Answer:
Taking into consideration only the income, the increase in unit sales will not increase the income of Honda. It can impact in other ways, like a decrease in inventory.
Explanation:
Giving the following information:
Honda Motor Company is considering offering an $1800 rebate on its minivan
New price $30200
Old price $28400.
The marketing group estimates that this rebate will increase sales over the next year from 42000 to 53900 vehicles.
Honda's profit margin with the rebate is $5650 per vehicle.
Normal price:
Income= (5650+1800)*42000= $312,900,000
New price:
Income= 5650* 53900= $304,535,000
Taking into consideration only the income, the increase in unit sales will not increase the income of Honda. It can impact in other ways, like a decrease in inventory.
During the late nineteenth century, the United States experienced a period of sustained deflation, or a falling price level. Explain in terms of the quantity theory of money how a deflation is possible. Is it necessary for the quantity of money to decline for deflation to occur?
Answer:
It is not necessary a decline in quantity of money for deflation to occur.
The quantity theory of money states that if money supply and velocity of circulation don't change economic growth (positive change in GDP) will result in declining price levels
Explanation:
The quantity of money theory states that
[tex]M\times V=P\times Y[/tex]
where M is the money supply, V is the velocity of circulation, P is the price level and Y is the GDP
We can put this equation in terms of percentage changes, which gives
[tex]\hat{M}+\hat{V}=\hat{P}+\hat{Y}[/tex]
where the [tex]\hat{M}[/tex] denotes the percentage change in the money supply, and similarly for the other variables.
Then for the percentage change in prices to be negative we have that
[tex]\hat{P}<0\hat{M}+\hat{V}-\hat{Y}[/tex]
since
[tex]\hat{P}= \hat{M}+\hat{V}-\hat{Y}[/tex]
[tex]\hat{M}+\hat{V}-\hat{Y}<0[/tex]
So if the there's no change in circulation velocity or gdp, then inflation can occur if there's a decline in money supply (percentual change in M is negative).
But it also could be other scenarios:
1. money supply or output did not change and velocity of circulation decreased
2. money supply and velocity remained constant but GDP grew
Tyler Corporation was organized in 2014. It’s corporate charter authorized the issuance of 50,000 shares of common stock, par value $5 per share, and 10,000 shares of 8% preferred stock, per value $25 per share.
Prepare journal entries for each of the following transactions:
January 1 Sold and issued 45,000 shares of common stock for cash at $ 25 per share
February 1 Sold and issued 5,000 shares of preferred stock for cash of $75 per share.
June 1 Purchased 7,500 shares of common stock in the open market at $24 per share.
August 1 Sold 1,000 shares of the treasury stock at $26 per share.
October 1 Sold another 1,500 shares of the treasury stock at $23 per share.
December 1 Declared dividends totaling $100,000.
Allocations of the dividend to preferred and common stockholders.
December 31 Paid the dividends that were declared.
Answer& Explanation:
cash 1,125,000 (45,000 x 25)
common stock 225,000 (45,000 x 5)
additional paid-in 900,000 (1,125,000 - 225,000)
cash 375,000 ( 5,000 x 75)
common stock 25,000 (5,000 x 5)
additional paid in 50,000 ( 75,000 - 25,000)
Treasury Stock 180,000 ( 7,500 x 24)
Cash 180,000
Cash 26,000
Treasury Stock 24,000 ( 1,000 x 24)
Asdditional paid in TS 2,000 ( 26,000 - 24,000)
Cash 34,500 ( 1,500 x 23)
Additional Paid-in TS 1,500
Treasury Stock 36,000 ( 1,500 x 24)
Dividends 100,000
Dividneds payable 100,000
Dividends payable 100,000
cash 100,000
In the context of supply chain management, which of the following is true of adaptability?
a. It helps in overcoming short-term fluctuations in the supply chain.
b. It can be enhanced by making a series of make-or-buy decisions.
c. It involves aligning the interests of various elements in the supply chain.
d. It focuses on achieving power and trust.
Answer: In the context of supply chain management "b. It can be enhanced by making a series of make-or-buy decisions." is TRUE of adaptability.
Explanation: Adaptability is basically how the company has to adapt the changes, to new technologies so as not to be left behind in addition to obtaining multiple financial and administrative benefits.
The SRT partnership agreement specifies that partnership net income be allocated as follows:
Partner S Partner R Partner T
Salary allowance $20,000 $25,000 $15,000
Interest on average capital balance 10% 10% 10%
Remainder 30% 30% 40%
Average capital balances for the current year were $60,000 for S, $50,000 for R, and $40,000 for T.
Refer to the information given. Assuming a current year net income of $125,000, what amount should be allocated to each partner?
Partner S Partner R Partner T
A. $15,000 $15,000 $20,000
B. $37,500 $37,500 $50,000
C. $41,000 $45,000 $39,000
D. $42,000 $48,000 $35,000
Answer: Option (C) is correct.
Explanation:
Given that,
Partner S:
Salary allowance = $20,000
Interest on average capital balance = 10% of 60,000
= $6,000
Average capital balances for the current year = $60,000
Remainder = 30% of 50,000
= $15,000
Amount should be allocated = Salary allowance + Interest on average capital balance + Remainder
= $20,000 + $6,000 + $15,000
= $41,000
Partner R:
Salary allowance = $25,000
Interest on average capital balance = 10% of 50,000
= $5,000
Average capital balances for the current year = $50,000
Remainder = 30% of 50,000
= $15,000
Amount should be allocated = Salary allowance + Interest on average capital balance + Remainder
= $25,000 + $5,000 + $15,000
= $45,000
Partner T:
Salary allowance = $15,000
Interest on average capital balance = 10% of 40,000
= $4,000
Average capital balances for the current year = $40,000
Current year net income = $125,000
Remainder = 40% of 50,000
= $20,000
Amount should be allocated = Salary allowance + Interest on average capital balance + Remainder
= $15,000 + $4,000 + $20,000
= $39,000
Workings:
Salary allowed = $20,000 + $25,000 + $15,000
= $60,000
Interest on average capital balance = $6,000 + $5,000 + $4,000
= $15,000
Total = Salary allowed + Interest on average capital balance
= $60,000 + $15,000
= $75,000
Remainder = Current year net income - Total
= $125,000 - $75,000
= $50,000
A lottery claims its grand prize is $5 million, payable over 5 years at $1 comma 000 comma 000 per year. If the first payment is made immediately, what is the grand prize really worth? Use an interest rate of 4%.The real value of the grand prize is $nothing. (Round your response to the nearest dollar.)
Answer:
present value of the prize: 4,451,822 dollars
Explanation:
we will calcualte the present value of an annuity-due of 5 payment of 1,000,000 discount at 4%
[tex]C \times \frac{1-(1+r)^{-time} }{rate}(1+r) = PV\\[/tex]
C 1,000,000
time 5
rate 0.04
[tex]1000000 \times \frac{1-(1+0.04)^{-5} }{0.04}(1+0.04) = PV\\[/tex]
PV $4,451,822.3310
This will be the present value of the prize today
The US Securities and Change Commission (SEC), a US federal agency, is considered to be an investor’s advocate. Its purpose is to protect investors, maintain market integrity, and facilitate capital formation. Under the Sarbanes–Oxley Act of 2002, the SEC requires CFOs to certify that the firm’s:
(A) Growth plans are on track
(B) Shareholders are protected
(C) Financial statements are audited
(D) Earnings numbers are accurate
Answer:
(D) Earnings numbers are accurate
Explanation:
Under the Sarbanes–Oxley Act of 2002, the SEC requires CFOs to certify that the firm’s financial statements should represent true and accurate amounts. It does contain any false commitment which affects the overall shareholder decisions.
Moreover, the top manager of the company checks the accuracy of the financial reports which contains important and valuable information about the company.
So, all options are incorrect except D.
If the interest rate is 7.5 percent, then what is the present value of $4,000 to be received in 6 years?
a. $3,040.63
b. $2,420.68
c. $2,996.33
d. $2,591.85
Answer:
d. $2,591.85
Explanation:
To solve we can use the present value formula defined by
[tex]PV=\frac{FV}{(1+r)^t}[/tex]
where PV is present value, FV is future value, t is time and r is the interest rate , we can replace the values given in the question. Where 4000 is the future value, the time is t=6 years, and the interest rate is r=0.075, so we get
[tex]PV=\frac{4000}{(1+0.075)^6}=2,591.85[/tex]
The present value of $4,000 to be received in 6 years at a 7.5 percent interest rate is approximately $2,556.05, with the closest answer choice being option d, $2,591.85.
Explanation:To calculate the present value of $4,000 to be received in 6 years at an interest rate of 7.5 percent, we apply the present value formula: Present Value = Future Value / (1 + r)^n, where 'r' is the interest rate and 'n' is the number of years. Plugging our numbers into the formula gives us Present Value = $4,000 / (1 + 0.075)^6.
Performing the calculation:
Present Value = $4,000 / (1.075)^6 = $4,000 / 1.5648 approximately.
Present Value = $2,556.05 approximately.
Although none of the provided options exactly match this result, the closest to this computed value is option d, $2,591.85.
Bowyer Driving School’s 2014 balance sheet showed net fixed assets of $3 million, and the 2015 balance sheet showed net fixed assets of $3.7 million. The company’s 2015 income statement showed a depreciation expense of $200,000. What was net capital spending for 2015? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
Answer: $900,000
Explanation:
Net fixed assets(2014) = $3 million
Net fixed assets(2015) = $3.7 million
Depreciation expense = $200,000
Net capital spending for 2015 = closing balance of 2015 - opening balance of assets + depreciation for the year
= $3,700,000 - $3,000,000 + $200,000
= $900,000
Therefore, the net capital spending for the year 2015 is $900,000.
Conner Enterprises issued $120,000 of 10%, 5-year bonds with interest payable semi annually. Determine the issue price of the bonds are priced to yield (a) 10%, (b) 8%, and (c) 12%. Use financial calculator or Excel to calculate answers. Round answers to the nearest whole number.
The price of bonds issued by Conner Enterprises will vary based on the market yield. A bond with a 10% coupon rate will be sold at a premium if the market yield is 8%, at par if the yield is 10%, and at a discount if the yield is 12%.
Explanation:The student's question is about the pricing of bonds issued by Conner Enterprises at different yield rates. When the yield rate matches the coupon rate, the bond is sold at face value. However, if the market interest rates are lower than the coupon rate, the bonds will sell for a premium; conversely, if market rates are higher, the bonds will sell at a discount.
For a bond with a 10% coupon rate and a market yield of 10%, the price would be at par, meaning the issue price would equal the face value, or $120,000. If the bonds were priced to yield 8%, the price would be higher than $120,000 because the bond's fixed interest payments are more attractive compared to the market rate. Conversely, if the bonds were priced to yield 12%, the issue price would be less than $120,000, as the coupon rate is no longer as attractive as the new market rate.
Using the example of the water company bond, if interest rates rise, the bond will be sold for less than its face value due to the lower interest rate compared to the market rate. Similarly, if we calculate the price for a bond at an interest rate of 9% using the formula given, we can determine the actual price someone would be willing to pay for it.
The following information relates to Carried Away Hot Air Balloons, Inc.:Advertising Costs $16,800Sales Salary 15,200Sales Revenue 570,000President's Salary 51,000Office Rent 55,000Manufacturing Equipment Depreciation 1,500Indirect Materials Used 5,700Indirect Labor 10,300Factory Repair and Maintenance 860Direct Materials Used 23,710Direct Labor 34,600Delivery Vehicle Depreciation 930Administrative Salaries 22,400How much was Carried Away's manufacturing overhead?
The manufacturing overhead of Carried Away Hot Air Balloons, Inc. is calculated by summing up all the indirect costs associated with manufacturing, which amounts to $18,360.
Explanation:To calculate the manufacturing overhead of Carried Away Hot Air Balloons, Inc., we need to sum up all the indirect costs associated with the production, ignoring any expenses that don't apply directly to the manufacturing process. In this question, the components of manufacturing overhead are Indirect Materials Used ($5,700), Indirect Labor ($10,300), Factory Repair and Maintenance($860), and Manufacturing Equipment Depreciation ($1,500).
Adding these four expenses together, we get:
$5,700 + $10,300 + $860 + $1,500 = $18,360
Hence, Carried Away's manufacturing overhead is $18,360.
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Rand Corporation acquires Southern Company's assets and liabilities for $20,000,000 in cash. At the date of acquisition, Southern's balance sheet reported assets of $75,000,000 and liabilities of $65,000,000. Investigation reveals that Southern's reported plant assets are overvalued by $1,400,000. Rand reports how much goodwill on this acquisition?
Answer: $8,600,000
Explanation:
Acquire Southern Company's assets and liabilities in cash = $20,000,000
Southern's balance sheet reported,
Assets = $75,000,000
Liabilities = $65,000,000
plant assets are overvalued by $1,400,000
Actual Value of Southern's Assets = Total Fair Value - Overvaluation
= $75,000,000 - $1,400,000
= $73,600,000
Goodwill = Actual Value of Southern's Assets - Value of Liabilities
= $73,600,000 - $65,000,000
= $8,600,000
Final answer:
Goodwill is calculated by subtracting the fair value of the net assets of Southern Company from the purchase price paid by Rand Corporation. With the plant assets overvalued by $1,400,000, the adjusted net assets are $8,600,000 and the resulting goodwill is $11,400,000.
Explanation:
The student is asking how to calculate the goodwill resulting from Rand Corporation's acquisition of Southern Company. To determine goodwill, we subtract the fair value of the identifiable net assets acquired from the purchase price. First, we need to adjust the assets and liabilities reported on Southern's balance sheet to reflect their fair value. Southern's plant assets were overvalued by $1,400,000; thus, we subtract this from the reported assets value of $75,000,000 to get $73,600,000. Next, calculate the net assets by subtracting liabilities from assets ($73,600,000 - $65,000,000 = $8,600,000). Finally, we subtract this net assets figure from the cash paid by Rand Corporation ($20,000,000 - $8,600,000 = $11,400,000), which is the amount of goodwill to be reported.
An uncontrollable aspect of the domestic environment that can have a direct effect on the success of a foreign venture is:
level of technology. structure of distribution. economic climate. cultural forces. geography and infrastructure.
Answer: Economic climate
Explanation: In simple words, the view of economists, businesses and investors on the economic conditions of a country is its economic climate. It constitutes factors such as job market, stock market and credit availability etc.
These factors are domestic and could not be controlled by any authority completely. The fluctuations in such factors exist in every economy.
These factors could affect any venture from foreign. The needs of resources for such a venture like capital or customers etc is highly dependent on the constituents of economic climate.
Thus, the correct answer is economic climate.
Firm A produces desks. It is situated in the US but imports wood from Brazil. Last year it imported $8,000 in lumber and sold 100% of its production for a total value of $56,000 (assume transportation costs are negligible). What was the total value added by this firm to the economy (in terms of GDP) last year (in dollars)?
(A) 56,000
(B) 64,000
(C) 48,000
Answer:
The correct answer is C: 48000
Explanation:
The Expenditure Approach is a method of measuring GDP by calculating all spending throughout the economy including consumer consumption, investing, government spending, and net exports. This method calculates what a country produces, assuming that the finished goods and services of a country equals the amount spent in the country for that period.
The formula is:
GDP=C+I+G+/-NX
GDP: Gross Domestic Product
(C) consumer spending – this is the amount that all consumers spend on goods and services for personal use.
(I) investment – this is the amount that businesses or owners spend to invest in new equipment or expansions.
(G) government spending – this includes spending on new infrastructure like bridges and roads.
(NX) net exports – this includes spending on a country’s exports minus its spending on imports.
AddedGDP= 56000-8000
AddedGDP= 48000
Retained earnings at the beginning and ending of the accounting period were $650 and $1,400, respectively. Revenues of $2,500 and dividends paid to stockholders of $550 were reported during the period. What was the amount of expenses reported for the period?
Answer:
The amount of expenses reported for the period is $1,200
Explanation:
For computing the amount of expense, we have to apply the formula which is shown below:
Ending retained earning balance = Beginning retained earning balance + revenues earned - cash dividend paid - expenses incurred
$1,400 = $650 + $2,500 - $550 - expenses incurred
$1,400 = $2,600 - expenses incurred
So, the expenses incurred would be
= $2,600 - $1,400
= $1,200
The following data have been recorded for recently completed Job 450 on its job cost sheet. Direct materials cost was $2,057. A total of 32 direct labor-hours and 216 machine-hours were worked on the job. The direct labor wage rate is $21 per labor-hour. The Corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $29 per machine-hour. The total cost for the job on its job cost sheet would be:
Answer:
Total cost= $8993
Explanation:
Total manufacturing cost is the aggregate amount of cost incurred by a business to produce goods in a reporting period.
Generally accepted accounting principles require that the cost of goods sold shall consist of:
the cost of direct materials
the cost of direct labor
the cost of manufacturing overhead
In this exercise:
direct materials= $2057
direct labor= 32hours*$21=$672
manufacturing overhead= 216hours*$29= $6264
Total cost= 2057 + 672 + 6264= $8993
Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $360,000, and direct labor costs to be $180,000. Actual overhead costs for the year totaled $387,000, and actual direct labor costs totaled $203,000. At year-end, the balance in the Factory Overhead account is a:
Answer:
Balance for the Factory Overhead account: 19,000 credit
Explanation:
We will first, calculate the overhead rate based on the predetermination overhead rate:
[tex]\frac{Cost\: Of \:Manufacturing \:Overhead}{Cost \:Driver}= Overhead \:Rate[/tex]
The total manufacturing cost will be distributed over the cost driver. In this case, labor cost:
360,000/180,000 = 2 overhead rate
Then, we calculate the applied overhead 203,000 x 2 = 406,000
Now, the balance for factory overhead account:
Actual overhead: 387,000 debit
payable, accumulated depreicaiton and other 387,000 credit
WIP 406,000 debit
Applied Overhead 406,000 credit
Balance:
406,000 - 387,000 = 19,000 credit
Due to a recession, expected inflation this year is only 4.25%. However, the inflation rate in Year 2 and thereafter is expected to be constant at some level above 4.25%. Assume that the expectations theory holds and the real risk-free rate (r*) is 3.5%. If the yield on 3-year Treasury bonds equals the 1-year yield plus 0.5%, what inflation rate is expected after Year 1? Round your answer to two decimal places.
Answer:
inflation rate after 1 year is 5.00%
Explanation:
expected inflation = 4.25%
risk-free rate (r) = 3.5%
Treasury bonds = 1-year yield plus 0.5%
to find out
what inflation rate is expected after Year 1
solution
we say that yield on 1st year treasury bond is here
r1 = r + inflation rate = 3.5 + 4.25 = 7.75 %
and in 3rd year bond bond value is
r3 = r1 + 0.5% = 7.75 + 0.5 = 8.25 %
and
r3 = r + inflation3
so inflation3 = 8.25 - 3.5 = 4.75 %
so
for 1st year inflation is = 4.25 %
and for 2nd year inflation is = I
and for 3rd year inflation is = I
so mean of these
[tex]\frac{4.28 + I + I}{3} = 4.75[/tex]
so I = 5.00 %
so
inflation rate after 1 year is 5.00%
Grand-cola spends $3 on direct materials, direct labor, and variable manufacturing overhead for every unit (12-pack of soda) it produces. Fixed manufacturing overhead costs
$3million per year. The plant, which is currently operating at only 80 %
of capacity, produced 15 million units this year. Management plans to operate closer to full capacity next year, producing 25
million units. Management doesn't anticipate any changes in the prices it pays for materials, labor, and manufacturing overhead.
1.
What is the current total product cost (for the 15 million units), including fixed and variable costs?
2.
What is the current average product cost per unit?
3.
What is the current fixed cost per unit?
4.
What is the forecasted total product cost next year (for the25 million units), including fixed and variable costs?
5.
What is the forecasted average product cost next year?
6.
What is the forecasted fixed cost per unit?
7.
Why does the average product cost decrease as production increases?
Answer:
Instructions are listed below
Explanation:
Giving the following information:
Q=15 million
Q*=25 million
Unitary variable cost= $3
Fixed manufacturing overhead costs $3million per year
A) For Q:
Total cost= 3000000+15000000*3= $63000000
B) Average cost per unit=63000000/15000000=$4.2
C) Fixed cost per unit= 3000000/15000000= $0.2
D) Q*=25000000
Total cost= 30000000+25000000*3=$78000000
E) Fixed cost per unit= 3000000/25000000= $0.12
D) It decreases because the fixed costs are distributed by more units.
The current total product cost is $45 million, the current average product cost per unit is $3, the current fixed cost per unit is $0.20. The forecasted total product cost next year is $75 million, the forecasted average product cost next year is $3, and the forecasted fixed cost per unit is $0.12. The average product cost decreases as production increases due to the spreading of fixed costs over a larger number of units.
Explanation:1. The current total product cost, including fixed and variable costs, can be calculated by multiplying the number of units (15 million) by the total cost per unit ($3). So the current total product cost is $45 million.
2. The current average product cost per unit can be calculated by dividing the current total product cost ($45 million) by the number of units (15 million). So the current average product cost per unit is $3.
3. The current fixed cost per unit is calculated by dividing the fixed manufacturing overhead costs ($3 million) by the number of units (15 million). So the current fixed cost per unit is $0.20.
4. The forecasted total product cost next year, including fixed and variable costs, can be calculated by multiplying the number of units (25 million) by the total cost per unit ($3). So the forecasted total product cost next year is $75 million.
5. The forecasted average product cost next year can be calculated by dividing the forecasted total product cost next year ($75 million) by the number of units (25 million). So the forecasted average product cost next year is $3.
6. The forecasted fixed cost per unit is calculated by dividing the fixed manufacturing overhead costs ($3 million) by the number of units (25 million). So the forecasted fixed cost per unit is $0.12.
7. The average product cost decreases as production increases because the fixed costs are spread over a larger number of units. This means that the fixed cost per unit decreases as more units are produced, resulting in a lower average product cost.