Final answer:
Henry's accounting profits would be $55,000, while his economic profits would be $38,000 after considering opportunity costs. He should open the microbrewery as the economic profit is positive. The indifference rate of return is 38%, making the microbrewery a favorable investment compared to a 7% return on savings.
Explanation:
Accounting profits are the net income of a business, calculated as total revenues minus explicit costs. In Henry's case, accounting profits can be calculated by subtracting all costs from the total sales revenues. If we consider his salary as part of his costs, the accounting profit would be:
Total Sales Revenue: $55,000 (surplus) + $40,000 (salary) = $95,000
Accounting Profits: $95,000 total revenue - $40,000 salary = $55,000
Calculation of Economic Profits
Economic profits take into account both explicit and implicit costs. Implicit costs include the opportunity cost of the owner's investment and forgone salary. To calculate the economic profits, subtract the opportunity cost of the savings and the forgone salary from Henry's accounting profits.
Opportunity Cost of Savings: 7% of $100,000 = $7,000
Forgone Salary: $50,000 - $40,000 = $10,000
Economic Profits: $55,000 - $7,000 - $10,000 = $38,000
Decision on Opening the Microbrewery
To determine if Henry should open the microbrewery, we compare his economic profit to his current situation. If the economic profit is positive, it indicates that he's better off opening the microbrewery compared to his current job. In this case, Henry's economic profit is $38,000, which is positive, suggesting that it would be beneficial for him to open the microbrewery.
Indifference Rate of Return
To find the rate of return that would make Henry indifferent between opening the microbrewery and not, we need to find the rate at which the opportunity cost of his savings equals the economic profit estimated from the microbrewery.
Indifference Rate of Return: Economic profit / Investment = $38,000 / $100,000 = 38%.
This rate is substantially higher than the current 7%, suggesting that at any rate below 38%, the microbrewery would be the more attractive option.
A stock with a beta of 0.6 has an expected rate of return of 13%. If the market return this year turns out to be 10 percentage points below expectations, what is your best guess as to the rate of return on the stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)
Answer:
what is your best guess as to the rate of return on the stock?
12,2%
Explanation:
Stock Beta Return
$ 1 0,60 13,0%
Market
-10% -6% 12,2%
Eaton Tool Company has fixed costs of $210,600, sells its units for $58, and has variable costs of $32 per unit. a. Compute the break-even point. b. Ms. Eaton comes up with a new plan to cut fixed costs to $160,000. However, more labor will now be required, which will increase variable costs per unit to $35. The sales price will remain at $58. What is the new break-even point?
Answer:
A)Break-even point= 8100 units
B) Break-even point= 6957 units
Explanation:
Giving the following information:
Fixed costs of $210,600
Price per unit= $58
Variable costs of $32 per unit.
A)Break-even point= fixed costs/contribution margin= 210600/(58-32)= 8100 units
B) Fixed cost= 160000
Unitary variable cost= $35
Break-even point= 160000/(58-35)= 6957 units
The following account balances were drawn from the financial records of Kent Company (KC) as of January 1, 2018: Assets, $35,000; Liabilities, $6,000; Common Stock, $12,000; and Retained Earnings, $17,000. KC has agreed to pay the creditors $400 of interest per year. Further, KC agrees that for the 2018 fiscal year any annual earnings remaining after the interest charges will be paid out as dividends to the owners. Required Assuming KC earns a before interest expense recognition profit of $1,600 during 2018, determine the amount of interest and dividends paid. Assuming KC earns a before interest expense recognition profit of $900 during 2018, determine the amount of interest and dividends paid. Assuming KC earns a before interest expense recognition profit of $300 during 2018, determine the amount of interest and dividends paid.
Answer:
Earnings = $1,600, Interest = $400, Dividend = $1,200
Earnings = $900, Interest = $400, Dividend = $500
Earnings = $300, Interest = $400, Dividend = $0
Explanation:
As not provided, taxes are ignored.
Provided interest to be paid to creditors = $400
Case 1
Earnings before interest and taxes = $1,600
Less: Interest = $400
Earnings after interest = $1,200
Dividend to shareholders = $1,200
Case 2
Earnings before interest and taxes = $900
Less: Interest = $400
Earnings after interest and taxes = $500
Dividend to shareholders = $500
Case 3
Earnings before interest and taxes = $300
Less: Interest = $300
Earnings after interest = - $100
Since the earnings are negative, as company is facing losses, no dividend will be distributed.
Kent Company (KC) pays a fixed annual interest of $400. For 2018, KC would pay $1,200, $500, and $0 in dividends for profits of $1,600, $900, and $300, respectively, after paying the interest.
Explanation:To determine the amount of interest and dividends paid by Kent Company (KC) in the three given scenarios, we first acknowledge that the interest paid is a fixed amount of $400 per year. After paying interest, the remaining profit (if any) is distributed as dividends.
If KC earns a profit of $1,600 before interest in 2018, the interest paid is $400, leaving $1,200 for dividends.For a profit of $900, after paying $400 as interest, KC has $500 available to pay as dividends.With a profit of $300, the entire profit after paying interest is insufficient to cover the interest payment, leaving no earnings to be distributed as dividends.Therefore, the amount of dividends varies based on the profit earned, whereas the interest payment remains constant.
Which of the following statements is MOST correct?A. Because the cost of debt is lower than the cost of equity, value-maximizing firms maintain debt ratios of close to 100%.B. Corporations that are 100% equity financed will have a much lower weighted average cost of capital because the lack of debt lowers their risk of bankruptcy.C. The source of capital with the lowest after-tax cost is preferred stock, because it is a hybrid security, part debt and part equity.D. The cost of a particular source of capital is equal to the investor's required rate of return after adjusting for the effects of both flotation costs and corporate taxes.
Answer:
B. Corporations that are 100% equity financed will have a much lower weighted average cost of capital because the lack of debt lowers their risk of bankruptcy.
Explanation:
Ashestate Inc. recently set up a risk management department. What is a task the risk management department is likely taking on?
a. addressing interdepartmental conflict
b. setting expatriate manager pay scales
c. planning protests of globalization
d. engaging in extensive scenario planning
Answer: engaging in extensive scenario planning
Explanation: The job of risk management department in every organisation is to tackle the problem that have arise or may arise in the future. Risk management involves implementing the plans made and helping the organisation to avoid or transfer risk.
This is a critical task and involves extensive research of various aspects of the organisation and the environment it works in.
Thus, from the above we can conclude that the correct option is D.
Final answer:
The risk management department at Ashestate Inc. is likely engaging in extensive scenario planning to anticipate and mitigate potential risks. This involves preparing strategic responses to diverse challenges, including those posed by globalization and to integrate risk management across the organization's departments. Hence, the answer is D.
Explanation:
The task that Ashestate Inc.'s risk management department is most likely taking on is d. engaging in extensive scenario planning. Risk management in a company involves anticipating, evaluating, and providing strategies to mitigate potential issues that could impact the organization's objectives. Scenario planning is a proactive approach used by risk management departments to prepare for possible future events, including both threats and opportunities presented by globalization, and to create strategic responses that enhance the company's resilience and adaptability.
Scenario planning may include developing contingencies for different risk events such as economic downturns, changes in market conditions, geopolitical events, or technological disruptions. The goal is to ensure that the organization can maintain operations and achieve its objectives, even when facing adverse situations. This strategic process also includes integrating plans across multiple departments, managing cultural diversity, and addressing the challenges of a global workforce.
Carla Company was formed on December 1, 2016. The following information is available from Carla’s inventory records for Product BAP. Units Unit Cost January 1, 2017 (beginning inventory) 708 $ 7.00 Purchases: January 5, 2017 1,416 8.00 January 25, 2017 1,534 9.00 February 16, 2017 944 10.00 March 26, 2017 708 11.00 A physical inventory on March 31, 2017, shows 1,888 units on hand. Prepare schedule to compute the ending inventory at March 31, 2017, under FIFO inventory method.
Answer:
Ending Inventory under FIFO mar-31 1.888 19.352
Explanation:
Purch. Unit cost Purcha.. End. Inv. Cost End. Inv
Beg. Inv. Jan-1 708 7 708 0 0
Jan-5 1.416 8 2.124 0 0
Jan-25 1.534 9 3.658 236 2.124
feb-16 944 10 4.602 944 9.440
mar-26 708 11 5.310 708 7.788
Total purchases 5.310
Ending Inventory mar-31 1.888 19.352
Exercise 3-05 The ledger of Whispering Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared. Debit Credit Prepaid Insurance $3,900 Supplies 2,596 Equipment 23,960 Accumulated Depreciation-Equipment $7,711 Notes Payable 20,800 Unearned Rent Revenue 7,050 Rent Revenue 61,030 Interest Expense –0– Salaries and Wages Expense 14,510 An analysis of the accounts shows the following. 1. The equipment depreciates $259 per month. 2. One-third of the unearned rent was recognized as revenue during the quarter. 3. Interest of $470 is accrued on the notes payable. 4. Supplies on hand total $622. 5. Insurance expires at the rate of $325 per month. Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are Depreciation Expense, Insurance Expense, Interest Payable, and Supplies Expenses. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
Answer:
Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly.
Explanation:
Depreciation expense 777
Accumulate depreciation 777
Insurance expense 975
Prepaid Insurance 975
Interest expense 470
Notes ´payable 470
Expense supllies 1974
Supplies 1974
Unearned revenue 2350
Revenue 2350
The adjusting entries at March 31 include depreciation expense, unearned rent revenue, interest payable, insurance expense, and supplies expense.
Explanation:To prepare the adjusting entries at March 31, we need to consider the information provided. Here are the adjusting entries:
Depreciation Expense: debit Accumulated Depreciation-Equipment and credit Depreciation Expense for $259.Unearned Rent Revenue: debit Unearned Rent Revenue and credit Rent Revenue for one-third of $7,050.Interest Payable: debit Interest Expense and credit Interest Payable for $470.Insurance Expense: debit Insurance Expense and credit Prepaid Insurance for $325.Supplies Expense: debit Supplies Expense and credit Supplies for $2,596 - $622 = $1,974.These adjusting entries will help ensure that the accounts accurately reflect the expenses, revenues, and liabilities for the quarter.
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Assume one investor bought a 10-year inflation-protected bond with a fixed annual real rate of 1.5% and another investor bought a 10-year bond without inflation protection with a nominal annual return of 4.2%. If inflation over the 10-year period averaged 2 percent, which investor earned a higher real return?
A. The investor who purchased the inflation protected bond.
B. The investor who purchased the bond without inflation protection.
C. Both investors earned the same real return.
D. Neither investor earned a positive real return.
Answer:
B. The investor who purchased the bond without inflation protection.
Explanation:
According to fisher, is necessary to calculate the real interest rate of both options for a comparision. The formula is defined as follows:
Real interest rate = nominal rate - inflation
Investor A
1.5% annual rate of interest
There is no inflation to be calculated because the bond is inflation-protected.
Real interest rate = 1.5% - 0 = 1.5%
Investor B
4.2% annual rate of interest
2% average inflation
Real interest rate = 4.2% - 2% = 2.2%
In conclusion, the investor without inflation protection earns a higher real returnTaco Casa is considering installing touch screen terminals for patrons to place their food orders. They discovered that installation costs at stores with four screens were $60,000 but were $80,000 at stores with six terminals. What are the marginal costs of installing another terminal at a location?
Answer:
The marginal cost of each screen is $10,000.
Explanation:
Giving the following information:
They discovered that installation costs at stores with four screens were $60,000 but were $80,000 at stores with six terminals.
The marginal cost of each screen is $10,000. And the fixed costs are $20,000.
Six screens= 20000 + 10000*6= $80,000
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With the advent of inexpensive accounting programs (like QuickBooks) how have our jobs, which respect to manually inputting information, in accounting been made easier in terms of: (1) journalizing (2) posting (3) Unadjusted and Adjusted Trial Balance (4) Financial Statement (income, balance sheet, state of cash flows, etc.)?
Answer:
1. Journal entries are quicker and more comfortable in the manual accounting
2. Posting is easier in computer software-based accounting
3. Trial balance adjustment in manual accounting is tricky. However, a lengthy process may pose a challenge for computerized accounting.
4. Financial statements are more straightforward in software-based accounting than manual accounting
Explanation:
The introduction of accounting software such as QuickBooks has transformed the working for accounting professionals. The conventional accounting system replacement has made the job more comfortable. However, there are new challenges added, such as learning the software, making error-free inputs, and pace of computer-related entries. However, considering that once these skills are learned, the overall job is easier than before.
1. Journal entries in manual are made quicker, and errors can be rectified. However, entries are linked automatically to their respective ledgers that solve the challenges with compound entries
2. Posting is simpler in software as the general ledger is created on a single click. Manual posting requires time and efforts
3. Adjusted entries need to manual input in conventional method to create the adjusted trial balance whereas, in software, its added through adjusting journal entries.
4. Financial statements are much more straightforward in software as they are available on one click, whereas in manual accounting, they are required to be calculated.
Retro Company is authorized to issue 10,000 shares of 8%, $100 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. If Retro issues 5,000 shares of preferred stock for land with an asking price of $625,000 and a market value of $550,000, which of the following would be the best journal entry for Retro to record?a. Land 500,000Preferred Stock 500,000b. Land 550,000Preferred Stock 550,000c. Land 625,000Preferred Stock 500,000Paid-in Capital in Excess of Par - Preferred 125,000d. Land 550,000Preferred Stock 500,000Paid-in Capital in Excess of Par - Preferred 50,000
Answer:
c. Land 625,000 Preferred Stock 500,000 Paid-in Capital in Excess of Par - Preferred 125,000
Explanation:
The journal entry is shown below:
Land A/c Dr $625,000
To Preferred stock $500,000
To Paid-in Capital in Excess of Par - Preferred $125,000
(Being issue of preference shares for the land is recorded)
The land is recorded at historical cost or purchase price. In market value, the land should not be recorded that's why we considered asking price
And, the remaining balance is credited to the paid-in-capital account
You are thinking of purchasing a house. The house costs $ 350 comma 000$350,000. You have $ 50 comma 000$50,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 3030-year mortgage that requires annual payments and has an interest rate of 6 %6% per year. What will be your annual payment if you sign this mortgage?
Answer:
The annual payment will be 21794,67
Explanation:
M=[tex]P\frac{ r (1+r)^{n} }{(1+r)^{n}-1}[/tex]
M is your payment. ( In this case, annual)
P is the principal.
r is your annual interest rate
n is your number of payments (the number of years you will be paying the loan)
Replacing,
The principal is house cost $350,000 minus the down payment (50000)
P=350000-50000=300000
r=0,06
n=30
M=[tex]300000\frac{ 0.06 (1+0.06)^{30} }{(1+0,06)^{30}-1}[/tex]
M=[tex]300000\frac{ 0.06 (1.06)^{30} }{(1,06)^{30}-1}[/tex]
M=[tex]300000\frac{ 0,0636}{0,9433}[/tex]
M=21794,67
The annual payment for a 30-year mortgage with a 6% interest rate would be approximately $17,978.39.
Explanation:To calculate the annual payment on a 30-year mortgage at an interest rate of 6%, you can use the formula for the present value of an annuity. The formula is:
Payment = Amount / (1 - (1 + interest rate)^(-number of periods)) / interest rate
Using this formula, the annual payment for a $300,000 mortgage would be approximately $17,978.39.
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Trak Corporation incurred the following costs while manufacturing its bicycles. Bicycle components $100,000 Advertising expense $45,000 Depreciation on plant 60,000 Property taxes on plant 14,000 Property taxes on store 7,500 Delivery expense 21,000 Labor costs of assembly-line workers 110,000 Sales commissions 35,000 Factory supplies used 13,000 Salaries paid to sales clerks 50,000 (a) Identify each of the above costs as direct materials, direct labor, manufacturing overhead, or period costs. Bicycle components select a classification Depreciation o
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Bicycle components $100,000.
Advertising expense $45,000.
Depreciation on plant 60,000.
Property taxes on plant 14,000.
Property taxes on store 7,500.
Delivery expense 21,000.
Labor costs of assembly-line workers 110,000.
Sales commissions 35,000.
Factory supplies used 13,000.
Salaries paid to sales clerks 50,000.
- Direct materials are those materials and supplies that are consumed during the manufacture of a product, and which are directly identified with that product.
- Direct labor is production or services labor that is assigned to a specific product, cost center, or work order.
- Manufacturing overhead refers to indirect factory-related costs that are incurred when a product is manufactured.
- Period costs are not directly tied to the production process. Overhead or sales, general, and administrative (SG&A) costs are considered period costs. SG&A includes costs of the corporate office, selling, marketing, and the overall administration of company business.
Direct material:
Bicycle components $100,000.
Direct labor:
Labor costs of assembly-line workers 110,000.
Manufacturing overhead:
Depreciation on plant 60,000.
Property taxes on plant 14,000.
Factory supplies used 13,000.
Period cost:
Advertising expense $45,000.
Property taxes on store 7,500.
Delivery expense 21,000.
Sales commissions 35,000.
Salaries paid to sales clerks 50,000.
Segway focuses on the personal people-mover market of individuals who need to move longer distances with ease. Its stand-up scooter is used in two narrow markets: tourist tours and warehouse employee movement. What type of marketing strategy should this company use?
(A) differentiated marketing
(B) niche marketing
(C) mass marketing
Segway should use a niche marketing strategy because they focus on very defined, narrow segment of the market. Niche marketing is about tailoring marketing efforts to meet specific needs of these defined segments.
Explanation:The company, Segway, should use a niche marketing strategy. This is because the company focuses its products (personal people-movers) on very specific, narrow segments of the market (tourist tours and warehouse employee movement). Niche marketing involves designing and promoting products or services for a well-defined, specialized segment of the market. In this case, Segway's specialized segments are individuals in tourism and warehouse operations who need to move over long distances with ease. Through niche marketing, Segway can develop a deep understanding of the specific needs within these segments and create tailored marketing efforts to meet those needs.
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Maxwell and Jim have resided together for several years but are not married. Maxwell is concerned that if he dies first, his family may contest the transfer of his assets to Jim through his will so he wants to avoid any transfers through his will. Of the following options, which transfer arrangements would ensure that Maxwell’s assets will be transferred to Jim at Maxwell’s death?
Answer:
The best answer to the question: Of the following options, which transfer arrangements would ensure that Maxwell´s assets will be transferred to Jim at Maxwell´s death?, would be, according to research of the same question on internet sources: The implementation of a trust, of which, three, would be useful to them: a QPRT (Qualified Personal Residence Trust), an Irrevocable Trust Fund, or a Revocable Trust Fund.
Explanation:
The reason for these being the answers to the question would be that, especially in states where same-sex marriage is not permitted, and where the rights of homosexual partners are not insured, at the passing of the owner of property, or assets, usually these assets would pass on through will to the descendants of the person who passed away. However, Maxwell wants to ensure that his partner, Jim, does have the right to get his assets, and no one else. So to stop any sort of contest on the part of his family, Maxwell may resort to establishing a Trust Fund, completely free and un-linked to his will, and these three types: QPRT, Irrevocable Trust Fund, or a Revocable Trust Fund, would help him accomplish his goal.
Maxwell can ensure the transfer of his assets to Jim by creating a Joint Tenancy With Rights of Survivorship, naming Jim as Payable-On-Death or Transfer-On-Death beneficiary for bank and brokerage accounts, and making Jim a Life Insurance Beneficiary.
Explanation:Maxwell can ensure the transfer of his assets to Jim by employing several different legal options. The following methods should largely prevent his assets being contested after his death.
Create a Joint Tenancy With Rights of Survivorship: This allows each person to own the entire property. If Maxwell dies first, the property automatically reverts to Jim, bypassing the probate process.Use Payable-On-Death (POD) Accounts and Transfer-On-Death (TOD) Accounts: For assets such as bank and brokerage accounts, naming Jim as POD or TOD beneficiary will enable them to be transferred to him on Maxwell's death.Make Jim a Life Insurance Beneficiary: The proceeds from a life insurance policy won't go through probate and will go directly to Jim if he is named as the beneficiary.Learn more about Asset Transfer here:
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Situation: Better Living Through PowerPoint, LLC is a consulting firm that works with clients to improve internal reporting practices. The firm uses a job-order costing system that allocates overhead on the basis of consultant labor dollars. A client contract is best categorized as which of the following?
Expenditure
Period Cost
Product Cost
Cost Object
Indirect Cost
Answer:
Cost Object
Explanation:
The contract will be a cost object.
Cost for labor and overhead will be assign and allocate to the contract to determinate the cost.
The period cost will be not being assign to the contract.
It will be assigned with product cost like labor cost and, the allocate indirect cost using the overhead predetermined rate
José is the manager of Sandy's Candy, a popular confectioner in Illinois. He is in charge of outlining future organizational goals to employees at company meetings and emphasizing the ethical guidelines that employees are expected to follow at work. According to Mintzberg, he is performing the role of a
Answer: Figurehead
Explanation: Figurehead refers to the individual who appears to be in power but do not have much authority in real. The real decision making authority resides on someone's else hands. For example - The queen of England has no power but is still considered as queen.
In the given case, Jose is considered as the manager but still he do not make any decisions. His duties are limited to outlining future goals and making ethical guidelines.
Hence from the above we can conclude that he is performing the role of figurehead.
"The correct answer is: Jose's actions align with the figurehead and liaison roles as defined by Mintzberg. These roles are essential for a manager to effectively lead an organization and maintain its culture and reputation."
Henry Mintzberg identified ten roles that a manager performs within an organization, which can be categorized into three groups: interpersonal roles, informational roles, and decisional roles.
In the given scenario, Jose is performing two distinct roles:
1. Figurehead Role: As a manager, Jose is expected to perform certain ceremonial and symbolic duties. By outlining future organizational goals to employees at company meetings, he is acting as a figurehead. This role involves representing the organization to outsiders as well as performing ceremonial duties within the organization, such as announcing goals and reiterating the company's mission and values.
2. Liaison Role: Jose is also performing the liaison role by establishing and maintaining communication with individuals outside and within the organization. By emphasizing ethical guidelines that employees are expected to follow at work, he is fostering communication and ensuring that the organization's values are understood and upheld by its members. This role is crucial for networking and building relationships that can be beneficial for the organization.
Future value (with changing interest rates). Jose has $6 comma 000 to invest for a 2-year period. He is looking at four different investment choices. What will be the value of his investment at the end of 2 years for each of the following potential investments? a. Bank CD at 4%. b. Bond fund at 7%. c. Mutual stock fund at 11%. d. New venture stock at 23%. a. What will be the value of Jose's bank CD investment that offers an annual rate of return of 4% for 2 years?
Answer:
a.- CD 6,489.60
b.- Bonds 6,869.40
c.- Mutual stock 7,392.60
d.- Venture Stock 9,077.40
Explanation:
We will calculate the future value of a lump sum:
[tex]Principal \: (1+ r)^{time} = Amount[/tex]
Principal $6,000.00
time 2 years
rate 4% = 0.04000
[tex]6000 \: (1+ 0.04)^{2} = Amount[/tex]
Amount 6,489.60
b.- bond fund rate 7%
rate 0.07000
[tex]6000 \: (1+ 0.07)^{2} = Amount[/tex]
Amount 6,869.40
c.- Mutual fund rate 11%
rate 0.11000
[tex]6000 \: (1+ 0.11)^{2} = Amount[/tex]
Amount 7,392.60
d.- venture stock rate 23%
rate 0.23000
[tex]6000 \: (1+ 0.23)^{2} = Amount[/tex]
Amount 9,077.40
If goods are not rationed according to price, if follows that they won't get rationed at all. some non-price rationing device will be used to ration the goods. first-come-first-served will necessarily be the rationing device used in the market. there will be surpluses in the market. g
Answer:
Some non-price rationing device will be used to ration the goods.
Explanation:
Rationing refers to the controlled distribution of a good or service, particularly one that is scarce. When the supply of a particular good or service is below the quantity demanded, this usually means that the price of the product rises, and price acts as a rationing device. However, if goods are not rationed according to price, then it follows that some non-price rationing device will be used instead to ration the goods.
Mattel Inc.'s2016 financial statements show operating profit before interest and tax of $519,233 thousand, net income of $318,022 thousand, provision for income taxes of $91,720 thousand and net nonoperating expense before tax of $109,491 thousand. Assume Mattel’s statutory tax rate for 2016 is 37%. Mattel's 2016 effective tax rate is: Select one: A. 22.4% B. 37.0% C. 19.4% D. 17.7% E. None of the above
Answer:
A. 22.4%
Explanation:
Income TAXES
Operating profit before interest and tax $ 519.233
Net nonoperating expense before tax -$ 109.491
Subtotal $ 409.742
Provision for income taxes -$ 91.720 -22,4%
Net Income $ 318.022
The Mountain Top Shoppe has sales of $512,000, average accounts receivable of $31,400 and average accounts payable of $24,800. The cost of goods sold is equivalent to 71 percent of sales. How long does it take The Mountain Top Shoppe to pay its suppliers?
Answer:
How long does it take The Mountain Top Shoppe to pay its suppliers?
25 days
Explanation:
Sales $512,000
COGS 71%
COGS $363,520
Av Acc Receiv 31.400
Av Acc Payable 24.800
Days 365
DPO - Days Payables Outstanding ==> ($24,800/$363,520)*365= 25 Days
Bagels and cream cheese are complementary goods. The price of flour, used to make bagels, has fallen. As a result, the equilibrium price of cream cheese ______ and the equilibrium quantity of cream cheese ______.
(A) Rises; rises
(B) Rises; falls
(C) Falls; falls
(D) Falls; rises
Answer: When the price of the flour falls, the equilibrium price of the cream rises and the equilibrium quantity of the cream cheese also rises
Answer A is correct
Explanation:
if flour is cheaper, bagels are chepear so demand increases and both equilbrium price and equilibrium quantity rises
Final answer:
When the price of flour used to make bagels falls, the equilibrium price of cream cheese rises and the equilibrium quantity of cream cheese also rises, based on their status as complementary goods. Cross price elasticity of demand shows that bagels and cream cheese are complements, and income elasticity indicates that bagels are a normal good.
Explanation:
Given that bagels and cream cheese are complementary goods, a decrease in the price of flour, which is used to make bagels, would likely lead to an increase in the supply of bagels, thereby reducing their price. The lower price of bagels would increase the demand for cream cheese, as they are often consumed together, thus increasing the equilibrium quantity of cream cheese. However, the price change of cream cheese depends on the relative changes in supply and demand; if the demand increases by a higher proportion than the increase in supply, the price of cream cheese will rise. Conversely, if the supply increases more significantly than the demand, the price may fall. Assuming that the demand for cream cheese increases due to the increased consumption of bagels, the answer would be (A) Rises; rises.
To determine the cross price elasticity of demand for cream cheese with respect to the price of bagels, we use the given percentage changes: eAB = (-3%)/(10%) = -0.3. This negative value indicates that bagels and cream cheese are complements. Now, calculating the income elasticity of demand: ey = (+1%)/(10%) = +0.1. Since this is a positive value, it shows that bagels are considered a normal good.
Which of the following statements is most CORRECT? Federal bankruptcy law deals only with corporate bankruptcies. Municipal and personal bankruptcy are governed solely by state laws. All bankruptcy petitions are filed by creditors seeking to protect their claims against firms in financial distress. Thus, all bankruptcy petitions are involuntary as viewed from the perspective of the firm's management.
Answer: All bankruptcy petitions are filed by creditors seeking to protect their claims against firms in financial distress.
Explanation:Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor. Bankruptcy is not the only legal status that an insolvent person may have, and the term bankruptcy is therefore not a synonym for insolvency. In some countries, such as the United Kingdom, bankruptcy is limited to individuals; other forms of insolvency proceedings (such as liquidation and administration) are applied to companies. Bankruptcy is the legal proceeding involving a person or business that is unable to repay outstanding debts. The bankruptcy process begins with a petition filed by the debtor, which is most common, or on behalf of creditors, which is less common. All of the debtor's assets are measured and evaluated, and the assets may be used to repay a portion of outstanding debt.
In the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period. How much must you invest each month in a mutual fund yielding 11.5% compounded monthly to become a millionaire in 10 years? (Round your answer to the nearest cent.)
Answer:
Ans. In order to become a millionaire in 10 years, you must invest in this mutual fund $4,476.21 at the end of every month, for 120 months (10 years)
Explanation:
Hi, first, we have to transform this compound rate into an effective rate. this is as follows.
[tex]r(EffectiveMonthly)=\frac{r(compound monthly)}{12} =\frac{0.115}{12}=0.009583[/tex]
So, the effective monthly rate that we have to use is 0.9583% and the formula (Future value of an annuity) only works if the rate has the same units as the periods, therefore, we just go ahead and transform years into months. That is 10Years*12=120 months.
And now, in order to reach $1,000,000 in 10 years, we need to use the following formula.
[tex]FutureValue=\frac{A((1+r)^{n} -1)}{r}[/tex]
Using the data we just worked on, everything should look like this.
[tex]1,000,000=\frac{A((1+0.009583))^{120} -1)}{0.009583}[/tex]
And we solve for A, as follows
[tex]A=\frac{1,000,000*(0.009583)}{(1+0.009583)^{120}-1 } =4,476.21[/tex]
And there you go, in order to become a millionaire (reach 1,000,000) you are going to need to invest in this mutual fund $4,476.21 every month, at the end of each month, for 120 months.
Best of luck.
Wilke Co. issued at 103 plus accrued interest $4,000,000, 9% bonds. The bonds are dated January 1, 2018, and pay interest semiannually on July 1 and January 1. In addition, Wilke Co. incurred $27,000 of bond issuance costs. Compute the net amount of cash received by Wilke Co. as a result of the issuance of these bonds
Answer:
The net amount of cash received by WilkeCo. as a result of the issuance of these bonds is $ 4153000.
Explanation:
Selling price of the bonds = $ 4000000*103%
= $ 4120000
Accrued interest fro, januaru to february 28 = $ 4000000*9%*2/12
= $ 60000
Net amount received = selling price of the bonds + accrued interest from januaru to february 28 - bond insurance cost
= $ 4120000 + $ 60000 - $27000
= $ 4153000
Therefore, the net amount of cash received by WilkeCo. as a result of the issuance of these bonds is $ 4153000.
A mass-production plant has eight machines and currently operates one 8-hour shift per day, 5 days per week, 50 weeks per year. Each machine produces the same part at a rate of 24 parts per hour. (a) Determine the annual production capacity of this plant. (b) If the plant were to operate three 8-hour shifts per day, 7 days per week, 52 weeks per year, determine the annual percentage increase in plant capacity?
Answer:
A) Annual capacity= 48000 parts
B) Annual capacity= 69888 parts
Explanation:
Giving the following information:
Eight machines
8-hour shift per day, 5 days per week, 50 weeks per year.
Each machine produces the same part at a rate of 24 parts per hour.
A) Annual capacity= [(24*8)*5]*50= 48000 parts
B) Annual capacity= [(24*8)*7]*52= 69888 parts
Final answer:
The annual production capacity of the plant initially is 384,000 parts/year. When operations increase to three 8-hour shifts daily, 7 days a week, for 52 weeks a year, the capacity expands to 1,142,848 parts/year. The capacity increase is 197.62%.
Explanation:
The question asks for the calculation of the annual production capacity of a manufacturing plant under two different operational scenarios, and the percentage increase in capacity if the operational hours are changed.
Part A: Initial Annual Production Capacity
To calculate the initial annual production capacity:
Production rate per machine: 24 parts/hour
Number of machines: 8
Hours per day: 8
Days per week: 5
Weeks per year: 50
Annual production capacity = 24 parts/hour * 8 machines * 8 hours/day * 5 days/week * 50 weeks/year = 384,000 parts/year.
Part B: New Operational Scenario and Percentage Increase
In the new scenario:
Shifts per day: 3
Days per week: 7
Weeks per year: 52
New annual production capacity = 24 parts/hour * 8 machines * 8 hours/shift * 3 shifts/day * 7 days/week * 52 weeks/year = 1,142,848 parts/year.
The percentage increase in capacity is calculated by:
((1,142,848 - 384,000) / 384,000) * 100 = 197.62%
Therefore, the plant capacity increases by 197.62% when moving from one to three shifts a day, operating seven days a week for 52 weeks a year.
Which of the following is not typically considered a function of financial intermediaries?
A. Providing a payment mechanism
B. Investing in real assets
C. Accumulating funds from smaller investors
D. Spreading, or pooling risk among individuals
Answer: The correct answer is "B".
"B. Investing in real assets" is NOT typically considered a function of financial intermediaries.
Explanation: A financial intermediary is an institution specialized in mediation between economic units that save or invest their funds, and units that wish to borrow funds.
Financial intermediaries are dedicated to investing in financial assets.
Fox, Greg, and Howe are partners with average capital balances during 20X1 of $120,000, $60,000, and $40,000, respectively. Partners receive 10% interest on their average capital balances. After deducting salaries of $30,000 to Fox and $20,000 to Howe, the residual profit or loss is divided equally. In 20X1 the partnership sustained a $33,000 loss before interest and salaries to partners. By what amount should Fox's capital account change?
A. $7,000 increase
B. $11,000 decrease
C. $35,000 decrease
D. $42,000 increase
Answer:
A. $7,000 increase
Explanation:
-33,000
-30,000
-20,000
-12,000
-6,000
-,4000
-105,000
Distribute equally betwne partner: (35,000)
FOX:
30,000 salary + 12,000 interest - 35,000 los distribution = 7,000 increase
To determine the change in Fox's capital account, we account for interest, salaries, and shared loss. After calculating these amounts, it's found that Fox's capital account should decrease by $11,000. So, option B is correct.
We need to calculate the change in Fox's capital account after accounting for interest on capital, salaries, and the shared loss. First, calculate the total interest on the partners' capitals which is 10% of their respective average balances: Fox at $120,000, Greg at $60,000, and Howe at $40,000.
Fox: $120,000 * 10% = $12,000
Greg: $60,000 * 10% = $6,000
Howe: $40,000 * 10% = $4,000
Next, allocate the salaries: $30,000 to Fox and $20,000 to Howe. Finally, divide the loss of $33,000 equally among the three partners. Each partner's share of the loss is $11,000.
Now we can determine the net change to Fox's capital account:
Interest received: $12,000
Salary received: $30,000
Less share of loss: -$11,000
Net change to Fox's capital account = $12,000 + $30,000 - $11,000 = $31,000
However, Fox's account should decrease by the loss amount of $11,000 since the loss exceeds the sum of interest and salary received. Therefore, if we start with the capital account increase of $31,000 and then subtract $42,000 (the sum of $31,000 and another $11,000 loss to get the true decrease), we find that Fox's capital account should change by:
$31,000 (initial increase) - $42,000 (additional loss required to obtain decrease amount) = $11,000 decrease.
Bike Atlanta currently produces 1,000 axles per month. The following per unit data apply for sales to regular customers: Direct materials $30 Direct manufacturing labor 5 Variable manufacturing overhead 10 Fixed manufacturing overhead 40 Total manufacturing costs $85 The plant has capacity for 3,000 axles and is considering expanding production to 3,000 axles. What is the total cost of producing 3,000 axles?
Answer:
The total cost of producing 3,000 axles is $255,000
Explanation:
The computation of the total cost is shown below:
= Total per unit manufacturing costs × total number of axles produced
= $85 × 3,000 axles
= $255,000
The total manufacturing includes all costs such as Direct materials, direct manufacturing labor, Variable manufacturing overhead and, Fixed manufacturing overhead.
Wheels, Inc. manufactures wheels for bicycles, tricycles, and scooters. For each cost given below, determine if the cost is a product cost or a period cost. If the cost is a product cost, further determine if the cost is direct materials (DM), direct labor (DL), or manufacturing overhead (MOH) and then determine if the product cost is a prime cost, conversion cost, or both. If the cost is a period cost, further determine if the cost is a selling expense or administrative expense (Admin). Cost (a) is answered as a guide.
Solution:
Cost Product Period
DM DL MOH Prime Conversion Selling Admin.
a. Metal used for rims X X
b. Sales salaries
c. Rent on factory
d. Wages of assembly
workers
e. Salary of production
supervisor
f. Depreciation on
office equipment
g. Salary of CEO
h. Delivery expense
Answer:
a. Metal used for rims: Product - DM- Prime
b. Sales salaries: Period - Selling
c. Rent on factory: Product - MOH - Conversion
d. Wages of assembly workers: Product - DL - Prime - Conversion
e. Salary of production supervisor: Period - Admin
f. Depreciation on office equipment: Period
g. Salary of CEO: Period - Admin
h. Delivery expense: Period - Selling
Explanation:
- Direct materials are those materials and supplies that are consumed during the manufacture of a product, and which are directly identified with that product.
- Direct labor is production or services labor that is assigned to a specific product, cost center, or work order.
- Manufacturing overhead refers to indirect factory-related costs that are incurred when a product is manufactured.
- Period costs are not directly tied to the production process. Overhead or sales, general, and administrative (SG&A) costs are considered period costs. SG&A includes costs of the corporate office, selling, marketing, and the overall administration of company business.
- Product costs are the direct costs involved in producing a product. A manufacturer, for example, would have production costs that include: Direct labor, Raw materials, Manufacturing supplies, Overhead that's directly tied to the production facility such as electricity.
- Prime cost= direct material + direct labor
- Conversion cost= direct labor + MOH
In this exercise:
a. Metal used for rims: Product - DM- Prime
b. Sales salaries: Period - Selling
c. Rent on factory: Product - MOH - Conversion
d. Wages of assembly workers: Product - DL - Prime - Conversion
e. Salary of production supervisor: Period - Admin
f. Depreciation on office equipment: Period
g. Salary of CEO: Period - Admin
h. Delivery expense: Period - Selling
The different costs at Wheels, Inc. are categorized into Product or Period costs. Product costs are those directly associated with production, including Direct Materials, Direct Labor, and Manufacturing Overhead. Period costs are not directly tied to production and include Selling and Administrative Expenses.
Explanation:In financial accounting, businesses categorize costs as either
product
or
period costs
.
Product costs
are expenses directly tied to the production of goods including Direct Materials (DM), Direct Labor (DL), and Manufacturing Overhead (MOH). They can further be categorized as a prime cost (DM, DL), conversion cost (DL, MOH), or both.
Period costs
are not directly tied to production. They include Selling and Administrative Expenses. Here's how the costs of Wheels, Inc. gets categorized:
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