Answer:
Instructions are below.
Explanation:
Giving the following information:
Freese Inc. sells a product for 650 per unit. The variable cost is 455 per unit, while fixed costs are 4,290,000.
A) To calculate the break-even point both in units and dollars, we need to use the following formulas:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 4,290,000/ (650 - 455)
Break-even point in units= 22,000 units
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 4,290,000/ (195/650)
Break-even point (dollars)= $14,300,000
B) Now for a selling price of $655:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 4,290,000/ (655 - 455)
Break-even point in units= 21,450 units
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 4,290,000/ (200/655)
Break-even point (dollars)= $14,049,750
Answer:
Selling price = $650
Variable costs = $455
Contribution margin = $195
Fixed costs $4,290,000
A. Break even point = Fixed costs divided by contribution
= 4,290,000/195
= 22,000 units
Break even point sales =BEP units x selling price
= 22,000 x $650
= $14,300,000
B.
Selling price = $655
Variable costs = $455
Contribution margin = $200
Fixed costs $4,290,000
Break even point = Fixed costs divided by contribution
= 4,290,000/200
= 21,450 units
Break even point sales =BEP units x selling price
= 21,450 x $655
= $14,049,750
The Draper Corporation is considering dropping its Doombug toy due to continuing losses. Data on the toy for the past year follow:
Sales of 15,000 units $ 150,000 Variable expenses 120,000 Contribution margin 30,000 Fixed expenses 40,000 Net operating loss $ (10,000 ) If the toy were discontinued, Draper could avoid $8,000 per year in fixed costs. The remainder of the fixed costs are not avoidable. Assuming all other conditions stay the same, at what level of annual sales of Doombugs (in units) should Draper be indifferent between discontinuing Doombugs or continuing the production and sale of Doombugs?
To find the break-even point for continuing the Doombug toy line, Draper Corporation needs to equate the unavoidable fixed costs with the contribution margin per unit. They would need to sell 16,000 units after dropping the avoidable fixed costs to break even.
The question from the Draper Corporation case relates to the analysis of whether to continue or discontinue the Doombug toy line. This situation can be evaluated using break-even analysis in a managerial accounting context. The calculation must factor in the unavoidable fixed costs that Draper Corporation would continue to incur and the avoidable fixed costs saved if the production ceases.
To find the sales level at which the company should be indifferent between continuing or discontinuing the Doombug, we need the contribution margin per unit and the avoidable fixed costs. The contribution margin per unit is calculated by taking the total contribution margin ($30,000) and dividing it by the number of units sold (15,000 units), giving $2 per unit. To cover the remaining fixed costs ($32,000, which is $40,000 total fixed costs minus $8,000 avoidable costs), divide these costs by the contribution margin per unit:
Breakeven Units = [tex]\frac{Total Fixed Costs - Avoidable Fixed Costs}{Contribution Margin per Unit}[/tex] =[tex]\frac{\$32,000}{\$2}[/tex] = 16,000 units $$
Thus, the Draper Corporation would need to sell 16,000 units of the Doombug after dropping the avoidable fixed costs to break even and be indifferent to the decision to stop production.
TravelToday, Inc., disclosed the following rounded amounts (in thousands) concerning the Allowance for Doubtful Accounts on its Form 10-K annual report.
Allowance for Doubtful Accounts
(dollars in thousands)
Beginning Increases for Decreases for Ending
Year Balance Bad Debt Expense Write-Offs Balance
2016 $ 9,300 $ 4,150 $ ? $ 1,350
2015 8,300 4,750 3,750 9,300
2014 12,800 1,050 5,550 8,300
Required:
1-a. Prepare a T-account for the Allowance for Doubtful Accounts and enter into it the 2014 amounts from the above schedule. The balance at the beginning of each year in the Allowance for Doubtful Accounts is a credit balance.
1-b. Write the T-account in equation format to prove the above items account for the changes in the account.
2. Record summary journal entries for 2015 related to (a) estimating Bad Debt Expense and (b) writing off specific customer account balances.
3. Supply the missing information for 2016.
4. If TravelToday had written off an additional $33 of Accounts Receivable during 2016, by how much would Net Receivables have decreased? How much would Net Income have decreased?
Answer:
Kindly refer to the attached document for answers 1 to 3
4. If $33 was written off additionally
Then transfer to receivables in the year would have declined to $1,317 from $1,350 and the receivables balance would then be $16,167 from $16,200
Net income will not be affected by the $33 additional write off
To address the student's question, the T-account for 2014 was prepared, the equation was used to prove the changes in the Allowance for Doubtful Accounts, summary journal entries for 2015 were recorded, and the missing write-offs for 2016 were calculated. It was also determined that an additional write-off of $33 would decrease Net Receivables but not affect Net Income.
Understanding Allowance for Doubtful Accounts
To prepare a T-account for the Allowance for Doubtful Accounts using the 2014 amounts, you would note the beginning balance as a credit (since it is a contra asset account), add the increases for the year as credits, and the decreases as debits. By the end of 2014, the transactions will reflect a credit balance of $8,300.
T-account for 2014:
Beginning balance (Credit): $12,800
Bad Debt Expense (Credit increase): $1,050
Write-offs (Debit decrease): $5,550
Ending balance (Credit): $8,300
To write the T-account in equation format:
Beginning balance + Increases (Bad Debt Expense) - Decreases (Write-offs) = Ending balance
$12,800 + $1,050 - $5,550 = $8,300
Summary Journal Entries for 2015:
(a) Bad Debt Expense
Debit: Bad Debt Expense $4,750 (Expense increases)
Credit: Allowance for Doubtful Accounts $4,750 (Contra asset increases)
(b) Write-Offs
Debit: Allowance for Doubtful Accounts $3,750 (Contra asset decreases)
Credit: Accounts Receivable $3,750 (Asset decreases)
Missing Information for 2016:
To find the missing write-offs for 2016, we can use the equation format:
$9,300 (Beginning balance) + $4,150 (Bad Debt Expense) - Write-offs = $1,350 (Ending balance)
Write-offs = $9,300 + $4,150 - $1,350 = $12,100
Effect of Additional Write-Offs:
If Travel Today had written off an additional $33 in Accounts Receivable during 2016, the Net Receivables would decrease by $33, and there would be no effect on Net Income, as write-offs affect only the balance sheet accounts and have no impact on the income statement once the allowance for doubtful accounts has been adjusted for the Bad Debt Expense.
Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data.
BUSINESS SOLUTIONS
Income Statement
For Three Months Ended March 31, 2020
Computer services revenue $ 25,307
Net sales 18,693
Total revenue 44,000
Cost of goods sold $ 14,052
Depreciation expense—Office equipment 400
Depreciation expense—Computer equipment 1,250
Wages expense 3,250
Insurance expense 555
Rent expense 2,475
Computer supplies expense 1,305
Advertising expense 600
Mileage expense 320
Repairs expense—Computer 960
Total expenses 25,167
Net income $ 18,833
BUSINESS SOLUTIONS
Comparative Balance Sheets
December 31, 2019, and March 31, 2020
Mar. 31, 2020 Dec. 31, 2019
Assets
Cash $ 68,057 $ 48,372
Accounts receivable 22,867 5,668
Inventory 704 0
Computer supplies 2,005 580
Prepaid Insurance 1,110 1,665
Prepaid rent 825 825
Total current assets 95,568 57,110
Office equipment 8,000 8,000
Accumulated depreciation—Office equipment (800 ) (400 )
Computer equipment 20,000 20,000
Accumulated depreciation—Computer equipment (2,500 ) (1,250 )
Total assets $ 120,268 $ 83,460
Liabilities and Equity
Accounts payable $ 0 $ 1,100
Wages payable 875 500
Unearned computer service revenue 0 1,500
Total current liabilities 875 3,100
Equity
Common stock 98,000 73,000
Retained earnings 21,393 7,360
Total liabilities and equity $ 120,268 $ 83,460
Required:
Prepare a statement of cash flows for Business Solutions using the indirect method for the three months ended March 31, 2020. Owner Santana Rey contributed $25,000 to the business in exchange for additional stock in the first quarter of 2020 and has received $4,800 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)
To prepare the statement of cash flows using the indirect method, start with the net income and then adjust it for non-cash expenses and changes in operating assets and liabilities. Santana Rey's equity contribution and dividends were also taken into account to determine the overall increase in cash.
Explanation:To prepare a statement of cash flows for Business Solutions using the indirect method, we begin with the net income and adjust it for non-cash charges (depreciation) and changes in operating assets and liabilities. Here is the breakdown:
Net Income: $18,833Add back Depreciation Expense (Office and Computer Equipment) = $1,650Adjustments for changes in operating assets and liabilities: Increase in Accounts Receivable = -$17,199, Increase in Inventory = -$704, Decrease in Prepaid Insurance = $555, Decrease in Prepaid Rent = $0, Decrease in Accounts Payable = $1,100, Increase in Wages Payable = -$375, Decrease in Unearned Service Revenue = $1,500Cash Flows from Operations (=Net Income + Depreciation + Adjustments) = $5,860Fundamental financing activities: Rey's Equity Contribution = $25,000, Rey's Dividends = -$4,800. Hence, Net Cash Provided by Financing = $20,200.At the end, the increase in cash is Cash Flow from Operations + Cash Flow from Financing = $26,060.Learn more about Statement of Cash Flows here:https://brainly.com/question/32701049
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Fruit First produces and sells baskets of dried fruit for $20 each. It receives a special order from Carol Costellano for 150 fruit baskets at a special price of $16. The company incurs a variable cost of $11 and a fixed manufacturing overhead of $6 per unit of fruit basket. The company is operating at full capacity and will have to cancel its existing orders to fill this special order. What will be the total opportunity cost that must be considered in the incremental analysis for this decision?
Answer:
$600
Explanation:
Normal selling price for baskets of dried fruits = $20
No. of baskets ordered = 150
At this price, the total selling revenue will be =$20*150 =$3000
Variable cost = $11*150 =$1650
Manufacturing overhead cost = $6*150 =$900
Income at a selling price of $20 = $3000-$(1650+900)=$450
For the special order
Selling price= $20
Total selling revenue =$16*150=$2400
Income at a selling price of $16 = $2400-$2550 = -$150 loss
The opportunity cost of this decision will be leaving a profit of $450 and obtaining a loss of $150
Total opportunity cost that must be considered in the incremental analysis for this decision =$450 +$150 =$600
The total opportunity cost for Fruit First is the lost profit on the displaced orders, which is 150 baskets x $9 lost contribution margin per basket, amounting to $1350.
The total opportunity cost for Fruit First in accepting Carol Costellano's special order at a special price involves calculating the loss from the reduced price per unit and the cost of cancelling existing orders. To fill the special order at $16 per unit instead of the regular $20, the company already incurs a lost contribution margin of $4 per unit (the difference between the usual selling price and the special order price). Since the variable cost is $11 per unit, the contribution margin on the regular orders would have been $9 per unit ($20 - $11). However, because the company is operating at full capacity, the opportunity cost also includes the profit forgone from the orders that must be canceled to accommodate this special order. If the fixed manufacturing overhead is $6 per unit and is unrecoverable, this cost should not figure into the incremental analysis for the special order as it is a sunk cost, assuming the fixed overhead does not increase because of the special order.
For 150 baskets, the total opportunity cost would therefore involve the lost profit on the displaced regular orders: 150 baskets imes $9 lost contribution margin per basket = $1350. The opportunity cost is the foregone profit from the orders that are cancelled to take on the special order.
Company requires a minimum cash balance of $ 3,100. When the company expects a cash deficiency, it borrows the exact amount required on the first of the month. Expected excess cash is used to repay any amounts owed. Interest owed from the previous month's principal balance is paid on the first of the month at 14% per year. The company has already completed the budgeting process for the first quarter for cash receipts and cash payments for all expenses except interest. Hoppy does not have any outstanding debt on January 1. Complete the cash budget for the first quarter for Hoppy Company. Round interest expense to the nearest whole dollar. Begin by preparing the cash budget for January, then prepare the cash budget for February and March. Finally, prepare the totals for the quarter. (Complete all answer boxes. Enter a "0" for any zero balances. Round all amounts entered into the cash budget to the nearest whole dollar.
Answer:
January February March Total
Beginning Cash Balance 3,100 3,100 3,100 9,300
Cash Receipts 22,500 28,000 42,500 93,000
Cash Available 25,600 31,100 45,600 102,300
Cash Payments:
All Expenses except interest 32,000 33,000 38,000 103,000
Interest 0 87 134 221
Total Cash Payments 32,000 33,087 38,134 103,221
Ending Cash Balance before (6,400) (1,987) 7,466 (921)
Financing
Minimum Cash Balance Desired (3,100) (3,100) (3,100) (9,300)
Projected Cash Excess (Deficiency) (9,500) (5,087) 4,366 (10,221)
Financing:
Borrowing 9,500 5,087 - 14,587
Principal Payments 0 0 (4,366) (4,366)
Total effects of Financing 9,500 5,087 (4,366) 10,221
Ending Cash Available 3,100 3,100 3,100 9,300
It is mentioned that the company will raise the exact amount of deficiency at the beginning of next month so any deficiency in January will be raised on 1st of February and any excess cash will be used to repay the principal amount.
Interest = Amount raised * Rate * Month
Interest due in Feb. = 9,500(Raised) * 14% * 1/12 months
Interest due in Feb. = 9,500(Raised) * 0.14 * 1/12 months = $110.83
Interest Due in March = (9,500+5,087) * 14% * 1/12 months
Interest Due in March = 14,587 * 0.14 * 0.083 months = $169.5
A firm derives revenue from two sources: goods X and Y. Annual revenues from good X and Y are $10,000 and $20,000, respectively.
If the price elasticity of demand for good X is -4.0 and the cross-price elasticity of demand between Y and X is 2.0, then a 2 percent decrease in the price of X will _______.
Answer:
X demand would rise by 8% ; Y demand would fall by 4%
Explanation:
Price Elasticity of Demand is the responsiveness in demand quantity, due to change in good's price
P.Ed = % change in demand / % change in own price
Cross Price Elasticity is the responsiveness in a good's demand quantity, due to change in other good's price
C.Ed = % change in demand (Y) / % change in other good's price (X)
Given {Good X Elasticities} : P.Ed = (-) 4 ; C.Ed = 2
Price of X decrease = 2%
P.Ed = 4 = % change in demand / 2
% change in demand of X = 2 x 4 = 8%
P.Ed absolute value ignoring negative has been taken due to law of demand price - demand inverse relationship already depicting it. So, 2% fall in price of X increases it's quantity demanded by 8%
C.Ed = 2 = % change in Y demand / 2
% change in Y demand = 2 x 2 = 4%
Cross Price Elasticity of demand is positive in case of substitute goods. These goods can be interchange-ably used to satisfy a particular want. Substitutes price & demand are directly related;- as price fall of a good makes it relatively cheap, increases its demand, decreases other good's demand. So, 2% decrease in good X price decreases good Y demand by 4%
It takes 30 minutes of direct labor time to make one unit. Direct labor wages average $17 per hour. Variable overhead is applied at the rate of $5 per direct labor hour. Fixed overhead is budgeted at $56,500 per month. What is the budgeted overhead for November
Answer:
$404,000
Explanation:
Overheads includes all indirect cost incurred to product the units to be sold. Indirect costs are those costs which are not directly traceable / attributable to the product. These cost are variable and fixed.
Time for each unit = 30 minutes = 0.5 hours
Budgeted production in November = Closing Inventory + Sales in November - Opening Inventory.
Budgeted production in November = (180,000 x 10% ) + 135,000 - 14,000 = 139,000
Budgeted production overhead Included all the variable and fixed overheads incurred to produce the budgeted production.
Variable overhead = 139,000 x 5 X 0.5 = $347,500
Total budgeted Overhead = $347,500 + $56,500 = $404,000
Consider tablets which are used by a majority of consumers. Suppose that due to the development of 5G technology, tablets underwent a major advance from 2020 to 2021 in terms of the number of functions they could do. The tablets in 2021 sold at the same price as those in 2020. What would be the effect on the CPI?
Answer:
Tablets are used by a majority of consumers. Although the tablets underwent a major advance from 2020 to 2021, the price of the tablets remained the same. Therefore, the CPI would largely remain the same as the price of tablets remained the same.
Unchanged CPI
Fixed expenses consist of $300,000 of common costs allocated to the three products based on relative sales, as well as direct fixed expenses unique to each model of $30,000 (Tingler), $79,500 (Shocker), and $34,300 (Stunner). The common costs will be incurred regardless of how many models are produced. The direct fixed expenses would be eliminated if that model is phased out.
Answer and explanation:
Attached is a comprehensive solution
in a well formatted excel table
Question: The question is not complete. Find below the complete quesion and the answer.
Cawley Company makes three models of tasers. Information on the three products is given below.
Tingler Shocker Stunner
Sales $300,000 $500,000 $200,000
Variable expenses 150,000 200,000 145,000
Contribution margin 150,000 300,000 55,000
Fixed expenses 120,000 230,000 95,000
Net income $ 30,000 $70,000 $(40,000)
Fixed expenses consist of $300,000 of common costs allocated to the three products based on relative sales, and additional fixed expenses of $30,000 (Tingler), $80,000 (Shocker), and $35,000 (Stunner). The common costs will be incurred regardless of how many models are produced. The other fixed expenses would be eliminated if a model is phased out. James Watt, an executive with the company, feels the Stunner line should be discontinued to increase the company.
1. Compute current net income for Crawley company
2. Compute net income after dropping the stunner line model
Answer:
1. Current net income = $60,000
2. net income = $40,000
Explanation:
See the attached file for the calculation
Anand purchased a 30 year mortgage at 6.00% convertible monthly. The amount of the loan is for $200,000. Anand plans to make the required monthly payments. The first month that his outstanding balance is $100,000 or less, he plans to purchase a larger home. How many monthly payments will Anand need to make?
Answer:
252
Explanation:
In this question we use the PMT and the NPER formula which is to be shown in the attachment below:
Given that,
Present value = $200,000
Future value or Face value = $0
RATE = 6% ÷ 12 = 0.5%
NPER = 30 years × 12 months = 360 months
The formula is shown below:
= PMT(RATE;NPER;-PV;FV;type)
The present value come in negative
So, after solving this, the pmt is $1,199.10
Now NPER is
Given that,
Present value = $200,000
Future value or Face value = $100,000
RATE = 6% ÷ 12 = 0.5%
PMT = $1,199.10
The formula is shown below:
= NPER(RATE;PMT;-PV;FV;type)
The present value come in negative
So, after solving this, the pmt is 251.82
The following data are from the accounting records of Kain Company: Net income $40,000 Depreciation expense 8,000 Decrease in accounts payable 1,800 Decrease in merchandise inventory 2,500 Increase in long-term liabilities 10,000 Increase in common stock 25,000 Increase in accounts receivable 4,000 Based on this information, the net cash flows from operating activities on the statement of cash flows using the indirect method would be: a.$51,300. b.$42,100. c.$50,000. d.$44,700.
Answer:
d. $44,700
Explanation:
The preparation of the Cash Flows from Operating Activities - Indirect Method is shown below:
Cash flow from Operating activities - Indirect method
Net income $40,000
Add : Depreciation expense $8,000
Less: Decrease in accounts payable -$1,800
Add: Decrease in merchandise inventory $2,500
Less: Increase in accounts receivable -$4,000
Net cash flows from operating activities $44,700
The long term liabilities and the common stock is not relevant. Hence, ignored it
Final answer:
The net cash flows from operating activities using the indirect method would be $44,700 after adding back non-cash depreciation expense, subtracting the increase in accounts receivable, adding the decrease in merchandise inventory, and subtracting the decrease in accounts payable to the net income.
Explanation:
To calculate the net cash flows from operating activities using the indirect method, we start with the net income and make adjustments for non-cash expenses and changes in working capital. We add back depreciation since it's a non-cash expense and adjust for the changes in working capital accounts (accounts receivable, inventory, accounts payable).
The calculation is as follows:
Net Income: $40,000
Add: Depreciation Expense: $8,000
Decrease in Accounts Receivable: Subtract the increase: $(4,000)
Decrease in Merchandise Inventory: Add the decrease: $2,500
Decrease in Accounts Payable: Subtract the decrease: $(1,800)
Now, we sum these amounts:
$40,000 (Net Income)
+$8,000 (Depreciation Expense)
-$4,000 (Increase in Accounts Receivable)
+$2,500 (Decrease in Merchandise Inventory)
-$1,800 (Decrease in Accounts Payable)
Total adjustments = $8,000 - $4,000 + $2,500 - $1,800 = $4,700
Net cash provided by operating activities = $40,000 + $4,700 = $44,700
Therefore, the correct answer is (d) $44,700.
Cala Manufacturing purchases land for $477,000 as part of its plans to build a new plant. The company pays $40,700 to tear down an old building on the lot and $60,165 to fill and level the lot. It also pays construction costs $1,535,600 for the new building and $96,932 for lighting and paving a parking area. Prepare a single journal entry to record these costs incurred by Cala, all of which are paid in cash.
Answer:
(A) Record the Total Costs of the plant assets.
Transaction General Journal Debit Credit
1 Land 477000
Dismantling cost 40700
Leveling cost 60165
Construction cost 1535600
Lighting & Paving Area 96932
Cash 2210397
Note:
1. According to IAS 16 Cost of asset consists of expense which has endurs future economic benefit.
2. Cost of Asset includes construction cost ,development cost , Dismantling cost and lighting & paving area etc.
Final answer:
To record Cala Manufacturing's expenditure on the new plant, the accounting journal entry would debit Land for $577,865, Buildings for $1,535,600, and Furniture and Fixtures for $96,932. Credit would be made to Cash for the total sum of $2,210,397.
Explanation:
To record the costs incurred by Cala Manufacturing for its new plant construction and related expenses, a single journal entry would be made in their accounting system. This includes the purchase of land, site preparation costs, construction costs of the new building, and costs for lighting and paving a parking area.
The journal entry would follow this format:
Debit Land for \$477,000 + \$40,700 + \$60,165 = \$577,865.Debit Buildings for the construction costs of \$1,535,600.Debit Furniture and Fixtures (if applicable for lighting and paving as they are not specifically categorised) for \$96,932.Credit Cash for the total amount of \$2,210,397 (The sum of all debits).. Use a business directory to identify several
nonprofit corporations in your area. What public service is each providing? Why do you
think each is a public rather than a private
corporation?
Nonprofit organizations are businesses that aim to provide charitable, religious, or educational purposes rather than making a profit. They may provide public services such as healthcare, education, or social support. These organizations are considered public corporations because they serve the public good and rely on funding or donations to fulfill their mission.
Explanation:A nonprofit organization is a business entity that has a primary mission of providing charitable, religious, or educational purposes, rather than making a profit.
Some examples of nonprofit corporations in your area might include a nonprofit health organization, a private hospital, or a governmental agency like Health and Social Services.
A nonprofit health organization, for example, provides public health services such as medical research, health education, or access to affordable healthcare for disadvantaged populations.
These organizations are considered public rather than private corporations because their main goal is to serve the public good rather than generating profit for shareholders or owners. They may receive government funding, rely on donations, or operate using volunteer labor to fulfill their mission.
Explain precisely why ‘Opportunity Cost’ is always a RELATIVE concept and is never to be construed in ABSOLUTE terms. In addition, why is the PPF function never strictly convex -what is the economic implication of strict convexity? You are free to provide appropriate examples of your choice.
Answer:
Opportunity costs are defined as the additional costs or benefits lost from choosing one activity or investment over another alternative. It is a relative concept because you cannot be 100% sure that the other investments or activities would have yielded a specific gain.
For example, when you calculate the economic cost of starting your own business, you consider your current salary as an opportunity cost. But what happens if you get fired (or the company closes), your opportunity cost would have been $0? Or how can you exactly measure your future salaries? Maybe in a couple of years you get promoted to manager, or maybe not?
The same applies to economies, since the opportunity cost of producing certain tradable goods is not always fixed, it might decrease or increase due to productivity or efficiency changes. But in order to calculate or determine we must include the most probable option.
In microeconomics, a strictly convex production possibilities frontier function must include a combination of both goods. In strict convexity, the second derivative f''(x) ˃ 0, so the PFF curve cannot be straight, it must have a slope.
When we calculate the opportunity costs of PPF, we usually try to determine which product has the lowest opportunity cost, but that is not an interior solution because both goods are not being produced (the curve is not strictly convex). On a strictly convex curve, as you approach the extremes the opportunity cost of producing one good is high, but on the center the opportunity cost is much lower.
Sub Station and Planet Sub reported the following selected financial data ($ in thousands). Sub Station's business strategy is to sell the best tasting sandwich with the highest quality ingredients. Planet Sub's business strategy is to sell the lowest cost sub on the planet.
Sub Station Planet Sub
Net sales $108,249 $62,071
Net Income 25,922 3.492
Total assets, beginning 75,183 38,599
Total assets, ending 116,371 44,533
Required:
1. Calculate Sub Station's return on assets, profit margin, and asset turnover ratio.
Answer:
The computations are shown below:
Explanation:
Return On Assets = Net income ÷ Average Total Assets × 100
where,
Average of Assets = (Beginning Total Assets + Ending Total Assets) ÷ 2
= ($75,183 + $116,371) ÷ 2
= $191,554 ÷ 2
= $95,777
So, the return on investment is
=$25,922 ÷ $95,777 × 100
= 27.06%
Profit Margin = Net income ÷ Sales × 100
= $25,922 ÷ $108,249 × 100
= 23.95%
Assets Turnover = Sales ÷ Average of Total Assets
= $108,249 ÷$95,777
= 1.13
To calculate Sub Station's financial ratios, we found its return on assets to be 27.07%, profit margin to be 23.94%, and asset turnover ratio to be 1.13.
Here’s a step-by-step explanation:
1. Return on Assets (ROA)
Return on Assets measures how efficiently a company uses its assets to generate profit.
ROA = (Net Income / Average Total Assets) x 100
Average Total Assets = (Total assets, beginning + Total assets, ending) / 2
For Sub Station:
Average Total Assets = ($75,183 + $116,371) / 2 = $95,777
ROA = ($25,922 / $95,777) x 100 = 27.07%
2. Profit Margin
The Profit Margin indicates the percentage of revenue that has turned into profit.
Profit Margin = (Net Income / Net Sales) x 100
For Sub Station:
Profit Margin = ($25,922 / $108,249) x 100 = 23.94%
3. Asset Turnover Ratio
The Asset Turnover Ratio measures the efficiency of a company's use of its assets to generate sales.
Asset Turnover Ratio = Net Sales / Average Total Assets
For Sub Station:
Asset Turnover Ratio = $108,249 / $95,777 = 1.13
Wendell’s Donut Shoppe is investigating the purchase of a new $18,600 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $3,800 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 1,000 dozen more donuts each year. The company realizes a contribution margin of $1.20 per dozen donuts sold. The new machine would have a six-year useful life. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes? (Round your final answer to the nearest whole dollar amount.) 2. What discount factor should be used to compute the new machine’s internal rate of return? (Round your answers to 3 decimal places.) 3. What is the new machine’s internal rate of return? (Round your final answer to the nearest whole percentage.) 4. In addition to the data given previously, assume that the machine will have a $9,125 salvage value at the end of six years. Under these conditions, what is the internal rate of return? (Hint: You may find it helpful to use the net present value approach; find the discount rate that will cause the net present value to be closest to zero.) (Round your final answer to the nearest whole percentage.)
Answer:
1. Total Annual Cash Inflows = 5000
2. Discount Factor = 3.72
3. New Machine's internal rate of return = 16%
Explanation:
Note: the question is incomplete and it lacks essential data to be used in part 4. Without the exhibits mentioned in the questions, it is not possible to solve this question completely. We will be solving it till part 3.
1) What would be the total annual cash inflows associated with the new machine for capital budgeting purposes?
Answer:
In this we have to calculate the total annual cash inflows and the formula to calculate it is mentioned below:
Total Annual Cash Inflows = Savings in Part Time help annually + Additional contribution Margin from Expected Sales.
Total Annual Cash Inflows = 3800 + ( 1000 x 1.20)
Total Annual Cash Inflows = 3800 + 1200
Total Annual Cash Inflows = 5000
2. What discount factor should be used to compute the new machine’s internal rate of return?
Answer:
Formula to calculate the Discount factor:
Discount Factor = Price of new machine/ annual cash inflow
Price of new machine = 18600 USD
Annual cash inflow = 5000
Discount Factor = 18600 /5000
Discount Factor = 3.72
3. What is the new machine’s internal rate of return?
Answer:
As, it can be seen from the exhibits (which are missing from this question) that the discount factor for 6 years is nearly closest to 16%, hence the new machine's internal rate of return = 16%
Note: the question is incomplete and it lacks essential data to be used in part 4. without the exhibits mentioned in the questions. It is impossible to solve further.
The total annual cash inflow is $5,000. There isn't enough information provided to calculate the discount factor and the Internal Rate of Return (IRR). The salvage value will also change the calculation.
Explanation:1. To calculate the total annual cash inflows, we add the cost savings from reducing part-time help and the additional contribution from the sale of new donuts. The cost saving is $3,800. The additional contribution is the number of dozens of new donuts (1,000) times the contribution margin per dozen ($1.20), which is $1,200. So, the total annual cash inflows are $3,800+$1,200=$5,000.
2. The question does not provide enough information to determine the discount factor. Normally, it would either be provided or calculated based on a given discount rate (interest rate).
3. The Internal Rate of Return (IRR) also cannot be determined without either the net present value at a specific discount rate or the cash inflows for each year given. The IRR is the discount rate that makes the Net Present Value (NPV) of a project zero.
4. With a salvage value, the calculation would change, as the salvage value is a one-time cash inflow at the end of the machine’s life. Again, without specific annual cash inflows, it is impossible to accurately calculate the IRR.
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You need to have $34,000 in 11 years. You can earn an annual interest rate of 3 percent for the first 6 years, and 3.6 percent for the next 5 years. How much do you have to deposit today?
Answer:
$23,859.25
Explanation:
As we know that
Future value = Present value × (1 + interest rate)^number of years
where,
Future value = $34,000
Interest rate and the number of years are different to each other
So, the present value is
$34,000 = Present value × (1.03)^6 × (1.036)^5
$34,000 = Present value × 1.4250238247
So, the present value is $23,859.25
We simply applied the above formula so that the approximate today deposited value or present value could come
To determine the present value required to meet the future goal of $34,000 in 11 years at two different interest rates, you must perform a two-step calculation involving the compound interest formula. First, calculate the amount $34,000 would be equivalent to after 5 years at 3.6% interest, and then determine its equivalent after another 6 years at 3% interest, thereby revealing the initial deposit needed today.
To calculate how much you would need to deposit today to have $34,000 in 11 years with different interest rates for different periods, you would use the compound interest formula and present value calculations. Let's first find the future value of the deposit after the first 6 years using the first interest rate of 3 percent. Then, we'll need to grow that amount for the next 5 years at the 3.6 percent rate.
The compound interest formula is A = P(1 + r/n)nt, where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or borrowed for
For the first 6 years at 3 percent:
P = unknown
r = 0.03
n = 1 (compounded annually)
t = 6
Then, for the next 5 years at 3.6 percent:
r = 0.036
t = 5
First, calculate the amount after 6 years.
P(1 + 0.03)6 = X, where X is the amount we'll have after 6 years.
Next, we will grow X for another 5 years at 3.6%
X(1 + 0.036)5 = $34,000
Now, we must work backwards to find X and then P using the reverse of the compound interest formula (in this case considering it as the present value), which ultimately needs to be solved for P.
Ultimately, to find out how much to deposit today, we calculate the present value of $34,000 discounted back 5 years at 3.6%, and then the result further discounted back 6 years at 3%.
Whirly Corporation’s contribution format income statement for the most recent month is shown below: Total Per Unit Sales (7,400 units) $ 229,400 $ 31.00 Variable expenses 133,200 18.00 Contribution margin 96,200 $ 13.00 Fixed expenses 55,100 Net operating income $ 41,100 Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 40 units? 2. What would be the revised net operating income per month if the sales volume decreases by 40 units? 3. What would be the revised net operating income per month if the sales volume is 6,400 units?
Answer:
1. $41,100
2. $40,580
3. $28,100
Explanation:
1. Sales volume increase by 40 units
Total sales $229,400
7,440 × $31
Less: Variable Expense $133,200
7,440 × $18
Contribution margin $96,200
Less: Fixed expenses $55,100
Net operating income $41,100
2. Sales volume decreases by 40 units
Sales Volume $228,160
7,360 × $31
Less: Variable expense $132,480
7,360 × $18
Contribution margin $95,680
Less: Fixed expenses $55,100
Net operating income $40,580
3. Sales volume is 6,400 units
Total sales $198,400
6,400 × $31
Less: Variable expense $115,200
6,400 × $18
Contribution margin $83,200
Less: Fixed expenses $55,100
Net operating income $28,100
Landow Company uses variable costing for internal purposes and wants to restate income to that of absorption costing for external reporting purposes. Landow's income under variable costing is $630,000. Fixed production cost in ending inventory is $120,000 and $85,000 in beginning inventory. What is Landow's income under absorption costing? $595,000. $510,000. $665,000. $750,000.
Answer: 665000
Explanation:
N/a
Thom owes $7,200 on his credit card. The credit card carries an APR of 18.4 percent compounded monthly. If Thom makes monthly payments of $225 per month, how long will it take for him to pay off the credit card assuming that he makes no additional charges
Answer: 45 months
Explanation:
Credit owed $7200
Monthly payment $225
APR annaully 18.4%
Monthly APR = 18.4/12 = 1.533%
SOLUTION
1st Month interest payment
1.533% x $7200 / 100 = $110.40
Principal paid (monthly payment - interest paid) = $225 - $110.40 = $114.60
Balance ( principal - principal paid) = 7200 - 114.60 = $7085.40
2nd Month interest payment
1.533% x $7085.40 / 100 = $108.64
Principal paid (monthly payment - interest paid) = $225 - $108.64 = $116.36
Balance ( principal - principal paid) = $7085.40 - $116.36 = $6969.04
By following this step up to the 45th month you get $74.74 as the monthly payment this sums up to.
Month interest payment
1.533% x $74.74 / 100 = $1.15
Principal paid (monthly payment - interest paid) = $75.88 - $1.15 = $74.74
Balance ( principal - principal paid) = $74.74 - $74.74 = $0
The payment would be completed at exactly 45months
For each adjustment, indicate the income statement and balance sheet account affected, and the impact on net income. If an adjustment caused net income to decrease, enter the amount as a negative value. Net income before adjustments can be found on the income statement tab. (Hint: Select unadjusted on the drop-down.)
Every transaction will have effects on the financial statements of the organization. The effect can be on more than one financial statement.
a. Rent :
Income Statement 750 Balance Sheet 8250 Net Income 9,000 decreaseb. Insurance :
Income Statement 200 Balance Sheet 2200 Net Income 2,400 decreasec. Office Supplies :
Income Statement 12,200 Balance Sheet 1200 Net Income 12,200 decreased. Depreciation :
Income Statement 500Balance Sheet 26,000 Net Income 6,000 decreasee. Un billed Fees :
Income Statement 10,690 Balance Sheet 1,800 Net Income 10,690 increasef. Unpaid Wages :
Income Statement 2600 Balance Sheet 2600 Net Income 2,600 decreaseLearn more at https://brainly.com/question/14777340
Financial adjustments impact both the income statement and balance sheet, altering net income and account values. Taxable income is a key factor in these adjustments, and the merchandise trade balance, determined by exports and imports, affects the financial statements.
Explanation:Understanding Financial Adjustments and Their Impact on Financial StatementsTo evaluate the impact of financial adjustments on income statements and balance sheets, it's essential to recognize how each adjustment affects these financial documents. When identifying the effects on net income, adjustments either increase or decrease the profitability as displayed in the income statement. For the balance sheet, adjustments alter the value of assets, liabilities, or equity.
Consider taxable income, which is calculated by subtracting deductions and exemptions from the adjusted gross income. Different tax rates apply to different income levels, which could lead to further adjustments. Remember, the calculation of net income is influenced by various components, including tax rates and credits, as well as any alternative minimum tax.
When focusing on the merchandise trade balance, a few steps are integral. Step 1 requires entering the export amount of goods and services; Step 2, recording imports; and Step 3 marks the entry of income payments under exports. The merchandise trade balance (Step 9), for example, is obtained by subtracting the value of imports from exports, with unilateral transfers also affecting the balance.
These transactions not only affect the overall trade balance but also have implications for the national income and subsequently the tax computations, which could adjust the net income. It is vital to carefully identify each adjustment to accurately reflect its impact on both the income statement and balance sheet accounts.
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Suppose Jacques and Kyoko are playing a game in which both must simultaneously choose the action Left or Right. The payoff matrix that follows shows the payoff each person will earn as a function of both of their choices. For example, the lower-right cell shows that if Jacques chooses Right and Kyoko chooses Right, Jacques will receive a payoff of 5 and Kyoko will receive a payoff of 3Kyoko Left Right 3,72,6 4,5 Left Jacques Right 3,8 The only dominant strategy in this game is for to choose The outcome reflecting the unique Nash equilibrium in this game is as follows: Jacques chooses_and Kyoko chooses
Answer: 1. Jacques picks Right
2. Jacques picks Right and Kyoko picks Right.
Explanation:
Hello.
I wasn't quite clear on your question so I added an attachment with the full question.
1. The only dominant strategy in this game is for ____Jacques____ to choose ___Right____.
The Dominant strategy for a player is that strategy that will result in the highest payoff independent of the actions of the other player.
If Jacques plays Right, they will have more or equal payouts but never less than Left regardless of what Kyoko does. Therefore choosing Right is Jacques's Dominant strategy.
2. The outcome reflecting the unique Nash equilibrium in this game is as follows: Jacques chooses___Right_______and Kyoko chooses ____Right_____.
Jacques will go with their dominant strategy of picking Right. This will make Kyoto pick the alternative of Right that results in the higher payoff. They make a payoff of 8 if they pick Right as well so that is what they will do.
If you need any clarification do comment. Cheers.
In economics, the cost of something is a. always measured in units of time given up to get it. b. the dollar amount of obtaining it. c. what you give up to get it. d. often impossible to quantify, even in principle. 1
Answer:
The correct answer is C
Explanation:
Economies is the study of how the society uses the resources which are limited and it deals with the consumption, production as well as distribution of the goods and services.
And under the economics the cost of something like or product is defined as what the person give up in order to get something.
For example, a person wants to purchase to product, he needs to give up the money against it in order to have the product or item with him.
If the month-end bank statement shows a balance of $54,000, outstanding checks are $15,000, a deposit of $6,000 was in transit at month end, and a check for $900 for non-sufficient funds charged by the bank against the account, the correct balance in the adjusted balance per bank at month end is Group of answer choices $45,000. $44,100. $62,100. $75,000.
Answer:
A. $45,000
Explanation:
We have to use bank reconciliation statement to find the adjusted balance per bank at the end of month. Although we do not have cash balance, we will use the bank part to adjust the bank balance.
Bank balance as per month end $54,000
Add: Deposit in transit $6,000
$60,000
Less: Outstanding check $(15,000)
Adjusted bank balance $45,000
Note: Non-sufficient funds will be deducted from cash book.
Therefore, option A is the answer.
7) You are thinking of building a new machine that will save you $50,000 in the first year. The machine will then begin to wear out so that the savings decline at a rate of 2.5 percent per year forever. What is the present value of the savings if the discount rate is 8 percent per year?\
Answer:
$476190.47
Explanation:
Given,
Annual Saving = $50,000.
Growth = -2.5%
Interest rate = 8%
Present value of savings = Annual Saving / (Interest rate- Growth)
= $50,000 / (0.08-(-0.025)
= $50,000 / (0.08+0.025)
= $50,000 / 0.105
= $476190.47.
Therefore, the present vaue of the savings is $14,285.71.
Blue Landscaping began construction of a new plant on December 1, 2017. On this date, the company purchased a parcel of land for $150,000 in cash. In addition, it paid $2,400 in surveying costs and $3,840 for a title insurance policy. An old dwelling on the premises was demolished at a cost of $3,360, with $1,200 being received from the sale of materials.
Architectural plans were also formalized on December 1, 2017, when the architect was paid $36,000. The necessary building permits costing $3,360 were obtained from the city and paid for on December 1 as well. The excavation work began during the first week in December with payments made to the contractor in 2018 as follows.
Date of Payment Amount of Payment
March 1 $ 262,800
May 1 333,600
July 1 63,600
The building was completed on July 1, 2018.
To finance construction of this plant, Blue borrowed $603,600 from the bank on December 1, 2017. Blue had no other borrowings. The $603,600 was a 10-year loan bearing interest at 10%.
Compute the balance in each of the following accounts at December 31, 2017, and December 31, 2018. (Round answers to 0 decimal places, e.g. 5,275.)
December 31, 2017 December 31, 2018
(a) Balance in Land Account
(b) Balance in Building
(c) Balance in Interest Expense
Final answer:
At December 31, 2017, Blue Landscaping's Land Account is $154,080, the Building Account is $39,360, and the Interest Expense is $5,030. By December 31, 2018, the Land Account remains at $154,080, the Building Account increases to $699,360, and the Interest Expense for the year is $60,360.
Explanation:
To compute the balance in each account for Blue Landscaping at December 31, 2017, and December 31, 2018, the costs incurred and payments made towards the construction must be taken into account, as well as the interest expense incurred from the loan.
December 31, 2017 Balances
Land Account: includes the purchase of land, surveying costs, title insurance, and net demolition costs (demolition costs minus the sale of materials): $150,000 + $2,400 + $3,840 - ($3,360 - $1,200) = $154,080.Building Account: includes the architectural plans fee and permits since no construction payments were made in 2017: $36,000 + $3,360 = $39,360.Interest Expense: the interest for one month (December) on the loan at 10%: $603,600 * 10% * (1/12) = $5,030 (rounded to $5,030).December 31, 2018 Balances
The Land Account will remain unchanged at $154,080 as no further costs are added to land.Building Account: add payments made to the contractor to the initial balance: $39,360 + $262,800 + $333,600 + $63,600 = $699,360.Interest Expense: the interest for the full year (2018) on the loan at 10%: $603,600 * 10% = $60,360.Chavez Corporation reported the following data for the month of July: Inventories: Beginning Ending Raw materials $ 31,000 $ 32,000 Work in process $ 18,000 $ 21,000 Finished goods $ 34,000 $ 49,000 Additional information: Raw materials purchases $ 68,000 Direct labor cost $ 93,000 Manufacturing overhead cost incurred $ 61,000 Indirect materials included in manufacturing overhead cost incurred $ 8,800 Manufacturing overhead cost applied to Work in Process $ 60,000 Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold. The cost of goods manufactured for July is:
Answer:
cost of goods manufactured= $217,000
Explanation:
Giving the following information:
Inventories:
Beginning Ending
Raw materials $ 31,000 $ 32,000
Work in process $ 18,000 $ 21,000
Additional information:
Raw materials purchases $68,000
Direct labor cost $ 93,000
Manufacturing overhead cost applied to Work in Process $ 60,000
To calculate the cost of goods manufactured, we need to use the following formula:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
First, we need to calculate the direct material used in production.
Direct material used= beginning inventory + purchases - ending inventory
Direct material used= 31,000 + 68,000 - 32,000= 67,000
Now, we can calculate the cost of goods manufactured:
cost of goods manufactured= 18,000 + 67,000 + 93,000 + 60,000 - 21,000
cost of goods manufactured= $217,000
Problem 13-140 Brewer Company is considering purchasing a machine... Brewer Company is considering purchasing a machine that would cost $537,600 and have a useful life of 9 years. The machine would reduce cash operating costs by $82,708 per year. The machine would have a salvage value of $107,520 at the end of the project. (Ignore income taxes.) Required: a. Compute the payback period for the machine. (Round your answer to 2 decimal places.) Payback period years b. Compute the simple rate of return for the machine. (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Simple rate of return %
Answer:
Payback is 6.5 years
simple rate of return is 6.50%
Explanation:
The payback period for the investment is the number of years it would take the initial capital outlay of $537,600 to recoup itself,which is given by the formula below:
payback period=initial investment/annual incremental savings
initial investment is $537,600
annual incremental savings is $82,708
payback period=$537,600/$82,708= 6.5 years
Simple rate of return =annual savings-depreciation/initial investment
depreciation=($537,600-$107,520)/9=$47,786.67
simple rate of return=($82,708-$47,786.67)/$537,600=6.50%
Macroeconomics is: the study of individual choice and how that choice is influenced by economic forces. the study of aggregate economic relationships. the study of the pricing policies of firms and the purchasing decisions of households. an analysis of economic reality that proceeds from the parts to the whole.
Answer:
The study of how human beings COORDINATE their WANTS and DESIRES, given the decision making mechanisms, social customs, and political realities of the society
Blossom Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal annual payments of $32,207 at the beginning of each year. The first payment is received on January 1, 2020. Blossom had purchased the machine during 2016 for $146,000. Collectibility of lease payments by Blossom is probable. Blossom set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Blossom at the termination of the lease.
Compute the amount of the lease receivable.
Prepare all necessary journal entries for Blossom for 2020.
Suppose the collectibility of the lease payments was not probable for Blossom. Prepare the necessary journal entry for the company in 2020.
Suppose at the end of the lease term, Blossom receives the asset and determines that it actually has a fair value of $1,470 instead of the anticipated residual value of $0. Record the entry to recognize the receipt of the asset for Blossom at the end of the lease term.
Answer:
Explanation:
Check the attached file for well formatted answer
Amount of the lease receivable = $211,999
Journal entries for Blossom for 2020 are as follows :-
Date Account Titles and Explanation Debit Credit
1/1/20 Lease receivable A/c Dr. $211,999
Cost of goods sold A/c Dr. $146,000
To Sales A/c $211,999
To Inventory A/c $146,000
(To record the lease)
Cash A/c Dr. $32,207
To Lease receivable A/c $32,207
(To record the first lease payment)
12/31/20 Interest receivable A/c Dr. $10787.52
To Interest revenue A/c
[($211,999 - $32,207) × 6% rate]
$10,787.52
(To record interest receivable on the amount after first annual payments)
1/1/2020 Cash A/c Dr. $32,207
To Deposit Liability A/c $32,207
( To record the collectibility of the lease payments was not probable for Blossom)
1/1/2020 Inventory A/c Dr. $1,470
To Gain on Lease A/c $1,470
The computed lease receivable for Blossom is $201,108.44. Journal entries will include recording the lease payment and the interest revenue. If collectability is not probable, only lease revenue is recognized as payments are received. If at the end of the lease the machine has a fair value of $1,470, an entry is made to recognize this.
Explanation:The lease receivable represents the current value of the lease payments that Blossom Company expects to receive over the 8-year lease term. The lease payments are an annuity due as they are received at the beginning of each year. As such, the amount of the lease receivable can be calculated as follows:
Lease Receivable = Lease Payment * ((1 - (1 + Interest Rate) ^ - Lease Term) / Interest Rate)
Plugging in the given values:
Lease Receivable = $32,207 * ((1 - (1 + 6%) ^ -8) / 6%) = $201,108.44.
The necessary journal entries for Blossom in 2020 will include:
January 1, 2020: Debit Lease Receivable $32,207, Credit Cash $32,207 (to record the receipt of the lease payment)December 31, 2020: Debit Interest Receivable $12,066.51 (6% of $201,108.44), Credit Interest Revenue $12,066.51 (to record the interest earned on the lease receivable).However, if the collectability of the lease payments was not probable for Blossom, the company would only recognize revenue as the payments are received. Thus, the only journal entry in 2020 would be:
January 1, 2020: Debit Cash $32,207, Credit Lease Revenue $32,207.
Finally, at the end of the lease term, if Blossom finds that the machine has a fair value of $1,470, the company would make the following entry:
Debit Equipment $1,470, Credit Gain on Return of Leased Equipment $1,470 (assuming Blossom had fully depreciated the machine by this time).
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