1. The standard labor hours allowed to make 19,700 Jogging Mates is approximately 9198.33 hours. 2. The standard labor cost allowed to make 19,700 Jogging Mates is approximately $53,344.33. 3. The labor spending variance is approximately -$1,176.67. 4. The labor rate variance is $0 and the labor efficiency variance is $1,176.67. 5. The variable overhead rate variance is $0 and the variable overhead efficiency variance is approximately -$1,516.60.
Explanation:1. The standard labor hours allowed (SH) to make 19,700 Jogging Mates can be calculated by multiplying the number of units produced by the standard labor time per unit:
Standard labor hours allowed = Number of units produced × Standard labor time per unit
Standard labor-hours allowed = 19,700 units × 27 minutes / 60 minutes per hour = 9198.33 hours
Therefore, the standard labor hours allowed to make 19,700 Jogging Mates is approximately 9198.33 hours.
2. The standard labor cost allowed (SH × SR) to make 19,700 Jogging Mates can be calculated by multiplying the standard labor hours allowed by the standard rate per hour:
Standard labor cost allowed = Standard labor hours allowed × Standard rate per hour
Standard labor cost allowed = 9198.33 hours × $5.80 per hour = $53,344.33
Therefore, the standard labor cost allowed to make 19,700 Jogging Mates is approximately $53,344.33.
3. The labor spending variance can be calculated by subtracting the actual labor cost from the standard labor cost allowed:
Labor spending variance = Standard labor cost allowed - Actual labor cost
Labor spending variance = $53,344.33 - $54,521 = -$1,176.67
Therefore, the labor spending variance is approximately -$1,176.67.
4. The labor rate variance can be calculated by multiplying the actual hours of direct labor by the difference between the actual rate per hour and the standard rate per hour:
Labor rate variance = Actual hours of direct labor × (Actual rate per hour - Standard rate per hour)
Labor rate variance = 9,565 hours × ($5.80 per hour - $5.80 per hour) = $0
Therefore, the labor rate variance is $0.
The labor efficiency variance can be calculated by subtracting the standard labor cost allowed from the actual labor cost:
Labor efficiency variance = Actual labor cost - Standard labor cost allowed
Labor efficiency variance = $54,521 - $53,344.33 = $1,176.67
Therefore, the labor efficiency variance is $1,176.67.
5. The variable overhead rate variance can be calculated by multiplying the actual hours of direct labor by the difference between the actual variable overhead rate and the budgeted variable manufacturing overhead rate:
Variable overhead rate variance = Actual hours of direct labor × (Actual variable overhead rate - Budgeted variable manufacturing overhead rate)
Variable overhead rate variance = 9,565 hours × ($4.10 per hour - $4.10 per hour) = $0
Therefore, the variable overhead rate variance is $0.
The variable overhead efficiency variance can be calculated by subtracting the standard hours allowed from the actual hours of direct labor and multiplying by the budgeted variable manufacturing overhead rate:
Variable overhead efficiency variance = (Actual hours of direct labor - Standard hours allowed) × Budgeted variable manufacturing overhead rate
Variable overhead efficiency variance = (9,565 hours - 9198.33 hours) × $4.10 per hour = -$1,516.60
Therefore, the variable overhead efficiency variance is approximately -$1,516.60.
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A company purchased factory equipment on April 1, 2013 for $80,000. It is estimated that the equipment will have an $10,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2013 is A. $5,250. B. $8,000. C. $7,000. D. $6,000.
Answer:
A.$5,250
Explanation:
=(80,000-10,000)/10=7,000*9/12=$5,250
The depreciation have been worked out on pro rata basis for 9 months starting from April 1st to 31 December 2013.
Answer:
A.$5,250
Explanation:
=(80,000-10,000)/10=7,000*9/12=$5,250
The depreciation for 9 months starting from April 1st to 31 December 2013.recoded as depreciation expense $5,250
The company produced 7,771 units and sold 2,111 units for $628 each. Variable manufacturing costs were 352 per unit. Fixed manufacturing costs were $4,969. Variable selling and administrative costs were $24 per unit sold and fixed selling and administrative costs were $2,811. There was no beginning inventory. What is the contribution margin? As always, no $ and commas.
Answer:
The contribution margin is 531 972
Explanation:
Computation of contribution margin
The contribution margin is revenues - Variable costs
Sales Revenue ( 2 111 * 628) 1 325 708
Variable manufacturing costs ( 2 111 * 352) 743 072
Variable Selling and Administrative costs ( 2 111 * 24) 50 664
Contribution Margin 531 972
All costs of a fixed nature in manufacturing or selling and administrative expenses are not considered in determining the contribution margin
On April 2, Kelvin sold $80,000 of inventory items on credit with the terms 2/10, net 30. Payment on $60,000 sales was received on April 8 and the remaining payment on $20,000 sales was received on April 27. Assuming Kelvin uses the net method of accounting for sales discounts, the entry recorded on April 27 would be:
Liquid Sleeve, Inc. is a company that makes a sealing solution for machine shaft surfaces that have been compromised by abrasion, high pressures, or inadequate lubrication. The manager is considering adding a metal-based nanoparticle (Type Al or Fe) to its solution to increase the product's performance at high temperatures.
The costs associated with each type are estimated. If the company's MARR is 30% per year, which nanoparticle type should the company select? Utilize an NPV analysis.
Type FE Type Al
First cost, $ -150,000 -280,000
Annual operating cost, $/year -92,000 -74,000
Salvage value, $ 30,000 70,000
Life, years 2 4
Answer:
Liquid Sleeve should select the Type FE because it has a lower Present Value cost of $257,455.62
Explanation:
The preferred metal-based would be the one with owner a present value cost.
So we will compute the present value of the the cost the two options.
Type FE =
Initiall cost = -150,000
PV of operating cost = -92,000× (1- (1.3)^(-2))/0.3
= 92,000 × 1.360946746
= $(125,207.10)
PV of salvage value = 30,000 × (1.3)^(-3)= 17,751.48
Total PV = (125,207.10) + (150,000) - 17,751.48 = $(257,455.62 )
Type A1
initial cost = -$280,000
PV of operating cost = 74,000 × (1- (1.3)^(-4))/0.3 = 160,301.81
PV of salvage value = 70,000 × (1.3)^(-4)= 24,508.95
Total Cost = (280,000) + -(160,301.81) + 24,508.95 = $(415,792.86)
Option Payoff One Year from Now 1 100% chance of receiving $1,100 2 50% chance of receiving $1,000 50% chance of receiving $1,200 3 50% chance of receiving $200 50% chance of receiving $2,000 If Erik is risk averse, which investment will he prefer?
Answer:
First one
Explanation:
1) $1100
2) 0.5(1000) + 0.5(1200)
= $1100
3) 0.5(200) + 0.5(2000)
= $1100
Since all expected values are equal.
He should go for the first one, to avoid risks
Bridgeport Inc. had pretax financial income of $139,400 in 2020. Included in the computation of that amount is insurance expense of $4,400 which is not deductible for tax purposes. In addition, depreciation for tax purposes exceeds accounting depreciation by $10,000.Prepare Bridgeport’s journal entry to record 2020 taxes, assuming a tax rate of 25%.
Answer:
Dr income expense($33450 +$2500) $35950
Cr income tax payable $33450
Cr deferred income tax $2500
Explanation:
The adjusted taxable income adjusted for disallowed insurance expense of $4,400 as well as the excess depreciation(timing difference) of $10,000
Pretax financial income $139,400
add:
disallowed expense $4,400
less:
additional depreciation ($10,000)
Adjusted taxable income $133,800
income tax expense is $133800 *25%=$33450
deferred tax liability =$10,000*25%=$2500
total tax expense for the year is 35950 ($33450+$2500)
Protective Covenants are:
A. restrictions or requirements placed on the borrower in a bond contract designed to protect the lenders
B. may specify that the borrower refrain from doing certain things, or require that they do certain things
C. All of the above
D. None of the above
Answer:
The correct answer is C. All of the above .
Explanation:
A protective covenant is there to ensure that the lenders interests are protected and that the recollect of the loan is possible.
Both of the answer a and b are expressing this in different ways.
Answer:
The correct answer is letter "C": All of the above.
Explanation:
A Protective Covenant is a term imposed on a loan or other form of debt arrangement that demands that the borrower maintain or even refrain from certain business activities. Covenants protect the borrowers from threats that they did not foresee when calculating the risk of the loan. Most loan agreements include a clause that the lender shall have the power to make the loan due and payable immediately if a covenant is violated.
Assume that Bon Temps is expected to experience supernormal growth of 30% for the next 3 years, then to return to its long-run constant growth rate of 6%. What is the stock’s value under these conditions? What are its expected dividend yield and its capital gains yield in Year 1? In Year 4?
Answer:
Expected value one year from now=D2/(k-g)
=2.25/(16%-6%)
=22.5
Explanation:
Given the following history, use a three-quarter moving average to forecast the demand for the third quarter of this year. Note, the 1st quarter is Jan, Feb, and Mar; 2nd quarter Apr, May, Jun; 3rd quarter Jul, Aug, Sep; and 4th quarter Oct, Nov, Dec.
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Last year 100 125 135 175 185 200 150 140 130 200 225 250
This year 125 135 135 190 200 190
Forecast for the third quarter:
The forecast for the third quarter of this year (Jul, Aug, Sep) is 193.33 units using a three-quarter moving average.
To forecast the demand for the third quarter of this year using a three-quarter moving average, we'll calculate the average demand for the first and second quarters and use that average as the forecast for the third quarter.
First, calculate the moving averages for the last year's data and this year's data:
For last year (LY), the moving averages are:
- Q1 (Jan, Feb, Mar): (100 + 125 + 135) / 3 = 120
- Q2 (Apr, May, Jun): (175 + 185 + 200) / 3 = 186.67
- Q3 (Jul, Aug, Sep): (150 + 140 + 130) / 3 = 140
- Q4 (Oct, Nov, Dec): (200 + 225 + 250) / 3 = 225
For this year (TY), the moving averages for the available data are:
- Q1 (Jan, Feb, Mar): (125 + 135 + 135) / 3 = 131.67
- Q2 (Apr, May, Jun): (190 + 200 + 190) / 3 = 193.33
Now, we'll use the moving average of this year's Q2 (193.33) as the forecast for Q3 since it's the most recent data available.
So, the forecast for the third quarter (Jul, Aug, Sep) of this year is 193.33 units. This moving average method provides a simple forecast based on historical patterns, assuming that the recent trend in demand will continue into the next quarter.
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To forecast the demand for the third quarter, use the 3/4 moving average formula applied to the given history data
Given data:
The 3/4 moving average for the third quarter this year can be calculated using the following steps:
Calculate the moving average for the first two quarters of this year.Then, apply the 3/4 moving average formula: ((Last year Q1 + Q2 + Q3 + This year Q1 + Q2 + Q3 + Q4) + (This year Q1 + Q2 + Q3))/3.Finally, substitute the actual values and calculate the forecast for the third quarter.A manufacturing company reports the following items: Finished goods inventory beginning balance: $1,000; Finish goods inventory ending balance: $1,200; Cost of goods manufactured $5,000. The cost of goods sold is $ .
Answer:
The cost of goods sold is $4,800
Explanation:
Given,
Beginning Inventory = $1,000
Ending Inventory = $1,200
Cost of goods manufactured = $5,000
Cost of goods sold = Beginning Inventory + Cost of goods manufactured - Ending Inventory.
Cost of goods sold = $1,000 + $5,000 - $1,200
Cost of goods sold = $4,800
Final answer:
The Cost of Goods Sold for the manufacturing company is calculated by adding the beginning inventory to the cost of goods manufactured and then subtracting the ending inventory. The COGS is $4,800.
Explanation:
To calculate the Cost of Goods Sold (COGS), we need to take into account the cost of goods that were ready for sale at the beginning of the period (beginning inventory), add the cost of goods manufactured during the period, and then subtract the cost of goods that are unsold at the end of the period (ending inventory).
Cost of Goods Sold Calculation
COGS = Beginning Inventory + Cost of Goods Manufactured - Ending Inventory
Using the figures provided:
Beginning Inventory = $1,000Cost of Goods Manufactured = $5,000Ending Inventory = $1,200So, COGS = $1,000 + $5,000 - $1,200
COGS = $4,800
Therefore, the Cost of Goods Sold for the manufacturing company is $4,800.
The Lords' University uses automated presentations during education fairs to help prospective students get an idea about the different subjects offered and the facilities available on campus. In the context of sales communication, it can be said that the university most likely uses _____.
a.
written sales presentations
b.
directed sales presentations
c.
canned sales presentations
d.
organized sales dialogues
e.
adaptive sales presentations
Answer: c. Canned sales presentations
Explanation:
Canned Sales presentations are the "ONE SIZE FITS ALL" of Sales presentations. They are organised and structured to ensure that they can give information to multiple types of people.
Canned Sales Presentations are not very flexible. They are generally used when information has to be repeated over and over to the same.or different types of people and usually already have all information that will be needed.
The Lords' University uses this type of presentations as they used an Automated Presentation that is mostly the same period in, period out but that is built to have all the information that is needed and can be repeated to multiple people (prospective students).
Final answer:
The Lords' University most likely uses canned sales presentations for their automated presentations at education fairs. These are pre-designed to be used repeatedly and fit well with the use of computer-based media like PowerPoint in business settings.
Explanation:
The Lords' University employs automated presentations during education fairs, which are likely to be canned sales presentations. These are pre-recorded or pre-designed presentations that can be used repeatedly without alteration for numerous audiences. Given that these presentations are automated and are not likely to change based on the audience's reactions or questions, they align with the definition of canned sales presentations rather than adaptive sales presentations, which are tailored to the audience's responses.
Computer-based media tools such as PowerPoint are commonly used to create such presentations, making them both accessible and easy to distribute across different settings, from small conference rooms to large amphitheaters. Effective presentation aids are integral to conveying information clearly and keeping the audience engaged, which is crucial in business settings where oral communication is the most common method yet susceptible to listeners' minds wandering.
Marigold Company estimates that annual manufacturing overhead costs will be $865,920. Estimated annual operating activity bases are direct labor cost $492,000, direct labor hours 49,200, and machine hours 98,400. Compute the predetermined overhead rate for each activity base. (Round answers to 2 decimal places, e.g. 10.50% or 10.50.) Overhead rate per direct labor cost enter percentages rounded to 2 decimal places % Overhead rate per direct labor hour $enter a dollar amount rounded to 2 decimal places Overhead rate per machine hour
Answer:
Instructions are below.
Explanation:
Giving the following information:
Marigold Company estimates that annual manufacturing overhead costs will be $865,920. Estimated annual operating activity bases are direct labor cost $492,000, direct labor hours 49,200, and machine hours 98,400.
To calculate the estimated manufacturing overhead rate we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Direct labor cost:
Estimated manufacturing overhead rate= 865,920/492,000= $1.76 per direct labor dollar
Direct labor hour:
Estimated manufacturing overhead rate= 865,920/49,200= $17.6 per direct labor hour
Machine-hours:
Estimated manufacturing overhead rate= 865,920/98,400=$8.8 per machine hour
One of the reasons that channels of distribution often pose longevity problems is that most middlemen _____. Do not maintain sufficient inventory to serve customers Lack product knowledge resulting in low sales volume Have little loyalty to their vendors Tend to slow down distribution to extract higher commissions Do not have sufficient knowledge of the target market
Answer:
Have little loyalty to their vendors.
Explanation:
Middlemen are intermediaries that buy goods from the producers and sell directly to the consumers. They assist the producers to get different feedbacks about the products from the consumer. Middlemen include wholesalers, retailers, brokers.
In some situations, middlemen increase the prices of various products thereby making it difficult for consumers to purchase, they also have little loyalty to the producers of a particular product they tend to purchase the product when there is high productivity but reject it when productivity reduces.
Seneca Hill Winery recently purchased land for the purpose of establishing a new vineyard. Management is considering two varieties of white grapes for the new vineyard: Chardonnay and Riesling. The Chardonnay grapes would be used to produce a dry Chardonnay wine, and the Riesling grapes would be used to produce a semidry Riesling wine. It takes approximately four years from the time of planting before new grapes can be harvested. This length of time creates a great deal of uncertainty concerning future demand and makes the decision about the type of grapes to plant difficult. Three possibilities are being considered: Chardonnay grapes only; Riesling grapes only; and both Chardonnay and Riesling grapes. Seneca management decided that for planning purposes it would be adequate to consider only two demand possibilities for each type of wine: strong or weak. With two possibilities for each type of wine, it was necessary to assess four probabilities. With the help of some forecasts in industry publications, management made the following probability assessments:
Riesling Demand
Chardonnay Demand Weak Strong
Weak 0.05 0.50
Strong 0.25 0.20
Revenue projections show an annual contribution to profit of $20,000 if Seneca Hill only plants Chardonnay grapes and demand is weak for Chardonnay wine, and $70,000 if they only plant Chardonnay grapes and demand is strong for Chardonnay wine. If they only plant Riesling grapes, the annual profit projection is $25,000 if demand is weak for Riesling grapes and $45,000 if demand is strong for Riesling grapes. If Seneca plants both types of grapes, the annual profit projections are shown in the following table:
Riesling Demand
Chardonnay Demand Weak Strong
Weak $22,000 $40,000
Strong $26,000 $60,000
a. What is the decision to be made, what is the chance event, and what is the consequence? Identify the alternatives for the decisions and the possible outcomes for the chance events.
b. Develop a decision tree.
c. Use the expected value approach to recommend which alternative Seneca Hill Winery should follow in order to maximize expected annual profit.
d. Suppose management is concerned about the probability assessments when demand for Chardonnay wine is strong. Some believe it is likely for Riesling demand to also be strong in this case. Suppose the probability of strong demand for Chardonnay and weak demand for Riesling is 0.05 and that the probability of strong demand for Chardonnay and strong demand for Riesling is 0.40. How does this change the recommended decision? Assume that the probabilities when Chardonnay demand is weak are still 0.05 and 0.50.
e. Other members of the management team expect the Chardonnay market to become saturated at some point in the future, causing a fall in prices. Suppose that the annual profit projections fall to $50,000 when demand for Chardonnay is strong and Chardonnay grapes only are planted. Using the original probability assessments, determine how this change would affect the optimal decision.
Seneca Hill Winery must decide on grape varieties to plant based on probability assessments of future demand. A decision tree and expected value calculations can aid in making a profit-maximizing decision. Changes in probabilities and profit projections affect the decision, as seen with adjustments to the likelihood of demand scenarios and revenue from Chardonnay.
Decision Making, Chance Events, and Consequences
The decision to be made by Seneca Hill Winery involves choosing which variety or combination of grape varieties to plant: Chardonnay only, Riesling only, or both. The chance event is the future market demand for each type of wine, which could be strong or weak. The consequences are the financial outcomes or annual profits that result from the combination of these decisions and chance events.
Decision Tree Development
A decision tree is a visual representation that starts with the decision node (the choice of grape variety), followed by chance nodes (representing the strong or weak demand for each wine), and the ends with terminal nodes indicating the profits.
Expected Value Analysis
To maximize expected annual profit, we calculate the expected value for each strategy:
Chardonnay only: 0.05*20,000 + 0.25*70,000 = 14,500Riesling only: 0.50*25,000 + 0.20*45,000 = 16,000Both: 0.05*22,000 + 0.50*40,000 + 0.25*26,000 + 0.20*60,000 = 33,500Both grapes offer the highest expected annual profit, so Seneca should plant both Chardonnay and Riesling grapes.
Revised Probabilities and Profit Projections
Changing the probability assessments affects the expected value calculations. With a higher likelihood of strong demand for both varieties when Chardonnay demand is strong, the expected profit changes, potentially altering the optimal decision. If Chardonnay profits decrease to $50,000 under strong demand, this also affects the expected values and might influence Seneca to reconsider the decision to plant Chardonnay only.
A U.S. company that manufactures home appliances is interested in entering the foreign market of China. The company has many national appliance competitors in the Chinese market with an understanding of the unique needs of Chinese customers. Based on these facts, the U.S. company should consider what strategy for entering the Chinese market?
Answer: Global strategic alliance
Explanation:
A global strategic alliance is a strategy that is used when a company wants to go into a business and have an edge over others in the business in a new market usually outside the home domain of the company.
A global strategic alliance is also used when a firm is establishing it's branch in another country where the government protects its local industries. Alliances are then formed between two or more firms for a specified period of time.
The purpose of the alliance is to maximize competitive advantage. A global strategic alliance is an arrangement that takes place between two firms to accomplish a mutually beneficial project despite each other retaining their independence.
The average ticket price for a concert at the opera house was $50. The average attendance was 2500. When the ticket price was raised to $54, attendance declined to an average of 2100 persons per performance. What should the ticket price be to maximize revenue for the opera house?
Answer:
The price per ticket should be $37.5
Explanation:
First we need to determine the change in demand (attendance) as a result of every $1 increase in the price of ticket.
The ticket price increased by $4 (from 50 to 54) and the demand fell by 400 (from 2500 to 2100). The change per dollar is, 400 / 4 = 100.
So, for every $1 increase in price, demand falls by 100.
The revenue is calculated by multiplying price by quantity demanded. Revenue equation will be,
Let x be the change in price from $50.
Revenue = (50 + x) * (2500 - 100x)
Revenue = 125000 - 5000x + 2500x - 100x²
Revenue = 125000 - 2500x - 100x²
To calculate the price that maximizes the revenue, we need to take the derivative of this equation.
d/dx = 0 - 1 * 2500x° - 2 * 100x
0 = -2500 - 200x
2500 = -200x
2500 / -200 = x
-12.5 = x
Price should be 50 - 12.5 = 37.5
At price $37.5 the revenue of the Opera House is maximized.
Cost of Goods Manufactured for a Manufacturing Company
The following information is available for Ethtridge Manufacturing Company for the month ending July 31:
Cost of direct materials used in production $1,150,000
Direct labor 966,000
Work in process inventory, July 1 316,400
Work in process inventory, July 31 355,500
Total factory overhead 490,500
Determine Ethtridge's cost of goods manufactured for the month ended July 31.
Ethtridge Manufacturing Company
Statement of Cost of Goods Manufactured
For the Month Ended July 31
$
Add manufacturing costs incurred during July:
$
Total manufacturing costs incurred
Total manufacturing costs $
Cost of goods manufactured $
Answer:
Cost of goods manufactured $ 2567,400
Explanation:
Ethtridge Manufacturing Company
Statement of Cost of Goods Manufactured
For the Month Ended July 31
Direct materials $1,150,000
Direct labor 966,000
Total factory overhead 490,500
Total manufacturing costs $ 2606500
Add July 1 Work in process inventory, 316,400
Cost of Goods Available for manufacture $ 2922,900
Less July 31 Work in process inventory, 355,500
Cost of goods manufactured $ 2567,400
When we add the direct materials. direct labor and FOH we get the total manufacturing costs .
When the total manufacturing costs are added to the opening work in process inventory we get the cost of goods available for manufacture and we get the cost of goods manufactured by subtracting the ending work in process inventory from the cost of goods available for manufacture.
Assume the market basket for the consumer price index has two products, bread and milk, with the following values in 2013 and 2018 for price and quantity: Base Year (2013) 2018 Product Quantity Price Price Milk 50 $1.20 $1.50 Bread 100 1.00 1.10 The Consumer Price Index for 2018 equals A. 116. B. 85. C. 86. D. 118.
The market basket for the consumer price index has two products, bread and milk, with the following values in 2013 and 2018 for price and quantity: Base Year (2013) 2018 Product Quantity Price Price Milk 50 $1.20 $1.50 Bread 100 1.00 1.10 The Consumer Price Index for 2018 equals (A) 116
Explanation:
The market basket for the consumer price index has two products, bread and milk, with the following values in 2013 and 2018 for price and quantity: Base Year (2013) 2018 Product Quantity Price Price Milk 50 $1.20 $1.50 Bread 100 1.00 1.10 The Consumer Price Index for 2018 equals (A) 116
The CPI is a statistical technique that estimate or make use of the prices of a sample of representative items and these prices are collected periodically.
The Consumer Price Index (CPI) is index which is used to examine the weighted average price of consumer goods and services basket , which includes transportation, food, and medical care and is calculated by taking price changes for each item in the predetermined basket of goods and averaging them out
A customer has requested that Lewelling Corporation fill a special order for 2,600 units of product S47 for $31 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $20.70: Direct materials $ 6.20 Direct labor 3.00 Variable manufacturing overhead 3.30 Fixed manufacturing overhead 8.20 Unit product cost $ 20.70 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product S47 that would increase the variable costs by $1.80 per unit and that would require an investment of $16,000.00 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be:
Answer:
$27,420
Explanation:
The computation of the annual financial advantage or disadvantage for the company is shown below:
Incremental revenue (2,600 units × $31) $80,600
Incremental cost
Direct material (2,600 units × $6.20) $16,120
Direct labor (2,600 units × $3) $7,800
Variable manufacturing overhead (2,600 units × $3.30) $8,580
Additional variable cost (2,600 units × $1.80) $4,680
Special molds $16,000
Total incremental cost $53,180
Incremental profit (loss) $27,420
We simply deduct the all incremental cost from the incremental revenue so that the incremental profit or loss could come
Residual income is Select one: A. the excess of investment center income over the minimum return set by management. B. income beyond the breakeven point determined by the product's lifecycle. C. excess income earned after budgeted income has been achieved. D. a percentage of income received by an organization for its participation in a joint venture.
Answer:
Excess of investment center income over the minimum return set by the management.
Explanation:
Residual income can be defined as the continuous flow of cash after a particular work/task has been completed. This means an individual continuous to get payment after a work is done. This includes the amount of money that is acquired from business investments, royalties gotten from a published article or book, renting of an apartment, creating an application, working with different affiliates.
Residual income enables an individual to work on other business opportunities while still earning money from the previous efforts.
The time value of a call option is I) the difference between the option's price and the value it would have if it were expiring immediately. II) the same as the present value of the option's expected future cash flows. III) the difference between the option's price and its expected future value. IV) different from the usual time value of money concept.
Answer:
I) The difference between the option's price and the value it would have if it were expiring immediately
Explanation:
Time value in options trading simply refers to the part of an option's premium (cost or price) which is attributed to the amount of the time remaining until expiration.
An addition of the option's time value and intrinsic value equals the total premium of an option.
Therefore, we can mathematically state that:
Time Value = Option Premuim(Price) - Intrinsic Value.
The Option Premuim is an amount of money known as the price or cost.
In an exchange for the right granted by the option, an option buyer pays for the premium to an option seller.
Generally, it is seen that the more time that remains until the expiration, the greater the time value of the option. This happens as a result of investors willing to pay a higher premium for more time since the longer time taken to execute contract will be profitable due to a favorable move in the underlying asset.
Also, the lesser time remaining on an option will result in lesser willingness of investors to pay because the probability for profitability is slim.
Answer:
I) The difference between the option's price and the value it would have if it were expiring immediately
Explanation:
Time value simply means the option's premium portion that is accountable to the amount of time remaining until the option contract expires.
These is the difference between the option's price and the value it would have if it were expiring immediately.
Time value is the premium amount that the those investing is desire to pay more than the intrinsic value.
Time value can be calculated using below formula;
Time Value = Options Premium - Intrinsic Value.
Call options helps to purchase shares of stock at a stable price until the expiration date.
The intrinsic value and the time value are the two areas of call option. These intrinsic value and time value helps to know when to buy the underlying stock.
However time value of the option increases with with the time remains untill expiration
Quinlan has ample E & P to cover any distributions made during the year. One distribution made to a shareholder consists of property with an adjusted basis of $536,200 and a fair market value of $321,720. What are the tax consequences of this distribution to Quinlan? If an amount is zero, enter "0". As a result of the distribution, Quinlan Corporation has a realized of $ of which $ is recognized. The shareholder received property with a basis of $
Answer:
1.Quinlan distribution has realized a loss of
$214,480 of which $0 is recognized.
2. The shareholder received property with a basis of $321,720
Explanation:
1.
When property is been said to be distributed to shareholders the amount of dividend equal to the fair value of the said property which is $321,720 on the date of the distribution. Therefore the amount of taxable dividend is $321,720 which is before the dividends received deduction.
Therefore;
Net loss which shall not be allowed ($536,200-$321,720)
=$214,480
Quinlan distribution has realized a loss of
$214,480 which is not allowed to be recognized
2. Adjusted basis of the property distributed is $321,720
Tobias is a 50% member in Solomon LLC, which does not invest in real estate. On January 1, Tobias's adjusted basis for his LLC interest is $130,000, and his at-risk amount is $105,000. His share of losses from Solomon for the current year is $150,000, all of which is passive. Tobias owns another investment that produced $90,000 of passive activity income during the year. (Assume that Tobias is a single taxpayer, there were no distributions or changes in liabilities during the year, and that the Solomon loss is Tobias's only loss for the year from any activity.) How much of Solomon's losses may Tobias deduct on his Form 1040
Answer:
Tobias may deduct $90,000 of his Solomon loss because he has passive activity income.$20,000 of his basis is suspended under Section 704(d).$25,000 of his loss is suspended under Section 465.
Explanation:
Required and excess reserves Suppose that Second Republic Bank currently has $200,000 in demand deposits and $130,000 in outstanding loans. The Federal Reserve has set the reserve requirement at 10%.What are the Reserves, Required Reserves, and Excess Reserves?
Answer:
Reserves = $70,000
Required reserves = $20,000
Excess Reserves = $50,000
Explanation:
The data given from the question:
Demand deposits = $200,000
Outstanding loans = $130,000
Reserve requirement = 10%
And we are solving for:
Reserves, Required Reserves and Excess Reserves
For these we will look at 3 balance sheet
Assets = Total liabilities + capital
Reserves + Outstanding Loan = Demand Deposits
Reserves + $130,000 = $200,000
Reserves = $70,000
Since reserve ratio =10%, Out of total $200,000 deposits, required reserves = $200,000 x 10% = $20,000
Excess Reserves = Total Reserves - Required Reserves = $(70,000 - 20,000) = $50,000.
Final answer:
Second Republic Bank has total Reserves of $70,000, Required Reserves of $20,000, and Excess Reserves of $50,000, with each calculated based on the given demand deposit of $200,000 and a 10% Federal Reserve requirement.
Explanation:
The question asks us to calculate the Reserves, Required Reserves, and Excess Reserves for Second Republic Bank given its demand deposits and outstanding loans, with the Federal Reserve setting the reserve requirement at 10%. To clarify these terms:
Reserves are the amount of funds a bank has on hand to cover any withdrawals made by clients.
Required Reserves is the amount that a bank must hold by regulation, which in this case is 10% of demand deposits.
Excess Reserves is any amount of money that a bank holds over the required minimum.
Assuming that Second Republic Bank must maintain 10% of demand deposits as reserves, we calculate the Required Reserves as 10% of $200,000, equaling $20,000.
Given that the bank has $130,000 in loans and loans and reserves together should equal total deposits, the total Reserves would equal demand deposits minus outstanding loans, which is $200,000 - $130,000 = $70,000. Therefore, the Excess Reserves would be the total Reserves minus the Required Reserves, which is $70,000 - $20,000 = $50,000.
Lusk Corporation produces and sells 14,800 units of Product X each month. The selling price of Product X is $30 per unit, and variable expenses are $24 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $74,000 of the $112,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the annual financial advantage (disadvantage) for the company of eliminating this product should be:
Answer:
The income will decrease by $50,800
Explanation:
Giving the following information:
Product X:
Sales= 14,800*30= 444,000
Variable costs= 14,800*24= (355,200)
Contribution margin= 88,800
Fixed costs= (112,000)
Net income= (23,200)
The study shows that $74,000 of the $112,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued.
Now, we need to calculate the effect on income if Product X is discontinued.
Effect on income= net income - unavoidable fixed costs
Effect on income= 23,200 - 74,000= -50,800
The income will decrease by $50,800
What action lead to the eventual implementation of Brown vs. Board of Education in the South?
A. The Supreme Court ordering Arkansas to implement their previous decisions.
B. Dwight Eisenhower sending federal troops to escort African American students to their new schools.
C. Congress passing new regulations forcing southern states to comply.
D. Virginia bowing to public pressure and implementing the decision.
Answer:
Dwight Eisenhower sending federal troops to escort African American students to their new schools
Explanation:
Based on an 1879 law, the board of Education in Topeka, Kansas operated separate elementary schools for white and African-American students in Communities with more than 15,000 residents.
The Equal Protection Clause of the Fourteenth Amendment to the United states constitution prohibits states from segregation public school students on the basis of race.
This marked a reversal of the "separate but equal" doctrine from Plessy v, Fergusson that had permitted separate schools for white and coloured children provided that the facilities were equal.
Answer:
The answer is option B. Dwight Eisenhower sending federal troops to escort African American students to their new schools was the action that lead to the eventual implementation of Brown vs. Board of Education in the South.
Explanation:
The U.S. Supreme Court ruled unanimously that racial segregation in public schools violated the Fourteenth Amendment to the Constitution, which prohibits the states from denying equal protection of the laws to any person within their jurisdictions on may 17, 1954.
But this decision was not implemented. Over three years later on on September 4, 1957, the Arkansas National Guard was directed by Governor Orval Faubus to block the black students' entry into the high school.
Then, Eisenhower sent in federal troops to escort the Little Rock Nine into the school ans it drew national attention to the civil rights movement which eventually led to the implementation of Brown vs. Board of Education in the South?
Frank Wesley, project manager for the LOGON project, is concerned about the development time for the robotic transporter. Although the subcontractor, Creative Robotics, has promised a delivery time of 6 weeks, Frank knows that the actual delivery time will be a function of the number of other projects Creative Robotics is working on. As an incentive to speed up delivery of the transporter, Frank has three options: S1: Do nothing S2: Promise Creative Robotics a future contract with Iron Butterfly S3: Threaten to never contract with Creative Robotics again. He estimates the impact of these actions on delivery time would be as follows: Payoffs: Strategy Creative Robotics Workload Low Average Busy S1 4 6 8 S2 3 4 7 S3 3 6 6 What strategy should Frank adopt based upon uncertainty criteria
Answer:
s3
Explanation:
Adopting s1 will result in delivery time of 8 weeks when Creative Robotics is busy as per maximin criteria and maximax criteria.
Adopting s3 will result in delivery time of 6 weeks when Creative Robotics is busy as per minimax criteria.
In this scenario, minimax criteria must be used to make decision as worst loss is to be estimated.
The Devon Motor Company produces automobiles. On April 1st the company had no beginning inventories and it purchased 6,950 batteries at a cost of $125 per battery. It withdrew 6,400 batteries from the storeroom during the month. Of these, 100 were used to replace batteries in cars being used by the company’s traveling sales staff. The remaining 6,300 batteries withdrawn from the storeroom were placed in cars being produced by the company. Of the cars in production during April, 90 percent were completed and transferred from work in process to finished goods. Of the cars completed during the month, 30 percent were unsold at April 30th. Required: 1. Determine the cost of batteries that would appear in each of the following accounts on April 30th.a) raw materials
b) work in process
c) finished goods
d) cost of goods sold
e) selling expanse
2. Specify whether each of the above accounts would appear onthe balance sheet or on the income statement at April 30
Answer:
1)
Beginning inventory = 0
Plus: purchases = 6950
Less: withdraws= 6400
= ending inventory = 550
550-100 batteries used by staff= 450 batteries used in production
= 450 × $125 = $56250
Since 90% is completed, it means 10% is in WIP, i.e.,
WIP = 10% × 56250
= 5625
completed = 90% ×56250 = 50625
Since 30% of completed were unsold, it means remaining 70% were sold, which is COGS, i.e.,
COGS = 70% × 50625
= 35437
Note: selling expense cannot be deteremined from the given information.
2) WIP and Finished Goods accounts would appear on the balance sheet while COGS and selling expense would appear in income statement at April 30.
The expenses for Devon Motor Company's batteries in April are distributed across various accounts: Raw Materials $68,750, Work in Process $78,750, Finished Goods $236,250, Cost of Goods Sold $472,500, and Selling Expense $12,500. The first three appear on the balance sheet whereas the last two appear on the income statement.
Explanation:The cost of each battery is $125. The total cost of batteries purchased by the Devon Motor Company is $868,750 (6,950 batteries * $125 per battery).
Raw Materials: This will be $68,750. Because 550 batteries (6,950 purchased - 6,400 withdrawn) are still available in the storeroom on April 30 and each one costs $125. Work in Process: This represents cars that are under production but not finished yet. Here it comes to $78,750 which computes by taking 10% of 6,300 batteries (which equals 630 batteries) that were placed in production and had the battery cost multiplied by $125. Finished Goods: This pertains to cars that are ready for sale, but unsold. It comes to $236,250, calculated by taking 30% of the 90% completed cars with installed batteries (which comes around to 1,890 batteries) and multiplying that by $125 per battery. Cost of Goods Sold: This denotes the cost of the sold cars' batteries, and it is $472,500, which is calculated by taking 70% of the 90% completed cars with installed batteries (about 3,780 batteries) at $125 per battery. Selling Expense: This would be $12,500, which is the cost of the 100 batteries used by the sales staff at $125 per battery.
For the second part of your question, raw materials, work in process and finished goods are all part of the balance sheet while cost of goods sold and selling expense are part of the income statement.
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Bramble Corp. recorded operating data for its auto accessories division for the year. Sales $790000 Contribution margin 260000 Total direct fixed costs 90000 Average total operating assets 250000 How much is ROI for the year if management is able to identify a way to improve the contribution margin by $30000, assuming fixed costs are held constant?
Answer:
80%
Explanation:
For computing the return on investment first we have to need the following calculations
New contribution margin = Old contribution margin + increase in contribution margin
= $260,000 + $30,000
= $290,000
And,
Net Income = Contribution margin - Total direct fixed costs
= $290,000 - $90,000
= $200,000
ROI = Net income ÷ average operating assets
= $200,000 ÷ $250,000
= 80%
Rita Company buys merchandise on account from Linus Company for $590. Rita sells the goods to Ellis for $900 cash. Use a tabular summary to record the transactions for Rita Company using a perpetual inventory system.
Answer:
Record of transaction is given below
Explanation:
given data
Selling price of goods = $900
Cost of goods sold = $590
solution
we get here Record of transaction in Rita Company that is
Inventory accounts Dr $900
Account payable Cr $900
and
Record of transaction in Linus Company is
Account receive able Dr $900
Sales revenue Cr $900
and
Cost of goods sold Dr $590
Inventory Cr $590
To record the purchase and sale in Rita Company’s ledger using a perpetual inventory system, two transactions are made. First is the purchase of merchandise on account from Linus Company, second is the sale of the merchandise to Ellis for cash. This results in a gross profit of $310 for Rita Company.
Explanation:The subject of the student's question involves recording business transactions using a perpetual inventory system for Rita Company. The example provided to help the student understand how to record transactions is:
Rita Company buys merchandise on account from Linus Company for $590. Then, Rita sells the goods to Ellis for $900 cash. The tabular summary to record these transactions would involve two components: the purchase transaction and the sales transaction.
Transaction 1 (purchase on account):
- Inventory $590
- Accounts Payable $590
Transaction 2 (sale for cash):
- Cash $900
- Sales Revenue $900
- Cost of Goods Sold $590
- Inventory $590
After these entries, Rita Company would see an increase in cash by $900, an increase in cost of goods sold by $590, and a decrease in inventory by $590, resulting in a gross profit of $310 from the sale ($900 - $590).