Answer:
Holmes should sell process the product further, because the profit if process further is higher than sell product now.
Explanation:
Net profit if sell product now is $37,500 ( = sales to another manufacturer $97,500 – already spent $60,000)
Sales as in process further/ Incremental Accounting
Sales: $695,125 (=$415 x 1,675 units)
Additional Process costs: $485,570 (=$290 x 1,675 units)
Net profit if process further = total sales $695,125 – already spent $60,000 – additional process cost $485,570 = $149,555, higher than profit $37,500 if sell now.
A portfolio has three stocks 300 shares of Yahoo (YHOO), 300Shares of General Motors (GM),
and 80 shares of Standard and Poorʹs Index Fund (SPY). If the price of YHOO is $20, the price of
GM is $30, and the price of SPY is $150, calculate the portfolio weight of YHOO and GM.
A) 11.1%, 20.0%
B) 16.7%, 28.3%
C) 22.2%, 33.3%
D) 22.2%, 43.3%
Answer:
c. 22.2%, 33.3%
Explanation:
Portfolio weight of each investment equals division of total value of each investment to total value of portfolio.
Portfolio weight of YHOO = (300×$20)/(300*$20 +300× $30 + 80×150)= 0.222= 22%Portfolio weight of GM = (300×$30)/(300*$20 +300× $30 + 80×150)= 0.333= 33%Drogo, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 12 years to maturity that is quoted at 110 percent of face value. The issue makes semiannual payments and has an embedded cost of 6 percent annually.
a. What is the company’s pretax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Pretax cost of debt %.
b. If the tax rate is 35 percent, what is the aftertax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Aftertax cost of debt %.
Answer:
1. 4.89%
2. 3.18%
Explanation:
In this question, we use the Rate formula which is shown in the spreadsheet.
The NPER represents the time period.
Given that,
Present value = $1,000 × 110% = $1,100
Assuming figure - Future value or Face value = $1,000
PMT = 1,000 × 6% ÷ 2 = $30
NPER = 12 years × 2 = 24 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this,
1. The pretax cost of debt is 4.89%
2. And, the after tax cost of debt would be
= Pretax cost of debt × ( 1 - tax rate)
= 4.89% × ( 1 - 0.35)
= 3.18%
For a variety of reasons, a bank sometimes will hold more reserves than is legally required. These reserves are known as excess reserves. How does holding excess reserves affect the money supply? Choose one:
(A) The money supply will increase as banks loan out more money.
(B) The money supply will increase as banks hold more vault cash.
(C) The money supply will increase as a bank’s vault cash falls.
(D) The money supply will decrease as banks loan out less money.
(E) There is no impact. The level of deposits and loans will be unaffected.
Option D , The money supply will decrease as banks loan out less money.
Explanation:
Banks are lending their deposits and increasing the economic supply of money. Nevertheless, if the bank holds more money and invests less then the supply of money into the economy rises.
Conversely, the ratio increased, boosted, lowered the cash multiplier, and decreased the supply of money. Expansionary fiscal policy is the decrease in the necessary reserve ratio; contraction monetary policy is the rise in the reserve ratio.
When attempting to control the monetary supply, the Fed has two challenges. Firstly, the Federal does not regulate the amount of cash families want to keep in their accounts as deposits. The second problem seems to be that the banks ' capital is not verified by the Fed. If the banks opt for more excess reserves and deposits, the sum of money will be lower.
Excess reserves held by a bank decrease the money supply because this money is not being loaned out to stimulate economic activity. Therefore, the money supply will decrease as banks loan out less money.
Explanation:When a bank holds excess reserves, it means it is retaining more money than it is legally obligated to. This action directly impacts the money supply in the economy. The correct answer is (D) The money supply will decrease as banks loan out less money.
Here's why: Banks loan out their reserves to borrowers, and these loans enter the economy as new money, which increases the money supply. When banks hold back some of their reserves, they reduce the amount of loans they can make, which in effect decreases the potential money supply. Instead of being used for loans that could stimulate economic activity, these funds are being held back, thus effectively reducing the total money supply.
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Misty McDougall is the manager of the Zachary Bagel Shop. The corporate office had budgeted her store to sell 2,900 ham sandwiches during the week beginning July 17. Each sandwich was expected to contain 7 ounces of ham. During the week of July 17, the store actually sold 3,400 sandwiches and used 24,400 ounces of ham. The standard cost of ham is $0.20 per ounce. The variance report from company headquarters showed an unfavorable materials usage variance of $820. Ms. McDougall thought the variance was too high, but she had no accounting background and did not know how to register a proper objection.
Answer:
The report is incorrect the direct materials quantity variance should be unvaforable for 120 dolllars not 820.
Explanation:
We are going to verify the materials quantity variance:
[tex](standard\:quantity-actual\:quantity) \times standard \: cost = DM \: quantity \: variance[/tex]
std quantity 23,800.00 (3,400 sandwiches x 7 ounces each)
actual quantity 24,400.00
std cost $0.20
[tex](23,800 - 24,400) \times 0.20 = DM \: quantity \: variance[/tex]
difference -600.00
We use 600 extra ounces thus, the variance will be negative
We multiply by each ounce standard cost to obtain the quantity variance:
quantity variance $(120.00)
The manager is concerned about the high materials usage variance in the bagel shop.
Explanation:The subject of this question is Business and the grade level is College.
The manager of the Zachary Bagel Shop is concerned about the unfavorable materials usage variance. In this case, the variance refers to the difference between the standard usage (based on the budget) and the actual usage of ham during the week. The $820 unfavorable variance indicates that more ham was used than budgeted.
To address the high variance, the manager can investigate the reasons for the increase in ham usage. It could be due to factors such as incorrect portion sizes, wastage, or theft. By identifying the source of the variance, the manager can take corrective actions to minimize future variances and align with the budgeted costs.
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Required information The Foundational 15 [LO9-1, LO9-2, LO9-4, LO9-5, LO9-6] [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct material: 5 pounds at $8.00 per pound $ 40.00 Direct labor: 2 hours at $14 per hour 28.00 Variable overhead: 2 hours at $5 per hour 10.00 Total standard variable cost per unit $ 78.00 The company also established the following cost formulas for its selling expenses: Fixed Cost per Month Variable Cost per Unit Sold Advertising $ 200,000 Sales salaries and commissions $ 100,000 $ 12.00 Shipping expenses $ 3.00 The planning budget for March was based on producing and selling 25,000 units. However, during March the company actually produced and sold 30,000 units and incurred the following costs: Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production. Direct-laborers worked 55,000 hours at a rate of $15.00 per hour. Total variable manufacturing overhead for the month was $280,500. Total advertising, sales salaries and commissions, and shipping expenses were $210,000, $455,000, and $115,000, respectively. Foundational 9-12 12. What amounts of advertising, sales salaries and commissions, and shipping expenses would be included in the company’s flexible budget for March?
Answer:
Consider the following calculations
Explanation:
The amounts of advertising, sales salaries and commissions, and shipping expenses would be included in the company’s flexible budget for March are calculated below.
Flexible budgetAdvertising = 200.000
Sales salaries and commissions [100.000 + (12.00 * 30.000 )] = 460.000
Shipping expenses [(3.00 * 30.000)]= 90.000
The flexible budget for March for Preble Company would account for $200,000 in advertising, $360,000 in sales salaries and commissions and $90,000 in shipping expenses.
Explanation:The flexible budget adjusts with the level of activity and in this case, it's based on the number of units being produced and sold.
In Preble Company, the advertising expense is fixed at $200,000, so in calculating the flexible budget for March, the advertising cost will still be $200,000.
The variable costs such as sales salaries, commissions and shipping expenses change with the level of activity. Since these costs are $12 per unit sold, the sales salaries and commissions for March will amount to $12 * 30,000 units = $360,000. The shipping expenses are $3 per unit sold, which will amount to $3 * 30,000 = $90,000.
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Hardware Suppliers reports net income of $157,000. Included in net income is a gain on the sale of land of $16,000. A comparison of this year’s and last year’s balance sheets reveals an increase in accounts receivable of $27,000, an increase in inventory of $16,000, and a decrease in accounts payable of $47,000.Required: Prepare the operating activities section of the statement of cash flows using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)
Final answer:
The operating activities section of the statement of cash flows using the indirect method begins with the net income of $157,000, deducts the non-cash gain on the sale of land of $16,000, and adjusts for increases in accounts receivable and inventory, and a decrease in accounts payable. The final total cash provided by operating activities is $51,000.
Explanation:
To prepare the operating activities section of the statement of cash flows using the indirect method, we start with the net income and adjust for non-cash items and changes in working capital.
Net income: $157,000
Adjustments for non-cash items:
- Gain on the sale of land: (-$16,000)
Adjustments for changes in working capital:
- Increase in accounts receivable: (-$27,000)
- Increase in inventory: (-$16,000)
- Decrease in accounts payable: (-$47,000)
When we adjust the net income, we remove the gain on the sale of land because it's a non-operating item. We also consider the changes in working capital. Increases in current assets and decreases in current liabilities are uses of cash, so they are subtracted from the net income.
Adjusted net income for operating activities is calculated as follows:
Start with net income: $157,000Subtract gain on the sale of land: $157,000 - $16,000 = $141,000Subtract increase in accounts receivable: $141,000 - $27,000 = $114,000Subtract increase in inventory: $114,000 - $16,000 = $98,000Subtract decrease in accounts payable: $98,000 - $47,000 = $51,000The total cash provided by operating activities is $51,000.
Decision Point: Pricing Your Writing Desk Fir-Niche's new product development team is developing an ornate writing desk. Before the prototype is produced, you have been asked to engage in target costing to recommend the target cost of materials per unit. This is part of an effort to make the writing desk of the best quality materials that the target market will be willing to pay, while still allowing Fir-Niche to make a profit. Conner emails you a report that contains the following information to help you make your decision
Fixed costs - 250 000$
Projected units sold in one year - 1000
Average price target market will pay - 550$
What cost of material per unit (variable cost) do you recommend for the ornate writing desk?
1. 100$/per unit
2. 200$/per unit
3. 300$/per unit
200$/unit cost of material per unit (variable cost) is recommended for the ornate writing desk.
How to calculate which cost of material per unit (variable cost) is recommended for the ornate writing desk?Given:
Fixed Cost = $25000
Units sold in 1 year = 1000
Average Price = $550
Total Revenue (TR) = Price x Quantity
$550 x 1000 = 550,000
Total Cost (TC) = Fixed Cost + Per unit Variable Cost (VC) x Quantity
= $250,000 + 1000 x VC
Profit = TR - TC
= 550,000 - (250,000 + 1000VC)
= 300,000 - 1000VC
Now,
When VC = $200Profit = 300,000 - 1000*(200) = 300,000 - 200,000 = 100,000When VC = $100profit = 300,000 - 1000*(100)= 300,000 - 100,000 = 200,000When VC = $300Profit = 300,000 - 1000*(300) = 300,000 - 300,000 = 0Now, $300 can not be the variable cost as it causes profit to be break-even leading to no profit or loss.
Therefore, 200$/unit (option 2) cost of material per unit (variable cost) is recommended for the ornate writing desk as at this choice there are more profits without compromising on the quality.
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Katzev Company manufactures a personal computer designed for use in schools and markets it under its own label. Katzev has the capacity to produce 40,000 units a year but is currently producing and selling only 32,000 units a year. The computer’s normal selling price is $750 per unit with no volume discounts. The unit-level costs of the computer’s production are $250 for direct materials, $225 for direct labor, and $62.50 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Katzev during the year are expected to be $2,000,000 and $500,000, respectively. Assume that Katzev receives a special order to produce and sell 6,000 computers at $562.50 each.
Should katzev accept or reject the special order?
Answer:
Accept the special order.
Explanation:
To accept a special order, the price of the special order should be lower than the making price.
If Katzev accepts the special order,
the revenue ($562.50 x 6,000 computers) = $3,375,000
Less: Avoidable costs (Unit-level costs)
Materials ($250 x 6,000) 1,500,000
Direct labor ($225 x 6,000) 1,350,000
Manufacturing costs 375,000
($62.5 x 6,000)
Total Avoidable costs $3,225,000
Profit if accepts the special order $ 150,000
As the company will receive profit, the company should accept the order.
Note: Fixed costs cannot be avoided irrespective of accepting order or making products. Therefore, total product- and facility-level costs are not deducted.
Considering the incremental cost and revenue, and the company's production capacity, it is beneficial for Katzev to accept the special order as it would result in additional profits.
Explanation:To determine whether Katzev Company should accept the special order, Katzev needs to consider the incremental cost and incremental revenue associated with accepting this order. The unit-level cost of a computer is $250 for direct materials, $225 for direct labor, and $62.50 for indirect unit-level manufacturing costs. So, the total unit-level cost is $537.50 per computer. Multiplying by 6,000 for the special order yields an incremental cost of $3,225,000.
On the revenue side, the special order price is $562.50, so multiplying by 6,000 computers equals $3,375,000. So, the incremental revenue is higher than the incremental cost, meaning the company would make a profit from accepting the special order. Also, it's noted that the company has the capacity to produce 40,000 units but is currently only producing 32,000 units. This means that the company has enough capacity to fill this special order without having to incur additional costs. Therefore, given these considerations, Katzev should accept the special order.
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The following information pertains to Travis Concrete: Sales revenue $ 1,500,000 Gross margin 600,000 Income 90,000 Invested capital 450,000 The company's imputed interest rate is 8%. The capital turnover is:
Answer:
The capital turnover is: 3.33
Explanation:
The capital turnover ratio is also referred to annual sales of a business to the total amount of its stockholders' equity. It indicates a company's effectiveness in using its capital to generate revenue.
The capital turnover ratio is calculated by the following formula:
The capital turnover = Net Annual Sales /Average amount of working capital
In where:
Average amount of working capital = Current assets - Current abilities
In Travis Concrete:
The capital turnover = Sales revenue/Invested capital = $1,500,000/$450,000 = 3.33
The capital turnover for Travis Concrete is 3.33, calculated by dividing the sales revenue by the invested capital.
Capital Turnover is calculated by dividing the sales revenue by the invested capital. In this case, it would be $1,500,000 / $450,000, resulting in a capital turnover of 3.33.
Bryant Company sells a wide range of inventories, which are initially purchased on account. Occasionally, a short-term note payable is used to obtain cash for current use. The following transactions were selected from those occurring during the year. a. On January 10, purchased merchandise on credit for $25,500. The company uses a perpetual inventory system. b. On March 1, borrowed $55,000 cash from City Bank and signed a promissory note with a face amount of $55,000, due at the end of six months, accruing interest at an annual rate of 6.50 percent, payable at maturity. Required: 1. For each of the transactions, indicate the accounts, amounts, and effects on the accounting equation. (Enter any decreases to account balances with a minus sign.) 2. What amount of cash is paid on the maturity date of the note? 3. Indicate the impact of each transaction (increase, decrease, and NE for no effect) on the debt-to-assets ratio. Assume Bryant Company had $450,000 in total liabilities and $650,000 in total assets, yielding a debt-to-assets ratio of 0.69, prior to each transaction. (Round your answer to 2 decimal places.)
Answer:
1. January 10:
Inventory account increases by $25,500
Account payable increases by $25,500;
Total asset will increase by $25,500 and total liabilities will increases by $25,500. Equity remains the same.
March 1:
Cash account increases by $55,000.
Promissory note payable increases $55,000
Total asset will increase by $55,000 and total liabilities will increases by $55,000. Equity remains the same.
2.
The amount of cash will be paid at maturity date (Sep 1) of the note is $56,787.5
3.
Jan 10: debt-to-assets ratio = 0.70, thus increase in Debt to asset ratio comparing to the ratio 0.69 at the beginning
March 1: debt-to-assets ratio = 0.72, thus increase in Debt to asset ratio comparing to the ratio 0.69 at the beginning
Explanation:
- Working note for 2: Repayment will include Face value + Interest rate expenses incurred = 55,000 + 55,000 * 6.5% *6/12 = $56,787.5
- Working note for 3:
Jan 10: Debt-to-asset ratio = (450,000 + 25,500) / (650,000 + 25,500) = 0.70
Mar 1: Debt-to-asset ratio =(450,000 + 55,000) / (650,000 + 55,000) = 0.72
According to above equation, the total debt-to-asset ratio of January 10 is 0.70 and in March 1 is 0.72.
What is the term debt-to-asset ratio about?
Debt-to-asset ratio provides the percentage of the total assets financed by liabilities, creditors, and debt. It is calculated by dividing the total liabilities by the total assets.
Solution:-
1. January 10:-
Inventory account increases by $25,500
Account payable increases by $25,500
Total asset will increase by $25,500 and total liabilities will increases by $25,500. Equity remains the same.
March 1:
Cash account increases by $55,000.
Promissory note payable increases $55,000
Total asset will increase by $55,000 and total liabilities will increases by $55,000. Equity remains the same.
2. The amount of cash will be paid at maturity date (Sep 1) of the note is $56,787.5
3. Jan 10:- debt-to-assets ratio = 0.70, thus increase in Debt to asset ratio comparing to the ratio 0.69 at the beginning
March 1:- debt-to-assets ratio = 0.72, thus increase in Debt to asset ratio comparing to the ratio 0.69 at the beginning
Working note for 2:- Repayment will include Face value + Interest rate expenses incurred = 55,000 + 55,000 * 6.5% *6/12 = $56,787.5
Working note for 3:-
Jan 10:- Debt-to-asset ratio = (450,000 + 25,500) / (650,000 + 25,500) = 0.70
Mar 1:- Debt-to-asset ratio =(450,000 + 55,000) / (650,000 + 55,000) = 0.72
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Harrison Forklift's pension expense includes a service cost of $17 million. Harrison began the year with a pension liability of $42 million (underfunded pension plan). 1. Interest cost, $13; expected return on assets, $11; amortization of net loss, $3. 2. Interest cost, $13; expected return on assets, $10; amortization of net gain, $3. 3. Interest cost, $13; expected return on assets, $10; amortization of net loss, $3; amortization of prior service cost, $4 million. Required: Prepare the appropriate general journal entries to record Harrison’s pension expense in each of the following independent situations regarding the other components of pension expense ($ in millions): (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
Answer:
Journal Entries:
Explanation:
Event 1 Pension expense A/C Dr. $22
Plan assets A/C Dr. $11
To PBO A/C $30
To Amortization of net loss-OCI A/C $3
Event 2 Pension expense A/C Dr.$17
Plan assets A/C Dr. $ 10
Amortization of net gain- OCI A/C Dr. $3
To PBO A/C $30
Event 3 Pension expense A/C Dr.$27
Plan assets A/C Dr. $10
To PBO A/C $30
To Amortization of net loss-OCI A/C $3
To Amortization of prior service cost-OCI A/C $4
1. PBO ($17 service cost + $13 interest cost) = 30
2. PBO ($17 service cost + $13 interest cost) = 30
3. PBO ($17 service cost + $13 interest cost) = 30
The amortization amounts are reported as other comprehensive income in the statement of comprehensive income.
Final answer:
The question involves creating journal entries to record pension expenses for Harrison Forklift under different conditions involving service cost, interest cost, expected return on assets, and amortizations. Each scenario is addressed with a corresponding journal entry that reflects the specific components of the pension expense for that situation.
Explanation:
The student's question relates to the recording of pension expenses for Harrison Forklift in various scenarios. Each scenario involves varying amounts of interest cost, expected return on assets, amortization of net loss or gain, and possibly amortization of prior service cost. The pension expense is calculated by combining the service cost with these other components, and the appropriate general journal entries will reflect these calculations.
Scenario 1:
Service Cost: $17M
Interest Cost: $13M
Expected Return on Assets: $11M
Amortization of Net Loss: $3M
Total Pension Expense: $22M ($17M + $13M - $11M + $3M)
Journal Entry: Pension Expense $22M; Pension Liability $22M
Scenario 2:
Service Cost: $17M
Interest Cost: $13M
Expected Return on Assets: $10M
Amortization of Net Gain: $3M
Total Pension Expense: $20M ($17M + $13M - $10M - $3M)
Journal Entry: Pension Expense $20M; Pension Liability $20M
Scenario 3:
Service Cost: $17M
Interest Cost: $13M
Expected Return on Assets: $10M
Amortization of Net Loss: $3M
Amortization of Prior Service Cost: $4M
Total Pension Expense: $27M ($17M + $13M - $10M + $3M + $4M)
Journal Entry: Pension Expense $27M; Pension Liability $27M
Scientific management forms of work organization are being replaced with flatter, team-oriented work structures that serve ____________________ and employee involvement rather than mass manufacturing.A. union demandsB. increased productivityC. flexible specializationD. extrinsic motivators
Answer: flexible specialization
Explanation: In simple words, flexible specialization refers to an organisation which is expertise in its field of business regrading manufacturing or after sales service ans still can change their level and method of business within a short notice as per the situation.
Only team oriented work structures can implement that as in such as structure all the employees suggestions are taken into consideration which brings harmony and trust. On the other hand, scientific management involves planning by the top managers and execution by the lower level.
Hermes International produces a Kelly handbag, named for the late actress Grace Kelly. Craftsmen stitch the majority of each $7,000 bag by hand and sign it when they finish. This is an example of _____ production.
A. small-batch
B. large-batch
C. mass
D. continuous-process
Answer: (A) Small-batch
Explanation:
Small batch production is one of the type batch production that is used for describing the small production and the low manufacturing in an organization.
The small batch production basically allow all the kinds of products in the market and the products are basically distribute in the small scale. This process is known as small batch production.
According to the question, Hermes international mainly produces the handbag as it is one of an example of small batch production.
In 2019, Alliant Corporation acquired Centerpoint Inc. for $548 million, of which $98 million was allocated to goodwill. At the end of 2021, management has provided the following information for a required goodwill impairment test: Fair value of Centerpoint Inc. $ 402 million Book value of Centerpoint’s net assets (excluding goodwill) 352 million Book value of Centerpoint’s net assets (including goodwill) 450 million Required: 1. Determine the amount of the impairment loss. (Negative amount should be indicated by a minus sign. Enter your answer in millions (i.e., 10,000,000 should be entered as 10)).
Answer:
$48 million
Explanation:
In this scenario, we compare the values between book value including goodwill and the fair value of machinery, the difference would be the loss on impairment of the asset
In mathematically,
= Book value including goodwill - fair value
= $450 million - $402 million
= $48 million
All other information which is given is not relevant. Hence, ignored it
The amount of the impairment loss is $48 million.
Explanation:In order to determine the amount of the impairment loss, we need to compare the fair value of Centerpoint Inc. with its book value. The fair value of Centerpoint Inc. is $402 million, while its book value (including goodwill) is $450 million. The difference between the fair value and the book value is $48 million. However, since the fair value is lower than the book value, an impairment loss needs to be recognized.
To calculate the impairment loss, we subtract the fair value of Centerpoint Inc. from its book value (including goodwill). Therefore, the amount of the impairment loss is $450 million - $402 million = $48 million.
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Debt Management Ratios You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $30 million in assets with $29 million in debt and $1 million in equity. LotsofEquity, Inc. finances its $30 million in assets with $1 million in debt and $29 million in equity. Calculate the debt ratio and equity multiplier for the two firms.
The debt ratio and equity multiplier for LotsofDebt, Inc. are 96.67% and 30, respectively, indicating high leverage. For LotsofEquity, Inc., these ratios are 3.33% and approximately 1.03, suggesting a conservative financial structure with low leverage.
Explanation:Debt Management Ratios Calculation
To calculate the debt ratio and the equity multiplier for both LotsofDebt, Inc. and LotsofEquity, Inc., we can use the following formulas:
Debt Ratio = Total Debt / Total AssetsEquity Multiplier = Total Assets / Total EquityFor LotsofDebt, Inc.:
Debt Ratio = $29 million / $30 million = 0.9667 or 96.67%Equity Multiplier = $30 million / $1 million = 30For LotsofEquity, Inc.:
Debt Ratio = $1 million / $30 million = 0.0333 or 3.33%Equity Multiplier = $30 million / $29 million = 1.0345 or approximately 1.03These ratios indicate that LotsofDebt, Inc. is highly leveraged with a much higher proportion of debt financing, whereas LotsofEquity, Inc. uses primarily equity to finance its assets.
Division A of Huskie, Inc. has operating data as follows: Capacity 20,000 units Selling price $80 per unit Variable costs $40 per unit Fixed costs $20 per unit Division B wants to purchase units from Division A. If Division A agrees to sell units to Division B, A's variable costs will be $5 less per unit. If Division A has capacity available to meet B's requirements, what is the minimum price it should charge? A. $30 B. $35 C. $40 D. $60
Answer:
B. $35
Explanation:
While making these kind of decisions relevant cost is to be considered.
Since there is an idle capacity lying to meet the demand of Division B, the fixed cost shall be avoided while making this decision.
Thus, concerned cost is variable cost. Since the company is supplying in its own company to other division there might be some avoidable cost in the nature of variable, as for example: transportation, selling and marketing.
Here it is $5
Thus, relevant variable cost = $40 - $5 = $35
This represents the correct option.
The presence of _____________________ in transactions involving goods can easily cause a ______________________ if the result is only a relatively small number of buyer and sellers communicating enough information so that they can agree on a price.
A. imperfect information; thin marketB. adverse information; decline in prices or quantities of products soldC. adverse selection; decline in prices or quality of purchased goodsD. imperfect selection; thick market
Answer:
The answer is letter A.
Explanation:
The presence of ___imperfect information__________________ in transactions involving goods can easily cause a _____thin market_________________ if the result is only a relatively small number of buyer and sellers communicating enough information so that they can agree on a price.
Final answer:
The correct answer to the fill-in-the-blank question is 'imperfect information' and 'thin market'. These terms describe a market situation where few buyers and sellers are active due to uncertainties about product quality, resulting in difficulty determining prices and lower market participation.
Explanation:
The presence of imperfect information in transactions involving goods can easily cause a thin market if the result is only a relatively small number of buyers and sellers communicating enough information so that they can agree on a price. Economists describe a market with few participants as a thin market, which often occurs when imperfect information is present and makes it difficult for consumers to assess the quality of the goods, leading to lower participation from buyers and sellers. This scenario is representative of how market thickness and information quality can influence economic transactions.
Consider an economy with two types of firms, S and I. S firms always move together, but I firms
move independently of each other. For both types of firms there is a 40% probability that the
firm will have a 20% return and a 60% probability that the firm will have a -30% return.
The standard deviation for the return on an individual firm is closest to ________.
A) 24.49%
B) -10.00%
C) 12.25%
D) 9.80%
Answer:
option (A) 24.49%
Explanation:
Data provided in the question:
Return : 20% -30%
Probability : 40% 60%
Now,
Expected return = ∑ (Return × Probability)
= ( 0.20 × 0.40 ) + (-0.30 × 0.60)
= 0.08 - 0.18
= - 0.10 or - 10%
Thus,
Variance = ∑ [ Probability × (Return - Expected return)² ]
= 0.40 × ( 0.20 - ( -0.10))² + 0.60 × ( -0.30 - ( -0.10))²
= ( 0.40 × 0.09 ) + ( 0.60 × 0.04 )
= 0.036 + 0.024
= 0.06
Also,
Standard deviation = √variance
thus,
Standard deviation = √0.06
or
Standard deviation = 0.2449 or 24.49%
Hence,
the correct answer is option (A) 24.49%
Faulk Industries (FI) produces low cost digital cameras that sell for $175. FI requires a 25% return on sales. Currently feasible costs are $9,944,000 and a cost reduction of $100,250 is required to meet their target. FI assumes they will sell ____cameras. A. 70,313 B. 56,823 C. 75,000 D. 85,000
Answer:
option (C) 75,000
Explanation:
Data provided in the question:
Selling cost of digital cameras = $175
Required return on sales = 25%
feasible costs = $9,944,000
cost reduction = $100,250
Now,
cost of camera = $175 × (1 - Desired profit )
or
cost of camera = $175 × (1 - 0.25)
or
cost of camera = $131.25
Now,
Net cost of cameras sold = cost of camera × Number of cameras FI sell
$9,944,000 - $100,250 = $131.25 × Number of cameras FI sell
or
$9,843,750 = $131.25 × Number of cameras FI sell
or
Number of cameras FI sell = 75,000
Hence,
the answer is option (C) 75,000
Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one cup of tea, one biscuit, and one magazine. In year one, the basket costs $10.00.1. In year two, the price of the same basket is $9.00. Is this called inflation or deflation? What is the annual rate of it?2. How many baskets can $80.00 buy in year one? How many in year two?3. What happens to the value of money if the price level falls?
Answer:
1. Deflation
-10%
2. In year 1 - 8 baskets
In year 2 - 8.9 baskets
3. The value of money increases
Explanation:
Deflation is a fall in general price levels. The price fell from $10 to $9. It indicates deflation has occured.
Inflation is a rise in price level.
Annual rate = (current year price - previous year price ) / previous year price
(9 - 10) / 10 = -0.1 = -10%
The annual change is negative because price level fell.
$80 would buy $80/$10 = 8 baskets of goods in year 1
$80 Will buy $80/$9 = 8.9 baskets of goods in year 2.
A fall in price levels increases the value of money because less money can buy the same basket of goods. Therefore, the purchasing power of money increases.
The price level is decreasing, which is called deflation. The annual rate of deflation is 10%. $80.00 can buy approximately 8 baskets of goods in year one and 8.89 baskets of goods in year two. The value of money increases when the price level falls.
Explanation:In this scenario, the price level is decreasing from year one to year two, which is called deflation. The annual rate of deflation can be calculated by finding the percentage change in the price level. In this case, the percentage change is 10%.
In year one, $80.00 can buy 8 baskets of goods. In year two, $80.00 can buy approximately 8.89 baskets of goods. When the price level falls, the value of money increases. This means that each unit of currency can purchase more goods and services.
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Jeff is approached by a salesperson. The salesperson fails to make a first impression and Jeff decides in the early minutes of the sales presentation itself that he will not buy anything from the salesperson.
Which of the following phenomena is observed here?
a. Central traits principle
b. Incremental effect
c. Primacy effect
d. Covariation principle
Answer:
Letter c is correct. Primacy effect.
Explanation:
The primacy effect is a phenomenon that describes about the preference that humans have over a first choice, that is, individuals generally have a preference for the first data they receive about something, than the next data. This effect is compared to the first impression, which is the initial perceptions we get from meeting someone that are difficult to change even over time.
A good strategy for salespeople is to bring their highest performing product on the first visit, to have a positive effect on customer expectations and encourage sales.
An author has signed a contract in which the publisher promises to pay her $10,000 plus 20 percent of gross receipts from the sale of her book. True or false: If both the publisher and the author care only about their own financial return from the project, then the author will prefer a higher book price than will the publisher.
Answer:
False. The author will NOT prefer a higher book price than will the publisher.
Explanation:
It is evident from the diagram -please check the attached image to the exercise- that the author wants to set a lower price than the publisher (to sell the higher quantity) .
A contract can be said as an agreement that derives its enforceability by law.
The statement "If both the publisher and the author care only about their own financial return from the project, then the author will prefer a higher book price than will the publisher" is FALSE.
What is a promise in a contract?When one party signifies its assent to the other party to perform the obligation it is said to be a promise. However, when two persons or two parties agree to perform the obligations for consideration then it becomes an agreement.
What is the financial return?The financial return is nothing but the profits generated in terms of money by selling a product or by rendering a service.
Here, if the author and publisher only care about their individual financial return, in that case, the author will never agree to the deal of $10,000 and 20% of the sale proceeds.
The author has done all the hard work and any rational person will never settle just for a 20% share of the sales proceeds of their own creation.
Therefore, the statement "If both the publisher and the author care only about their own financial return from the project, then the author will prefer a higher book price than will the publisher" is FALSE.
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Walthaus Corporation's standard cost sheet is as follows Direct material Direct labor Variable overhead Fixed overhead 4 feet at $5.00 per foot 3 hours at $10.00 per hour 3 hours at $2.00 per hour 3 hours at $1.00 per hour Additional information Actual results: purchased 30,000 lbs of material at $5.25 per lb. (there were no beginning or ending material inventories); direct labor cost incurred was 26,000 hours at $9.75 per hour; actual variable overhead incurred, $50,000; and actual fixed overhead incurred $43,000. Overhead is applied to work-in-process on the basis of direct labor hours. The company produced 8,000 units of product during the period. The number of estimated hours for computing the fixed overhead application rate totaled 45,000 hours. What are the fixed overhead price and production volume variances? O $2.000 F; $23,000 U $2,000 U; $23,000 F. $4,000 F: $25,000 F. $4,000 F: $25,000 U. None of these.
Answer:
1. U. None of these
2. Variable overhead price variance = $2,000 F
Variable overhead efficiency variance = $4,000 U
Explanation:
Please see attachment.
What is the best indicator that a training and development program was worth the investment?
a. long-term behavioral change
b. effective recruiting and onboarding
c. attentive participants
d. perfect test scores
e. strong negative reactions and resistance when training starts
Answer: It is answer B.
Explanation:
I done this in class and my teacher check it
Mount Nittany Medical Center has an X-ray machine that cost $84,300. Shipping and site preparation costs $1,200 and installation costs $400 At the end of the 3rd year of service, the X-ray machine was traded in for a different X-ray machine with a purchase price of $89,999, shipping and site preparation costs $1,600 and installation costs $400. The trade-in allowance was $27,000 for purchasing the new machine. This equipment is a 5- year MACRS class. What is the cost basis of the new X-ray machine for computing the amount of depreciation for income tax purposes?
Answer:
Please see attachment
Explanation:
Please see attachment
Penn Company has a division that manufactures a component that sells for $ 50 and has variable costs of $ 25 and fixed costs of $ 10$ Another division wants to purchase the component. What is the minimum transfer price if the division is operating at capacity?
A $10
B. $25
C. $35
D. $50
Answer:
C. $35
Explanation:
Given;
Selling price of the manufactured component = $ 50
Variable costs of production = $ 25
Fixed costs of Production = $ 10
If the component is to be sold to another division, the minimum sales price is equivalent to the total production cost of the transferring division
= $ 25 + $ 10
= $ 35
The minimum transfer price if the division is operating at capacity is $35.
Current operating income for Bay Area Cycles Co. is $74,000. Selling price per unit is $120, the contribution margin ratio is 30%, and fixed expense is $250,000. Required: 1. Calculate Bay Area Cycle’s breakeven point in units and total sales dollars. (Round your Unit answer to nearest whole units and other answer to the nearest whole dollar.) 2. Calculate Bay Area Cycle’s margin of safety and margin of safety ratio. (Do not round your intermediate answers and Round your percentage answer to the 1 decimal place and other answer to nearest whole dollar)
Answer:
1. 6,944 units and $833,333.33
2. $1,080,000 and 22.83%
Explanation:
The computations are shown below:
1. Break-even point in units
= (Fixed expenses ) ÷ (Contribution margin per unit)
where,
Contribution margin per unit = Selling price per unit × contribution margin ratio
= $250,000 ÷ $36
= 6,944 units
Break-even point in sales
= (Fixed expenses ) ÷ (Contribution margin ratio)
= $250,000 ÷ 30%
= $833,333.33
2. For margin of safety and margin of safety ratio:
Margin of safety = Expected sales - break even sales
where,
Expected sales = (Operating income + fixed expense) ÷ (contribution margin ratio)
= ($74,000 + $250,000)
= ($324,000) ÷ (30%)
= $1,080,000
So, the margin of safety would be
= $1,080,000 - $833,333.33
= $246,667
Margin of safety ratio = Margin of safety ÷ total sales
= $246,667 ÷ $1,080,000
= 22.83%
Bay Area Cycles Co.'s breakeven point is approximately 6945 units or $833,400 in total sales dollars. Its margin of safety is -$586,733 with a margin of safety ratio of -238%.
Explanation:To determine the breakeven point in units for Bay Area Cycles Co., we use the formula: Fixed Costs / Contribution Margin per Unit. Contribution margin per unit can be calculated as 30% of $120 (selling price per unit), which is $36. Hence, the breakeven point in units would be $250,000 / $36 = approximately 6944.44 units, rounded up to 6945 units as units cannot be fractional. The breakeven point in sales dollars would be 6945 units * $120 = $833,400.
To calculate the margin of safety, we subtract the breakeven revenue from the actual revenue. The actual revenue is $74,000 (operating income) / 30% (contribution margin ratio) = $246,667 (round to the nearest dollar). Hence, the margin of safety is $246,667 - $833,400 = -$586,733. The negative value suggests the company is not breaking even yet. The margin of safety ratio would be the margin of safety / actual sales = -$586,733 / $246,667 = -238 %.
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Assume an economy begins with zero inflation, a 25 percent income tax rate, and a real interest rate of 4 percent. If inflation rises to 4 percent, the nominal interest rate becomes ________ percent and the after-tax real interest becomes ________ percent.
Answer:
8%
2%
Explanation:
Real interest rate is interest rate that has been adjusted for inflation . It is calculated as nominal interest rate - inflation rate.
Nominal interest rate is interest rate that has not been adjusted for inflation. It is calculated as real interest rate + inflation rate. The nominal interest rate is the more commonly quoted interest rate.
Nominal interest rate = 4%+4%=8%
After tax real interest rate = [nominal interest rate × ( 1 - tax rate )] - inflation rate
0.08 × (0.75) = 0.06 = 6%
6% - 4% = 2%
Which of the following statements is CORRECT?
Dividends paid reduce the net income that is reported on a company's income statement.
If a company uses some of its bank deposits to buy short-term, highly liquid marketable securities, this will cause a decline in its current assets as shown on the balance sheet.
If a company issues new long-term bonds to purchase fixed assets during the current year, this will increase both its reported current assets and current liabilities at the end of the year.
Accounts receivable are reported as a current liability on the balance sheet.
If a company pays more in dividends than it generates in net income, its retained earnings as reported on the balance sheet will decline from the previous year's balance.
Answer:
If a company pays more in dividends than it generates in net income, its retained earnings as reported on the balance sheet will decline from the previous year's balance.
Explanation:
The dividend is shown while preparing the retained earning statement. So, it does not affect the net income.
The highly liquid marketable securities does not show a decline in the current assets
If the long term bonds are issued to purchase fixed assets it would show under the long term liabilities and the long term assets rather than the current assets and the current liabilities
Account receivable are reported in the current assets rather than the current liabilities
We know that
The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid
If the dividend amount is more than the net income so the ending balance of retained earning will decline than its beginning year balance.
Answer:
E
Explanation:
If a company pays more divided than net income, its retained will reduce more than reported in the previous balance sheet. This is beacue dividends are paid out of retained earnings; therefore where the dividend payment is higher than the net income.
Project Marvel is a five-year project. The project has a total cash inflow of $350,000. The present value of such inflows is $275,000. The project requires an initial investment of $200,000 and additional working capital of $25,000. What is the net present value of the project? a. $0 b. $50,000 c. ($50,000) d. ($250,000)
Answer:
The correct answer is B.
Explanation:
Giving the following information:
Project Marvel is a five-year project. The project has a total cash inflow of $350,000. The present value of such inflows is $275,000. The project requires an initial investment of $200,000 and an additional working capital of $25,000.
NPV= -Io + ∑[Cf/(1+i)^n]
Cf= cash flow
NPV= -225,000 + 275,000= 50,000
Answer:
The answer is: B
Explanation:
Capital budgeting is a process of evaluating investment projects to be undertaken by a company. Net Present Value (NPV) computation is one of the techniques used in this evaluation. This computation entails discounting cash flows, using an appropriate discount rate, which emerge as a result of undertaking the project or investment at the initial period prior to the commencement of a project or investment.
The computation of the net present value of future cash inflows of Project Marvel has already been done and the value is given as: $275, 000. The cash outflows which would occur are given as an initial investment of $200,000 and additional working capital of $25, 000. Total cash outflows which would occur in the current period thus amount to $225, 000. The net cash inflow from Project Marvel is $50, 000 ($275,000 - $225,000)