Answer:
The company's turnover rounded to the nearest tenth: C) 9.5
Explanation:
Asset turnover helps investors understand how effectively companies are using their assets to generate sales. Asset turnover is calculated by using following formula:
Asset Turnover = Total Sales or Revenue/ Average Total Assets
where:
Average Total Assets = (Beginning Assets + Ending Assets )/2 = (Assets at the beginning of year +Assets at end of year )/2
In the House of Orange:
Average Total Assets = ($84,000 + $90,000)/2 = $87,000
Asset Turnover = $826,650/$87,000 = 9.5
Final answer:
The company's turnover is found by dividing sales by average operating assets. Sales were $826,650 and the average operating assets were $87,000, resulting in a turnover of approximately 9.5 when rounded to the nearest tenth.
Explanation:
To find the company's turnover, we need to use the formula for asset turnover ratio, which is calculated by dividing sales by average operating assets. For the House of Orange, the sales were $826,650, and the average operating assets are the average of the beginning and end of year assets, which are $84,000 at the beginning and $90,000 at the end. Thus, the average operating assets are calculated as ($84,000 + $90,000) / 2 = $87,000.
Now, we use the sales and average operating assets to find the turnover: Turnover = Sales / Average Operating Assets = $826,650 / $87,000 ≈ 9.506, which rounded to the nearest tenth is 9.5. So, the correct answer would be (C) 9.5.
Which of the following statements is CORRECT?
Dividends paid reduce the net income that is reported on a company's income statement.
If a company uses some of its bank deposits to buy short-term, highly liquid marketable securities, this will cause a decline in its current assets as shown on the balance sheet.
If a company issues new long-term bonds to purchase fixed assets during the current year, this will increase both its reported current assets and current liabilities at the end of the year.
Accounts receivable are reported as a current liability on the balance sheet.
If a company pays more in dividends than it generates in net income, its retained earnings as reported on the balance sheet will decline from the previous year's balance.
Answer:
If a company pays more in dividends than it generates in net income, its retained earnings as reported on the balance sheet will decline from the previous year's balance.
Explanation:
The dividend is shown while preparing the retained earning statement. So, it does not affect the net income.
The highly liquid marketable securities does not show a decline in the current assets
If the long term bonds are issued to purchase fixed assets it would show under the long term liabilities and the long term assets rather than the current assets and the current liabilities
Account receivable are reported in the current assets rather than the current liabilities
We know that
The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid
If the dividend amount is more than the net income so the ending balance of retained earning will decline than its beginning year balance.
Answer:
E
Explanation:
If a company pays more divided than net income, its retained will reduce more than reported in the previous balance sheet. This is beacue dividends are paid out of retained earnings; therefore where the dividend payment is higher than the net income.
What is credit??????
Answer:
Credit is the provision of money or bills, based on a loan agreement between the bank and another party that requires the borrower to carry out the amount of interest in return
Note :
Sorry if my English ia a mess. becaues, I can't speak English
Credit:
Credit is the customer's ability to obtain services or goods before payment, based on the confidence that money to be paid will be made by him/her in the future.
In accounts, credit in an entry recording is a sum received listed on the right-hand side or column of an account.
Your financial power is part of the credit. You get what you need today, such as a car loan or a credit card, depending on the assurance that you can pay later. Planning to strengthen your mortgage helps ensure that you apply for credit if you need it.
Your statement is the basis for determining your credit score by the various financial reporting agencies that the borrowers use to assess your value of loan.
Bank of America, TransUnion and Equifax are three major national credit service companies.
Harrison Forklift's pension expense includes a service cost of $17 million. Harrison began the year with a pension liability of $42 million (underfunded pension plan). 1. Interest cost, $13; expected return on assets, $11; amortization of net loss, $3. 2. Interest cost, $13; expected return on assets, $10; amortization of net gain, $3. 3. Interest cost, $13; expected return on assets, $10; amortization of net loss, $3; amortization of prior service cost, $4 million. Required: Prepare the appropriate general journal entries to record Harrison’s pension expense in each of the following independent situations regarding the other components of pension expense ($ in millions): (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
Answer:
Journal Entries:
Explanation:
Event 1 Pension expense A/C Dr. $22
Plan assets A/C Dr. $11
To PBO A/C $30
To Amortization of net loss-OCI A/C $3
Event 2 Pension expense A/C Dr.$17
Plan assets A/C Dr. $ 10
Amortization of net gain- OCI A/C Dr. $3
To PBO A/C $30
Event 3 Pension expense A/C Dr.$27
Plan assets A/C Dr. $10
To PBO A/C $30
To Amortization of net loss-OCI A/C $3
To Amortization of prior service cost-OCI A/C $4
1. PBO ($17 service cost + $13 interest cost) = 30
2. PBO ($17 service cost + $13 interest cost) = 30
3. PBO ($17 service cost + $13 interest cost) = 30
The amortization amounts are reported as other comprehensive income in the statement of comprehensive income.
Final answer:
The question involves creating journal entries to record pension expenses for Harrison Forklift under different conditions involving service cost, interest cost, expected return on assets, and amortizations. Each scenario is addressed with a corresponding journal entry that reflects the specific components of the pension expense for that situation.
Explanation:
The student's question relates to the recording of pension expenses for Harrison Forklift in various scenarios. Each scenario involves varying amounts of interest cost, expected return on assets, amortization of net loss or gain, and possibly amortization of prior service cost. The pension expense is calculated by combining the service cost with these other components, and the appropriate general journal entries will reflect these calculations.
Scenario 1:
Service Cost: $17M
Interest Cost: $13M
Expected Return on Assets: $11M
Amortization of Net Loss: $3M
Total Pension Expense: $22M ($17M + $13M - $11M + $3M)
Journal Entry: Pension Expense $22M; Pension Liability $22M
Scenario 2:
Service Cost: $17M
Interest Cost: $13M
Expected Return on Assets: $10M
Amortization of Net Gain: $3M
Total Pension Expense: $20M ($17M + $13M - $10M - $3M)
Journal Entry: Pension Expense $20M; Pension Liability $20M
Scenario 3:
Service Cost: $17M
Interest Cost: $13M
Expected Return on Assets: $10M
Amortization of Net Loss: $3M
Amortization of Prior Service Cost: $4M
Total Pension Expense: $27M ($17M + $13M - $10M + $3M + $4M)
Journal Entry: Pension Expense $27M; Pension Liability $27M
Current operating income for Bay Area Cycles Co. is $74,000. Selling price per unit is $120, the contribution margin ratio is 30%, and fixed expense is $250,000. Required: 1. Calculate Bay Area Cycle’s breakeven point in units and total sales dollars. (Round your Unit answer to nearest whole units and other answer to the nearest whole dollar.) 2. Calculate Bay Area Cycle’s margin of safety and margin of safety ratio. (Do not round your intermediate answers and Round your percentage answer to the 1 decimal place and other answer to nearest whole dollar)
Answer:
1. 6,944 units and $833,333.33
2. $1,080,000 and 22.83%
Explanation:
The computations are shown below:
1. Break-even point in units
= (Fixed expenses ) ÷ (Contribution margin per unit)
where,
Contribution margin per unit = Selling price per unit × contribution margin ratio
= $250,000 ÷ $36
= 6,944 units
Break-even point in sales
= (Fixed expenses ) ÷ (Contribution margin ratio)
= $250,000 ÷ 30%
= $833,333.33
2. For margin of safety and margin of safety ratio:
Margin of safety = Expected sales - break even sales
where,
Expected sales = (Operating income + fixed expense) ÷ (contribution margin ratio)
= ($74,000 + $250,000)
= ($324,000) ÷ (30%)
= $1,080,000
So, the margin of safety would be
= $1,080,000 - $833,333.33
= $246,667
Margin of safety ratio = Margin of safety ÷ total sales
= $246,667 ÷ $1,080,000
= 22.83%
Bay Area Cycles Co.'s breakeven point is approximately 6945 units or $833,400 in total sales dollars. Its margin of safety is -$586,733 with a margin of safety ratio of -238%.
Explanation:To determine the breakeven point in units for Bay Area Cycles Co., we use the formula: Fixed Costs / Contribution Margin per Unit. Contribution margin per unit can be calculated as 30% of $120 (selling price per unit), which is $36. Hence, the breakeven point in units would be $250,000 / $36 = approximately 6944.44 units, rounded up to 6945 units as units cannot be fractional. The breakeven point in sales dollars would be 6945 units * $120 = $833,400.
To calculate the margin of safety, we subtract the breakeven revenue from the actual revenue. The actual revenue is $74,000 (operating income) / 30% (contribution margin ratio) = $246,667 (round to the nearest dollar). Hence, the margin of safety is $246,667 - $833,400 = -$586,733. The negative value suggests the company is not breaking even yet. The margin of safety ratio would be the margin of safety / actual sales = -$586,733 / $246,667 = -238 %.
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Faulk Industries (FI) produces low cost digital cameras that sell for $175. FI requires a 25% return on sales. Currently feasible costs are $9,944,000 and a cost reduction of $100,250 is required to meet their target. FI assumes they will sell ____cameras. A. 70,313 B. 56,823 C. 75,000 D. 85,000
Answer:
option (C) 75,000
Explanation:
Data provided in the question:
Selling cost of digital cameras = $175
Required return on sales = 25%
feasible costs = $9,944,000
cost reduction = $100,250
Now,
cost of camera = $175 × (1 - Desired profit )
or
cost of camera = $175 × (1 - 0.25)
or
cost of camera = $131.25
Now,
Net cost of cameras sold = cost of camera × Number of cameras FI sell
$9,944,000 - $100,250 = $131.25 × Number of cameras FI sell
or
$9,843,750 = $131.25 × Number of cameras FI sell
or
Number of cameras FI sell = 75,000
Hence,
the answer is option (C) 75,000
At December 31, 2012 and 2013, Plank Corp. had outstanding 3,000 shares of $100 par value 8% cumulative preferred stock and 15,000 shares of $10 par value common stock. At December 31, 2012, dividends in arrears on the preferred stock were $12,000. Cash dividends declared in 2013 totaled $45,000. What amounts were payable on each class of stock?Preferred Stock Common Stock
Answer:
Preference shareholders = $36,000
Equity shareholders = $9,000
Explanation:
As provided the outstanding preference dividend at end of 2012 = $12,000
Total cash dividends declared = $45,000 in the year 2013
Regular preference dividends = $100 [tex]\times[/tex] 3,000 [tex]\times[/tex] 8% = $24,000
Thus, when dividends will be paid in 2013 then firstly they will be used for payment to preference shareholders.
Thus, the company shall pay:
$12,000 + $24,000 = $36,000 to preference shareholders.
Further the balance will be paid to equity shareholders.
= $45,000 - $36,000 = $9,000
Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one cup of tea, one biscuit, and one magazine. In year one, the basket costs $10.00.1. In year two, the price of the same basket is $9.00. Is this called inflation or deflation? What is the annual rate of it?2. How many baskets can $80.00 buy in year one? How many in year two?3. What happens to the value of money if the price level falls?
Answer:
1. Deflation
-10%
2. In year 1 - 8 baskets
In year 2 - 8.9 baskets
3. The value of money increases
Explanation:
Deflation is a fall in general price levels. The price fell from $10 to $9. It indicates deflation has occured.
Inflation is a rise in price level.
Annual rate = (current year price - previous year price ) / previous year price
(9 - 10) / 10 = -0.1 = -10%
The annual change is negative because price level fell.
$80 would buy $80/$10 = 8 baskets of goods in year 1
$80 Will buy $80/$9 = 8.9 baskets of goods in year 2.
A fall in price levels increases the value of money because less money can buy the same basket of goods. Therefore, the purchasing power of money increases.
The price level is decreasing, which is called deflation. The annual rate of deflation is 10%. $80.00 can buy approximately 8 baskets of goods in year one and 8.89 baskets of goods in year two. The value of money increases when the price level falls.
Explanation:In this scenario, the price level is decreasing from year one to year two, which is called deflation. The annual rate of deflation can be calculated by finding the percentage change in the price level. In this case, the percentage change is 10%.
In year one, $80.00 can buy 8 baskets of goods. In year two, $80.00 can buy approximately 8.89 baskets of goods. When the price level falls, the value of money increases. This means that each unit of currency can purchase more goods and services.
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Required information The Foundational 15 [LO9-1, LO9-2, LO9-4, LO9-5, LO9-6] [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct material: 5 pounds at $8.00 per pound $ 40.00 Direct labor: 2 hours at $14 per hour 28.00 Variable overhead: 2 hours at $5 per hour 10.00 Total standard variable cost per unit $ 78.00 The company also established the following cost formulas for its selling expenses: Fixed Cost per Month Variable Cost per Unit Sold Advertising $ 200,000 Sales salaries and commissions $ 100,000 $ 12.00 Shipping expenses $ 3.00 The planning budget for March was based on producing and selling 25,000 units. However, during March the company actually produced and sold 30,000 units and incurred the following costs: Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production. Direct-laborers worked 55,000 hours at a rate of $15.00 per hour. Total variable manufacturing overhead for the month was $280,500. Total advertising, sales salaries and commissions, and shipping expenses were $210,000, $455,000, and $115,000, respectively. Foundational 9-12 12. What amounts of advertising, sales salaries and commissions, and shipping expenses would be included in the company’s flexible budget for March?
Answer:
Consider the following calculations
Explanation:
The amounts of advertising, sales salaries and commissions, and shipping expenses would be included in the company’s flexible budget for March are calculated below.
Flexible budgetAdvertising = 200.000
Sales salaries and commissions [100.000 + (12.00 * 30.000 )] = 460.000
Shipping expenses [(3.00 * 30.000)]= 90.000
The flexible budget for March for Preble Company would account for $200,000 in advertising, $360,000 in sales salaries and commissions and $90,000 in shipping expenses.
Explanation:The flexible budget adjusts with the level of activity and in this case, it's based on the number of units being produced and sold.
In Preble Company, the advertising expense is fixed at $200,000, so in calculating the flexible budget for March, the advertising cost will still be $200,000.
The variable costs such as sales salaries, commissions and shipping expenses change with the level of activity. Since these costs are $12 per unit sold, the sales salaries and commissions for March will amount to $12 * 30,000 units = $360,000. The shipping expenses are $3 per unit sold, which will amount to $3 * 30,000 = $90,000.
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Dividends Paid and Dividends in Arrears The Glendora Company has 200,000 shares of cumulative, five percent, $100 par value preferred stock outstanding. Last year the company failed to pay its regular dividend, but the board of directors would like to resume paying its regular dividend this year. Calculate the dividends in arrears and the total dividend that must be paid this year. Dividend in arrears $Answer Total dividend $Answer
Answer:
Dividend in arrears $ 1,000,000
Total Dividend $ 2,000,000
Explanation:
The dividend at 5% of $100 par value is $5 per unit of shares. Recall, each unit of the preference shares has a par value of $100
Dividend calculation = $5 multiplied by the total unit of shares
previous year shares dividend is 5 x 200, 000 unit of shares = $ 1,000,000
This year total dividend payout will be current year of $1,000,000 plus previous year of $1,000,000 = $2,000,000
Answer:
Dividend in arrears $1,000,000
Total dividend $2,000,000
Explanation:
Where there is a cumulative preferred stock, any unpaid dividend on such stock must be accrued for and paid when management determined to pay them as such divided is more of a liability than equity.
In the case of Glendora Company, as the management did not pay the cumulative preferred dividend last year, such amount must be provided for and paid together with current year dividend. The amount of dividend payable on the preferred stock each year is (200,000 units x $100 each x 5%) = $1,000,000 per annum.
The amount will double the following year thereby making the divided payable to $2,000,000 as follows:
Accrued dividend $1,000,000
Current year dividend $1,000,000
Total amount due $2,000,000
Matthew's Fish Fry has a monthly target operating income of $6,600. Variable expenses are 80% of sales and monthly fixed expenses are $840. What is the monthly margin of safety in dollars if the business achieves its operating income goal?
A. $29,760
B. $41,400
C. $33,000
D. $37,200
Answer:
The correct answer is C
Explanation:
Break even Sales is computed as:
Contribution margin ratio = Fixed Cost / Break even Sales
where
Contribution margin ratio = 1 - Variable expense of 80%
= 20%
Fixed Cost is $840
30% = $840 / Break even Sales
Break even Sales = $840 / 20%
= $4,200
The actual sales is computed as:
Actual Sales = (Fixed Cost + Desired Profit) / Contribution margin ratio
= ($840 + $6,600) / 20%
= $7,440 / 0.2
= $37,200
The margin of safety is computed as:
Margin of Safety = Actual Sales - Break even sales
= $37,200 - $4,200
= $33,000
Penn Company has a division that manufactures a component that sells for $ 50 and has variable costs of $ 25 and fixed costs of $ 10$ Another division wants to purchase the component. What is the minimum transfer price if the division is operating at capacity?
A $10
B. $25
C. $35
D. $50
Answer:
C. $35
Explanation:
Given;
Selling price of the manufactured component = $ 50
Variable costs of production = $ 25
Fixed costs of Production = $ 10
If the component is to be sold to another division, the minimum sales price is equivalent to the total production cost of the transferring division
= $ 25 + $ 10
= $ 35
The minimum transfer price if the division is operating at capacity is $35.
The presence of _____________________ in transactions involving goods can easily cause a ______________________ if the result is only a relatively small number of buyer and sellers communicating enough information so that they can agree on a price.
A. imperfect information; thin marketB. adverse information; decline in prices or quantities of products soldC. adverse selection; decline in prices or quality of purchased goodsD. imperfect selection; thick market
Answer:
The answer is letter A.
Explanation:
The presence of ___imperfect information__________________ in transactions involving goods can easily cause a _____thin market_________________ if the result is only a relatively small number of buyer and sellers communicating enough information so that they can agree on a price.
Final answer:
The correct answer to the fill-in-the-blank question is 'imperfect information' and 'thin market'. These terms describe a market situation where few buyers and sellers are active due to uncertainties about product quality, resulting in difficulty determining prices and lower market participation.
Explanation:
The presence of imperfect information in transactions involving goods can easily cause a thin market if the result is only a relatively small number of buyers and sellers communicating enough information so that they can agree on a price. Economists describe a market with few participants as a thin market, which often occurs when imperfect information is present and makes it difficult for consumers to assess the quality of the goods, leading to lower participation from buyers and sellers. This scenario is representative of how market thickness and information quality can influence economic transactions.
Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $3 per pound, but a 2% discount is usually taken. Freight costs are $.15 per pound, and receiving and handling costs are $.10 per pound. The hourly wage rate is $10.00 per hour, but a raise which will average $.25 will go into effect soon. Payroll taxes are $1.00 per hour, and fringe benefits average $2.00 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively. The standard direct materials quantity per unit is a. 2.6 pounds. b. 2.7 pounds. c. 2.9 pounds. d. 3.0 pounds. 4. The standard direct labor hours per unit is
a. 1 hour.
b. 1.1 hours.
c. 1.2 hours.
d. 1.3 hours.
Answer:
standard direct materials quantity per unit = 3.00 Pounds
so correct option is d. 3.0 pounds
Direct Labor is = 1.3 hours
correct option is d. 1.3 hours.
Explanation:
given data
materials = 2.6 pounds
waste = 0.3 pounds
spoilage = 0.1 pounds
discount = 2 %
Freight costs = $.15 per pound
handling costs = $.10 per pound
wage rate = $10.00 per hour
Payroll taxes = $1.00 per hour
fringe benefits average = $2.00 per hour
Standard production time = 1 hour per unit
to find out
standard direct materials quantity per unit and The standard direct labor hours per unit
solution
standard direct materials quantity per unit = Net Raw Material Required + waste + Spoilage ............1
standard direct materials quantity per unit = 2.6 + 0.3 + 0.10
standard direct materials quantity per unit = 3.00 Pounds
so correct option is d. 3.0 pounds
and
Direct Labor is = Net Hrs Required + Allowance + Rest
Direct Labor is = 1 + 0.2+ 0.1
Direct Labor is = 1.3 hours
correct option is d. 1.3 hours.
The standard direct labor hours per unit is 1.3 hours. Thus, option D is correct.
What is production?"Production can be defined as the way investor goods have been produced that can be made to the work of getting or with respect to the need and the demand. It also new various types of resources to make a product there can be similar or multiple product ranges."
Resources = 2.6 pounds.
0.3 pounds of trash
loss = 0.1 pounds of food.
10% off = 2%
The cost of shipping is $.15 per pound.
The costs of handling are $.10 per pound.
Hourly salary is $10.00.
Taxes on wages equal $1.00 per hour.
Average perks and benefits: $2.00 per hour
1 hour is the average production time for each unit.
The standard direct labor hour per unit and the standard direct materials quantity per unit
Direct Labor is = Net Hrs Required + Allowance + Rest
Direct Labor is = 1 + 0.2+ 0.1
1.3 hours of direct labor.
Therefore, option D is the correct option.
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Consider the following statement: "The Fed has an easy job. Say it wants to increase real GDP by $200 billion. All it has to do is increase the money supply by that amount." The statement is ▼ correct incorrect because an increase in the money supply ▼ does does not affect real GDP directly.
Answer:
The statement is incorrect
Explanation:
As the statement correctly describes, the money supply does not directly affect real GDP, what it affects directly is the interest rate, and the inflation rate, which are monetary variables, while GDP is a variable that measures output.
When the Fed increases the money supply, it may be doing so with the hope of stimulating economic activity, and thus, increasing GDP, but the Fed knows that any effect will be indirect. What will happen under this expansionary monetary policy is that the interest rate will fall, and as it falls, the supply of loans will grow, investment will become cheaper, and more investment means more factors of production, or more productivity, which in turn, increase the real GDP, but as it can be seen, the effect is indirect.
In fact, if the FED goes overboard with increasing the money supply, it may cause high inflation or even hyperinflation, and these events actually lead to less investment, less saving, and less economic activity, resulting in a probable stagnation or contraction of GDP.
Katzev Company manufactures a personal computer designed for use in schools and markets it under its own label. Katzev has the capacity to produce 40,000 units a year but is currently producing and selling only 32,000 units a year. The computer’s normal selling price is $750 per unit with no volume discounts. The unit-level costs of the computer’s production are $250 for direct materials, $225 for direct labor, and $62.50 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Katzev during the year are expected to be $2,000,000 and $500,000, respectively. Assume that Katzev receives a special order to produce and sell 6,000 computers at $562.50 each.
Should katzev accept or reject the special order?
Answer:
Accept the special order.
Explanation:
To accept a special order, the price of the special order should be lower than the making price.
If Katzev accepts the special order,
the revenue ($562.50 x 6,000 computers) = $3,375,000
Less: Avoidable costs (Unit-level costs)
Materials ($250 x 6,000) 1,500,000
Direct labor ($225 x 6,000) 1,350,000
Manufacturing costs 375,000
($62.5 x 6,000)
Total Avoidable costs $3,225,000
Profit if accepts the special order $ 150,000
As the company will receive profit, the company should accept the order.
Note: Fixed costs cannot be avoided irrespective of accepting order or making products. Therefore, total product- and facility-level costs are not deducted.
Considering the incremental cost and revenue, and the company's production capacity, it is beneficial for Katzev to accept the special order as it would result in additional profits.
Explanation:To determine whether Katzev Company should accept the special order, Katzev needs to consider the incremental cost and incremental revenue associated with accepting this order. The unit-level cost of a computer is $250 for direct materials, $225 for direct labor, and $62.50 for indirect unit-level manufacturing costs. So, the total unit-level cost is $537.50 per computer. Multiplying by 6,000 for the special order yields an incremental cost of $3,225,000.
On the revenue side, the special order price is $562.50, so multiplying by 6,000 computers equals $3,375,000. So, the incremental revenue is higher than the incremental cost, meaning the company would make a profit from accepting the special order. Also, it's noted that the company has the capacity to produce 40,000 units but is currently only producing 32,000 units. This means that the company has enough capacity to fill this special order without having to incur additional costs. Therefore, given these considerations, Katzev should accept the special order.
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Ann would like to buy a house. It costs $2,500,000. Her down payment will be $50,000. She will take out a mortgage for the remainder. It will be a 30 year, fully amortizing, FRM, with constant monthly payments and monthly compounding. The annual interest rate is 4.00%. She will pay $5,000 in closing costs at origination. She will also pay 1.75% of the balance in buy-down points at origination. Note: the home is bought and the loan is taken in month 0, the first payment is due in month
1. In the spreadsheet where it says "cash inflow", "outflow" and "net cash flow" you should only take into account cash flow related to the mortgage.
2. Fill in the spreadsheet (sheet "FA AMORTIZATION SCHEDULE") for Ann. (It is called an amortization schedule or amortization calendar.)
3. Compute Ann's annualized IRR for the mortgage in the spreadsheet. (Use the net cash flow.)
(3.a) What is the annualized IRR for the mortgage?
(3.b) Is it higher or lower than the mortgage contract rate?
(3.c) Why? in excel
Answer:
Please find the cash flow calculation in the excel attached
Explanation:
The Equated Monthly Installment (Monthly payment is calculated based on the fact that there is a balloon payment at the end of the term.
3b)IRR is lower than the
mortgage contract rate
3c) The reason for lower IRR is the inclusion of Balloon Payment
Please find the cash flow calculation:-
ABC and XYZ are all-equity firms. ABC has 1,750 shares outstanding at a market price of $20 a share. XYZ has 2,500 shares outstanding at a price of $28 a share. XYZ is acquiring ABC for $36,000 in cash. The incremental value of the acquisition is $3,000. What is the net present value of acquiring ABC to XYZ?
Answer:
$2,000
Explanation:
The computation of the net present value is shown below:
= Number of outstanding shares × market price per share + incremental value of the acquisition - acquired value in cash
= 1,750 shares × $20 + $3,000 - $36,000
= $35,000 + $3,000 - $36,000
= $2,000
All other information which is given is not relevant. Hence, ignored it
Morgan, the best candidate for the position of director of marketing, has tested positive for the presence of illegal drugs in a hair sample. Given this scenario, the HR manager should: Group of answer choices
a. hire Morgan and inform him of the company’s Employee Assistance program.
b. inform Morgan that someone else has been hired.
c. notify Morgan that he was denied the job because of a positive drug test.
d. ask Morgan to submit to a second type of drug test at another laboratory.
Answer: The correct answer is "d. ask Morgan to submit to a second type of drug test at another laboratory.".
Explanation: Given this scenario, the HR manager should: ask Morgan to submit to a second type of drug test at another laboratory to prove whether Morgan has actually used drugs and evaluate whether it is convenient to hire him or not.
An owner lists his home and agrees to pay a 6% commission provided he nets $10,000 after paying the commission and the balance of his mortgage, which is $75,000. To the nearest dollar, what should the selling price be to net the owner his $10,000?
Answer:
selling price is $90425.53
Explanation:
GIVEN DATA:
Commission 6%
net funds $10,000
mortgage is $75,000
Required selling price is given as
[tex]= \frac{Net\ funds\ required}{1 - commission}[/tex]
[tex]= \frac{10,000 + 75000}{1 - 0.06}[/tex]
[tex]=\frac{85000}{0.94}[/tex]
=$90425.53
selling price is $90425.53
To find the selling price that will net the owner $10,000, subtract the commission and mortgage balance from the selling price and solve for x. The selling price should be $90,425.
Explanation:To find the selling price that will net the owner $10,000, we need to take into account the 6% commission and the balance of the mortgage. Let's represent the selling price as x. The commission would be 0.06x, and the balance of the mortgage is $75,000. So, the equation we can set up is:
x - 0.06x - $75,000 = $10,000
To solve for x, we can combine like terms:
0.94x - $75,000 = $10,000
Then, we can isolate x by adding $75,000 to both sides:
0.94x = $85,000
Dividing both sides by 0.94:
x = $90,425
Therefore, the selling price should be $90,425 to net the owner $10,000.
Bryant Company sells a wide range of inventories, which are initially purchased on account. Occasionally, a short-term note payable is used to obtain cash for current use. The following transactions were selected from those occurring during the year. a. On January 10, purchased merchandise on credit for $25,500. The company uses a perpetual inventory system. b. On March 1, borrowed $55,000 cash from City Bank and signed a promissory note with a face amount of $55,000, due at the end of six months, accruing interest at an annual rate of 6.50 percent, payable at maturity. Required: 1. For each of the transactions, indicate the accounts, amounts, and effects on the accounting equation. (Enter any decreases to account balances with a minus sign.) 2. What amount of cash is paid on the maturity date of the note? 3. Indicate the impact of each transaction (increase, decrease, and NE for no effect) on the debt-to-assets ratio. Assume Bryant Company had $450,000 in total liabilities and $650,000 in total assets, yielding a debt-to-assets ratio of 0.69, prior to each transaction. (Round your answer to 2 decimal places.)
Answer:
1. January 10:
Inventory account increases by $25,500
Account payable increases by $25,500;
Total asset will increase by $25,500 and total liabilities will increases by $25,500. Equity remains the same.
March 1:
Cash account increases by $55,000.
Promissory note payable increases $55,000
Total asset will increase by $55,000 and total liabilities will increases by $55,000. Equity remains the same.
2.
The amount of cash will be paid at maturity date (Sep 1) of the note is $56,787.5
3.
Jan 10: debt-to-assets ratio = 0.70, thus increase in Debt to asset ratio comparing to the ratio 0.69 at the beginning
March 1: debt-to-assets ratio = 0.72, thus increase in Debt to asset ratio comparing to the ratio 0.69 at the beginning
Explanation:
- Working note for 2: Repayment will include Face value + Interest rate expenses incurred = 55,000 + 55,000 * 6.5% *6/12 = $56,787.5
- Working note for 3:
Jan 10: Debt-to-asset ratio = (450,000 + 25,500) / (650,000 + 25,500) = 0.70
Mar 1: Debt-to-asset ratio =(450,000 + 55,000) / (650,000 + 55,000) = 0.72
According to above equation, the total debt-to-asset ratio of January 10 is 0.70 and in March 1 is 0.72.
What is the term debt-to-asset ratio about?
Debt-to-asset ratio provides the percentage of the total assets financed by liabilities, creditors, and debt. It is calculated by dividing the total liabilities by the total assets.
Solution:-
1. January 10:-
Inventory account increases by $25,500
Account payable increases by $25,500
Total asset will increase by $25,500 and total liabilities will increases by $25,500. Equity remains the same.
March 1:
Cash account increases by $55,000.
Promissory note payable increases $55,000
Total asset will increase by $55,000 and total liabilities will increases by $55,000. Equity remains the same.
2. The amount of cash will be paid at maturity date (Sep 1) of the note is $56,787.5
3. Jan 10:- debt-to-assets ratio = 0.70, thus increase in Debt to asset ratio comparing to the ratio 0.69 at the beginning
March 1:- debt-to-assets ratio = 0.72, thus increase in Debt to asset ratio comparing to the ratio 0.69 at the beginning
Working note for 2:- Repayment will include Face value + Interest rate expenses incurred = 55,000 + 55,000 * 6.5% *6/12 = $56,787.5
Working note for 3:-
Jan 10:- Debt-to-asset ratio = (450,000 + 25,500) / (650,000 + 25,500) = 0.70
Mar 1:- Debt-to-asset ratio =(450,000 + 55,000) / (650,000 + 55,000) = 0.72
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Connors Corporation acquired manufacturing equipment for use in its assembly line. Below are four independent situations relating to the acquisition of the equipment.
"A. The equipment was purchased on account for $40,000. Credit terms were 2/10, n/30. Payment was made within the discount period and the company records the purchases of equipment net of discounts.
B. Connors gave the seller a noninterest-bearing note. The note required payment of $42,000 one year from date of purchase. The fair value of the equipment is not determinable. An interest rate of 12% properly reflects the time value of money in this situation.
C. Connors traded in old equipment that had a book value of $13,500 (original cost of $29,000 and accumulated depreciation of $15,500) and paid cash of $37,000. The old equipment had a fair value of $8,500 on the date of the exchange. The exchange has commercial substance.
D. Connors issued 2,500 shares of its no-par common stock in exchange for the equipment. The market value of the common stock was not determinable. The equipment could have been purchased for $40,000 in cash."
Answer:
A: we reocrd at cost, which is the discounted price:
40,000 x (1 - 2%) = 39,200
Equipment 39,200 debit
Cash 39,200 credit
B: we discount the note implicit interest:
42,000 / 1.12 = 37,500
Equipment 37,500 debit
Note payables 37,500 credit
C: Because; there is commercial substance we recognize the loss on the old equipment as the book value is 13,500 while it is being traded at 8,500
We write off, post the cash used and the loss. The new equipment enter the accounting for the difference to blaance the entry:
equipment 45,500 debit
acc depreciation 15,500 debit
loss at disposal 5,000 debit
cash 37,000 credit
equipment 29,000 credit
D: we evaluate the equipment at fair value
Equipment 40,000 debit
common stock 2,500 credit
additional paid-in 37,500 credit
We now it is no-par therefore there is an additional paid in.
As we aren't provide with the face value we assume is 1 dollar.
Explanation:
A.
Journal entry 40,000/(1-.02) = 39,200
Debit: Equipment - new 39,200
Credit: Accounts Payable 39,200
B. 42,000/(1+.12)=37,500 then 42,000-37,500 = 4,500
Debit: Equipment - new 37,500
Debit: Discount on Notes Payable 4,500
Credit: Notes Payable 42,000
C.
Debit: Equipment - new 45,500 (37,000+8,500)
Debit: Accumulated Depreciation 15,500
Debit: Loss on Exchange of assets 5,000 (13,500-8,500)
Credit: Cash 37,000
Credit: Equipment - old 29,000
D.
Debit: Equipment 40,000
Credit: Common Stock 40,000
An author has signed a contract in which the publisher promises to pay her $10,000 plus 20 percent of gross receipts from the sale of her book. True or false: If both the publisher and the author care only about their own financial return from the project, then the author will prefer a higher book price than will the publisher.
Answer:
False. The author will NOT prefer a higher book price than will the publisher.
Explanation:
It is evident from the diagram -please check the attached image to the exercise- that the author wants to set a lower price than the publisher (to sell the higher quantity) .
A contract can be said as an agreement that derives its enforceability by law.
The statement "If both the publisher and the author care only about their own financial return from the project, then the author will prefer a higher book price than will the publisher" is FALSE.
What is a promise in a contract?When one party signifies its assent to the other party to perform the obligation it is said to be a promise. However, when two persons or two parties agree to perform the obligations for consideration then it becomes an agreement.
What is the financial return?The financial return is nothing but the profits generated in terms of money by selling a product or by rendering a service.
Here, if the author and publisher only care about their individual financial return, in that case, the author will never agree to the deal of $10,000 and 20% of the sale proceeds.
The author has done all the hard work and any rational person will never settle just for a 20% share of the sales proceeds of their own creation.
Therefore, the statement "If both the publisher and the author care only about their own financial return from the project, then the author will prefer a higher book price than will the publisher" is FALSE.
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Consider an economy with two types of firms, S and I. S firms always move together, but I firms
move independently of each other. For both types of firms there is a 40% probability that the
firm will have a 20% return and a 60% probability that the firm will have a -30% return.
The standard deviation for the return on an individual firm is closest to ________.
A) 24.49%
B) -10.00%
C) 12.25%
D) 9.80%
Answer:
option (A) 24.49%
Explanation:
Data provided in the question:
Return : 20% -30%
Probability : 40% 60%
Now,
Expected return = ∑ (Return × Probability)
= ( 0.20 × 0.40 ) + (-0.30 × 0.60)
= 0.08 - 0.18
= - 0.10 or - 10%
Thus,
Variance = ∑ [ Probability × (Return - Expected return)² ]
= 0.40 × ( 0.20 - ( -0.10))² + 0.60 × ( -0.30 - ( -0.10))²
= ( 0.40 × 0.09 ) + ( 0.60 × 0.04 )
= 0.036 + 0.024
= 0.06
Also,
Standard deviation = √variance
thus,
Standard deviation = √0.06
or
Standard deviation = 0.2449 or 24.49%
Hence,
the correct answer is option (A) 24.49%
Walthaus Corporation's standard cost sheet is as follows Direct material Direct labor Variable overhead Fixed overhead 4 feet at $5.00 per foot 3 hours at $10.00 per hour 3 hours at $2.00 per hour 3 hours at $1.00 per hour Additional information Actual results: purchased 30,000 lbs of material at $5.25 per lb. (there were no beginning or ending material inventories); direct labor cost incurred was 26,000 hours at $9.75 per hour; actual variable overhead incurred, $50,000; and actual fixed overhead incurred $43,000. Overhead is applied to work-in-process on the basis of direct labor hours. The company produced 8,000 units of product during the period. The number of estimated hours for computing the fixed overhead application rate totaled 45,000 hours. What are the fixed overhead price and production volume variances? O $2.000 F; $23,000 U $2,000 U; $23,000 F. $4,000 F: $25,000 F. $4,000 F: $25,000 U. None of these.
Answer:
1. U. None of these
2. Variable overhead price variance = $2,000 F
Variable overhead efficiency variance = $4,000 U
Explanation:
Please see attachment.
Suppose there are only two goods produced in an economy: phones and meals. Maria is adept at assembling electronics but has poor skills at preparing food. Mike is an accomplished chef but is not very skilled at assembling electronics.
Currently Mike and Maria each work independently, and they each produce both meals and phones. However, they are considering trading some of their respective output with each other, but only if that would allow each person to become more propserous.
Which statement is not true?
O Mike should produce more food and fewer phones, and Maria should produce more phones and fewer meals.
O Customers will gain if Mike and Maria decide to specialize in what they do best and trade their output.
O Mike and Maria would gain by using their time making only the one good that they are best at producing.
O Mike and Maria will both gain only if they trade the same number of phones for the same number of meals.
Answer:
This statment is not true: O Mike and Maria will both gain only if they trade the same number of phones for the same number of meals.
Explanation:
Mike and Maria agreed to trade part of their results only if that option brought prosperity for both. So we must consider that exchanging the same number of phones and meals would not bring a balance of gain to both, since the financial value of a cell phone is much higher than that of a meal, so Maria would lose.
Compared to the other statements, all are true, because specialization in what they do best would provide added benefits to customers and producers, who would find ways to produce the good more effectively and streamlined processes.
The incorrect statement is that Mike and Maria must trade equal numbers of phones and meals to benefit. They should specialize in the production of goods where they have a comparative advantage, and then trade to improve both of their consumption possibilities.
Explanation:The statement that is not true is that Mike and Maria will both gain only if they trade the same number of phones for the same number of meals. This is based on understanding the principle of comparative advantage and specialization. While Mike should indeed produce more food and fewer phones, and Maria should produce more phones and fewer meals, the key to their gain from trade is that each specializes in producing the good for which they have a comparative advantage. By doing so, both can increase their total output, and through trade, they can improve their consumption possibilities.
Division of labor increases productivity by allowing workers to focus on tasks that make the best use of their abilities and skills. In the case of specialized workers like a baker and a chef, if each specializes in their best task, the kitchen can produce more meals efficiently because each worker's productivity is maximized. This principle extends to economies at the macro level, where countries specialize in producing goods for which they have a comparative advantage and engage in international trade, thereby increasing overall welfare.
Crane Corporation is projecting a cash balance of $33,900 in its December 31, 2019, balance sheet. Crane’s schedule of expected collections from customers for the first quarter of 2020 shows total collections of $209,050. The schedule of expected payments for direct materials for the first quarter of 2020 shows total payments of $48,590. Other information gathered for the first quarter of 2020 is: sale of equipment $3,390; direct labor $79,100, manufacturing overhead $39,550, selling and administrative expenses $50,850; and purchase of securities $15,820. Crane wants to maintain a balance of at least $28,250 cash at the end of each quarter. Prepare a cash budget for the first quarter.
Answer:
Total cash required= (15,820)
Explanation:
Giving the following information:
Crane Corporation is projecting a cash balance of $33,900 in its December 31, 2019, balance sheet. Crane’s schedule of expected collections from customers for the first quarter of 2020 shows total collections of $209,050. The schedule of expected payments for direct materials for the first quarter of 2020 shows total payments of $48,590. Other information gathered for the first quarter of 2020 is: sale of equipment $3,390; direct labor $79,100, manufacturing overhead $39,550, selling and administrative expenses $50,850; and purchase of securities $15,820. Crane wants to maintain a balance of at least $28,250 cash at the end of each quarter.
Cash budget:
From last year= 33,900
Collections= 209,050
Direct material= (48,590)
Equipment= 3,390
Direct labor= (79,100)
Overhead= (39,550)
Selling and administrative expenses= (50,850)
Securities= (15,820)
Ending inventory= (28,250)
Total= (15,820)
Project Marvel is a five-year project. The project has a total cash inflow of $350,000. The present value of such inflows is $275,000. The project requires an initial investment of $200,000 and additional working capital of $25,000. What is the net present value of the project? a. $0 b. $50,000 c. ($50,000) d. ($250,000)
Answer:
The correct answer is B.
Explanation:
Giving the following information:
Project Marvel is a five-year project. The project has a total cash inflow of $350,000. The present value of such inflows is $275,000. The project requires an initial investment of $200,000 and an additional working capital of $25,000.
NPV= -Io + ∑[Cf/(1+i)^n]
Cf= cash flow
NPV= -225,000 + 275,000= 50,000
Answer:
The answer is: B
Explanation:
Capital budgeting is a process of evaluating investment projects to be undertaken by a company. Net Present Value (NPV) computation is one of the techniques used in this evaluation. This computation entails discounting cash flows, using an appropriate discount rate, which emerge as a result of undertaking the project or investment at the initial period prior to the commencement of a project or investment.
The computation of the net present value of future cash inflows of Project Marvel has already been done and the value is given as: $275, 000. The cash outflows which would occur are given as an initial investment of $200,000 and additional working capital of $25, 000. Total cash outflows which would occur in the current period thus amount to $225, 000. The net cash inflow from Project Marvel is $50, 000 ($275,000 - $225,000)
Hermes International produces a Kelly handbag, named for the late actress Grace Kelly. Craftsmen stitch the majority of each $7,000 bag by hand and sign it when they finish. This is an example of _____ production.
A. small-batch
B. large-batch
C. mass
D. continuous-process
Answer: (A) Small-batch
Explanation:
Small batch production is one of the type batch production that is used for describing the small production and the low manufacturing in an organization.
The small batch production basically allow all the kinds of products in the market and the products are basically distribute in the small scale. This process is known as small batch production.
According to the question, Hermes international mainly produces the handbag as it is one of an example of small batch production.
Division A of Huskie, Inc. has operating data as follows: Capacity 20,000 units Selling price $80 per unit Variable costs $40 per unit Fixed costs $20 per unit Division B wants to purchase units from Division A. If Division A agrees to sell units to Division B, A's variable costs will be $5 less per unit. If Division A has capacity available to meet B's requirements, what is the minimum price it should charge? A. $30 B. $35 C. $40 D. $60
Answer:
B. $35
Explanation:
While making these kind of decisions relevant cost is to be considered.
Since there is an idle capacity lying to meet the demand of Division B, the fixed cost shall be avoided while making this decision.
Thus, concerned cost is variable cost. Since the company is supplying in its own company to other division there might be some avoidable cost in the nature of variable, as for example: transportation, selling and marketing.
Here it is $5
Thus, relevant variable cost = $40 - $5 = $35
This represents the correct option.
Cameron Company had 10,000 shares of common stock authorized and 9,500 shares issued and outstanding at the beginning of the year. There were no stock transactions during the year. During the year, the company reported net income of $30,000. Cameron Company has no preferred stock authorized. The company's basic earnings per share (rounded to two decimal points) is
Answer:
The basic earnings per share of the company is $3.16.
Explanation:
The formula to compute the basic earnings per share is as:
Basic earnings per share = (Net Income - Preferred dividends) / Weighted average common shares outstanding
where
Net Income is $30,000
Preferred dividends is $0
Weighted average common shares outstanding is 9,500
Putting the values in the above formula:
= ($30,000 - $0) / 9,500
= $30,000 / 9,500
= $3.16 per share