Answer:
Annual depreciation= $77,000
Explanation:
Giving the following information:
Purchase price= $800,000
Salvage value= $30,000
Useful life= 10 year
Under the straight-line method of depreciation, the depreciation expense is constant along the useful life.
We need to use the following formula:
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (800,000 - 30,000)/10
Annual depreciation= $77,000
Yields on short-term bonds tend to be more volatile than yields on long-term bonds. Suppose that you have estimated that the yield on 20-year bonds changes by 10 basis points for every 21-basis-point move in the yield on 5-year bonds. You hold a $1.5 million portfolio of 5-year maturity bonds with modified duration 4 years and desire to hedge your interest rate exposure with T-bond futures, which currently have modified duration 9 years and sell at F0 = $70. How many futures contracts should you sell? (Do not round intermediate calculations. Round your final answer to the nearest whole number.)
Answer:
The yield on momentary securities tends to be more eccentric than yields on long haul securities. In the event that it is assessed that the yield on 20-year securities changes by 10 premise focuses for each 15-premise point move in the yield on 5-year securities. One is holding a $1 million arrangement of 5-year development securities with changed length 4 years and ready to support his loan cost introduction with T-bond prospects. T-bond fates as of now have adjusted term 9 years and sell at $95 (F0).
The quantity of prospects gets that he should sell can be determined as demonstrated as follows: according to the assumption the portfolio misfortune considering the given data would be:
P = Portfolio esteem =$1,000.000
D = Modified length =4 years
Ay =Bond portfolio yield =15 premise
Misfortune on the Portfolio = P x Ay =$1,000,000 x 0.15%x 4 = $6,000
The adjustment in the fates cost (per $100 standard worth) will be as determined underneath:
$95 x 0.0001x 9 = $0.0855
This is a difference in $85.50 on a $100,000 standard worth agreements. Along these lines you should sell: $6,000/$85.50= 70
Hence, he ought to go short is 70 contracts.
Which axiom of service-dominant logic applies to this statement? Customers don't buy a car (product)—they buy the company's ability to add value through a defined set of benefits. Multiple Choice Service is the fundamental basis of exchange. Value is co-created by multiple parties, including the company and the customer. A unique experience is created when the customer interacts with the company’s marketing efforts and product. Value is defined by the customer. A customer-centric approach has been supplanted by a newer service-dominant approach.
Answer:
The correct answer is letter "B": Value is co-created by multiple parties, including the company and the customer
Explanation:
Value refers to the qualification an individual provides to a good or service based on the need it provides to the individual. It does not necessarily mean that the more valuable a product is the more expensive than good will be. It represents that an individual values more that product because it satisfies for him or her a need that must be covered.
Then, if a carmaker provides additional benefits to its customers and those benefits represent values the consumers are looking for, a purchase is likely to take place. Then, both producers and consumers can add value to a product or service.
Problem 4-4 Calculation of Gain or Loss (LO 4.3) Jocasta owns an apartment complex that she purchased 6 years ago for $750,000. Jocasta has made $50,000 of capital improvements on the complex, and depreciation claimed on the building to date is $128,700. Calculate Jocasta's adjusted basis in the building.
Answer:
$671,300
Explanation:
The calculation of adjusted basis in the building is shown below:-
Adjusted basis = Original cost of the property + Cost of capital improvements - Depreciation claimed
= $750,000 + $50,000 - $128,700
= $800,000 - $128,700
= $671,300
Therefore for computing the adjusted basis we simply add original cost of the property with cost of capital improvements and deduct depreciation claimed.
Darlington Inc., permits any of its employees to buy shares directly from the company. There are no brokerage fees and shares can be purchased at a 10% discount. During May, employees purchased 14,000 shares at a time when the market price of the shares was $10 per share. Prepare the appropriate journal entry for the May purchase. (
Answer: Please refer to Explanation
Explanation:
The following is the appropriate journal entry.
DR Bank Account (14,000 * 10 - 10%) $126,000
DR Employee Compensation Expense (10% * $140000) $14,000
CR Share Capital Account $140,000
(To record issue of shares to employees)
If you need any clarification do comment.
Answer:
Dr Cash 126,000
Dr Compensation expense 14,000
Cr Common stock 14,000
Cr Paid-in capital—in excess of par 126,000
Explanation:
Darlington Inc Journal entry
Dr Cash ($10 x 14,000 x 90%) 126,000
Dr Compensation expense ($10 x 14,000 x 10%) 14,000
Cr Common stock ($1 x 14,000) 14,000
Cr Paid-in capital—in excess of par ($9 x 14,000) 126,000
Sales Mix and Break-Even Analysis Michael Company has fixed costs of $2,313,840. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follow: Product Selling Price Variable Cost per Unit Contribution Margin per Unit QQ $640 $380 $260 ZZ 460 280 180 The sales mix for Products QQ and ZZ is 85% and 15%, respectively. Determine the break-even point in units of QQ and ZZ. If required, round your answers to the nearest whole number. a. Product QQ units b. Product ZZ units
Answer:
a.
Break even in units of QQ is 7930 units
b.
Break even in units of ZZ is 1400 units
Explanation:
To calculate the break even in units of each product, we first need to find out the overall break even point in units for the company. The over all break even point in units for a two product company is,
Overall Break even in units = Total Fixed costs / Weighted average contribution margin per unit
Where,
Weighted average contribution margin per unit = Weight of Product A in sales mix * Contribution per unit of Product A + Weight of Product B in sales mix * Contribution per unit of Product B
Weighted average CM per unit = 0.85 * 260 + 0.15 * 180
Weighted average CM per unit = $248 per unit
Over all break even in units = 2313840 / 248 = 9330 units
a.
Break even in units Product QQ = 9330 * 0.85 = 7930.5 rounded off to 7930 units
b.
Break even in units Product ZZ = 9330 * 0.15 = 1399.5 rounded off to 1400 units
Blanchard Company manufactures a single product that sells for $190 per unit and whose total variable costs are $150 per unit. The company’s annual fixed costs are $635,000. The sales manager predicts that annual sales of the company’s product will soon reach 40,500 units and its price will increase to $205 per unit. According to the production manager, variable costs are expected to increase to $145 per unit, but fixed costs will remain at $635,000. The income tax rate is 20%. What amounts of pretax and after-tax income can the company expect to earn from these predicted changes?
Answer:
The amounts of pretax and after-tax income can the company expect to earn from these predicted changes are $1,795,000 and $1,436,000 respectively.
Explanation:
The sales less the variable cost gives the contribution margin.
The contribution margin less the fixed cost gives the net operating income. Furthermore, net income is the difference between the total sales and the total costs (fixed and variable).
Both sales and variable cost are dependent on the number of units sold.
with these expected changes,
Pretax Income
= 40,500($205 - $145) - $635,000
= $1,795,000
After tax income
= 80% * $1,795,000
= $1,436,000
1) The three main categories of government outlays are A) net interest payments, government investment, and government consumption expenditures. B) net government subsidies, the government deficit, and government purchases. C) government purchases, transfer payments, and net interest payments. D) government consumption expenditures, government investment, and transfer payments.
Answer: D) government consumption expenditures, government investment, and transfer payments.
Explanation:
What does the Government do with all the taxes it keeps collecting?
That's a question a lot of people want to know the answer to.
Option D encapsulates this.
Government consumption Spending is a major component of government spending and is done mainly for the direct satisfaction of individual citizens in the Nation. It includes things like Education, Health and Defense.
Another important component is Government Investment. This comprises of all goods and services acquired by the government for the benefit of the nation in future. They include infrastructure spending like roads and bridges as well as research spending.
Finally we have Transfer Payments. This portion of government spending has been on the up and up because it comprises of Social Security benefits and Unemployment insurance. Essentially these are payments that the government receives nothing in return for but underscores the care it has for citizens.
Answer:
D) government consumption expenditures, government investment, and transfer payments.
Explanation:
Government spending or expenditure is made up of consumption, investment, and transfers.
When government obtains goods and services for current use of satisfying its citizens. This is called government expenditure.
When the government is involved in infrastructure investment and research spending, they are looking at the future benefit. This is called investment.
Transfer of funds not meant to obtain goods and services like social security payments is referred to as government transfers.
The Porch Cushion Company manufactures foam cushions. The number of cushions to be produced in the upcoming three months follows:Number of foam cushions to be produced in July13,000Number of foam cushions to be produced in August19,000Number of foam cushions to be produced in September12,000Each cushion requires 2 pounds of the foam used as stuffing. The company has a policy that the ending inventory of foam each month must be equal to 30% of the following month's expected production needs. How many pounds of foam does The Porch Cushion Company need to purchase in August?
To calculate the number of pounds of foam The Porch Cushion Company needs to purchase in August, add the number of cushions planned for that month to the ending inventory of foam in August, and multiply by the foam needed for each cushion.
Explanation:To calculate the number of pounds of foam The Porch Cushion Company needs to purchase in August, we need to find the total number of foam cushions expected to be produced in the two following months (August and September) and multiply it by the amount of foam needed for each cushion.
In August, the company plans to produce 19,000 cushions. In September, they plan to produce 12,000 cushions. According to the company's policy, the ending inventory of foam in August should be 30% of the expected production in September, which is 0.3 * 12,000 = 3,600 cushions.
To find the total number of cushions for which foam needs to be purchased in August, we sum the cushions to be produced in August and the ending inventory of foam in August: 19,000 + 3,600 = 22,600 cushions.
Since each cushion requires 2 pounds of foam, the company needs to purchase 22,600 * 2 = 45,200 pounds of foam in August.
Skinner Company began business on June 30, 2018. At that time, it issued 18,000 shares of $50 par value, 6% cumulative preferred stock and 90,000 shares of $10 par value common stock. Through the end of 2020, there has been no change in the number of preferred and common shares outstanding. a. Assume that Skinner declared and paid cash dividends of $63,000 in 2018, $0 in 2019, and $378,000 in 2020. Compute the total cash dividends and the dividends per share paid to each class of stock in 2018, 2019, and 2020
Answer:
2018
Preferred Dividend = $54,000
Common Stockholders = $9,000
2019
Preferred Dividend arrears =$54,000
Common Stockholders = $0
2020
Preferred Dividend = $54,000
Common Stockholders = $270,000
Explanation:
Preferred stockholders has an advantage that they are paid first when there is any dividend is announced. The residual dividend will be divided into the common stockholders. Any prior years due dividend and current years dividend associated with preferred share will be paid first.
As per given data
Preferred shares = 18,000 x $50 = $900,000
Preferred Dividend = $900,000 x 6% = $54,000
2018
Dividend Declared = $63,000
Dividend Allocated to Common Stockholders = Dividend Declared - Preferred Dividend = $63,000 - $54,000 = $9,000
2019
Dividend Declared = $0
Preferred Dividend Arrears = $54,000
2020
Dividend Declared = $378,000
Preferred Dividend Arrears = $54,000
Dividend Allocated to Common Stockholders = Dividend Declared - Preferred Dividend - Preferred Dividend Arrears = $378,000 - $54,000 - $54,000 = $270,000
Rafner Manufacturing identified the following budgeted data in its two production departments.
Assembly Finishing
Manufacturing overhead costs $1,200,000 $600,000
Direct labor hours 12,000 DLH 20,000 DLH
Machine hours used 6,000 MH 16,000 MH
What are the company's departmental overhead rates if the assembly department assigns overhead based on direct labor hours and the finishing department assigns overhead based on machine hours?
Answer:
$137.5
Explanation:
The Rafner Manufacturing assigns its manufacturing overheads cost on machine and labor hours. The assembly department assigns its overheads based on direct labor hours. The overhead rate will be,
$1,200,000 / 12,000 = $100 / labor hour
The finishing department assigns its overheads based on machine hours,
$600,000 / 16,000 Machine hours = 37.5
The Assembly department's overhead rate is $100 per direct labor hour, while the Finishing department's overhead rate is $37.5 per machine hour.
Explanation:
The overhead rate for each department can be calculated by dividing the total overhead costs by the appropriate base (direct labor-hours for the Assembly department and machine hours for the Finishing department).
For the Assembly department, the overhead rate is $1,200,000 / 12,000 direct labor hours = $100 per direct labor hour.
For the Finishing department, the overhead rate is $600,000 / 16,000 machine hours = $37.5 per machine hour.
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Some consumers like to buy products on-line, some consumers don't. Do YOU like to shop and buy on-line? Think about your opinion of on-line shopping and your experiences buying on-line. Is there a product that you would prefer/always buy on-line? What is it and why do you like buying it on-line? Is there a product that you would NOT/never buy online? What is it and what's your concern about buying it on-line?
Answer to Question 1:
I'm am indifferent. Sometimes I shop online for convenience.
In my experience however, getting my products and or purchases and the best price possible and at the best quality possible prevails over convenience as sometimes, people courier orders which are completely different from what was requested.
Answer to Question 2:
Of course, I could purchase books, data, and other products whose quality and quantity cannot be manipulated in anyway.
Answer to Question 3 & 4:
I would never purchase cooked food online.
I once purchased grilled fish online only to discover that it was not properly cooked on the inside. The interior of the fish was raw with blood in it. It was disgusting.
Cheers!
Carl puts $10, 000 into a bank account that pays an annual effective interest rate of 4% for ten years. If a withdrawal is made during the first five and one-half years, a penalty of 5% of the withdrawal amount is made. Carl withdraws K at the end of each of years 4, 5, 6, and 7. The balance in the amount at the end of year 10 is 10, 000. Calculate K.
Answer:
K=$980
Explanation:
10,000*(1.04)^10=1.05K(1.04^6+1.04^5)+K(1.04^4+1.04^3)+10,000
K=14,802-10,000/1.05(1.04^6+1.04^5)+1.04^4+1.04^3
K=4,802.4/4.91=$980
For example, the sticky-price theory asserts that the output prices of some goods and services adjust slowly to changes in the price level. Suppose firms announce the prices for their products in advance, based on an expected price level of 100 for the coming year. Many of the firms sell their goods through catalogs and face high costs of reprinting if they change prices. The actual price level turns out to be 90. Faced with high menu costs, the firms that rely on catalog sales choose not to adjust their prices. Sales from catalogs will _______(Remain the same/fall/rise), and firms that rely on catalogs will respond by _______ (Increasing/Reducing) the quantity of output they supply. If enough firms face high costs of adjusting prices, the unexpected decrease in the price level causes the quantity of output supplied to ______ (Fall below/Rise above) the natural rate of output in the short run.
Answer:
1. Fall
2. Reducing
3. Fall Below
Explanation:
1. FALL. Due to the Menu Costs (costs to suppliers of having to constantly update prices) of inflation being too high for the Catalogue sellers. They leave the prices where they are at 100. Prices have fallen to 90 though so people will therefore buy less from catalogues as they will be considered more expensive.
2. REDUCING. Firms dealing with Catalogues will respond by reducing output. The more output they supply, the more variable costs they deal with. Seeing as their Demand has fallen leading to a reduction in profitability, they will scale back operations to try to spend less and also because less people are buying output.
3. Fall Below. The Quantity of output supplied was dependant on a price level of 100. That was where the natural rate was. Now as prices have fallen and quantity supplied have gone with them, the effect would be a fall Below the Natural Output Level.
If you need any clarification do react or comment.
The American Cancer Society has been sending letters soliciting donations for years. When they added pre-printed address labels personalized as a gift to the receiver of the solicitation, donation levels went up by 30%. Which principle of social influence explains this phenomenon best? (choose only one answer) Note your answers on scratch paper in case your browser or internet crashes.
A. Reciprocity
B. Social proof
C. Authority
D. Liking
E. Scarcity
Answer:
The answer is option option A) The principle of social influence explains this phenomenon best is the principle of Reciprocity.
Explanation:
The principle of reciprocity is a popular social law of psychology that portrays the need to give to get.
It states that "in many social situations we pay back what we received from others".
Every body has a need. even the potential donors with all their wealth need validation every now and then
Therefore, taking on a reciprocity approach by the American Cancer Society by adding pre-printed address labels personalized as a gift to the receiver of the solicitation met the need for validation among potential donors which made their donation levels go up by 30%.
Answer:
Reciprocity
Explanation:
Reciprocity is defined as the act of giving a thing of value to someone which in turn results in the other party giving back also.
For example when a person recieves a gift he will naturally want to reciprocate the gesture.
The American Cancer Society added pre-printed address labels personalized as a gift to the receiver of the solicitation, donation levels went up by 30%.
This is an action that pushed recipients of solicitation to donate more.
Louise Fulkerson is president of the Student Marketing Association at Baylor University. Louise and the otherofficers want to conduct a short survey to determine the type of programming they should offer for theupcoming year. Their population is defined as "students in the College of Business." One of the officerssuggests that each of them go into their classes, mostly seniors, and conduct the survey. "We can do it easilyand fast, and our professors will be glad to help the association out by giving us a few minutes to conduct thesurvey," says one of the officers. But Louise is worried about the sample. "Most of us are marketing majorsand we are all seniors taking senior classes. I would prefer to ask the Department Chairperson if we cansurvey students taking Fundamentals of Marketing because all majors have to take this course, and most ofthe future members of the Association will be coming from these Fundamentals classes." Louise is suggestingwhich one of the following sampling methods?
A) quota sample
B) purposive sample
C) stratified sample
D) representative sample
E) systematic sample
Answer:
B) purposive sample
Explanation:
A purposive sample is a non-probability sample that is selected based on the characteristics of a population and the objective of the study. Purposive sampling is different from convenience sampling and is also known as judgmental, selective, or subjective sampling.
Several subtypes of purposive sampling exist:
Homogeneous Sampling: collecting a very specific set of participants. For example, age 20-24, college-educated, male.
Maximum Variation Sampling: collecting a wide range of participants with different viewpoints to study a certain phenomenon.
The main goal of purposive sampling is to focus on particular characteristics of a population that are of interest, which will best enable you to answer your research questions.
In 2021, its first year of operations, Kimble Corp. has a $900,000 net operating loss when the tax rate is 20%. In 2022, Kimble has $250,000 taxable income and the tax rate remains 20%. Assume the management of Kimble Corp. thinks that it is more likely than not that the loss carryforward will not be realized in the near future because it is a new company (this is before results of 2022 operations are known). (a) What are the entries in 2021 to record the tax effects of the loss carryforward
Answer and Explanation:
Kimble Corp entries in 2021 to record the tax effects of the loss carryforward
a)Dr Deferred Tax Asset ($900,000 × 20%) 180,000
Cr Benefit Due to Loss Carryforward $180,000
Dr Benefit Due to Loss Carryforward $180,000
Cr Allowance to Reduce Deferred Tax Asset to Expected Realizable Value $180,000
(b)
Dr Income Tax Expense ($250,000 × 20%) $50,000
Cr Deferred Tax Asset $50,000
Dr Allowance to Reduce Deferred Tax Asset to Expected Realizable value $50,000
Cr Benefit Due to Loss Carryforward $50,000
Suppose that a well-respected study published in Child Psychology Today finds that a very high proportion of children raised by stay-at-home fathers are accepted to Harvard University. If a large number of previously working fathers quit their jobs and become stay-at-home dads, which of the following will occur, all else equal? (i) The unemployment rate will decrease. (ii) The size of the labor force will decrease. (iii) The number of unemployed people will increase. (iv) The unemployment rate will increase.
Answer:
(ii) and (iv) only
(ii) The size of the labor force will decrease.
(iv)The unemployment rate will increase.
If many fathers become stay-at-home dads, the size of the labor force will decrease because these men are not engaged in paid work. The unemployment rate and the number of unemployed people will not increase because these men are not searching for work, but have chosen to be out of the workforce.
Explanation:If a large number of fathers leave their jobs to become stay-at-home dads, multiple impacts could happen, all else being equal. Firstly, the size of the labor force would decrease as these men are choosing not to engage in paid work. Secondly, the number of unemployed people would not necessarily increase as they aren't searching for work; instead, they have opted out of the workforce. As these men are not technically unemployed, but out of the workforce, they do not contribute to the unemployment rate, and hence it's incorrect to state that the unemployment rate would increase.
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E16 13B (L0 3) (Accounting for Restricted Stock) Holt Company issues 10,000 shares of restricted stock to its new CEO, on January 1, 2020. The stock has a fair value of $260,000 on this date. The service period related to this restricted stock is 5 years. Vesting occurs if the CEO stays with the company for 5 years. The par value of the stock is $1. At December 31, 2021, the fair value of the stock is $180,000.Instructions(a)Prepare the journal entries to record the restricted stock on January 1, 2020 (the date of grant) and December 31, 2021.(b)On February 22, 2022, the CEO leaves the company. Prepare the journal entry (if any) to account for this forfeiture.
Answer and Explanation:
The journal entries are shown below:
a. Unearned compensation $260,000
To Common stock $10,000 (10,000 shares × $1)
To Paid in capital in excess of par - common stock $250,000
(Being the unearned compensation is recorded)
It increased the common stock and the remaining balance is transferred to the paid in capital so these account are credited while on the other hand the contra equity is decreased so unearned compensation is debited
Compensation expenses $52,000 ($260,000 ÷ 5 years)
To Unearned compensation $52,000
(being the compensation expense is recorded)
Since there is a compensation expense so the expense account is debited as it increased the expenses while on the other hand we credited the unearned compensation
b. Common stock 10,000
Paid in capital in excess of par - common stock $250,000
To Compensation expenses $104,000 ($52,000 × 2 years)
To Unearned compensation $156,000
(Being the forfeiture is recorded)
This entry reflects the reversing of the entry with related to the common stock, paid in capital, and compensation expense
An industrial manufacturer that works with one or a few large clients and develops products that only these clients will use is most likely to implement a(n) ________ strategy.
Answer: Custom marketing
Explanation: A custom marketing strategy will most likely be employed by an industrial manufacturer that works with one or a few large clients and develops products that only these clients will use. Marketing creates, communicates, and delivers value, and it involves the management of customer relationships. A custom marketing strategy is one in which a manufacturer customizes and develops products that are unique to the needs of his customers and thus is an essential strategy for delivering a personalized customer experience to each segment of clients, thereby increasing loyalty and customer satisfaction.
Suppose a competitive market is comprised of firms that face identical cost curves. The firms experience an increase in demand that results in positive profits for the firms. Which of the following events are then most likely to occur?(i)New firms will enter the market.(ii)In the short run, price will rise; in the long run, price will rise further.(iii)In the long run, all firms will be producing at their efficient scale.
Answer:
(i)New firms will enter the market.
(iii)In the long run, all firms will be producing at their efficient scale
Explanation:
A perfect competition is characterised by many buyers and sellers of homogenous goods and services. Market price is set by the forces of demand and supply.
If firms are earning positive profits, in the long run new firms would enter into the industry and this woold drive positive profits to zero. As a result , firms would be operating at the efficient scale.
I hope my answer helps you
Answer:
I) New firms will enter the market, III)In the long run, all firms will be producing at their efficient scale.
Explanation:
In Microeconomics, this has already happened before. In most recent years, we have seen this For Flat Screen TVs and Smartphones. This is dynamic because the demand may or may not keep on increasing.
In addition to this, another important variable is the supply. The Cost curve is identical to both of them but this is also dynamical. But all of the firms will work harder and harder to lower the Cost curve, so they'll become more efficient.
Finally, in the long run the product retail price will inevitably fall.
Early in 2018, the Excalibur Company began developing a new software package to be marketed. The project was completed in December 2018 at a cost of $14,000,000. Of this amount, $11,000,000 was spent before technological feasibility was established. Excalibur expects a useful life of five years for the new product with total revenues of $15,000,000. During 2019, revenue of $6,000,000 was recognized. Required: 1. Prepare a journal entry to record the 2018 development costs. 2. Calculate the required amortization for 2019. 3. At what amount should the computer software costs be reported in the December 31, 2019, balance sheet
Answer:
The answer is given below;
Explanation:
1.Software Package Dr.$3,000,000
Project expenses Cr.$3,000,000
2.Amortization 3,000,000/5 $600,000
3. Software Package be reported in balance sheet(3,000,000-600,000)= $2,400,000
The $11,000,000 will be charged out as research cost and will be reported in Profit and loss account because after this amount technological feasibility was established that asset will yield returns for the business and can be used for the business. The remaining amount $3,000,000 will be reported as development cost.
The following 3 questions are based on this information. Kings Department Store has 625 rubies, 800 diamonds, and 700 emeralds from which they will make bracelets and necklaces that they have advertised in their Christmas brochure. Each of the rubies is approximately the same size and shape as the diamonds and the emeralds. Kings will net a profit of $250 on each bracelet, which is made with 2 rubies, 3 diamonds, and 4 emeralds, and $500 on each necklace, which includes 5 rubies, 7 diamonds, and 3 emeralds. How many of each should Kings make to maximize its profit?
Answer:
129 bracelets and 59 necklaces.
Explanation:
Kings departments store wants to maximize profit by making a combination of its two products necklaces and bracelets. The King store should use a strategy so that it can generate maximum profit with its available rubies, diamonds and emeralds.
$250a + $500b = Maximum Profit
For rubies : 2a + 5b = 625
For Diamonds : 3a + 7b = 800
For Emeralds: 4a + 3b = 700
Solving the equation we get maximum profit value of $61,750.The King departments stores should make 129 bracelets and 59 necklaces which will bring maximum profit to the store.
Analysis of an income statement, balance sheet, and additional information from the accounting records of Gadgets, Inc., reveals the following items. Required:
1. Purchase of patent
2. Depreciation expanse
3. Decrease in account receivable
4. Increase in inventory
5. purchase of equipment
Indicate on which section of statement of the cash flow each of the item shoul be reported: operating activities (indirect method), investing activities, financing activities, or a separate noncash activities note.
Answer and Explanation:
There are three categories of cash flow statement activities which are described below:
1. Operating activities: This involves all transactions that after net income impact the working capital. It will subtract the rise in current assets and a reduction in current liabilities, while adding the decline in current assets and a rise in current liabilities.
This will change those changes in working capital. For addition, the depreciation expenses are applied to the net profit and the loss on the selling of assets is added, while the gain on the sale of assets is deducted
2. Investing activities: it tracks operations that involve purchasing and selling long-term properties. Purchase is cash outflow while selling is cash inflow
3. Financing operations: it tracks transactions that have an effect on long-term debt and equity balance of shareholders. Share issue is a cash inflow while redemption and dividend are cash outflows.
Based on this, the classification are as follows
1. Purchase of patent = Investing activities
2. Depreciation expanse = Operating activities
3. Decrease in account receivable = Operating activities
4. Increase in inventory = Operating activities
5. purchase of equipment = Investing activities
If these transactions are held in cash
A company has preferred stock that can be sold for $28 per share. The preferred stock pays an annual dividend of 5% based on a par value of $100. Flotation costs associated with the sale of preferred stock equal $1.50 per share. The company's marginal tax rate is 35%. Therefore, the cost of preferred stock is;
Answer:
18.87%
Explanation:
The computation of the cost of preferred stock is shown below:
As we know that
The cost of preferred stock = Preferred dividend ÷ (issue price per share - flotation costs per share)
where,
Preferred dividend is
= 100 × 5%
= $5
Issued price per share is $28
And, the flotation cost is $1.50
So, the cost of preferred stock is
= $5 ÷ ($28 - $1.50)
= 18.87%
We simply applied the above formula
(a) A local bookseller is considering expanding store space to increase his capacity for books.
The rent for the additional space would cost $3000 per year. The bookseller predicts that the
added space will pull in an additional profit of $4000 per year. The current interest rate is 12%.
Should the bookseller invest in the extra space?
The book seller should invest in the extra space.
Explanation:
As per the given data:
rent for the additional space given is $300 per year, the additional profit that will be pulled by adding on the space = $4000 per year, the current rate of interest given is = 12%
In order to calculate about the decision, the present values needs to be calculated first
The present value of the investment = (- $ 3000 plus $ 4000) by 1.121
The present value of the investment = $ 571.43
The present value of the investment is positve, hence the book seller should invest in the extra space.
Which of the following statements are true about duration?
a. It is a weighted average of time periods where the weights are the percentage of the bond's value coming from that period.
b. It presents the effective average maturity of the bond's cash flows.
c. It is used to assess a bond's credit risk.
d. The duration of a zero-coupon bond is equal to its time to maturity.
Answer:
b. It presents the effective average maturity of the bond's cash flows.
d. The duration of a zero-coupon bond is equal to its time to maturity.
Explanation:
Duration is the weighted average of the time periods where Time period are weighted by multiplying by the present value of its cash flow divided by the bond's price.
Assume that Product Z is made of two units of A and three units of B. A is made of three units of C and four of D. D is made of two units of E Lead times for purchase or fabrication of each unit to final assembly are: Z takes two weeks; A, B, C, and D take one week each; and E takes three weeks. Sixty eight units of Product Z are required in Period 10. (Assume that there is currently no inventory on hand of any of these items.) b. Develop an MRP planning schedule showing gross and net requirements and order release and order receipt dates.
Answer and explanation:
a). The product structure tree is as given in the attached image 1
Z
A B
C D
E
b) The MRP schedule are also attached in the subsequent images
An MRP schedule for Product Z requires backward calculation from the due date, considering lead times of Z, A, B, C, D, and E to determine when each component needs to be ordered or manufactured. E needs to be ordered by Period 4, components of A by Period 7, and the assembly of Product Z starts by Period 8.
Explanation:To develop an MRP (Material Requirements Planning) schedule for Product Z, given the consumption rates and lead times for each component and sub-component, we must work backward from the due date for Product Z. The lead times indicate how long before the due date each component and sub-component must be ordered or manufactured to ensure timely completion.
Product Z requires two units of A and three units of B.Component A is composed of three units of C and four of D.Component D requires two units of E for completion.Now, considering the lead times:
Product Z takes two weeks to assemble.Components A, B, C, and D each take one week.Component E takes three weeks.Since we need 68 units of Product Z by Period 10, we must start assembling them by Period 8 (taking into account the two-week assembly time for Z). Therefore, we need all units of A and B at the latest by Period 8. The components of A (C and D) thus must be ordered by Period 7, and since D is made of E which takes three weeks, we need to order E by Period 4.
The MRP schedule will show the gross and net requirements for each component by period, as well as the order release and receipt dates to meet the demand for 68 units of Product Z by Period 10. This includes the calculation of quantities required, considering no initial inventory is on hand.
Common sense might say that a monopolist would produce more output than a competitive industry facing the same marginal costs. After all, if you’re making a profit, you want to sell as much as you can, don’t you? What’s wrong with this line of reasoning? Why do monopolistic industries sell less than competitive industries?
Explanation:
Even though a monopolist usually controls the market price of the commodity it may not be producing more because a monopolist overall goal is to achieve profit maximization.
However, producing more output would not be in their best interest despite been the market maker because it will decrease the price of the goods in the market due to over supply, leading to lower profit for them.
The reason why monopolistic industries sell less than competitive industries because:
Competitive market attracts more customers based on their competitive pricing and benefitsAccording to the given question, we can see that we need to show why a monopolist would have to produce more output in order to make profit, based on the marginal costs of both markets.
As a result of this, we can see that a monopolistic market which is one who seems to be totally dominant in the market would sell less than competitive industries because the competitive market attracts more customers based on their competitive pricing and benefits.
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One of Modular Products (MP) customers would like to obtain a 6-month option to purchase 500,000 tables for $119 each. These tables currently sell for $110 each. Assume u equals 1.0994 and d equals .9096. What price should MP charge for this option if the annual risk-free rate is 3.2 percent
Group of answer choices
a. $338,400
b. $421,900
c. $598,100
d. $479,900
e. $533,600
Answer:
Option E is correct one.
$533,600
Explanation:
% increase = u − 1
% increase = 1.0994 − 1
% increase = .0994, or 9.94%\large % increase = u − 1
% decrease = d − 1
% decrease = .9096 − 1
% decrease = −.0904, or −9.04%
Price with increase = $110(1.0994)
Price with increase = $120.934
Price with decrease = $110(.9096)
Price with decrease = $100.056
rf = Probability of rise(Increase percent) + (1 − Probability of rise)(Decrease percent)
.032(6/12) = Probability of rise(.0994) + (1 − Probability of rise)(−.0904)
Probability of rise = .5606, or 56.06%
Probability of fall = 1 − .5606
Probability of fall = .4394, or 43.94%
Payoff if price increases = $120.934 − 119
Payoff if price increases = $1.934
Payoff if price decreases = $0
Expected payoff = .5606($1.934) + .4394($0)
Expected payoff = $1.0842
Option value = $1.0842/[1 + .032(6/12)]
Option value = $1.0671
Contract value= Option to purchase*Option value
Contract value = 500,000($1.0671)
Contract value = $533,600
Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outside a firm’s control? Check all that apply. The general level of stock prices The effect of the tax rate on the cost of debt in the weighted average cost of capital equation The firm’s dividend payout ratio The impact of a firm’s cost of capital on managerial decisions Consider the following case: International Imports (I2) has two divisions, L and H. Division L is the company’s low-risk division and would have a weighted average cost of capital of 8% if it was operated as an independent company. Division H is the company’s high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. Division L is considering a project with an expected return of 9.5%. Should International Imports (I2) accept or reject the project? Accept the project Reject the project On what grounds do you base your accept–reject decision? Division L’s project should be accepted, because its return is less than the risk-based cost of capital for the division. Division L’s project should be accepted, since its return is greater than the risk-based cost of capital for the division.
Answer:
The general level of stock prices
The effect of the tax rate on the cost of debt in the weighted average cost of capital equation
The project should be accepted.
Division L’s project should be accepted, since its return is greater than the risk-based cost of capital for the division.
Explanation:
The company can determinate their payout ratio and the cost of capital of their equity the rest of the option are determined by either the market or the government.
It should be accepted as the return is based on the division which WACC is 8% therefore, it will make a good use of the capital as is above the expected capital cost
Factors outside a firm's control affecting WACC include stock prices and tax rate effects on cost of debt. A firm's dividend policy and capital cost impact on decisions are controllable. For International Imports, Division L's project should be accepted because its return exceeds its cost of capital.
The factors affecting the weighted average cost of capital (WACC) that are outside a firm's control include:
The general level of stock pricesThe effect of the tax rate on the cost of debt in the weighted average cost of capital equationFactors such as the firm's dividend payout ratio and the impact of a firm's cost of capital on managerial decisions are within the firm's control.
Considering the case of International Imports (I2) and its two divisions, L and H, with WACCs of 8% and 14% respectively, we address the project for Division L. Since Division L's project has an expected return of 9.5%, which is greater than its risk-based cost of capital of 8%, the project should be accepted. The return exceeds the cost, making it a financially viable project for Division L.