Borges Machine Shop, Inc., has a 1-year contract for the production of 200,000 gear housings for a new off-road vehicle. Owner Luis Borges hopes the contract will be extended and the volume increased next year. Borges has developed costs for three alternatives. They aregeneral-purpose equipment (GPE), flexible manufacturing system(FMS), and expensive, but efficient, dedicated machine (DM). The cost data follow:
General-Purpose Equipment (GPE)
Flexible Manufacturing System (FMS)
Dedicated Machine (DM)
Annual contracted units
200,000
200,000
200,000
Annual fixed cost
$100,000
$200,000
$500,000
Per unit variable cost
$15.00
$14.00
$13.00
The option GPE is best when the contracted volume is below nothing units (enter your response as a whole number).
The option FMS is best when the contracted volume is between nothing and nothing units (enter your responses as whole numbers).
The option DM is best when the contracted volume is overunits (enter your response as a whole number).
Answers
Answer:
Task 1:
GPE is best when the contracted volume is below 25,000 units.
Task 2:
FMS is best when the contracted volume is between 25,000 and 300,000 units.
Task 3:
DM is best when the contracted volume is over 300,000 units.
Explanation:
The schedule for total cost is attached.
Task 1:The option GPE is best when the contracted volume is below nothing units (enter your response as a whole number).
Answer:GPE is best when the contracted volume is below 25,000 units.
Working:GPE is best when cost for GPE is less than other two.
Difference between the variable cost per unit of GPE and FMS = $18 per unit - $14 per unit = $4 per unit.
Difference between the fixed cost of GPE and FMS = $200,000 - $100,000 = $100,000
The difference of cost between GPE and FMS can be found by (assuming n units produced)
GPE-FMS: 4n – $100,000
The cost difference has to be zero in order to lower the cost for GPE
Hence 4n-$100,000=0
Hence n = 25,000
GPE is best when the contracted volume is below 25,000 units.
Task 2:
The option FMS is best when the contracted volume is between nothing and nothing units (enter your responses as whole numbers).
Answer:FMS is best when the contracted volume is between 25,000 and 300,000 units.
Working:To compare FMS:
The cost has to be in between GPE and FMS
Considering difference between GPE and FMS
n = 25,000 (from above calculation)
Considering FMS and DM:
Difference in variable cost per unit of FMS and DM = $14 - $13 = $1 per unit
Difference in fixed cost of FMS and DM = $500,000 - $200,000 = $300,000
Difference = n – $300,000
n-300,000=0
n = 300,000
Hence FMS is best when the contracted volume is between 25,000 and 300,000 units.
Task 3:The option DM is best when the contracted volume is over units (enter your response as a whole number).
Solution:DM is best when the contracted volume is over 300,000 units.
Final answer:
To find the best manufacturing option, it's necessary to calculate the total cost per option and identify the break-even points by comparing the total cost equations. This analysis will provide the production volume ranges for when each option (GPE, FMS, DM) is most cost-effective.
Explanation:
To determine which manufacturing option is best for Borges Machine Shop at various production volumes, we need to calculate the total cost for each option at different volumes and compare them. The total cost is calculated by adding the fixed cost to the product of the variable cost per unit and the number of units produced.
For the General-Purpose Equipment (GPE), the total cost (TC) formula is:
TC = $100,000 + ($15 × number of units).
For the Flexible Manufacturing System (FMS), the total cost (TC) formula is:
TC = $200,000 + ($14 × number of units).
For the Dedicated Machine (DM), the total cost (TC) formula is:
TC = $500,000 + ($13 × number of units).
The point at which two options have the same total cost is where they break even, and this point can be calculated by setting the total cost equations of two options equal to each other.
Let's calculate the break-even points:
For GPE and FMS: $100,000 + $15n = $200,000 + $14nFor FMS and DM: $200,000 + $14n = $500,000 + $13nSolving these equations will give us the range of units where each option is best.
Related Questions
Linda Day George Company had bonds outstanding with a maturity value of $300,000. On April 30, 2014, when these bonds had an unamortized discount of $10,000, they were called in at 104. To pay for these bonds, George had issued other bonds a month earlier bearing a lower interest rate. The newly issued bonds had a life of 10 years. The new bonds were issued at 103 (face value $300,000). Issue costs related to the new bonds were $3,000.Ignoring interest, compute the gain or loss. (Round answer to 0 decimal places, e.g. 38,548.)Loss on redemption $Linda Day George Company had bonds outstanding witIgnoring interest, record this refunding transaction. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)Account Titles and ExplanationDebitCreditLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding wit(To record redemption of bonds payable.)Linda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding witLinda Day George Company had bonds outstanding wit
Answers
Answer:
Explanation:
Attach is the solution
On January 2, 2020, Grouper Company sells production equipment to Fargo Inc. for $54,000. Grouper includes a 2-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on January 2, 2020. During 2020, Grouper incurs costs related to warranties of $860. At December 31, 2020, Grouper estimates that $650 of warranty costs will be incurred in the second year of the warranty.
Required:
a. Prepare the journal entry to record this transaction on January 2, 2020, and on December 31, 2020 (assuming financial statements are prepared on December 31, 2017).b. Repeat the requirements for (a), assuming that in addition to the assurance warranty, Grando sold an extended warranty (service-type warranty) for an additional 2 years (2022â2023) for $800.
Answers
Answer:
Part a
January 2, 2020
Cash $54,000 (debit)
Revenue $54,000 (credit)
Warranty Provision $860 (debit)
Cash $860 (credit)
December 31, 2020
Warranty $650
Warranty Provision $650
Part b
January 2, 2020
Cash $54,000 (debit)
Revenue $54,000 (credit)
Cash $800 (debit)
Deferred Warranty Service $800 (credit)
December 31, 2020
No Entry
Explanation:
Part a
Recognise Revenue and Warranty Provision in terms of IAS 37 - Provisions. An assurance warranty is not a separate performance obligation hence accounted for in terms of IAS 37 - Provisions.
Part b
Recognise Revenue and Deferred Warranty Service in terms of IFRS 15 - Revenue from Contracts with Customer. A Service type Warranty is distinct and therefore is a separate performance obligation hence accounted for in terms of IFRS 15.
Rockville Enterprises manufactures woodworking equipment and is incorporated and based in Evansville, Indiana. All of itsreal property is in Indiana. Rockville employs a large sales force that travels throughout the U.S. Determine whether each of the following is a protected activity in nondomiciliary states under Public Law 86-272: a)Rockville advertises in Wisconsin using television, radio and newspapers.b) Rockville’s employees in Illinois check the credit of a potential customer.c) Rockville maintains a booth at an industry tradeshow in Arizona for 10 days.d)Sales representatives check the inventory of a Tennessee customer to make sure it has enough in stock and that the stock is properly displayed.e) Rockville holds a management seminar executive retreat for corporate executives over four days in Florida.
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Answer:
In the modern situation of Rockville Enterprises, it is producing wood functioning tools and situated in Evansville, following are the description whether Rockville Enterprise is a defensive commotion in non-ordinary conditions or not.
A) - Yes. All form of marketing is deliberated as secure action. As these marketing is revealed in all country.
B) - No. Inspection credit value of consumers is not secure action underneath the public regulation 86-272
C) - Yes. Sustaining a stand at a business exhibition in Arizona for 14 days is measured as secure action under the public regulation 86-272
D) - Yes. Inspection record is secure action underneath the public regulation 86-272
E) - No. Organizing administration meeting is not a secure action. Conversely. Organizing individual meeting is measured as secure action.
Final answer:
Under Public Law 86-272, Rockville Enterprises' activities such as advertising in Wisconsin are protected in nondomiciliary states, while activities like credit checking in Illinois and inventory checks in Tennessee are not protected due to exceeding mere solicitation. Management seminars in Florida also do not fall under protected activities.
Explanation:
The question involves understanding Public Law 86-272 and its implications for Rockville Enterprises, a company that manufactures woodworking equipment and operates nationwide from its base in Indiana. Here we analyze which activities are protected under this law in nondomiciliary states, where Rockville does not have a physical presence.
Advertising in Wisconsin through television, radio, and newspapers is protected under Public Law 86-272, as this constitutes solicitation of sales and does not establish a physical presence.
Credit checking in Illinois by employees is not protected, as this goes beyond mere solicitation and could be construed as conducting business locally.
Maintaining a booth at a tradeshow in Arizona for 10 days is generally considered a protected activity under Public Law 86-272, provided the activity is focused on solicitation of orders for sales.
Sales representatives checking inventory in Tennessee is not protected, as it involves more than solicitation and enters the realm of providing customer service or support post-sale.
Holding a management seminar in Florida is also not protected, as this activity does not directly relate to the solicitation of sales and represents a more substantial business operation in the state.
Jones, who is currently unemployed, is a participant in three means-tested welfare programs: food stamps, rent stamps, and day care stamps. Each program grants him $150 per week in stamps, which can be used like cash to purchase the good or service they cover. a. If benefits in each program are reduced by 40 cents for each additional dollar Jones earns in the labor market, how will Jones’s economic position change if he accepts a job paying $120 per week? Jones would be by $ 24 per week. b. Using your findings in part a, the effective marginal tax rate on Jones's earnings from this job would be .
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Answer:
(a) J was at first getting $450 for example $150 from every mean tried program. Presently as he begins winning, he will lose $0.40 from each program for each dollar earned. As his gaining is $120, so the decrease in from one program will be 0.4x 120 = $48 and all out decrease in pay from each of the three projects is 3x 48 = $144 . Consequently, it tends to be seen that he is procuring $120 yet losing $144. Along these lines, he is at loss of $24 on the off chance that he acknowledges the activity.
(b) When individuals are getting pay for not doing anything then the opposition towards working increments. The model above shows that there are situations when member is at genuine fiscal misfortune on the off chance that he joins a vocation which is an extremely solid disincentive for working. In this way, these methods tried projects will in general decrease the motivating force of doing tasks and working.
If Jones accepts a job paying $120 per week, his economic position will change by $72 per week. The effective marginal tax rate on Jones's earnings from this job would be 40%.
Explanation:To calculate how Jones's economic position will change if he accepts a job paying $120 per week, we need to determine the change in his benefits from the welfare programs. Each program grants him $150 per week, but benefits are reduced by 40 cents for each additional dollar he earns in the labor market. Therefore, for each dollar he earns, his benefits are reduced by 40 cents. If he accepts the job paying $120 per week, he will earn an additional $120 and his benefits will be reduced by $48 (40% of $120).
Therefore, Jones's economic position will change by $120 - $48 = $72 per week. He will be $72 per week better off than if he were unemployed and solely relying on welfare benefits.
The effective marginal tax rate on Jones's earnings from this job can be calculated by dividing the reduction in benefits ($48) by the increase in earnings ($120). This gives us a marginal tax rate of 40% ($48 / $120 = 0.4). Therefore, the effective marginal tax rate on Jones's earnings from this job would be 40%.
Define how managerial accounting differs from financial accounting. Be sure to address the diverse users of managerial and of financial accounting and provide examples of how at least five users would utilize accounting information. Cost can be classified in 5 categories-behavior, traceability, controllability, relevance and function. Briefly explain each category. (Watch Accounting 2 - ACCT 122 - Program #223 - Managerial Accounting Concepts and Accounting 2 - ACCT 122 - Program #224 - Managerial Accounting Concepts - Continued Illustrate how managerial accounting information assists managers in performing the roles of planning, directing, and controlling by providing an example of each.
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ANSWER:
Managerial accounting is the use of accounting information, to determine the best decision to take, inorder to better the organization, and bring in more profit.
While.
Financial accounting is reporting all financial transaction, by preparing a financial statement, which details out the inflow and outflow of money in the organization.
HOW TO USE ACCOUNTING INFORMATION:
1) Accounting Information are used by managerial accountants to determine the best business to invest more money into.
2) Accounting Information are used by financial accountant to report the profit or loss in the business of the company.
3) Accounting information are used by managerial accountant to decide which investment that should be added or removed from the portfolio, so that much profit will be achieved.
4) Accounting Information are used by financial accountant to calculate and tabulate it financial statement. Using statistical methods and accounting formulas.
5) Accounting Information are used by managerial accountant, to manage the returns in investment, and decide which investment, that will have the highest budget.
Traceability of cost means that all cost should be able to show what lead to it, why the cost is necessary, and the effect of the cost to the business.
Behavior of cost shows the way cost will change whenever they is a change in activities t looko lead to costing. A decrease in spending, will decrease the cost.
Controllability of Cost defines cost to be subject to the decision of how the business will be achieved. This shows that cost can be altered at anytime, to suit the need of the business.
Relevance of Cost defines cost to be used to show how relevant or irrelevant a cost can be to the business, which helps a manger to consider only the relevant cost in the business first.
Function of cost shows the amount invested in relation to the amount produced. It is represented in a cost curve, and is used to optimize the business of the organization.
Consider a town in which only two residents, Kevin and Maria, own wells that produce water safe for drinking. Kevin and Maria can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water.
Price Quantity Demanded Total Revenue
(Dollars per gallon) (Gallons of water) (Dollars)
6.00 0 0
5.50 45 $247.50
5.00 90 $450.00
4.50 135 $607.50
4.00 180 $720.00
3.50 225 $787.50
3.00 270 $810.00
2.50 315 $787.50
2.00 360 $720.00
1.50 405 $607.50
1.00 450 $450.00
0.50 495 $247.50
0 540 0
Suppose Kevin and Maria form a cartel and behave as a monopolist. The profit-maximizing price is $
––––– per gallon, and the total output is
––––– gallons. As part of their cartel agreement, Kevin and Maria agree to split production equally. Therefore, Kevin's profit is $
––––– .
Suppose Kevin and Maria form a cartel and behave as a monopolist. The profit-maximizing price is $
––––– per gallon, and the total output is
––––– gallons. As part of their cartel agreement, Kevin and Maria agree to split production equally. Therefore, Kevin's profit is $
––––– , and Maria's profit is $
––––– .
Suppose that Kevin and Maria have been successfully operating as a cartel. They each charge the monopoly price and sell half of the monopoly quantity. Then one night before going to sleep, Kevin says to himself, "Maria and I aren't the best of friends anyway. If I increase my production to 45 gallons more than the cartel amount, I can increase my profit even though her profit goes down. I will do that starting tomorrow."
After Kevin implements his new plan, the price of water
–––––––––– to $
––––– per gallon. Given Maria and Kevin's production levels, Kevin's profit becomes $
––––– and Maria's profit becomes $
––––– .
Because Kevin has deviated from the cartel agreement and increased his output of water to 45 gallons more than the cartel amount, Maria decides that she will also increase her production to 45 gallons more than the cartel amount.
After Maria increases her production, Kevin's profit becomes $
––––– , Maria's profit becomes $
––––– , and total profit (the sum of the profits of Kevin and Maria) is now $
––––– .
True or False: Based on the fact that both Kevin and Maria increase production from the initial cartel quantity, you know that the output effect was larger than the price effect at that quantity.
Note that Kevin and Maria started by behaving cooperatively. However, once Kevin decided to cheat, Maria decided to cheat as well. In other words, Maria's output decisions are based on Kevin's actions.
This behavior is an example of
–––––––––– .
Answers
Kevin and Maria initially form a profit-maximizing cartel, but when each independently increases production, the price falls and overall profits decrease. This behavior is an example of the 'prisoner's dilemma'.
Explanation:Suppose Kevin and Maria form a cartel and behave as a monopolist. The profit-maximizing price is $3 per gallon, and the total output is 270 gallons. As part of their cartel agreement, Kevin and Maria agreed to split production equally. Therefore, Kevin's profit and Maria's profit are $405 each, which is half the total revenue at the given price and quantity.
However, if Kevin increases his production by 45 gallons, the supply increases and the price falls to $2.5 per gallon. Given Kevin's increased production, his net profit is $446.25 (180 gallons × $2.5), and Maria's profit decreases to $393.75 (135 gallons× $2.5).
Assuming Maria responds in the same way and also increases her output by 45 gallons, the price falls further to $2 per gallon. Their profits then become $360 each (180 gallons × $2).
Therefore, based on the fact that both Kevin and Maria increase production from the initial cartel quantity, we can say that the output effect was larger than the price effect at that quantity. This behavior is an example of the 'prisoner's dilemma', prevalent in situations of strategic interdependence where each party's best move depends on what the other party does.
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The payback method is often more useful than the net present value method for evaluating systems projects because the effective lives of information system tend to be short and shorter payback projects are often desirable.
True/False
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Answer:
True
Explanation:
Payback method considers the time that a project takes to payback the capital invested in it from its net cash flows.
Projects that have a short payback period are preferred by investors because the capital invested takes a shorter time to be repaid. That is shorter risk period.
Net present value is a consideration of the expected future cash flows in a project. It is the difference between the net present value of an asset and the present value of cash flows over a certain period. It's calculation is based on a lot of assumptions so it is probe to error.
Payback method is preferred because the effective lives of information system tend to be short and shorter payback projects are often desirable.
Answer:
True
Explanation:
The payback method of evaluating capital expenditure projects is very popular because it's easy to calculate and understand. It has severe limitations, however, and ignores many important factors that should be considered when evaluating the economic feasibility of projects.
In finance, the net present value or net present worth applies to a series of cash flows occurring at different times. The present value of a cash flow depends on the interval of time between now and the cash flow. It also depends on the discount rate. NPV accounts for the time value of money.
Payback method considers the time that a project takes to payback the capital invested in it from its net cash flows.
The payback method is often more useful than the net present value method for evaluating systems projects because the effective lives of information system tend to be short and shorter payback projects are often desirable.
Labor Variances Verde Company produces wheels for bicycles. During the year, 660,000 wheels were produced. The actual labor used was 360,000 hours at $9.50 per hour. Verde has the following labor standards: 1) $10.00 per hour; 2) 0.5 hour per wheel.
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Answer and Explanation:
Given:
Actual output = 660,000
Actual labor hours = 360,000 at $9.50 per hour
Standard labor rate = $10 per hour
Standard output hour = 0.5 hour per wheel
Computation:
Labor Variances includes:
1. Labor Cost Variance
2. Labor Rate Variance
3. Labor Efficiency Variance
1. Labor Cost Variance = (SR×SH) - (AR×AH)
Labor Cost Variance = [$10(Actual output×Standard output hour)] - [$9.5×360000]
Labor Cost Variance = [$10×330,000] - $3,420,000
Labor Cost Variance = $120,000 (Adverse)
2. Labor Rate Variance = (SR-AR)AH
Labor Rate Variance = ($10-$9.5)×360,000
Labor Rate Variance = $180,000 (Favorable)
3. Labor Efficiency Variance = (SH- AH)×SR
Labor Efficiency Variance = [(Actual output×Standard output hour)-360,000]×10
Labor Efficiency Variance = (330,000 - 360,000) ×10
Labor Efficiency Variance = $300,000 (Adverse)
The labor rate variance and labor efficiency variance for Verde Company are calculated based on standard and actual labor hours and costs. The labor rate variance is $180,000 Unfavorable, while the labor efficiency variance is $300,000 Unfavorable.
Explanation:We need to calculate the labor variances for Verde Company. To do that, first, we need to calculate the standard hours for the actual production, which is 660,000 wheels * 0.5 hour/wheel, yielding 330,000 standard hours. The standard labor cost for this is simply the standard hours * standard rate per hour, resulting in $3,300,000.
The actual cost of labor is the actual hours of work * actual rate per hour, giving us $3,420,000. Hence, the Labor rate variance is actual hours *(standard rate - actual rate), which is 360,000 * ($10.00-$9.50), resulting in $180,000 Unfavorable. The Labor efficiency variance is standard rate * (standard hours - actual hours), yielding $10.00 * (330,000 - 360,000), or $300,000 Unfavorable.
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Labor costs represent a large percentage of total costs for many firms. According to data from the Bureau of Labor Statistics, U.S. labor costs were up 2.0% in 2015, compared to 2014.
a. When labor costs increase, what happens to average total cost and marginal cost? Consider a case in which labor costs are only variable costs and a case in which they are both variable and fixed costs. An increase in labor productivity means each worker can produce more output. Recent data on productivity show that labor productivity in the U.S. nonfarm business sector grew by 1.7% between 1970 and 1999, by 2.6% between 2000 and 2009, and by 1.1% between 2010 and 2015.
b. When productivity growth is positive, what happens to the total product curve and the marginal product of labor curve? Illustrate your answer with a diagram.
c. When productivity growth is positive, what happens to the marginal cost curve and the average total cost curve? llustrate your answer with a diagram.
d. If labor costs are rising over time on average, why would a company want to adopt equipment and methods that increase labor productivity?
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Answer: Labor cost is a representative of greater percentage of total cost for many firms. From the data of Bureau of Labor statistics, the U.S labour cost up to 2% in 2015 in comparison to 2014.
Explanation:
A. As labor increases, average total cost and marginal cost increases as well due to the fact that labor is part of total cost of production. If labor cost represents only variable cost when firms shut down, labor cost will be save but if it represents but variable and fixed cost, labor cost can't be avoided.
B. A positive productivity growth lead to a total product curve and marginal labor curve shift upward because total output and marginal product of labor curve increases.
C. A positive productivity curve will result in an downward shift of marginal cost curve and average total cost curve because average total cost and marginal cost decreases per output.
D. If labor cost are rising overtime on average. equipments, technologies and methods that increases labor productivity will be adopted in order for total output and marginal product of labour to increase.
Both Bond Bill and Bond Ted have 11.2 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 4 years to maturity, whereas Bond Ted has 21 years to maturity. Both bonds have a par value of 1,000. If interest rates suddenly rise by 3 percent, what is the percentage change in the price of these bonds
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Answer:
3.33% increase in the price of bond.
Explanation:
Price of the bond is the present value of all cash flows of the bond. These cash flows include the coupon payment and the maturity payment of the bond. Price of the bond is calculated by following formula:
According to given data
Price at par means the the bond have face equal to par which is $1,000 and the yield to maturity is also equals to the the coupon rate.
Coupon payment = C = $1,000 x 11.2 = $112 annually = $56 semiannually
Number of periods = n = 2 x 4 years = 8 periods
As the interest rate rises by 3%
Revised discount rate = r = 11.2% + 3% = 14.2 annually = 7.1% semiannually
Price of the Bond = $56 x [ ( 1 - ( 1 + 7.1% )^-8 ) / 7.1% ] + [ $1,000 / ( 1 + 7.1% )^8 ]
Price of the Bond = 455.63 + $577.68 = 1,033.31
Change in price = $1,033.31 - $1,000 = $33.31
Percentage change = $33.31 / $1,000 = 0.03331 = 3.33%
Answer:
Bond Bill = (value of bond - par value) / par value
= ( 910.78 - 1000) / 1000 = -0.0892 = -8.92%
Bond Ted = ( $800 - $1000 ) / $1000 = -0.1994 = -19.94%
Explanation:
The value of coupon rate for both bonds = 11.2 %
when there is an increase of 3% coupon rate = 14.2%
percentage change in the value of the bonds =
( value of bond - par value) / par value
value of bond = present value of coupon + present value of face value
the semiannual coupon payments = (1000 * 11.20) / 2 = $56
semi-annual coupon rate when increased = 14.20% / 2 = 7.10%
number of payments for Bond bill = 4 years * 2 = 8
number of payments for Bond Ted = 21 years * 2 = 42
value of Bond Bill = $56 * ( PVIFA*7,10% *8 ) + $1000 * (PVIFA*7.10%*8 )
= $910.78
Value of Bond Ted = $56 * (PVIFA*7.10%*42 ) + $1000 * ( PVIFA * 7.10%*42)
= $800.58
calculate the individual percentage change in value of each bonds
Bond Bill = (value of bond - par value) / par value
= ( 910.78 - 1000) / 1000 = -0.0892 = -8.92%
Bond Ted = ( $800 - $1000 ) / $1000 = -0.1994 = -19.94%
A project is composed of many elements and includes a variety of tools to manage all of the elements of the project. Which of the following best defines the relationship between organizational culture and estimating?
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Kelvie Inc. is a manufacturing company and held the following investments during 2012. Show how each investment would impact/change Kelvie’s 2012 year-end financial statements using the template provided on Blackboard. Indicate the type of activity for each line reported on the Statement of Cash Flows.Kelvie Inc. purchased Mao & Co.’s 5-year, 5%, $100,000 bond. The bond was purchased on January 1, 2012 for $95,788 to yield 6% interest. The bond pays annual interest on December 31. Kelvie intends to hold the bond to maturity. At December 31, 2012, the bond had a fair market value of $96,500.Kelvie Inc. purchased 6,000 shares of Dalton Ltd. common stock at a cost of $255,000 on July 31, 2012. These shares do not give Kelvie significant influence over Dalton. On October 31, 2012, Dalton Ltd. paid a $2 per share cash dividend. At December 31, 2012, Dalton Ltd. was trading at $40 a share.On January 1, 2012, Kelvie Inc. invested in ASP Industries by acquiring 30% of ASP’s outstanding stock for $21,500,000. During 2012, ASP Industries reported net income of $5,000,000 and paid cash dividends totaling $1,000,000. At December 31, 2012, ASP Industries had a market value of $75,000,000. Note: Ignore any excess price issues.
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Answer:
Explanation:
Investments Impact in Type of activity
financial statement
1 Purchase of Mao &Co's Increase the investments Investing
bond of $ 100,000 in Balance sheet activity
Cost of bond $ 95788 Debit to the investments
account $ 95,788
Annual interest on Credit to the income account
Bond of $ 5000 - interest income
No impact of fair market value
in financial statement
2 Purchase of 6000 Debit $ 255,000 to the Investing activity
shares of Dalton ltd investment account
Receipt of dividend Credit $ 12,000 to the
dividend income account
3 Acquisition of 30% Debit $ 21,500,000 to the Investing activity
ASP's outstanding stock investment account
Receipt of dividend Credit $ 1,000,000 to the
dividend income account
Kelli Blakely is a portfolio manager for the Miranda Fund, a core large-cap equity fund. The market proxy and benchmark for performance measurement purposes is the S&P 500. Although the Miranda portfolio generally mirrors the asset class and sector weightings of the S&P, Blakely is allowed a significant amount of leeway in managing the fund. However, her portfolio holds only stocks found in the S&P 500 and cash.
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The question discusses mutual funds and investment strategies related to the S&P 500 benchmark. Portfolio managers like Kelli Blakely must weigh the decision to use actively managed or index funds, taking into account factors like historical performance and fees. The Principles of Diversification and Portfolio Theory also play roles in how investors should approach asset allocation to balance risk and return.
Explanation:The student's inquiry pertains to the realm of investing, specifically portfolio management within the scope of mutual funds, the use of benchmarks like the S&P 500 for performance measurement, and the choice between actively managed funds and index funds. Kelli Blakely, as a portfolio manager for the Miranda Fund, must navigate these principles while adhering to the fund's strategy, which aligns closely with the asset class and sector weightings of the S&P 500 but allows for some manager discretion. Choosing between an actively managed fund and an index fund like the S&P 500 requires a consideration of factors such as historical returns, associated fees, and the theory of diversification. Warren Buffet, among others, advocates for a diversified investment approach, often recommending low-cost index funds for the majority of investors due to the challenges that active management faces in consistently outperforming market benchmarks.
Portfolio Theory suggests that asset allocation is key to managing risk and return, with diversification as a central tenet. Investors must balance the potential higher returns of riskier assets like stocks with the stability provided by fixed-income investments like bonds. Furthermore, mutual funds and indices such as the Dow Jones Industrial Average (DJIA) and the Standard and Poor 500 Index (S&P 500) serve as important benchmarks for assessing fund performance, and various companies offer mutual funds designed to mimic these benchmarks, such as the BlackRock ESG Aware Moderate Allocation Index, which invests in a mix of equity and fixed income iShares ESG ETFs.
M. Cotteleer Electronics supplies microcomputer circuitry to a company that incorporates microprocessors into refrigerators and other home appliances. One of the components has an annual demand of 250 units, and this is constant throughout the year. Carrying cost is estimated to be $1 per unit per year, and the ordering (setup) cost is $20 per order.
To minimize cost, how many units should be ordered each time an order is placed?
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Answer:
Order size per time = 100 units
Explanation:
To minimize cost, M Cotteleer Electronics Supplies should adopt the EOQ.
The Economic Order Quantity (EOQ) is the order size that minimizes the balance of ordering cost and holding cost. At the EOQ, the carrying cost is equal to the holding cost.
It is computed using he formula below
EOQ = √ (2× Co× D)/Ch
C0- ordering cost per order- 20, Ch-carrying cost per per unit per annum- $1, D- annual demand 250 units
EOQ= √ (2× 20× 250)/1
=100 units
To minimise cost, the M Cotteleer Electronics Supplies should order 100 units per time
Assuming that total dividends declared in 2017 were $64,000, and that the preferred stock is not cumulative but is fully participating, common stockholders should receive 2017 dividends of what amount?
Common stockholders should receive $
Answers
Answer:
$40,235
Explanation:
Dividend distributed to preferred share is based on the predetermined rate associated with these share. When the dividend is declared preferred share dividend is paid first. The remainder is distributed between the common stockholders.
Dividend Declared = $64,000
Preferred Dividend = $100,000 x 7% = $7,000
Participation
Preferred Shares = $100,000 / $20 = 5,000 shares
Common shares = 12,000 shares
Total Shares = 12,000 + 5,000 = 17,000 shares
on Pro-rata basis
Participation dividend to preferred stockholder = ($64,000 - $7,000) x 5000 / 17000 = $16,765
Dividend to common stock holders = $64,000 - $7,000 - $16,765 = $40,235
Suppose Tim and Alyssa are playing a game in which both must simultaneously choose the action Left or Right. The payoff matrix that follows shows the payoff each person will earn as a function of both of their choices. For example, the lower-right cell shows that if Tim chooses Right and Alyssa chooses Right, Tim will receive a payoff of 9 and Alyssa will receive a payoff of 5.
Alyssa
Left Right
Tim Left 6, 6 8, 5
Right 3, 6 9, 5
The only dominant strategy in this game is for _____ to choose ______ .
The outcome reflecting the unique Nash equilibrium in this game is as follows: Tim chooses _____ and Alyssa chooses _________
Alyssa
Left Right
6,6 8,5
3,6 9,5
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Answer:
1. The only dominant strategy in this game is for Alyssa to choose left.
2. Tim chooses right and Alyssa chooses right.
Explanation:
A dominant strategy is that strategy that always provides the best outcome for a player regardless of what the opponent's strategy is.
Nash equilibrium is a set of strategies, one for each player, such that no player has incentive to change his or her strategy given what the other players are doing.
Now in this game, the dominant strategy is for Alyssa to choose left. If Tim chooses left Alyssa will choose left to earn a payoff of 6. If Tim chooses right the Alyssa will still choose left to earn a payoff of 6. Whatever strategy Tim uses, Alyssa continues to pick left.
Let us consider if there's a dominant strategy for Tim. When Alyssa chooses left Tim chooses left to earn a higher payoff of 6 instead of 3. If Alyssa chooses right then Tim will choose right to earn a payoff of 9 which is higher than 8 (if he had chosen left), we can therefore conclude Tim has no dominant strategy, as his decisions are based on what Alyssa does.
The outcome reflecting the unique Nash equilibrium in this game is as follows: Tim chooses right and Alyssa chooses right. There's no incentive to change at this point.
Tom is the quality control manager for the company XYZ. XYZ recently received some complaints about its product A's quality and the general manager Steve requested Tom to investigate it. To gain a better understanding of the production process, Tom decided to use p-chart to monitor and identify the assignable cause variations. For the next 8 working days, Tom collected 8 samples (each of the size 100 units) and found the following number of defects, 4, 6, 0, 1, 3, 5, 8, 3.
a. What is the defect rate for sample 2? Ignore the percentage sign, and round your answer to the nearest integer. For example, if your answer is 12.34%, input 12.
Your answer is .
b. What is p-bar? Ignore the percentage sign, and round your answer to two decimals. For example, if your answer is 12.34%, input 12.34. (Note that this is different from question a.)
Your answer is .
c. What is sigma? Ignore the percentage sign, and round your answer to two decimals. For example, if your answer is 12.34%, input 12.34.
Your answer is .
d. What is upper control limit UCL for this p-chart? Ignore the percentage sign, and round your answer to two decimals. For example, if your answer is 12.34%, input 12.34.
Your answer is .
e. What is lower control limit LCL? (If LCL is negative, input 0) Ignore the percentage sign, and round your answer to two decimals. For example, if your answer is 12.34%, input 12.34. If your answer is -1.234%, input 0.
Your answer is .
f. How many outlier(s) is(are) identified? Round your answer to the nearest whole number. For example, if the answer is 3.12, input 3.
Your answer is
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Answer:
Answer a= Defect rate of sample 2= 6/100 =6
Answer b=
Data % defect % defect
4 4/800 0.005
6 6/800 0.0075
0 0/800 0
1 1/800 0.00125
3 3/800 0.00375
5 5/800 0.00625
8 8/800 0.01
3 3/800 0.00375
Sum 0.0375
p bar =0.0375
Answer c= sigma = [p bar(1-p bar) / sample size]]0.5
Sigma = (0.0375*(1-0.0375)/100)^0.5 =0.019
Answer d= UCL=p bar + 3*(Estimated standard deviation) = 0.0375+3*0.019 =0.0945
Answer e= LCL=p bar - 3*(Estimated standard deviation) =0.0375-3*0.019 =-0.0195=0
An employee earned $42,700 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $128,400 maximum per year and the rate for FICA Medicare 1.45%. The employer's total FICA payroll tax for this employee is:
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Answer: $3,266.55
Explanation: The employee's salary scale falls between $1 and $128,400 so the FICA tax rate for social security of 6.2% and Medicare of 1.45% applies to him.
Social security tax payable
$42,700 x 6.2% / 100 = $2,647.4
Medicare tax payable
$42,700 x 1.45% / 100 = $619.15
Total tax payable by the employee
$2647.4 + $619.15 = $3,266.55
owns a Dell laptop computer. She uses the computer in class and her classmates can see the Dell logo when she uses her laptop. One of her classmates is looking to purchase a new laptop and asks Felicity her opinion of Dell computers. Felicity informs her classmate that she is satisfied with her laptop and recommends that her classmate purchases one, too. For Dell, Felicity is exhibiting some of the benefits of _____.
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Complete question:
Trudy owns a Dell laptop computer. She uses the computer in class and her classmates can see the Dell logo when she uses her laptop. One of her classmates is looking to purchase a new laptop and asks Trudy her opinion of Dell computers. Trudy informs her classmate that she is satisfied with her laptop and recommends that her classmate purchases one, too. For Dell, Trudy is exhibiting some of the benefits of _____.
a. brand recognition
b. brand equity
c. brand insistence
d. brand loyalty
e. brand mark
Answer:
For Dell, Trudy is exhibiting some of the benefits of brand loyalty .
Explanation:
Brand loyalty is described as favorable emotions towards the company and willingness to buy the same product or service consistently from the same company now and in the future, irrespective of the behavior of the rival or adjustments in the world.
Corporations spend large sums of money in customer support and promotions in order to create and retain brand awareness with the existing commodity.
Coca-Cola Corporation is an example of an established company that has culminated in consumers showing brand loyalty in light of Pepsi's beverages and advertisement campaigns over the years.
I In your business, assets, and liabilities have historically varied with sales. Assets are usually 82 percent of sales, and liabilities are usually 54 percent of sales. Your sales next year will be $208,000 which represents an increase of $40,000. Your profit margin is 11.99 percent. You anticipate that you will have an 42 owner payout of net profit. Using the percentage of sales method, determine the amount of additional financing or surplus for your business next year. (answer to two decimal places, negative numbers start with -)
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Answer and Explanation:
Computation table for Surplus amount:
Particular Current year Future year
Sales $168,000 $208,000
Less: Net Profit 11.99% of sales $20,143.8 $24,932.2
Cost (sales - 11.99%) $147,856.8 $183,060.8
Owner's payout 42% of cost $62,099.856 $76,885.536
Surplus (Cost - Owner payout) $85,756.944 $106,175.264
Computation table for additional financing fund:
Particular Current year Future year
Assets 82% of sales $137,760 $170,560
Less: Liabilities 54% of sales $90,720 $112,320
Additional Funding $47,040 $58,240
Suppose Hubert and Kate form a cartel and behave as a monopolist. The profit-maximizing price is $ per gallon, and the total output is gallons. As part of their cartel agreement, Hubert and Kate agree to split production equally. Therefore, Hubert's profit is $ , and Kate's profit is $ .
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Consider a town in which only two residents, Hubert and Kate, own wells that produce water safe for drinking. Hubert and Kate can pump and sell as much water as they want at no cost. For them, total revenue equals profit.
The following table shows the town's demand schedule for water,
Quantity Demanded Total Revenue (Dollars per gallon) (Gallons of water) (Dollars) $247.50 $450.00 $607.50 4.00 180 $720.00 $787.50 3.00 270 $810.00 $787.50 2.00 $720.00 $607.50 $450.00 $247.50 (Look at attached image for clearer image)
Answer:
$3, $810
Explanation:
By carefully examining the table above we can infer that Hubert and Kate's profit is maximised at $3 unit price.
The total output at this point is 270 with a total Revenue of $810, implying that they will share the amount equally 810/2= $405 for Kate and $405 for Hubert.
Hubert and Kate forming a cartel means they behave as a monopoly, choosing an output at which marginal cost equals marginal revenue. Given the average cost equals the marginal cost, they would split the positive economic profit. However, in reality, collusion such as this often leads to overproduction and lesser profits due to the prisoner's dilemma.
Explanation:In instances where firms like Hubert and Kate's form a cartel, they effectively behave as a
monopoly
. The cost and profit dynamics of monopolies are such that they attempt to maximize profit by choosing an output where the Marginal Cost (MC) equals Marginal Revenue (MR). The monopoly price is ascertained by drawing a line from this output quantity up to the demand curve. If indeed the cost remains steady (i.e., marginal cost curve is horizontal), average cost is the same as marginal cost. Thus, the joint profit to be shared by Hubert and Kate, would be calculated as the rectangle's area equating the monopoly quantity and the difference between the demand price and the average cost. In a
perfectly competitive market
, the forces of competition would likely erode these supernormal profits over time. However, barriers to entry often ensure that monopolists retain their profits.
To calculate total revenue, total cost, and profit:The total revenue would be the total price that consumers are willing to pay, times the quantity sold. Total cost is simply the quantity produced multiplied by the average cost. The profit is found by subtracting total cost from total revenue.
In real-world scenarios, this monopolistic cooperation is often likened to the prisoner's dilemma. Even though firms could theoretically cooperate to maximize combined profits, they often end up overproducing and earning less as a result.
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7) Suppose AVC = $113 when the firm produces 515 units of output. Then the firm's fixed cost amounts to a) $5,500, and its profit amounts to $20,375. b) $5,980, and its profit amounts to $25,750. c) $5,750, and its profit amounts to $20,375 d) $6,180, and its profit amounts to $25,750.
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Answer:
d) $6,180, and its profit amounts to $25,750.
Explanation:
At output 515, average variable cost is $113
VC = AVC * Q
= $113 x 515
= $58,195
TC = ATC * Q
= $125 x 515
= $64,375
Now calculate for Fixed Cost
Total Cost (TC) = VARIABLE COST (VC) + FIXED COST (FC)
FC = TC - VC
= $64,375 - $58,195
= $6,180
Calculate for profit
Profit = TR - TC
= $90,125 - $64,375
= $25,750
A flexible budget: Multiple Choice presents a statement of expectations for a period of time but does not present a firm commitment. presents the plan for only one level of activity and does not adjust to changes in the level of activity. classifies budget requests by activity and estimates the benefits arising from each activity. presents the plan for a range of activity so that the plan can be adjusted for changes in activity levels.
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Answer:
presents the plan for a range of activity so that the plan can be adjusted for changes in activity levels.
Explanation:
A flexible budget presents the plan for a range of activity so that the plan can be adjusted for changes in activity levels.
In order to ensure the flexibility of a budget, it is usually updated to reflect the actual level of activity during the period and this helps to compare actual results with respect to the budget based on the actual activity over a period of time.
Briefly explain what the term "balance of trade" refers to from a macroeconomic perspective and include a brief description of how exports and imports influence the balance of trade.
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Answer:
In a macroeconomic perspective, the balance of trade (BOT) simply refers to the difference between the value of the imports and exports of a country. In measuring the relative strength of a country's economy, economists make use of the balance of trade. Also, in considering the balance of payments, the balance of trade is the largest component considered.
In balance of trade, TRADE DEFICIT and TRADE SURPLUS are usually considered in relation to their import and export activities
The Trade Deficit results when a country imports more good and services than it exports. While the Trade Surplus results when a country exports more goods and services than it imports.
Since 1976, the United States had a trade deficit. This was as a result of their dependency on oil imports and consumer products. While since 1995, China which produces and exports many of the world's consumable goods has recorded a trade surplus.
When trade deficit occurs, countries affected borrow money to pay for their goods and services but when trade surplus occurs in a country, such country lends money to deficit countries.
Formula for BOT = Total Value Of Imports minus (➖) Total value of exports.
Answer: balance of trade is used to show the major difference between a country import and export over a specified period of time.
Explanation: Balance of trade is used to show the major difference between a country import and export over a specified period of time. Macroeconomics is the study of the whole factors that affect a countries economy.
When exports is greater than import, this leads to what is called unbalanced or unfavorable balance trade ( trade surplus) same applies when import exceeds export. The balance of trade is a part of a large economic unit this is where it relates to macroeconomics.
Elias is a risk-averse investor. David is a less risk-averse investor than Elias. Therefore, Group of answer choices for the same risk, Elias requires a lower rate of return than David. Cannot be determined. for the same risk, David requires a higher rate of return than Elias. for the same return, Elias tolerates higher risk than David. for the same return, David tolerates higher risk than Elias.
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For the same level of risk, David requires a lower rate of return than Elias because David is less risk-averse. For the same return, David would tolerate a higher level of risk than Elias.
Explanation:The scenario provided involves a comparison between two investors based on their risk tolerance. Elias is described as being risk-averse, while David is less risk-averse than Elias. A risk-averse investor requires a higher rate of return to be compensated for the additional risk they are taking on. Therefore, for the same level of risk, David, being less risk-averse, would require a lower rate of return than Elias, since David is willing to accept more risk for the same potential return.
However, if we're looking at the tolerance for risk for the same return, then David, being less risk-averse, would tolerate a higher level of risk compared to Elias. This is because less risk-averse investors are generally willing to take on more risk in the pursuit of potentially higher returns. The tradeoff between return and risk is a foundational concept in investment strategies and reflects personal preferences, which must also consider different time frames for investment.
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Madeline Rollins is trying to decide whether she can afford a loan she needs in order to go to chiropractic school. Right now, Madeline is living at home and works in a shoe store, earning a gross income of $1,260 per month. Her employer deducts a total of $320 for taxes from her monthly pay. Madeline also pays $190 on several credit card debts each month. The loan she needs for chiropractic school will cost an additional $290 per month. Calculate her debt payments-to-income ratio with and without the college loan
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Answer:
Without loan:
Debt = Credit card debts = 190
Without loan:
Debt = Loan payments+credit card debt =190+290 = 480
Explanation:
Gross Income = $1260
Income after tax = 1260-290 = 970
1st case(without loan)
Debt = Credit card debts = 190
Debt/income = 190/970 =0.1958 = 19.58%
2nd case (with loan)
Debt = Loan payments+credit card debt =190+290 = 480
Suzanne, an HR specialist, is assessing training and development needs at
her firm by reviewing job descriptions. Which type of analysis is Suzanne
most likely conducting?
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Bonita Industries produces 5000 units of part A12E. The following costs were incurred for that level of production: Direct materials $ 60000 Direct labor 165000 Variable overhead 80000 Fixed overhead 175000 If Bonita buys the part from an outside supplier, $45000 of the fixed overhead is avoidable. If the outside supplier offers a unit price of $73, net income will increase (decrease) by $145000. $(60000).$85000. $(15000).
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Bonita Industries will save $80000 and therefore increase their net income by the same amount if they buy part A12E from the outside supplier instead of producing it in-house.
Explanation:In determining whether Bonita Industries should produce part A12E in-house or buy from an outside supplier, we first need to calculate the total cost of producing the part in-house. The total cost of producing 5000 units of part A12E in-house is $60000 (direct materials) + $165000 (direct labor) + $80000 (variable overhead) + $175000 (fixed overhead) = $490000. Since $45000 of the fixed overhead is avoidable if the part is bought from an outside supplier, the true cost of producing the part in-house is $490000 - $45000 = $445000.
The cost of buying the part from an outside supplier is $73 * 5000 units = $365000. Comparing this with the in-house production cost, Bonita Industries will save $445000 - $365000 = $80000 if they buy from the outside supplier. Therefore, the net income will increase by $80000 if Bonita buys part A12E from the outside supplier.
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SAP Inc. received a $1 million grant under its Small Business Innovation program. SAP invested the grant money and developed a system to remove metal contaminants from storm water in shipyards. The firm estimates that each shipyard spends $500,000 a year on storm water clean-up efforts. If SAP is able to sign up and retain four shipyards from the first year onwards, what is the present value (PV) of the project (net of investment) if the cost of capital for SAP is 20% per year
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Answer:
$4,000,000
Explanation:
The computation of the present value of the project is shown below:
Since it is given that for four shipyards and it is signed
Therefore,
Total revenue = $500,000 × 4 = $2,000,000
And we assume
Cost of operations and other costs is
= 50% of revenue
= $1,000,000
Now
Net revenue is
= $2,000,000 - $1,000,000
= $1,000,000
So, the present value of the project is
= Present Value of net revenues - Initial cost
= ($1,000,000 ÷ 0.20) - $1,000,000
= $4,000,000
An ever-present facet of all exchanges between buyers and sellers, the value inculcated with marketing utility that emphasizes the connectivity between the tangibility and intangibility in the flows of marketing offerings is:a. The marketing conceptb. Service utilityc. Marketing myopia
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Answer:
Option B is correct one.
Service utility
Explanation:
These are the ramifications of the job of service utility. Different ramifications are - it suits all inclusive associated and innovation empowered worth conveyance point of view, it's a cost concentrated piece of distributive procedure, and it's hard to evaluate, on account of fluctuating client desires for service delivery.