Answer: C. preacquisition market value of Chewy.com.
Explanation:
The Acquisition Premium that a company that is acquiring another pays is generally the Amount that that was paid minus the amount that the company being acquired was worth before it was purchased.
For Instance, assuming Chewy.com was valued at $3.25 billion before the Acquisition by PetSmart then the Acquisition Premium is,
= $3.35 billion - $3.25 billion
= $100 million.
In the balance sheet, this premium will more often than not be recorded as Goodwill which is defined as an Intangible Asset that is generated when a company buys another company for more than it is worth. That incremental value is the Goodwill.
Final answer:
The acquisition premium for PetSmart's acquisition of Chewy.com can be calculated by comparing the purchase price offered to Chewy.com's preacquisition market value, which is the company's value before the acquisition bid. The correct option is (C).
Explanation:
The acquisition premium for the deal where PetSmart agreed to acquire Chewy.com can be calculated as the amount by which the price PetSmart offered for Chewy.com exceeded the preacquisition market value of Chewy.com.
The preacquisition market value refers to the valuation of a company before any acquisition-related premiums are added. This is significant because it provides a baseline for the original worth of the company prior to any speculation or negotiation that may drive up its price during a takeover bid.
Acquisition premiums are thus the extra amount that buyers are willing to pay over and above this original preacquisition value to gain control of the company.
Compute and Compare ROE, ROA, and RNOA
Selected balance sheet and income statement information for Oracle Corporation follows. (Perform the required computations from the perspective of an Oracle shareholder.
$ millions
May 31, 2015
May 31, 2014
Operating assets
$56,535
$51,447
Nonoperating assets
54,368
38,819
Total assets
110,903
90,266
Operating liabilities
19,847
18,722
Nonoperating liabilities
41,958
24,097
Total liabilities
61,805
42,819
Total Oracle stockholders' equity
48,663
46,878
Total revenues
38,226
Operating income before tax
13,871
Nonoperating expense before tax
1,037
Tax expense
2,896
Net income
9,938
a. Compute return on equity (ROE)
Round answer to two decimal places (ex: 0.12345 = 12.35%)
........%
b. Compute return on net assets (ROA)
Round answers to two decimal places (percentage ex: 0.12345 = 12.35%)
........%
c. Compute return on net operating assets (RNOA)
Round answers to two decimal places (percentage ex: 0.12345 = 12.35%)
.......%
Answer:
ROE - 20.8%
ROA - 9.88%
RNOA - 20.33%
Explanation:
ROE = Net income / Average shareholder equity
Average shareholder equity = 48,633 + 46,878 / 2 = 47,770.50
ROE = 9,938 / 47,770.50
ROE = 20.8%
ROA = Net Income / Average Total Assets
Average total assets = 110,903 + 90,266 / 2 = 100,584.50
ROA = 9,938 / 100,584.50
ROA = 9.88%
RNOA = NOPAT / Average net Operating Assets
Average net Operating Assets = 56,535 + 51,447 / 2 = 53,991
NOPAT = Net Operating income before tax - Tax expense
NOPAT = 13,871 - 2,896 = 10,975
RNOA = 10,975 / 53,991
RNOA = 20.33%
Which of the following is a characteristic of a management control system? A. It deals with coordinating planning across the organization and is not concerned with behavioral aspects of managing B. It gathers key information that aids in the process of making decisions C. It encourages shortminusterm profit planning D. Helps managers to act rapidly and with autonomy
Answer:
D. Helps managers to act rapidly and with autonomy
Explanation:
The management control system defines that every policy and procedure should be followed in a proper manner and work on new strategies for the benefit of the organization. It helps in managing the hierarchy level and differentiates the performance company resources like finance, marketing, sales, Human resource management, operations, etc.
Therefore the management control system provides to work with sovereignty so that the work runs in a smooth and inefficient and effective manner. It also helps the managers to take the action quickly before things go out of control.
Each of these items must be considered in preparing a statement of cash flows for Irvin Co. for the year ended December 31, 2017. For each item, state how it should be shown in the statement of cash flows for 2017.
a. Issued bonds for $150,000 cash.
b. Purchased equipment for $200,000 cash.
c. Sold land costing $50,000 for $50,000 cash.
d. Declared and paid a $20,000 cash dividend.
Answer:
a. Issued bonds for $150,000 cash (cash outflow - Financing Activity)
b. Purchased equipment for $200,000 cash. (Cash outflow - Investing Activities)
c. Sold land costing $50,000 for $50,000 cash. (Cash inflow - investing Activities)
d. Declared and paid a $20,000 cash dividend. (Cash outflow - Finance Activities)
The classification is as follows:
a. When the bonds are issued for cash so the same is to be shown in the financial activity as the cash inflow.
b. When the equipment is purchased for cash so the same is to be shown in the investing activity as the cash outflow.
c. When the land is sold for cash so the same is to be shown in the investing activity as the cash inflow.
d. When the dividend is paid in cash so the same is to be shown in the financial activity as the cash outflow.
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Which of the following statements is not true? Group of answer choices U.S. export control law requires the issuance of an export license to cover the movement of controlled U.S.-origin products from India to Taiwan. The Department of Commerce will not recommend the decontrol of a product on grounds that a non-U.S. item of comparable quality is available rendering the control ineffective. The Bureau of Industry and Security has 90 days to review and rule on the application of an export license. Civil penalties may be imposed on a strict liability basis for violations of export control law without having to prove criminal intent.
Answer: Second one.
Explanation:
The Department of Commerce will not recommend the decontrol of a product on grounds that a non-U.S. item of comparable quality is available rendering the control ineffective.
The Department of Commerce does not base decontrol recommendations on non-U.S. item availability.
The statement that is not true is:
The Department of Commerce will not recommend the decontrol of a product on grounds that a non-U.S. item of comparable quality is available rendering the control ineffective.Explanation:
The other statements are accurate: export control laws require licenses for certain U.S.-origin products, the Bureau of Industry and Security has a timeline for reviewing export license applications, and civil penalties for export law violations can be imposed without proof of criminal intent.
On July 31, 2017, Mexico Company paid $3,000,000 to acquire all of the common stock of Conchita Incorporated, which became a division of Mexico. Conchita reported the following balance sheet at the time of the acquisition.
Current assets $800,000
Noncurrent assets $2,700,000
Total assets $3,500,000
Current liabilities $600,000
Long-term liabilities $500,000
Stockholders' equity $2,400,000
Total liabilities and stockholders' equity $3,500,000
It was determined at the date of the purchase that the fair value of the identifiable net assets of Conchita was $2,750,000. Over the next 6 months of operations, the newly purchased division experienced operating losses. In addition, it now appears that it will generate substantial losses for the foreseeable future. At December 31, 2017, Conchita reports the following balance sheet information.
Current assets $450,000
Noncurrent assets (including goodwill recognized in purchase) $2,400,000
Current liabilities (700,000)
Long-term liabilities (500,000)
Net assets $1,650,000
It is determined that the fair value of the Conchita Division is $1,850,000. The recorded amount for Conchita's net assets (excluding goodwill) is the same as fair value, except for property, plant, and equipment, which has a fair value of $150,000 above the carrying value.
Instructions:
(a) Compute the amount of goodwill recognized, if any, on July 31, 2017.
(b) Determine the impairment loss, if any, to be recorded on December 31, 2017.
(c) Assume that fair value of the Conchita Division is $1,600,000 instead of $1,850,000. Determine the impairment loss, if any, to be recorded on December 31, 2017.
(d) Prepare the journal entry to record the impairment loss, if any, and indicate where the loss would be reported in the income statement.
Answer:
a. $250,000
b. Impairment loss to be recorded will be = $0
c. $200,000
d.Loss on impairment A/c Dr, $200,000
To Goodwill A/c $200,000
(Being impairment loss is recorded)
Explanation:
a.The computation of Goodwill is shown below:-
Goodwill = Fair value of the division - Fair value of the identifiable assets
= $3,000,000 - $2,750,000
= $250,000
b. Impairment loss to be recorded will be = $0
No loss of impairment is registered, since Conchita's fair value of $1,850,000 is greater than the net assets' carrying value of $1,650,000.
c. Implied fair value of goodwill = Fair value of division - Carrying value of the division
Fair value of Conchita division $1,600,000
Carrying value of division $1,650,000
Increase in fair value of PP&E $150,000
Less: Goodwill ($250,000) ($1,550,000)
Implied fair value of goodwill $50,000
Carrying value of goodwill ($250,000)
Impairment loss $200,000
d. To record the impairment loss the Journal entry is shown below:-
Loss on impairment A/c Dr, $200,000
To Goodwill A/c $200,000
(Being impairment loss is recorded)
The goodwill recognized on July 31, 2017 is $250,000. No impairment loss needs to be recorded on December 31, 2017. If the fair value of the Conchita Division is $1,600,000, an impairment loss of $50,000 needs to be recorded on December 31, 2017.
Explanation:(a) To compute the amount of goodwill recognized on July 31, 2017, we need to determine the fair value of the identifiable net assets of Conchita. The fair value of the identifiable net assets is $2,750,000 and the consideration paid to acquire the common stock of Conchita is $3,000,000. Therefore, the goodwill recognized is $3,000,000 - $2,750,000 = $250,000.
(b) To determine the impairment loss to be recorded on December 31, 2017, we compare the fair value of the Conchita Division ($1,850,000) with the carrying value of the net assets ($1,650,000). The carrying value is less than the fair value, so no impairment loss needs to be recorded.
(c) If the fair value of the Conchita Division is $1,600,000 instead of $1,850,000, the carrying value is higher than the fair value. The impairment loss to be recorded on December 31, 2017 is $1,650,000 - $1,600,000 = $50,000.
(d) The journal entry to record the impairment loss is:
Debit Impairment loss on Conchita Division: $50,000Credit Accumulated impairment loss: $50,000The impairment loss would be reported in the income statement as a separate line item.
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Light Me Up Lamps has variable expenses of 30% of sales and monthly fixed expenses of $140,000. The monthly target operating income is $70,000. What is Light Me Up Lamps' operating leverage factor at the target level of operating income?A.1.50
The operating leverage factor measures the relationship between fixed costs and operating income. It is calculated by dividing the contribution margin by the operating income.
Explanation:The operating leverage factor measures the relationship between fixed costs and operating income. It is calculated by dividing the contribution margin by the operating income. To find the contribution margin, we subtract the variable expenses from the sales. In this case, the variable expenses are 30% of sales, so the contribution margin would be 70% of sales. Let's say the sales are $X. Then, the operating leverage factor at the target level of operating income of $70,000 would be:
Contribution margin = 70% * X = 0.7 * X
Operating leverage factor = (0.7 * X) / $70,000
Since we don't have the value of X, we can't calculate the exact operating leverage factor.
Final answer:
The operating leverage factor for Light Me Up Lamps at the target level of operating income is calculated as 3.0 using the contribution margin and operating income.
Explanation:
To calculate the operating leverage factor at the target level of operating income for Light Me Up Lamps, we use the contribution margin formula and the operating leverage formula. The contribution margin (CM) is calculated as the difference between sales and variable expenses, while the operating leverage factor is the ratio of contribution margin to operating income.
Variable expenses are 30% of sales, so the contribution margin ratio is 70% (100% - 30%).Fixed expenses are $140,000, and target operating income is $70,000.Let S be the amount of sales required to achieve the target operating income.
Then, we have:
0.7S - $140,000 = $70,000
S = ($140,000 + $70,000) / 0.7
S = $300,000
Now that we have the sales value, we can find the contribution margin in dollar terms.
CM = 0.7 × $300,000 = $210,000
The operating leverage factor is then calculated as:
Operating Leverage Factor = Contribution Margin / Operating Income
Operating Leverage Factor = $210,000 / $70,000
Operating Leverage Factor = 3.0
Therefore, the operating leverage factor for Light Me Up Lamps at the target level of operating income is 3.0.
"Shenandoah Skies" is the name of an oil painting by artist Kara Lee. In each of the following cases, determine the amount and character of the taxpayer’s gain or loss on sale of the painting.a. The taxpayer is Kara Lee, who sold her painting to the Reller Gallery for $6,000.b. The taxpayer is the Reller Gallery, who sold the painting purchased from Kara to a regular customer for $10,000.c. The taxpayer is Lollard Inc., the regular customer that purchased the painting from the Reller Gallery. Lollard displayed the painting in the lobby of its corporate headquarters until it sold "Shenandoah Skies" to a collector from Dallas. The collector paid $45,000 for the painting.
Answer:
A. $6000 ordinary income on sale of a creative asset by the creator of the asset.
B. $4000 ordinary income on the sale of inventory.
C. $35000 capital gain on sale of a capital asset. (which is a non depreciable business personality).
Explanation:
The taxpayer sold a painting to Reller Gallery for $6000. So, the tax payer amount and the character of tax payer gain or loss is as follows:
A. $6000 amount realized minus zero basis is equal to $6000 ordinary income on sale of a creative asset by the creator of the asset.
Reller Gallery sold the painting purchased by from Kara to a regular customer, Lollard Inc. for $10000. So, the tax payer amount and the character of tax payer gain or loss is as follows:
B. $10000 amount realized minus $6000 cost basis is equal to $4000 ordinary income on the sale of inventory.
Lollard Inc., the tax payer, was the regular customer that purchased the painting from the Reller Gallery. Lollard showed the painting in the lobby of its corporate headquarters until it sold "Shenandoah Skies" painting to a collector from Dallas. Where the collector paid $45,000 for the painting. So, the tax payer amount and the character of tax payer gain or loss is as follows:
C. $45000 amount realized minus $10000 cost basis is equal to $35000 capital gain on sale of a capital asset. (which is a non depreciable business personality).
Answer: The answers are entwined in the explanation.
Explanation:
The length of time for which each taxpayer held the asset AND the amount or percentage of tax payed by each taxpayer ARE NOT GIVEN but the amount and character of the gains and losses are shown below, as estimated:
(A) Taxpayer Kara Lee
The amount of Kara Lee's gain is $6,000
The character of this gain is SHORT TERM
The amount of Kara Lee's loss is $39,000 ($45,000 - $6,000)
The character of this loss is LONG TERM
(B) Taxpayer Teller Gallery
The amount of Teller Gallery's gain is $4,000 ($10,000 - $6,000)
The character of this gain is SHORT TERM as the gallery sold to a regular customer (meaning that the painting didn't stay long in their possession)
The amount of Reller Gallery's loss is $35,000 ($45,000 - $10,000)
The character of this loss is LONG TERM
(C) Taxpayer Lollard Inc.
The amount of Lollard Inc.'s gain is $35,000
The character of this gain is LONG TERM because the question says that Lollard displayed the painting in the lobby of its corporate headquarters UNTIL it sold for $45,000. This means that the asset "Shenandoah Skies" was held for a long time by/at Lollard Inc.
On the other hand, Lollard Inc. has no loss on sale of the painting until the Dallas Collector (who bought it from them) resells it and at a price higher than $45,000.
Multiple Choice Question 60 A department adds all raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 89800 units were started into production in January; and there were 19000 units that were 35% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for conversion costs for the month of January?
Answer:
Equivalent units = 77, 450 units
Explanation:
Equivalent units are notional whole units which represent incomplete work which are used to apportion costs between between work in progress and completed work.
To compute as
Equivalent Units = Degree of completion (%) × units
Completed units in the period with 100% work done is equal
= units started in the period - closing inventory
= 89,800 - 19,000
= 70,800 units
Item Equivalent units
Completed units (100% × 70,800) 70,800
Closing inventory (35% × 19,000 ) 6,650
Total equivalent units 77,450
Total equivalent units = 70,800 + 6,650 = 77, 450 units
2001 was a bad year for Red Delicious apple farmers in Washington State. The market price for Red Delicious apples was $10.61 per box. As a result, many farmers decided not to pick the apples off their trees and instead let them rot. Assuming that the Red Delicious apple market was perfectly competitive, is it possible that these farmers were profit maximizing when they decided to let their apples rot in the short-run
Answer: This statement is correct. Maximizing profit refers to short run or long run process by which a businessdetermine the price, input, and output levels that lead to the highest profit possible.
By choosing not to not to pick the apples off their trees and instead let them rot the farmers are in fact maximizing profits as picking them and selling might lead to loss.
Answer:
No
Explanation:
Remember, when we say a firm is in a perfectly competitive market we imply that the firm has no overall dominance in the market but have other competitors who sell the same products.
Therefore the Delicious apple farmers would not be maximizing profit, if the Farmers deliberately left the produce to rot on the trees, as other competitors will likely supply the same products to the final consumers.
On January 1, 2018, David Mest Communications granted restricted stock units (RSUs) representing 25 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. The common shares had a market price of $15 per share on the grant date. At the date of grant, Mest anticipated that 5% of the recipients would leave the firm prior to vesting. On January 1, 2019, 4% of the RSUs are forfeited due to executive turnover. Mest chooses the option to account for forfeitures when they actually occur.
Required 1 to 3.
Prepare the appropriate journal entry to record compensation expense on December 31, 2018, December 31, 2019, and December 31, 2020. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
Answer:
See the explanation below.
Explanation:
Total compensation expenses = 25 million * 15 = $375 million
1. On December 31, 2018.
Compensation expenses = $375 million / 3 = $125 million
Journal entries will be as follows:
Details Dr ($'Million) Cr ($'Million)
Compensation expenses 125
Paid-in Capital - Restricted stock 125
To record the compensation expenses for 2018.
2. On December 31, 2019.
Compensation expenses = [$375 million * 96% * (2/3)] - $125 million = $115 million
Journal entries will be as follows:
Details Dr ($'Million) Cr ($'Million)
Compensation expenses 115
Paid-in Capital - Restricted stock 115
To record the compensation expenses for 2019.
3. On December 31, 2020.
Compensation expenses = ($375 million * 96%) - $125 million - $115 million = $120 million
Journal entries will be as follows:
Details Dr ($'Million) Cr ($'Million)
Compensation expenses 120
Paid-in Capital - Restricted stock 120
To record the compensation expenses for 2020.
For several years, CSK Auto, Inc., fraudulently reported inflated earnings. During this period, Maynard Jenkins was CEO. He was not involved in the fraud, however, and was never charged with a crime. Nonetheless, the SEC sought to claw back some of his earnings during this period. Is Jenkins financially responsible for the fraud that occurred on his watch, even though he did not participate? Should he be liable?
Jenkins, though not personally involved in the fraud, may be held financially responsible under the Sarbanes-Oxley Act of 2002 as the CEO during the period of misconduct. Yes, he will be held liable
Under the Sarbanes-Oxley Act of 2002, the U.S. Securities and Exchange Commission (SEC) has the authority to claw back bonuses and profits from CEOs and CFOs of companies that restate financials due to misconduct, regardless of the executive's involvement in the fraud. This is designed to ensure accountability at the highest levels of management.In the CSK Auto, Inc. case, although Maynard Jenkins was not personally involved in the fraudulent activities, he was the CEO during the period when the fraud occurred. The SEC's decision to seek clawbacks reflects the principle that top executives must be held accountable for the actions of their companies under their tenure, aiming to promote integrity and trust in financial markets.Examples of similar cases include John Stumpf of Wells Fargo, who resigned due to widespread fraudulent activities within his company, and Bernie Ebbers of WorldCom, who was held accountable despite initially not being directly implicated in the fraudulent activities.Power Corporation owns 75 percent of Swift Companyâs stock. Swift provides health care services to its employees and those of Power. During 20X2, Power recorded $37,500 as health care expense for medical care given to its employees by Swift. Swiftâs costs incurred in providing the services to Power were $32,000.a. By what amount will consolidated net income change when the intercompany services are eliminated in preparing Powerâs consolidated statements for 20X2?b.What would be the impact of eliminating the intercompany services on consolidated net income if Power owned 100 percent of Swiftâs stock rather than 75 percent?c.If in its consolidated income statement for 20X2 Power had reported total health care costs of $72,000, what was the cost to Swift of providing health care services to its own employees?
Answer:
Explanation:
a). There will be no effect on net income on after consolidation.
b). On the off chance that P possesses 100% of S Stock, at that point inter-company administrations must be wiped out. Along these lines an adjustment in the degree of responsibility for auxiliary won't influence the measure of end on merged total compensation.
c). Computation of cost to Swift
$72,000 - $32,000
= $50,000
1) A financial crisis can lead to a recession because it can cause:
A. wealth and income to fall, reducing spending and ultimately reducing employment.
B. investment and income to fall, lowering saving and increasing the money supply.
C. wealth and saving to fall, lowering investment and increasing the money supply.
D. investment and saving to fall, increasing spending and ultimately reducing employment.
2) A major new invention can lead to an expansion if there are:
A. increases in saving, the money supply, and employment:
B. decreases in wealth and increases in consumption and unemployment.
C. increases in investment, consumption, output, and employment.
D. decreases in saving and increases in consumption and unemployment.
Answer:
1. A
2. C
Explanation:
For part (1), any type of financial crisis can lead to a recession (Like the one in 2008 as well) and cause the wealth and income to fall, reducing the purchasing and spending power of the people and ultimately leading to an increase in unemployment. This is because businesses will cutoff their employees and this will cause unemployment and the people who would be lucky enough to still get a job will be hired on a very low income which will ultimately reduce spending as well.
Th opposite will happen in the other case (2), as there will be expansion if there in increase in wealth, investiture, consumption, production output and employment.
Hope this Helps.
Answer 1:
The correct answer is A)
Recessions are mostly caused by a lack of circulation of money in the economy.
Explanation:
In economic parlance, this shortage is captured as:
Shortage in government spending thus translating to low circulation of money as businesses that depend on the government experience low transactions. Please note that in many cases, the Government is the largest spender.
Shortage of Investment leading to low employment which ultimately reduces disposable income.
Answer 2
The correct answer here is C
An increase in investment goes hand in hand with an increase in consumption, output, and employment.
If for instance, the government makes capital available through the banks a very low-interest rate, this will encourage businesses to leverage off the cheap capital to expand, acquire new technologies, and employ more hands to become more competitive and more dominant in the market.
So a new invention will translate to expansion if
businesses are willing to invest in it;consumers are willing to buy it;the invention translates into increased output and lastly, if through the invest, businesses are willing to employ more labor to cater to the expansion in demandCheers!
On June 1, 2014, Siebens Enterprises loaned $27,000 to Tyler Company for one year at 8 percent interest. Under the terms of the promissory note, Tyler will repay the principal and pay one year's interest on May 31, 2015. Related to this note receivable, what amount of interest income would Siebens report on its 2014 income statement? (Round your final answer to the nearest whole dollar amount.)
Answer:
$1,260
Explanation:
The computation of amount of interest income is shown below:-
Principal $27,000
Rate of interest 8%
Interest for 7 month in 2014 $1,260
($27,000 × 8% × 7 ÷ 12)
Interest for 5 months in 2015 $900
( $27,000 × 8% × 5 ÷ 12)
12 months from 1 June 2014
to 31 may 2015 12 months
Interest $2,160
($27,000 × 8%)
T will repay the principal and one year interest
on may 31, 2015
($20,000 + $2,160) $22,160
So, Interest income to be reported on its 2014 income statement is $1,260
To prepare for the cross-country meet, a skier decides to significantly increase the amount of carbohydrates in his diet (a technique also known as carbohydrate loading). Why might this be beneficial to the cross-country skier
Answer:
It is beneficial to the skier in that more carbohydrates will give rise to excess glucose thus the energy required to ski.
Explanation:
Eating food that contains higher amount of carbohydrates will cause the muscles to store excess glucose in the form of glycogen and this can be used for the energy in short bouts required for skiing.
Furthermore, it is useful in providing energy over long course of time. I
But in the question context, the skier needs rapid energy source and this energy is provided by muscle glycogen.
A corporate charter specifies that the company may issue up to 26 million shares of stock. The company sells 18 million shares to investors and later buys back 6.0 million shares. The current number of shares of treasury stock after these transactions have been accounted for is: Multiple Choice 20.0 million shares. 12.0 million shares. 8.0 million shares. 6.0 million shares.
Answer: 6.0 million shares
Explanation: Six million shares would be the current number of shares of treasury stock after the transaction indicated above have all been accounted for. The treasury stock is defined as the issued stock of an incorporated company held by the company itself and the total issued stock for a company equals the sum of outstanding stock and treasury stock. When an incorporated company reissues treasury stock for more than it originally paid for the stock, it does not report a gain.
Given this, Treasury stock (shares held by the company) would be equal to 6.0 million shares
A monopolist's maximized rate of economic profits is $2 comma 700 per week. Its weekly output is 900 units, and at this output rate, the firm's marginal cost is $39 per unit. The price at which it sells each unit is $49 per unit. at this profit output rates, what are the firm's average total cost and marginal revenue?
Answer:
Average total cost= $46
Marginal revenue= $33
Explanation:
In this instance the monopolist's total cost is the revenue from sale of one unit less the economic profits per unit
Economic profit per unit= 2,700/900
Economic profit per unit= $3
Average total cost= (Price per unit) - (Economic profit per unit)
Average total cost= 49 - 3= $46
For this instance marginal revenue is equal to marginal cost.
Marginal revenue= Marginal cost= $39
A company uses the indirect method to determine its cash flows from operating activities. Use the following information to determine its net cash provided or used by operating activities. Net income $15,200 Depreciation expense 10,000 Cash payment on note payable 8,000 Gain on sale of land 3,000 Increase in inventory 1,500 Increase in accounts payable 2,850
Answer:
The net cash flows from operating activities is $15,550.
Explanation:
A company
Statement of cash flows (extract)
Net income $15,200
Add Depreciation expense 10,000
Increase in accounts payable 2,850
Less Gain on sale of land (3,000)
Increase in inventory (1,500)
Cash payment on note payable (8,000)
Net cash flows from operating activities $15,550
Sarah, a famous pianist, is told that she will have to undergo brain surgery that could result in partial paralysis of her right arm and leg. Before she enters the hospital, Sarah gives her Steinway piano to a good friend who is also a pianist and has the piano transported to the friend's home. The surgery is successful, and Sarah suffers no paralysis of any kind as a result of the surgery. Can Sarah revoke the gift to her friend? Explain.
Answer:
Yes, Sarah can revoke the gift to her friend.
Explanation:
Gift is the transfer of property from one person, usually the donor(giver) to another person, donee(receiver) without expecting any thing like compensation in return. Gift can be given or transfered to either an individual or organization.
A gift can be revoked by the donor in law. Such gift is called Causa Mortis Gift.
Causa Mortis Gift is a gift given or transfered in expectation of death of the donor. Where a donor gives out his/her gift during the course of undergoing major surgery, such could also be called Causa Mortis Gift. This type of gift can be revoked anytime before the donor's death or recovery from surgery or illness and cannot be revoked after his/her death.
Multiple Production Department Factory Overhead Rates
Spotted Cow Dairy Company manufactures three productsâwhole milk, skim milk, and creamâin two production departments, Blending and Packing. The factory overhead for Spotted Cow Dairy is $666,000. The three products consume both machine hours and direct labor hours in the two production departments as follows:
Direct Labor Hours Machine Hours
Blending Department
Whole milk 890 1,210
Skim milk 570 980
Cream 440 770
1,900 2,960
Packing Department
Whole milk 260 1,760
Skim milk 280 1,080
Cream 260 1,160
800 4,000
Total 2,700 6,960
The management of Spotted Cow Dairy Company now plans to use the multiple production department factory overhead rate method. The total factory overhead associated with each department is as follows:
Blending Department $342,000
Department 324,000
Total $666,000
Determine the multiple production department factory overhead rates, using machine hours for the Blending Department and direct labor hours for the Packing Department.
Answer:
total overhead costs for blending department = $342,000
total machine hours blending department = 2,960
overhead rate per machine hour = $342,000 / 2,960 hours = $115.5405405 per machine hour
total overhead costs for packaging department = $324,000
total direct labor hours packaging department = 800
overhead rate per direct labor hour = $324,000 / 800 hours = $405 per machine hour
product blending department packaging department
Whole milk 1,210 x $115.54 = $139,804 260 x $405 = $105,300
Skim milk 980 x $115.54 = $113,230 280 x $405 = $113,400
Cream 770 x $115.54 = $88,966 260 x $405 = $105,300
total $342,000 $324,000
total overhead rate assigned to each product:
product blending dep. packaging dep. total
Whole milk $139,804 $105,300 $245,104
Skim milk $113,230 $113,400 $226,630
Cream $88,966 $105,300 $194,266
total $342,000 $324,000 $666,000
Final answer:
The factory overhead rates are calculated for each department based on their activity bases: $115.54 per machine hour for the Blending Department and $405 per direct labor hour for the Packing Department.
Explanation:
To determine the factory overhead rates for Spotted Cow Dairy Company, we need to divide the total factory overhead cost of each department by the respective activity base (machine hours for Blending and direct labor hours for Packing).
Blending Department Overhead Rate Calculation
Total Blending Department Overhead = $342,000
Total Machine Hours in Blending = 2,960 hours
Blending Department Overhead Rate = Total Overhead / Total Machine Hours
Blending Department Overhead Rate = $342,000 / 2,960 hours = $115.54 per machine hour
Packing Department Overhead Rate Calculation
Total Packing Department Overhead = $324,000
Total Direct Labor Hours in Packing = 800 hours
Packing Department Overhead Rate = Total Overhead / Total Direct Labor Hours
Packing Department Overhead Rate = $324,000 / 800 hours = $405 per direct labor hour
g The natural unemployment rate describes the unemployment rate when Group of answer choices real GDP is equal to potential GDP. cyclical unemployment is positive. frictional unemployment is 0. the economy is no longer in a recession.
Answer:
The correct answer is letter "A": real GDP is equal to potential GDP.
Explanation:
Natural unemployment is defined as the lowest unemployment rate and the economy will rose. It's natural because factors other than a poor economy triggers it. One aspect of natural unemployment is frictional unemployment that is induced, for example, by conditions such as recent graduates starting to pursue a job. Another part of natural unemployment is structural unemployment, where employees do not find jobs and employers do not find workers having jobs available.
The natural unemployment rate describes the unemployment rate when the real Gross Domestic Product (GDP) equals the potential GDP. The real GDP measures a country's productivity adjusted for changes in inflation while the potential GDP measures the productivity of a country considering that inflation is constant.
Assume that the market is perfectly competitive. If the cost function for John's Shoe Repair is �(�) = 100 + 10� − �) + 3 4 �4, what is the firm's marginal cost function? What is its profit-maximizing condition if the market price is p? What is its short-run supply curve?
Answer:
Explanation:
C(q) = 100+10q-q^2+(1/3)q^3
To find the firm marginal cost function:
Take the derivative with respect to q
MC = 10 - 2q + q^2
Assuming that the market price is p , then the profit maximising condition is:
MR = MC
p = 10 - 2q + q^2
The short-run supply curve is the marginal cost curve that lies above the average variable cost.
The average variable cost is:
AVC =VC/Q
AVC = (10q-q^2+(1/3)q^3)/Q
AVC = 10 - q + (1/3)*q^2
So, the short-run supply curve is:
SRS = 10 - 2q + q^2 if p > 10 - q + (1/3)*q^2
Kaspar Corporation makes a commercial-grade cooking griddle. The following information is available for Kaspar Corporation's anticipated annual volume of 26,700 units.
Per Unit Total
Direct materials $20
Direct labor $6
Variable manufacturing overhead $14
Fixed manufacturing overhead $453,900
Variable selling and administrative expenses $5
Fixed selling and administrative expenses $186,900
The company uses a 41% markup percentage on total cost.
Compute the total cost per unit.
Total cost per unit $____________________
Answer:
$69 per unit
Explanation:
The computation of the total cost per unit is shown below:
Total cost per unit = Direct material + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead + Variable selling expenses + Fixed selling expenses
where,
Fixed manufacturing overhead per unit = Total fixed manufacturing overhead ÷ Number of units
= $453,900 ÷ 26,700 units
= $17 per unit
And,
Fixed selling and administrative expenses per unit is
= Total Fixed selling and administrative expenses ÷ Number of units
= $186,900 ÷ 26,700
= $7 per unit.
The other items per unit would remain the same
= $20 + $6 + $14 + $17 + $5 + $7
= $69 per unit
s flour in 15-pound bags. Panera Bread uses 5000 bags of flours each year. Carrying/holding costs are $20 per bag per year. Ordering costs are estimated at $5 per order. Assume that Panera Bread Chicago bakery is open 250 days a year and its daily demand is estimated at 20 bags. It takes 5 days for each order of flour to be filled. What is the minimum inventory held in a given EOQ cycle
Answer:
0 bags
Explanation:
Given that
Usage of bags per year = 5,000 bags
Carrying or holding cost per bag per year = $20
Ordering cost = $5 per order
Number of days open = 250 days
Estimated Daily demand = 20 days
Filling days required = 5 days
Based on the above information, the minimum inventory should be equal to zero as the daily demand is remains constant throughout the year. Therefore, it would be zero before replenishment
The minimum inventory held in a given EOQ cycle for Panera Bread Chicago bakery, considering a lead time of 5 days and daily demand of 20 bags, is calculated to be 100 bags. This is based on the need to have a safety stock that covers the demand during the lead time.
Explanation:The question refers to the Economic Order Quantity (EOQ) model, which is used to determine the optimal order quantity that minimizes total inventory costs, including ordering and holding costs. The EOQ model is a fundamental concept in supply chain management and operations research. To answer this question, we must calculate the EOQ and then use it to find the minimum inventory held in a given EOQ cycle. The EOQ formula is given by sqrt((2DS)/H), where D is the demand, S is the ordering cost, and H is the holding cost per unit per year. In this scenario, D=5000 bags per year, S=$5 per order, and H=$20 per bag per year. This leads to an EOQ of sqrt((2*5000*5)/20), which simplifies to sqrt(25000) or approximately 158 bags.
The minimum inventory level (also referred to as the safety stock) is dependent on the lead time and the daily demand. Given a lead time of 5 days and a daily demand of 20 bags, the minimum inventory, which serves as a buffer against variability in demand and lead time, can be calculated as daily demand multiplied by lead time. Hence, it is 20 bags/day * 5 days = 100 bags. This is not directly the result of the EOQ calculation but is related to the replenishment policy and lead time considerations in inventory management.
A potential investor is seeking to invest $500,000 in a venture, which currently has 1,000,000 million shares held by its founders, and is targeting a 50% return five years from now. The venture is expected to produce half a million dollars in income per year at year 5. It is known that a similar venture recently produced $1,000,000 in income and sold shares to the public for $10,000,000.a. What is the percent ownership of our venture that must be sold in order to provide the venture investor’s target return?
b. What is the number of shares that must be issued to the new investor in order for the investor to earn his target return?
c. What is the issue price per share?
d. What is the pre-money valuation?
e. What is the post-money valuation?
Answer:
a, 15%
b, 150,000
c, $ 3.30
d, = $3,333,333.33
e, $3,833,333.33
Explanation:
To solve this,
Note that we have been given a similar venture to compare to our venture.
The total shareholder's equity for the other venture (P) = $10,000,000 and the net income (E) = $1,000,000
Hence, Price/Earnings (P/E) for other venture = 10,000,000/1,000,000 = 10.0
Now for our venture, Earnings in the 5th year = $500,000
Assuming that P/E ratio for both the ventures to be equal, P/500,000 = 10.0
hence, total shareholder's value for our venture = $5,000,000 --------------- (1)
Now the investor invested $500,000 and expected 50% return after 5 years, hence the investor's value after 5 years would be equal to 500,000 * (1+50%) = $750,000 --------------- (2)
Now percent ownership of venture given to investor = (Value of investor's investment after 5 years/total value of all shareholders after 5 years)
Hence, divide (2) by (1)
percent ownership of venture given to investor = 750,000/5,000,000 = 0.15
or 15%
Therefore Answer to part 'a' is = 15%
Part (b) :For the percentage ownership given to new investor = 15%, total number of shares = 1,000,000
Hence, number of shares issued to new investor = 15% x 1,000,000 = 150,000
Hence, answer to part b = 150,000
Part (c): Amount invested by new investor = $500,000 and number of shares issued to him = 150,000
hence issue price of share = Amount invested / Number of shares issued
= 500,000/150,000 = $3.33
Hence, issue price per share = $3.33
Part (d):
The Pre money valuation is the value of the company before any external funding. In this case, the number of shares held with the founders before the new investor = 1,000,000 and the equity price = $3.33
hence, Value of the venture = 3.33 * 1,000,000 = $3,333,333.33
Hence, pre money valuation of the venture = $3,333,333.33
Part (e): Post money valuation of a company is the value of the company after external funding. In this case, investor invests $500,000 to the venture increasing the value of the company by the same amount.
Hence post money valuation = pre money valuation + Investment
= 3,333,333.33 + 500,000
= 3,833,333.33
Hence, post-money valuation of the venture = $3,833,333.33
Three engineers have the same amount of schooling and work experience, but earn different wages. One is a computer engineer who designs and tests new computers for an annual wage of $54,000 per year. Another is a chemical engineer who works in a nuclear lab and performs experiments on radioactive materials for an annual wage of $80,000 per year. The third is a civil engineer who performs daily inspections of cables on a suspension bridge for an annual wage of $91,000 per year.
Answer:
Variation in income in all three types of profession is due to different skills.
Explanation:
A computer engineer whose work is less risky due to which his income is also less.
Unlike a computer engineer, a chemical engineer who works in a nuclear lab performs more risky tasks and earns a higher income.
Unlike these two, the civil engineer who handles the responsibility of bridge safety performs the riskiest tasks for which he also needs high-quality skills, due to which one can get the most income.
Differing wages among computer, chemical, and civil engineers result from industry demand, specialized skills, and job responsibilities. Factors such as competition, location, and economic conditions contribute to the nuanced variations in their annual earnings.
The varying wages among computer, chemical, and civil engineers stem from distinct industry demands, job responsibilities, and skill requirements. The computer engineer's role in designing and testing computers may align with a particular industry's demand, influencing a $54,000 annual wage.
The chemical engineer, engaged in nuclear experiments, commands an $80,000 salary, reflecting the specialized skills and potential risks associated with their work. Meanwhile, the civil engineer's high annual wage of $91,000 could be attributed to the responsibility of inspecting critical components like suspension bridge cables.
Factors like industry competitiveness, geographical location, and economic conditions contribute to the nuanced wage differences, illustrating the influence of market dynamics, expertise, and job demands on engineer compensation.
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During the current month, a company that uses job order costing purchases $82,000 in raw materials for cash. It then uses $23,000 of raw materials indirectly as factory supplies and uses $50,600 of raw materials as direct materials. Prepare journal entries to record these three transactions
Answer:
See the explanation below:
Explanation:
Details Dr ($) Cr ($)
Inventory of raw materials 82,000
Cash 82,000
Being the purchase of raw materials
Factory overhead 23,000
Inventory of raw materials 23,000
Being the raw materials used indirectly as factory supplies
Work-in-Progress 50,600
Inventory of raw materials 50,600
Being the raw materials used directly in production
Answer:
Dr. Material Inventory $82,000
Cr. Cash $82,000
Dr. Work in Process Inventory $50,600
Dr. Manufacturing Overhead $23,000
Cr. Material Inventory $82,000
Explanation:
Purchases of Inventory is recorded in the material inventory account by debit entry, because inventory is an asset and it requires a debit entry to increase the inventory level. cash is paid so it is credited.
Direct raw material used will be transferred to Work in process account and Indirect raw material used will be transferred to Manufacturing overhead account by a debit the these accounts and credit to material Inventory account.
Suppose a bank already has excess reserves of $800 and the reserve ratio is 30%. If Andy deposits $1,000 of cash into his checking account and the bank lends $600 to Melanie, that bank can lend an additional:________
a. $200.
b. $1,000
c. $800.
d. $2,400.
e. $400
Answer:
The correct answer is $900.
Explanation:
According to the scenario, computation of the given data are as follows:
Reserve required = New deposits of cash × Reserve ratio%
= $1000 × 30/100
=$300
Excess reserve from Andy ‘s deposit = New deposit – Reserve required
= $1,000 – $300
= $700
Total reserve excess = New reserve excess + Old reserve excess
= $700 + $800
= $1,500
After lending to molly excess reserve = Total reserve excess – Amount lending to molly
= $1,500 - $600
= $900
The bank has only $900 excess reserve. So, Bank can only give $900 for lending.
Final answer:
After Andy deposits $1,000 in the bank, the additional reserves increase by $700. When the bank lends $600 to Melanie, it's left with $900 to lend further. The closest correct choice, accounting for a typo in the question, is $800.
Explanation:
When Andy deposits $1,000 cash into his checking account, the bank's reserves increase by that amount. Given the reserve ratio of 30%, the bank is required to keep 30% of its deposits as reserves. From this new deposit, the bank must therefore keep 30% of $1,000, which equals $300 as required reserves. The excess reserves that the bank can use to make loans is the deposit amount minus the required reserves ($1,000 - $300 = $700).
However, since the bank already has excess reserves of $800, the total excess reserves after Andy's deposit is $800 + $700 = $1,500. The bank has lent $600 to Melanie, reducing their capacity to lend further. Subtract the $600 from the total excess reserves ($1,500 - $600), and we have $900 available. The option closest to the correct amount the bank can additionally lend from the available choices is $800, but please note the exact figure should be $900. There is a typo in the question, so the closest correct answer would be option c: $800.
Pawprints Paint recently went public in a best efforts offering. The company offered 145,000 shares of stock for sale at an offer price of $23 per share. The administrative costs associated with the offering were $385,000 and the underwriter's spread was 9 percent. After completing their sales efforts, the underwriters determined that they sold a total of 138,700 shares. What were the net proceeds to the company
Answer:
$2,517,991
Explanation:
Gross proceed = Number of shares sold × price per share = 138,700 × $23 = $3,190,100
Underwriter's spread = $3,190,100 × 9% = $287,109
Administrative costs = $385,000
Net proceeds = Gross proceed - Underwriter's spread - Administrative costs
= $3,190,100 - $287,109 - $385,000
Net proceeds = $2,517,991
Answer: The net proceeds to the company is $ 2,517,991
Explanation:
Net proceeds are the final amount of money that a seller is entitled to get with respect to the disposal of an asset less all the related expenses like commission, fees and others which are already paid and it is calculated by deducting all the selling costs from the sale price of an asset. For instance, If a person 1 sells his residential property to person 2, then net proceeds shall be the funds person1 is entitled to receive from person2 after all the related costs like realtor’s fees and other costs are taken into due consideration.
Net Proceeds can be derived by summing up all the expenses and deducting the same from the amount that is received as sale proceeds.
Next, this process is to identify and sum up all the expenses that are incurred and related to the transaction.
Lastly, the total costs ascertained from the sale of the asset must be necessarily deducted from the total amount that is gotten as a result of the sale. The leftover amount is the net proceeds.
From the above question,
The net proceeds to the company =Number of Shares actually sold × Offer Price ×(1-Underwriter spread) -Administrative costs.
Gross sales proceeds $ 3,190,100. =138700×23
Lesss
Administrative costs = $385000
Underwriter's spread= = $287,109
=3190100×9
Net proceeds to the company is $ 2,517,991
A bond with 20 detachable warrants has just been offered for sale at $1,000. The bond matures in 20 years and has an annual coupon of $48. Each warrant gives the owner the right to purchase two shares of stock in the company at $46 per share. Ordinary bonds (with no warrants) of similar quality are priced to yield 6 percent.
What is the value of one warrant? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Value of one warrant $
Answer:
Value of one warrant = $ 6.88 (2 decimals).
Explanation:
Ordinary bond current value = pv(rate,nper,pmt,fv)
Ordinary bond current value = pv(6%,20,48,1000)
Ordinary bond current value = $ 862.36
Current Value of Bond with warrant = 1000
Warrant value = Current Value of Bond with a warrant - Ordinary bond current value
Warrant value = 1000 - 862.36
Warrant value = $ 137.64
No of Warrant with a bond = 20
Value of one warrant = Warrant value /No of Warrant with a bond
Value of one warrant = 137.64/20 = $6.882
Value of one warrant = $ 6.88 (2 decimals).