Answer:
The company's plantwide overhead rate on a per machine hour basis is $5 per hour.
Explanation:
Acording to the data, we have the following:
Direct Labour Cost=$200,000
Direct Labour Hours= 16,000
Total Overhead Cost= $25,000
Machine Hours= 5,000
Therefore, to calcuate the company's plantwide overhead rate on a per machine hour basis, we use the following formula:
Company's plantwide overhead rate= Total Overhead/ Machine hours
= $ 25,000 / 5000 hours
=$5 per hour
Final answer:
The company's plantwide overhead rate is calculated as $25,000 divided by 5,000 machine hours, resulting in $5 per machine hour.
Explanation:
To calculate the plantwide overhead rate based on machine hours, we use the formula:
Plantwide Overhead Rate = Total Overhead Costs / Total Machine HoursGiven that the total overhead costs are $25,000 and the total machine hours are 5,000, we can calculate the rate as follows:
Plantwide Overhead Rate = $25,000 / 5,000 = $5 per machine hour.Example Calculation:
If a job requires 100 machine hours, the overhead applied to the job would be 100 hours * $5/machine hour = $500.g Alphabet Co. uses activity-based costing. The company manufactures two products, Product A and Product B. There are three activity cost pools, with estimated costs and expected cost driver quantities as follows: Activity 1 cost pool has estimated overhead of $18,000. The expected cost driver quantity of Product A is 500 and Product B is 400. Activity 2 cost pool has estimated overhead of $21,000. The expected cost driver quantity is 1,000 for Product A and 500 for Product B. Activity 3 cost pool has estimated overhead of $32,000. The expected cost driver quantity is 300 for Product A and 200 for Product. What is the pool rate for Activity 1
Answer:
Activity 1 rate driver= $20 per driver
Explanation:
Activity-based costing is a form of absorption costing where overheads are charged to product using cost drivers.
Under this method, overheads are first analyzed and categorized by the activities responsible for them and then charged to product based on the amount of benefits enjoyed using cost drivers.
Activity rate per driver is calculated as:
Activity overhead for the period / Total cost drivers for the period
Activity 1 overhead = $18,000
Total expected cost drivers for activity 1 = 500 +400 = 900
Overhead rate per cost driver
= $18,000/900 hours
= $20 per driver
Listed below are selected transactions from a Loudon County Debt Service Fund (all amounts are in thousands of dollars).
1. The remaining funds of a Capital Projects Fund, $2,000, were transferred to the Debt Service Fund to be used in the repayment of debt and interest on that debt that was issued to finance and expansion of the transit system.
2. The county General Fund transferred $9,200 to the Debt Service Fund to provide financing for principal, interest, and fiscal agent fees for debt service transactions during the year. $6,700 of the transfer from the General Fund and all of the transfer from the CPF were invested.
Record the above transactions in the Debt Service Fund.
Answer:
LOUDON DEBT SERVICE FUND
Debit Service Fund Account
Capital project fund $2,000,000
County General fund 9,200,000
Investment 6,700,000
Balance c/d 4,500,000 -
11,200,000 11,200,000
Explanation:
Suppose labor productivity is $110,000 per worker in 2015. Calculate the value of labor productivity in 2035 (20 years later) if: Instructions: Enter your responses rounded to the closest $100. a. Productivity continues to grow by 2.6 percent per year. U.S labor productivity in 2035 would be $ 183,798 183,798 Correct per worker. b. Productivity falls to 2.0 percent per year (the average productivity growth between 1970 and 2009). U.S. labor productivity in 2035 would be $ 163,454 163,454 Correct per worker. c. How much lager would labor productivity per worker be in 2035 with the higher growth rate compared to the lower growth rate. Instructions: Enter your responses rounded to two decimal places. 1.12
Answer:
A. Based on a 2.6% productivity growth per year labor productivity will be $183,798 in 2035 (that is $73,798 improvement over 20 years)
B. Based on a 2.0% productivity growth per year labor productivity will be $163,454 in 2035 (that is $53,454 improvement over 20 years)
C. The difference between both growth scenarios is $20,343
Explanation:
A detailed presentation can be found attached.
The labor productivity in 2035 is estimated to be $183,798 per worker with a 2.6% annual growth rate and $163,454 per worker with a 2.0% annual growth rate. The difference between these two rates is 1.12 times larger at a growth rate of 2.6% than 2.0%.
Explanation:The question asks to calculate the value of labor productivity in 2035, given certain growing rates. In this scenario:
If productivity continues to grow by 2.6 percent per year, from a labor productivity of $110,000 in 2015, the estimation for 2035 predicts a U.S labor productivity of $183,798 per worker. If productivity falls to 2.0 percent per year (average productivity growth between 1970 and 2009), from the same initial labor productivity of $110,000 in 2015, U.S labor productivity in 2035 will be estimated to be $163,454 per worker. The difference in labor productivity per worker in 2035 with the higher growth rate compared to the lower growth rate is 1.12 times larger at a growth rate of 2.6% versus 2.0%.Learn more about Labor Productivity Calculation here:
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A stock is expected to pay dividends of $1.00, $0.75 and $2.00 for the next 3 years, respectively. After that time, dividends are expected to grow at a constant rate of 6% indefinitely. The required return on the stock is 10% during the non-constant growth period and 8% afterwards. Compute the fair market value of the stock today.
Answer:
The fair market value of the stock today is $82.67
Explanation:
The fair value of the stock can be calculated using the dividend discount model which bases the value or fair price of a stock today based on the present value of the expected future dividends from the stock. The dividends are discounted to the present value using an appropriate discount rate.
When the dividend growth rate of a stock becomes constant, we calculate the terminal value of the stock and discount it back too. The terminal value of the stock will be calculated at the end of year 3 using the required rate of return of 8% and will be discounted back 3 years to present value using the rate of 10%.
Thus, the price today of the given stock will be,
P0 = 1 / (1+0.1) + 0.75 / (1+0.1)^2 + 2 / (1+0.1)^3 +
[ (2 * (1+0.06) / (0.08-0.06)) / (1+0.1)^3 ]
P0 = $82.67
To compute the fair market value of the stock today, calculate the present value of the future dividends and the present value of the future stock price. The fair market value of the stock today is the sum of the present value of the dividends and the present value of the future stock price. The fair market value of the stock today is $82.7034.
Explanation:To compute the fair market value of the stock today, we need to calculate the present value of the future dividends and the present value of the future stock price. First, let's calculate the present value of the dividends for the next 3 years:
Year 1 dividend: $1.00 / (1 + 0.10)^1 = $0.9091Year 2 dividend: $0.75 / (1 + 0.10)^2 = $0.6198Year 3 dividend: $2.00 / (1 + 0.10)^3 = $1.5089Next, let's calculate the present value of the future stock price using the constant growth rate formula:
Future stock price = Year 4 dividend / (required return - growth rate) = $2.00 / (0.08 - 0.06) = $100
Finally, let's calculate the present value of the future stock price:
Present value of future stock price = $100 / (1 + 0.08)^3 = $79.6656
The fair market value of the stock today is the sum of the present value of the dividends and the present value of the future stock price:
Fair market value of the stock today = $0.9091 + $0.6198 + $1.5089 + $79.6656 = $82.7034
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1. Understanding Persuasion in a Social and Mobile Age Contemporary businesses have embraced leaner corporate hierarchies, simultaneously relying on teams, eliminating division walls, and blurring the lines of authority. As teams and managers are abandoning the traditional command structure, excellent persuasive skills are becoming ever more important at work. Effective businesspeople must learn to in order to improve relationships with teams and coworkers. influence The most striking developments, summ on, are less than three decades old. be authoritative be blunt Check all that apply command How has persuasion changed in the digitar ager Check an that apply. All businesses are in the persuasion business Persuasion is more complex and impersonal Persuasive techniques are more subtle and misleading Persuasive messages are slow to engage audiences Persuasive messages are targeted to very specific audiences While delivery channels have changed, the principles of effective persuasion have not. 1. Understanding Persuasion in a Social and Mobile Age Contemporary businesses have embraced leaner corporate hierarchies, simultaneously relying on teams, eliminating division walls, and blurring the lines of authority. As teams and managers are abandoning the traditional command structure, excellent persuasive skills are becoming ever more important at work. Effective businesspeople must learn to in order to improve relationships with teams and coworkers. The most striking developments, summarized in this section, are less than three decades old. Check all that apply How has perstasion changed in the digital age? Check all that apply All businesses are in the persuasion business Persuasion is more complex and impersonal Persuasive techniques are more subtle and misleading Persuasive messages are slow to engage audiences Persuasive messages are targeted to very specific audiences While delivery channels have changed, the principles of effective persuasion have not.
Answer:
Explanation:
1. Understanding Persuasion in a Social and Mobile Age Contemporary
businesses have embraced leaner corporate hierarchies, simultaneously relying on teams, eliminating division walls, and blurring the lines of authority.
As teams and managers are abandoning the traditional command structure, excellent persuasive skills are becoming ever more important at work.
As businesses change their hierarchies, persuasive skills are becoming ever more important at work as teams.In the digital age, businesses have moved toward leaner corporate hierarchies, simultaneously relying on teams, dismantling division walls, and blurring the lines of authority. This is why persuasive skills are becoming ever more important at work, as teams and managers are abandoning the traditional
command structure
How has persuasion changed in the digitar age Check an that apply.
All businesses are in the persuasion business
Persuasion is more complex and impersonal
Persuasive techniques are more subtle and misleading:Instead of a blunt, pushy hard-sell approach, persuaders play on emotions by using flattery, empathy, nonverbal cues, and likability appeals, which can be more subtle and misleading
The volume and reach of persuasive messages have exploded
In the digital age, business persuasion relies heavily on subtlety, credibility and physical attractiveness. The principles of effective persuasion have remained largely unchanged, but the delivery channels have evolved. All businesses are in essence in the persuasion business.
Explanation:The nature of persuasion has significantly evolved in the digital age. As businesses shift towards leaner corporate hierarchies, and traditional command structures are blurred, the power of persuasion has become a critical skillset for individuals and teams within a business structure.
In the digital age, all businesses are essentially in the persuasion business. Persuasion has become simultaneously more complex and impersonal due to several factors. Foremost among these factors is the shift towards subtle and nuanced techniques that are often more effective than direct messages. Yet, the principles of effective persuasion have remained largely unchanged.
In today's rapidly evolving workplace environments, characterized by shifts in technology, economics, foreign competition, globalization, and demographics, excellent persuasive skills are becoming ever more critical. Teams and managers need to use persuasive power to influence others and build group consensus, especially when authority is diffused throughout the organization.
In summation, while the delivery channels of persuasion have changed, the principles of effective persuasion - such as credibility, physical attractiveness, and subtlety - have remained the same. All businesses - irrespective of their field of operation - must learn to influence to improve relationships with teams and coworkers in today's social and mobile age.
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White company had no investments prior to the current year. It had the following transactions involving short-term available-for-sale and held-to-maturity securities during the year. Prepare journal entries to record the following transactions associated with the investment purchases. January 10 Purchased 6,000 shares of Gray Company stock at $15.00 plus a broker's fee of $700. (Classified as short-term available-for-sale securities) June 1 purchased $180,000 of Duke Company 4%, five-year bonds at par value. Interest payments are paid semiannually on June 1 and December 1. (Classified as held-to- maturity) July 1 Sold 3,000 shares of Gray company stock at $22 less a $600 brokerage fee. December 1 Received a check for the first semiannual interest payment on the Duke Company bonds. Answer (show calculations in description of JE when appropriate) Date Description DR CR Jan. 10 June 1 July 1 Dec. 1
Answer:
Gray stocks 90,700 debit
Cash 90,700 credit
Duke- Bond 180,000 debit
Cash 180,000 credit
Cash 65,400 debit
Gray stocks 45,350 credit
Gain on Securities 20,050 credit
Dec 1st
Cash 3,600 debit
Interest revenue 3,600 credit
Explanation:
Jan 10th
6,000 x $15 + 700 fee = $90,700
June 1st we record at cost as it was purchase at par.
July 1st
3,000 x $22 - 600 fee = $65,400
Cost: 90,700 x 3,000/6,000 = 45,350
Gain 65,400 - 45,350 = 20.050
December 1st
180,000 x 0.02 = $3,600
the rate is 4% payment semiannually so we divide the rate by 2.
1. What are the three stages in strategic management? Which stage is more analytical? Which relies most on empowerment to be successful? Which relies most on statistics?
Answer:
strategic management: strategy formulation, strategy implementation, and evaluation and control.
1. The three stages in strategic management are strategy formulation, strategy implementation, and strategy evaluation. 2. Strategy formulation is the most analytical. 3. Strategy implementation relies most on empowerment for success. 4. Strategy formulation relies heavily on statistics.
1. Strategic management consists of three main stages:
Strategy Formulation: This involves the development of a vision and mission, identifying the organization's external opportunities and threats, determining internal strengths and weaknesses, establishing long-term objectives, generating alternative strategies, and choosing particular strategies to pursue.Strategy Implementation: This is the process through which strategies and policies are put into action via the development of programs, budgets, and procedures. It often requires changes within the organization and relies heavily on leadership and communication.Strategy Evaluation: The final stage involves monitoring and controlling the strategies to ensure that they are moving the organization towards its goals. It involves the review of internal and external factors, performance measurements, and corrective actions if needed.2. Most Analytical Stage:
Strategy Formulation is the most analytical stage as it involves extensive research, data analysis, and the use of strategic planning models to assess the internal and external environment.
3. Stage Relying on Empowerment:
Strategy Implementation relies most on empowerment as it requires employees at all levels to take initiative and align their actions with the strategic objectives. Successful implementation depends on effective empowerment and leadership.
4. Stage Relying on Statistics:
Strategy Formulation also relies most on statistics as it involves the analysis of market data, trends, financial data, and other quantitative assessments to make informed decisions.
The complete question is:
1. What are the three stages in strategic management?
2. Which stage is more analytical?
3. Which relies most on empowerment to be successful?
4. Which relies most on statistics?
Sheffield Company purchases $50,300 of raw materials on account, and it incurs $63,900 of factory labor costs. Supporting records show that (a) the Assembly Department used $27,100 of the raw materials and $40,100 of the factory labor, and (b) the Finishing Department used the remainder. Manufacturing overhead is assigned to departments on the basis of 160% of labor costs. Journalize the assignment of overhead to the Assembly and Finishing Departments.
Answer:
Work-in-process - Assembly Department $64,160 (debit)
Work-in-process - Finishing Department $38,080 (debit)
Overhead $102,240 (credit)
Explanation:
Assembly Department Costs Assignments
J1 : Raw Materials
Work -in-process $27,100 (debit)
Raw Materials (credit)
J2 : Labor
Work -in-process $40,100 (debit)
Salaries and Wages Payable $40,100 (credit)
J3 : Overheads
Work-in-process $64,160 (debit)
Overhead $64,160 (credit)
Finishing Department Costs Assignments
J1 : Raw Materials
Work -in-process $23,200 (debit)
Raw Materials $23,200 (credit)
J2 : Labor
Work -in-process $23,800 (debit)
Salaries and Wages Payable $23,800 (credit)
J3 : Overheads
Work-in-process $38,080 (debit)
Overhead $38,080 (credit)
Summary of assignment of overhead
Work-in-process - Assembly Department $64,160 (debit)
Work-in-process - Finishing Department $38,080 (debit)
Overhead $102,240 (credit)
LCI Cable Company grants 2.9 million performance stock options to key executives at January 1, 2021. The options entitle executives to receive 2.9 million of LCI $1 par common shares, subject to the achievement of specific financial goals over the next four years. Attainment of these goals is considered probable initially and throughout the service period. The options have a current fair value of $20 per option.
Prepare the appropriate entry when the options are awarded on January 1, 2021.
Answer:
On the date of grant of options-January 1 2021 no entries are required yet in the books of accounts
Explanation:
The value of the options granted to the key executives is computed as follows:
total options fair value=number of shares *current fair value per option
number of shares granted is 2.9 million
current fair value per option is $20
total options fair value=2,900,000*$20
=$58,000,000
the total options value would recognized in the books over four year period on straight line basis =$58,000,000/4
=$14,500,000
At 31 December 2021 for instance,the following entries would be passed:
Dr Compensation expense $4,500,000
Cr Paid-in capital-stock options $4,500,000
However, on the date of grant of options-January 1 2021 no entries are required yet in the books of accounts
Final answer:
LCI Cable Company would record the grant of performance stock options as a compensation expense, recognized over a four-year service period. The total fair value of $58 million would be spread out equally, resulting in an annual expense of $14.5 million. The entry on January 1, 2021, would be to debit Compensation Expense and credit Equity - Stock Options Outstanding for $14.5 million.
Explanation:
When LCI Cable Company grants performance stock options to key executives at the beginning of 2021, the company is creating a compensation expense that will be recognized over the service period, which in this case is the next four years. As the attainment of the specific financial goals tied to the stock options is considered probable, the company would record the total fair value of the stock options as a compensation expense over the four-year period.
The journal entry on January 1, 2021, to record the grant of these options would be:
Credit Equity - Stock Options Outstanding, a part of stockholders' equity, reflecting the company's commitment to issue shares in the future if executives meet the vesting requirements.
To calculate the annual expense, you would take the fair value of the options, which is $20 per option, and multiply by the total number of options, which is 2.9 million. This gives a total fair value of $58 million, which would be spread evenly over the four years, resulting in an annual compensation expense of $14.5 million, assuming straight-line amortization.
Debit Compensation Expense for $14.5 million
Credit Equity - Stock Options Outstanding for $14.5 million
Your company's human resource manager is away from the office on vacation, and you have four open positions to fill in your department. Which of the following tests should you choose if you want to engage applicants in a conversation to determine if they have good communication skills?a. An employment testb. An online checkc. An interviewd. An application form
Answer:
An interview
Explanation:
Job interviewing is one of the most common methods companies use to recruit new candidates. The interview involves a conversation between prospective candidates and recruiting firm members, usually one candidate at a time. However, there may be one or more members of the interview panel. Through the interview, the candidate's communication skills can be tested as there is an interaction between the interviewer and the interviewerA tornado struck the only manufacturing plant of Toledo Farm Implements (TFI) on June 1. All work-in-process inventory was destroyed, but a few records were salvaged from the wreckage and from the company's headquarters. If acceptable documentation is provided, the loss will be covered by insurance. The insurable value of work-in-process inventory consists of direct materials, direct labor, and applied overhead. The following information about the plant appears on the April financial statements at the company's downtown headquarters: Materials inventory, April 30 $ 98,000 Work-in-process inventory, April 30 172,400 Finished goods inventory, April 30 64,000 Cost of goods sold through April 30 697,200 Accounts payable (materials suppliers), April 30 43,200 Manufacturing overhead through April 30 369,800 Payroll payable, April 30 0 Withholding and other payroll liabilities, April 30 19,400 Overhead applied through April 30 359,200 A count of the inventories on hand May 31 shows the following: Materials inventory $ 86,000 Work-in-process inventory
Required:
Determine the cost of the work-in-process inventory lost in the disaster.
Calculating the lost WIP inventory involves starting with the April 30 WIP value, adding May's manufacturing costs, and subtracting any remaining inventory. Without complete data, an exact calculation isn't possible, and TFI must work with their insurer to estimate the loss.
Explanation:To determine the cost of the work-in-process (WIP) inventory lost in the disaster at Toledo Farm Implements (TFI), we need to calculate the WIP as of May 31. This is done by adding the beginning WIP inventory to the total manufacturing costs incurred during the month (materials used, direct labor, and overhead applied) and then subtracting the ending WIP inventory (if any).
Starting with the WIP inventory as of April 30, which was $172,400, we then add the costs of materials used, direct labor, and manufacturing overhead applied during May. The value of materials used can be calculated by taking the beginning materials inventory, adding purchases (which can be calculated by the change in accounts payable if that represents solely material purchases), and then subtracting the ending materials inventory. The exact amount of materials purchased is not provided, but if we assume all accounts payable were for materials, purchases would be the change in accounts payable plus the materials used during May. We need additional data for direct labor costs and actual overhead costs for May to make a complete calculation, but we know the applied overhead figure is $359,200 as of April 30.
The missing figures make it impossible to calculate the exact loss without assumptions or additional data. If such data is unattainable, TFI should consult with their insurer on an estimation method acceptable for the insurance claim.
Photo Framing's cost formula for its supplies cost is $1,080 per month plus $18 per frame. For the month of November, the company planned for activity of 618 frames, but the actual level of activity was 608 frames. The actual supplies cost for the month was $12,550. The spending variance for supplies cost in November would be closest to:
Answer:
$526 was the spending variance in November
Explanation:
The spending variance in the month involves knowing the difference between actual supplies cost incurred in the month and the budgeted supplies cost based on actual activity
Budgeted supplies cost based on actual activity of 608 frames=$1080+(608*$18)
Budgeted supplies cost based on actual activity of 608 frames=$1080+$10,944=$12,024
Spending variance=$12,550-$12.024 =$526
The actual spend was $526 more than the budgeted spend based on actual activity,hence an unfavorable variance was recorded
Oceanside Marine Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Oceanside uses standard costs to prepare its flexible budget. For the first quarter of the year, direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 2 pound per unit; $ 12 per pound Direct labor: 4 hours per unit; $ 19 per hour Oceanside produced 3 comma 000 units during the quarter. At the end of the quarter, an examination of the direct materials records showed that the company used 7 comma 500 pounds of direct materials and actual total materials costs were $ 99 comma 300. What is the direct materials cost variance? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.) A. $ 3 comma 720 Unfavorable B. $ 9 comma 300 Unfavorable C. $ 3 comma 720 Favorable D. $ 9 comma 300 Favorable
Answer:
B. $9 comma 300 Unfavorable
Explanation:
To calculate the direct material cost variance we use formula :
Cost variance : (Actual cost - Standard cost ) * Actual quantity
Actual cost : Actual total direct material cost / Actual direct material used in pounds
$99,300 / 7500 pounds = $13.24
$13.24 - $12 * 7,500 pounds = $9,300
The actual cost is higher than the standard cost therefore the variance is unfavorable.
Between projects A and B, project A will be considered a superior financial undertaking if it has:
a. A shorter payback period than project B.
b. A lower net present value than project B.
c. A lower average rate of return than project B.
d. A longer payback period than project B.
Answer:
A. a shorter payback period than project B.
Explanation:
Payback period is the period when the investment value is fully recovered through the business.
Hence the shorter the payback period, the better it is because this means that the return on investment in earned at a greater pace.
Hope this clear things up.
Good luck.
What is the value of the monetary base, given that the value of deposits at all depository institutions equals $ 2265.83 billion, currency is $ 1144.60 billion, and bank deposits held at the Fed are $ 1422.30 billion?
The value of the monetary base, given that the value of deposits at all depository institutions should be $2,566.9 billion
Calculation of the value of the monetary base:
Data provided as per the question:
Currency = $1144.60 billion
Bank deposits = $1422.30 billion
So,
Value of the monetary base = Currency + bank deposits
= $1144.60 billion + $1422.30 billion
= $2,566.9 billion
Therefore for computing the value of the monetary base we simply added currency with bank deposits.
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The monetary base is calculated by adding the value of currency in circulation and reserves held at the central bank. Given the provided information, the monetary base is $2566.90 billion.
Explanation:The monetary base, often called high-powered money or reserve money, is a measure of the money supply and includes all of the physical currency in circulation plus reserves held at the central bank, in this case, the Federal Reserve (Fed). The equation for the monetary base is MB = Currency + Reserves. Given the data you provided, the value of the monetary base (MB) can be found by summing the currency in circulation and the deposits held at the Fed. That is,
MB = Currency + Deposits at the Fed = $1144.60 billion + $1422.30 billion = $2566.90 billion
It's important to remember that the deposits at depository institutions are not included in the monetary base calculation. This figure represents the money that banks and other financial institutions have in their accounts, not the money held by the central bank or in circulation among the public.
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Abe Frill wants to attend AVP Tech. He will need to have $15,000 seven years from today. How much should Abe put in the bank today (12% quarterly) to reach his goal in the future?
Answer:
$6,556.15
Explanation:
The calculation of Initial Deposit Required is shown below:-
Future value required = Present value × (1 + Rate of interest ÷ Quarterly)^Time period
15,000 = Present value(1 + 0.12 ÷ 4)^7×4
15,000 = Present value(1 + 0.12 ÷ 4)^28
Present value = $6,556.15
Therefore, for computing the initial deposit required simply we applied the above formula and the initial deposit required = $6,556.15.
Accounting Rate of Return Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. Cobre Company is considering the purchase of new equipment that will speed up the process for extracting copper. The equipment will cost $3,600,000 and have a life of 5 years with no expected salvage value. The expected cash flows associated with the project are as follows: Year Cash Revenues Cash Expenses 1 $6,000,000 $4,800,000 2 6,000,000 4,800,000 3 6,000,000 4,800,000 4 6,000,000 4,800,000 5 6,000,000 4,800,000 Emily Hansen is considering investing in one of the following two projects. Either project will require an investment of $75,000. The expected cash revenues minus cash expenses for the two projects follow. Assume each project is depreciable. Year Project A Project B 1 $22,500 $22,500 2 30,000 30,000 3 45,000 45,000 4 75,000 22,500 5 75,000 22,500 Suppose that a project has an ARR of 30% (based on initial investment) and that the average net income of the project is $120,000. Suppose that a project has an ARR of 50% and that the investment is $150,000. Required: 1. Compute the ARR on the new equipment that Cobre Company is considering. Round your answer to one decimal place. % 2. Conceptual Connection: Which project should Emily Hansen choose based on the ARR
Answer:
Computation of Accounting Profit of the new project
Years Cash Revenue Cash expenses Depreciation Profit
1 $6,000,000 $4,800,000 720,000 480,000
2 6,000,000 4,800,000 720,000 480,000
3 6,000,000 4,800,000 720,000 480,000
4 6,000,000 4,800,000 720,000 480,000
5 6,000,000 4,800,000 720,000 480,000
Accounting rate of return of the new project
= Average Profit / Initial investment
= $480,000/$3,600,000
= 13.3%
2. Project A 's ARR = 30%
Project B's ARR = 50%
New Project's ARR = 13.3%
Emily Hansen should choose project with highest ARR. Therefore, project B should be selected since it has highest ARR of 50% as compare to others.
Explanation:
The Accounting Rate of Return is the analytical tool that measures the average return the business will gain from the initial investment upon a specified project. The higher the ARR higher are the chances for the project to provide higher returns.
1. The Accounting Rate of Return for the new project is 13.30%.
2. Based upon ARR Emily Hansen should choose "Project B"
Computations:
1. The Accounting Rate of Return for the new project is computed as follows:
[tex]\begin{aligned}\text{Accounting Rate of Return}&=\frac{\text{Average Profit}}{\text{Initial Investment}}\\&=\frac{\$480,000}{\$3,600,000}\times100\\&=13.30\%\end{aligned}[/tex]
The computation of the average profit is shown in the image below.
2. The ARR of all the projects is:
Project A: 30%
Project B: 50%
Project C: 13.30%
For the independent scenarios, the investor or the business owner must choose the project having the highest ARR.
Therefore, upon the comparison, Emily Hansen will choose Project B having the highest ARR of 50%.
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A recent MSOE graduate wants to set up an endowment fund that can award scholarships to engineering students totaling $100,000 per year forever. The first scholarships are to be granted now and continue each year from now on. How much must the alumni donate now, if the endowment fund is expected to earn interest at a rate of 5% per year?
Answer:
The amount of donation would be of $2,000,000
Explanation:
According to the given data we have the following:
Perpetual scholarships= $100,000
interest rate=5%
Hence, in order to calculate how much must the alumni donate now if the endowment fund is expected to earn interest at a rate of 5% per year, we have to use the following formula:
Present Value= Annual Amount/Rate
Present Value=$100,000/5%
Present Value=$2,000,000
The amount of donation would be of $2,000,000
On January 1, Alan King decided to transfer an amount from his checking account into an investment account that later will provide $80,000 to send his son to college (four years from now). The investment account will earn 8 percent, which will be added to the fund each year-end. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1) (Use appropriate factor(s) from the tables provided.)
Answer:
The requirement of the question is as below:
How much must Alan deposit on January 1? (Round your final answer to the nearest whole dollar amount.)
What is the interest for the four years? (Round your final answer to the nearest whole dollar amount.)
Alan deposit on January 1 is $ 58,802.39
Interest for four years is $21,197.61
Explanation:
The first is asking for today's worth of the investment,which is the amount to be invested,this can be computed using the present value as shown below:
PV=FV*(1+r)^-n
PV is the present value
FV is the worth of the investment in 4 years from now which is $80,000
r is the rate of return of 8%
n is the number of years of investment which is 4 years
PV=$80,000*(1+8%)^-4
PV=$80,0008(1+0.08)^-4
PV=$80,000*(1.08)^-4
PV =$ 58,802.39
interest for four years=FV-PV
interest for four years=$80,000-$ 58,802.39
=$21,197.61
Eighty units of end item X are needed at the beginning of week 6, and another 30 units are needed at the beginning of week 8. Prepare a material requirements plan for component D. D can only be ordered in whole cases (50 units per case). One case of D is automatically received every other week, beginning in week 1 (i.e., weeks 1, 3, 5, 7). Lot-for-lot ordering will be used for all items except D. Also, there are 30 units of B and 20 units of D now on hand. Lead times for all items are a function of quantity: one week for up to 100 units, two weeks for 101 to 200 units, three weeks for 201 to 300 units, and four weeks for 301 or more units.
Answer:
Find attached in the files below
is a list of steps from 1 to 7 containing solution
to the above problem
The first image also contains the complete question
Which statement is true regarding a foreign currency option? Multiple Choice A foreign currency option gives the holder the obligation to buy or sell foreign currency in the future. A foreign currency option gives the holder the obligation to only sell foreign currency in the future. A foreign currency option gives the holder the obligation to only buy foreign currency in the future. A foreign currency option gives the holder the right but not the obligation to buy or sell foreign currency in the future. A foreign currency option gives the holder the obligation to buy or sell foreign currency in the future at the spot rate on the future date.
Answer: A foreign currency option gives the holder the right but not the obligation to buy or sell foreign currency in the future
Explanation:
A currency option which is also referred to as the forex option is a contract which gives the buyer the right, but not obligated to purchase or sell a particular currency at an exchange rate on or before a particular date.
Currency options is a common way for individuals, corporations, or financial institutions to curtail adverse movements in the exchange rates.
Consider a zero-coupon bond with a $1000 face value and 10 years left until maturity with annual compounding. If the YTM of this bond is 10.4%, then the price of this bond is closest to:
Answer:
$372
Explanation:
FV = 1000
Ytm=10.4%=0.104
N=10
Compute FV
FV=X(1+i)^-n
FV=1000(1+0.104)^-10
FV=1000(1.104)^-10
FV= 1000(0.3717)
FV=371.799
FV=372
The price closest to the bond is $372
Conley Company has fixed costs of $23,415,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follow:
Product Selling Price Variable Cost per Unit Contribution Margin per Unit Yankee $295 $120 $175 Zoro 235 160 75 The sales mix for products Yankee and Zoro is 30% and 70%, respectively. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below. Open spreadsheet
Determine the break-even point in units of Yankee and Zoro of the overall (total) product, E. If required, round your answers to the nearest whole number.
Answer:
Yankee = 66,900 units
Zoro = 156,100 units
Explanation:
Break Even Point = Fixed Costs / Contribution per unit
= $23,415,000 / ((3×$175) + (7×$75))
= $23,415,000 / $1,050
= 22,300
Yankee = 22,300×3
= 66,900
Zoro = 22,300×7
= 156,100
If the dollar appreciates relative to the Euro then: Multiple Choice European cars will become less expensive in the United States. American cars will become less expensive in Europe. the price of cars will not be affected. European cars will become more expensive in the United States. American cars will become less expensive in the United States.
Answer:
The correct answer is letter "A": European cars will become less expensive in the United States.
Explanation:
When a currency appreciates over another it means its value is greater than the other. For instance, if the dollar appreciates over the euro, all European items will be cheaper in countries where the dollar is the official currency. Besides, American items will be expensive in countries where the euro is the official currency for trade.
Therefore, European cars in the U.S. will be less expensive.
Jones is the manager of an upscale clothing store in a shopping mall that contains only two such stores. While these two competitors do not carry the same brands of clothes, they serve a similar clientele. Jones was recently notified that the mall is going to implement a 10 percent across-the-board increase in rents to all stores in the mall, effective next month. How should Jones change her prices in response to this 10 percent increase in monthly rent?
Answer:
Jones is the manager of an upscale clothing store in a shopping mall that contains only two such stores. While these two competitors do not carry the same brands of clothes, they serve a similar clientele. Jones was recently notified that the mall is going to implement a 10 percent across-the-board increase in rents to all stores in the mall, effective next month. How should Jones change her prices in response to this 10 percent increase in monthly rent?
In response to this 10 percent increase in monthly rent, Jones should not increase the prices for both stores.
Explanation:
A 10 percent increase in the rent signifies an increase in the fixed cost. Therefore, both stores observe a rise of 10 percent in their fixed cost, when a 10 percent across-the-board increase in rent is applied in the mall. However, this does not raise the variable cost and the marginal cost.
Therefore, in response to this 10 percent increase in monthly rent, Jones should not increase the prices for both stores.
Radar Company sells bikes for $490 each. The company currently sells 4,300 bikes per year and could make as many as 4,620 bikes per year. The bikes cost $260 each to make: $180 in variable costs per bike and $80 of fixed costs per bike. Radar received an offer from a potential customer who wants to buy 320 bikes for $460 each. Incremental fixed costs to make this order are $48,000. No other costs will change if this order is accepted.
Required:
Compute Radar’s additional income (ignore taxes) if it accepts this order.
Answer:
Radar's additional income for accepting the order is calculated as follows:
Sales - 320 x $460 = $147,200
less Cost of Sales = 320 x $180 + $48,000 = $105,600
Additional Income = $41,600
Explanation:
The additional income of $41,600 is $147,200 - $105,600, which is the result of deducting cost of sales from Sales.
The cost of sales includes the variable cost per bike, including the incremental fixed costs ($48,000) to make this order.
To make a decision whether to accept an order or not, the company needs to consider all variable costs, including the incremental fixed costs. The resulting additional income is what is available to offset the fixed costs.
Final answer:
Radar's additional income if it accepts the special order of 320 bikes at $460 each would be $41,600, which is calculated by subtracting the incremental costs ($105,600) from the incremental revenue ($147,200).
Explanation:
To calculate Radar's additional income if it accepts the special order of 320 bikes at $460 each, we need to consider the incremental revenues and costs associated with the order.
Incremental Revenue and Costs
The incremental revenue from selling the additional 320 bikes at $460 each would be $147,200 (320 bikes * $460).
The incremental costs include the variable costs of making the bikes ($180 per bike) and the additional fixed costs of $48,000. The total incremental cost for producing 320 bikes would be $57,600 ($180 variable cost per bike * 320 bikes) plus $48,000 in fixed costs, totaling $105,600.
Additional Income Calculation
To compute the additional income, subtract the incremental costs from the incremental revenues: $147,200 (incremental revenue) - $105,600 (incremental costs) = $41,600.
Thus, Radar's additional income from accepting the special order is $41,600.
Michael's, Inc., just paid $2.00 to its shareholders as the annual dividend. Simultaneously, the company announced that future dividends will be increasing by 4.4 percent. If you require a rate of return of 8.6 percent, how much are you willing to pay today to purchase one share of the company's stock?
Answer:
$49.71
Explanation:
The computation of the willing to pay for the company stock is shown below:
= Next year dividend ÷ (Required rate of return - growth rate)
where,
Next year dividend is
= $2 + $2 × 4.4%
= $2 + 0.088
= $2.088
The required rate of return is 8.6% and the growth rate is 4.4%
So, the price of one share of the company stock is
= $2.088 ÷ (8.6% - 4.4%)
= $2.088 ÷ 4.2%
= $49.71
We simply applied the above formula
Your grandmother left you $90,000 that you'll receive when you turn 40 in 18 years. Since you'd rather have some money now, you want to sell your claim to the inheritance. Attempt 1/10 for 10 pts. Part 1 What is the minimum amount that you should sell your claim for now if the interest rate is 5%
Answer:
The minimum amount to sell the claim is =$37,396.85
Explanation:
The minimum amount is the present value of the the expected future sum discounted at the rate of 5%.
PV = FV × (1+r)^(-n)
FV - 90,000, r- 5%, n- 18
= 90,000 × (1.05)^(-18)
= 37,396.85
The minimum amount to sell the claim is =$37,396.85
Final answer:
Calculate the minimum amount to sell your claim now using the present value formula at an interest rate of 5% for a $90,000 inheritance received in 18 years.
Explanation:
The present value formula can be used to calculate the minimum amount to sell your claim for now:
Present Value formula: PV = FV / (1 + r)^nGiven FV = $90,000, r = 5%, n = 18 yearsCalculating the present value:PV = $90,000 / (1 + 0.05)^18 = $90,000 / (1.05)^18 = $90,000 / 2.078928 = $43,222.96
So, the minimum amount you should sell your claim for now is approximately $43,222.96.
On January 1 st 2012, Everhart Corporation, a calendar year company issues $100,000, 5%, 5-year bonds dated January 1, 2012. The bond pays interest semiannually on January 1 and July 1 . The bonds are issued to yield 6%. 2.50% 3.00% 5.00% 6.00% Present value of a single sum for 5 periods 0.88385 0.86261 0.78353 0.74726 Present value of a single sum for 10 periods 0.78120 0.74409 0.61391 0.55839 Present value of an annuity for 5 periods 4.64583 4.57971 4.32948 4.21236 Present value of an annuity for 10 periods 8.75206 8.53020 7.72173 7.36009 If Everhart Corporation uses the effective interest method to amortize any premiums or discounts on their
outstanding bonds, what will be the journal entries to record interest expense for calendar year 2013?
Answer:
Interest expense 2894.7 debit
discount on Bonds Payable 394.7 credit
cash 2500 credit
Interest expense 2906.55 debit
discount on Bonds Payable 406.55 credit
interest payable 2500 credit
Explanation:
We have to solve for the 2013 year which is one year after the issuance ofthe bonds.
We solve for the bond issuance price and then, we construct the bonds schedule and take the numbers from period 3 and 4.
Issuance proceeds: present value fo the coupon payment and maturity at market rate:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 2,500.000
time 10
rate 0.03
[tex]2500 \times \frac{1-(1+0.03)^{-10} }{0.03} = PV\\[/tex]
PV $21,325.5071
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 100,000.00
time 10.00
rate 0.03
[tex]\frac{100000}{(1 + 0.03)^{10} } = PV[/tex]
PV 74,409.39
PV c $21,325.5071
PV m $74,409.3915
Total $95,734.8986
Now we will calcautlethe interest expense by multiplying carrying value by the market value and sutract from the cash outlay to determinate the amortization on the bonds.
Which of the following actions are likely to reduce the length of a company’s cash conversion cycle? Select one: a. Adopting a new inventory system that reduces the inventory conversion period. b. Reducing the average days sales outstanding (DSO) on its accounts receivable. c. Reducing the amount of time the company takes to pay its suppliers. d. Statements a and b are correct. e. All of the statements above are correct.
Answer:
e. All of the statements above are correct.
Explanation:
Cash Conversion Cycle Duration Significance
The greater the quantity of inventory the company purchases, the less cash it has on hand to pay bills. The more days a company's money is tied up in inventory, the longer the cash conversion cycle and the greater the number of days creditors must wait for their money.
Sufficient cash flow is incredibly important to the success of your business. It’s a critical metric in business health. The amount of available cash your business has on hand at any given time affects both your daily and long-term operations. Poor cash flow makes your day-to-day business operations more challenging and it also negatively affects your timeline on paying creditors.
Fortunately, there are ways to shorten your cash conversion cycle. Reducing the cycle length can even boost your bottom line through interest savings. This are the few ways:
1. Improve Your Cash Flow Management
2. Collect Your Accounts Receivables Faster
3. Manage your inventory more efficiently
4. Improve Your Accounts Receivables Process
5. Take advantage of your bank’s treasury management service