Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales.
The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $68,000 of manufacturing overhead for an estimated activity level of $40,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows:
Raw materials $ 10,400
Work in process $ 4,900
Finished goods $ 8,900
During the year, the following transactions were completed:
a. Raw materials purchased on account, $ 169,000.
b. Raw materials used in production, $147,000 (materials costing $126,000 were charged directly to jobs; the remaining materials were indirect).
c. Costs for employee services were incurred as follows:
Direct labor $ 156,000
Indirect labor $ 182,000
Sales commissions $ 25,000
Administrative salaries $ 45,000
d. Rent for the year was $18,900 ($13,900 of this amount related to factory operations, and the remainder related to selling and administrative activities).
e. Utility costs incurred in the factory, $20,000.
f. Advertising costs incurred, $15,000.
g. Depreciation recorded on equipment, $21,000.($15,000 of this amount related to equipment used in factory operations; the remaining $6,000 related to equipment used in selling and administrative activities.)
h. Record the manufacturing overhead cost applied to jobs.
i. Goods that had cost $226,000 to manufacture according to their job cost sheets were completed.
j. Sales for the year (all paid in cash) totaled $509,000. The total cost to manufacture these goods according to their job cost sheets was $218,000.
Required:
1. Prepare journal entries to record the transactions for the year.
2. Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don't forget to enter the beginning balances in your inventory accounts).
3A. Is Manufacturing Overhead underapplied or overapplied for the year?
3B. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.
4. Prepare an income statement for the year. All of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.
Answers
Answer:
Goldnest company
A. Journal entries
1.Raw Materials Purchased.
Debit Direct Raw materials Account with $ 169,000
Credit Accounts Payable Account with $ 169,000
2.Labour Costs incurred
Debit Direct labor with $ 156,000
Debit Indirect labor with $ 182,000
Debit Sales commissions with $ 25,000
Debit Administrative salaries with $ 45,000
Credit Cash with $ 408,000
3.Rentals Costs for the year
Debit Factory Rent for the year with $13,900
Debit Office Rent for the year with $5,900
Credit Cash Account with $18,900
4. Utility costs incurred in the factory
Debit Factory Utility Account with $20,000
Credit Cash Account with $20,000
5.Advertising Expense Incurred
Debit Advertising Expense Account with $15,000
Credit Cash Account with $15,000
6. Depreciation recorded on equipment
Debit Depreciation on Factory equipment with $15,000
Debit Depreciation on Office equipment with $6,000
Credit Accumulated depreciation with $21,000
7.Sales in the Year
Debit Cash Account with $509,000
Credit Sales with $509,000
B. T Accounts are included in the attached for your understanding
C. Manufacturing overhead has been over applied by $34,300. Workings of this has been attached for your understanding
D.income statement closes with a net profit of $195,000. Refer to attached for detailed breakdown
Explanation:
Related Questions
Nina has a part-time job as she finishes her degree in fashion design. After obtaining her degree she decides to quit her part-time job to search for a job that better fits her now-improved skill set. Nina has a few interviews, but it is taking time to find the job that suits her best. Nina would be considered cyclically unemployed. a discouraged worker tructura uneoveremployed. frictionally unemployed.
Answers
Answer:
The correct answer is letter "D": frictionally unemployed.
Explanation:
Frictional unemployment is one component of what economists call natural unemployment triggered by factors other than a poorly performing economy. Temporary job transfers caution frictional unemployment. This involves cases such as new employees joining the workforce, people moving to another city in search of a job, or people quitting to look for a better one.
The following data relating to direct materials cost for October of the current year are taken from the records of Good Clean Fun Inc., a manufacturer of organic toys: Quantity of direct materials used 3,000 lb. Actual unit price of direct materials $5.50 per lb. Units of finished product manufactured 1,400 units Standard direct materials per unit of finished product 2 lb. Direct materials quantity variance—unfavorable $1,000 Direct materials price variance—unfavorable $1,500 Determine the standard direct materials cost per unit of finished product, assuming that there was no inventory of work in process at either the beginning or end of the month. If required, round your standard cost per unit answer to two decimal places. Product finished units Standard finished product for direct materials used units Deficiency of finished product for materials used units Standard cost for direct materials $ per unit
Answers
Answer:
Explanation:
a) Product finished 1,400 units
b) Standard finished for direct material used =Quantity of direct material used/Standard direct material per unit of finished product
= (3000/2)
= 1500units
c) Deficiency of finished product for material used = Product finished - Standard finished for direct material used
= 1,500- 1,400
= 100units
d) Standard cost for direct material = Direct material variance/Deficiency of finished product for direct material used
= $1,000/100 units
= $10.00
The standard direct materials cost per unit of finished product for Good Clean Fun Inc. is $11. This is achieved by multiplying the standard amount of materials used per unit (2 lb) by the actual unit price ($5.50 per lb). It's also important to note that the company incurred unfavorable direct materials price and quantity variances.
Explanation:The problem essentially requires us to determine the standard direct materials cost per unit of finished product. In other words, we need to know how much it ideally costs to manufacture one unit of the product.
Given that the standard amount of direct materials per unit of the finished product is 2 lbs, and knowing that a Standard Cost Accounting system is used by Good Clean Fun Inc., the Standard Cost of Direct Material can be computed by multiplying the Actual Unit Price ($5.50 per lb) by the standard amount of material used (2 lb). Thus, the standard cost for direct materials per unit is $5.50 x 2 = $11 per unit.
Please note, however, that in practice, variance analyses are also very important. Variance analysis is essentially the quantitative investigation of the difference between actual and planned behavior. In this case, the firm incurred unfavorable direct materials price and quantity variances, meaning it paid more for materials than it had planned (price variance), and it also used more materials than it had planned (quantity variance).
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Kegler Bowling buys scorekeeping equipment with an invoice cost of $190,000. The electrical work required for the installation costs $20,000. Additional costs are $4,000 for delivery and $13,700 for sales tax. During the installation, the equipment was damaged and the cost of repair was $1,850.
What is the total recorded cost of the automatic scorekeeping equipment?
Answers
The total recorded cost of the equipment is $229,550.
Explanation:To calculate the total recorded cost of the automatic scorekeeping equipment, we need to add up the invoice cost, electrical work cost, delivery cost, sales tax, and repair cost. The invoice cost is $190,000, the electrical work cost is $20,000, the delivery cost is $4,000, the sales tax is $13,700, and the repair cost is $1,850. Adding all these costs together, the total recorded cost of the automatic scorekeeping equipment is $229,550.
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The total recorded cost of Kegler Bowling's automatic scorekeeping equipment is $229,550. This includes the invoice cost, the cost of electrical work for installation, delivery charges, sales tax, and repair costs which were incurred during the installation.
Explanation:In accounting, the total recorded cost of an asset includes its purchase price and all other costs related to bringing it to its usable condition and location. In the case of the Kegler Bowling's automatic scorekeeping equipment, the total recorded cost would include the invoice cost of $190,000, the electrical work for installation $20,000, the delivery charges of $4,000, the sales tax of $13,700, and the repair costs of $1,850. All these are summed to give:
$190,000 + $20,000 + $4,000 + $13,700 + $1,850 = $229,550
Therefore, the total recorded cost of the automatic scorekeeping equipment is $229,550.
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Roberts Company uses the gross method and a perpetual inventory system. Assuming the following entries, compute the amount that Roberts Company received on August 11.
August 1 Sold goods costing $3,000 to Hill Company on account, $5,000, terms 3/10, n/30. The goods are shipped FOB Shipping Point, Freight Prepaid by Seller, $320.
August 7 Hill Company returned undamaged merchandise previously purchased on account, $1,200.
August 11 Received the amount due from Hill Company.
Answers
Answer:
August 1, sold goods on account terms 3/10, n/30
Dr Account receivable 5,000
Cr Sales revenue 5,000
Dr Cost of goods sold 3,000
Cr Merchandise inventory 3,000
Dr Accounts receivable (freight) 320
Cr Cash 320
When FOB shipping point is used, buyer pays the freight. When FOB destination is used, the seller pays the freight.
August 7, damaged merchandise returned
Dr Sales returns and allowances 1,200
Cr Accounts receivable 1,200
Dr Merchandise inventory 720 (approximately 60% since $3,000/$5,000)
Cr Cost of goods sold 720
August 11, invoice and freight charges collected
Dr Cash 4,006
Dr Sales discounts 114 (3% of $3,800)
Cr Accounts receivable 4,120 ($3,800 for the merchandise and $320 for the prepaid freight)
Raw materials inventory, beginning$1,200 Raw materials inventory, ending1,400 Work in process inventory, beginning7,100 Work in process inventory, ending6,800 Raw materials acquired27,800 Cost of direct materials used in production27,600 Sales commissions to sell clackers2,100 Direct labor cost20,000 Total manufacturing overhead28,900 How much is cost of goods manufactured for June
Answers
Answer:
76,800
Explanation:
Given that,
Raw materials inventory, beginning = $1,200
Raw materials inventory, ending = 1,400
Work in process inventory, beginning = 7,100
Work in process inventory, ending = 6,800
Raw materials acquired = 27,800
Cost of direct materials used in production = 27,600
Sales commissions to sell clackers = 2,100
Direct labor cost = 20,000
Total manufacturing overhead = 28,900
Cost of goods manufactured is determined the overall value of goods produced during a particular year and it is ready for sale. It includes all of the expenses that are incurred to convert the inventory in process into finished goods.
Cost of goods manufactured in June:
= Cost of direct material used in production + Direct Labor cost + Manufacturing Overhead + (Beginning work in process - Ending work in process Ending)
= 27,600 + 20,000 + 28,900 + (7,100 - 6,800)
= 76,800
ABC has 1 million shares outstanding, each of which has a price of $ 18. It has made a takeover offer of XYZ Corporation which has 1 million shares outstanding, and a price per share of $ 2.66. Assume that the takeover will occur with certainty and all market participants know this. Furthermore, there are no synergies to merging the two firms. a. Assume ABC made a cash offer to purchase XYZ for $ 3.42 million. What happens to the price of ABC and XYZ on the announcement? What premium over the current market price does this offer represent? b. Assume ABC makes a stock offer with an exchange ratio of 0.19. What happens to the price of ABC and XYZ this time? What premium over the current market price does this offer represent? c. At current market prices, both offers are offers to purchase XYZ for $ 3.42 million. Does that mean that your answers to parts (a) and (b) must be identical? Explain.
Answers
Answer:
(a) New Price of ABC = $17.24. New Price of XYZ = 3.42. Premium = 28.57%
(b) New Price of ABC = $17.36. New Price of XYZ = 3.30. Premium = 24.06%
(c) No since the prices would change relative to the premium offered. In part (b), the premium depends on the new price of ABC. Refer to the explanation below for an in-depth answer
Explanation:
(a) ABC is making a cash offer of $ 3.42 million to completely buyout XYZ Corporation i.e to acquire 100% shareholding which is 1 million shares. To find out the new price of XYZ, all you need to do is divide the amount offered by the number of shares. This is 3.42 Mn/1 Mn. Therefore, ABC is essentially offering $ 3.42 per share and so the new price of XYZ would change to reflect this.
Currently the price of XYZ is $2.66 while the price offered is $3.42. This means that ABC is paying a premium of 28.57% to buy the company (New Price/Old Price - 1). The price of ABC in this case will decrease to reflect this expenditure. The formula to calculate the new price of ABC is simple; Old price of ABC share - (Premium on XYZ share x Old Price of XYZ share) = $18 - (0.2857 x 2.66) = $17.24. Hence, the new price of ABC would be $17.24.
(b) Now, in this scenario, ABC is making a stock offer so to calculate the value of ABC's stock, we will need to look at the combined value of both these entities keeping in mind that the exchange ratio is 0.19. So, the formula is combined value of ABC= (Old Price of ABC + Old Price of XYZ)/ (1+Exchange ratio). Therefore, combined value = (18+2.66)/1.19 which is $17.36. New price of ABC is $17.36.
Similar to part (a), the new price of XYZ would be equal to the amount received by the shareholders per share. This would be calculated as the new price of ABC (since stock offer is announced instead of cash) x exchange ratio = 17.36 x 0.19 = $3.30. The premium in this case would be (using the formula mentioned in part a), 3.30/2.66 - 1 = 24.06%
(c) No, the answers to each part may not be identical. The market will react differently to the stock offer relative to the cash offer. In the stock offer, the market knows that ABC is paying a premium due to which the price of ABC will go down while the price of XYZ will go up. This will lower the amount of premium being offered (as demonstrated in each part above). The premium offered in part b will be lower because the premium depends on the new (lower) price of ABC. This is not the case with the cash offer since in the cash offer, the premium offered does not depend on the new price of XYZ.
a. The price of ABC is likely to decrease and the price of XYZ is likely to increase. The premium over the current market price of the cash offer can be calculated. b. The price of ABC is likely to decrease and the price of XYZ is likely to increase. The premium over the current market price of the stock offer can be calculated. c. The answers to parts (a) and (b) do not have to be identical because the method of payment and perceived value can impact market reaction.
Explanation:a. When ABC makes a cash offer to purchase XYZ for $3.42 million, the price of the ABC stock is likely to decrease because the company is spending a substantial amount of money to acquire XYZ. On the other hand, the price of the XYZ stock is likely to increase as investors anticipate the takeover and the potential gain from the transaction. The premium over the current market price of the offer can be calculated by subtracting the market price of XYZ before the offer from the offer price and dividing it by the market price of XYZ before the offer. In this case, the premium would be ($3.42 million - ($2.66 × 1 million)) / ($2.66 × 1 million).
b. When ABC makes a stock offer with an exchange ratio of 0.19, the price of ABC is likely to decrease as investors perceive the stock offer to be less valuable than cash. The price of XYZ is likely to increase as investors anticipate the takeover and the potential gain from the transaction. The premium over the current market price of the offer can be calculated by subtracting the market price of XYZ before the offer from the offer price and dividing it by the market price of XYZ before the offer. In this case, the premium would be (0.19 × $18 × 1 million - ($2.66 × 1 million)) / ($2.66 × 1 million).
c. The answers to parts (a) and (b) do not have to be identical because the method of payment and the perceived value of cash versus stock can impact the market reaction. In the cash offer, the stock price of ABC is likely to decrease due to the spending of a substantial amount of money, while in the stock offer, the stock price of ABC is likely to decrease due to the perceived lower value of stock as a method of payment.
Identify the internal control principle that is applicable to each procedure.The following reconciling items are applicable to the bank reconciliation for Ellington Company: (1) outstanding checks, (2) bank debit memorandum for service charge, (3) bank credit memorandum for collecting a note for the depositor, and (4) deposits in transit.
Answers
Answer:
B. Items (2) and (3) above will require adjustment on the books of the depositor.
Explanation:
The reconciling items per the books, items (2), and (3) above will require adjustment on the books of the depositor. The other reconciling items (1) and (4) do not require adjustment because they have already been recorded on the depositor's books.
The principles of internal control are the concepts that require management to set procedures in place to ensure company assets are safeguarded. In other words, these are the principles management uses to establish the ways to protect company assets.
Suppose an institution has purchased a $250,000 mortgage loan from the loan originator and wishes to create a mortgage pass-through security. In doing so, this institution will generate revenue by charging a servicing fee of 35 basis points. If the monthly mortgage payment on the loan is $1,250, how much income is passed through to the investor in the mortgage pass through each month (rounded to the nearest dollar)
Answers
Answer: $1,177
Explanation:
First we calculate the Monthly service fee by the formula,
Monthly servicing fee = Monthly servicing fee rate * Outstanding loan balance,
The service fee is 35 basis points which translates to 0.35 % and is an annual figure so we will adjust it to a monthly one,
= (0.35%/12) * $250,000
= $72.92
To calculate amount that passes through to the mortgage pass we do,
Mortgage pass-through amount = Monthly mortgage payment - Monthly servicing fee
= $1,250 - $72.92
= $1,177.08,
= $1,177
$1,177 is the income that will pass through to the investor in the mortgage pass through each month
Setrakian Industries needs to raise $94.8 million to fund a new project. The company will sell bonds that have a coupon rate of 5.98 percent paid semiannually and that mature in 15 years. The bonds will be sold at an initial YTM of 6.76 percent and have a par value of $2,000. How many bonds must be sold to raise the necessary funds?
Answers
Answer:
Units of bonds to be sold = 51, 122.75 units
Explanation:
The price of a bond is the present value (PV) of the future cash inflows expected from the bond discounted using the yield to maturity.
The price of the bond can be calculated as follows:
Step 1
PV of interest payment
Interest payment =( 5.98%× $2000)/2
= $59.8
Semi annual yield = 6.76/2 =3.38 %
PV of interest payment
= 59.8× (1-(1.0338)^(-15×2))/0.0338)
=$ 1116.5682
Step 2
PV of redemption value
= 2,000 × (1+0.0338)^(-15×2)
= 737.7923719
Step 3
Price of bond
=$ 1116.568 + 737.7923
=1854.360
Step 4
unit of bonds to be sold
= Amount to be raised /price of bond
=$94.8 million/1854.360
= 51, 122.75 units
Choose one item from the following list that you understand well enough to evaluate. Develop several criteria of evaluation that you could defend to distinguish excellence from meritocracy in the US area. Then choose an item you don’t know much about and explain the research you might perform to discover reasonable criteria of evaluation for it. Smart phones, NFL quarterbacks, fashion designers, Navajo rugs, UN secretary generals, contemporary painters, hip-hop bands, organic vegetables, athletic shoes, historic U.S. battlegrounds, breeds of dogs, former British prime ministers.
Answers
Answer:
Explanation:
Choose one item from the following list that you understand well enough to evaluate.
Develop several criteria of evaluation that you could defend to distinguish excellence from meritocracy in the US area.
First we need to understand what meritocracy and excellence are after which we can choose any topic from the list and evaluate it using these.
What is meritocracy?
Meritocracy is Governance by elites who deserve to wield power because they possess merit (defined as 'intelligence plus effort') instead of by those who merely possess wealth or belong to privileged classes.
Such a system, in theory, forms the basis of an 'equal opportunity' society. But, in practice, unrestricted meritocracy may result in a society without rules and concentrate power in only a few hands. The term was coined by the UK sociologist Michael Young in 1958 book, 'The Rise of Meritocracy.'
Hence we can infer that meritocracy is governance by elites who possess intelligence along with efforts (hard work).
Now we thing of what is governance by excellence?
Excellence means that you're indispensable. At least right now, in this moment, there's no one else I would choose but you. You, the excellent one, are so surprising, so delightful, so over-the-top.
The Governance Excellence model identifies 3 inputs that boards and senior management should strive to align to maximise performance and generate sustainable results for all stakeholders.
These inputs are Value, Capability and Support and represent the following areas of the business and organization:
Value
Capability
Support
So in order to understand the scenario with the case subjects we choose from the list the Smart phones for understanding the market share and customer preference for smartphones and is it due to excellence or meritocracy.
First we prepare the list of popular smartphones that are sold in US:
Rank
Brand
Units shipment (millions)
Market Share (%)
1
Samsung
82.8
22
2
Apple
46.7
12.4
3
Huawei
39.1
10.4
4
Oppo
30.0
8
5
Xiaomi
28
7.4
Here it can be inferred from the point of view of meritocracy as:
Meritocracy of Samsung as a brand in US market:
Launches unique products which are first in market
Advance and reliable technology
Pioneer in smartphone design and adaptability
Meritocracy of Apple as a Brand:
Apple is more inn innovative and refined than Samsung
Uses its own operating system and hardware
Unique design and brand quotient
Meritocracy of Huawei as a brand in US:
It plays in the niche market of having advance software and hardware compositions.
The built quality is not so good and smartphones manufacturing is not the prime business of the enterprise.
Meritocracy of Xiaomi as a brand in the US market:
Routine design and adapts prevalent concepts that are ongoing in the market.
Uses not so premium hardware and software.
Built quality is not so good and misses refinement.
Hence the meritocracy of these market players in the smartphone market in the US justify their market share they hold.
On the other hand when we analyze the same data with excellence as our perspective we find:
Excellence of Samsung as a brand:
Wide spread marketing and advertisement strategy.
Customer feedback and trial runs
Participation in international platforms for promotion of brand visibility.
Enduring hardware.
Wide spectrum of models available.
Efficient supply chain.
Excellence of Apple:
Manufactures only premium products with custom hardware.
Appeals to a certain range of customers.
Costly and efficient.
Research and development.
Limited models available.
Costly supply chain.
Whereas excellence of rest three brands can be assessed jointly as:
Efficient supply chain.
Good advertising and marketing.
Then choose an item you don’t know much about and explain the research you might perform to discover reasonable criteria of evaluation for it.
Hip-hop bands is an area that I don’t know much about and would like to do an extensive market research to understand the effects of excellence and meritocracy as effective in their market success.
List: Smart phones, NFL quarterbacks, fashion designers, Navajo rugs, UN secretary generals, contemporary painters, hip-hop bands, organic vegetables, athletic shoes, historic U.S. battlegrounds, breeds of dogs, former British prime ministers
Defining criteria is critical for evaluate and compare papers, to assess subjects like NFL quarterbacks or Navajo rugs. Criteria can combine universal standards and personal taste, and should be well-justified, especially when controversial.
In an evaluate and compare paper, defining criteria is essential for judging the merits and weaknesses of different subjects. To evaluate excellence in NFL quarterbacks, for example, one could assess their accuracy, leadership, agility, and records. Conversely, to understand Navajo rugs, which one may be less familiar with, research could include studying patterns, cultural significance, weaving techniques, and material quality, perhaps by consulting with experts or reading dedicated literature on the subject.
Criteria for evaluation can include universally accepted standards as well as personal preferences. These criteria provide the backbone of our judgments and ensure that our evaluations are well-rounded and can be defended. In any evaluation argument, clarifying and justifying the chosen criteria is crucial, particularly if they're subject to controversy or debate, which can be supported by citing authoritative sources or aligning them with common values.
The controller of Sunland Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Month Total Maintenance Costs Total Machine Hours January $2,590 330 February 2,890 380 March 3,490 530 April 4,390 660 May 3,090 530 June 5,470 730 (a1) Determine the variable cost components using the high-low method. (Round answer to 2 decimal places e.g. 2.25.) Variable cost per machine hour $
Answers
Answer:
Variable cost per unit= $7.2 per unit
Explanation:
Giving the following information:
Month Total Maintenance Costs Total Machine Hours
January: $2,590 - 330
February: $2,890 - 380
March: $3,490 - 530
April: $4,390 - 660
May: $3,090 - 530
June: $5,470 - 730
To calculate the variable cost under the high-low method, we need to use the following formula:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (5,470 - 2,590) / (730 - 330)
Variable cost per unit= $7.2 per unit
Assume that "cost of processing" includes all labor and materials, including the owner's wages. Assume further that Isabel's family signed a long-term contract (20 years) with a service company to keep the machines in good repair for a fixed fee of $3 comma 650 per year, or $10 per day. Derive the firm's total cost curve. 1.) Using the multipoint curved line drawing tool, draw the total cost curve. Properly label your curve.
Answers
Answer:
Check the explanation
Explanation:
In the field of economics, to draw a graph that will show a cost curve of any item will involve the costs of production as a function of the overall quantity that was produced. When there’s a free market economy, productively effective and efficient firms optimize their production procedures by reducing their cost consistent with each potential level of production, thereby resulting into a cost curve.
Kindly check the attached images below to see the full explanation and the graphical presentation of the total cost curve.
Cascade, Ltd., a merchandising firm, is preparing its cash budget for March. The following information is available concerning its inventories: Inventories at beginning of March $ 368,750 Estimated purchases for March 1,444,000 Estimated cost of goods sold for March 1,478,000 Estimated payments in March for purchases in February 363,000 Estimated payments in March for purchases prior to February 67,000 Estimated payments in March for purchases in March 70 % Required: What are the estimated cash disbursements in March?
Answers
Answer:
$1,440,800
Explanation:
The estimated cash disbursement for march is made up of estimated payment for February purchase to be settled in march, Estimated payments in March for purchases prior to February and 70% purchases in March.
The estimated cash disbursements in March
= $363,000 + $67,000 + (70% * $1,444,000)
= $1,440,800
Anne-Marie and Yancy calculate their current living expenditures to be ?$64,000 a year. During retirement they plan to take one cruise a year that will cost ?$5,000 in? today's dollars.? Anne-Marie estimated that their average tax rate in retirement would be 11 percent. Yancy estimated their Social Security income to be about ?$18,236 and their retirement benefits are approximately ?$28,044. Use this information to answer the following? questions: a. How much? income, in? today's dollars, will? Anne-Marie and Yancy need in retirement assuming 70 percent replacement and an additional ?$5,000 for the? cruise? b. Calculate their projected annual income shortfall in? today's dollars. c.? Determine, in? dollars, the future value of the shortfall 29 years from? now, assuming an inflation rate of 3 percent. d. Assuming a nominal rate of return of 8 percent and 22 years in?
Answers
Answer:
a. $49,800.00
b. $9,675.06
c. $8,545.65
Explanation:
a. Net need = (current living expenses x replacement ratio) + additional annual needs
Net need = ($64,000 x 0.70) + $5,000 = $ 44,800 + $5,000
Net need = $49,800.00
Gross need = net need / (1 – average tax rate)= $49,800.00 / (1 – 0.11)= $49,800.00/ 0.89= $55,955.06
b.
Present value shortfall = projected income need – projected income available
Present value short fall =$55,955.06 – ( $18,236 + $28,044 )
= $9,675.06
c
Calculator solutionPV-$1,977.27PMT$0I/YR5%N30CPT FV$8,545.65
Final answer:
a. Anne-Marie and Yancy will need $49,800 in today's dollars for retirement, taking into account a 70% replacement rate and an additional $5,000 for an annual cruise. b. Their projected annual income shortfall is $3,520. c. The future value of the shortfall 29 years from now, with a 3% inflation rate, is $9,314.4. d. Assuming an 8% nominal rate of return and 22 years in retirement, the future value of their accumulated retirement savings would be $27,564.36.
Explanation:
a. To calculate the income needed in today's dollars for retirement, we can use the concept of replacement rate. The replacement rate is the percentage of pre-retirement income that is needed in retirement. In this case, Anne-Marie and Yancy need 70% replacement rate. If their current living expenditures are $64,000 a year, then their needed income in retirement would be 70% of $64,000, which is $44,800.
Additionally, they want an additional $5,000 a year for the cruise. Therefore, their total income needed in retirement would be $44,800 + $5,000 = $49,800.
b. Calculating the projected annual income shortfall involves subtracting the expected retirement income from the needed income. The retirement income consists of Social Security income and retirement benefits, which is $18,236 + $28,044 = $46,280. The projected annual income shortfall would be $49,800 - $46,280 = $3,520.
c. To determine the future value of the shortfall 29 years from now, we can use the formula for compound interest. Assuming an inflation rate of 3%, the future value would be $3,520 multiplied by (1 + 0.03)^29 = $3,520 multiplied by 2.645 = $9,314.4.
d. Assuming a nominal rate of return of 8% and 22 years in retirement, we can calculate the future value of the accumulated retirement savings. Using the formula for compound interest, the future value would be ($49,800 - $46,280) multiplied by (1 + 0.08)^22 = $3,520 multiplied by 7.823 = $27,564.36.
"A company currently using an inspection process in its material receiving department is trying to install an overall cost reduction program. One possible reduction is the elimination of one inspection position. This position tests items for which the probability of a material defect averages 0.04. By inspecting all items, the inspector is able to remove all defects. The inspector can inspect 53 units per hour. The hourly rate including fringe benefits for this position is $10. If the inspection position is eliminated, defects will go into product assembly and will have to be replaced later at a cost of $11 each when they are detected in final product testing. Assume that the line will operate at the same rate (i.e., the inspection rate) if the inspection operation was eliminated. a-1. If the inspector position is eliminated, what will the hourly cost of defects be? (Round your answer to 2 decimal places.)"
Answers
Answer:
$23.32
Explanation:
We have the given information as below:
Defective content average = 0.04
Number of units inspected per hour = 53
Hourly rate = $10
Cost involved in final product testing = $11
Now to determine if the inspector position is eliminated, we will need to calculate the number of defective products:
defective products = Defective content average × Number of units inspected per hour
defective products = 0.04 × 53 = 2.12
the hourly cost of defects = defective products × Cost involved in final product testing
The hourly cost of defects = 2.12 × $11 = $23.32
These selected condensed data are taken from a recent balance sheet of Bob Evans Farms (in millions of dollars).
Cash $ 29.3
Accounts receivable 20.5
Inventory 28.7
Other current assets
24.0
Total current assets $102.5
Total current liabilities $201.2
Compute working capital and the current ratio. (If answer is negative enter it with a negative sign preceding the number e.g. -15,000 or in parenthesis e.g. (15,000). Round Current Ratio to 2 decimal places, e.g. 0.78 : 1.)
Answers
Answer:
The working capital is -$98.7 while the current ratio is 0.51 : 1
Explanation:
The working capital is the amount of capital that is available for the day to day operations of the business. The working capital represents the liquidity situation of the business. The working capital is calculated as follows,
Working Capital = Current Assets - Current liabilities
Working Capital = 102.5 - 201.2 = - $98.7
The current ratio is a measure of the liquidity of a firm that measures its capacity to pay its short term obligations. The current ratio tells us the amount of current assets available for every 4! of current liability.
Current ratio = Current Assets / Current Liabilities
Current ratio = 102.5 / 201.2
Current ratio = 0.51 : 1
Final answer:
The working capital for Bob Evans Farms is calculated to be -$98.7 million, indicating more liabilities than assets in the short term. The current ratio is 0.51:1, showing that the company has 51 cents in assets for every dollar of liabilities, suggesting potential liquidity issues.
Explanation:
To calculate the working capital, we subtract total current liabilities from total current assets. Using the condensed data provided from the balance sheet of Bob Evans Farms, the working capital is calculated as follows:
Total current assets = $102.5 million
Total current liabilities = $201.2 million
Working Capital = Total current assets - Total current liabilities
Working Capital = $102.5 million - $201.2 million
Working Capital = -$98.7 million
The negative working capital means that the company has more short-term liabilities than short-term assets. To calculate the current ratio, divide the total current assets by the total current liabilities.
Current Ratio = Total current assets / Total current liabilities
Current Ratio = $102.5 million / $201.2 million
Current Ratio = 0.51:1
The current ratio, rounded to two decimal places, indicates liquidity and shows that for every dollar of liability, there is only $0.51 in assets, which could be indicative of potential liquidity problems.
The SML helps determine the level of risk aversion among investors. The higher the level of risk aversion, the the slope of the SML. Which kind of stock is most affected by changes in risk aversion? (In other words, which stocks see the biggest change in their required returns?)
Answers
Answer: High-beta stocks.
Explanation:
Higher beta stocks are judged to be more volatile than lower beta stock. Essentially, they see the highest change in required returns as a result of risk aversion.
A beta that is greater than 1 shoes that the asset is more volatile than the market which has a beta of 1. If a stock has a beta of 3 for instance. That means it is 200% more volatile than the market.
This is why they are more affected by risk aversion.
If you need any clarification do comment.
Laserspot is involved in producing and selling high-end golf equipment. The company has recently been involved in developing various types of laser guns to measure yardages on the golf course. One small laser gun, called Little Laser, appears to have a very large potential market. Because of competition, Laserspot does not believe that it can charge more than $80 for Little Laser. At this price, Laserspot believes it can sell 100,000 of these laser guns. LittleLaser will require an investment of $7,500,000 to manufacture, and the company wants an ROI of 16%. Determine the target cost for one LittleLaser.
Answers
Answer: $68
Explanation:
We will answer this question in steps yeah.
Okay.
LittleLaser requires a return on investment of 16% right.
The Investment is $7.5 million.
Then let's find out what 16% of that is.
= 16% * $7.5 million
= $1,200,000
That means the company requires an ROI of $1.2 million.
They believe they can sell 100,000 units so let's see the ROI per unit.
= $1,200,000/100,000
= $12 per unit.
Now, they believe they can sell at no more than $80 but require a $12 profit/ ROI.
The Target cost should include the profit but not exceed $80. That would mean,
= 80 - 12
= $68
The target cost for one LittleLaser given the target ROI and sales price is $68
You purchased 1,350 shares of stock in Natural Chicken Wings, Inc., at a price of $43.58 per share. Since you purchased the stock, you have received dividends of $1.09 per share. Today, you sold your stock at a price of $47.76 per share. What was your total percentage return on this investment
Answers
Answer:
12.09%
Explanation:
The computation of the total percentage return on this investment is shown below:
= {(Sale price of the stock - purchase price of stock + dividend received per share) ÷ purchase price of stock) × 100
= {($47.76 - $43.58 + $1.09 ) ÷ $43.58} × 100
= ($5.27 ÷ $43.58 ) × 100
= 12.09%
We simply applied the above formula so that the total percentage return on this investment could come
Wolverine World Wide, Inc., manufactures military, work, sport, and casual footwear and leather accessories under a variety of brand names, such as Hush Puppies, Wolverine, Merrell, Stride Rite, and Bates, to a global market. The following transactions occurred during a recent year. Dollars are in thousands.
A. Issued common stock to investors for $14,084 cash (example).
B. Purchased $872,418 of additional inventory on account.
C. Borrowed $11,700.
D. Sold $1,346,068 of products to customers on account; cost of the products sold was $750,547.
E. Paid cash dividends of $21,258.
F. Purchased for cash $25,726 in additional property, plant, and equipment.
G. Incurred $345,584 in selling expenses, paying three-fourths in cash and owing the rest on account.
H. Earned $1,772 interest on investments, receiving 90 percent in cash.
I. Incurred $2,990 in interest expense to be paid at the beginning of next year.
Required:
For each of the transactions, complete the tabulation, indicating the effect (positive value for increase, negative value for decrease, and leave blank if no effect) of each transaction. (Remember that A = L + SE, R – E = NI, and NI affects SE through Retained Earnings). The first transaction is provided as an example.("Enter the revenue side and the cost of goods sold side of the transaction on separate lines in the table. Do not net the effects on Stockholders' Equity or Net Income.)
Answers
Answer:
A. Issued common stock to investors for $14,084 cash (example).
increased ASSETS (cash) and SE by $14,084 (common stock)B. Purchased $872,418 of additional inventory on account.
increased ASSETS (inventory) and LIABILITIES by $872,138 (accounts payable)C. Borrowed $11,700.
increased ASSETS (cash) and LIABILITIES by $11,700 (notes payable)D. Sold $1,346,068 of products to customers on account; cost of the products sold was $750,547.
increased REVENUE by $1,346,068 and COGS by $750,547increased ASSETS (accounts receivable) by $1,346,068 and decreased inventory by $750,547, net increase of assets is $595,521. Increased EQUITY by increasing retained earnings.E. Paid cash dividends of $21,258.
decreased ASSETS and EQUITY (retained earnings) by $21,258F. Purchased for cash $25,726 in additional property, plant, and equipment.
increased ASSETS (P, P & E) but also decreased ASSETS (cash) by the same amount, so no change at all.G. Incurred $345,584 in selling expenses, paying three-fourths in cash and owing the rest on account.
increased COGS by $345,584reduces ASSETS (cash) by $259,188, increases LIABILITIES (accounts payable) by $86,396, reduces EQUITYH. Earned $1,772 interest on investments, receiving 90 percent in cash.
increases ASSETS by $1,772 (cash $1,594.80 + investments $177.20) and increases EQUITY by $1,772increases REVENUE by $1,772I. Incurred $2,990 in interest expense to be paid at the beginning of next year.
increases COGS by $2,990increases LIABILITIES by $2,990 and reduces EQUITY by $2,990This question requires an understanding of business transactions related to assets, liabilities and stockholder's equity, such as issuing common stock, purchasing inventory, borrowing money, selling products, paying dividends, purchasing property, incurring selling expenses, earning interest, and incurring interest expenses. By analyzing each transaction, we can determine how it impacts the company's financial position.
Explanation:The question is basically asking for an analysis of Wolverine World Wide, Inc.'s financial transactions for a year. Let's go through these transactions one by one:
A: The company issued common stock and received $14,084 in cash. This results in an increase in Assets (Cash) and Stockholder's Equity.
B: The company purchased additional inventory amounting to $872,418 on account. This increases Assets (Inventory) and Liabilities.
C: The company borrowed $11,700. This raises Assets (Cash) and Liabilities.
D: The company sold products worth $1,346,068 to customers. This raises Assets (Accounts Receivable) and Stockholder's Equity (Revenue). The cost of the products sold was $750,547 which causes a decrease in Inventory and an increase in Expenses.
E: The company paid cash dividends of $21,258. This reduces Assets (Cash) and reduces Stockholder's Equity (Dividends).
F: The company purchased additional property, plant, and equipment for $25,726, paid in cash. This increases Assets (Property, Plant and Equipment) and decreases Assets (Cash).
G: Selling expenses were $345,584, with three-fourths being paid in cash. This raises Expenses and lowers Assets (Cash). The balance is a liability (Accounts Payable).
H: The company earned $1,772 in interest on its investments, with 90% received in cash. This raises both Assets (Cash) and Stockholder's Equity (Revenue).
I: The company incurred $2,990 in interest expense. This raises Expenses and Liabilities.
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Conner Corporation's December 31 post-closing trial balance contains the following normal account balances: Cash $10,000 Accounts payable 13,000 Building 260,000 Long-term notes payable 940,000 Common stock 420,000 Retained earnings 342,000 Accumulated depreciation-Equipment 130,000 Land 1,129,000 Accounts receivable 21,000 Accumulated depreciation-Building 70,000 Interest payable 24,000 Patent (net of amortization) 60,000 Notes payable (short term) 80,000 Inventory 137,000 Equipment 266,000 Allowance for doubtful accounts 1,000 Accumulated depreciation-Leasehold improvements 22,000 Leasehold improvements 140,000 Trademark (net of amortization) 19,000
Required Prepare a December 31 classified balance sheet for Dooley Company.
Answers
Answer:
Total Assets 1819,000
Total Liabilities and Owner's Equity: 1819,000
Explanation:
The Classified Balance sheet has the following format.
Conner Corporation
Classified Balance Sheet
December 31
Current Assets
Cash $10,000
Accounts receivable 21,000
Less Allowance for doubtful accounts 1,000
Net Accounts Receivable 20,000
Inventory 137,000
Total Current Assets 167,000
Property Plant Equipment
Land 1,129,000
Building 260,000
Less Accumulated depreciation-Building 70,000
Building 190,000
Equipment 266,000
Less Accumulated depreciation-Equipment 130,000
Equipment 136,000
Leasehold improvements 140,000
Less Accumulated depreciation-Leasehold improvements 22,000
Leasehold improvements 118,000
Total Fixed Assets 1573,000
Intangible Assets
Patent (net of amortization) 60,000
Trademark (net of amortization) 19,000
Total Intangible Assets: 79,000
Total Assets 1819,000
Current Liabilities
Accounts payable 13,000
Interest payable 24,000
Notes payable (short term) 80,000
Total current Assets 117,000
Long term Liabilities
Long-term notes payable 940,000
Total Long term Liabilities 940,00
Owner's Equity
Common stock 420,000
Retained earnings 342,000
Total Common stock and Owner's Equity 762,000
Total Liabilities and Owner's Equity: 1819,000
Suppose the risk-free rate is 3.5%; on average, an AAA-rated corporate bond carries a credit spread of 0.3%, an A-rated corporate bond carries a credit spread of 1.1%, and a B-rated corporate bond carries a credit spread of 3.9%. Company XYZ’s outstanding debt is rated BBB by rating agencies. What would be the cost of debt for XYZ based on prevailing market rates?
Answers
Answer:
The cost of BBB rated bond will be more than 4.6% and lesser than 7.4%.
Explanation:
In order to calculate the cost of debt for XYZ based on prevailing market rates, we need to calculate first the following steps:
First, we have to calculate the cost of A rated bond using the following formula:
cost of A rated bond= Risk free rate+credit spread on A rated bond
=3.5%+1.1%
=4.6%
Next, we have to calculate the cost of A rated bond using the following formula:
cost of B rated bond= Risk free rate+credit spread on B rated bond
=3.5%+3.9%
=7.4%
Therefore, after having calculated the cost of A rated bond and the cost of B rated bond, we can conclude that the cost of BBB rated bond will be more than 4.6% and lesser than 7.4%.
Answer:
The multiple choices are:
A: 6.5%
B: 7.4%
C: 3.8%
D: 4.6%
The correct option is A,6.5%
Explanation:
The hierarchy of bonds in terms of credit rating quality is given below from the highest rating to the lowest rating below:
AAA
AA
A
BBB
BB
B
CCC
CC
C
D(default)
This above is based on Standard & Poor's and Fitch rating scales.
According to the question AAA bond cost can be computed thus:
AAA cost of debt=risk free rate+credit spread
risk free rate is 3.5%
credit spread on AAA is 0.3%
AAA cost of debt=3.5%+0.3%
=3.8%
A cost of debt =3.5%+1.1%
=4.6%
B cost of debt=3.5+3.9%
=7.4%
A BBB lies in between A and B bonds,in other words,BBB would have higher cost of debt compared to A bond but a lower cost of debt when compared with a B bond
Consequently,option B is wrong because that is the cost of B rated bond as well as option D as that is cost of A rated bond,since the correct is lesser than 7.4% but higher than 4.6%,option A 6.5% is perfect choice
XYZ has a current market price of $30.00 per share with earnings last year of $2.50 per share, a beta of 1.1 and a dividend of $1.25. Using the price/earnings multiplier, what price do you expect the stock to trade at if earnings per share next year are $3.00
Answers
Answer:
The expected price for the stock is $36
Explanation:
The price earning multiple is a measure that provides the information regarding how much are the investors willing to pay for each $1 of earnings per share. The formula for price earnings multiple is,
P/E = Price per share / Earnings per share
Based on the information, the P/E multiple for XYZ is,
P/E = 30 / 2.5 = 12
Using this price / earnings multiplier, we calculate the price at which the stock will trade as,
12 = Price per share / 3
12 * 3 = Price per share
Price per share = $36
Again, please consider the closed economy of Economia, which has the following information:
$6500 consumption
$7500 government spending (NOT including transfer payments)
$10,000 overall taxes
$2000 transfer payments
$18,000 total income (output)
Carefully following all instructions, calculate (total) national savings for this economy.
Answers
Answer:
$4,000
Explanation:
The computation of the total national saving is shown below:
As we know that
National savings = Total income - consumption - government spending
= $18,000 - $6,500 - $7,500
= $4,000
By deducting the consumption and the government spending from the total income we can get the national savings and the same is applied
Categories of expendituresGilberto and Juanita Ivanov live in Swarthmore, PA. Juanita's father, Lorenzo, lives in SwedenFor each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption, investment, government purchases, exports, or imports.a. The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore.b. Lorenzo in Sweden orders a bottle of Vermont maple syrup from the producer's website.c. Gilberto's employer upgrades all of its computer systems using U.S.-made products.d. Juanita gets a new video camera made in the United States.e. Gilberto buys a sweater made in Guatemala
Answers
Answer:
A. The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore.
The repaving of the highway is part of the U.S. GDP, and the category is government pruchases, or G, because it is the state that is spending the money on repaving the road.
B. Lorenzo in Sweden orders a bottle of Vermont maple syrup from the producer's website.
The bottle of maple syrup is part of the U.S. GDP, in the category of net exports, or XN. Exports are included in GDP because they correspond to goods that were produced domestically, and later sold abroad.
C. Gilberto's employer upgrades all of its computer systems using U.S.-made products.
The U.S. made products to upgrade the computer are part of the U.S. GDP, in the category of consumption, or C. The products were made in the United States, and were purchased by a citizen, not by a government agency, for this reason, the transaction is classified as private consumption.
D. Juanita gets a new video camera made in the United States.
The camera is part of the U.S. GDP, in the category of consumption. This example is the same as above: the camera was made in the United States, and purchased by an American citizen, who lives in the United States.
E. Gilberto buys a sweater made in Guatemala.
The sweater is not part of U.S. GDP because it was not made domestically, it is an import, and imports are not part of GDP.
Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activityminuscost drivers Account inquiry $750,000 15,000 hours Account billing $250,000 5,000,000 lines Account verification accounts $173,250 70,000 accounts Correspondence letters $42,000 7,000 letters Total costs $1,215,250 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,000 hours 3,500 hours Account billing lines 900,000 lines 750,000 lines Account verification accounts 9,000 accounts 7,000 accounts Correspondence letters 1,200 letters 1,600 letters How much of the total costs will be assigned to Department B?
Answers
Answer:
$239,425
Explanation:
In activity based costing, cost is assigned to each department based on the activity cost contributed by the department to the company's cost pool.
Given
Activities Total Costs Activityminuscost drivers
Account inquiry $750,000 15,000 hours
Account billing $250,000 5,000,000 lines
Account verification accounts $173,250 70,000accounts
Correspondence letters $42,000 7,000 letters
Total costs $1,215,250
The above activities are used by Departments A and B as follows: Department A B
Account inquiry hours 2,000 hours 3,500 hours
Account billing lines 900,000 lines 750,000 lines
Account verification accounts 9,000 accounts 7,000 accounts Correspondence letters 1,200 letters 1,600 letters
total costs will be assigned to Department B
= 3500/15000 * $750,000 + 750000/5000000 * $250,000 + 7000/70000 * $173250 + 1600/7000 * $42,000
= $175,000 + $37,500 + $17,325 + $9,600
= $239,425
Final answer:
To determine the total costs assigned to Department B, the cost per activity is computed and multiplied by the respective activity usage for Department B, resulting in a total cost of $239,425.
Explanation:
To calculate how much of the total costs will be assigned to Department B using activity-based costing (ABC), we need to compute the cost per activity and then multiply it by the activity usage for Department B. The cost per activity for each cost pool is determined by dividing the total costs by the total activity drivers. Using the provided information:
Account inquiry cost per hour: $750,000 / 15,000 hours = $50 per hour
Account billing cost per line: $250,000 / 5,000,000 lines = $0.05 per line
Account verification cost per account: $173,250 / 70,000 accounts = $2.475 per account
Correspondence cost per letter: $42,000 / 7,000 letters = $6 per letter
Now, we can sum up the total costs for Department B:
Account inquiry costs for Department B: 3,500 hours imes $50 per hour = $175,000
Account billing costs for Department B: 750,000 lines imes $0.05 per line = $37,500
Account verification costs for Department B: 7,000 accounts imes $2.475 per account = $17,325
Correspondence costs for Department B: 1,600 letters imes $6 per letter = $9,600
The total cost assigned to Department B would be the sum of the above costs: $175,000 + $37,500 + $17,325 + $9,600 = $239,425.
In 2006, Evo Morales assumed the presidency in Bolivia, a South American country in which official commerce is done in Spanish. Morales was the first Bolivian president of indigenous descent. As president, he quickly instituted reforms that were designed to reduce discrimination against indigenous populations with the aim of eventually reducing inequality. Suppose discrimination before Morales took two forms–discrimination in education by not providing state funds to educate all children (and particularly not educating indigenous children in their native language or in Spanish), and discrimination in the job market by firms not willingly hiring indigenous workers.
(a) In terms of education, which policy would be better at combating discrimination and inequality:
(1) Providing state funds to educate all people in their native languages or (2) providing state funds for a public education system that requires all people to learn Spanish and a second, indigenous lanuguage? Why?
Answers
Answer:
Education is vital part of each ones' life. The more you get more you will acquire and more learning you get. In order to reduce the segregation or imbalance government need to spend its reserve so as to diminish disparity by giving appropriate education. Here so in order to reduce disparity the two languages are essential as government need to spend with the goal that one can study Spanish and one indigenous language so they can investigate themselves in various languages and investigate themselves that further discriminate among the two.
Millennium, Inc, a leading producer of environmentally friendly cleaning agents is looking for a site for a new production facility. The company is mainly focusing on sites that are close to major highways and rail hubs and are not too far from some major population centers. This suggests that an important location consideration for Millennium is:________
a. quality of life.
b. access to cheap land.
c. reducing time to market.
d. access to low cost labor.
Answers
Answer:
c. reducing time to market
Explanation:
While deciding upon production facility, an enterprise has to take into consideration the following factors:
Infrastructure: This refers to location of the site with regard to transportation, utilities and the associated costs. This means the location should be such that, the transportation of inputs and products should be convenient i.e well connected by roads and railways.Access to supply chain and customers: The production facility should be easily accessible to suppliers for transport of inputs.Availability of labor : Labor is a factor of production and thus the location of production facility should be near to place where the laborers are available.In the given case, the company deals in environmental friendly cleaning agents and is looking for the ideal site for it's production process. It is essential that the production facility be well connected with the market for inputs required for production.
Hence it is evident that the important location consideration for the company is reducing the time to market since rail hubs and highways connectivity reduces such time and transportation cost as well.
A college raises its annual tuition from $16,000 to $17,000, and its student enrollment falls from 4,600 to 4,300. The price elasticity of demand is about ________. Therefore, the demand for college is _______.
Answers
Answer:
The PED is about -1.043. Therefore, the demand for college is price elastic.
Explanation:
The price elasticity of demand measures the sensitivity and responsiveness of quantity demanded to changes in price levels.
A PED of 1 means that price elasticity of demand is unitary elastic and any % change in price will bring about the same % change in demand.
A PED of greater than 1 means that the price elasticity of demand is elastic and the percentage change in demand will be greater than percentage change in price.
A PED of less than 1 means that the price elasticity of demand is inelastic and the percentage change in demand will be greater than percentage change in price.
The PED is calculated using the following formula,
PED = % change in Quantity demanded / % change in Price
PED = [(4300 - 4600) / 4600 ] / [(17000 - 16000) / 16000 ]
PED = -1.043
The minus sign represents that the good is a normal good.
As the PED is greater than 1, the PED is elastic for the product.
For 2018, Winters Manufacturing uses machineminushours as the only overhead costminusallocation base. The direct cost rate is $ 2 per unit. The selling price of the product is $ 27. The estimated manufacturing overhead costs are $ 220 comma 000 and estimated 20 comma 000 machine hours. The actual manufacturing overhead costs are $ 225 comma 000 and actual machine hours are 25 comma 000. What is the profit margin earned if each unit requires two machineminushours?
Answers
Answer:
Profit margin = $3 per unit
Explanation:
The profit margin earned is the difference between selling price and the manufacturing cost
Manufacturing cost per unit = variable cost + fixed overhead cost per unit
overhead absorption rate = estimated overhead/estimated machine hours
=$220,000/20,000 machine hours
= $11 per hour
Manufacturing cost per unit = 2 + (11 × 2) = $24 per unit
Profit margin = 27 - 24
= $3 per unit