Answer:
Selection 1 has lowest NPV = $316.9
Explanation:
Rate of discount is 10% therefore PV factor for every year = [tex]\frac{1}{(1+0.1){^n}}[/tex]
Here 0.1 because interest rate is 10% n = number of year for year 1 = 1 for year 2 = 2 and so on.
Selection 1
Year Cash Flow PV Factor Value
1 $100 0.909 $90.9
2 $100 0.826 $82.6
3 $100 0.751 $75.1
4 $100 0.683 $68.3
Net Present Value = $316.9
Selection 2
In this only in 4th year the payment is received = $500 X 0.683 PV Factor
= $341.5
Selection 3
Only in year 1 $350 is received = $350 X 0.909 = $318.15
Selection 4
Year Cash Flow PV Factor Value
1 $50 0.909 $45.45
2 $50 0.826 $41.3
3 $50 0.751 $37.55
4 $375 0.683 $256.125
Net Present Value = $380.425
Selection 1 has lowest NPV = $316.9
Selection a) has the lowest present value of approximately $364.20 when the discount rate is 4%. The correct answer is option a : $100; $100; $100; $100
To find the present value of each selection, we use the formula for calculating the present value of a series of cash flows:
[tex]\[ PV = \frac{CF_1}{(1+r)^1} + \frac{CF_2}{(1+r)^2} + \frac{CF_3}{(1+r)^3} + \frac{CF_4}{(1+r)^4} \][/tex]
where [tex]\( CF_n \)[/tex] represents the cash flow at the end of period n and r is the discount rate.
Let's calculate the present value for each selection:
a) [tex]\( PV_a = \frac{100}{(1+0.04)^1} + \frac{100}{(1+0.04)^2} + \frac{100}{(1+0.04)^3} + \frac{100}{(1+0.04)^4} \)[/tex]
[tex]\[ PV_a = \frac{100}{1.04} + \frac{100}{1.04^2} + \frac{100}{1.04^3} + \frac{100}{1.04^4} = 96.15 + 92.59 + 89.29 + 86.17 = 364.20 \][/tex]
b) [tex]\( PV_b = \frac{0}{(1+0.04)^1} + \frac{0}{(1+0.04)^2} + \frac{0}{(1+0.04)^3} + \frac{450}{(1+0.04)^4} \)[/tex]
[tex]\[ PV_b= \frac{450}{1.04^4} = \frac{450}{1.1699} = 384.69 \][/tex]
c) [tex]\( PV_c = \frac{400}{(1+0.04)^1} + \frac{0}{(1+0.04)^2} + \frac{0}{(1+0.04)^3} + \frac{0}{(1+0.04)^4} \)[/tex]
[tex]\[ PV_c = \frac{400}{1.04} = 384.62 \][/tex]
d) [tex]\( PV_d = \frac{50}{(1+0.04)^1} + \frac{50}{(1+0.04)^2} + \frac{50}{(1+0.04)^3} + \frac{275}{(1+0.04)^4} \)[/tex]
[tex]\[ PV_d = \frac{50}{1.04} + \frac{50}{1.04^2} + \frac{50}{1.04^3} + \frac{275}{1.04^4} = 48.08 + 46.30 + 44.59 + 242.71 = 381.68 \][/tex]
Therefore, selection a) has the lowest present value of approximately $364.20.
Complete question : Consider the cash flows in selections a through d. In each case, the first cash flow occurs at the end of the first period, the second cash flow at the end of the second period, and so on. Which of the following selections has the lowest present value if the discount rate is 4%?
a) $100; $100; $100; $100
b) $0; $0; $0; $450
c) $400; $0; $0; $0
d) $50; $50; $50; $275
Agler Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials $ 1 Direct labor 10 Variable overhead 5 Fixed overhead 8 Total $ 24 Funkhouser Company has contacted Agler with an offer to sell it 4,000 of the subassemblies for $17 each. If Agler buys the subassemblies, $2 of the fixed overhead per unit will be allocated to other products. Should Agler make or buy the subassemblies?
Answer:
It should buy the subassemblies
as it generates a 4,000 cost savings.
Explanation:
DM 1
DL 10
VFO 5
FO 8
total 24
make cost:
4,000 x 24 = 96,000
buy cost:
4,000 x 17 = 68,000
fixed cost:
8 per unit - 2 allocated in other product: 6 per unit
4,000 x 6 = 24,000
Total cost 92,000
Current cost - alternative cost:
96,000 - 92,000 = 4,000 COST SAVINGS
In 2014, GoPro spent \$27.5$27.5 million on capital expenditures, experienced an increase in net working capital (including cash) equal to \$239$239 million, and realized \$18$18 million in depreciation. What is GoPro's unlevered free cash flow for 2014? *Make sure to input all currency answers without any currency symbols or commas, and use two decimal places of precision.
In this case, the called information is not enough to calculate the unlevered free cash flow. We need both the EBIT and the taxes, which are not given in the question. We can do a simplified calculation using the available data, but it will not be the accurate Unlevered Free Cash Flow without the missing figures.
Explanation:Unlevered Free Cash Flow (UFCF) is a company's cash flow before taking interest payments into account. It is calculated by adding depreciation back to Earnings Before Interest and Taxes (EBIT), then subtracting taxes, and finally reducing the net amount by the change in net working capital and capital expenditures. In this case, the question does not provide information about GoPro's EBIT or taxes, which are necessary components in calculating UFCF. However, if we take the three provided figures, we can partially calculate a simplified UFCF using the following equation: EBIT + Depreciation - Capital Expenditures - Change in Net Working Capital. Using the provided information, we find the calculation to be: Simplified UFCF = $18 million (depreciation) - $27.5 million (capital expenditures) - $239 million (change in Net Working Capital). Unfortunately, without the EBIT and tax figures, we can't provide a complete answer.
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Which of the following is not important to know when preparing the flexible budget? A) Budgeted production levels B) Actual production levels C) Actual per-unit costs D) Budgeted per-unit costs E) All of the above are important for the flexible budget
All of the above are important for the flexible budget
Final answer:
All options provided are important when preparing a flexible budget. Actual and budgeted production levels, as well as actual and budgeted per-unit costs, are necessary to adjust and analyze the budget effectively. Costs like average cost, average variable cost, variable costs, and marginal cost are measured on a per-unit basis, while production technology refers to manufacturing processes that influence cost structure.
Explanation:
The correct answer to the student's question is that all the options provided (A, B, C, D) are important to know when preparing a flexible budget. Specifically, actual production levels are necessary to adjust the budget according to the actual activity during the period, while budgeted production levels provide a baseline for performance evaluation and planning. Furthermore, both actual per-unit costs and budgeted per-unit costs are essential as they help in analyzing the variances between expected and actual performance.
Costs measured on a per-unit basis typically include average cost, average variable cost, variable costs, and marginal cost. Fixed costs, however, do not vary with the production level and are therefore not calculated on a per-unit basis when considering the total fixed costs, although they can be expressed on a per-unit basis if allocated across units produced. In contrast, production technology refers to the method or process through which goods are manufactured and it influences the efficiency and cost structure of production.
Alpha Industries is considering a project with an initial cost of $8 million. The project will produce cash inflows of $1.49 million per year for 8 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.61 percent and a cost of equity of 11.27 percent. The debt–equity ratio is .60 and the tax rate is 35 percent. What is the net present value of the project?
To find the net present value of a project in the business field, calculate the weighted average cost of capital (WACC) using the cost of equity, cost of debt, tax rate, and debt-equity ratio. Use the WACC as the discount rate to calculate the NPV. A positive NPV generally suggests the project could add value.
Explanation:The subject of this question pertains to the field of finances, more specifically to corporate finance and investment analysis in a business context. To calculate the net present value (NPV), we first need to calculate the weighted average cost of capital (WACC). The WACC incorporates the cost of equity and cost of debt adjusted for taxes, accounting for the debt-equity ratio. In this case, the WACC gets calculated as follows: Cost of Equity * Equity/(Debt+Equity) + Cost of Debt * (1-tax rate) * Debt/(Debt+Equity).
Substitute the given values to calculate the WACC, and then use the resulting WACC as the discount rate to calculate the NPV of the project by subtracting the initial investment from the sum of future cash inflows discounted back to present dollar value.
Please note, that it's also advisable to compare the resulting NPV with other potential investments to make an informed decision. If NPV is positive, it generally indicates that the project might add value to the firm.
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A monopolist earns $60 million annually and will maintain that level of profit indefinitely, provided that no other firm enters the market. However, if another firm enters the market, the monopolist will earn $60 million in the current period and $20 million annually thereafter. The opportunity cost of funds is 18 percent, and profits in each period are realized at the beginning of each period.
a. What is the present value of the monopolist’s current and future earnings if entry occurs?b. If the monopolist can earn $35 million indefinitely by limit pricing, should it do so? Explain.
Answer:
Given:
Monopolist earns = $60 million
The opportunity cost of funds = 18 %
The monopolist will earn = $20 million after another firm enters the market
The present value of the monopolist’s current and future earnings if entry occurs can be computed using the following formula:
[tex]\Pi_{MD} = Earning Annualy + \frac{Earning After firm enters}{Opportunity cost}[/tex]
[tex]\Pi_{MD} = \Pi_{M} + \frac{\Pi_{D}}{i}[/tex]
[tex]\Pi_{MD} = 60 + \frac{20}{0.18}[/tex]
[tex]\Pi_{MD} = 171.1[/tex]
The present value of the monopolist’s is $171.1 million
If the monopolist can earn $35 million indefinitely by limit pricing,then the present value of the monopolist’s current earnings:
[tex]\Pi_{MD} = \Pi_{M} + \frac{\Pi_{D}}{i}[/tex]
[tex]\Pi_{MD} = 60 + \frac{35}{0.18}[/tex]
[tex]\Pi_{MD} = 254.4[/tex]
∴ If the monopolist can earn $35 million indefinitely by limit pricing, then they should do so.
Final answer:
The present value of the monopolist’s earnings when entry occurs is the $60 million for the first year plus the discounted value of the $20 million annual profit thereafter. When compared to the present value of $35 million annual profits indefinitely achieved through limit pricing, the monopolist can make a strategic decision by comparing the present values of both scenarios.
Explanation:
To solve for the present value of the monopolist's current and future earnings with another firm entering the market, we must discount the future profits to the present value using the opportunity cost of funds, in this case, 18%. The monopolist earns $60 million initially and $20 million annually thereafter. The present value of earning $60 million indefinitely is calculated by dividing $60 million by the opportunity cost rate, which is $60 million / 0.18. However, since entry occurs, we calculate the present value of the first year's profit of $60 million plus the perpetuity starting from the second year at $20 million annually, discounted by the 18% rate.
The first year's profit is:
PVfirst year = $60 million
The perpetuity starting from the second year is:
PVsecond year onwards = $20 million / 0.18
The total present value when another firm enters the market is:
PVtotal = PVfirst year + PVsecond year onwards / (1 + 0.18)
In the case of limit pricing, the monopolist would earn $35 million indefinitely. To calculate the present value of these earnings:
PVlimit pricing = $35 million / 0.18
To decide if the monopolist should pursue limit pricing, we compare the present value of earnings with limit pricing to that of earning $60 million initially and $20 million thereafter when there is entry.
Castillo Corporation, a manufacturer, reports costs for the year as follows: Direct Materials Used $735,000 Wages to Line Workers 510,000 Office Rent 26,000 Indirect Materials Used 700,000How much is the total period costs for Castillo? $735,000 $510,000 $26,000 $700,000
Answer:
The correct answer would be option C, $26000
Explanation:
There are a lot of costs associated with the production, Advertisement, Sales, etc of a product. These costs acts as the overheads for the company. If there is a cost which cannot be capitalized into Inventory, Prepaid expenses, or fixed assets, it is called as the Period Cost. Good examples of Period costs are Advertisement expenses, Selling Expenses, etc.
In the given question, Office Rent is the such type of a cost which cannot be capitalized into above mentioned accounts. Office Rent comes under the period cost category. So the correct answer is $26000.
Final answer:
The total period costs for Castillo Corporation are $26,000, which is the cost for Office Rent. This is the only non-manufacturing cost provided in the data.
Explanation:
The total period costs for Castillo Corporation consist of the costs that are not directly tied to the manufacturing process, which include selling and administrative expenses. In the given data, the only cost that is not directly related to manufacturing is Office Rent, amounting to $26,000. Hence, the total period costs are $26,000. Costs such as Direct Materials Used, Wages to Line Workers, and Indirect Materials Used are all part of the manufacturing process, and therefore, are considered product costs, not period costs.
Byron Corporation forecasts that its income will be $21,000 next year. The firm pays out 30 percent of earnings as dividends to common stockholders. Its target capital structure is 40 percent debt and 60 percent common equity. What Byron's retained earnings break point
Answer:
RE break point = $24500
Explanation:
21,000 net income
30% OF Earnings as dividends
21,000 x 30% = 6,300 dividends
Retained Earnings (assuming no previous beginning value)
21,000 - 6,300 = 14,700
RE break point = 14,700/0.6 = 24500
What does the $24,500 mean?
This mean that the company can raise financing for this ammount without changing their capital structure (60% equity 40% debt)
If the company wants to finance for more, it will need to raise new shares or chance their capital structure, and therefore the WACC will change
Vocabulary Check. Choose the term within the parentheses that best matches each of the following descriptions. (LO1-1–LO1-7) a. Expenditure on research and development (financing decision / investment decision) b. A bank loan (real asset / financial asset) c. Listed on a stock exchange (closely held corporation / public corporation) d. Has limited liability (partnership / corporation) e. Responsible for bank relationships (the treasurer / the controller) f. Agency cost (the cost resulting from conflicts of interest between managers and shareholders / the amount charged by a company’s agents such as the auditors and lawyers)
Answer:
a. Investment decision b. financial asset c. Public corporation d. Corporation e. Treasurer f. the cost incurred from conflicts of interest between managers and shareholders
Explanation:
a. Expenditure on research and development will be categorized as an investment decision, as the return on this is not certain. Such investment may or may not increase productivity or find a new product line.
b. A bank loan is classified as a financial asset because it is a non physical, liquid asset. A real asset is a physical asset which has some intrinsic value, for instance, land, equipment etc.
c. A public corporation is a company owned by government whose shares are publicly traded, so if it's listed on stock exchange the company will be a public corporation.
d. In partnerships, the partners share profits and liability equally. While in the corporations there is limited liability.
e. The controller supervises over accountants and oversees the preparation of reports, auditing and accounting functions of a company. While the treasurer manages the external interactions, such as interactions with bankers, investors and share holders.
f. Agency cost is an internal expense. It arises when an agent acts on behalf of principal. It arises from core inefficiencies, for instance,it arises when interest of managers of the company and the shareholders is in conflict.
The terms 'investment decision,' 'financial asset,' 'public corporation,' 'corporation,' 'the treasurer,' and 'agency cost' are correct answers in the context of finance and business vocabulary related to decisions, assets, corporations, roles, and costs.
The vocabulary check for a student studying basic concepts in finance and business might look like this:
Expenditure on research and development is an investment decision because it concerns allocating company funds with the expectancy of future benefits.A bank loan is a type of financial asset for the bank since it represents an agreement that the bank will receive payments over time.A company that is listed on a stock exchange is a public corporation because its shares are available to the public.An entity that has limited liability implies that the owners are not personally liable for the company's debts, which is a characteristic of a corporation.The individual responsible for bank relationships and other financial matters in a corporation is the treasurer.Agency cost refers to the cost resulting from conflicts of interest between managers and shareholders, and not the fees paid to agents like auditors and lawyers.Which of the following statements is correct with respect to a limited partnership?
a.A limited partner may not be an unsecured creditor of the limited partnership.
b.A general partner may not also be a limited partner at the same time.
c.A general partner may be a secured creditor of the limited partnership.
d.A limited partnership can be formed with limited liability for all partners.
Answer: option D
Explanation: A Limited liability partnership is an ownership style which exhibits characteristics of both partnership and corporations. This was implemented for the benefit of business entities and for the ease of owners.
a. In a limited liability a limited partner will never be personally liable for the debts.
b. A general partner can be a limited partner as long as there are two legal partners.
c. A general partner cannot be a secured creditor as he will always have unlimited liability.
d. A Limited liability partnership is the form of partnership in which some or all of the partners have limited liability.
A limited partnership is a type of partnership where general partners have unlimited liability, while limited partners have limited liability based on their initial investment.
Explanation:A limited partnership is a type of partnership where there are both general partners and limited partners. The general partners have unlimited liability and are personally responsible for the partnership's debts. On the other hand, limited partners have limited liability and are not personally responsible for the partnership's debts beyond their initial investment.
Based on this information, the correct statement is a. A limited partner may not be an unsecured creditor of the limited partnership. Limited partners are not considered creditors of the partnership, and their liability is limited to their investment in the business.
6) If a security pays $55 in one year and $133 in three years, its present value is $150 if the interest rate is A) 5 percent. B) 10 percent. C) 12.5 percent. D) 15 percent. Answer: B Ques Status: Previous Edition AACSB: Analytic
Mark who lives in a country where interest rates are very high, goes to an ATM every day to get $10 of spending money. Jim, who lives in a country with relatively low interest rates, goes to the ATM once a month to get $300 of spending money. Why does Mark use the ATM more frequently? (Assume they both have interest bearing checking accounts.
Answer:
The correct answer is that Mark's opportunity cost of holding cash is higher
Explanation:
Opportunity cost is nothing but the value of the next best alternative that a person has given up , when that person had the choice of selecting between any number of options. You will not find this cost to be shown in your financial statements or balance sheets but this cost is very important in telling which option is the best to use or more profitable for a person or company.
In this question the reason why Mark uses ATM more frequently is because for him the opportunity cost for him in holding more money in hand is high as compared to the Jim whose opportunity cost of holding more money in hand is less , which means he is not not going to miss out on much of the opportunity. The reason why the opportunity cost is high for Mark is because of high rate of interest in his country , if Mark holds more money in hand then the amount of money he is going to lose on interest that he would have gained by keeping the money in bank will be high which means his opportunity cost of holding money is high.
Explain how consumer and producer surplus affect economic well-being. When the price of a good or service is – enough, it will encourage consumers to buy. However, the price also has to be – enough to encourage producers to sell. In this way, both parties benefit from the sale. In order to calculate producer surplus, sellers must understand their direct costs and their – costs, while consumers must consider their – price based on the value they place on a particular good or service.
Answer:
the general welfare will be the sum of consumer surplus and producer surplus.
Explanation:
The consumer and producer surplus assessment serves to measure the overall efficiency of the market, which in turn is associated with overall well-being. An efficient market is one in which both consumers and producers have the incentive to negotiate and effect trade.
Consumer surplus is the difference between the amount he or she is willing to pay and how much he or she actually pays for the product. This surplus is positive when the amount paid is less than the amount for which the consumer would be willing to pay.
Similarly, the producer's surplus is the difference between the market price and the price at which the seller is willing to produce and sell. When the producer's surplus is positive, it means that he sells the product for a price higher than the minimum value that would stimulate him to produce.
Thus, the general welfare will be the sum of consumer surplus and producer surplus.
Answer: Low, high, opportunity, reservation.
Explanation: When the price of a good or service is low enough, it will encourage consumers to buy. However, the price also has to be high enough to encourage producers to sell. In this way, both parties benefit from the sale. In order to calculate producer surplus, sellers must understand their direct costs and their opportunity costs, whereas consumers must consider their reservation price based on the value they place on a particular good or service.
Using the following accounts and a predetermined overhead rate of 50% of direct labor cost, determine the amount of applied overhead.
Work in Process Inventory
Beginning WIP 23,000
Direct materials 69,000
Direct labor ?
Applied overhead ?
To finished goods ?
Ending WIP 47,220
Finished Goods Inventory
Beginning FG 6,400
169,280
Ending FG
The best production method is determined by evaluating the costs of labor and capital for each method. Method 1 is the most cost-effective initially and remains so even if labor costs increase or if the cost of capital decreases.
Explanation:When evaluating the best production method, we must consider the costs of labor and capital for each method. With labor costing $100/unit and capital costing $400/unit:
Method 1 incurs a cost of (50 units of labor × $100/unit) + (10 units of capital × $400/unit) = $5,000 + $4,000 = $9,000.Method 2 incurs a cost of (20 units of labor × $100/unit) + (40 units of capital × $400/unit) = $2,000 + $16,000 = $18,000.Method 3 incurs a cost of (10 units of labor × $100/unit) + (70 units of capital × $400/unit) = $1,000 + $28,000 = $29,000.Thus, Method 1 is the most cost-effective initially. If the cost of labor rises to $200/unit, the costs change:
Method 1: ($200 × 50) + ($400 × 10) = $14,000.Method 2: ($200 × 20) + ($400 × 40) = $18,000.Method 3: ($200 × 10) + ($400 × 70) = $30,000.Even with increased labor costs, Method 1 remains the least expensive. Finally, if the cost of labor remains at $40/unit, but the cost of capital decreases to $50/unit, the total cost for each method would be:
Method 1: ($40 × 50) + ($50 × 10) = $2,000 + $500 = $2,500.Method 2: ($40 × 20) + ($50 × 40) = $800 + $2,000 = $2,800.Method 3: ($40 × 10) + ($50 × 70) = $400 + $3,500 = $3,900.In this last scenario, Method 1 should be used as it is still the most cost-effective.
Which of the following ratios useful in assessing the liquidity position of a company?
Incorrect A.
Both defensive-interval ratio and return on stockholders' equity
B.
Defensive-interval ratio only
C.
Return on stockholders' equity only
D.
Neither defensive-interval ratio nor return on stockholders' equity
Answer:
The option B is a correct answer which is useful in assessing the liquidity position of a company.
Explanation:
Defensive Interval Ratio :
The defensive interval ratio (DIR) is that ratio which measures that by how many days can company operate without fixed assets or non current assets.
It is a type of liquidity ratio which shows that company can pay its current obligations without impacting long term obligations. It is always display in days.
Return on Stockholders' equity :
The return on stockholder equity is a profitability ratio which represents how much the company is earning profit during a particular period.
Liquidity ratio:
The liquidity ratio is that ratio which shows the relationship between current assets and current liabilities. It describes that how the company can meet its short term obligations with its available current assets.
Thus, by above explanation it is clear that the option B is a correct answer which is useful in assessing the liquidity position of a company.
The defensive-interval ratio is the only ratio among the options provided that is useful in assessing the liquidity position of a company. It measures the company's ability to cover daily operational expenses with its liquid assets. Return on stockholders' equity is related to profitability rather than liquidity.
Explanation:To assess the liquidity position of a company, certain financial ratios are used. The correct answer to which ratio is useful in assessing this is B. Defensive-interval ratio only. The defensive-interval ratio (also known as the defensive interval period) measures a company's ability to operate without access to additional external financial resources. It calculates how many days a company can cover its cash expenses without the need for additional cash inflows. This ratio is computed by dividing liquid assets by daily operational expenses.
On the other hand, the return on stockholders' equity (ROE) measures a company's profitability and how efficiently it uses its equity capital. It is not a measure of liquidity but of profitability and return on investment. To calculate ROE, you divide net income by average shareholders' equity.
Therefore, for assessing liquidity, we focus on ratios that evaluate how well a company can meet its short-term obligations, like the defensive-interval ratio. Ratios dealing with profitability or return on investment, such as ROE, are not relevant to liquidity assessments.
North Company has completed all of its operating budgets. The sales budget for the year shows 50,000 units and total sales of $2,250,000. The total unit cost of making one unit of sales is $25. Selling and administrative expenses are expected to be $300,000. Interest is estimated to be $10,000. Income taxes are estimated to be $200,000. Prepare a budgeted multiple-step income statement for the year ending December 31, 2017.
Answer:
Sales 2,250,000
variable cost 1,250,000
25 x 50,000
Gross Profit 1,000,000
Fixed Cost
Selling & Administrative 300,000
Operating income 700,000
interest expense
10,000
non- controllable expenses 10,000
non-controllable income 690,000
income taxes 200,000
net income 490,000
Explanation:
the interest expense is not part of the operating cost, those cost are not part of the business activity. It is on the non-controllable expenses
The budgeted multiple-step income statement for North Company shows a gross profit of $1,000,000, operating income of $700,000, and a net income of $490,000 for the year ending December 31, 2017.
Budgeted Multiple-Step Income Statement
To prepare the budgeted income statement for North Company for the year ending December 31, 2017, we will use the data provided:
Sales (50,000 units at $45 each) = $2,250,000
Cost of Goods Sold (50,000 units at $25 each) = $1,250,000
Gross Profit (Sales - Cost of Goods Sold) = $1,000,000
Selling and Administrative Expenses = $300,000
Operating Income (Gross Profit - Selling and Administrative Expenses) = $700,000
Interest Expense = $10,000
Income Before Taxes (Operating Income - Interest Expense) = $690,000
Income Taxes = $200,000
Net Income (Income Before Taxes - Income Taxes) = $490,000
The budgeted multiple-step income statement measures North Company's financial performance for the specified period by detailing gross profit, operating income, and net income.
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Which of the following is most representative of the functional finance view of the macroeconomy? The economy is self-regulating and the best thing the government can do to enhance stability is to stay out of the way. Budgets should be balanced. Doing otherwise is morally wrong. The government should decide on tax and spending plans based on their effects on the economy. Crowding out almost completely cancels out any deficit spending, so fiscal policy is likely to be ineffective.
Answer:
The government should decide on tax and spending plans based on their effects on the economy.
Explanation:
According to the functional finance theory, the government is the authority which should finance itself to come along to meet with the explicit goals of the economy of the country. The theory has been proposed by Abba P. Lerner. Some of the goals of the economy include attainment of full employment, decreasing the rate of inflation and ensuring growth.
Current information for the Healey Company follows: Beginning raw materials inventory $15,200 Raw material purchases 60,000 Ending raw materials inventory 16,600 Beginning work in process inventory 22,400 Ending work in process inventory 28,000 Direct labor 42,800 Total factory overhead 30,000 All raw materials used were traceable to specific units of product. Healey Company's Cost of Goods Manufactured for the year is: $139,000. $137,000. $128,600. $131,400. $125,800.
Answer:
125,800
Explanation:
FIRST we check how many materials were used in production
beg raw + purchases = ending raw + used in production
15,200 + 60,000 = 16,600 + used in production
used in production = 58,600
SECOND the cost added during the period for the three main cost components
Raw materials 58,600
DL 42,800
MOH 30,000
cost added during the period 131,400
LASTLY the COGM
Beg WIP + cost added = ending + COGM
22,400 + 131,400 = 28,000 + COGM
COGM = 153,800 - 28,000
COGM = 125,800
Buffy is engaging product users to create an exhaustive list of things that bother them when they use the product and how often those situations arise, then asking the consumers to rate the list in order of importance and asking which brands are associated with the items on the list. She is using an approach called _____________________________
Answer: Problem detection
Explanation: Problem detection is used in R&D, it is a techniques that asks consumers who are familiar with the product or service to ponder upon an exhaustive list of things that bothers them while using the product.
This is done to find the ideas to make creative strategies and improvements in product/service.
Problem Detection approach identifies and prioritizes the most pressing consumer concerns so that the brand they are associated with can address unmet needs that exist in the marketplace.
The per-worker production function flattens out due to ________. A) the negative relationship between price and quantity demanded B) the positive relationship between price and quantity demanded C) the diminishing marginal product of capital D) an increase in the general level of prices
Answer: the correct answer is C) the diminishing marginal product of capital.
Explanation:
Inputs include labor and raw materials. The law of diminishing marginal returns states that when an advantage is gained in a factor of production, the marginal productivity will typically diminish as production increases. This means that the cost advantage usually diminishes for each additional unit of input produced.
Financial statements can be prepared directly from the?reversing trial balance.post-closing trial balance.All of these are correct.trial balance.adjusted trial balance.
Answer:
The correct answer is adjusted trial balance.
Explanation:
Financial statements include specific information taken directly from the adjusted trial balance. Adjusting entries have been recorded in the general journal and posted to the ledger accounts.
Financial Planning Partners Inc., employs 12 full-time CPAs and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 2018: Budget Actual Indirect costs $300,000 $309,000 Annual salary of each attorney $118,000 $128,000 Annual salary of each paraprofessional $31,500 $32,500 Total professional labor-hours 50,000 dlh 56,000 dlh When using a normal costing system, year-end accounting records will show that indirect costs are __________.
Final answer:
Using a normal costing system, Financial Planning Partners Inc. will show that the year-end accounting records have applied $336,000 in indirect costs for the year after calculating the predetermined overhead rate and applying it to the actual direct labor hours worked.
Explanation:
To calculate the year-end accounting records for indirect costs using a normal costing system, we need to calculate the predetermined overhead rate (POR) and then apply it to the actual direct labor hours (dlh) worked during the year.
Step 1. Calculate the predetermined overhead rate:
Budgeted indirect costs: $300,000
Budgeted direct labor-hours: 50,000 dlh
Predetermined overhead rate (POR) = Budgeted indirect costs ÷ Budgeted direct labor-hours
POR = $300,000 ÷ 50,000 dlh
POR = $6 per dlh
Step 2. Apply the POR to the actual direct labor hours:
Actual direct labor-hours: 56,000 dlh
Applied indirect costs = POR × Actual dlh
Applied indirect costs = $6 per dlh × 56,000 dlh
Applied indirect costs = $336,000
Therefore, the year-end accounting records will show that the company applied $336,000 in indirect costs for the year.
A Clarke Corporation subsidiary buys marketable equity securities and inventory on April 1, 2017, for 100,000 won each. It pays for both items on June 1, 2017, and they are still on hand at year-end. Inventory is carried at cost under the lower-of-cost-or-net realizable rule. Currency exchange rates for 1 won follow: January 1, 2017 $ 0.84 = 1 won April 1, 2017 0.85 = 1 June 1, 2017 0.86 = 1 December 31, 2017 0.88 = 1 Problem 10-11 (LO 10-2, 10-4) Assume that the U.S. dollar is the subsidiary’s functional currency. What balances does a consolidated balance sheet report as of December 31, 2017?
Answer:
Inventory at December 31th, 2017 = $85,000
Marketable securities at December 31th, $88,000
Explanation:
Inventory $100,000 WON (foreing currency)
securities $100,000 WON (foreing currency)
At April 1 The currenct exchage is 0.85
So their are posted at 100,000 x 0.85 = 85,000 Dollars
Because Inventory is carried at cost under the lower-of-cost-or-net realizable rule. their valuation doesn't change, because the WON never went down the 0.85 so their net realizable was higher than cost so
Inventory at December 31th, 2017 = $85,000
The marketable securities will be adjusted at the current exchange because they are a short term investment
Marketable securities at December 31th, $88,000
Assume that the price elasticity of demand for movie theatres is 20.85 during all evening shows but for all afternoon shows the price elasticity of demand is 22.28. For the theater to maximize total revenue, it should a. charge the same price for both shows, holding other things constant. b. charge a higher price for the afternoon shows and lower price for the evening shows, holding other things constant. c. charge a lower price for the afternoon shows and higher price for the evening shows, holding other things constant. d. Need more information.
To maximize total revenue, a theater should charge a lower price for afternoon shows and a higher price for evening shows due to the slightly higher price elasticity of demand for afternoon screenings. This tactic leverages higher consumer price sensitivity during afternoons to increase ticket sales, while maintaining profits during evenings when demand is less elastic.
Explanation:When considering how a theater should price its tickets to maximize total revenue, understanding the price elasticity of demand is crucial. Since the price elasticity of demand is greater than 1 for both afternoon and evening shows, it indicates that demand is elastic for both time slots. A highly elastic demand means that consumers are very responsive to price changes. Following the principles of elasticity, a business should lower prices when demand is elastic to increase the total quantity sold and thus increase total revenue. In this case, given that the demand elasticity is slightly higher for afternoon shows (22.28) than for evening shows (20.85), this could suggest that afternoon show consumers are slightly more price-sensitive than evening show consumers.
Therefore, to maximize revenue, the theater should pursue option c: charge a lower price for the afternoon shows and a higher price for the evening shows, holding other things constant. This strategy would capitalize on the higher elasticity during the afternoon to sell more tickets when a price drop leads to a disproportionately larger increase in quantity sold. During the evening, where demand is slightly less elastic, a higher price could be maintained as the quantity sold would not decrease by as much in response to a price increase.
Brenda is a new employee orientation trainer for a global corporation with subsidiaries all over the world. She needs to convey information to new employees that will help them in communicating across cultures. Brenda explains to new employees that ________ cultures rely heavily on nonverbal cues and subtle situational cues in communicating with others, and a person's official status, place in society, and reputation carry considerable weight.
Answer:
High context cultures are heavily dependent on non verbal cues and subtle situational cues while communicating with others. In such cultures a person's reputation, prestige, status in society are considerably important.
Explanation:
In high context cultures are complete contrast to low context. In low context cultures, communication takes place clearly through language and rules of communication are clearly stated. While on the other hand in high context cultures, communication is subtle through body language, tone of voice, person's status etc. The use of contextual elements is more.
Brenda is explaining to new employees that multicultural cultures rely heavily on nonverbal cues and subtle situational cues in communication. In these cultures, a person's official status, place in society, and reputation carry considerable weight. Understanding these cultural differences can help employees communicate more effectively.
Explanation:Brenda is explaining to new employees that multicultural cultures rely heavily on nonverbal cues and subtle situational cues in communication. In these cultures, a person's official status, place in society, and reputation carry considerable weight. Understanding these cultural differences can help employees communicate more effectively.
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Suppose Lisa starts driving for Uber as a part-time job to supplement her income as a home-based web designer. When working as a web-designer she can make $25 per job and each day and can complete 2 additional jobs in the first hour of work but by the eighth hour she can only produce an additional 0.5 jobs. What hourly rate would Lisa need driving for Uber to induce her to drive for Uber in that 8th hour instead of web designing?
Answer:
$12.5(at least) would be needed to induce Lisa for driving Uber instead of working on web designing.
Explanation:
Lisa makes $25 per job on web designing from her home and in the first hour she can complete 2 additional jobs. But as per the question by the eight hour she can only do .5 jobs which means that for the eight hour she would earn -
.5 x $25 = $12.5 ( per job she gets $25)
So if Lisa goes on doing work as uber driver she is going to loose $12.5 in the eight hour , so we can say that if Lisa is offered $12.5 hourly rate to work as cab driver then she is not going to miss out on the money she would have made as web designer from home.
Lisa would need to make more than $12.5 per hour driving for Uber in her 8th hour to make it more financially beneficial than working her job as a web designer.
Explanation:If Lisa can make $25 per job in an hour's work as a web designer, and she is capable of completing 2 jobs in the first hour but only an additional 0.5 jobs by the eighth hour, we need to determine the opportunity cost of her working as an Uber driver instead. The opportunity cost of the eighth hour of work as an Uber driver would be the income she could potentially make in web designing, which is $25*0.5 = $12.5. Therefore, the hourly rate she would need to earn driving for Uber to make it more productive than web designing would need to be higher than $12.5.
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Julie's Boutique has total receipts for the month of $30,660 including sales taxes. If the sales tax rate is 5%, what are Julie's sales for the month? Question 10 options: A) $32,193 B) $29,200 C) It cannot be determined. D) $29,127
Answer:
The correct answer is B) $29,200
Explanation:
Px is total receipts for the month including sales taxes
Px' is total receipts for the month not including sales taxes
t=is tax rate
Taxes is Px' *tax rate
Px=Px' + taxes
Px=Px' + Px' *tax rate
Px=Px'*(1+tax rate)
We need to know Px'
So, Px'=Px/(1+tax rate)
Replacing,
Px'=30,660/1,05=$29,200
Final answer:
To determine Julie's Boutique's sales before sales tax from the total receipts of $30,660 with a 5% tax rate, we divide the total by 1.05, resulting in sales of B) $29,200.
Explanation:
The question is asking to determine Julie's Boutique's sales for the month excluding the sales tax. The total receipts including sales taxes is $30,660, and the sales tax rate is 5%.
To find the sales amount before tax, we can set up an equation where the total receipts (R) equal the sales (S) plus the sales tax (0.05 * S), which is R = S + 0.05 * S. Since R is $30,660, the equation becomes $30,660 = S + 0.05 * S. This can be simplified to $30,660 = 1.05 * S.
To find S, we divide the total receipts by 1.05:
$30,660 / 1.05 = $29,200
Therefore, Julie's sales for the month before sales tax were B) $29,200.
On October 1 2017 Sunland Company issued 4 10 year bonds with a face value of $6110000 at 104 Interest is paid on October 1 and April 1 with any premiums or discounts amortized on a straight line basis Bond interest expense reported on the December 31 2017 income statement of Sunland Company would be:
Answer:
The income statment will list
Interest expense 219,960Explanation:
face value 6,110,000
issued at 104
[tex]Principal \times\frac{issued\: points}{100} = cash \:proceeds\\6,110,000 \times\: \frac{104}{100} = 6,354,400[/tex]
Premium 244,400
Straight line method
[tex]\frac{Premium}{total \: payments} = amortization\: per \: payment[/tex]
It's life is 10 years. It makes 2 payment per year. Total payment 20
244,400/20 = 12,220
Cash disbursements per payment
6,110,000 x 2% = 122,200
premium amortization 12,220
Interest expense per payment 109,980
Total interest expense per year 219,960 (there are two payment per year)
The following data were taken recent annual reports of Southwest Airlines, which operates a low-fare airline service to 50 cities in the United states:
Determine the number of times interest charges are earned for the current and preceding years.
(Round to one decimal place.)
Current year
Interest Expense $200,000,000
Income before income taxes $845,000,000
Determine the number of times interest charges are earned for the current year
a. 5.6
b. 5.2
c. 5.8
d. 4.1
Answer:
b. 5.2
Explanation:
First we need to Calculate the Income before interest and taxes,
so we have to add the interest expense to get EBIT
then we calculate the TIE Times Interest Earned
[tex]TIE = \frac{EBIT}{interest \: expense} \\\\EBIT = EBT + Interest \: expense\\\\EBIT = 845,000,000 + 200,000,000\\EBIT = 1,045,000,000\\\\TIE = \frac{1,045,000,000}{200,000,000} = 5.225[/tex]
For rounding reasons, option "B" should be correct.
Kathleen is a member of the human resource department at Jade Corp. Setting a goal to enhance the firm's strategy, Kathleen works to attain it by understanding the current human resources. Through a series of surveys, interviews, and observations, she learns what talents the various departments of Jade Corp. are currently in need of, and attracts new human resources according to those requirements. What kind of HRM responsibility does this example illustrate?
Answer: HRM's responsibility to serve as a strategic partner
Explanation: an strategic partner is the person with whom a long-term agreement is reached for sharing of physical and/or intellectual resources in achievement of defined common objective.
Which of the following statements is false? A perfectly price-discriminating monopolist does not lower price on all previous units in order to sell an additional unit of its product. Second-degree price discrimination is when the seller charges a uniform price per unit for one specific quantity, a lower price of an additional quantity, and so on. Charging senior citizens less for medicine is an act of third-degree price discrimination. Charging women less for a car wash is an act of second-degree price discrimination. A price taker cannot practice price discrimination.
Answer: Charging women less for a car wash is an act of second-degree price discrimination
Explanation: Second-degree price discrimination occurs when a company charges a different price for different quantities of the same commodity consumed.
Third-degree price discrimination occurs when a company charges a different price to different consumer groups.
Seller shouldn't be a price taker in order for him/her to practice price discrimination.
Hence, Charging women less for a car wash is an act of third -degree price discrimination
Final answer:
The false statement is that charging women less for a car wash is an act of second-degree price discrimination; it is actually an example of third-degree price discrimination, which differentiates prices based on demographic groups.
Explanation:
The statement "Charging women less for a car wash is an act of second-degree price discrimination" is false. In the context of price discrimination, first-degree (or perfect price discrimination) occurs when a monopolist charges each consumer the maximum price they are willing to pay, capturing all consumer surplus and maximizing profits. Second-degree price discrimination involves setting different prices based on the quantity consumed, such as bulk discounts. Third-degree price discrimination involves setting different prices for different demographic groups, such as charging senior citizens less for medicine. Charging women less for a car wash is actually an example of third-degree price discrimination, as it sets prices based on a demographic group. Lastly, a price taker cannot practice price discrimination as they must accept the market price and cannot influence it.