,000 at the end of 13 * 2 = 26 periods (since it's semiannual).
The bond's price is then given by the present value of these cash flows, which can be calculated using the formula for the present value of an annuity for the interest payments, and the formula for the present value of a lump sum for the principal repayment. The yield to maturity should be used as the discount rate, and it should be divided by 2 since payments are semiannual.
So, the bond's price is $44 * [(1 - (1 + 4.8% / 2) ^ -26) / (4.8% / 2)] + $2,000 / (1 + 4.8% / 2) ^ 26 = $891.60 + $1089.84 = $1981.44. So the price of the bond is $1981.44.
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