Answer:
602 U
Explanation:
Dermody Snow Removal's
Vehicle operating cost is $2,930 per month plus $323 per snow-day
Actual level of activity was 16 snow-days
Spending variance for vehicle operating cost = Flexible budget-actual
Hence;
= (323*16+2930)-8,700
=(5,168+2,930)-8,700
=8,098-8,700
=602 U
Therefore the spending variance for vehicle operating cost in December would be closest to 602 U
Widely varying consumption ratios: work against the implementation of activity-based costing. indicate an out-of-control production environment. dictate a need for traditional costing systems. create an unsolvable product-costing problem. are reflective of product-line diversity.
Answer:
Option D is correct.
Widely varying consumption ratios are reflective of product-line diversity.
Explanation:
Widely varying consumption ratios are reflective of product-line diversity.
Products in different lines have varying resource requirements which leads to widely varying consumption ratios.
Fifty bakeries in New York formed an association. The association signed an agreement with stores throughout the city, under which the stores agreed to purchase bread only from a bakery assigned to them by the association. The association also decided to raise the retail price of bread from 75 to 85 cents. All the association's members printed the new price on their bread sleeves. Are the bakeries in violation of the antitrust laws?
Answer:
The correct answer is: Yes, the bakeries violate the antitrust laws.
Explanation:
The U.S. Clayton Antitrust Act of 1914 is the legislation that regulates antitrust business practices that do not allow fair competition within a market. Three are the main unfair techniques forbidden by the Clayton Act: anticompetitive mergers, tying arrangements, and exclusive agreements.
In anticompetitive mergers firms offering similar products unite to settle the prices of the goods creating a form of monopoly. Therefore the 50 bakeries of New York who gathered to raise the price of bread from $0.75 to $0.85 are breaking the Clayton Antitrust Act of 1914.
Oriole Company took a physical inventory on December 31 and determined that goods costing $250,000 were on hand. Not included in the physical count were $20,000 of goods purchased from Pelzer Corporation, FOB shipping point, and $17,000 of goods sold to Alvarez Company for $25,000 FOB destination. Both the Pelzer purchase and the Alvarez sale were in transit at year-end. What amount should Oriole report as its December 31 inventory?
Answer:
The answer is given below;
Explanation:
Inventory- Unadjusted $250,000
Goods purchased-FOB shipping point $25,000
Goods sold to alvarez-FOB Destination $17,000
Total inventory to be reported at December 31 $292,000
Please note that in FOB shipping point,the sale and purchase is recorded when goods are dispatched from seller's warehouse.In our case, we have recorded purchase.
In case of FOB destination,sale and purchase are not recorded untill the goods are received by the buyer.In our case we have not recorded sale as the inventory is in transit rather we record it is as inventory stock as it was previously omitted from it.
A concentration ratio indicates the:
a. number of firms in an industry.
b. number of large firms in an industry compared to the number of large firms in another related industry.
c. percentage of total sales accounted for by the (for example) four largest firms.
d. percentage of sellers in an industry relative to the number of buyers.
e. percentage of sellers in an industry protected by barriers to entry relative to the number of sellers that wish to enter.
Answer:
The correct answer is letter "A": number of firms in an industry.
Explanation:
A concentration ratio measures the number of competitors within the same industry. The lowest concentration ratio of a firm, it represents there are more market rivals. The highest the concentration ratio, the lower the number of competitors of the firm. The ratio is expressed in percentage terms. A firm having a 100% concentration ratio is a monopoly.
The following excerpt is from an article "State reports find fraud rate of 42% in auto body repairs," published in the Sacramento Bee newspaper in September of 2003. The Bureau of Automotive Repair (BAR), a branch of the California Department of Consumer Affairs, investigates complaints about collision-repair shops in California. "For the past two years, ... consumers have been steered to BAR to determine if their cars had been properly fixed by collision-repair shops across the state. Of the 1,315 vehicles inspected in the two year BAR study that ended in June, 42 percent were overbilled for labor not performed or parts not supplied, Consumer Affairs Director Kathleen Hamilton said at a news conference last week.... the average loss was $812." Determine if the following two critiques of the BAR study are valid or invalid: The article continues, "Officials in the auto-body repair industry blasted the report. 'This is not a true random inspection but a complaint-driven inspection,' said David McClune, chief of the California Autobody Association. The cars belong to disgruntled drivers, he claimed. 'The results of this study can't be projected upon the industry as whole,' said McClune."
(i) Valid
(ii) Invalid
Answer:
i) valid
Explanation:
The research only included car owners (and their cars) that suspected that auto repair shops had not done their job properly. The 42% of fraud rate is applicable to that specific population which is car owners that suspect auto repair shops have committed fraud. It is not representative of the general population of all the car owners whose cars have been repaired.
It is like making a research in a university campus and saying that 99% of the US population buys college books. Maybe 99% (or even 100%) of all college students buy college books, but the rest of the population doesn't and they do not have a reason to do so either.
Divine Apparel has 3,900 shares of common stock outstanding. On October 1, the company declares a $0.50 per share dividend to stockholders of record on October 15. The dividend is paid on October 31. Record all transactions on the appropriate dates for cash dividends. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
1. October 1
Dividends (Cr) 1950
Dividend Payable (Dt) 1950
2. October 15
No journal entry required
3. Record the payment of cash dividends
Dividend Payable (Cr) 1950
Cash (Dt) 1950
Explanation:
(3,900 shares of common stock outstanding) *(declared $0.50 per share dividend) = 1950
An airline company must plan its fleet capacity and its long-term schedule of aircraft usage. For one flight segment, the average number of customers per day is 70, which represents a 65 percent utilization rate of the equipment assigned to the flight segment. If demand is expected to increase to 84 customers for this flight segment in three years, what capacity requirement should be planned? Assume that management deems that a capacity cushion of 25 percent is appropriate.
Final answer:
To accommodate an expected increase to 84 customers with a 25% capacity cushion, the airline should plan for a future capacity requirement of 112 seats.
Explanation:
The student is asking about fleet capacity planning for an airline, based on both current demand and expected future demand, while accounting for a desired capacity cushion. If the airline's flight segment currently operates at a 65% utilization rate with an average of 70 customers per day, the current capacity (100% utilization) can be calculated by dividing 70 by 0.65, which results in approximately 108 seats (rounded to whole numbers for practical purposes). With an expected increase to 84 customers, the future utilization rate without a capacity cushion would be 84 divided by 108, or approximately 77.8%. To maintain a 25% capacity cushion, the airline should plan for a capacity where 84 customers represent 75% (100% - 25%) utilization. Thus, the future capacity requirement would be 84 divided by 0.75, resulting in 112 seats required to accommodate the increased demand with the capacity cushion.
PB10-2 Recording and Reporting Current Liabilities with Evaluation of Effects on the Debt-to-Assets Ratio [LO 10-2, LO 10-5] Tiger Company completed the following transactions. The annual accounting period ends December 31. Jan. 3 Purchased merchandise on account at a cost of $24,000. (Assume a perpetual inventory system.) Jan. 27 Paid for the January 3 purchase. Apr. 1 Received $80,000 from Atlantic Bank after signing a 12-month, 5 percent promissory note. June 13 Purchased merchandise on account at a cost of $8,000. July 25 Paid for the June 13 purchase. July 31 Rented out a small office in a building owned by Tiger Company and collected eight months’ rent in advance amounting to $8,000. Dec. 31 Determined wages of $12,000 were earned but not yet paid on December 31 (Ignore payroll taxes). Dec. 31 Adjusted the accounts at year-end, relating to interest. Dec. 31 Adjusted the accounts at year-end, relating to rent. Required: 1. & 2. Prepare journal entries for each of the transactions through August 1 and any adjusting entries required on December 31. 3. Show how all of the liabilities arising from these items are reported on the balance sheet at December 31.
Complete Question:
PB10-2 Recording and Reporting Current Liabilities with Evaluation of Effects on the Debt-to-Assets Ratio [LO 10-2, LO 10-5]
Tiger Company completed the following transactions. The annual accounting period ends December 31.
Jan. 3 Purchased merchandise on account at a cost of $24,000. (Assume a perpetual inventory system.) Jan.
27 Paid for the January 3 purchase.
Apr. 1 Received $80,000 from Atlantic Bank after signing a 12-month, 5 percent promissory note.
June 13 Purchased merchandise on account at a cost of $8,000.
July 25 Paid for the June 13 purchase.
July 31 Rented out a small office in a building owned by Tiger Company and collected eight months’ rent in advance amounting to $8,000.
Dec. 31 Determined wages of $12,000 were earned but not yet paid on December 31 (Ignore payroll taxes).
Dec. 31 Adjusted the accounts at year-end, relating to interest.
Dec. 31 Adjusted the accounts at year-end, relating to rent.
Required:
1. & 2. Prepare journal entries for each of the transactions through August 1 and any adjusting entries required on December 31.
3. Show how all of the liabilities arising from these items are reported on the balance sheet at December 31.
Answer:
Prepared journal Entries for Questions 1, 2 and 3 are attached as images in this order
1 Journal Entry Worksheet 1 (image 1)
2 Journal Entry Worksheet 1 (image 2)
3 Journal Entry Balance sheet 1 (image 3)
Madison, Inc. has the following asset account balances: Buildings and equipment $4,622,500 Accumulated depreciation 622,500 Patents 375,000 Goodwill 325,000 Accounts receivable 215,000 Land 2,507,500 What is the total amount that should reported on Madison, Inc.'s balance sheet under Property, plant, & equipment? Select one:
A. $6,507,500
B. $7,830,000
C. $7,207,500
D. $7,750,500
Answer:
A. $6,507,500
Explanation:
Accumulated depreciation is the contra asset account and it needs to be adjusted in the cost of the relevant assets to represent the net book value of the assets. Building and Land are classified as the property.
Buildings and equipment $4,622,500
Accumulated depreciation ($622,500)
Net Buildings and equipment $4,000,000
Land $2,507,500
Total Property, plant, & equipment $6,507,500
The following accounts are non Property, plant, & equipment.
Patents $375,000
Goodwill $325,000
Accounts receivable 215,000
Alliance Company budgets production of 27,000 units in January and 31,000 units in the February. Each finished unit requires 4 pounds of raw material K that costs $2.50 per pound. Each month's ending raw materials inventory should equal 35% of the following month's budgeted materials. The January 1 inventory for this material is 37,800 pounds. What is the budgeted materials needed in pounds for January
Answer:
Instructions are below.
Explanation:
Giving the following information:
Production:
January= 27,000 units
February= 31,000 units
Each finished unit requires 4 pounds of raw material
Estimated cost= $2.50 per pound.
Desired ending inventory= 35% of the following month's budgeted materials.
Beginning inventory= 37,800 pounds.
To calculate the purchase of material needed, we need to use the following formula:
Purchases= sales + desired ending inventory - beginning inventory
Direct material budget (in pounds)
Production= (27,000*4)= 108,000
Desired ending inventory= (31,000*4)*0.35= 43,400
Beginning inventory= (37,800)
Total= 113,600
Total direct material cost= 113,600*2.5= $284,000
A company has a selling price of $1,850 each for its printers. Each printer has a 2 year warranty that covers replacement of defective parts. It is estimated that 3% of all printers sold will be returned under the warranty at an average cost of $151 each. During November, the company sold 31,000 printers, and 410 printers were serviced under the warranty. What is the company's warranty expense for the month of November?
Answer:
$140,430
Explanation:
A company estimated 3% of the printers sold will be returned under the warranty of 2 Years at an average cost of $151.00 each.
The company sold 31000 printers in the Month of November. So, at the time of sale (in the month of November) the company estimated 3% of 31000 printers i.e 930 Printers will be returned under warranty of 2 Years at a cost of $151.00 each. So, the company incurred the warranty cost/expense in month of November is;
930 Printers X $151.00 = $ 140430.00
You will be paying $10,000 a year in tuition expenses at the end of the next 2 years. Bonds currently yield 8%. a. What is the present value and duration of your obligation? b. What maturity zero-coupon bond would immunize your obligation? c. Suppose you buy a zero-coupon bond with value and duration equal to your obligation. Now suppose that rates immediately increase to 9%.
For complete answer find complete 5 attachments
The present value of the obligation is $17,832.28 and the duration is 2 years. A zero-coupon bond with a maturity of 2 years would immunize the obligation. If rates rise to 9%, the value of the bond will fall.
Explanation:The subject of your question relates to Present Value and Bond Duration in financial mathematics. In a. you're asked to calculate the present value of your tuition obligation of $10,000 a year for next 2 years at an 8% bond yield rate. The concept behind this is that the money available now (present) is worth more than the same amount in the future due to its potential earning capacity (yield rate). Hence, Present Value = $10,000/(1+0.08) + $10,000/(1+0.08)² = $9,259.26 + $8,573.02 = $17,832.28.
As for the duration of your obligation, it's the weighted average maturity of the cash flows, which should be 2 years.
In b. a zero-coupon bond that would immunize your obligation would be one with a maturity and face value that matches your obligation and the yield rate. Hence, a 2-year zero-coupon bond.
In c., if rates rise to 9%, the value of the zero-coupon bond will fall as bond prices and interest rates have an inverse relationship. The bond would need to be revalued using the new rate.
Learn more about Finance here:https://brainly.com/question/36998854
#SPJ3
Net Work Corporation, whose annual accounting period ends on December 31, issued the following bonds: Date of bonds: January 1, 2018 Maturity amount and date: $420,000 due in 10 years (December 31, 2027) Interest: 10.0 percent per year payable each December 31 Date issued: January 1, 2018
Required: For each of the three independent cases that follow provide the following amounts to be reported on the January 1, 2018, financial statements immediately after the bonds were issued: (Deductions should be indicated by a minus sign.) Case A (issued at 100) Case B (at 96 Casec (at 104) January 1, 2018-Financial Statements: a. Bonds payable b. Unamortized premium (discount) c. Carrying value
Answer:
The following amounts to be reported on the January 1, 2018 is shown below:-
Explanation:
January 1, 2018 Case A Case B Case C
Financial Statements (issued at 100) (at 96) (at 104)
a. Bonds payable $420,000 $420,000 $420,000
b. Unamortized
Premium (discount) 0 $16,800 $16,800
c. Carrying value $420,000 $403,200 $403,200
Working Note
For Case B Unamortized Premium (discount)
= ($420,000 - ($420,000 ÷ 100 ×96)) = $16,800
For Case C Unamortized Premium (discount)
($420,000 - ($420,000 ÷ 100 ×104)) = $16,800
Under different issuance scenarios, the bonds payable entry remains constant at $420,000 but the amount of unamortized discount or premium, and the resulting carrying value, may differ based on whether the bonds were issued at 100%, 96%, or 104% of their face value.
Explanation:The amount to be recorded in the financial statements for each of the three cases would be calculated as follows:
Case A (issued at 100): The bonds were issued at their face value. Therefore, the bonds payable would be $420,000. There would be no unamortized premium or discount, which means the carrying value would also be $420,000.Case B (issued at 96): The bonds were issued at a discount, so you multiply the face value by 0.96 to get $403,200, which is the carrying value. The unamortized discount would be the face value minus the carrying value, or $16,800. The bonds payable remains $420,000.Case C (issued at 104): Here, the bonds were issued at a premium. Multiply the face value by 1.04 to get the carrying value of $436,800. The unamortized premium is the carrying value minus the face value, or $16,800. The bonds payable still remains $420,000.Learn more about Bonds Issued at Discount and Premium here:https://brainly.com/question/28391873
#SPJ11
Charles Wilson, the CFO of Sunland Automotive, Inc., is putting together this year's financial statements. He has gathered the following balance sheet information: The firm had a cash balance of $23,015, accounts payable of $163,257, common stock of $312,100, retained earnings of $512,159, inventory of $212,100, goodwill and other assets equal to $78,656, net plant and equipment of $710,100, and short-term notes payable of $21,115. It also had accounts receivable of $141,258 and other current assets of $11,223. How much long-term debt does Sunland Automotive have
Answer:
The long term debt is $167,721
Explanation:
Workings are attached.
Answer:
long temr liabilities $167,721
Explanation:
We solve using the accounting equation:
Assets = Liabilities + Equity
Assets:
cash balance of $23,015,
inventory of $212,100,
accounts receivable of $141,258
and other current assets of $11,223
net plant and equipment of $710,100,
goodwill and other assets equal to $78,656
Total: 1.176.352
Equity
common stock of $312,100,
retained earnings of $512,159
Total 824.259
We now replace and solve for Liaibilities
Assets = Liabilities + Equity
1,176,352 = Liabilities + 825,259
Liaiblities = 352,093
Where:
accounts payable of $163,257
and short-term notes payable of $ 21,115
Total short term: $ 184,372
long term + short term = total liabilities
long term + 184,372 = 352,093
352,093 - 184,372 = 167,721
Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $40,000. The estimated useful life was five years and the residual value was $4,500. Assume that the estimated productive life of the machine is 10,000 units. Expected annual production for year 1, 2,100 units; year 2, 3,100 units; year 3, 2,100 units; year 4, 2,100 units; and year 5, 600 units. Required: 1. Complete a depreciation schedule for each of the alternative methods. (Do not round intermediate calculations.)
A.) straight-line
B.) Units of Production
C.) Double declining balance
Answer:
Schedule is in the MS Excel file attached with this answer.
Explanation:
Straight Line depreciation is a method of depreciation in which the cost of the asset net of residual value is divided over useful life.
Unit of production method Depreciate the asset based on the production for the period done by asset and total lifetime production capacity of the asset..
In double declining method the double depreciation is charged.
Sea Side Enterprises is trying to predict the cost associated with producing its anchors. At a production level of 5 comma 500 anchors, Sea Side Enterprises average cost per anchor is $ 55. If $ 17 comma 000 of the costs are fixed, and the plant manager uses the cost equation to predict total costs, her forecast for 9 comma 000 anchors will be (Round any intermediary calculations to the nearest cent.)
Answer:
$482,182
Explanation:
The computation of the total cost is shown below:
As we know that
Total cost = Fixed cost + variable cost
But before that first we have to compute the variable cost
where,
Fixed cost is $17,000
And, the variable cost is
= 5,500 × $55 - $17,000
= $285,500
Now the total cost is
= Variable cost per unit × number of anchors + fixed cost
= $285,500 ÷ 5,500 × 9,000 + $15,000
= $482,182
To forecast the total cost for producing 9,000 anchors, we calculate the total fixed and variable costs. The total cost comes to $484,190.
To determine Sea Side Enterprises' costs at a production level of 9,000 anchors, we start with the given information. At 5,500 anchors, the average cost per anchor is $55, and $17,000 of these costs are fixed.
Step 1: Calculate the total cost for 5,500 anchors.
Total cost = Average cost per anchor x Number of anchors = $55 x 5,500 = $302,500.
Step 2: Determine the variable cost.
Variable cost = Total cost - Fixed costs = $302,500 - $17,000 = $285,500.
Step 3: Calculate the variable cost per anchor.
Variable cost per anchor = Total variable cost / Number of anchors = $285,500 / 5,500 = $51.91.
Step 4: Use the cost equation to predict total costs for 9,000 anchors.
Total cost = Fixed costs + (Variable cost per anchor x Number of anchors) = $17,000 + ($51.91 x 9,000) = $17,000 + $467,190 = $484,190.
Therefore, the forecasted total cost to produce 9,000 anchors is $484,190.
NoMoreKidSongs Corp. paid a dividend last quarter of $6.18. It is expected to grow at 3% over the next year, 8%, the following year, and 11% the year after that. After this period of non-constant growth, the dividends are expected to grow at a constant rate of 2% indefinitely. What is the dividend paid in year 2 after the first two years of non-constant growth
Answer:
$6.87
Explanation:
The Dividend will grow first with non-constant growth rate and then after 3 years it will grow at a constant rate of 2%.
Last Dividend Paid = $6.18
In the first year the Growth rate is 3%
First Year Dividend = $6.18 ( 1 + 3% ) = $6.18 ( 1 + 0.03 ) = $6.18 ( 1.03 ) = $6.3654
In the Second year the Growth rate is 8%
Second Year Dividend = $6.3654 x ( 1 + 8% ) = $6.3654 x ( 1 + 0.08 ) = $6.3654 x ( 1.08 ) = $6.87
A seller knows that there are two bidders for the object he is selling. He believes that with probability 1/2, one has a buyer value of $5 and the other has a buyer value of $7 and, with probability 1/2, one has a buyer value of $3 and the other has a buyer value of $10. He knows that bidders will want to buy the object so long as they can get it for their buyer value or less. He sells it in an English auction with a reserve price which he must set before the auction starts. To maximize his expected profits, he should set the reserve price at:_______
Answer:
Reserve price = $6.25
Approximately $7
Explanation:
Reserve price is the lowest set price that is acceptable by a seller at an auction.
With probability 1/2:
Buyer values = $5 and $7
Buyer values= $3 and $10
Since the seller knows there are two bidders for the object he is selling and he wants to maximize his expected profits. He also sells it in an English auction which he must set the reserve price before the commencement of the auction. His reserve price should be:
[tex] (\frac{5*1}{4}+\frac{7*1}{4}) + (\frac{3*1}{4}+\frac{10*1}{4}) [/tex]
= (1.25 + 1.75) + (0.75 + 2.5)
= 3 + 3.25
$6.25
The maximize his expected profit the buyer should set his reserve price at approximately $7
Answer:
$6
Explanation:
bidder 1:
50% chance paying $5
50% chance paying $7
expected value = ($5 x 50%) + ($7 x 50%) = $6
bidder 2:
50% chance paying $3
50% chance paying $10
expected value = ($3 x 50%) + ($10 x 50%) = $6.50
According to Myerson's optimal reserve price theory, the reserve price does not depend on the number of bidders, instead it depends on the distribution of the buyers' valuation. In this case, both buyers' valuations are very similar, $6 and $6.50, so one of them should be the reserve price. Since this is an open bid and the reserve price will probably serve as reference point, the reserve price should be $6 so that both bidders can participate and hopefully the price will exceed $7 (the highest second bid).
Lakeland, Inc. has 25,000 shares of 6%, $100 par value, noncumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2015. There were no dividends declared in 2014. The board of directors declares and pays a $250,000 dividend in 2015. What is the amount of dividends received by the common stockholders in 2015
Answer:
The common stockholders will receive a dividend of $100000 in 2015
Explanation:
The preferred stock is non cumulative which means that in case it does not pay dividends in a certain year, the dividends will no be accumulated and the company will not be obliged to pay these dividends in later year.
The per share preferred stock dividend for the company is = 100 * 0.06 = $6
The total dividends on preferred stock per year = 6 * 25000 = $150000
The common stockholders are paid dividends after the preferred stockholders are paid.
Thus, for 2015 the common stockholders will receive a dividend of,
Common stock dividend = 250000 - 150000 = $100000
Pfd Company has debt with a yield to maturity of 7.1 %, a cost of equity of 15.4 %, and a cost of preferred stock of 8.9 %. The market values of its debt, preferred stock, and equity are $ 9.9 million, $ 2.9 million, and $ 13.9 million, respectively, and its tax rate is 40 %. What is this firm's after-tax WACC? Note: Assume that the firm will always be able to utilize its full interest tax shield.
Answer:
After-tax WACC is 10.56%
Explanation:
WACC=Ke*E/V+Kd*E/D*(1-t)*Kp*P/V
Ke is the cost of equity at 15.4%
Kd is the cost of debt of 7.1%
Kp is the cost of preferred stock of 8.9%
E is the value of equity at $13.9 million
D is the value of debt at $9.9 million
P is the value of preferred stock at $2.9 million
V=E+D+P
V is the total finance available calculated below:
V=$13.9+$9.9+$2.9=$26.7 million
tax rate at 40% or 0.4
WACC=(15.4%*13.9/26.7)+(7.1%*9.9/26.7*(1-0.4))+(8.9%*2.9/26.7)
WACC=(15.4%*13.9/26.7)+(7.1%*9.9/26.7*0.6)+(8.9%*2.9/26.7)
WACC=10.56%
A company’s manager estimates that in the upcoming year, increasing advertising costs by $25,000 will cause sales revenue to increase by $60,000. If the company’s contribution margin ratio is 35%, what will be overall effect on net income? Group of answer choices
Answer:
Loss of $4,000 in overall net income
Explanation:
Contribution margin is the net of the sale price and variable cost. Contribution margin ratio is the ratio of contribution to sales.
According to given data
Sales = $60,000
Contribution Margin = $60,000 x 35% = $21,000
Net Income = Contribution margin - Fixed costs = $21,000 - $25,000 = -$4,000
Advertisement Expense is a fixed cost.
There will be a loss of $4,000 added to overall net income.
Final answer:
Considering a contribution margin ratio of 35%, an increase in advertising costs by $25,000, which boosts sales by $60,000, will result in a net decrease in income of $4,000.
Explanation:
The question revolves around the impact of an increase in advertising budget on a company's net income, considering a specific contribution margin ratio. With an increase in advertising costs by $25,000 anticipated to boost sales revenue by $60,000 and given the contribution margin ratio is 35%, we calculate the incremental contribution margin (35% of $60,000) and the effect on net income.
Incremental contribution margin: [tex]0.35 \times $60,000 = $21,000[/tex]
Next, we determine the net income change by subtracting the additional advertising costs from the incremental contribution margin.
Net income change: $21,000 (incremental contribution margin) - $25,000 (additional advertising costs) = -$4,000.
Therefore, the overall effect on net income will be a decrease of $4,000.
As the product manager for Whirlpools line of washing machines you are in charge of pricing new products. Your product team has developed a revolutionary new washing machine that relies on radically new technology and requires very little water to get clothes clean. This technology will likely be difficult for your competition to copy. Should you adopt a skimming or a penetration pricing strategy? Justify your answer.
Answer:
The management should adopt skimming pricing strategy.
Explanation:
For the fact that this is a new technology and very difficult to be copied, the management should adopt skimming pricing strategy. This will allow them to charge high prices and make money in the market before their competitors starts making the same kind of washing machine. This product has benefits for the consumers as well as it consumes less water to clean the clothes so there is high probability of this machine is accepted even if the prices are exorbitantly higher and from this, its going to be demanded by many costomers.
Answer:
The appropriate pricing strategy is price skimming
Explanation:
Penetration pricing strategy is adopted by a company launching a new product that has many competing products in the market place whereby a low initial price is set for the product such that customer's acceptance and patronage can be gained before the product is priced appropriately.
Skimming pricing strategy relates to a unique product being priced high in order to earn returns as quickly as possible before competitors begin to copy the new product.
Under this scenario,the washing machine is unique and would be appealing to consumers since it requires little quantity of water to make clothes clean,hence charging higher price would not deter households from purchasing it.
A convertible bond is selling for $800. It has 10 years to maturity, a $1000 face value, and a 10% coupon paid semi-annually. Similar nonconvertible bonds are priced to yield 14%. The conversion price is $50 per share. The stock currently sells for $31.375 per share. Determine the bond's option premium.
Answer:
The bond's option premium is $11.88
Explanation:
Acording to the data we have the following:
The Maturity Value of Bond=$1000
The Coupon Rate = 10%
Hence, there is an interest of $100 Per year but it is semi anually , Therefore there is an interest of $50 received per year .
Also, the YTM = 14% , which means 7% for 6 months
Therefore, to calculate the bond's option premium, we have to use first the formula to calculate the fair value of bond.
The Fair Value of Bond = PVAF( 7% , 20 )*50 + PV( 7% , 20 )*1000
= 50*10.594 + 1000*0.2584
= $529.70 + $258.419
=$788.119
Hence, The bond's option premium = $800 - $788.119 = $11.88
Benjamin Graham, the father of value investing, once said, "In the short run, the market is a voting machine, but in the long run, the market is a weighing machine." In this quote, Benjamin Graham was referring to the key difference between the "price" and the "value" of a security. In November 2006, Citigroup's stock (NYSE: C) was trading at $49.59. Following the credit crisis of 2007-2008 and by the end of October 2009, Citigroup's stock price had plummeted to $4.27. Several banks went under, and others saw their stock prices lose more than 60% of their value. Based on your understanding of stock prices and intrinsic values, which of the following statements is true? a. A stock's market price is based only on true investor returns. b. A stock's intrinsic value is based on true risk in the company. You can estimate the value of a company's stock using models such as the corporate valuation model and the dividend discount model. Which of the following companies would you choose to evaluate if you were using the discounted dividend model to estimate the value of the company's stock? a. A company that has been distributing a portion of their earnings every quarter for the past six years b. A company that is in a high-growth stage and plans to retain all its earnings for the next few years to support its growth
Answer: 1. b. A stock's intrinsic value is based on true risk in the company.
2. a. A company that has been distributing a portion of their earnings every quarter for the past six years
Explanation:
1. A Stock's intrinsic value is what it is truly a measure of it's true risk. It is not like the market price that follows trading patterns but rather is based on factors inside the company. It is often arrived at through complex calculations that take into account the business aspects of the company and as such is much more thorough. This is why it is the true risk of a stock.
2. The Dividend discount model of stock valuation relies heavily on dividends bein gdistributed to calculate stock price. The formula requires that the dividend of the next period be divided by the rate of return minus the growth rate. A company that is paying no dividends therefore cannot use this model to calculate stock value which is why the first option is correct.
If you need any clarification do react or comment.
On January 1, Year 2, Grande Company had a $63,400 balance in the Accounts Receivable account and a $1,300 balance in the Allowance for Doubtful Accounts account. During Year 2, Grande provided $152,000 of service on account. The company collected $161,300 cash from accounts receivable. Uncollectible accounts are estimated to be 1% of sales on account. The amount of uncollectible accounts expense recognized on the Year 2 income statement is
Answer:
$1,520
Explanation:
Given that,
Accounts Receivable balance = $63,400
Allowance for Doubtful Accounts balance = $1,300
Services provided on account during year 2 = $152,000
Cash collected from accounts receivables = $161,300
Estimated Uncollectible accounts = 1% of sales on account
Therefore, the amount of uncollectible accounts expense during the year 2 is the 1 percent of the amount of services provided on account to a customer.
Hence, the amount of uncollectible accounts expense recognized on the Year 2 income statement is calculated as follows:
= Services provided on account × Estimated Uncollectible accounts
= $152,000 × 1%
= $1,520
J.C Coats Inc. carefully develops standards for its coat making operation. Its specifications call for 2 square yards of wool per coat. The budgeted price of wool is $44 per square yard. The actual price for the wool was $36 and the usage was only 1.70 yards of wool per coat. What would be the standard cost per output for the wool?
Answer:
Standard cost= $88 per unit
Explanation:
Giving the following information:
Its specifications call for 2 square yards of wool per coat. The budgeted price of wool is $44 per square yard.
To calculate the standard cost per unit, we need to multiply the total direct material quantity per unit for its unitary cost.
Standard cost= 2sq*$44= $88 per unit
Consider the labour statistics for the country of Menap, which consists of five districts and a capital region with varying degrees of poverty. Round your answers to two decimal places. District Unemployed (in millions) Employed (in millions) 1 20 39 2 29 52 3 16 36 4 30 56 5 18 41 Capital 23 54 What is the labour force in Menap?
Answer:
The correct answer is 414 million.
Explanation:
According to the scenario, the computation of the given data are as follows:
We can calculate the labor force by using following formula:
Labor force = Total unemployed + Total employed
By putting the value in the formula, we get
= (20 + 29 + 16 + 30 + 18 + 23) + ( 39 + 52 + 36 + 56 + 41 + 54)
= 136 million + 278 million
= 414 million
The labor force in Menap is 414 million.
The calculation is as follows:We know that
Labor force = Total unemployed + Total employed
So,
= (20 + 29 + 16 + 30 + 18 + 23) + ( 39 + 52 + 36 + 56 + 41 + 54)
= 136 million + 278 million
= 414 million
Find out more information about the labor here: https://brainly.com/question/10513697
The IRS reports that the mean federal income tax paid in the year 2007 was $7908. Assume that the standard deviation is $5000. The IRS plans to draw a sample of 1000 tax returns to study the effect of a new tax law. Which is more likely to happen: For the sample mean to be less than $7500 or for an individual to pay a tax less than $7500
Answer:
Mean is less than $7500
Explanation:
From the calculation, the p-value is less than 0.0049.
Find attached of the calculation
Hi-Tech, Inc., reports net income of $66.0 million. Included in that number are depreciation expense of $5.6 million and a loss on the sale of equipment of $1.6 million. Records reveal increases in accounts receivable, accounts payable, and inventory of $2.6 million, $3.6 million, and $4.6 million, respectively. What are Hi-Tech's net cash flows from operating activities? (List cash outflows and any decrease in cash as negative amounts. Round your answers to 1 decimal place. Enter your answers in millions (i.e., $10,100,000 should be entered as 10.1).)
Answer:
Net cash flows from operating activities$69.6
Explanation:
Hi-Tech, Inc
Cash Flows from Operating Activities
Net income $66
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation expense 5.6
Loss (on sale of equipment)1.6
Increase in accounts receivable(2.6)
Increase in inventory(4.6)
Increase in accounts payable 3.6
Net cash flows from operating activities$69.6
Therefore Hi-Tech's net cash flows from operating activities will be $69.6
Answer:
Hi-Tech's net cash flows from operating activities is $69.6 million
Explanation:
Prepare the Cash Flow from Operating Activities Section Using the Indirect method as follows :
Cash Flow from Operating Activities
Net income $66.0 million
Adjustment of Non-cash items :
depreciation $5.6 million
loss on the sale of equipment $1.6 million
Adjustment of Working Capital Items :
Increase in accounts receivable ( $2.6 million)
Increase in accounts payable $3.6 million
Increase in accounts inventory ( $4.6 million)
Net Cash Flow from Operating Activities $69.6 million
Consider Adjusting Journal Entries - Unearned Revenue
Skypress Company collected $5,600 in May of 2013 for 4 months of service which would take place from October of 2013 through January of 2014. The revenue reported from this transaction during 2013 would be:
$0
$4,200
$5,600
$1,400
Answer:
$4,200
Explanation:
Skypress Company
$5,600 × 3/4
=$5,600×0.75
= $4,200
Therefore the revenue reported from this transaction during 2013 would be $4,200