Answer:
B. Reject
B. Division H's project should be rejected, because its return is less than the risk-based cost of capital for the division.
Explanation:
As we can see that the project H Weighted average cost of capital is 14% and the expected rate of return is 12%
So based on this its expected rate of return is less than the cost of capital i.e Weighted average cost of capital
Therefore, the project should be rejected as we compared the Weighted average cost of capital and the expected rate of return
A company purchased $2,000 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $300 worth of merchandise. On July 12, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 12 is:
Answer:
The correct journal entry to record the payment on July 12 is:
Debit Accounts Payable $1,700
Credit Merchandise $34
Credit Cash $1,666
Explanation:
Credit terms of 2/10, n/30 means that 2% discount for the payment within 10 days and the full amount to be paid within 30 days.
On July 5:
Debit Merchandise $2,000
Credit Accounts payable $2,000
On July 7:
Debit Accounts payable $300
Credit Merchandise $300
On July 12, the company pays and takes the appropriate discount:
2% x ($2,000 - $300) = $34
The company uses a perpetual inventory system, and records purchases using the gross method.
The journal entry to record the payment:
Debit Accounts Payable $1,700
Credit Merchandise $34
Credit Cash $1,666
Grommit Engineering expects to have net income next year of $ 40.13 million and free cash flow of $ 22.34 million. Grommit's marginal corporate tax rate is 30 %. a. If Grommit increases leverage so that its interest expense rises by $ 16.1 million, how will net income change? b. For the same increase in interest expense, how will free cash flow change?
Answer:
A.
If Grommit increases leverage so that its interest expense rises by $16.1M its net income will therefore fall by the after-tax interest expense.
B.
For the same increase in interest expense the free cash flow will not be affected.
Explanation:
A.
If Grommit increases leverage so that its interest expense rises by $16.1M its net income will therefore fall by the after-tax interest expense.
40.13M -16.1*(1-0.30)
=40.13M-15.8
=$24.33M
B.
For the same increase in interest expense the free cash flow will not be affected.
Identify each of the statements regarding goldsmiths and the evolution of banks as either true or false. Receipts for gold deposits were nontransferable. Because what became paper money issued by goldsmiths depended on the amount of gold deposited, goldsmiths could not actually create money. The earliest banks backed deposits 100% with gold. Early banks' ability to create money was limited only by the goldsmiths' prudence and judgement. The development of paper money and the banking system was due in large part to convenience.
Answer:
1. False
2. false
3. True
4. False
5. True
Explanation:
Receipts for gold deposits were nontransferable. (False)
Because what became paper money issued by goldsmiths depended on the amount of gold deposited, goldsmiths could not actually create money. (False)
The earliest banks backed deposits 100% with gold. (True)
Early banks' ability to create money was limited only by the goldsmiths' prudence and judgement. (False)
The development of paper money and the banking system was due in large part to convenience. (True)
Final answer:
The earliest banks did back deposits with gold, but over time goldsmiths began issuing more paper money than gold held, ultimately giving rise to our modern banking system where money is created through loans and the majority of money exists as electronic records.
Explanation:
Let's evaluate the statements about goldsmiths and the evolution of banks to identify them as true or false:
Receipts for gold deposits were nontransferable. False. Initially, receipts were nontransferable, but over time they evolved to become transferable as people started to use them in trade.
Because what became paper money issued by goldsmiths depended on the amount of gold deposited, goldsmiths could not actually create money. False. Goldsmiths could and did create money through the issuance of paper receipts that were in excess more than the gold held in reserve.
The earliest banks backed deposits 100% with gold. True. The initial practice of banking was to hold gold in the vault as a 100% reserve for the deposits.
Early banks' ability to create money was limited only by the goldsmiths' prudence and judgement. True. While constrained by the amount of gold, goldsmiths could issue more notes than they had gold, creating money, thereby limited by their discretion and trustworthiness.
The development of paper money and the banking system was due in large part to convenience. True. The transition from using cumbersome gold and silver coins to using paper notes was largely driven by the need for convenience in trade and commerce.
The evolution of banks from goldsmiths issuing receipts to modern banking where money is created through loans shows the development of our financial systems. During the War of 1812, banks issued banknotes with little to no backing of specie, which later led to concerns over the real value of currency and the push for a new national bank.
National defense is a good that is nonexcludable and nonrival in consumption. Suppose that instead of national defense being paid for with tax dollars national defense is paid for by voluntary contributions from (potentially) all individuals within Latvia. Cedric, who is a Latvian citizen, must decide whether he wants to contribute to the national-defense budget. Further, suppose that there are a total of 10 citizens, including Cedric. For the optimal amount of safety, each citizen should pay $10$10 . Every $1$1 contributed (by anyone) to the national defense leads to increased security, which each person values at $0.20$0.20 . This means that every dollar spent on defense is worth $2.00$2.00 to Latvia as a whole. How much does Cedric personally value the increase in national defense when he contributes $10$10 to the defense fund? Cedric's personal value: $ If contributions are voluntary, and assuming people rationally maximize their utility, what is the total contributed to national defense? total contributed voluntarily: $ Suppose that instead of relying on voluntary contributions the government simply levies a tax of $10$10 on each person to pay for national defense. How much better or worse off would Cedric be if everyone (including himself) were taxed $10$10 instead of contributing voluntarily? If Cedric is worse off, be sure to put a negative sign in front of the number. Cedric's gain or loss under tax: $
Answer:
Explanation:
find the attached document below
The amount that Cedric personally value the increase in national defense when he contributes $10 to the defense fund is $2
The benefit to Cedric after paying $10 to the defense budget will be;
= $10 × 0.2
= $2
Also, if the contributions are voluntary, then there'll be nobody that will contribute. Therefore, the total contribution to the national defense is $0.00.
Lastly, when $10 is imposed on each citizen, the total amount that's contributed will be:
= $10 × 10 = $100
Since each person gives a valuation of $0.20 to every dollar that's contributed, then the personal valuation will be:
= 100 × $0.20 = $20
Since Cedric is contributing $10 to the fund, his personal net gain will be:
= $20 - $10 = $10
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Which statement is most appropriate for the body of a cover message?
a. I have honed my communication skills through many presentations, papers, and final projects.
b. Giving numerous classroom presentations on marketing techniques and writing biweekly research papers has given me a chance to hone my writing and communication skills.
c. I presented marketing techniques, produced a final marketing portfolio, and wrote biweekly research papers.
Answer:
C
Explanation:
The statement uses an active verb and has clear, concise information that specifically applies to a job rather than a class.
Kinslow Manufacturing Company paid a dividend yesterday of $2.50 per share. The dividend is expected to grow at a constant rate of 5% per year. The price of Kinslow's common stock today is $25 per share. If Kinslow decides to issue new common stock, flotation costs will equal $2.00 per share. Keys' marginal tax rate is 34%. Based on the above information, the cost of retained earnings is;
Answer:
15.50%
Explanation:
The computation of the cost of retained earning is shown below:
As we know that
Price = Dividend × (1 + growth rate) ÷ (required rate of return - growth rate)
$25 = $2.50 × (1 + 0.05) ÷ (required rate of return - 5%)
$25 = $2.625 ÷ (required rate of return - 5%)
After solving the required rate of return is 15.50%
We simply applied the above formula to find out the cost of retained earning
On February 3, Smart Company sold merchandise in the amount of $2,000 to Truman Company, with credit terms of 2/10, n/30. The cost of the items sold is $1,380. Smart uses the perpetual inventory system and the gross method. Truman pays the invoice on February 8, and takes the appropriate discount. The journal entry that Smart makes on February 8 is:
Answer:
Cash $1,960
Sales discounts $40 ($2,000 × 0.02)
Accounts receivable $2,000
(Being the sale of merchandise is recorded)
Explanation:
The journal entry is shown below:
On Feb 8
Cash $1,960
Sales discounts $40 ($2,000 × 0.02)
Accounts receivable $2,000
(Being the sale of merchandise is recorded)
While recording this we debited the cash as the cash is received and the discount is also given since the payment is made within 10 days and we credited the account receivable as it reduced the assets
Income multipliers:
a. Are useful as a preliminary analysis tool to weed out obviously unacceptable investment opportunities.
b. Are adequate as the sole indication of a property's investment worth.
c. Relate the property's price or value to after tax cash flows
d. None of the above.
Answer:
option a
Explanation:
Throughout the macroeconomic environment, the influence of a income multiplier applies to the assumption that capital can be re-used and that a dollar will potentially produce more than one dollar for economic growth. Multipliers of profits in real estate transactions are assessment devices.
Some of the core theories of Keynesian is really the idea of a income amplifier. This relates to the idea that perhaps a dollar invested becomes additional income.
a set of cash flows begins at 20000 the first year with a decrease of $2000 each year until n = 10. With an interest rate of 7%, what is the equivalent uniorm annual cash flow
Answer:
Explanation:
Present value (PV) is sum of all cash flows discounted at 7%.
(a) Annual decrease = $2,000
PV is computed as follows.
Year Cash Flow ($) PV Factor at 7% Discounted Cash Flow ($)
(A) (B) (A) x (B)
1 20,000 0.9346 18,692
2 18,000 0.8734 15,722
3 16,000 0.8163 13,061
4 14,000 0.7629 10,681
5 12,000 0.7130 8,556
6 10,000 0.6663 6,663
7 8,000 0.6227 4,982
8 6,000 0.5820 3,492
9 4,000 0.5439 2,176
10 2,000 0.5083 1,017
PV ($) = 85,041
Lance contributed investment property worth $650,000, purchased Four years ago for $350,000 cash, to Cloud Peak LLC in exchange for an 75 percent profits and capital interest in the LLC. Cloud Peak owes $302,500 to its suppliers but has no other debts.
a. What is Lance’s tax basis in his LLC interest?
b. What is Lance’s holding period in his interest?
c. What is Cloud Peak’s basis in the contributed property?
d. What is Cloud Peak’s holding period in the contributed property?
Answer:
a. Tax basis $ 576,875
b. Four years
c. $350,000
d. Four years
Explanation:
a. Tax basis $ 576,875
($350,000+$226,875)
Lance’s basis in his LLC interest is made up of the $350,000 basis of the investment property he transferred to the LLC and his $226,875 share of the LLC debt is ($302,500 x 75%) due to the fact that LLC general debt obligations are treated as non recourse debt which is why Lance’s profit sharing ratio is used to allocate a portion of the LLC debt to him.
b. Lance's Holding period in his interest is four years in which Lance had been holding investment property.
c. Basis $350,000
d. Cloud Peak’s holding period in the contributed property is four years
Lance's tax basis in his LLC interest is $576,875, comprising his original basis in the contributed property and his share of the LLC's liabilities. His holding period for the LLC interest is four years, beginning from the date he originally purchased the property. Cloud Peak's basis in the property is $350,000, and its holding period is also four years.
The tax and accounting concepts in the question pertain to a member's basis in an LLC, holding periods for tax purposes, and the basis and holding period of property contributed to an entity. Here are the answers to the student's questions:
Lance’s tax basis in his LLC interest would generally be equal to his basis in the property contributed, which is $350,000. This is due to the fact that tax basis transfers from the member to the LLC in a property contribution scenario, assuming no liabilities are assumed by the other members as a result of the transfer. Since Cloud Peak does have liabilities which Lance is now responsible for (75% of $302,500), Lance must also consider this in his basis calculation, which would increase his basis by $226,875 (75% of $302,500). Thus, Lance's initial basis in the LLC interest would be $576,875 ($350,000 basis in property + $226,875 portion of liabilities).Lance’s holding period in his interest will include the holding period of the property he contributed since the holding period of the property carries over to the LLC interest in cases of contributions where the property is a capital asset or a Section 1231 asset. Thus, Lance's holding period for the LLC interest begins when he originally purchased the property, so it would be four years as of the contribution date.Cloud Peak’s basis in the contributed property is the same as Lance's adjusted basis in the property immediately before the contribution, which is $350,000.Cloud Peak’s holding period for the contributed property also includes Lance's holding period. This means that for purposes of determining gain or loss on future disposition, Cloud Peak's holding period began when Lance originally purchased the property, so it's also four years as of the contribution date.A stock is expected to maintain a constant dividend growth rate of 4.6 percent indefinitely. If the stock has a dividend yield of 5.9 percent, what is the required return on the stock?
Answer:
10.5%
Explanation:
Dividend yield=5.9%
Growth rate=4.6%
Required return on the stock=Dividend yield+growth rate
=5.9%+4.6%=10.5%
Using the following information, compute the direct material price variance: Actual production, usage, and costs: * units produced: 13,325 units * Direct materials purchased: 132,600 pounts at $5.60 per pound * Direct materials used: 131,900 pounds * Direct labor: 34,450 hours used at a total cost of $347,945 * Machine hours used: 53,235 * Variable manufacturing overhead: $370,516 The following standards were in place for one unit of this product at the beginning of the year: Standard Quantity Standard Price Standard Cost per unit Direct Material 10 pounds per unit $5.50 per pound $55.00 per unit Direct Labor 2.6 hours per unit $10.00 per labor hour $26.00 per unit Variable Overhead 4 machine hours per unit $7.00 per machine hour $28.00 per unit Total standard cost $109.00 per unit Multiple Choice $13,260 Unfavorable $700 Favorable $7,425 Favorable $7,425 Unfavorable
Answer:
Material price variance = $13,260 unfavorable
Explanation:
Material price variance
A material price variance occurs where materials are purchased at a price either lower or higher than the standard price. A favorable variance is recorded where the actual total cost of materials is lower that the standard cost. While an adverse variance implies the opposite
$
132,600 pounds should have cost (132,600×$5.50 ) = 729,300
but did cost (actual cost - ( 132,600× $5.60) = 742,560
Material price variance 13,260 unfavorable
Example In 1972, Walter Mischel, a professor at Stanford University, conducted an experiment in which he offered young children one marshmallow to eat now-or three marshmallows if they could wait for 10 minutes. When Mischel followed up on the children later, he found that those who had waited 10 minutes for their marshmallow as children had better jobs, higher salaries, and other positive life outcomes as adults. Kent Thiry took over DaVita Inc. in 1999 when the dialysis company was on the verge of failure. From 2000 to 2005, he turned the company around by creating a culture in which employees could "feel an emotional level of trust and mutual commitment."Thiry helped employees see that they were a community first and a company second, changing their feelings about the business and its mission Component of Emotional Intelligence relationship management Example In 1972, Walter Mischel, a professor at Stanford University, conducted an experiment in which he offered young children one marshmallow to eat now-or three marshmallows if they could wait for 10 minutes. When Mischel followed up on the children later, he found that those who had waited 10 minutes for their marshmallow as children had better jobs, higher salaries, and other positive life outcomes as adults Kent Thiry took over DaVita Inc. in 1999 when the dialysis company was on the verge of failure. From 2000 to 20o5, he turned the company around by creating a culture in employees could "feel an emotional level of trust and mutual commitment. " Thiry helped employees see that they were a community first and a company second, changing ther feelings about the business and its mission. Component of Emotional Intelligen relationship management 31
Answer:
1- Option is correct that is self management because When children were able to delay gratification in order to get a larger number of marshmallows later, they were practicing self-management. Self-management requires setting aside one’s emotions in order to achieve long-term goals.
2-Option is correct that relationship management because Relationship management is a strategy in which an organization maintains a continuous level of engagement with its employees and customers.
Explanation:
Guardian Inc. is trying to develop an asset-financing plan. The firm has $490,000 in temporary current assets and $390,000 in permanent current assets. Guardian also has $590,000 in fixed assets. Assume a tax rate of 30 percent. a. Construct two alternative financing plans for Guardian. One of the plans should be conservative, with 70 percent of assets financed by long-term sources, and the other should be aggressive, with only 56.25 percent of assets financed by long-term sources. The current interest rate is 12 percent on long-term funds and 8 percent on short-term financing. Compute the annual interest payments under each plan.
Answer:
Conservative approach $ 158,760
Aggresive approach $ 150,675
Explanation:
total financing needs:
490,000 + 390,000 + 590,000 = 1470000
Conservative approach
long term financing: 70% of the needs at 12%
1029000 x 0.12 = 123480
remaining 30% financed with short-term at 8%
441,000 x 0.08 = 35280
Total interest expense 158760
Aggresive approach
long term financing: 56.25% of the needs at 12%
826,875 x 0.12 = 99,225
remaining 43.75% financed with short-term at 8%
643,125 x 0.08 = 51,450
Total interest expense $ 150,675
A company that just paid a $1.60 annual dividend is currently priced at $40. You estimate the company will grow at 10% per year for the next 4 years and then grow at 6% per year for the next 2 years before leveling off to an estimated terminal growth rateof 4%. Assume stock’s beta is 1.2, the risk-free rate is 3% and the return on the market portfolio is 9%. Based on your assumptions, is this stock undervalued or overvalued? By how much?
Answer:
The stock stock's fair value is $34.02 and it is over valued in the market by $5.98
Explanation:
The required rate of return on the stock can be calculated using the SML approach. The required rate using SML will be,
r = rRF + Beta * (rM - rRF)
r = 3% + 1.2 * (9% - 3%)
r = 10.20%
Using the dividend discount model, we can calculate the fair price of the stock today. DDM bases the value of a stock on the present value of the expected future dividends from the stock. The price today under DDM is,
P0 = 1.6 * (1+0.1) / (1+0.102) + 1.6 * (1+0.1)^2 / (1+0.102)^2 +
1.6 * (1+0.1)^3 / (1+0.102)^3 + 1.6 * (1+0.1)^4 / (1+0.102)^4 +
1.6 * (1+0.1)^4 * (1+0.06) / (1+0.102)^5 + 1.6 * (1+0.1)^4 * (1+0.06)^2 / (1+0.102)^6
+ [ (1.6 * (1+0.1)^4 * (1+0.06)^2 * (1+0.04) / (0.102 - 0.04)) / (1+0.102)^6 ]
P0 = $34.02
Difference = 40 - 34.02 = $5.98
The stock's fair value is less than the market value which means that the stock is overvalued in the market by $5.98.
Carlton Company uses the percent of sales method to estimate its bad debt expense. Based on past experience, the company estimates 2 percent of credit sales to be uncollectible. At the end of the current year, the company's unadjusted trial balance shows Accounts Receivable of $245,000 and Credit Sales of $900,000.
Required:
Prepare the necessary december 31 adjusting entry by selecting the account names from the drop down menus and entering the dollar amounts in the debit or credit columns.
Answer:
Debit Bad debt expense with 18,000 ; and Credit Allowance for doubtful accounts with 18,000
Explanation:
Bad debt expenses = $900,000 × 2% = $18,000
The adjusting journal entries will look a s follows
Details Dr ($) Cr ($)
Bad debt expense 18,000
Allowance for doubtful accounts 18,000
To record the uncollectible Accounts Receivable
Carlton Company will make an adjusting entry for bad debt expense by debiting Bad Debt Expense and crediting Allowance for Doubtful Accounts by $18,000, which is 2 percent of $900,000 in credit sales.
The Carlton Company needs to make an adjusting entry at the end of the year for bad debt expense using the percent of sales method. With credit sales of $900,000 and an estimated 2 percent as uncollectible, the bad debt expense can be calculated. Therefore, the adjusting entry on December 31 would involve debiting Bad Debt Expense and crediting Allowance for Doubtful Accounts by $18,000 (2% of $900,000).
The journal entry would look like this:
Bad Debt Expense: $18,000 (debit)
Allowance for Doubtful Accounts: $18,000 (credit)
This entry will increase the company's bad debt expense for the year, while simultaneously increasing the allowance for doubtful accounts, which is a contra-asset account that reduces the balance of accounts receivable on the balance sheet.
A stationery company plans to launch a new type of indelible ink pen. Advertising for the new product will be heavy and will cost the company $8 million, although the company expects general revenues of $280 million next year from sources other than sales of the new pen. If the company has a corporate tax-rate of 35% on its pretax income, what effect will the advertising for the new pen have on its taxes
Answer:
The advertising spend would reduce income taxes by $2.8 million
Explanation:
The advertising expense since it is allowable expense from profits made in the year would reduce income taxes next year by $2.8 million ($8 million *35%)
This means that because of its tax deductibility,it would make a business sense to incur the advertising cost of $8 million coupled with the fact the it has the potential to increase sales revenue over and above the current level of $280 million
. Understanding how shirking decreases team output Caroline sells bottled water from a small stand by the beach. On the last day of summer vacation, many people are on the beach, and Caroline realizes that she can make a lot more money this day if she hires someone to walk up and down the beach selling water. She finds a college student named Antonio and makes him the following offer: They'll each sell water all day and split their earnings (revenue minus the cost of water) equally at the end of the day. Caroline knows that if they both work hard, Antonio will earn $90 on the beach and Caroline will earn $180 at her stand, so they will each take home half of their total revenue: . If Antonio shirks, he'll generate only $50 in earnings. Caroline does not know that Antonio estimates his personal cost (or disutility) of working hard as opposed to shirking at $25.
Once out of Caroline's sight, Antonio faces a dilemma: work hard (put in full effort) or shirk (put in low effort).
In terms of Antonio's total utility, it is better for him to (shirk or work hard?)
Taking into account the loss in utility that working hard brings to Antonio, Caroline and Antonio together (are/ are not) ff if Antonio works hard instead of shirking.
Caroline knows Antonio will shirk if unsupervised. She considers hiring her good friend Carrie, who happens to be free on that day, to keep an eye on Antonio. The most Caroline should be willing to pay Carrie to supervise Antonio, assuming supervision is sufficient to encourage Antonio to work hard, is (25, 20, 45, 15)
Caroline knows Antonio will shirk if unsupervised, but she could not find a reliable person to watch him. Which of the following arrangements will ensure that Antonio works hard without making Caroline any worse off than she is when Antonio shirks?
Allow Antonio to keep 73% of the revenue from the bottles of water he sells instead of 50%
Make Antonio promise to work hard Pay Antonio $70, regardless of how many bottles of water he sells
Allow Antonio to keep 70% of the revenue from the bottles of water he sells instead of 50%
Answer:
Check the explanation
Explanation:
a) In terms of Antonio's total utility, its worse for him to work.
Increase in income from shirking = $60/2 = $30
Increase in income from working = $110/2 - $30 = $25
b) Taking into account the loss in utility that working hard brings to Antonio, Caroline and Antonio together are not better off Antonio shirks instead of working hard.
Increase in combined income from shirking = $60
Increase in combined income from working = $110 - $30 = 80
c) Caroline will be willing to pay carry at most $25 yo Carrie.
Increase in Caroline's income from working vs shirking =( $110 - $60)/2 = $25
d) Allow Antonio to keep 75% of the revenue from the bottles of water he sells instead of 50%
Explanation:
Antonio
Increase in income from shirking = $60 x .75 = $45
Increase in income from working =( $110 x .75) - $30 = $52.5
Hence, Antonio would have incentive to work hard.
The Sisyphean Company has a bond outstanding with a face value of $ 5 comma 000 that reaches maturity in 8 years. The bond certificate indicates that the stated coupon rate for this bond is 9% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the Sisyphean bond is 10.6%, then the price that this bond trades for will be closest to?
Answer:
$4,575.60
Explanation:
For computing the price of the bond we have to use the present value formula that is to be reflected in the attached spreadsheet which is presented below:
Given that,
Future value = $5,000
Rate of interest = 10.6% ÷ 2 = 5.3%
NPER = 8 years × 2 = 16 years
PMT = $5,000 × 9% ÷ 2 = $225
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after applying the formula the price of the bond is $4,575.60
Explain how each of the following events affects the AS curve. a. The Fed increases the money supply. Aggregate supply is unchanged Aggregate supply shifts to the left Aggregate supply shifts to the right b. Oil prices drop sharply. Aggregate demand shifts to the right Aggregate demand shifts to the left Aggregate supply shifts to the right Aggregate supply shifts to the left
Answer:
A) When the Feds increase money supply, Aggregate supply shifts to the right.
B) When oil prices drop sharply, Aggregate demand shifts to the right
Explanation:
When Fed increases the money supply, aggregate supply shifts to the right.
This is one of the activity in the open market operation used by government to control the supply of money.
The Fed uses its tools to control the supply of money to help stabilize the economy. When the economy is slumping, the Fed increases the supply of money to spur growth.
And when oil prices drop sharply, Aggregate demand shifts to the right as an indicator of increase in consumption.
Oil price drop will reduce energy bill and raise consumers' real income which leads to an increase in aggregate demand.
Increasing the money supply by the Fed does not affect the Aggregate Supply curve, which remains unchanged. However, when oil prices drop sharply, this reduces production costs and can cause the Aggregate Supply curve to shift to the right, indicating lower inflation, higher output, and lower unemployment.
Explanation:The question pertains to how certain events affect the Aggregate Supply (AS) curve in the context of the aggregate demand/aggregate supply (AD/AS) model. Specifically, the student has asked about the effects of an increase in the money supply by the Federal Reserve (the Fed) and a sharp drop in oil prices on the AS curve.
Firstly, if the Fed increases the money supply, this action does not directly affect the AS curve. It predominantly influences Aggregate Demand. Therefore, in response to part (a), Aggregate supply is unchanged.
Secondly, for part (b), when oil prices drop sharply, this is likely to reduce the cost of production for many companies. Lower input costs can lead to an increase in aggregate supply since production becomes more profitable. Hence, Aggregate supply shifts to the right.
Moving the AS curve to the right implies a potential combination of lower inflation, higher output, and lower unemployment, whereas a shift to the left can cause stagflation. Changes in the AS curve impact the economy's equilibrium output, price level, and employment.
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During 2016 Green Thumb Company introduced a new line of garden shears that carry a two-year warranty against defects. Experience indicates that warranty costs should be 2% of net sales in the year of sale and 3% in the year after sale. Net sales and actual warranty expenditures were as follows: Net sales Actual warranty expenditures2016 $ 45,000 $ 1,000 2017 120,000 3,500 At December 31, 2017, Green Thumb should report as a warranty liability of:Multiple Choice$900$1,250$3,750$4,500
Answer:
$3,750
Explanation:
Data given
Net sales of 2016 = $45,000
After-sale percentage = 3%
Net sales of 2017 = $120,000
Year of sale percentage = 2%
The computation of warranty liability is shown below:-
Warranty liability = (Net sales of 2016 × After-sale percentage) + (Net sales of 2017 × Year of sale percentage)
= ($45,000 × 3%) + ($120,000 × 2%)
= $1,350 + $2,400
= $3,750
Therefore for computing the warrant liability we simply applied the above formula.
Sikes Corporation, whose annual accounting period ends on December 31, issued the following bonds: Date of bonds: January 1, 2018 Maturity amount and date: $300,000 due in 10 years (December 31, 2027) Interest: 10 percent per year payable each December 31 Date issued: January 1, 2018 Required: For each of the three independent cases that follow, provide the amounts to be reported on the January 1, 2018, financial statements immediately after the bonds are issued. TIP: See Exhibit 10.5 for an illustration distinguishing Bonds Payable from their carrying value. (Deductions should be indicated by a minus sign.)
Question in order:
See the first image attached
Answer and Explanation:
Reported amount as of 1, January 2018 after bonds were issued is as below
CASE A CASE B CASE C
Issued at 100 Issued at 95 issued at 103
a. Bonds Payable $130,000 $130,000 $130,000
b. Discount Premium $0 $6,500 $3,900
Discount Premium
130,000×(100 130,000×(100-
-95)⁰/₀ 103)⁰/₀
c. Carrying value $130,000 $123,500 $133,900
payable bonds would be the maturity amount or face value of bonds. The bonds payable would remain same, that is, $130,000 in each case.
In case B, the discount is calculated because the bonds are issued at a price which is less than the face value
in case C, The premium is calculated when the bond are issued at a price that is more than the face value
Carrying value will be calculated by deducting the discount from the bond s payable or by adding the premium in the bonds payable
. Bob owned a duplex used as rental property. The duplex had an adjusted basis to Bob of $86,000 and a fair market value of $300,000. Bob transferred the duplex to his brother, Carl, in exchange for a triplex that Carl owned. The triplex had an adjusted basis to Carl of $279,000 and a fair market value of $300,000. Two months after the exchange, Carl sold the duplex to his business associate to whom he was not related for $312,000. How much, if any, gain or loss did Carl recognize with respect to the transaction with Bob
Answer:
A) No gain or loss on the exchange with Bob, and $12,000 gain on the subsequent sale
Explanation:
Since apparently both Bob and Charles owned their property for more than 2 years, the exchange classifies under section 1031 exchange between related parties. Therefore, no gain or loss should be recognized by any of them.
When Charles sold the property to his business associate, who is not related to him, he realize a $12,000 gain (= $312,00 - $300,000 basis).
After being observed many times, Bevarly Demarr, a hospital lab analyst, had an average observed time for blood tests of 14 minutes. Bevarly's performance rating is 110%. The hospital has a personal, fatigue, and delay allowance of 16%. a) The normal time for this process = nothing minutes (round your response to one decimal place).
Answer:
The answer is 10.5 minutes
Explanation:
The normal time for this process = (10*105%) =10.5 minutes
Answer:
Explanation: The average of the time = 14
multiply it by the performance rating
14 * 1.10 = 15.4
Weisman, Inc. uses activity-based costing as the basis for information to set prices for its six lines of seasonal coats.Activity Cost PoolsEstimatedOverheadExpected Use ofCost Drivers per ActivityDesigning $427,300 11,400 designer hoursSizing and cutting 4,146,000 160,000 machine hoursStitching and trimming 1,459,000 81,300 labor hoursWrapping and packing 323,400 30,300 finished unitsCompute the activity-based overhead rates using the following budgeted data for each of the activity cost pools. (Round answers to 2 decimal places, e.g. $12.25.)Activity-based overhead ratesDesigning $Weisman, Inc. uses activity-based costing as the bper designer hourSizing and cutting $Weisman, Inc. uses activity-based costing as the bper machine hourStitching and trimming $Weisman, Inc. uses activity-based costing as the bper labor hourWrapping and packing $Weisman, Inc. uses activity-based costing as the bper finished unit
Answer:
$37.48 per designer hours
$25.91 per machine hours
$17.95 per labor hours
Explanation:
Activity cost pool : DESIGNING
EstimatedOverhead(X) :$427, 300
Expected Use ofCost Drivers per ACTIVITY (Y) : 11400
Rate (X ÷ Y) = $37.48 per designer hours
Activity cost pool : SIZING & CUTTING
EstimatedOverhead(X) :$4,146,000
Expected Use ofCost Drivers per ACTIVITY (Y) : 160,000
Rate (X ÷ Y) = $25.91 per machine hours
Activity cost pool : STITCHING&TRIMMING
EstimatedOverhead(X) :$1,459,000
Expected Use ofCost Drivers per ACTIVITY (Y) : 81300
Rate (X ÷ Y) = $17.95 per labor hours
Activity cost pool : WRAPPING&PACKING
EstimatedOverhead(X) :$323,400
Expected Use ofCost Drivers per ACTIVITY (Y) : 30,300
Rate (X ÷ Y) = $10.67 per finished unit
The activity-based overhead rates are: Designing: $37.50 per designer hour, Sizing and Cutting: $25.91 per machine hour, Stitching and Trimming: $17.94 per labor hour, Wrapping and Packing: $10.67 per finished unit
Calculating Activity-Based Overhead Rates
Understanding Activity-Based Costing (ABC):
ABC assigns overhead costs to products based on the specific activities involved in producing them. It is more accurate than traditional methods that allocate overhead costs based on a single driver like direct labor hours.
Calculating Overhead Rates:
To calculate the activity-based overhead rate for each activity cost pool, we divide the estimated overhead cost by the expected use of the cost driver.
Activity-Based Overhead Rates:
1. Designing:
Overhead Rate = Estimated Overhead / Expected Use of Cost Driver
Overhead Rate = $427,300 / 11,400 designer hours
Overhead Rate = $37.50 per designer hour
2. Sizing and Cutting:
Overhead Rate = $4,146,000 / 160,000 machine hours
Overhead Rate = $25.91 per machine hour
3. Stitching and Trimming:
Overhead Rate = $1,459,000 / 81,300 labor hours
Overhead Rate = $17.94 per labor hour
4. Wrapping and Packing:
Overhead Rate = $323,400 / 30,300 finished units
Overhead Rate = $10.67 per finished unit
A company incurred the following costs for a new delivery truck: Purchase price $ 150 comma 000 Sales tax 7 comma 900 Delivery charge from sellers location 1 comma 200 Special racks for storage 3,000 Normal repairs to the truck before it was used for the first time 1,100 Signs painted on the truck 2,000 Insurance on truck before it was used for the first time 3,000 What is the cost of the delivery truck
Answer:
$168,200
Explanation:
Given that,
Purchase price = $ 150,000
Sales tax = 7,900
Delivery charge from sellers location = 1,200
Special racks for storage = 3,000
Normal repairs to the truck before it was used for the first time = 1,100
Signs painted on the truck = 2,000
Insurance on truck before it was used for the first time = 3,000
All the above expenses are included in determining the cost of the delivery truck. Normal repairs to the truck and insurance on truck are also included in the cost of truck because it was incurred before the truck used for the first time.
Cost of the delivery truck:
= Purchase price + Sales tax + Delivery charge from sellers location + Special racks for storage + Normal repairs to the truck before it was used for the first time + Signs painted on the truck + Insurance on truck before it was used for the first time
= $150,000 + $7,900 + $1,200 + $3,000 + $1,100 + $2,000 + $3,000
= $168,200
The manager at Screaming Trees has been trying to calculate the portion of the company's overhead expenses that is fixed and the portion that is variable. Over the past twelve months, the number of yards of processed was highest in July, when the total monthly overhead costs totaled $ 28 comma 000 for 32 comma 000 yards of mulch processed. The lowest number of yards of mulch processed in the last twelve months occurred in October, when total overhead costs were $ 23 comma 000 for 24 comma 000 yards of mulch processed. What is the fixed portion of the monthly overhead expenses? (Do not round any intermediate calculations.)
Answer:
$8,000
Explanation:
For computing the fixed portion first we have to compute the variable portion using the high low method which is shown below:
Variable cost per hour = (High total monthly overhead costs - low total monthly overhead costs) ÷ (High number of yards - low number of yards)
= ($28,000 - $23,000) ÷ (32,000 yards - 24,000 yards)
= $5,000 ÷ 8,000 yards
= $0.625 per yard
Now the fixed cost equal to
= High total monthly overhead costs - (High number of yards × Variable cost per yard)
= $28,000 - (32,000 yards × $0.625)
= $28,000 - $20,000
= $8,000
The fixed portion of the company's monthly overhead expenses can be calculated using the High-Low method of cost estimation. This involves calculating the variable cost per unit using the given highest and lowest levels of activity and costs, then subtracting the variable costs from the total cost. The fixed cost is found to be $8,000.
Explanation:To calculate the fixed portion of the monthly overhead expenses you need to understand that a company's total overhead costs consist of both fixed costs (which do not change with the volume of output) and variable costs (which do change with the volume of output). In this case, you are given information about total overhead costs at two different levels of output (yards of mulch processed).
Using the High-Low method of cost estimation, first, calculate the variable cost per unit from the highest and lowest levels of activity. In July, they processed 32,000 yards with costs of $28,000, and in October, they processed 24,000 yards at a cost of $23,000. The difference in cost ($28,000 - $23,000 = $5,000) divided by the difference in activity (32,000 - 24,000 = 8,000 yards) gives us a variable cost of $0.625 per yard.
Next, compute the fixed costs by taking the total costs at either the high or low level of activity and subtracting the variable cost portion. Taking July's total cost of $28,000, you subtract the variable cost portion (32,000 yards * $0.625/yard), which gives you a fixed cost of $8,000. Therefore, the fixed portion of monthly overhead expenses is $8,000.
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On January 1, 2022, Ivanhoe Creek Country Club purchased a new riding mower for $15,400. The mower is expected to have a 10-year life with a $2,700 salvage value.What journal entry would Ivanhoe Creek make on December 31, 2022, if it uses straight-line depreciation? (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 and Explanation:
The Journal entry is shown below:-
Depreciation expense Dr, $1,270
To Accumulated depreciation $1,270
(Being depreciation expenses is recorded)
Working note
Depreciation per year using SLM = (Cost - Salvage value) ÷ Useful life
= ($15,400 - $2,700) ÷ 10
= $12,700 ÷ 10
= $1,270
For recording the depreciation expenses we simply debited the Depreciation expense and credited the accumulated expenses.
Final answer:
The annual depreciation expense for the new riding mower using the straight-line method is $1,270, resulting in a journal entry with a debit to Depreciation Expense and a credit to Accumulated Depreciation - Riding Mower for the same amount.
Explanation:
To calculate the annual depreciation expense for Ivanhoe Creek Country Club's new riding mower using the straight-line depreciation method, we subtract the salvage value from the cost and then divide by the useful life of the asset:
Cost of the new riding mower = $15,400
Salvage value at the end of useful life = $2,700
Useful life = 10 years
Depreciation expense per year = ($15,400 - $2,700) / 10 = $1,270
Therefore, the journal entry on December 31, 2022, would be:
Debit: Depreciation Expense $1,270
Credit: Accumulated Depreciation - Riding Mower $1,270
This entry records the annual depreciation for the riding mower.
Item 15Item 15 Gee-Gee's is going to pay an annual dividend of $2.05 a share next year. This year, the company paid a dividend of $2 a share. The company adheres to a constant rate of growth dividend policy. What will one share of this common stock be worth six years from now if the applicable discount rate is 11.2 percent
Answer:
$27.33
Explanation:
For computing the one share of the common stock after six years from now first, we have to determine the price of the common stock which is shown below
Price of the common stock = Next year dividend ÷ (Required rate of return - growth rate)
= $2.05 ÷ (11.2% - 2.50%)
= $23.56
The growth rate is
= ($2.05 - $2) ÷ ($2)
= 2.50%
Now the one share of the common stock after six years is
= $2 × 1.025^7 ÷ (11.2% - 2.50%)
= 2.3773715073 ÷ 8.7%
= $27.33
he equilibrium price at which a perfectly competitive firm sells its good is $5. The profit-maximizing quantity of output is 70 units. At this quantity of output, the firm has an average fixed cost of $2 and an average variable cost of $7. In the short run, this perfectly competitive firm should .
Answer:
Price is greater than the average variable cost in the short run the firm will Continue to operate.
Explanation:
Total Revenue = price quantity sold = $5 × 70
= $350
Total Cost = (Average variable cost + Average fixed cost) × Quantity
= ($7 + $2) × 70
= $9 × 70
= $630
Therefore,The total revenue of the company is less than its total cost which means that the company is incurring losses. However, a firm should function in the short run as long as its price meets the average cost of the product.
In this case, the price is 5 dollars and the average variable cost is 7 dollars. So, price is greater than the average variable cost in the short run the firm will Continue to operate.