Answer:
Task 1:
The answer is $700.
Task 2:
The answer is $130.
Task 3:
The answer is $20.
Task 4:
The answer is $10,570.
Task 5:
The answer is $110.
Explanation:
Task 1:How much does each investor make on his investment with the 7% rate of return?Solution:Adrian & Clemens makes [$10,000*0.07] on their investment = $700.
Task 2:How much does Adrian pay in fees for his actively managed mutual fund?Solution:Adrian owes to his broker = (10000*.013) = $130
Task 3:How much does Clemens pay in fees for the index fund?Solution:Clemens owes to his broker= ($10000*.002) = $20
Task 4:At the end of the year, what's the total value (AFTER FEES) of Adrian's mutual fund?Solution:Value of Adrian's stock = $10000+$570 (net of brokerage) = $10,570
Task 5:What's the total value (AFTER FEES) of Clemens's index fund?Solution:Value of clemens' stock = $10000+$680 (net of brokerage) = $10,680
Task 6:How much more value does Clemens' investment generate than Adrian's in one year's time?Solution:Clemens investment makes ($680-$570) than adrian's investment = $110
1. The amount each investor make on the investment is $700.
2 The amount paid in fees should be $130.
3. The amount paid in fees for the index fund is $20
4. The total value after fees should be $10,570
5. The total value after fees should be $10,680
6. The more value should be $110.
Calculation of the amount of each part:
1. The amount that each investor make should be
= 7% of $10,000
= $700
2. The amount paid in fees should be
= 1.3% of $10,000
= $130
3. The amount paid in fees for the index fund is
= 0.2% of $10,000
= $20
4. The total value after fees should be
= $10,000 + $570
= $10,570
5. The total value after fees should be
= $10,000 + $680
= $10,680
6. The more value should be
= $680 - $570
= $110
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Flingers Inc. reveals the following information in their annual report for FY 2004. Earnings and Expenses Sales $10,000,000 Cost of goods sold $5,000,000 Pre-tax earnings $500,000 Merchandise inventory $80,000 Total assets $2,000,000 What is Flingers' return on assets?
Answer:
25%
Explanation:
Given: Sales= $10,000,000
Cost of goods sold= $5000000.
Pre-tax earning= $500000.
Merchandise inventory= $80000.
Total assets= $2000000.
Now, computing the value of return on assets.
Formula; [tex]Return\ on\ assets= \frac{Net\ income}{Average\ total\ assets} \times 100[/tex]
⇒ [tex]Return\ on\ assets= \frac{500000}{2000000} \times 100[/tex]
⇒ [tex]Return\ on\ assets= 0.25 \times 100[/tex]
∴ Return on assets= [tex]25\%[/tex]
Hence, Flinger´s return on assets is 25%
A loan of XX is repaid with level annual payments at the end of each year for 10 years. You are given: i.The interest paid in the first year is 3,600; and ii.The principal repaid in the 6th year is 4,871. Calculate XX.
Final answer:
The initial loan amount "XX" cannot be determined with the provided information, as the interest rate and the annual payment amount are missing, which are necessary to calculate the loan balance after 5 years or the original loan amount.
Explanation:
The problem at hand is to calculate the initial loan amount, denoted as XX, which is repaid with level annual payments over 10 years. Given the principal repayment amount in the 6th year and the interest payment in the first year, we can calculate the initial loan amount using the amortization concept of loans. Unfortunately, the question doesn't provide the interest rate or the annual payment, both of which are essential to finding the loan balance after 5 years or calculating the original loan amount. Additional information is needed to solve this problem accurately.
Billy Bob runs a seafood restaurant. Last year he earned $50,000 in revenue. He had explicit costs of $20,000. Billy Bob could have made $30,000 working for the county and could have received an additional $20,000 if he rented out his building and equipment. Calculate Billy Bob's economic profit.
Answer:
-$20,000
Explanation:
Economic profit takes into account opportunity cost of an activity.
Opportunity cost is the next best option forgone when one alternative is chosen over other alternatives. Opportunity cost is also known as implicit cost.
Because Bobby chose to work at the seafood resutrant, he forgoed the opportunity of working at the county. Thus, his opportunity cost is $30,000.
Also, if he wasn't making use of the restaurant, he could have rented it out. Thus, his opportunity cost of making use of the restaurant is $20,000.
Economic profit = Revenue - (Implicit cost + Explicit cost)
$50,000 - ($20,000 + $30,000 + $20,000) = -$20,000
I hope my answer helps you
The Detroit designated market area (DMA) has approximately 2 million television households. Audience research shows that 60 percent of these households had their sets turned on during a particular Saturday evening and 300,000 households were watching the Detroit Pistons in a playoff game. The program rating for the game in the Detroit DMA is _____ while the share of audience is ____.
Answer:
Program rating 25%
Share of audience is 15
Explanation:
program rating = 30000/ 60%x 2million = 25%
If project A generates $10 million of free cash flow over its five year useful life and project B generates $8 million of free cash flow over its useful life, then Project A will have a shorter payback period than Project B, assuming both projects require the same initial investment.
Answer: False
Explanation:
This seems to me like a True or False question and the answer would be False.
Payback period is calculated on the basis of the timing of cash flows and since we do not know the useful life of Project B neither do we know the timing of it's cash flows, we cannot say for certain that Project A has a shorter Payback period.
For example, the initial investment could be $5 million for instance but Project A only pays $10 million on its 5th year whereas Project B had a useful life of 4 years and paid $2 million each of those years. Meaning it would have paid back before the end of the 3rd year.
If you need any clarification do react or comment.
A process currently services an average of 50 custom-ers per day. Observations in recent weeks show that its utilization is about 90 percent, allowing for just a 10 percent capacity cushion. If demand is expected to be 75 percent of the current level in five years and management wants to have a capacity cushion of just 5 percent, what capacity requirement should be planned?
Answer:
40 customers
Explanation:
Expected Demand Rate*current service rate/current utilization=capacity requirement/required utilization
.75*(50/90)=x/.95
x=39.58
x=40 customers
To determine the capacity requirement, calculate the future demand and divide it by the utilization rate minus the desired capacity cushion.
Explanation:To calculate the capacity requirement that should be planned, we need to determine the future demand and the desired capacity cushion. The current demand is 50 customers per day with a utilization rate of 90% and a capacity cushion of 10%. In five years, the demand is expected to be 75% of the current level and management wants a capacity cushion of 5%.
First, we calculate the future demand by multiplying the current demand by 0.75: future demand = 50 * 0.75 = 37.5 customers per day.
Next, we calculate the required capacity by dividing the future demand by the utilization rate (1 - capacity cushion): required capacity = 37.5 / (0.90 - 0.05) = 44.12 customers per day.
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Mr. Ballard retired in 2018 at age 69 and made his first withdrawal of $35,000 from his traditional IRA. At year-end, the IRA balance was $441,000. In 2019, he withdrew $60,000 from the IRA. At year-end, the account balance was $407,000. Determine how much of each annual withdrawal was taxable assuming that: Mr. Ballard made $320,000 nondeductible contributions to the IRA. Mr. Ballards contributions to the IRA were fully deductible.
Answer:
a)
Contributions amounting to $320,000 were non deductible.
First year of withdrawal:
Taxfree withdrawal % = Uncovered Investments / Current year value x 100
Taxfree withdrawal % = [$320,000 / ($441,000 + $35,000)] x 100
Taxfree withdrawal % = [$320 / $476,000] x 100
Taxfree withdrawal % = 67.23%
Amount of taxfree withdrawal = 67.23% x $35,000
Amount of taxfree withdrawal = $23,530.5
Taxable amount = Total Withdrawal - Tax free withdrawal
Taxable amount = $35,000 - $23,530.5
Taxable amount = $11,469.5
Second year of withdrawal:
Taxfree withdrawal % = [($320,000 - $23,530.5) / ($407,000 + $60,000)] x 100
Taxfree withdrawal % = [$296, 469.5 / $467,000] x 100
Taxfree withdrawal % = 63.48%
Amount of taxfree withdrawal = 63.48% x $60,000
Amount of taxfree withdrawal = $38,088
Taxable amount = $60,000 - $38,088
Taxable amount = $21,912
b)
$35,000 would be included in taxable income in first year and $60,000 would be included in taxable income in second year.
Bruce Corporation makes four products in a single facility. These products have the following unit product costs:
Products
A B C D
Direct materials $16.60 $20.50 $13.50 $16.20
Direct labor 18.60 22.00 16.40 10.40
Variable manufacturing overhead 5.40 6.60 9.10 6.10
Fixed manufacturing overhead 28.50 15.40 15.50 17.50
Unit product cost 69.10 64.50 54.50 50.20
Additional data concerning these products are listed below.
Products
A B C D
Grinding minutes per unit 2.50 1.60 1.20 0.80
Selling price per unit $83.70 $76.10 $72.90 $67.60
Variable selling cost per unit $3.60 $4.10 $3.80 $4.50
Monthly demand in units 4,000 3,000 3,000 5,000
The grinding machines are potentially the constraint in the production facility. A total of 10,500 minutes are available per month on these machines. Direct labor is a variable cost in this company. Which product makes the MOST profitable use of the grinding machines?
Answer:
Product D
Explanation:
The contribution margin will be used for this assessment
Contribution margin is the selling price of an item less the associated variable selling cost to determine the extra profit for each unit of an item sold.
However , the grinding hour being the constraint in this scenario , the contribution per minute of production will be used.
A B C D
Direct materials 16.60 20.50 13.50 16.20
Direct labor 18.60 22.00 16.40 10.40
Variable Man. 5.40 6.60 9.10 6.10
Variable selling C. 3.60 4.10 3.80 4.50
Selling price 83.70 76.10 72.90 67.60
Contribution/unit 39.50 22.90 30.10 30.40
Minute /unit 2.50 1.60 1.20 0.8
Contribution /min 15.8 14.13 25.08 38
Product D with the highest contribution per minute of production makes the most profitable use of the machine.
New Gadgets, Inc., currently pays no dividend but is expected to pay its first annual dividend of $4.80 per share exactly 5 years from today. After that, the dividends are expected to grow at 3.3 percent forever. If the required return is 11.1 percent, what is the price of the stock today?
Answer:
The price of the stock today is $40.39
Explanation:
The price of the stock today can be calculated using the constant growth model of the DDM approach. The constant model is used whenever the expected dividend is expected to grow at a constant rate forever. The formula for price today is,
P0 = D1 / r -g
Where we use D1 that is dividend expected for the next year to calculate price today. As the company will pay dividend in the year 5 that is D5, we will calculate the price using this model that will be price at Year 4 and dicount it back for 4 years to calculate the price today.
P0 = [4.8 / (0.111 - 0.033)] / (1+0.111)^4
P0 = $40.39
The price of the stock today for New Gadgets, Inc., given the provided parameters and using the Gordon Growth Model for calculation, equates to approximately $18.81 per share.
Explanation:The subject of your question pertains to the field of finance, and more specifically, the calculation of the inherent value of a company's stock. For the case of New Gadgets, Inc., we should apply the Gordon Growth Model (a variant of the Dividend Discount Model) to determine the current price of the stock. With the specification that the firm starts paying dividends in the 5th year, we discount this future dividend using the formula for the present value of growing perpetuity: P = D / (r - g), where D represents the amount of the dividend ($4.80); r the required return (11.1%), and g the growth rate of dividends (3.3%). However, since the first dividend will only be paid in 5 years, we must discount this derived price for the additional years (in this case, 5 years) at the required return. The formula becomes: P = D / ((1 + r) ^ n * (r - g)) which simplifies to P = $4.80 / ((1 + 0.111) ^ 5 * (0.111 - 0.033)). After doing the math, the computed price of the share today comes out to be around $18.81.
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The Copy Department in the College of Business at State University provides photocopying service for both the Marketing and Economics Department. The following budget has been prepared for the year. Available capacity 6,000,000 pages Budgeted usage: Marketing 3,600,000 pages Economics 1,800,000 pages Cost equation $120,000 $0.025 per page If the Copy Department uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the Marketing Department
Answer:
The correct answer is $170,000.
Explanation:
According to the scenario, computation of the given data are as follows:
We can calculate the cost allocated to Marketing by using following formula:
Total cost allocated = Fixed cost + Variable cost
Where, Fixed cost = (3,600,000 ÷ 5,400,000) × $120,000
= $80,000
And , Variable cost = $0.025 × 3,600,000 = $90,000
By putting the value, we get
Total cost allocated = $80,000 + $90,000
= $170,000
Final answer:
The total cost allocated to the Marketing Department by the Copy Department at State University is $162,000, calculated by multiplying the department's budgeted usage of 3,600,000 pages by the total cost per page of $0.045.
Explanation:
To determine how much cost will be allocated to the Marketing Department by the Copy Department at State University, we first need to understand that a dual rate for allocating costs includes both fixed and variable costs. The fixed costs are given as $120,000, and the variable cost is $0.025 per page. The total available capacity is 6,000,000 pages, and the budgeted usage for Marketing is 3,600,000 pages, and for Economics, it's 1,800,000 pages.
We begin by calculating the fixed cost per page by dividing the total fixed costs by the available capacity. This is $120,000 / 6,000,000 pages = $0.02 per page. Next, we add the variable cost per page of $0.025 to the fixed cost per page of $0.02 to get a total cost per page of $0.045.
Then, we can calculate the total cost to be allocated to the Marketing Department by multiplying their budgeted usage of 3,600,000 pages by the total cost per page of $0.045. Therefore, the Marketing Department will be allocated 3,600,000 pages × $0.045 per page = $162,000.
On January 2, 2021, L Co. issued at face value $26,000 of 4% bonds convertible in total into 2,200 shares of L's common stock. No bonds were converted during 2021. Throughout 2021, L had 2,200 shares of common stock outstanding. L's 2021 net income was $8,000. L's income tax rate is 25%. No potential common shares other than the convertible bonds were outstanding during 2021. L's diluted earnings per share for 2021 would be:
Final answer:
The diluted earnings per share (EPS) for L Co. is calculated by dividing the net income minus any preferred dividends by the sum of outstanding shares and dilutive potential shares from convertible securities. L Co.'s diluted EPS for 2021 is $1.36364 after accounting for the tax rate.
Explanation:
The student asked how to calculate diluted earnings per share (EPS) for L Co. for the year 2021, considering that L Co. has convertible bonds that could potentially be converted into shares of common stock. To find the diluted EPS, we first need to calculate the net income available to common stockholders and then divide this by the diluted number of shares outstanding. The formula for diluted EPS is Net Income - Preferred Dividends / Average Shares Outstanding + Dilutive Convertible Securities.
Since no preferred dividends are mentioned, we assume there are none, and the net income is $8,000. For the diluted number of shares, we add the shares that the bonds could convert into. L Co. has 2,200 shares outstanding and can be converted into another 2,200 shares via bonds. Therefore, the diluted number of shares would be 2,200 (existing) + 2,200 (potential from conversion), giving us a total of 4,400 shares.
Diluted EPS = Net Income / (Existing Shares + Convertible Shares) = $8,000 / 4,400 = $1.81818. This value is pre-tax and to get the after-tax diluted EPS, you would multiply by (1 - Tax Rate), so $1.81818 * (1 - 0.25) = $1.36364.
Cornish Company had the following results of operations for the past year: Sales (20,000 units at $22) $ 440,000 Direct materials and direct labor $ 200,000 Overhead (40% variable) 100,000 Selling and administrative expenses (all fixed) 92,000 (392,000 ) Operating income $ 48,000 A foreign company (whose sales will not affect Cornish's market) offers to buy 3,000 units at $17.00 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $500 and selling and administrative costs by $1,000. If Cornish accepts the offer, its profits will:
Answer:
Increase by $13,500
Explanation:
Cornish Company
Selling price per unit$17.00
Variable costs per unit
Direct materials and direct labor($200,000/20,000 units)$10.00
Variable overhead[(40% * $100,000)/20,000 units]2.00
Total variable costs per unit($12.00)
Contribution margin per unit$5.00 Units in order* 3,000units
Total contribution margin$15,000
Less incremental fixed costs:
Overhead$500
Selling and administrative1,000
Total incremental fixed costs($1,500)
Incremental income from order$13, 500
Therefore If Cornish accepts the offer, its profits will increase by $13,500
Samantha, a one-third partner, has an adjusted basis of $90,000 for her partnership interest. If Samantha sells her entire partnership interest to Emma for $100,000 cash, what is the amount and character of Samantha's gain or loss from the sale?
a. $10,000 capital gain.
b. $10,000 ordinary income.
c. $20,000 ordinary income; $10,000 capital gain.
d. $10,000 capital loss; $20,000 ordinary income.
Answer:
Correct option is D.
$10,000 capital loss; $20,000 ordinary income.
Explanation:
Samantha's share of unrealized receivables is $20,000 ($60,000 unrealized receivables × 1/3 interest). Susan will recognize $20,000 of ordinary income and a $10,000 capital gain determined as the difference between the total gain of $30,000 and the ordinary income of $20,000.
Answer:
$10,000 capital gain.
Explanation:
Given that:
Adjusted basis of $90,000Sell her interest for $100,000So the difference between her basis and sales interest is:
$100,000 - $90,000
= $10,000
She will have a gain on sales of her interest because she receives the only cash for the sales and the amount is greater than her basis in her partnership. Therefore, the gain will be seen as capital
According to the depreciation rates used by the company and described in the Production Cost Report, if a company adds 70 new workstations at a cost of $75,000 each and also spends $10 million for an addition to its assembly plant to accommodate the new workstations, then its annual depreciation costs will rise by:
a. 4% of $15,250,000 or $610,000.
b. $1,550,000.
c. $193,750.
d. $800,000.
e. $775,000
Answer:
Its annual depreciation costs will rise by 4% of $15,250,000 or $610,000. The right answer is a
Explanation:
In order to calculate the amount its annual depreciation costs will rise by, we would have to calculate first the total cost with the following formula:
Total cost=(Number of workstation added×cost of work station)+money spend
Total cost=(70×$75,000)+10,000,000
Total cost=$15,250,000
Therefore, Annual depreciation=4%×$15,250,000
=$610,000
Its annual depreciation costs will rise by 4% of $15,250,000 or $610,000
Final answer:
To determine the rise in annual depreciation costs after adding new workstations and expanding the assembly plant, the straight-line method of depreciation would be used. However, without the specific depreciation rate, we cannot determine the exact increase in annual depreciation costs from the provided options.
Explanation:
The question is asking about the increase in annual depreciation costs for a company after adding new workstations and expanding its assembly plant. To calculate the additional depreciation costs, we assume that the straight-line method of depreciation is used since the provided examples illustrate this method. With this method, the total cost of the asset is spread evenly over its useful life.
If the company adds 70 new workstations at a cost of $75,000 each, the total cost for the workstations is 70 times $75,000, which equals $5,250,000. The addition to the assembly plant costs $10,000,000. The combined cost is therefore $5,250,000 (workstations) + $10,000,000 (assembly plant addition) = $15,250,000.
Without the specific depreciation rate for the new assets, we cannot determine the exact increase in annual depreciation. Thus, we are unable to select the correct option among the given choices a to e. We would need the specific depreciation rate applied to the combined cost of the new workstations and the assembly plant addition to calculate the annual increase in depreciation.
Sheela Dairy Corporation buys unprocessed cows' milk from local farmers. At the dairy, this unprocessed milk is broken down into cream and low-fat milk. The cream can be sold at this point or can be further processed into butter. Which of the following would be relevant in the decision to further process the cream into butter?Question 3 options:a. the amount paid to the farmers to purchase the unprocessed milk.b. the cost of breaking down the unprocessed milk into cream and low-fat milk.c. the portion of corporate fixed expenses that are currently being allocated to cream.d. none of these
Answer:
The answer is D) None of these statement is relevant in the decision to further process the cream into butter.
Explanation:
option A) the amount paid to the farmers to purchase the unprocessed milk: this information is not relevant to further develop the cream and low fat milk to butter. It was already considered before this stage of production.
Option B) the cost of breaking down the unprocessed milk into cream and low-fat milk: this cost was already accounted for since the processing into cream and low fat milk is completed.
Option C) the portion of corporate fixed expenses that are currently being allocated to cream: This information is not going to help in the decision making for further processing.
Indicate whether each of the following transactions represents an increase in net exports, a decrease in net exports, an increase in net capital outflow, or a decrease in net capital outflow for the United States. Transaction Net Exports Net Capital Outflow Increase Decrease Increase Decrease The Sony pension fund buys a bond from the U.S. Treasury. A South Korean tourist buys some Sunkist oranges from an American farmer. An American buys a Toyota. An American buys a share of Sony stock.
Answer:
A. Decrease net capital outflow
B. Increase in net exports
C. Decrease in net exports.
D. Increase net capital outflow.
Explanation:
A. When the Sony pension fund buys U.S treasury then there is a inflow of capital. Hence, this will decrease the net capital outflow.
B. The Sunkist oranges is purchased by the South Korean tourist from the american farmer will increase the exports of the U.S. Hence, there is an increase in the net exports.
C. When a Toyota is purchased by an American then this will increase the imports of United states and hence, there is a reduction in the net exports.
D. The shares of Sony are purchased by an american, so there is a outflow of capital and this will increase the net capital outflow.
Each transaction impacts either net exports or net capital outflow for the U.S: buying a bond from the U.S. Treasury increases net capital inflow, buying Sunkist oranges increases net exports, buying a Toyota decreases net exports, and buying a share of Sony stock increases net capital outflow.
Explanation:When the Sony pension fund buys a bond from the U.S. Treasury, there is an increase in net capital inflow, as this represents financial capital from Japan flowing into the U.S. economy. The South Korean tourist buying Sunkist oranges from an American farmer is an increase in net exports for the U.S., as this is a sale of American goods overseas. An American buying a Toyota would lead to a decrease in net exports, as this is a purchase of foreign goods. Transactions such as an American buying a share of Sony stock would result in an increase in net capital outflow, as this is an investment of U.S. capital in a foreign company.
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Which of the following is true for American options? A. Put-call parity provides an upper and a lower bound for the difference between call and put prices B. Put call parity provides an upper bound but no lower bound for the difference between call and put prices C. Put call parity provides a lower bound but no upper bound for the difference between call and put prices D. There are no put-call parity results
The statement that holds true for the American Option is (A) Put-call parity provides an upper and lower bound for the difference between call and put prices
Explanation:
According to the Put-call parity concept when we hold the short European put and long European call of similar class the return delivered is same as holding one forward contract of the same underlying asset, that has the same expiration, forward price and which is equal to the strike price of the option
In financial management put–call parity concept is used to define the relationship that exist between the price of a European call option and European put option, and both of them have identical strike price and expiry
The formula used for calculating put call parity is
c + k = f +p
where (c) call price plus the (k) strike price of both options is equal to the futures price(f) plus the put price(p)
Put-call parity provides an upper and a lower bound for the difference between call and put prices.
Explanation:The correct answer is A. Put-call parity provides an upper and a lower bound for the difference between call and put prices.
Put-call parity is a fundamental concept in options pricing, which states that the sum of a call option and a put option with the same strike price and expiration date equals the price of the underlying asset.
Using put-call parity, we can derive upper and lower bounds for the difference between call and put prices. These bounds are based on the cost of carry and the time value of money.
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A review of Parson Corporation's accounting records found that at a volume of 144,000 units, the variable and fixed cost per unit amounted to $6 and $2, respectively. On the basis of this information, what amount of total cost would Parson anticipate at a volume of 137,000 units?
Answer:
1,110,000
Explanation:
Parson Corporation's
Volume of unit × Fixed cost per unit
144,000 unit ×2 cost per unit= 288,000
Volume of unit × Variable cost per unit
137,000 unit × 6 cost per unit = 822,000
Therefore
822,000+288,000= 1,110,000
Parson would anticipate 1,110,000 of total cost at a volume of 137,000 units.
Answer:
$ 1, 100,000
Explanation:
Total fixed costs=(2 x 144,000)= $288,000
Hence total cost at 137,000 units=Total fixed costs+Total variable costs
=$288,000 + (6 x 137,000)
=$1,110,000.
Tri-State Mill uses a special sander to finish lumber. Data on the sander and its usage follow. Cost Driver Rate Cost Driver Volume Resources used Energy $ 0.50 per machine-hour 8,000 machine-hours Repairs $ 13 per job 800 jobs Resources supplied Energy $ 7,600 Repairs $ 12,700 Sales revenue from finishing totaled $37,000. Required: a. Prepare a traditional income statement. b. Prepare an activity-based income statement.
Solution:
a. To Prepare a traditional income statement.
Finishing Sales 37,000.00
Energy Costs 7,600.00
Repair Costs 12,700.00
20,300.00
Operating Profit 16,700.00
b. To Prepare an activity-based income statement.
Resources Used Unused Resources Resources Supplied
Finishing Sales 37,000.00
Costs
Volume Related Energy 4,500 3,000 7,600.00
Batch Related Repairs 10,500 2,100.00 12,700.00
Total Costs 15,000 5,100 20,100.00 20,100.00
Finishing Operating Profits 15,900.00
Riveria Co. makes and sells a single product. The current selling price is $32 per unit. Variable expenses are $20 per unit, and fixed expenses total $43,200 per month. Sales volume for May totaled 4,100 units. Required: a. Calculate operating income for May. b. Calculate the breakeven point in terms of units sold and total revenues. c. Management is considering installing automated equipment to reduce direct labor cost. If this were done, variable expenses would drop to $14 per unit, but fixed expenses would increase to $67,800 per month. 1. Calculate operating income at a volume of 4,100 units per month with the new cost structure. 2. Calculate the breakeven point in units with the new cost structure. (Round your answer.) 3. Why would you suggest that management seriously consider investing in the automated equipment and accept the new cost structure
Answer:
Explanation:
Rivera Co
Selling price $32
Less Variable costs $20
Contribution $12
Sales Volume 4,100 units
A.
Sales = $131,200
Variable costs = $82,000
Contribution = $49,200
Fixed costs = $43,200
Gross profit/ operating income = $6,000
B.
Break even.point (units)= fixed costs divided by contribution per unit
= 43,200 / 12
= 3,600 units
Break even point sales = Break even point (units) x unit selling price
= 3,600 x $32
= $115,200
C.
Sales = $131,200
Variable costs = $57,40
Contribution = $73,800
Fixed costs = $67,800
Gross profit/ operating income = $16,000
D.
Break even.point (units)= fixed costs divided by contribution per unit
= 67,800 / ($32 - $14)
= 3,767 units
Break even point sales = Break even point (units) x unit selling price
= 3,767 x $32
= $120,533
E.
Management should consider the project because Operating income increased by $10,000.
However it takes more sales effort to break even (additional 167units more)
Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of $3,000. The division sales for the year were $1,047,000 and the variable costs were $860,000. The fixed costs of the division were $190,000. If the mountain bike division is dropped, 30% of the fixed costs allocated to that division could be eliminated. The impact on operating income for eliminating this business segment would be: Multiple Choice $187,000 decrease $130,000 decrease $187,000 increase $54,000 decrease $57,000 decrease
Consider a mutual fund with $300 million in assets at the start of the year and 10 million shares outstanding. The fund invests in a portfolio of stocks that provides dividend income at the end of the year of $1.5 million. The stocks included in the fund's portfolio increase in price by 7%, but no securities are sold and there are no capital gains distributions. The fund charges 12b-1 fees of .75%, which are deducted from portfolio assets at year-end. a. What is the fund's net asset value at the start and end of the year?
Answer: Start = $300 million
End = $318.59 million
Explanation:
NAV can be calculated by dividing the funds Assets net of Liabilities by the total number of outstanding shares.
At start of the year NAV is $300 million and NAV per share is therefore,
= 300 million/ 10 million
= $30 per share.
Ending NAV
During the year the fund made Investments and increased by a price of 7%
= 300 million (1 + 0.07)
= $321 million
We still have to subtract the 12b-1 fees that the fund charges though and that would result in,
= 321 million * (1 - 0.0075)
= 318.5925
= $318.59 million.
Dividing this by the total number of outstanding shares we have,
= 318.59 /10
= $31.86
$31.86 is the NAV per share at year end.
Perpetual Inventory Using LIFO Beginning inventory, purchases, and sales data for DVD players are as follows: November 1 Inventory 73 units at $99 10 Sale 48 units 15 Purchase 93 units at $105 20 Sale 53 units 24 Sale 13 units 30 Purchase 27 units at $111 The business maintains a perpetual inventory system, costing by the last-in, first-out method. Determine the cost of goods sold sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 4. Under LIFO, if units are in inventory at two different costs, enter the units with the HIGHER unit cost first in the Cost of Goods Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost column. Schedule of Cost of Goods Sold LIFO Method DVD Players
Answer:
Sale - November 10
Cost of Sales
= 48 units × $99
= $4,752
Inventory Balance
=25 units × $99
=$2,475
Sale - November 15
Cost of Sales
=53 units × $105
= $5,565
Inventory Balance
40 units × $105 = $4,200
25 units × $99 = $ 2,475
Total = $6,675
Sale - November 24
Cost of Sales
= 13 units × $105
= $ 1,365
Inventory Balance
27 units × $105 = $ 2,835
25 units × $99 = $ 2,475
Total = $5,310
Explanation:
LIFO Inventory System sells the Recently Acquired Inventory First followed By Older Inventory Acquired.
Final answer:
Using the LIFO method, we calculate COGS for each sale date by using the most recent inventory costs first. The total COGS for Nov 10 is $4752, Nov 20 is $5565, and Nov 24 is $1365. Remaining inventory is updated after each transaction, with the most recent purchase prices used first.
Explanation:
Perpetual Inventory Using LIFO
When applying the Last-In, First-Out (LIFO) method in a perpetual inventory system, the most recent inventory costs are used first when calculating the cost of goods sold (COGS). Let's determine the COGS for each sale and the ending inventory balance after each sale:
November 10 Sale of 48 units: We have only the beginning inventory, so all 48 units at $99 are sold, totaling $4752 in COGS.
November 20 Sale of 53 units: We have 25 units left from the beginning inventory at $99 and we sold 28 units from the new purchase at $105, totaling $2625 (25 units x $99) + $2940 (28 units x $105) = $5565 in COGS.
November 24 Sale of 13 units: All 13 units are from the new purchase at $105, totaling $1365 in COGS.
The remaining inventory after each sale would be calculated by deducting the COGS from the total inventory available before the sale. After the sales on November 10, 20, and 24, and the purchase on November 15, the balance is 73 units - 48 units sold + 93 units purchased - 53 units sold - 13 units sold = 52 units at $105. When the additional 27 units are purchased on November 30 at $111, the inventory balance will include these new units at the higher price, with the older inventory listed thereafter.
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Tile Depot, specializing in retail of construction materials, carries a popular flooring tile. The annual demand is estimated to be 5,000 cases. The ordering cost of this tile is $250 per order and the carrying cost is $10 per case per year. Tile Depot opens six days per week that is equivalent to 300 working days per year. The lead time for this item is usually two weeks or 12 working days. The economic ordering quantity (EOQ) for this item is a.$250 b.$300 c.$400 d.$500 e.$600
Answer:
d.$500
Explanation:
Economic order quantity is the quantity at which business incur minimum cost. This is the level of order where the holding cost equals to the ordering cost of the business.
As per given data
Annual Demand = 5,000 cases
Ordering cost = $250
Carrying cost = $10
EOQ = [tex]\sqrt{\frac{2 X S X D}{H} }[/tex]
EOQ = [tex]\sqrt{\frac{2 X 250 X 5,000}{10} }[/tex]
EOQ = 500
Answer:
EOQ = 500 units
Explanation:
Explanation:
The Economic Order Quantity (EOQ) is the order quantity that minimizes the balance of holding cost and ordering cost. At the EOQ, the holding cost is exactly the same as the ordering cost.
It is calculated as follows:
EOQ = √(√2× Co D)/Ch)
Co- ordering cost - 250,
Ch - holding cost - 10
D- annual demand- 5000
So we apply the formula:
EOQ = √(2× 250 × 5,000/10)
EOQ = 500 units
Angela is now going to evaluate a new salt process delivery system and wants to know if the upper and lower control limits at 3 standard deviations for the new system will meet the upper and lower controls specifications noted above. The population standard deviation is ? = .07. The data (in percent) from the initial trial samples are:
Sample 1: 1.98 2.11 2.15 2.06
Sample 2: 1.99 2.0 2.08 1.99
Sample 3: 2.20 2.10 2.20 2.05
Sample 4: 2.18 2.01 2.23 1.98
Sample 5: 2.01 2.08 2.14 2.16
Provide your findings to Angela. Please show all work.
a.What are the advantages and disadvantages of Frito-Lay drivers stocking their customers' shelves?
b.Why is quality a critical function at Frito-Lay?
Complete Question:
Frito•Lay's Quality•Controlled Potato Chips Frito-Lay, the multi-billion-dollar snack food giant, produces billions of pounds of odic( every year at its downs of US. and Canadian plants. From the fanning of potatoes—I brida, Moral Carolina, and Michigan—b factory and to retail stores, the ingredients and final product of Lay's chips, for example, are respected at least 11 Ines: h the field, before tnbadhg at the plant, after washing and peeling, at the sizing station, at he fryer, after seasoning, when bagged (for weight), at carton filling, h the warehouse, and as they are placed on the store shelf by Frib-Lay personnel. Similar inspections take place for ib other famous products, including Cheetos, Fritz, Ruffles, and Tostibs. In addition to these employee inspections, the firm uses proprietary vision systems to look for defective potato clips. Chips are pulled off the high-speed line and checked twice if he visits system senses them to be to brown. lire company follows the very strict standards of the American Institute of Baling (AIB), standards that are much tougher than those of the US. Food and Drug Administration. Two warnourted AIB site visits per year keep Frito-Lay's plants cn their toes. Scores, consistently in the "excellent' range, are posted, and every employee knows exactly how the plant is doing. There are two key metrics in Frito-Lay's continuous improvement quality program: (1) total customer complaints (measured on acomplabb per million bag basis) and (2) horror daily statistical process control scores (far oil, moisture, seasoning, and salt content, for chip thickness, for fryer temperature, and for weight). In the Florida plant, Angela McCormack, who holds engineering and MBA degrees, oversees a 16-member quality assurance staff. They watch all aspects of quality, including trailing employees on the factory floor, monitoring automated processing eq.ibment, and developing and updating statistical process control (SPC) charts. The upper and lower control limits for one checkpoint, salt content in Lay's chips, are 2.22% and 1.98%, respectively. To see exactly how these limits are created using SPC, watch the vkleco that accompanies this case. Angela is now gonged b evaluate a new salt process delivery system and wants to Prow if the per and bv.er control limits at 3 standard deviations for the new system will meet the upper and lower control specifications noted above. the data (in percents) from the initial trial samples ae:
Sample 1:1.98, 2.11, 2.15, 206
Sample 2: 1.99, 2.0, 208, 1.99
Sample 3: 2.20, 2.10. 220, 205
Sample 4: 2.18, 2.01, 223, 1.98
Sample 5: 2.01, 2.08, 2.14, 216
Provide the report to Angela
Answer and explanation:
check the attached file for comprehensive step by step solution
The mean of each sample was calculated and then used to determine an overall mean, which was then utilized to compute upper and lower control limits. The standard deviation was incorporated into this calculation. The computed control limits were recommended for comparison with the system's specifications.
Explanation:To evaluate the new salt process delivery system, we will first calculate the mean of each sample, and then calculate the overall mean. When we have the overall mean, we can compute the upper and lower control limits.
Mean of Sample 1 = (1.98 + 2.11 + 2.15 + 2.06)/4 = 2.075Mean of Sample 2 = (1.99 + 2.0 + 2.08 + 1.99)/4 = 2.015Mean of Sample 3 = (2.20 + 2.10 + 2.20 + 2.05)/4 = 2.1375Mean of Sample 4 = (2.18 + 2.01 + 2.23 + 1.98)/4 = 2.10Mean of Sample 5 = (2.01 + 2.08 + 2.14 + 2.16)/4 = 2.0975The overall mean is then (2.075 + 2.015 + 2.1375 + 2.10 + 2.0975)/5 = 2.085
Using the formula for control limits, which is mean ± (3 × standard deviation), and given the standard deviation is 0.07, the upper control limit will be 2.085 + (3 × 0.07) = 2.295 and the lower control limit will be 2.085 - (3 × 0.07) = 1.875. Angela should compare these control limits with the system's specifications.
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What traditional recruitment method communicates the firm's employment needs to the public through media such as newspapers and industry publications? advertising job fairs internships recruiters
Answer:
The correct answer is letter "A": advertising.
Explanation:
Advertising has been the most common form of publishing job offerings. Mostly, companies use newspapers to post new job opportunities but other mediums of information such as radio or television are also utilized. Though, nowadays most recruiters are increasing the use of social media platforms like LinkedIn to capture prospective employees.
Final answer:
Advertising in traditional media like newspapers and industry publications is a key method for firms to communicate job opportunities. The rise of the internet and sites like LinkedIn has made job seeking easier, but a mix of active and passive job search strategies is recommended for best results.
Explanation:
The traditional recruitment method that communicates a firm's employment needs to the public through media such as newspapers and industry publications is known as advertising. This method is a key component of what's often called the 'visible job market', wherein employers actively seek to fill positions by making them known to a wide audience. In contrast, the 'invisible' or 'hidden job market' requires a more proactive approach from job-seekers, such as networking, to uncover opportunities that aren't publicly advertised.
With the rise of the internet, many employers have shifted towards online platforms to post job opportunities. Company websites often feature an Employment or Careers section where these opportunities are listed. Furthermore, social media and professional networking sites, like LinkedIn, have revolutionized job-seeking, making it easier to learn about and apply for new positions.
However, job-seekers should not limit themselves to passive methods such as responding to ads. They should engage in various job search strategies, which may involve attending job fairs, networking at professional events, or utilizing informational interviews to tap into the hidden job market.
The cost to produce Part A was $12 per unit in 2019. During 2020, it has increased to $15 per unit. In 2020, Sandhill Company has offered to supply Part A for $11 per unit. For the make-or-buy decision:
a) incremental revenues are $4 per unit.
b) net relevant costs are $3 per unit.
c) differential costs are $4 per unit.
d) incremental costs are $3 per unit.
Answer:
Differential cost = $4 per unit
Explanation:
For a make or buy decision the relevant cash flows include
the differential variable of the two options savings from avoidable fixed costs associated with internal productionDifferential cost = internal cost - External purchase price
= 15- 11
= $4 per unit
Hardware is adding a new product line that will require an investment of $ 1 comma 450 comma 000. Managers estimate that this investment will have a 10-year life and generate net cash inflows of $ 320 comma 000 the first year, $ 280 comma 000 the second year, and $ 230 comma 000 each year thereafter for eight years. The investment has no residual value. Compute the ARR for the investment.
Answer:
6.83%
Explanation:
The computation of the accounting rate of return is shown below:
As we know that
Average accounting rate of return = Average annual operating income ÷ Initial Investment
where,
Average annual operating income is
Year 1 net cash inflow $320,000
Year 2 net cash inflow $280,000
Years 3-10 ($230,000 × 8) $1,840,000
Total net cash flows $2,440,000
Less: Total depreciation ($1,450,000)
$990,000
Divided it by years of life ÷ 10 years
Average annual operating income $99,000
So,
Average accounting rate of return is
= $99,000 ÷ $1,450,000
= 6.83%
Henry Crouch's law office has traditionally ordered ink refills 55 units at a time. The firm estimates that carrying cost is 40% of the $11 unit cost and that annual demand is about 235 units per year. The assumptions of the basic EOQ model are thought to apply. For what value of ordering cost would its action be optimal? a) For what value of ordering cost would its action be optimal? Its action would be optimal given an ordering cost of $___________per order (round your response to two decimal places)
Answer:
Its action would be optimal given an ordering cost of $28.31 per order
Explanation:
According to the given data we have the following:
economic order quantity, EOQ= 55 units
annual demand, D=235
holding cost per one unit per year, H=40%×$11=$4.4
ordering cost, S=?
In order to calculate the ordering cost we would have to use the following formula:
EOQ=√(2×D×S)
(H)
Hence, S=(EOQ)∧2×H
2×D
S=(55)∧2×4.4
2×235
S=13,310
470
S=$28.31
Its action would be optimal given an ordering cost of $28.31 per order
Its action would be optimal given an ordering cost of $28.32 per order.
a. Ordering cost
First step is to calculate the carrying cost
Carrying cost= 11x40%
Carrying cost=4.4
Second step is to calculate the ordering cost
Ordering cost=Order unit^2(Carrying cost)/2(Annual demand)
Ordering cost=55^2(4.4)/2(235)
Ordering cost=13,310/470
Ordering cost=$28.32
b. If the true ordering cost turns out to be much less than your answer to part (a). The impact on the firm's ordering policy is to reduce the order quantity.
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Assume that a bank receives a cash deposit of $9,000 from a customer. What is the immediate impact of this transaction on the money supply? Explain. Suppose that the reserve requirement is 10 percent and banks voluntarily keep an additional 10 percent in reserves. Calculate each of the following. The maximum amount by which this bank will increase its loans from the transaction in part (a) The maximum increase in the money supply that will be generated from the transaction in part (a) Assume that the government increases spending by $9,000, which is financed by a sale of bonds to the central bank. Indicate what will happen to the money supply. Explain what will happen to the money demand.
Answer:
the money multiplier = 1 / reserve ratio
in this case, the reserve ratio is 10% (required) + 10% (voluntary) = 20%, so the money multiplier = 1/20% = 5
What is the immediate impact of this transaction on the money supply?
None, since the money supply doesn't change. When a customer deposits money in a bank, the money does not increase, only its composition changes.The maximum amount by which this bank will increase its loans from the transaction in part (a)
the bank will be able to loan ⇒ total deposit x (1 - reserve ratio) = $9,000 x (1 - 20%) = $7,200The maximum increase in the money supply that will be generated from the transaction in part
since the banks started to "create" money by lending the money, the money supply will increase by ⇒ total deposit x (money multiplier - 1) = $9,000 x 4 = $36,000Assume that the government increases spending by $9,000, which is financed by a sale of bonds to the central bank. Indicate what will happen to the money supply.
The money supply will increase.Explain what will happen to the money demand.
The money demand will also increase because aggregate demand and income will increase. Aggregate demand will increase by ⇒ $9,000 x government multiplier. The government multiplier = 1 / MPS.When the money multiplier is = 1 / reserve ratio in this case, the reserve ratio is 10% (required) + 10% (voluntary) is = 20%, so the money multiplier = 1/20%=5
What is Money Supply?
None, since when the money supply doesn't switch. When a consumer deposits money in a bank, the money does not improve, only its formatting changes.
The greatest amount by which this bank will increase its loans from the transaction in part (a)
When the bank will be able to loan is ⇒ The total deposit x (1 - reserve ratio) = $9,000 x (1 - 20%) = $7,200
The greatest increase in the money supply that will be generated from the transaction in part
since the banks started to "complete" money by lending the money, the money supply will increase by ⇒ total deposit x (money multiplier - 1) = $9,000 x 4 = $36,000
Suppose that the government rise spending by $9,000, which is financed by a sale of bonds to the central bank. Also, The Foreshadow what will transpire to the money supply.
The money supply will grow. The money demand will also rise because aggregate demand and income will increase.
Aggregate demand will improve by ⇒ a $9,000 x government multiplier. The government multiplier = 1 / MPS.
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