Answer: Option (A) is correct.
Explanation:
Each of the buyer and seller are small when we are relating it with the whole market. so, there will be no power in the hands of a single decision maker and if a firm wants to change their prices then it will not have any influence on the market price. In a competitive market, there are large number of buyers and sellers, thus, one buyer or seller doesn't have any impact on the market price.
Answer: A
Explanation:
It's a competitive market
A large firm in the 3-D printing industry employs 250 people, of which 36 are upper-level managers. As a result of this employee-to-manager ratio, the firm experiences 14.4% reduced productivity. At the same time, a small firm with 65 employees and 2 upper-level managers experiences 3.1% reduced productivity.
If everything else is constant, what can we say about the cost structure in this industry over this range of production?
Choose one:
A. The firms in this industry have economies of scale.
B. The firms in this industry have constant returns to scale.
C. The firms in this industry have diseconomies of scale.
Answer:
C. The firms in this industry have diseconomies of scale.
Explanation:
Diseconomy of scale occurs when the cost with the factors of production grows more than the output resulting from the investment, resulting in an increase in the average cost per unit produced.
In the case in question, the factor of production works. Investment is the cost of the total manpower of managers and employees. If after this investment the final production decreased (-14.4% and -3.1% respectively), this means that these firms had diseconomies of scale. Because they are firms of the same nature, it is pertinent to affirm that the sector of these firms presented diseconomies of scale.
Answer:
C. The firms in this industry have diseconomies of scale.
Explanation:
The firms in this industry have diseconomies of scale. Diseconomies of scale occur when a company or a business grows very large, and with this new size, the costs per unit increase. While economies of scale see decreasing costs and increasing output as it grows, diseconomies of scale see increase in costs when output is increased.
Which of the following is true?
a.a shift left of the long-run aggregate supply and potential GDP will also shift the short-run aggregate supply curve left as well.
b.a shift right of the long-run aggregate supply and potential GDP will also shift the short-run aggregate supply curve right as well.
c.a change the money wage and other resource prices does not shift the long-run aggregate supply.
d.all of the answers are true.
Answer:
the correct option is c) change in the money wage and other resource prices does not shift the long run aggregate supply
Explanation:
First of all aggregate supply can be defined as the sum total of all the goods and services that are supplied in the economy during a defined period of time.
In the given question the option C is right because it is assumed that in the case of long run aggregate supply , the supply curve tends to remain static because any kind of change in the aggregate demand causes only temporary changes in the total output of the economy and the slope of the curve remains vertical. It is also assumed that the economy is being used at optimal as only factors like labor, capital, and technology can bring in aggregate supply.
Options a) and b) can't be true because if the supply curve is gonna shift , it is first going to shift in short run aggregate supply then long run aggregate supply , not the other way around.
If both fixed expenses and the selling price per unit increase while variable costs per unit are unchanged, which of the following statements is true? A. Breakeven point in units could increase, decrease, or remain the same. B. Breakeven point in units remains unchanged. C. Breakeven point in units decreases. D. Breakeven point in units increases.
Answer:
A
Explanation:
the sales price increase and because the variable cost are the same the contribution margin will increase, which lead to think the BEP is lower.
But, because the fixed cost also increase we cannot determinate where the new BEP Will be higher or lower. The fixed cost could increase so much that nulifies the increase in the contribution margin or even be higher enought that the BEP goes higher.
So Option A is the only true statment.
The breakeven point in units increases when both fixed expenses and the selling price per unit increase while variable costs per unit are unchanged. The breakeven point is determined by covering all fixed and variable costs with the revenue generated from sales; thus, more units must be sold to cover higher fixed costs.
Explanation:If both fixed expenses and the selling price per unit increase while variable costs per unit are unchanged, the correct statement is that the breakeven point in units increases. The breakeven point is where total revenue equals total costs, and fixed expenses make up part of the total costs. When the selling price per unit increases, the revenue per unit also increases, offsetting some of the impact of the increased fixed expenses. However, if the increase in the selling price does not proportionately match the increase in fixed expenses, the number of units needed to break even will still rise. This is because the additional revenue generated by the higher selling price per unit must now cover a higher fixed cost before reaching profitability.
Let us consider an example where the fixed cost is $40,000, the variable cost per unit is $0.30, and the initial selling price is $1.50, leading to a unit contribution margin of $1.20. If the fixed expenses increase, the breakeven in units would be calculated by dividing the new fixed cost by the unit contribution margin. A small price increase would likely result in the breakeven point in units being roughly the same or only slightly adjusted, but a more significant increase in fixed expenses without a proportionate increase in the selling price would mean a higher number of units need to be sold to break even. Hence, the answer is breakeven point in units increases (Option D).
Bailey is a new salesperson for a textbook publisher. She is compiling a list of professors who make textbook buying decisions and plans to contact these professors to determine what texts they are currently using, and if they plan to adopt a new text. Identifying those decision makers who are willing to consider one of her texts is called
Answer: It is called prospecting and qualifying.
Bailey is engaged in sales prospecting to identify potential customers who are decision-makers in textbook purchasing, aiming to discover their interest in new textbooks.
Bailey, who is a new salesperson for a textbook publisher, is involved in a process known as identifying leads or sales prospecting. This entails compiling a list of professors who are responsible for textbook purchasing decisions and reaching out to them to learn about their current textbook usage and whether they might consider adopting a new text. By targeting decision makers who are open to considering one of her textbook options, she is looking for prospective customers in her sales process.
This activity is crucial in the business of textbook sales because it allows the salesperson to focus efforts on those who have the authority to make purchasing decisions. Bailey's approach of expanding the selection of textbooks and including both popular and less common textbooks helps to cover a wider range of potential needs and preferences among faculty and students.
A company purchased a weaving machine for $248,170. The machine has a useful life of 8 years and a residual value of $13,500. It is estimated that the machine could produce 757,000 bolts of woven fabric over its useful life. In the first year, 108,500 bolts were produced. In the second year, production increased to 112,500 units. Using the units-of-production method, what is the amount of depreciation expense that should be recorded for the second year?
Answer:
Depreciation for second year = $34,875
Explanation:
Total amount of depreciation to be charged in useful life = Cost of machine - Residual Value
= $248,170 - $13,500 = $234,670
Total expected units to be produced during the life of machine = 757,000 bolts
Depreciation per unit bolt = $234,670/757,000 = $0.31
When depreciation is based on units of production method, it will be charged based on units of production.
Depreciation for second year = Units produced in second year X Rate of depreciation per unit of production
= 112,500 X $0.31 = $34,875
$34,875
To calculate the depreciation expense for the second year using the units-of-production method, we can multiply the depreciation per unit by the number of units produced in the second year.
Explanation:To calculate the depreciation expense using the units-of-production method, we need to determine the depreciation per unit of production.
Depreciation per unit = (Cost - Residual Value) / Total Units of Production
Depreciation Expense for the second year = Depreciation per unit * Number of Units Produced in the second year.
In this case, the depreciation per unit would be (248170 - 13500) / 757000 = $0.318 per bolt of woven fabric. Therefore, the depreciation expense for the second year would be 0.318 * 112500 = $35,925.
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In general, it is a bad move for a company to produce more of a good or service if, by doing so,a. marginal cost exceeds marginal revenueb. variable costs exceed fixed costsc. demand exceeds supplyd. fixed costs exceed marginal revenue
Answer:
The correct option here is A) marginal cost exceeds marginal revenue
Explanation:
When a company is producing more goods and services, it becomes a bad move because at this point company's marginal cost starts exceeding the marginal revenue , which means with each additional units a company is producing it is losing profit on that unit, so it is better for a company to produce less and try to find that level of output where its marginal cost and revenue are equal because at that level, company would be able to make optimal profits.
It's generally bad for a company to produce more of a product or service if the marginal cost of making an additional unit surpasses the marginal revenue gained from selling that unit. This is because this would mean the company is using its resources inefficiently, possibly leading to a financial loss.
Explanation:In economics and business, it's generally not advantageous for a company to produce more of a good or service if certain conditions are present. Specifically, if the marginal cost of producing an additional unit of the product exceeds the marginal revenue gained from selling that unit, the company would lose money on each additional unit produced.
The marginal cost is the increase in total cost that arises from producing one extra unit of a product, while the marginal revenue is the increase in total revenue that results from selling one extra unit. If marginal cost is greater than marginal revenue, the company is not efficiently allocating its resources and may end up with a financial loss.
Therefore, option a. 'marginal cost exceeds marginal revenue' accurately describes a situation where it would be detrimental for a company to produce more of a product or service. The other options, although relevant to different business situations, do not necessarily indicate a bad move in terms of increased production.
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How has the Internet dramatically reduced search costs?a. by making the shopping experience more funb. by eliminating the need to travel to stores to shopc. by reducing the benefit of competitiond. by offering products for sale at prices below those in stores
Answer: Option (b) is correct.
Explanation:
Correct : by eliminating the need to travel to stores to shop.
Internet literally reduced the search cost by saving the travel time of the consumers to the shopping stores. Now days, almost all the consumers prefer to buy products online instead of travelling here and there for the products.
Buying products from the stores involves certain costs such as travelling cost, waste of time, miscellaneous,etc.
Hence, internet facility helps in reducing these kind of costs, that's why in today's world mostly people rely more on internet for shopping and all instead travelling to the stores.
The Internet has reduced search costs through eliminating physical shopping trips, enhancing global shopping experience, improving 'business-to-business' transactions, and streamlining the job search process.
Explanation:The internet has dramatically reduced search costs in several significant ways. Firstly, it has eliminated the need to physically travel to stores to shop, thereby reducing transport costs and time. This is made possible due to technological advancements and the rise of global e-commerce platforms. Consumers can now order goods from anywhere in the world, increasing competition among retailers and setting the stage for lower prices.
Secondly, technology has also facilitated the development of 'business-to-business' websites. Such platforms have streamlined the procurement process by enabling buyers and suppliers to find each other with ease.
Lastly, the internet has simplified the job search process. Convenient tools such as LinkedIn and other online job portals have made it easier for job seekers to find opportunities and make contact with potential employers.
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A company that reports segment information had average total assets of $1,530,450 and total net income of $602,700. Segment A had average total assets of $931,800 and segment operating income of $304,300. Segment B had average assets of $598,650 and segment operating income of $298,400. The segment return on assets for Segment A is:
Answer: 0.32 times
Explanation: Return on assets can be defined as the ratio under which companies are evaluated on the basis of total amount of assets investment. It is a ratio that evaluates the profitability of a company, it shows the ability of a company to generate revenue from the assets invested in it.
It can be computed as following :-
[tex]=\:\frac{NET\:INCOME}{AVERAGE\:TOTAL\:ASSETS}[/tex]
[tex]=\:\frac{\$304,300}{\$931,800}[/tex]
= 0.32 times
Fortune Company's direct materials budget shows the following cost of materials to be purchased for the coming three months: January February March Material purchases $12,040 $14,150 $10,970 Payments for purchases are expected to be made 50% in the month of purchase and 50% in the month following purchase. The December Accounts Payable balance is $6,500. The budgeted cash payments for materials in January are:
The budgeted cash payments for materials in January are $12,520.
To calculate the budgeted cash payments for materials in January for Fortune Company, we need to consider both the payments made in January for purchases made in December and the payments made in January for purchases made in January itself.
1. Payments for December Purchases:
- December Accounts Payable: $6,500
- Since payments are made 50% in the month of purchase and 50% in the following month, we assume that the $6,500 is the amount to be paid in January for purchases made in December.
2. Payments for January Purchases:
- January Material Purchases: $12,040
- 50% of January purchases will be paid in January: [tex]\( 0.50 \times 12,040 = 6,020 \)[/tex]
Now, sum these amounts to get the total budgeted cash payments for materials in January:
[tex]\[\text{Total January Payments} = 6,500 + 6,020 = 12,520\][/tex]
Suppose an airline determines that its customers traveling for business have inelastic demand and its customers traveling for vacations have an elastic demand. If the airline's objective is to increase total revenue, it should A. decrease the price charged to vacationers and increase the price charged to business travelers. B. decrease the price to both groups of customers. C. increase the price charged to vacationers and decrease the price charged to business travelers. D. increase the price for both groups of customers.
Answer: If the airline's objective is to increase total revenue, it should decrease the price charged to vacationers and increase the price charged to business travelers.
Explanation:
Here the objective of the airline is to increase total revenue, therefore airline should practice price discrimination i.e. charge different prices to vacation travelers and business travelers.
Since customers traveling for vacations have elastic demand i.e. ε > 1 , so if airline reduces the price of air ticket for them, then there will be a percentage decrease in the price that will be less then the percentage increase in the number of vacation travelers.
Therefore, total revenue will increase with decreasing price charged to vacationers.
Whereas;
The demand of business travelers is inelastic i.e. ε < 1, so if airline increases the price of air ticket for business travelers, then there will be a percentage increase in the price that will be more then the percentage decrease in the number of vacation travelers
Therefore, total revenue will increase with increasing price charged to business travelers.
Suppose you know that a company’s stock currently sells for $56 per share and the required return on the stock is 10 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it’s the company’s policy to always maintain a constant growth rate in its dividends, what is the current dividend per share?
Answer:
$2.8 divdends per share
Explanation:
$56 market price
Rate of return 10%
The gain for an investment in stocks is:
[tex]\frac{DividendsYield+SharePriceVariation}{Investment} = $Return on Investemnt[/tex]
In this case we are told that this is distribute evenly, this means:
dividends paid = market price gain
So dividends yield 5% and market price yields another 5% to achieve the 10%
So currently $56 market price x 0.05% = $2.8 divdends per share
It costs Sheffield Corp. $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 2000 scales at $15 each. Sheffield would incur special shipping costs of $1 per scale if the order were accepted. Sheffield has sufficient unused capacity to produce the 2000 scales. If the special order is accepted, what will be the effect on net income?
Answer:
the effect on pre-tax net income will be an increase for 4,000.
Explanation:
This is a case for Relevant cost:
The company has sufficient capacity to produce this scales, without increasing the fixed cost.
we need to check if the offer covers the variable cost and the additional shipping cost.
15$ sales price - $12 variable cost - $1 shipping cost = $2 contribution margin
2000scales *2 CM = 4,000 effect on net income
Accounts receivable arising from sales to customers amounted to $120,000 and $105,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $407,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is: a) $407,000 b) $512,000, c) $422,000, d) $392,000
Answer:
The answer is 422,000.
Explanation:
The cash flow from operating activities is equal to Net income minus changes in working capital. Working capital (WC) is defined as Current assets minus Current Liabilities. Changes in working capital is defined as WC at end of the year minus WC at the beginnig of the year.
If the only change in Current assets is the disminution of accounts receivable, then the WC also decreases in that amount. So, the changes in WC is $105,000 - $120,000 = $(15,000).
The the cash flow from operating activities is[tex]$ 407,000 - $ (15,000) = 407,000 + 15,000 = 422,000[/tex]
Assume today is December 31, 2013. Imagine Works Inc. just paid a dividend of $1.15 per share at the end of 2013. The dividend is expected to grow at 18% per year for 3 years, after which time it is expected to grow at a constant rate of 6% annually. The company's cost of equity (rs) is 9.5%. Using the dividend growth model (allowing for nonconstant growth), what should be the price of the company's stock today (December 31, 2013)? Round your answer to the nearest cent. Do not round intermediate calculations. $ per share
Answer:
Intrinsic Value $43.69
Explanation:
[tex]\left[\begin{array}{ccc}Year&Dividends&Present Value\\1&1.357&1.23926940639269\\2&1.60126&1.33546840140948\\3&53.9853371428571&41.1181399520726\\Intrinsic&Value&43.6928777598748\\\end{array}\right][/tex]
The first Step is calculate the dividends:
[tex]dividends \times growth \: rate = next\: perdiod \: dividends[/tex]
We multiply 1.15 today dividends by the growth rate of 18% to get year 1
then year 1 by this growth rate to get year 2 and finally
year 2 times growth rate to get year 3 Dividends
Then on year 3 we apply the Dividends growth model
[tex]\frac{divends}{return-growth} = Intrinsic \: Value[/tex]
[tex]\frac{Year3 }{0.095-0.06} = Intrinsic \: Value[/tex]
Third, we need to bring this values to present
[tex]\frac{Nominal}{(1+rate)^{time} } = PV[/tex]
Year 1 /1.095
Year 2 /1.095^2
Year 2 /1.095^3
Final step, we add them to get the intrinsic value of the bond today.
Economic theory suggests countries benefit from international trade by producing more of those good and services for which they have a comparative advantage (and less of that for which a country does not have a comparative advantage). However, countries rarely specialize completely. Why? Even with international trade, countries rarely specialize completely because
Answer: Increasing opportunity cost
Explanation:
Yes, economic theory suggest that countries producing more of those goods in which they have a comparative advantage then they must have benefit from international trade. But countries rarely specialized in the production of one good and that is because of increasing opportunity cost.
Countries with a constant opportunity cost are completely specialized in the production of one good.
In case of increasing opportunity cost, when a country shift their resources from the production of one good to another, this will lead to an increase in the opportunity cost of producing that good.
This is because of the productivity of the resources. This means that resources that are reallocate from the production of one good to another were better suited for the good whose production decreases.
Horse Country Living publishes a monthly magazine for which a 12-month subscription costs $30. All subscriptions require payment of the full $30 in advance. On August 1, the balance in the Subscriptions Received in Advance account was $40,500. During the month of August, the company sold 900 yearly subscriptions. After the adjusting entry at the end of August, the balance in the Subscriptions Received in Advance account is $60,000.
Required
1)Identify and analyze the transaction to record the sale of the 900 yearly subscriptions during the month of August
2)Identify and adjust the sale on August 31
3)Assume that the accountant made the correct entry during August to record the sale of the 900 subscriptions but forgot to make the adjustments on August 31. Would net income for August be overstated or understated? Explain your answer
Answer:
(1)
Cash 27,000
Subscriptions Received in Advance 27,000
(2)
Subscriptions Received in Advance 7,500
Subscriptions Received 7,500
(3)
It woulbe be understated. Because the August adjustment recognize revenues. If it wasn't done, then revenues are less than it should be. So net income is understated.
Explanation:
(1)
At the beginning of the year the subscription represent an obligation to the business, it must deliver their magazines, the revenue is not earned.
total amount900 x 0 = 27,000
(2)
beginning + new subcription - ending = earned revenue
40,500 + 27,000 - 60,000 = 7,500
(3)
It woulbe be understated. Because the August adjustment recognize revenues. If it wasn't done, then revenues are less than it should be. So net income is understated.
Final answer:
The sale of 900 subscriptions is recorded by debiting Cash and crediting Subscriptions Received in Advance. An adjusting entry for one month's worth of earned revenue is made by debiting Subscriptions Received in Advance and crediting Subscription Revenue. Forgetting this adjustment would lead to an understatement of net income for August.
Explanation:
Recording and Adjusting Subscription Revenue and Its Impact on Net Income
1) To record the sale of the 900 yearly subscriptions during the month of August, we would perform the following journal entry: Debit Cash for $27,000 (900 subscriptions × $30 each) and Credit Subscriptions Received in Advance for $27,000. This transaction increases both the company's cash and its liability for deferred subscription revenue.
2) At the end of August, an adjusting entry must be made to recognize the subscription revenue that has been earned during the month. Since the subscriptions are for a 12-month period, and one month has passed, 1/12th of the revenue received in advance should be recognized as earned. Therefore, we Debit Subscriptions Received in Advance for the portion earned ($40,500 for the initial balance plus $27,000 from new subscriptions equals $67,500 in total, divided by 12 gives $5,625) and Credit Subscription Revenue for $5,625.
3) If the accountant recorded the sale of the subscriptions but forgot to adjust for revenue recognition on August 31, the net income for August would be understated. This is because the earned revenue for August hasn't been accounted for, leading to a lower net income than should be reported.
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $93,000 per quarter. The company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Product Selling Price Quarterly Output A $ 3 per pound 16,000 pounds B $ 4 per pound 21,000 pounds C $ 8 per gallon 8,000 gallons Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below: Product Additional Processing Costs Selling Price A $ 44,000 $ 5 per pound B $ 35,000 $ 8 per pound C $ 22,000 $ 11 per gallon Required: a. Compute the incremental profit (loss) for each product.
Answer:
The incremental profit (loss) for each product is:
A = $-12,000
B = $49,000
C = $41,000
Explanation:
Split off Point: The split off point is that point in which joint products treated separately and sell them as a unique product.
Incremental Cash flow: The incremental cash flow is that cash flow which show the difference between the split off sales and normal sales.
Here, incremental means that if split off sales is greater than normal sales than firm is earning profit else the firm will suffer loss.
Steps to compute the incremental cash flows for each products:
Step 1: First write Additional selling price of all three products
Step 2: Than write the Split off selling price of all three products
Step 3: Now take the difference of selling price
Step 4: After that, multiply step 3 with split off sales
Step 5: Than write the additional sales
Step 6: Compare the two sales and analyse whether firm earns profits or suffer a loss, and finally the increment cash flows come.
The calculation is done in attachment sheet.
Thus, the incremental profit (loss) for each product is:
A = $-12,000
B = $49,000
C = $41,000
On the statement of cash flows, the sale of long-term investments for cash is an example of: a) cash inflow in the cash flows from financing activities section b) cash outflow in the cash flows from financing activities section c) cash inflow in the cash flows from investing activities section d) cash outflow in the cash flows from investing activities section
Answer:
On the statement of cash flows, the sale of long-term investments for cash is an example of cash inflow in the cash flows from investing activities section.
Explanation:
The cash flow statements consists of three activities -
1. Cash flow from operating activities
2. Cash flow from investing activities
3. Cash flow from financing activities.
The cash flow from operating activities deals with changes in currents assets and currents liabilities. For example - creditors debtors, stock, bills payable, etc.
The cash flow from investing activities deals with purchase and sale of fixed assets, intangible assets etc. like - purchase of machinery, sale of plant, etc.
Whereas the cash flow from financing activities deals with long term liabilities of the balance sheet. example - issue of shares and debentures, etc.
Inflow and outflow of cash would result in increase and decrease of the cash balance.
Thus, by selling of long term investments for cash is an example of cash inflow in the cash flows from investing activities.
You purchase 100 shares of stock for $40 a share. The stock pays a $2 per share dividend at year-end. a. What is the rate of return on your investment if the end-of-year stock price is (i) $38; (ii) $40; (iii) $42? (Leave no cells blank - be certain to enter "0" wherever required. Enter your answers as a whole percent.)
Answer:
a. 5% b. 5% c. 5%
Explanation: Stocks are the securities issued by the companies to raise capital in securities markets. Dividend is the return that investors get for bearing the risk of ownership.
As we know that,
[tex]Return=\:\frac{dividend}{market\:price}[/tex]
[tex]Return=\:\frac{2}{38}=\:5.26\%=\:5\%\:in\:whole[/tex]
[tex]Return=\:\frac{2}{40}=\:5\%=\:5\%\:in\:whole[/tex]
[tex]Return=\:\frac{2}{42}=\:4.76\%=\:5\%\:in\:whole[/tex]
Which of the following events can cause the labor-supply curve to shift?a. a technological advance b. an increase in the price of output c. an increase in the wage rate d. an increase in the rate of immigration
Answer: The event "d. an increase in the rate of immigration" can change the labor supply curve.
Explanation: when the production price increases, the labor demand curve shifts to the right.
When a technological advance is incorporated according to the type of technology, the demand curve can shift to the left or right.
An increase in the salary rate would result in a change in the amount of work offered because the amount of work an individual offers depends on the salary rate.
An increase in the immigration rate shifts the labor supply curve because it would imply that the number of people willing to work increases.
Logan Products computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 28,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $593,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $3.00 per direct labor-hour. Logan's actual manufacturing overhead for the year was $733,264 and its actual total direct labor was 28,500 hours. Required: Compute the company's predetermined overhead rate for the year. (Round your answer to 2 decimal places.)
Answer:
Predetermined rate = $24.178
Explanation:
Company's predetermined rate for overhead = Variable + Fixed
Variable provided = $3 per hour
Fixed = $593,000/28,000 hours = $21.1786
Now for actual output fixed expenses will remain fixed = $593,000
Variable = $733,264 - $593,000 = $140,264
Variable overhead rate per hour = $140,264/28,500 = $4.9215
thus predetermined rate = ($3 X 28,000) + $593,000
= $84,000 + $593,000 = $677,000/28,000 hours (predetermined)
= $24.178
Actual = $733,264/28,500 = $25.728
Final Answer
Predetermined rate = $24.178
Last year Aldrin Co. had negative net cash flow, yet its cash on the balance sheet increased. What could explain these events? Select one: a. Aldrin issued long-term debt. b. Aldrin repurchased some of its common stock. c. Aldrin sold some of its assets. d. Statements a and b are correct. e. Statements a and c are correct.
Answer: option C
Explanation: Cash flow can be categorized as inflow and outflow. Inflow can be defined as the money coming in the business like revenue. Cash outflow is money leaving the business like in form of expenditures.
Excess of cash inflow over cash outflow results in positive cash flows and vice- versa.
a. Debt is a source of capital hence its issuance will result in inflow of money.
b. Company will have to spend money for repurchasing the stock therefore it will be a cash outflow.
c. selling of assets will bring money to the firm,hence,cash inflow.
Thus, occurrence of either A or C can result in increase in cash flow.
Aldrin Co.'s increase in cash despite a negative net cash flow can be attributed to either issuing long-term debt or selling assets, which are financing and investing activities respectively.
This scenario can be explained through activities that are not directly related to the company's main business operations. Issuing long-term debt is an example of a financing activity that would increase cash. Alternatively, selling some of its assets can also add cash to the company's balance sheet. Both of these actions could explain why there's more cash even with a negative operational cash flow.
Repurchasing common stock would actually use up cash reserves and therefore, cannot account for an increase in cash if the company is already experiencing a negative operational cash flow. When considering the provided options, the correct explanations are that Aldrin Co. could have either issued long-term debt (which would bring in cash) or sold some assets (which would also result in a cash inflow).
Suppose that the MC Software Corporation earns a profit of $10 per share. If the prevailing interest rate is 12 percent and the stock is currently selling for $100 per share, what is the current price/earnings ratio
Answer:
Price Earning Ratio = Price/Earnings = we use the general formula.
[tex]\frac{100}{10}[/tex]
$100/$10 = 10 times
Explanation:
Price Earning ratio is calculated using the current market price of share and earnings per share of the company. In the given question there is no relevance of interest rate as this is not the cost of equity.
Price Earning Ratio tells how much earnings are required to meet the cost of 1 share.
Another formula for P/E ratio = 1/Cost of Equity. Since 12% is not cost of equity this formula cannot be used.
Also earnings per share is given assumed it is after interest cost if any.
Xenon Tech acquired a patent on January 1st, 2013, for $26,400. The patent was estimated to have a useful life of 12 years. On July 1st, 2017, the company incurred legal fees of $6,000 to successfully defend the patent in an infringement suit. How much amortization expense will Xenon Tech recognize on the Income Statement for the year ended December 31st, 2017?
Answer:
The amount that will recognize under amortization expenses is $2600.
Explanation:
The first step here would be to calculate the amortization expenses for the first 4 years of the patent, here will use straight line depreciation method,
Formula - original value of asset / useful life in years
- $26,400 / 12
- $2200
Now for the 4 years this amount would become $2200 x 4 = $8800
The amount of amortization for the first half of 2017 ( up to 30 June ) would be-
= half of full year expenses
= $2200 / 2
= $1100
So up to 30 June 2017, the expenses are $9900 ( $8800+$1100), So the new book value would be = $26,400 - $9900
= $16,500
In this $16,500 we will add the amount of legal fees, so the total would be -
$16,500 + $6000
= $22,500
The next step is to divide this value by remaining useful; years which is 7.5,
$22,500 / 7.5
= $3000
Now we will divide this amount by 2 because we have to take out expense for remaining last 6 months of 2017
$3000 / 2
= $1500
Adding the expenses for first and second half of 2017 to take out total amortization expense of 2017 -
$1100 + $1500
= $2600
Pisces Company manufactures sonars for fishing boats. Model 100 sells for $ 300. Pisces produces and sells 5 comma 000 units per year. Cost data are as follows: Variable manufacturing $ 95 per unit Variable selling and administrative $ 6 per unit Fixed manufacturing $ 280 comma 000 per year Fixed selling and administrative $ 120 comma 000 per year An offer has come in for a oneminustime sale of 300 units at a special price of $ 120 per unit. The marketing manager says that the sale will not affect the company's regular sales activities, and that it will not require any variable selling and administrative costs. The production manager says that there is plenty of excess capacity and the sale will not impact fixed costs in any way. What is the effect of this deal on operating income
Answer:
Revised Net operating Profit = $595,000 + $7,500 = $602,500
Thus The net impact of this deal on operating income is increase by $7,500.
Explanation:
Present operating income is as follows:
Sales = $300 X 5,000 = $1,500,000
Less: Variable Costs
Manufacturing = $95 X 5,000 = $475,000
Selling and Administrative = $6 X 5,000 = $30,000
Contribution margin = $995,000
Less: Fixed cost
Manufacturing = $280,000
Selling & Administrative = $120,000
Current Operating Income = $595,000
Provided with new order no selling & administrative cost to be incurred also fixed cost will not change as it is in the capacity fixed.
In case order is considered
Additional Revenue shall be as follows:
Sales = $120 X 300 = $36,000
Less:
Variable Manufacturing cost $95 X 300 = $28,500
Operating Profit = $7,500
Revised Net operating Profit = $595,000 + $7,500 = $602,500
Thus The net impact of this deal on operating income is increase by $7,500.
Pair Co. sells one product and uses the last-in, first-out (LIFO) method to determine inventory cost. Information for the month of January follows: Units Unit Cost Beginning inventory, 1/1 3,000 $ 4.70 Purchases, 1/4 8,000 $ 3.90 Sales 7,500 Pair has determined that at January 31 the replacement cost of its inventory was $4 per unit and the net realizable value was $4.90 per unit. Pair’s normal profit margin is $1 per unit. Pair applies the lower of cost of or market rule to total inventory and records any resulting loss. At January 31, what should be the net carrying amount of Pair’s inventory?
Answer:
Ending Inventory 14,000
Explanation:
PURCHASES
DATE QUANTY PRICE SUBTOTAL
Beginning 3000 $3.90 $14,100.00
Purchase 8000 $4.70 $31,200.00
Total available 11,000
Sales 7,500
Ending Inventory 3,500
Book value (FIFO) 3,500 x 4.7 = 16,450
Cost $4
net realizable $4.90
Lower Cost =$4
Ending Inventory 4$ x 3,500 = $14,000
Loss 2,450
The net carrying amount of Pair's inventory at the end of January is $14,000. This amount was calculated using the Last-In, First-Out (LIFO) method and the lower of cost or market rule.
Explanation:To calculate the net carrying amount of Pair's inventory at the end of January, we first need to calculate the cost of the goods sold (COGS). Since Pair uses the Last-In, First-Out (LIFO) method, the last units purchased are considered first for the COGS. From the 7,500 units sold, 8,000 units purchased on 1/4 will be considered first. This takes all the 7,500 units sold with a cost of $3.90 each, totaling $29,250. The remaining units, 3,500 (3,000 from beginning inventory and 500 from the purchases), had a cost of $4.70 each, totaling $16,450 (3,500 * $4.7).
According to the lower of cost or market rule, the cost of the inventory must be compared to the market value, which is the replacement cost, and the lowest amount is used. The replacement cost of $4/unit is lower than the original cost of $4.7/unit, so the replacement cost is used. This means the cost of the remaining inventory is $14,000 (3,500 * $4).
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Jewelry Company has a sales budget for next month of $450,000. Cost of goods sold is expected to be 45 percent of sales. All goods are paid for in the month following purchase. The beginning inventory of merchandise is $20,000, and an ending inventory of $24,000 is desired. Beginning accounts payable is $206,500. The cost of goods sold for next month is expected to be:
$160,000
$202,500
$360,000
$406,000
Answer:
The cost of goods sold for next month is expected to be $202,500
Explanation:
Given that,
Sales budget = $450,000
Cost of Good sold = 45% of sales
Opening inventory = $20,000
Ending inventory = $24,000
Beginning accounts payable = $206,500
Since, in the given question, it is mentioned that the cost of good sold is 45% of sales.
So,
Cost of Goods Sold (COGS) = 0.45 × $450,000
= $202,500
Hence, the cost of goods sold for next month is expected to be $202,500
Note: we don't considered other things which is mentioned in the question.
The shareholders' equity of Green Corporation includes $386,000 of $1 par common stock and $570,000 par of 7% cumulative preferred stock. The board of directors of Green declared cash dividends of $67,000 in 2018 after paying $37,000 cash dividends in each of 2017 and 2016. What is the amount of dividends common shareholders will receive in 2018?
Answer:
The amount of dividends common shareholders will receive in 2018 is $21,300
Explanation:
The computation of amount of dividend of common shareholders is shown below:
Previous year stock dividend (2017 & 2016) = ($570,000 × 7% ) - 37000 × 2
= $5800
Current year stock dividend 2017 = $570,000 × 7% = $39900
Current year cash dividend 2018= $67,000
Now, subtract the 20178 stock dividend and previous year stock dividend from Current year cash dividend 2018 which equals to $21,300
= $67,000 - $39900 - $5800
= $21,300
Thus, the amount of dividends common shareholders will receive in 2018 is $21,300
GDP per person tells us the income and expenditure of theA. richest person in the economy. B. poorest person in the economy. C. entire economy. D. average person in the economy.
Answer:
The answer is (C) entire economy.
Explanation:
Gross domestic product (GDP) is the total sum of goods and services that a country produces within a certain amount of time. It is a general estimate of what a country produces as a whole – not just the poorest, the average, or the richest person. To calculate GDP, you need to measure the output, expenditure, and income of a country’s economy – and adding them up to get the total. This total is the GDP.
A bakery is one of many that operate in the bread industry. The market demand curve for bread is downward-sloping. The bakery incurs fixed costs and has an upward-sloping marginal cost curve. Which of the following statements is correct?
a.The bakery can raise the market price by constraining its production.
b.The bakery always makes a positive economic rent.
c.The bakery's supply curve is horizontal.
d.The bakery faces a flat demand curve.
Answer: (d.)The bakery faces a flat demand curve.
Explanation:
The bakery faces a flat demand curve because a firm in a perfectly competitive market is a price taker and the demand curve for a firm is equal to the price the supply curve is a part of Marginal cost above Average variable cost , so the supply curve is upward sloping . The bakery is in the perfectly competitive market so it can earn positive, negative or zero economic profit in the short run and zero economic profit in the long run.
The correct statement is that the bakery can potentially raise market prices by constraining production, although this effect could be minimal if it's a small bakery in a highly competitive market. The other three statements each have reasons why they are not necessarily correct.
Explanation:The statement 'The bakery can raise the market price by constraining its production.' appear to be correct. This is due to the fact that the law of supply and demand asserts that as the availability of a product decreases (constrained production), the demand for it increases, forcing the price up. However, this might depend very much on the degree of market power the bakery holds. If it's a small bakery within a highly competitive market, its individual actions might not significantly affect the market price. This is characteristic of Perfect Competition market structure.
'The bakery always makes a positive economic rent.' is not necessarily correct because whether a firm makes an economic rent or not depends on a variety of factors like its costs, the price it gets for products and the competition in the market.
The statement 'The bakery's supply curve is horizontal.' is incorrect because a firm's supply curve is primarily driven by its marginal costs, which in this scenario are given as upward sloping.
'The bakery faces a flat demand curve.' is also incorrect as under perfect competition a firm faces a horizontal demand curve but here it is mentioned that market demand curve for bread is downward-sloping.
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