Final answer:
The question discusses various accounting entries, including depreciation of equipment, which is calculated using the straight-line method for a $160,000 equipment with a 5-year life and no residual value, giving a yearly depreciation of $32,000 and a book value of $128,000 at year-end.
Explanation:
The question involves various aspects of business accounting, including interest expense and revenue, advance payments, salary expenses, supply costs, and depreciation of equipment. Each part requires a specific accounting treatment to reflect the true financial position of the business at year-end. We will specifically discuss the depreciation of equipment as part of our example.
Depreciation of Equipment
For the equipment purchased at the beginning of the year with a cost of $160,000 and a useful life of five years with no residual value, the annual depreciation expense would be calculated using the straight-line method. This method evenly spreads the cost of the asset over its useful life. Thus, the annual depreciation expense is $32,000 ($160,000 / 5 years). The book value of the equipment at the end of the year would be $128,000 ($160,000 - $32,000).
Key Takeaways
It is crucial to record depreciation to reflect the usage and the reduced value of assets over time.
Accurate record-keeping ensures that financial statements present a true view of the company's financial health.
Understanding such basic principles is foundational for anyone studying business or accounting.
Which of the following is not correct?
a. With a growth rate of about 2 percent per year, average income per person doubles about every 60 years.
b. In some countries real income per person has changed very little over many years.
c. Across countries there are large differences in the average income per person. These differences are reflected in large differences in the quality of life.
d. The ranking of countries by average income changes substantially over time.
What is the eventual effect on real GDP if the government increases its purchases of goods and services by $80,000? Assume the marginal propensity to consume (MPC) is 0.75. $ What is the eventual effect on real GDP if the government, instead of changing its spending, increases transfers by $80,000? Assume the MPC has not changed. $ An increase in government transfers or taxes, as opposed to an increase in government purchases of goods and services, will result in an identical eventual effect on real GDP. a smaller eventual effect on real GDP. a larger eventual effect on real GDP. no change to real GDP.
Answer:
Given that,
(a) Government purchases increases by $80,000
Marginal propensity to consume (MPC) = 0.75
[tex]Real GDP =\frac{1}{1-MPC}\times Government\ purchases[/tex]
[tex]Real GDP =\frac{1}{1-0.75}\times 80,000[/tex]
= 4 × 80,000
= $320,000
Therefore, Real GDP increases by $320,000.
(b) If transfers increases by $80,000
MPC = 0.75 (MPC doesn't change)
[tex]Real GDP =\frac{MPC}{1-MPC}\times Government\ transfers[/tex]
[tex]Real GDP =\frac{0.75}{1-0.75}\times 80,000[/tex]
= 3 × 80,000
= $240,000
Therefore, total change in real GDP is $240,000. So, real GDP increases by $240,000.
(c) It is totally clear from the above calculations that an increase in the government transfers or taxes, as opposed to an increase in government purchases will result in a smaller eventual effect on real GDP.
Change in real GDP occur due to increase in government transfers = $240,000
Change in real GDP occur due to increase in government purchases = $320,000
The eventual effect on real GDP if the government, instead of changing its spending, increases transfers by $80,000 is c. a smaller eventual effect on real GDP
Explanation:What is the eventual effect on real GDP if the government increase its purchases of goods and services by $50,000? Assume the marginal propensity is to consume is 0.75
The change in real gross domestic product is
[tex]=\frac{1}{1-MPC} * change in the government purchase\\=\frac{1}{1-0.75} * $50,000\\=4*$50.000\\=$200.000[/tex]
Therefore the is increasing of the real gross domestic product by $200.000 with an increase of $50.000 in the purchase of the government.
What is the eventual effect on real GDP if the government instead of changing its spending, increases transfers by $50,000? Assume the MPC has not changed.
[tex]=\frac{1}{1-MPC} * change in transfers\\=\frac{0.75}{1-0.75} * $50,000\\=3*$50.000\\=$150.000[/tex]
Therefore the is increasing of the real gross domestic product by $150.000 with an increase of $50.000 in the purchase of the government.
Therefore an increase in government transfers or taxes as opposed to an increase in government purchases of goods and services will result in:
a. an identical eventual effect on real GDP b. a larger eventual effect on GDPc. a smaller eventual effect on real GDP d. no change to real GDPLearn more about real GDP https://brainly.com/question/2381522
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Classifying Cash Flows Identify whether each of the following would be reported as an operating, investing, or financing activity on the statement of cash flows: a. Retirement of bonds payable Investing b. Purchase of inventory for cash Financing c. Cash sales Investing d. Repurchase of common stock Investing e. Payment of accounts payable Operating f. Disposal of equipment
Answer:
a. Financing activity
b. Operating activity
c. Operating activity
d. Financing activity
e. Operating activity
f. Investing activity
Explanation:
Basically there are three types of activities:
1. Operating activities: It includes those transactions which affect the working capital, and it records transactions of cash receipts and cash payments.
2. Investing activities: It records those activities which include purchase and sale of the fixed assets
3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance. Example: equity, bonds payable, etc
Based on the above information about each activity, the reporting of each transaction is shown below:
a. Financing activity: As the transaction is related to the bond payable
b. Operating activity: As the transaction is related to the inventory
c. Operating activity: As the transaction is related to the sales
d. Financing activity: As the transaction is related to the common stock
e. Operating activity: As the transaction is related to the account payable
f. Investing activity: As the transaction is related to the equipment
Some persons are counted as out of the labor force because they have made no serious or recent effort to look for work. However, some of these individuals may want to work even though they are too discouraged to make a serious effort to look for work. If these individuals were counted as unemployed instead of out of the labor force, then...
a. both the unemployment rate and labor-force participation rate would be lower.
b. both the unemployment rate and labor-force participation rate would be higher.
c. the unemployment rate would be lower, and the labor-force participation rate would be higher.
d. the unemployment rate would be higher ,and the labor-force participation rate would be lower.
Answer:
D) the unemployment rate would be higher, and the labor-force participation rate would be lower.
Does GAAP routinely require companies to disclosure forecasts of financial variables to external users? Indicate yes or no and explain how your answer relates to the qualitative characteristics of accounting information.
Answer:
No, they don´t.
Explanation:
Forecast is not required by GAAP, as the Relevance and the Faithful Representation are concepts that are not compatible with data projection. Forecast implies estimates, and subjective interpretations that do not fulfill financial statements aim and are difficult to verify.
GAAP does not require companies to disclose financial forecasts as they could compromise the reliability and verifiability of financial information, which are key qualitative characteristics of accounting information.
Explanation:No, GAAP (Generally Accepted Accounting Principles) does not routinely require companies to disclose forecasts of financial variables to external users. Disclosing such forecasts is not typically mandated because they deal with future events that are uncertain and thus, could potentially mislead users of financial statements. The qualitative characteristics of accounting information, as per GAAP, include relevance and faithful representation. Forecasts could be relevant, but due to their inherent uncertainty, may lack the reliability needed for faithful representation. Moreover, GAAP focuses on providing information that helps users make decisions based on historical financial data that are verifiable and objective.
During the year, the Senbet Discount Tire Company had gross sales of $1.21 million. The company’s cost of goods sold and selling expenses were $590,000 and $243,000, respectively. The company also had notes payable of $820,000. These notes carried an interest rate of 6 percent. Depreciation was $120,000. The tax rate was 25 percent. a. What was the company’s net income? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, rounded to the nearest whole dollar amount, e.g., 1,234,567.) b. What was the company’s operating cash flow? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, rounded to the nearest whole dollar amount, e.g., 1,234,567.)
Answer:
Ans. Net Income= $148,350 ; Operating Cash Flow= $268,350
Explanation:
Hi, first we need to find the interest expense that would come from the amount of notes payable times its interest rate, that is:
[tex]Interest Expense=NotesPayable*InterestRate=820,000*0.06=49,200[/tex]
Now we have all that we need.
In the image below, you can find the way the net income and the operating cash flow was calculate, please notice the signs aside of each item, that is the guide of how to calculate.
For example:
Gross Sales - Cost of Goods Sold =Gross Margin
1,200,000 - 590,000=610,000
Gross Margin - Selling Expenses-Depreciation= EBIT
610,000 - 243,000 - 120,000 = 247,000
EBIT - Interest Expenses = EBT
247,000 - 49,200 = 197,000
EBT - Taxes = Net Income
197,000 - (197,000*0.25) = 148,350
To find the operating cash flow we go like this.
Net Income + Depreciation = Operating Cash Flow
148,350 + 120,000 = 268,350
The only thing to add here is the net income and the depreciation. We add back the depreciation because this is an expense that is not monetary, therefore the funds are still in the company but the government allow us to discounted from taxes.
This is how this should look like
Notes Payable 820000
Interest 6% (49200 )
Income Statement
Gross Sales $1.200.000
(-)COGS -$590.000
(=)Gross Margin $610.000
(-)Selling Expenses -$243.000
(-)Depreciation -$120.000
(=)EBIT $247.000
(-)Interest Expense -$49.200
(=)EBT $197.800
(-)Taxes 25% -$49.450
(=)Net Income $148.350
Operating Cash Flow
Net Income $148.350
(+)Depreciation $120.000
(=)Operatign Cash Flo $268.350
Best of luck.
The company's net income is $115,750. The operating cash flow for the company is $320,250.
Explanation:To calculate the company's net income, we need to subtract the cost of goods sold, selling expenses, interest expenses, and depreciation from the gross sales. The net income is then subjected to the tax rate to calculate the after-tax net income. In this case, the company's net income is $115,750.
To calculate the company's operating cash flow, we start with the net income and then add back the depreciation expense. We also subtract the increase in notes payable. The operating cash flow for the company is $320,250.
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On May 1, Cullumber Company, a company that provides flying lessons, was started by issuing common stock in exchange for cash of $45,100. Following are the assets and liabilities of the company on May 31, 2019, and the revenues and expenses for the month of May. Cash $ 4,800 Notes Payable $28,000 Accounts Receivable 7,550 Rent Expense 1,150 Equipment 64,150 Maintenance and Repairs Expense 600 Service Revenue 6,950 Gasoline Expense 2,250 Advertising Expense 650 Utilities Expense 150 Accounts Payable 1,550 No additional investments were made in May, but the company paid dividends of $350 during the month. Prepare an income statement for the month of May.
Answer:
Explanation:
Before preparing the income statement, first, we have to compute the net income or net loss. So, the calculation is shown below:
In the simplest form, the net income = Total revenue - total expenses
= Service Revenue - Rent Expense - Maintenance and Repairs Expense - Gasoline Expense - Advertising Expense - Utility Expense
= $6,950 - $1,150 - $600 - $2,250 - $650 - $150
= $2,150
The preparation of the income statement is presented in the spreadsheet. Kindly find the attachment below:
In the AD partnership, Allen's capital is $140,000 and Daniel's is $40,000 and they share income in a 3:1 ratio, respectively. They decide to admit David to the partnership. Each of the following questions is independent of the others.
Refer to the information provided above. David invests $50,000 for a one-fifth interest. What amount of goodwill will be recorded?
A. $20,000
B. $4,000
C. $40,000
D. $15,000
Answer:
A. $20,000
Explanation:
For computing the goodwill amount we have to apply the formula which is shown below:
= Required capital - actual capital
where,
We know that David invested $50,000 for one-fifth interest
So, Required capital = David investment amount × 5
= $50,000 × 5
= $250,000
And, the actual capital would be
= Allen capital + Daniel capital + David investment
= $140,000 + $40,000 + $ 50,000
= $230,000
So, the goodwill would be
= $250,000 - $230,000 = $20,000
In economics, what is meant by "optimal decisions are made at the margin?" The concept of the margin was initially developed in 2012 by Professor Marginus; research is still being done on how it can be used for decision-making. The idea of the margin does not help compare trade-offs and is not relevant to decision-making. The idea of the margin is related to making decisions while thinking about the benefits and costs of small changes in behavior. The idea of the margin is that all economic decisions are made at the very fringes of society.
Answer:
The idea of the margin is related to making decisions while thinking about the benefits and costs of small changes in behavior.
Explanation:
Economic theory suggests that economic agents (firms, consumers and government) think on the sidelines. This means that decisions are made taking into consideration the benefits and costs of each choice. For example, for a firm to increase a unit of production (marginal unit) it will calculate the cost of production of that unit (marginal cost) and the profit that additional unit will generate (marginal benefit).
Optimal decisions are made at the margin by considering the benefits and costs of small changes in behavior or production.
Explanation:Optimal decisions are made at the margin means that decisions are made by considering the benefits and costs of small changes in behavior or production. It involves analyzing the additional benefits and costs of taking one more or one less unit of a resource or activity. For example, when deciding how long to sleep or how much time to allocate to exercise, thinking at the margin involves weighing the marginal benefit against the marginal cost to make the most productive or beneficial decision possible.
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Advertising 2,800 Beginning of year inventory 37,800 Depreciation 1,300 End of year inventory 38,200 General and administrative expenses 5,100 Gross sales 145,600 Interest expense 5,000 Lease payments 2,600 Management salaries 39,500 Purchases 41,600 Research and development 7,800 Returns and allowances 8,100 Taxes 16,200. What was gross profit from income statement for the year ending December 31, 2017? 2. What was operating profit (i.e., EBIT) from Delicious Dishes income statement for the year ending December 31, 2017?
Answer:
Gross Profit: $136.200
Operating Profit: $ 78.400
Explanation:
Gross Margin income statement
Sales $ 145.600 Return & Allowance -$ 8.100 Depreciation -$ 1.300Gross Profit $ 136.200
GAV Expenses -$ 5.100 Lease Expenses -$ 2.600 Management Expenses -$ 39.500 R&D Expenses -$ 7.800 Advertising Expenses -$ 2.800EBIT $ 78.400
Interest Expenses -$ 5.000EBT $ 73.400
Taxes Expenses -$ 16.200Net Income $ 57.200
This year, Clearwater Inc., will produce 55,600 hot water heaters at its plants in Harrisburg, PA in order to meet its expected demand. To accomplish this, each laborer at the Clearwater Plant will work 150 hours per month. If the labor productivity at the plant is 0.20 water heaters per labor-hour, How many heaters can one labor produce every month?
Answer:
Working 150 hours and producing 0.2 water heater per hour, each worker produce 30 heater per month.
Explanation:
the productivity is 0.20 water heater per labor-hour
during the month an employee works 150 hours
to know the amount of water heater per laborer, we will multiply the productivity rate by the amount of hours per month
150 hours x 0.2 = 30 water heater
Each employee produces 30 water heater.
A single laborer at the Clearwater Plant, with a productivity rate of 0.20 heaters per labor-hour and working 150 hours per month, is expected to produce 30 hot water heaters each month.
Explanation:Given that the labor productivity at the Clearwater Plant is 0.20 water heaters per labor-hour, we can calculate how many heaters one laborer can produce in a month by multiplying the productivity rate by the number of hours worked per month.
One laborer works 150 hours per month. Therefore, the number of heaters one laborer can produce every month is:
0.20 heaters/labor-hour × 150 hours/month = 30 heaters/month
Thus, a single laborer at Clearwater Inc. is expected to produce 30 hot water heaters each month.
Classify each of the following financial statement items taken from Ming Corporation’s balance sheet.
Classify each of the following financial statement Stockholders’ EquityLong-term InvestmentsCurrent AssetsIntangible AssetsLong-term LiabilitiesCurrent LiabilitiesProperty, Plant, and Equipment
Accounts payable
Classify each of the following financial statement Property, Plant, and EquipmentLong-term LiabilitiesStockholders’ EquityIntangible AssetsCurrent AssetsLong-term InvestmentsCurrent Liabilities
Accounts receivable
Classify each of the following financial statement Stockholders’ EquityCurrent AssetsProperty, Plant, and EquipmentLong-term LiabilitiesIntangible AssetsCurrent LiabilitiesLong-term Investments
Accumulated depreciation—equipment
Classify each of the following financial statement Intangible AssetsCurrent AssetsStockholders’ EquityLong-term LiabilitiesProperty, Plant, and EquipmentCurrent LiabilitiesLong-term Investments
Buildings
Classify each of the following financial statement Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant, and EquipmentStockholders’ Equity
Cash
Classify each of the following financial statement Intangible AssetsCurrent AssetsLong-term InvestmentsCurrent LiabilitiesProperty, Plant, and EquipmentLong-term LiabilitiesStockholders’ Equity
Interest payable
Classify each of the following financial statement Current AssetsCurrent LiabilitiesLong-term InvestmentsLong-term LiabilitiesProperty, Plant, and EquipmentStockholders’ EquityIntangible Assets
Goodwill
Classify each of the following financial statement Intangible AssetsCurrent AssetsCurrent LiabilitiesProperty, Plant, and EquipmentLong-term InvestmentsLong-term LiabilitiesStockholders’ Equity
Income taxes payable
Classify each of the following financial statement Intangible AssetsProperty, Plant, and EquipmentLong-term LiabilitiesCurrent AssetsLong-term InvestmentsCurrent LiabilitiesStockholders’ Equity
Inventory
Classify each of the following financial statement Current LiabilitiesStockholders’ EquityIntangible AssetsLong-term LiabilitiesCurrent AssetsLong-term InvestmentsProperty, Plant, and Equipment
Stock investments (to be sold in 7 months)
Classify each of the following financial statement Long-term LiabilitiesLong-term InvestmentsProperty, Plant, and EquipmentCurrent AssetsIntangible AssetsStockholders’ EquityCurrent Liabilities
Land (in use)
Classify each of the following financial statement Long-term InvestmentsCurrent AssetsIntangible AssetsStockholders’ EquityCurrent LiabilitiesLong-term LiabilitiesProperty, Plant, and Equipment
Mortgage payable
Classify each of the following financial statement Current LiabilitiesLong-term InvestmentsLong-term LiabilitiesProperty, Plant, and EquipmentStockholders’ EquityIntangible AssetsCurrent Assets
Supplies
Classify each of the following financial statement Property, Plant, and EquipmentLong-term InvestmentsStockholders’ EquityLong-term LiabilitiesIntangible AssetsCurrent AssetsCurrent Liabilities
Equipment
Classify each of the following financial statement Long-term InvestmentsProperty, Plant, and EquipmentCurrent LiabilitiesLong-term LiabilitiesStockholders’ EquityIntangible AssetsCurrent Assets
Prepaid rent
Answer:
Accounts payable - Current Liabilities
Accounts receivable- Current Assets
Accumulated depreciation—equipment - Property,Plant & Equipment
Buildings - Property,Plant & Equipment
Cash - Current Assets
Interest payable - Current liabilities
Goodwill - Intangible assets
Income taxes payable - Current liabilities
Inventory - Current Assets
Stock investments (to be sold in 7 months) - Current Assets
Land (in use) - Property,Plant & Equipment
Mortgage payable - long term liabilities
Supplies - Current Assets
Equipment - Property,Plant & Equipment
Prepaid rent - Current Assets
Financial statement items on Ming Corporation's balance sheet can be classified into specific categories such as Stockholders' Equity, Current Assets, Intangible Assets, Long-term Liabilities, Current Liabilities, and Property, Plant, and Equipment.
Stockholders' Equity: Long-term Investments
Current Assets: Accounts Receivable, Cash, Inventory, Supplies, Prepaid Rent
Intangible Assets: Goodwill
Long-term Liabilities: Interest Payable, Mortgage Payable
Current Liabilities: Accounts Payable, Income Taxes Payable
Property, Plant, and Equipment: Accumulated Depreciation—Equipment, Buildings, Land (in use), Equipment
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Fred purchases a bond, newly issued by the Big Time Corporation, for $10,000. The bond pays $400 to its holder at the end of the first, second, and third years and pays $10,400 upon its maturity at the end of four years. The principal amount of this bond is ___, the coupon rate is ____, and the term of this bond is _____.
A. $400 ; 40%; four years
B. $10,000; 4%; four years
C. $10,000; $400; 4% D. $10,400; 4%; four years
Answer: The correct answer is "B. $10,000; 4%; four years".
Fred purchases a bond, newly issued by the Big Time Corporation, for $10,000. The bond pays $400 to its holder at the end of the first, second, and third years and pays $10,400 upon its maturity at the end of four years. The principal amount of this bond is $10000, the coupon rate is 4%, and the term of this bond is four years.
Explanation: The maturity of the bond is at 4 years.
Its future value or face value is 10000.
The coupon rate is equal to [tex]\frac{Cupon}{Face value}[/tex] x 100
So Coupon rate = [tex]\frac{400}{10000}[/tex] x 100 = 4%
The principal amount of the bond is $10,000, the coupon rate is 4%, and the term of the bond is four years.
Explanation:The principal amount of the bond is $10,000 because that is the initial purchase price of the bond. The coupon rate is 4% because the bond pays $400 each year, which is 4% of the principal amount. The term of the bond is four years because it pays $400 per year for three years and then $10,400 at the end of the fourth year, which is the maturity date.
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Garrett Corporation provided the following information for the year: Beginning Balancelong dashWork-in-Process Inventory $ 25 comma 000 Ending Balancelong dashWork-in-Process Inventory 57 comma 000 Beginning Balancelong dashDirect Materials 80 comma 000 Ending Balancelong dashDirect Materials 59 comma 000 Purchaseslong dashDirect Materials 362 comma 000 Direct Labor 472 comma 000 Indirect Labor 18 comma 000 Depreciation on Factory Plant and Equipment 23 comma 000 Plant Utilities and Insurance 268 comma 000 What was the amount of direct materials used in production during the year?
Answer:
Direct material used= $383000
Explanation:
Giving the following information, we need to calculate the amount of direct material used in production:
Beginning Work-in-Process Inventory $ 25000
Ending Work-in-Process Inventory 57000
Beginning Direct Materials 80000
Ending Direct Materials 59000
Purchases Materials 362000
Direct Labor 472000
Indirect Labor 18000
Depreciation on Factory Plant and Equipment 23000
Plant Utilities and Insurance 268000
Direct material used= beginning inventory direct material + purchase direct material - ending inventory direct material
Direct material used= 80000 + 362000 - 59000= $383000
6. Determine the unit cost of each of these products using the method discussed in class. Then compare the resulting costs when all the overhead is allocated to the labor. (0.2 points) Indirect overhead = $150,000,000 Material Overhead = $9,100,000 Labor efficiency 87% Total labor hours 1,900,000 Direct labor rate $17.50 Total material purchased $510,000,000 Number of different products manufactured – approximately 300
1. Make the following statement True by filling in the blank from the choices below: Critical infrastructure owners and operators play an important partnership role in the critical infrastructure security and resilience community because they ____.
Answer:
The answer is "Develop and implement security and resilience programs for the critical infrastructure under their control, while taking into consideration the public good as well".
Explanation:
In the past, industrial control systems were generally not connected to IT networks and did not contain complex computing capabilities; therefore, they could be adequately protected using physical security measures like locks and fences. However, as OT has become more integrated with IT, such physical measures are becoming less adequate in securing the underlying critical assets.
Final answer:
To make the statement true, critical infrastructure owners and operators are important because they share responsibility and risk with partners, which includes leveraging complementary skills and making business decisions together.
Explanation:
The statement, “Critical infrastructure owners and operators play an important partnership role in the critical infrastructure security and resilience community because they share responsibility and risk with one or more partners,” becomes true when filled in with the concept of shared responsibility and risk. Partnerships in critical infrastructure sectors are vital as they often involve complementary skills that can significantly bolster the security and resilience of the infrastructures. Additionally, partners in these arrangements also have the capacity to make all business decisions jointly, which is an important aspect of managing shared infrastructure.
You are considering implementing a lockbox system for your firm. The system is expected to reduce the average collection time by 1.2 days. On an average day, your firm receives 320 checks with an average value of $99 each. The daily interest rate on Treasury bills is 0.014 percent. What is the anticipated amount of the daily savings if this system is implemented?
Answer:
$532.224
Explanation:
A lockbox system is a working capital management technique that accelerates cash collection. By using a lockbox system, daily collections of $31,680 ($320 x 99) will contribute to accelerated collection/savings of $38,016 ($31,680 x 1.2). This can be used to invest in Treasury bills that will provide daily savings/return on investment of $532.224 ($38,016 x 0.014%).
You run a hotel with 200 rooms. Fixed daily cost is $1500 which includes staff salary and property charges, maintenance cost is additional $300 daily. Variable cost per room is $15 which includes cleaning, utility cost etc. You charge $100 per room per day. You sold 50 rooms today, how much revenue did you earn.
Answer:
The revenue is $2,450
Explanation:
The computation of the revenue is shown below:
= Sales - variable cost - additional costs - fixed cost
where,
Sales = Selling units × price per unit
= 50 rooms × $100
= $5,000
Variable cost = variable cost × price per unit
= 50 rooms × $15
= $750
The other cost value would remain the same
Now put these values to the above formula
So, the value would equal to
= $5,000 - $750 - $300 - $1,500
= $2,450
Answer:
The revenue we earned for 1 day by renting the rooms equals $2450.
Explanation:
Since we rent 50 rooms at the rate of $100 per room thus the overall revenue that we earn equals
[tex]R=50\times 100=$5000[/tex]
Now the expenditures include:
1) Fixed daily cost = $1500
2) Maintenance cost = $300
3) Variable cost = $15 thus cost for 50 rooms equals = 15x50= $750
Thus the total expenditure on the hotel is the sum of all the above charges
thus [tex]E=1500+300+750=2250[/tex]
Thus the net revenue is the difference in total revenue and the total expenditure
Thus Net Revenue =$5000-$2550=$2450
For policymakers the problem with a recessionary gap is _____ and the problem with an expansionary gap is _____.
A. a tendency for inflation to develop; wasted resources B. wasted resources; a tendency for inflation to develop
C. an increase in cyclical unemployment; an increase in structural unemployment
D. an increase in structural unemployment; an increase in cyclical unemployment
Answer:
The correct answer is option B.
Explanation:
A recessionary gap implies that the resources are not being fully utilized. This means resources are being wasted.
An expansionary gap, on the other hand, means that the economy is producing at more than potential level. The price level at this point is high. There is a tendency for inflation to develop in this situation.
To curb the recessionary gap the economy can adopt the expansionary fiscal and monetary policy. While to curb expansionary gap, contractionary monetary and fiscal policy can be adopted.
A partial listing of costs incurred during March at Febbo Corporation appears below: Factory supplies $ 9,000 Administrative wages and salaries $ 85,000 Direct materials $ 126,000 Sales staff salaries $ 30,000 Factory depreciation $ 33,000 Corporate headquarters building rent $ 43,000 Indirect labor $ 26,000 Marketing $ 65,000 Direct labor $ 99,000 "The total of the product costs listed above for March is": Multiple Choice $516,000 $68,000 $293,000 $223,000
The total product costs for Febbo Corporation in March is calculated by adding up direct materials, direct labor, and factory overheads (includes factory supplies, factory depreciation, indirect labor), which equals $293,000.
Explanation:The total product costs would be the addition of direct materials, direct labor, and factory overheads. Here, 'Factory supplies', 'Factory depreciation', and 'Indirect labor' fall under factory overheads. So you simply need to add up those costs.
Adding these amounts together results in: Direct materials ($126,000) + Direct labor ($99,000) + Factory supplies ($9,000) + Factory depreciation ($33,000) + Indirect labor ($26,000) = $293,000.
So, the total of the product costs listed above for March is $293,000.
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In 2018, Rachel received a $1,900 refund of state income taxes that she paid in 2017. In 2017, Rachel claimed itemized deductions of $6,900 and this total included $2,800 of state income taxes. How much of the refund, if any, must Rachel include in her 2018 gross income if the standard deduction for 2017 was $5,800?
Answer:
$1,100
Explanation:
The amount which Rachel must include in her 2018 gross income would be computed by applying an equation which is shown below:
= Itemized deductions - standard deductions
= $6,900 - $5,800
= $1,100
The $1,100 would be included in the $1,900 refund which is presented in her 2018 gross income.
The excess amount between itemized deductions and standard deductions would indicate the extra refund amount which is already included in its $1,900 refund amount
Nick's Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $3 at the end of each year. The preferred sells for $35 a share. What is the stock's required rate of return? (Assume the market is in equilibrium with the required return equal to the expected return.) Round the answer to two decimal places.
Answer:
The stock's required rate of return is 8.57%
Explanation:
For computing the required rate of return for the stock, we need to apply the formula which is shown below:
The Required rate of return = (Dividend ÷ price) × 100
= ($3 ÷ $35 per share) × 100
= 8.57%
The find out the required rate of return, the dividend should be proportional to the price.
Which of the following accurately describes the difference between a change in supply and a change in quantity supplied? a. A change in quantity supplied is a movement along the supply curve, but a change in supply is a shift of the entire supply curve. b. A change in supply is a movement along the supply curve, but a change in quantity supplied is a shift of the entire supply curve. c. There is no difference; they mean the same thing. d. A decrease in supply causes an increase in demand, but a decrease in quantity supplied causes a decrease in demand.
Answer:
Option A
Explanation:
First let's make see the what is the difference (they are not the same thing.) And then lets analize which statement is the most accurate.
A change in supply and a change in quantity supplied are different things. The change in supply is caused by changes in costs and incentives that change how much a producer can and will produce at a given price.
The change in quantiy supplied is caused simply by a change in the retail price of the product.
The change in quantity supplied is shown as a movement along the curve. While the change in supply is shown graphically as a movement of the supply curve.
As we can see, that means that A is the correct answer.
The following data pertains to activity and costs for two months: June July Activity level in units........... 10,000 12,000 Direct materials .................. $16,000 $ ? Fixed factory rent ............... 12,000 ? Manufacturing overhead .... 10,000 ? Total cost ........................... $38,000 $42,900 Assuming that these activity levels are within the relevant range, the manufacturing overhead for July was: A) $10,000 B) $11,700 C) $19,000 D) $9,300
Answer:
B) $11,700
Explanation:
The computation of the manufacturing overhead is shown below:
Total cost = Direct material + Fixed factory rent + Manufacturing overhead
where,
Direct material = July units × (direct material cost ÷ June units)
= 12,000 units × ($16,000 ÷ 10,000 units)
= $19,200
The other items values would remain the same.
Now put these values to the above formula
So, the value would equal to
$42,900 = $19,200 + $12,000 + Manufacturing overhead
$42,900 = $31,200 + Manufacturing overhead
So, manufacturing overhead = $11,700
Suppose Natasha currently makes $50,000 per year working as a manager at a cable TV company. She then develops two possible entrepreneurial business opportunities. In one, she will quit her job to start an organic soap company. In the other, she will try to develop an Internet-based competitor to the local cable company. For the soap-making opportunity, she anticipates annual revenue of $465,000 and costs for the necessary land, labor, and capital of $395,000 per year. For the Internet opportunity, she anticipates costs for land, labor, and capital of $3,250,000 per year as compared to revenues of $3,275,000 per year. What opportunity should she pursue?
Answer:
It will be better to pursue the soap business as it provide a 20,000 economic gain.
Explanation:
currently Natasha wages: $50,000
soap business:
sales revenue 465,000 - cost = 395,000 = 70,000 accounting profit
less 50,000 opportunity cost: 20,000 economic gain
Internet opportunity as it will compete with the local TV company shw currently works, most probably will be fired or quit the job.
3,275,000 revenues - 3,250,000 cost = 25,000 accounting profit
less 50,000 opportunity cost: (25,000) economic loss
It will be better to pursue the soap business as it provide a 20,000 economic gain.
Final answer:
Considering both accounting and implicit costs, the organic soap business offers Natasha an economic profit of $20,000, while the Internet business would result in a loss of $25,000. Hence, Natasha should pursue the organic soap business opportunity.
Explanation:
When evaluating which entrepreneurial opportunity to pursue, Natasha must consider not only the accounting profit but also the economic profit, which factors in both explicit and implicit costs. The organic soap business anticipates an annual revenue of $465,000 with expenses of $395,000, resulting in an accounting profit of $70,000. Meanwhile, the Internet-based business expects revenues of $3,275,000 against costs of $3,250,000, leaving an accounting profit of $25,000.
However, Natasha must also consider the loss of her current $50,000 salary as an implicit cost. The economic profit calculation would be the accounting profit minus the implicit cost. For the soap business, the economic profit would be $20,000 ($70,000 - $50,000), and for the Internet business, it would result in a loss of -$25,000 ($25,000 - $50,000). Thus, based on economic profit, Natasha should pursue the organic soap business opportunity.
Suppose that every time a fund manager trades stock, transaction costs such as commissions and bid–ask spreads amount to 0.4% of the value of the trade. If the portfolio turnover rate is 50%, by how much is the total return of the portfolio reduced by trading costs? (Round your answer to 1 decimal place.)
Answer: 0.4%
Explanation:
Given that,
At every time a fund manager trades stock, then
Transaction costs = 0.4% of the value of the trade
Portfolio turnover rate = 50% ; On an average, 50% of the portfolio stock is sold and exchange with the other securities every year.
Trading costs on selling orders = 0.4%
Trading costs on buying orders = 0.4%
Therefore,
Total return of the portfolio reduced by trading costs:
[tex]= 2\times0.50\times0.004[/tex]
= 0.4%
Q#2 (Chapter 9). A diversified company has decided to use its overall firm WACC as a performance benchmark for rating its divisional managers and to decide whether new projects from its three divisions should be funded for investment capital. The firm WACC is 12%. The divisional WACCs for its high risk, average risk, and low risk divisions are 16%, 11.9%, and 8%, respectively. Please explain the pros and cons of using the firm WACC in evaluating its divisional managers and projects. Remember that WACC can be interpreted as a hurdle rate or the minimum acceptable return. Limit your answers to 10 sentences.
Answer:
Pros: Use of singe hurdle rate saves time in the evaluation of projects which results in prompt decision making.
Cons: Company may reject good projects and accept bad ones due to the assumptions underlying WACC use in capital budgeting.
Explanation:
Pros of using WACC: The use of WACC implies that the company uses a single hurdle rate for all projects, which simplifies the decision making and saves time when evaluating projects
Cons of using WACC: Use of WACC assumes that there is no change in capital structure i.e all projects are financed in exactly the same way and all projects have the same risk . These assumptions may lead to the company rejecting good projects and accepting bad ones. For example the company may accept a high risk project with a return of 14% when the minimum return that should be accepted according to the high risk divisional WACC is 16%. Likewise, the company may reject a low risk project with a return of 11%, when it is in fact a good project whose minimum return should be 8% as per the low risk divisional WACC.
Which of the following compensation proposals is most likely to be in the best interest of the company’s shareholders? A base salary of $500,000 plus a stock option package for 250,000 shares, with 20% of shares maturing at the end of each of the next five years A base salary of $500,000 plus perquisites worth $250,000 A base salary of $500,000 plus a stock option package for 250,000 shares that mature in six months
Answer:
A base salary of $500,000 plus a stock option package for 250,000 shares, with 20% of shares maturing at the end of each of the next five years
Explanation:
This options will force the employee to stay in the firm for at least 5 years
Also it will tie his contribution to the market share
So their interest will be alinged with the company's interest of increasing his value and project better earnings through the five years program.
Last year Stealth Bank received $100 million in interest payments from borrowers. $25 million in loans were written off as uncollectible. It paid out $30 million in interest to its depositors and collected $25 million for various fees it charged. Administration costs were $22 million and taxes were $3 million. What was the value of Stealth Bank's accounting profits?
Answer:
Accounting profit: 45,000,000
Explanation:
The accounting profit will bethe result of subtacting the expenses of the period from the revenues ofhte period.
interest revenues 100 millions
service charges 25 millions
write off (25) millions
interest paid (30) millions
admin cost (22) millions
taxes ( 3) millions
accounting profit: 45 millions
Financial markets and intermediaries:
A. channel savings to real investment.
B. increase risks for businesses.
C. generally reduce the liquidity of securities.
D. prevent the transportation of cash across time.
Answer: A. channel savings to real investment.
Explanation: Financial intermediaries are institutions that serve as intermediaries to make financial processes easier and more efficient.
The most common are banks and brokerage firms, so they help channel investment channels and improve the inherent risk through established regulations.