Answer:
The WACC is 10.93%
Explanation:
The WACC or weighted average cost of capital is the cost to firm of its capital structure. The capital structure of the firm consists of debt, preferred stock and common stock. The WACC is calculated by taking the sum of the weighted average cost of each component of the capital structure.
WACC = wD * rD * (1-tax rate) + wP * rP + wE * rE
Where,
w represents the weight of each component as a proportion of total assetsr represents the cost of each componentWe take the after tax cost of debt. So, rD is multiplied by (1-tax rate)WACC = 0.45 * 0.09 * (1-0.35) + 0.1 * 0.065 + 0.45 * 0.17
WACC = 0.109325 or 10.9325% rounded off to 10.93%
The following data relate to factory overhead cost for the production of 7,000 computers: Actual: Variable factory overhead $152,800 Fixed factory overhead 49,500 Standard: 7,000 hrs. at $27 189,000 If productive capacity of 100% was 11,000 hours and the total factory overhead cost budgeted at the level of 7,000 standard hours was $207,000, determine the variable factory overhead Controllable Variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $4.5 per hour. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Variance Amount Favorable/Unfavorable Controllable variance $ Volume variance $ Total factory overhead cost variance $
Answer:
Variable factory overhead controllable variance = $4,700 Favorable
Fixed overhead volume variance = $18,000 unfavorable
Total factory overhead cost variance = $22,700 Unfavorable
Explanation:
Variable factory overhead rate = $27 - $4.50
= $22.50
Standard variable overhead for actual production = 7,000 × $22.50
= $157,500
Variable factory overhead controllable variance = Standard variable overhead for actual production - Actual variable overhead
= $157,500 - $152,800
= $4,700 Favorable
Fixed overhead applied = 7,000 × $4.50
= $31,500
Budgeted fixed overhead = $207,000 - $157,500
= $49,500
Fixed overhead volume variance = Fixed overhead applied - Budgeted fixed overhead
= $31,500 - $49,500
= $18,000 Unfavorable
Fixed overhead budget variance = Budgeted fixed overhead - Actual fixed overhead
= $49,500 - $49,500
= $0
Total factory overhead cost variance = Controllable variance + Fixed overhead volume variance
= $4,700 + $18,000
= $22,700 Unfavorable
Therefore we have computed all the three points by applying the above formula.
Final answer:
Partially calculating the overhead variances, we find that the Fixed factory overhead Volume Variance is $18,000 unfavorable, and the Total factory overhead cost Variance is $4,700 favorable. We need additional information to calculate the Variable factory overhead Controllable Variance.
Explanation:
To calculate the variance for the factory overhead cost, we must compare actual costs to standard costs. Here is the breakdown based on the provided data:
Variable factory overhead Controllable Variance: This variance is the difference between the actual variable overhead and the standard variable overhead. Actual variable overhead is $152,800, and standard variable overhead would be calculated by taking the standard hours (7,000) times the variable portion of the standard rate. However, the variable portion of the standard rate is not explicitly provided, thus we need more information to calculate this variance.Fixed factory overhead Volume Variance: This variance is the difference between the budgeted fixed overhead and the applied fixed overhead. The budgeted fixed overhead for 7,000 hours was $207,000, which includes both variable and fixed costs. Fixed factory overhead rate is $4.5 per hour, thus budgeted fixed overhead at 7,000 hours is 7,000 hours * $4.5/hour = $31,500. The volume variance is, therefore, the budgeted fixed overhead (using standard hours) of $31,500 minus the actual fixed overhead of $49,500, resulting in a volume variance of $18,000 unfavorable.Total factory overhead cost Variance: This is the difference between the actual total overhead cost and the standard total overhead cost budgeted for the actual level of activity. Total actual overhead cost is the sum of variable and fixed actual costs ($152,800 + $49,500 = $202,300). The standard overhead cost for 7,000 hours was $207,000. The total variance is $202,300 - $207,000 = -$4,700, which is favorable.Due to missing data (the variable portion of the standard rate), we can only partially answer the question.
Suppose you are a euro-based investor who just sold Microsoft shares that you had bought six months ago. You had invested €10,000 to buy Microsoft shares for $120 per share; the exchange rate was $1.55 per euro. You sold the stock for $135 per share and converted the dollar proceeds into euro at the exchange rate of $1.50 per euro. How much of the return is due to the exchange rate movement?
Answer:
The answer is €375.
Explanation:
If the exchange rate is $1.55 per € then €10,000 is equal to $15,500. At $120 per share, you can but 129 shares for $15,500.
And if you sell those 129 share at $135 per share, then your total comes up to $17,415. If the exhange rate had stayed the same, that would be €11,235 just for the increase in the prices of the shares. But the exhange rate is $1.50 per € so the amount after selling the shares is €11,610. The difference the exhange rate makes is €11,610 - €11,235 = €375.
I hope this answer helps.
Suppose that Nowhere State University (NSU) seeks to increase its total revenue from tuition paid by students. To do this, NSU decides to increase the tuition it charges to students. In order for this strategy to work, the demand for NSU education must be . Suppose the true price elasticity of demand for NSU education is 1.4. To expand revenue earned by NSU, the university should the tuition it charges students.
Answer:
Explanation:
The revenue of NSU will rise if only the price elasticity of demand for the courses at NSU is elastic.
This will happens because when a commodity has elastic demand, the increase in its price leads to a rise in consumer’s total expenditure. Revenue will drop if the price elasticity of demand for the courses at NSU is not elastic (inelastic).
This will happen because when a commodity has inelastic demand, increase in its price will lead to reduction in consumer’s total expenditure
Revenue will remain unchanged if the price elasticity of demand for the courses at NSU is unit elastic.
This will happen because when a commodity has unit elastic demand, increase or decrease in price of commodity will not make any change in total firm’s total revenue.
Final answer:
Considering that the demand for NSU education has an elasticity of 1.4, it is elastic. Therefore, NSU should decrease the tuition to expand revenue since the resulting increase in enrollment will likely outweigh the reduction in price.
Explanation:
If Nowhere State University (NSU) seeks to increase its total revenue from tuition and decides to increase the tuition it charges to students, it is important to consider the price elasticity of demand for NSU's education. The price elasticity of demand is a measure of how much the quantity demanded of a good responds to a change in the price of that good, which is quantified as the percentage change in quantity demanded divided by the percentage change in price. Given that the true price elasticity of demand for NSU education is stated to be 1.4, this implies that the demand for NSU's education is elastic. For products with elastic demand, an increase in price typically leads to a proportionally larger decrease in quantity demanded, which would result in a decrease in total revenue. Therefore, to expand revenue, NSU should actually decrease the tuition it charges to students. A decrease in tuition might lead to an increase in the quantity of students enrolled that is proportionally larger than the decrease in the price of tuition. Conversely, if the demand were inelastic (< 1), it would mean that the percentage change in quantity demanded is less than the percentage change in price, so increasing the price would increase total revenue.
Cane Company manufactures two products called Alpha and Beta that sell for $150 and $105, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 107,000 units of each product. Its unit costs for each product at this level of activity are given below:
Alpha Beta
Direct materials $30 $10
Direct labor 25 20
Variable manufacturing overhead 12 10
Traceable fixed manufacturing overhead 21 23
Variable selling expenses 17 13
Common fixed expenses 20 15
Total cost per unit $125 $91
The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars.
Required:
1. What is the total amount of traceable fixed manufacturing overhead for the Alpha product line and for the Beta product line?
2. What is the company’s total amount of common fixed expenses?
3. Assume that Cane expects to produce and sell 85,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 15,000 additional Alphas for a price of $100 per unit. If Cane accepts the customer’s offer, how much will its profits increase or decrease?
4. Assume that Cane expects to produce and sell 95,000 Betas during the current year. One of Cane’s sales representatives has found a new customer that is willing to buy 5,000 additional Betas for a price of $44 per unit. If Cane accepts the customer’s offer, how much will its profits increase or decrease?
The total traceable fixed manufacturing overhead and common fixed expenses for the Alpha and Beta lines were calculated using given data. Further, by considering variable costs and revenues, the impact on profits of additional sales was evaluated. The findings reveal an increase in profits for additional Alpha sales but a decrease for Beta.
Explanation:1. To compute the traceable fixed manufacturing overhead for each product line, we first need to multiply the units produced by the cost per unit. Therefore, for Alpha, the traceable fixed manufacturing overhead equals 107,000 units * $21 per unit = $2,247,000. For Beta, the traceable fixed manufacturing overhead equals 107,000 units * $23 per unit = $2,461,000.
2. To determine the total amount of common fixed expenses, we can use the given unit cost figures. For Alpha, the total cost per unit is $125 and the common fixed expense per unit is $20, implying 20/125 = 16% of the total costs are common fixed expenses. For Beta, the total cost per unit is $91 and common fixed expense per unit is $15, implying 15/91 = 16.5% of total costs. We average the percentages and multiply by the total unit costs produced to determine the common fixed expense. Thus, the total common fixed expense is approximately 16.25% of $216 (average cost of alpha and beta) * 214,000 (total production of both Alpha and Beta) = $7,554,750.
3. The additional 15,000 Alphas would sell for $100 each resulting in revenue of $1,500,000. However, the variable costs would increase. Variable costs are equal to direct materials + direct labor + variable manufacturing overhead + variable selling expenses = $30 + $25 + $12 + $17 = $84 per unit. Thus, variable costs for the additional units would be 15,000 units * $84 = $1,260,000. The profit increase would be calculated by subtracting variable costs from the total revenue, which would result in an increase of $240,000.
4. The additional 5,000 Betas selling for $44 each would lead to a revenue of $220,000. Variable costs for Beta include direct materials + direct labor + variable manufacturing overhead + variable selling expenses, resulting in $10 + $20 + $10 + $13 = $53 per unit. For the additional units, this equals 5,000 units * $53 = $265,000. By subtracting the variable costs from total revenues, we find that accepting the offer would result in a decrease in profits of $45,000.
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Selected data for Lemon Grass, Inc. for the year are provided below: Factory Utilities $1,000 Indirect Materials Used 34,000 Direct Materials Used 292,000 Property Taxes on Factory Building 5,900 Sales Commissions 85,000 Indirect Labor Incurred 22,000 Direct Labor Incurred 150,000 Depreciation on Factory Equipment 6,800 What is the total manufacturing overhead?
Answer:
$154,700
Explanation:
Given that:
Indirect Materials: 34,000Direct Materials: 292,000 Factory Utilities: 1,000 Property Taxes: 5,900Sales Commissions: 85,000Indirect Labor : 22,000 Direct Labor: 150,000Depreciation on Factory Equipment: 6,800As we know that total manufacturing overhead are costs incurred to create the product or service that is not related to direct material or direct labor.
So our total manufacturing overhead in this question is:
Factory Utilities +Indirect Materials Used + Property Taxes on Factory Building + Sales Commissions + Indirect Labor Incurred + Depreciation on Factory Equipment
= 1,000 + 34,000 +5,900 + 85,000 + 22,000 + 6,800
= 154,700
Assume you’ve just started a new business to manufacture Fry-Plate, a new solar-powered cooking pan for camping. Your business analyst tells you that in the long run Fry-Plate will sell for $32.50 because, after a few years pass, similar products will be introduced by your competitors. Assume that, in the long run, you want to earn $4.50 on each unit of Fry-Plate sold. What is the target price? What is the target profit? What is the target cost? (Round your answers to 2 decimal places.)
Answer:
Target price $32.50
Target profit $4.50
Target cost $28.00
Explanation:
Target price $32.50
Target profit $4.50
Target cost ($32.50-$4.50)
$28.00
Therefore the target price is $32.50,
The target profit is $4.50 while the target cost is $28.00
Answer:
First of all let's understand that Target costing is a system under which a company plans the price, costs, and the margins that it wants to achieve for a new product in advance. The following are the three terms that should be familiarized.
(a) Target price – It is the price the company is expected to sell.
(b) Target profit – It is the required margin the company is expected to gain on selling price.
(c) Target cost – It is the cost the company is expected to incur on manufacturing of the product.
Based on the given information, the target price, target profit and target cost is determined as below:
(a) Target price is the selling price. That is $32.50.
(b) Target profit is the amount we wish to earn. That is $4.50.
(c) Target cost is the difference between the target price and the target profit. That is $28 ($32.50 - $4.50).
Explanation:
Which one of the following statements is TRUE? a. A shareholder-friendly charter will make it harder for a company to be acquired. b. A targeted share repurchase can be used to encourage a hostile takeover. c. A targeted share repurchase is when the company purchases stock from one shareholder at a higher price than it offers to other shareholders. d. An example of asset switching is an option to exchange one piece of real estate for another. e. Anti-takeover charter provisions are good for shareholders because they prevent a raider from stealing the company for a below-market price.
Answer:
The answer is C.) A targeted share repurchase is when the company purchases stock from one of the shareholder at a higher price than it offers to other shareholders.
Explanation:
This indicates that shareholders will benefit when the company is acquired because they usually receive a higher price for their shares.
A corporate body consist of a group of persons or board of directors that are chosen to govern the affairs of a corporation or other large institution.
The correct statement is that a targeted share repurchase is when the company purchases stock from one shareholder at a higher price than it offers to other shareholders.
Explanation:The correct statement among the options is:c. A targeted share repurchase is when the company purchases stock from one shareholder at a higher price than it offers to other shareholders.
A targeted share repurchase is a strategy used by companies to repurchase shares from specific shareholders, often those who hold a significant stake in the company. The company offers a premium price to these shareholders to incentivize them to sell their shares, which can help prevent a hostile takeover.
This strategy is shareholder-friendly because it allows the company to reward loyal shareholders and maintain control over its ownership structure, making it harder for outsiders to acquire the company.
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Operating profits and losses for the seven industry segments of Cullumber Corporation are:
Penley $94 Cheng $(18 )
Konami (41 ) Takuhi 34
KSC 27 Molina 136
Red Moon 50
Based only on the operating profit (loss) test, which industry segments are reportable?
Penley ReportableNot Reportable Cheng ReportableNot Reportable
Konami ReportableNot Reportable Takuhi ReportableNot Reportable
KSC ReportableNot Reportable Molina ReportableNot Reportable
Red Moon ReportableNot Reportable
Answer:
Penley Reportable
Cheng Not Reportable
Konami Reportable
Takuhi Not Reportable
KSC Reportable
Molina Not Reportable
Red Moon Reportable
Explanation:
total profits pf projectable segments
= 94 + 18 + 41 + 27 + 136 + 50
= $400
operating profit(loss) test = $400*10%
= $40
Manchester Corporation had 100,000 shares of common stock outstanding and 5% bonds with a face value of $1,000,000 outstanding throughout the current year. The bonds are convertible into 150,000 common shares. Net income for the current year was $212,500 with a 25% tax rate. What is the amount of the diluted EPS for the current year
Answer:
$.6375
Explanation:
Diluted EPS=Net Income /(Weighted Average shares + any convertible securities )
=$212,500*(1-25%)/(100,000+150,000)
=$.6375
Production Budget Aqua-pro Inc. produces submersible water pumps for ponds and cisterns. The unit sales for selected months of the year are as follows: Unit Sales April 180,000 May 220,000 June 200,000 July 240,000 Company policy requires that ending inventories for each month be 25% of next month's sales. However, at the beginning of April, due to greater sales in March than anticipated, the beginning inventory of water pumps is only 21,000. Prepare a production budget for the second quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.
Answer:
Production Budget April 214,000
Production Budget May 215,000
Production Budget June 210,000
Production Budget Total 639,000
Explanation:
We use the formula to calculate the production budget
Production = Sales + Ending Inventory - Opening Inventory.
Aqua-pro Inc.
Production Budget
For the Quarter
Particulars April May June July Total
Unit Sales 180,000 220,000 200,000 240,000
Add Desired
Ending Inventory 55,000 55,000 60,000 --x---x---x--
Less Opening
Inventory 21,000 55,000 50,000 60,000
Production Units 214,000 215,000 210,000 639,000
Ending Inventory Calculations
April 25% of 220,000= 55,000
May 25% of 200,000= 55,000
June 25% of 240,000 =60,000
Final answer:
The production budget for the second quarter is determined by calculating the number of units to be produced each month, aligning with sales forecasts and inventory policy, which mandates a 25% ending inventory relative to the next month's sales.
Explanation:
The production budget for Aqua-pro Inc. requires calculating the number of units to be produced each month based on sales forecasts and inventory policy. With the given unit sales for April (180,000), May (220,000), June (200,000), and July (240,000), along with the company's ending inventory policy of 25% of the next month's sales, we can calculate the production for each month.
For April, the beginning inventory is 21,000, and the desired ending inventory is 25% of May's sales, which is 55,000 units (220,000 * 0.25). Therefore, the production needed for April is April's sales plus May's ending inventory minus April's beginning inventory (180,000 + 55,000 - 21,000 = 214,000 units). Using the same method, calculate for May and June by taking into account the desired ending inventory for the following month and the actual unit sales of the current month.
To find the total production for the quarter, simply add the production amounts for April, May, and June. Keep in mind that July's beginning inventory also needs to be 25% of August's sales (which we assume to be equal to July's sales unless stated otherwise).
The Sports Equipment Division of Harrington Company is operated as a profit center. Sales for the division were budgeted for 2017 at $900,660. The only variable costs budgeted for the division were cost of goods sold ($442,410) and selling and administrative ($62,050). Fixed costs were budgeted at $101,520 for cost of goods sold, $89,750 for selling and administrative, and $69,820 for noncontrollable fixed costs. Actual results for these items were:
Sales $888,900
Cost of goods sold
Variable 419,540
Fixed 106,680
Selling and administrative
Variable 60,800
Fixed 73,180
Noncontrollable fixed 89,660
The Sports Equipment Division of Harrington Compan
The Sports Equipment Division of Harrington Compan
Prepare a responsibility report for the Sports Equipment Division for 2017. (List variable costs before fixed costs.)
Assume the division is an investment center, and average operating assets were $1,169,100. The noncontrollable fixed costs are controllable at the investment center level. Compute ROI. (Round ROI to 1 decimal place, e.g. 1.5.)
Return on investment
%
Answer and Explanation:
The preparation of the responsibility report is presented below:
Particulars Budget Actual difference
Sales $900,660 $888,900 $11,760 F
Variable costs
Cost of goods sold $442,410 $419,540 $22,870 F
Selling and administrative $62,050 $60,800 $1,250 F
Less: total variable costs $504,460 $480,340 $24,120 F
Contribution margin $396,200 $408,560 $12,360 F (A)
Controllable fixed costs
cost of goods sold $101,520 $106,680 $5,160 U
Add or less: Selling and administrative $89,750 $73,180 $16,570 F
Less: total controllable fixed cost $191,270 $179,180 $11,410 F (B)
controllable margin $204,930 $229,380 $23,770 F (A - B)
Now
Return on investment is
= ($229,380 - $89,660) ÷ $1,169,100
= 11.9%
The favorable variance leads when the standard cost is more than the actual cost while the unfavorable variance leads when the standard cost is less than the actual cost
Country Gold Silver Bronze Totals United States 35 39 29 103 China 32 17 14 63 Russia 27 27 38 92 Australia 17 16 16 49 Japan 16 9 12 37 Totals 127 108 109 344 If a medal is picked at random from this group, find the probability that it was A gold medal....................................... A silver medal won by a Russian...................................... A bronze medal or won by the United States............................... A silver medal or a bronze medal...................................... A gold medal and a silver medal....................................... A silver medal given that it was won by Japan................................. A medal won by Australia given that it was bronze.....................................
Answer:
0.3692
0.0785
0.5320
0.6308
0
0.2432
0.1468
Explanation:
A gold medal - Number of gold medals divided by total number of medals:
[tex]P(G) = \frac{127}{344}\\P(G) = 0.3692[/tex]
A silver medal won by a Russian - Number of silver medals won by Russia divided by total number of medals:
[tex]P(S\cap R) = \frac{27}{344}\\P(S\cap R) = 0.0785[/tex]
A bronze medal or won by the United States - Number of total bronze medals added to silver and gold medals from USA, divided by total number of medals:
[tex]P(B\cup U)=\frac{109+35+39}{344}\\P(B\cup U)=0.5320[/tex]
A silver medal or a bronze medal - Number of total silver plus total gold medals divided by total number of medals:
[tex]P(S\cup B)=\frac{108+109}{344}\\P(S\cup B)=0.6308[/tex]
A gold medal and a silver medal - A medal can't be both gold and silver, the probability is zero:
[tex]P(G\cap S)=0[/tex]
A silver medal given that it was won by Japan - Number of Japan silver medals divided total medals won by Japan:
[tex]P(S|J)=\frac{9}{37}\\P(S|J)=0.2432[/tex]
A medal won by Australia given that it was bronze - Number of Australia bronze medals divided by total bronze medals:
[tex]P(A|B)=\frac{16}{109}\\P(A|B)=0.1468[/tex]
A delivery company is considering adding another vehicle to its delivery fleet; each vehicle is rented for $350 per day. Assume that the additional vehicle would be capable of delivering 1500 packages per day and that each package that is delivered brings in $0.35 in revenue. Also assume that adding the delivery vehicle would not affect any other costs.
a. What are the MRP and MRC?
b.Should the firm add this delivery vehicle?
c. Now suppose that the cost of renting a vehicle doubles to $700 per day.
What are the MRP and MRC?Should the firm add a delivery vehicle under these circumstances? Next suppose that the cost of renting a vehicle falls back down to $350 per day but, due to extremely congested freeways, an additional vehicle would only be able to deliver 750 packages per day. What are the MRP and MRC in this situation? Would adding a vehicle under these circumstances increase the firm’s profits?`
Answer:
1. MRP = $525 , MRC = $350
2. Yes
3. MRP = $525 , MRC = $700
4. No
5.MRP = $262.5. MRC = $350
6. No
Explanation:
Marginal revenue product is the additional revenue generated by an extra unit of input added to a production process while marginal revenue cost incurred as a result of the extra unit added
MRP =change in total revenue/ change in unit.
MRC = change in total cost / change in unit
(a.) Cost of extra hire = $350 , extra delivery capacity = 1500 packages , Rate = $0.35
MRP = 1500*$0.35 = 525
MRC = $350.
MRP is greater than MRC , so it is advisable.
(b.)If the cost of extra hire doubles to $700 , extra delivery capacity $ rate does not change.
MRP remains the same $525.
MRC = $700
MRC is greater than MRP.
It is not advisable
(C)Extra cost of hire = $350 , extra delivery capacity = 750 , rate = $0.35
MRP = 750*0.35=$262.5
MRC = $350
MRC greater than MRP . it is not advisable
The Marginal Revenue Product (MRP) is $525 and the Marginal Cost (MRC) is $350. The firm should add the delivery vehicle as MRP is greater than MRC. When the rental cost doubles to $700 per day, MRP remains $525 but MRC increases to $700, therefore it would not be profitable to add the vehicle. When the rental cost returns to $350 but the number of packages the vehicle can deliver decreases to 750 per day, MRP drops to $262.50 and remains less than MRC, so it is not profitable to add the vehicle.
Explanation:a. The Marginal Revenue Product (MRP) is the additional revenue generated by adding one more unit of input. In this case, the MRP can be calculated by multiplying the revenue generated per package ($0.35) by the number of packages delivered per day (1500), which equals $525.
The Marginal Cost (MRC) is the additional cost incurred by producing one more unit of output. In this case, the MRC is equal to the rental cost of the additional vehicle, which is $350 per day.
b. To determine whether the firm should add the delivery vehicle, we compare the MRP and MRC. Since MRP ($525) is greater than MRC ($350), it would be profitable for the firm to add the delivery vehicle.
c. When the cost of renting a vehicle doubles to $700 per day, the MRP and MRC would remain the same. The MRP would still be $525 and the MRC would still be $700. However, since MRP is no longer greater than MRC, it would not be profitable for the firm to add the delivery vehicle.
When the rental cost returns to $350 per day but the number of packages the additional vehicle can deliver decreases to 750 per day, the MRP would be $262.50 and the MRC would still be $350. Since MRP is still less than MRC, it would not be profitable for the firm to add the delivery vehicle under these circumstances.
Adding the vehicle only increases the firm's profits when MRP is greater than MRC.
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BT Alex Brown Analysts are evaluating Energen (NYSE: EGN) for possible inclusion in a small-cap oriented portfolio. EGN is a diversified energy company involved in oil & gas products. As a result of EGN’s aggressive program of purchasing oil and gas producing properties, BT Alex Brown expects above-average growth for the next five years. The analysts establish the following facts and forecasts for EGN: Current market price is $20 Current dividends are $0.54 Required return on equity is 11% Initial 2-year period of 15% per year earnings and dividend growth Which of the following is closest to the present value of dividends for the first-two years? $0.62 $1.14 $0.71$1.34
Answer:
The correct option is $1.14
Explanation:
D1=D0*(1+g)
D1 is year 1 dividend
g growth rate of dividend of 15%
D1=$0.54*(1+15%)
D1=$0.54*(1+0.15)
D1=$0.54*1.15
D1=$0.621 00
D2=$0.621*1.15
D2=$0.71415
We need to apply the discount factor to each of the dividends,the discount factor is 1/(1+r)^n
r is the rate of return of 11%
n is the relevant year
present value of year 1 dividend=$0.62100*1/(1+11%)^1
present value of year 1 dividend=$0.559459459
Present value of year 2=$0.71415*1/(1+11%)^2
Present value of year 2=$0.579620161
Total value present values=$0.559459459 +$0.579620161
=$1.14
A donut store is open 8 hours a day and sells two types of donuts – blueberry cake donut and chocolate frosted donut. On average the demand is 80 donuts per day for EACH type. The store has only one machine which makes both types, and once it starts, it produces one donut every 2 minutes for either type. The production alternates between the two types, i.e., a batch of one type is followed by a batch of the other. The setup time is 20 minutes for either type. Assume the same batch size all the time for both types.
(a) If the batch size is 10 donuts per batch, what is the capacity per day for each type of donut?
(b) What is the minimal batch size in order to satisfy demand for both types?
Answer:
Part A)
Processing time for Each Batch = Setup time + Production time
Processing time for Each Batch = 20 + 2 × 10
Processing time for Each Batch = 40 minutes
Thus,
Capacity for one day = Total working Hour / processing time
Capacity for one day = 8 hours / 40 minutes
Capacity for one day = 12 batches
(6 batches of each donuts type, or 60 donuts of each type)
Part B)
Total production time for both donuts = (80 + 80) × 2
Total production time for both donuts = 320 minutes
Time for Total batch = 480 - 320
Time for Total batch = 160 minutes
Batch time available for each type = 160 / 2
Batch time available for each type = 80 minutes.
Number of batches = 80 minutes / 20 minutes
Number of batches = 4 batches
Thus,
Minimal batch size = 80 donuts / 4 batches
Minimal batch size = 20 donuts for each type of donuts in single batch.
Final answer:
The capacity per day for each type of donut, given a batch size of 10, is 60 donuts. The question of minimal batch size involves considering overall production capacity and setup times, aiming to satisfy the demand of 80 donuts per day for each type, with a more complex solution needed beyond simple division.
Explanation:
Capacity per Day for Each Type of Donut
To calculate the capacity per day for each type of donut, we first need to understand the time it takes to produce a batch. Since one donut is produced every 2 minutes, and the batch size is 10 donuts, it takes 20 minutes to produce a batch. Additionally, we have to add the setup time, which is another 20 minutes. Therefore, the total time to produce one batch of donuts is 40 minutes (20 minutes for production + 20 minutes for setup).
The store is open for 8 hours a day, which is 480 minutes. The machine alternates between making blueberry cake donuts and chocolate frosted donuts. So, each type of donut gets approximately half the available time, i.e., 240 minutes.
Therefore, the number of batches that can be made in 240 minutes for each type of donut is 240 minutes / 40 minutes per batch = 6 batches. Since each batch contains 10 donuts, the capacity per day for each type of donut is 6 batches * 10 donuts per batch = 60 donuts.
Minimal Batch Size to Satisfy Demand
To satisfy the demand of 80 donuts per day for each type, let’s calculate the minimal batch size. Given the demand is 160 donuts total for both types and considering the setup time and production time, the machine can effectively produce donuts for 440 minutes (480 minutes total - 2*20 minutes setup time).
As one donut takes 2 minutes to produce, in 440 minutes, the machine can produce 220 donuts in total for both types. Since the demand is 160 donuts (80 per type), to satisfy demand, we could theoretically use any batch size as long as total production is above 160. However, to meet demand exactly with minimal waste, adjusting the production times and considering efficiency, a careful recalculation considering the constraints of setup times and alternating production is required, aiming to increase the efficiency or possibly alter operation times.
Suppose you hold bonds in your investment portfolio and are concerned about interest rate risk. Other factors equal, which of the following statements is true?
O Your short term bonds have more interest rate risk than your long term bonds.
O Your long term bonds have more interest rate risk than your short term bonds.
O Your high coupon bonds have more interest rate risk than low coupon bonds.
O a & c are true.
O b & c are true.
Answer: Your long term bonds have more interest rate risk than your short term bonds.
Explanation:
Longer term bonds are considered riskier than shorter term bonds. This is because due to their long term it is generally feared that a rise in Inflation could reduce the payments due from the bonds.
There is also a fear that the price will have more exposure to interest rate risk overtime as interest rates could rise over the duration of the bond.
For these reasons, the risk is higher on Longer term bonds and as such the rate charged on them is higher as well.
If you need any clarification do react or comment.
7. A stock price (which pays no dividends) is $50 and the strike price of a two year European put option is $54. The risk-free rate is 3% (continuously compounded). Compute the lower bound for the put option such that there are arbitrage opportunities if the price is below the lower bound and no arbitrage opportunities if it is above the lower bound
Answer:
LOWER BOUND FOR THE OPTION
= $54 e-0.03045 *2 - $50
= ($54 * 0.94092) - $50
= $50.81 - $50
= $0.81
Note
3% is the simple interest but 0.03045 is the compound interest.
The lower bound for the European put option is calculated as the maximum of zero or the difference between the strike price and the current stock price, discounted back to the present using the risk-free rate over the option's life. The calculation results in $3.76704, which is the threshold below which an arbitrage opportunity might exist.
To compute the lower bound for a European put option, we can utilize a financial concept known as put-call parity. However, because we are not given any information about a corresponding call option or the price of a put option, we'll focus on the intrinsic value of the put option.
The value of a put option equals the present value (discounted value) of the strike price minus the current stock price, provided this difference is positive. Otherwise, the value is zero since an option cannot have a negative intrinsic value.
The formula for the lower bound of a European put option price is:
Lower bound = max(0, Strike Price - Current Stock Price) × exp(-risk free rate × time to expiry)
In this case:
Strike Price (K) = $54Current Stock Price (S) = $50Risk-free rate (r) = 3%Time to expiry (T) in years = 2We then calculate the lower bound:
Lower bound = max(0, 54 - 50) × exp(-0.03 × 2) = 4 × exp(-0.06) = 4 × 0.94176 = $3.76704
Therefore, if the price of the put option is below $3.76704, there would be an arbitrage opportunity. If it is above this price, there should be no arbitrage opportunities.
Important to note: The actual market price of the option could be higher due to the time value of money and other market factors, but it cannot be lower than its intrinsic value without presenting an arbitrage opportunity.
Camilo’s property, with an adjusted basis of $155,000, is condemned by the state. Camilo receives property with a fair market value of $180,000 as compensation for the property taken.
a. What is Camilo’s realized and recognized gain?
b. What is the basis of the replacement property
Answer:
The correct answer for (a) is $25,000 and $0 and for option (b) is $155,000.
Explanation:
According to the scenario, the computation of the given data are as follows:
Adjusted basis = $155,000
Fair market value = $180,000
(a). Realized gain = Fair market value - Adjusted basis
= $180,000 - $155,000
= $25,000
As, fair market value is more than the adjusted basis, so there will be no recognized gain.
So, Recognized gain = $0
(b). We can calculate the basis of the replacement by using following formula:
Basis = Market value - Realized gain
= $180,000 - $25,000
= $155,000
Does PepsiCo’s portfolio exhibit good resource fit? What are the cash flow characteristics of each of PepsiCo’s six segments? Which businesses are the strongest contributors to PepsiCo’s free cash flows?
Answer:
Yes, PepsiCo’s portfolio exhibit good resource fit.
The cash flow characteristics of PepsiCo's six segments are
Ability to scout for future acquisitions. Good credits and return on Investment.Reinvestment in the development of businessAbility to pay off expensesAbility to provide a buffer against future financial challengesGood sales in and out of season,The strongest contributors to PepsiCo is:
Frito-Lay North America (FLNA), Quaker Foods North America (QFNA), North America Beverages (NAB), Latin America, Europe Sub-Saharan Africa (ESSA), and Asia, Middle East and North Africa (AMENA)
Frito-Lay ratings is good in that it accounts for 29% of PepsiCo's total revenue as at Septemeber 2019 report.
Final answer:
To determine if PepsiCo's portfolio exhibits good resource fit, an analysis of the cash flow characteristics of each of its six segments is necessary, along with an understanding of the company's dependence on cash flows from investing and financing activities. Evaluating cash tied up in receivables and payables, alongside the company's financial stability, ethics, competitive environment, and workforce treatment, would provide a comprehensive view.
Explanation:
To evaluate if PepsiCo's portfolio exhibits good resource fit, we can first consider if the company's core operations generate more cash than they use. In general, a diversified portfolio like PepsiCo's, with multiple product lines and segments, should balance cash flows across the business divisions. Positive cash flow from operations indicates good resource fit as it implies the company is efficiently generating enough revenue to cover its operational costs and invest in growth.
For a detailed analysis, one would need to examine the cash flow characteristics of PepsiCo's six business segments. These segments include Frito-Lay North America, Quaker Foods North America, North America Beverages, Latin America, Europe Sub-Saharan Africa, and Asia, Middle East and North Africa. The segments' individual performance can indicate which are the strongest contributors to PepsiCo’s free cash flows and their influence on the overall resource fit of the company.
Moreover, understanding the dependence of the organization on cash flows from investing activities and financing activities is pivotal. Predictable cash flows from these activities can support basic operations if necessary, though a heavy reliance may indicate potential resource misalignment within the company's portfolio.
The analysis should also include the amount of cash tied up in transactions outside of the company's direct control, such as receivables and payables. High levels of receivables might indicate that a lot of cash is locked up, whereas a substantial amount in payables could suggest that the company has favorable payment terms with its suppliers, which is a positive sign of cash flow management.
the strength of PepsiCo's portfolio and cash flow contributions is assessed by looking at the firm's financial stability, its ethical considerations, employee treatment, competitive environment, as well as by examining strategic decisions like mergers and product line expansions.
On January 1, 2009, Vacker Co. acquired 70% of Carper Inc. by paying $650,000. This included a $20,000 control premium. Carper reported common stock on that date of $420,000 with retained earnings of $252,000. A building was undervalued in the company's financial records by $28,000. This building had a ten-year remaining life. Copyrights of $80,000 were to be recognized and amortized over 20 years. Carper earned income and paid cash dividends as follows: NI Div Paid 2009 $105,000 $54,600 2010 $134,400 $61,600 2011 $154,000 $84,000 On December 31, 2011, Vacker owed $30,800 to Carper. There have been no changes in Carper's common stock account since the acquisition. 1. Show the acquisition date FV allocation, which includes detailed steps such as allocation to BV, FV over BV, and Goodwill allocation, between controlling and noncontrolling interests.
Answer:
Goodwill allocations
Goodwill attributed to Vacker co. - 70% = $104000
Goodwill attributed to non-controllable interest - 30% = $36000
Explanation:
Showing the acquisition date FV allocation , which includes detailed steps such as allocation to BV,FV over BV and Goodwill allocation, between controlling and nocontrolling interests
$28000 was set out as the fair value of the building and will be amortized within ten years remaining
$80000 were to be recognized and amortized over 20 years
Amortized assets are : building and copyright
Goodwill = fair value of the assets acquired - controlling interests
The assets acquired include : copyright, common stocks , retained earnings and buildings
controlling interests = non-controlling interest * 30%
Goodwill allocations
Goodwill attributed to Vacker co. - 70% = $104000
Goodwill attributed to non-controllable interest - 30% = $36000
Return on Investment, Margin, Turnover Ready Electronics is facing stiff competition from imported goods. Its operating income margin has been declining steadily for the past several years. The company has been forced to lower prices so that it can maintain its market share. The operating results for the past 3 years are as follows: Year 1 Year 2 Year 3 Sales $14,500,000 $ 9,500,000 $ 9,000,000 Operating income 1,200,000 1,345,000 945,000 Average assets 15,000,000 15,000,000 15,000,000 For the coming year, Ready's president plans to install a JIT purchasing and manufacturing system. She estimates that inventories will be reduced by 70% during the first year of operations, producing a 20% reduction in the average operating assets of the company, which would remain unchanged without the JIT system. She also estimates that sales and operating income will be restored to Year 1 levels because of simultaneous reductions in operating expenses and selling prices. Lower selling prices will allow Ready to expand its market share. (Note: Round all numbers to two decimal places.) Required: 1. Compute the ROI, margin, and turnover for Years 1, 2, and 3. Year 1 Year 2 Year 3 ROI 0.77 % 0.09 % 0.06 % Margin 0.08 % 0.01 % 0.10 % Turnover 0.97 0.63 0.6 2. Conceptual Connection: Suppose that in Year 4 the sales and operating income were achieved as expected, but inventories remained at the same level as in Year 3. Compute the expected ROI, margin, and turnover. ROI % Margin % Turnover Why did the ROI increase over the Year 3 level? 3. Conceptual Connection: Suppose that the sales and net operating income for Year 4 remained the same as in Year 3 but inventory reductions were achieved as projected. Compute the ROI, margin, and turnover. ROI % Margin % Turnover Why did the ROI exceed the Year 3 level? 4. Conceptual Connection: Assume that all expectations for Year 4 were realized. Compute the expected ROI, margin, and turnover. ROI % Margin % Turnover Why did the ROI increase over the Year 3 level?
Answer:
See explaination
Explanation:
1. see attachment for the table
2: Conceptual connection
Year 4 : Sales = 14500000, Operating Income = 1200000, Average Assets = 15000000
ROI= Operating Income/Average Assets = 1200000/15000000 = 0.08
Margin = Operating income/Sales = 1200000/14500000 = 0.08
Turnover ratio :Sales/Average Assets = 14500000/15000000 = 0.97
The ROI has increased in year 4 over the 3rd Year’s ROI because Operating income is increased but inventory were same . So we are earning more amount of profit from the same level of investment which is the reason of increase in ROI.
3. Conceptual connection
Year 4 : Sales = 9000000, Operating Income = 945000, Average Assets = 12000000
ROI= Operating Income/Average Assets = 945000/12000000 = 0.08
Margin = Operating income/Sales = 945000/9000000 = 0.11
Turnover ratio :Sales/Average Assets = 9000000/12000000 = 0.75
The ROI has exceeded level of year 3 because operating profit is same but the investment in assets is lower under year 4. So we are able to earn same amount i.e. 945000 by investing lesser. The same return of profit with lower investment has increased the ROI.
4. Conceptual Connection
Year 4 : Sales = 14500000, Operating Income = 1200000, Average Assets = 12000000
ROI= Operating Income/Average Assets = 1200000/12000000 = 0.10
Margin = Operating income/Sales = 1200000/14500000 = 0.08
Turnover ratio :Sales/Average Assets = 14500000/12000000 = 1.21
The ROI has exceeded the level of year 3 because operating profit is increased at the same time the investment in assets is also decresed. So we are able to earn more amount by investing lesser. So there are two factors which has increased ROI first is more operating income and second the lower investment. We are able to earn more with lesser investment.
1. The computation of the ROI, margin, and turnover for Year 1, 2, and 3 is as follows:
ROI 8% ($1.2/$15 x100) 8.97% 6.3%
Margin 8.28% 14.16% 10.5%
Turnover 0.97x 0.63x 0.60x
2. The computation of the ROI, margin, and turnover for Year 4 is as follows:
Basis:
Sales in Year = $14,500,000
Operating income = $1,200,000
Average assets = $15,000,000
a. ROI = 8% ($1,200,000/$15,000,000 x 100)
b. Margin = 8.28% ($1,200,000/$14,500,000 x 100)
c. Turnover = 0.97x ($14,500,000/$15,000,000)
d. The Year 4's ROI increased over the Year 3 level because of the increased operating income.
3. The computation of the ROI, margin, and turnover for Year 4 is as follows:
Basis:
Sales in Year = $9,000,000
Operating income = $945,000
Average assets = $12,000,000
a. ROI = 7.88% ($945,000/$12,000,000 x 100)
b. Margin = 6.52% ($945,000/$14,500,000 x 100)
c. Turnover = 0.75x ($9,000,000/$12,000,000)
d. The Year 4's ROI exceeded the Year 3 level because of the reduced average assets versus the stable operating income.
4. The computation of the ROI, margin, and turnover for Year 4 is as follows:
Basis:
Sales in Year = $14,500,000
Operating income = $1,200,000
Average assets = $15,000,000
a. ROI = 8% ($1,200,000/$15,000,000 x 100)
b. Margin = 8.28% ($1,200,000/$14,500,000 x 100)
c. Turnover = 0.97x ($14,500,000/$15,000,000)
d. The Year 4's ROI increased over the Year 3 level because of the increased average assets and operating income.
Data and Calculations:
Ready Electronics Operating Results
Year 1 Year 2 Year 3 Projected Year 4
Sales $14,500,000 $ 9,500,000 $ 9,000,000 $14,500,000
Operating income 1,200,000 1,345,000 945,000 1,200,000
Average assets 15,000,000 15,000,000 15,000,000 12,000,000
Average assets in Year 4 = $12,000,000 ($15,000,000 x (1 - 20%).
Formula:
ROI (Return on Investment) = Operating Income/Average Assets x 100
Margin = Operating Income/Sales x 100
Turnover = Sales/Average Assets
Learn more about ROI, margin, and Asset Turnover here: https://brainly.com/question/25814719 and https://brainly.com/question/25895372
What is the payback period for Tangshan Mining company's new project if its initial after-tax cost is $5,000,000 and it is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $700,000 in year 3, and $1,800,000 in year 4
Answer:
Explanation:
Payback period calculates the amount of time it takes to recover the amount invested in a project to be recovered from the cumulative cash flow.
In year 1 , the amount recovered is = $-5,000,000 + $1,800,000 = $-3,200,000
In year 2, the amount recovered is = $-3,200,000 + $1,900,000 = $-1,300,000
In year 3, the amount recovered is = $-1,300,000 + $700,000 = $-600,000
In year 4, the amount recovered is 3 + (600,000 / 1,800,000) = 3.33 years
I hope my answer helps you
Rediger Inc., a manufacturing Corporation, has provided the following data for the month of June. The balance in the Work in Process inventory account was $32,000 at the beginning of the month and $22,000 at the end of the month. During the month, the Corporation incurred direct materials cost of $57,000 and direct labor cost of $31,000. The actual manufacturing overhead cost incurred was $54,000. The manufacturing overhead cost applied to Work in Process was $53,000. The cost of goods manufactured for June was:
Answer:
$53,000
Explanation:
Cost of Goods Sold is the cost of the inventory units which have been sold.
It is assumed that all the inventory is sold and there is no beginning and ending finished goods Inventory.
Manufacturing Cost
Direct Material $57,000
Direct Labor $31,000
Manufacturing overheads $54,000
Manufacturing cost $142,000
Beginning work in process $32,000
Ending work in process ($22,000)
Cost of Goods Sold $53,000
A firm is considering changing their credit terms. It is estimated that this change would result in sales increasing by $ 1 comma 400 comma 000 $1,400,000. This in turn would cause inventory to increase by $ 175 comma 000 $175,000, accounts receivable to increase by $ 140 comma 000 $140,000, and accounts payable to increase by $ 60 comma 000 $60,000. What is the firm's expected change in net working capital?
Answer:
The firm's expected change in net working capital: Net working capital increases by $255,000
Explanation:
Net working capital is calculated by using following formula:
Net working capital = Current assets - Current Liabilities
The inventory increases by $175,000, accounts receivable increases by $140,000.
The Current assets increases by: $175,000 + $140,000 = $315,000
The accounts payable increases by $60,000, the Current Liabilities increases by $60,000
Net working capital increases by: $315,000 - $60,000 = $255,000
Answer:
$255,000
Explanation:
As we Know Working capital is the the net or current assets and current liabilities.
Increase in Current Assets
Accounts receivable $140,000
Inventories $175,000
Total Increase in CA $315,000
Increase in Current Liabilities
Accounts payable $60,000
Increase in Working Capital = Increase in Current Assets - Increase in Current Liabilities
Change in Working Capital = $315,000 - $60,000 = -$255,000
As current Liabilities increased more than the current assets, so the working capital will decrease by $255,000
JT Engineering is deciding between two machines. Machine A costs $352,000, with inflows of $209,000 and outflows of $154,000. Machine B costs $380,000, with inflows of $231,000 and outflows of $166,000. Both have a 10-year life and no salvage value. JT uses the straight-line method for depreciation and requires a return of 12%. How desirable are the machines? Use annual rate of return to determine the answer.
Answer:
Machine B is preferrable with annual rate of return of 14.21%,higher than the required annual rate of return of 12%
Explanation:
Annual rate of return of both machine needs to ascertained ,then compared with the required annual rate of rate of 12% in order to determine which machine gives at least 12% annual rate of return and worth investing in.
Annual rate of return=net income/average investment
net income=inflows-outflows-depreciation
Machine A average investment=$352,000/2=$176,000
Machine B average investment=$380,000/2=$190,000
Machine A net income=$209,000-$154,000-($355,000/10)
=$209,000-$154,000-$35,500
=$19,500
Machine B net income=$231,000-$166,000-($380,000/10)
=$231,000-$166,000-$38,000
=$27,000
Machine A annual rate of return=$19,500/$176,000
=11.08%
Machine B annual rate of return=$27,000/$190,000
=14.21%
The Machine B is more preferable because its annual rate of return (14.21%) is higher than the required annual rate of return (12%).
The Annual rate of return of both machine needs to known to encourage comparison with the required annual rate of return
Given Information
The required annual rate of rate = 12%
Machine A average investment = $352,000/2
Machine A average investment = $176,000
Machine B average investment = $380,000/2
Machine B average investment = $190,000
Net income = Inflows - Outflows - DepreciationMachine A Net income = $209,000 - $154,000 - ($355,000/10)
Machine A Net income = $209,000 - $154,000 - $35,500
Machine A Net income =$19,500
Machine B Net income = $231,000 - $166,000 - ($380,000/10)
Machine B Net income = $231,000 - $166,000 - $38,000
Machine B Net income = $27,000
Annual rate of return = Net income/Average investmentMachine A Annual rate of return = $19,500/$176,000
Machine A Annual rate of return = 11.08%
Machine B Annual rate of return =$27,000/$190,000
Machine A Annual rate of return = 14.21%
Therefore, the Machine B is more preferable because its annual rate of return (14.21%) is higher than the required annual rate of return (12%).
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Consider returns R on a stock XYZ in the follwoing 4 states of he economy. each with probability p Boom state: p=0.15, R=35% Normal state: p=x?, R=8% Slowdown state: p=0.1, R=1% Recession state: p=0.2, R = -33% What is the expected return for stock XYZ? Quote your answer to 1 decimal place, but do not type the "%" Do not round intermediate results.
Answer:
The return on stock XYZ is 3.2
Explanation:
The expected return on a stock whose returns differ based on different scenarios can be calculated by multiplying the return in a scenario by the probability of that scenario and taking a sum of all such scenario returns after they have been multiplied by their respective probabilities.
The formula can be written as,
Return on a stock = rA * pA + rB * pB + ... + rN * pN
Where,
r represents the scenario returnsp represents the probability of scenariosProbability of normal state (x) = 1 - (0.15 + 0.1 + 0.2) = 0.55
Return on stock XYZ = 0.35 * 0.15 + 0.08 * 0.55 + 0.01 * 0.1 + (-0.33) * 0.2
Return on stock XYZ = 0.0315 or 3.15% rounded off to 3.2%
The following information relates to Halloran Co.'s accounts receivable for 2018: Accounts receivable balance, 1/1/2018 $ 844,000 Credit sales for 2018 3,470,000 Accounts receivable written off during 2018 54,000 Collections from customers during 2018 3,050,000 Allowance for uncollectible accounts balance, 12/31/2018 205,000 What amount should Halloran report for accounts receivable, before allowances, at December 31, 2018?A. $1,210,000.B. $1,264,000.C. $1,005,000.D. None of these answer choices are correct.
Answer:
The correct option is A.
Explanation:
Let us journalize the effects of the transactions as follows:
Debit Accounts receivable $3,470,000
Credit Sales revenue $3,470,000
(To record credit sales during the year)
Debit Allowance for doubtful accounts $54,000
Credit Accounts receivable $54,000
(To write-off accounts receivable)
Debit Cash $3,050,000
Credit Accounts receivable $3,050,000
(To record collections on account)
The net effects of the above journals on Accounts receivable is: $844,000 + $3,470,000 - $54,000 - $3,050,000 = $1,210,000
Complete the following table by indicating whether or not each scenario is an example of price discrimination.
Last-minute "rush" tickets can be purchased for most Broadway theater shows at a discounted price. They are typically distributed via lottery or on a first-come, first-served basis a few hours before the show. Assume that the theater in question does not hold seats in reserve for this purpose, but rather offers rush tickets only for seats not sold before the day of the performance. Horizon Wireless offers various features "à la carte" that a customer may add to his or her calling plan, such as a text messaging package, a data package, and an Internet package.
Answer: yes; no
Explanation:
Price discrimination is an exploitative selling strategy that sellers use to try to charge their customers on different prices for the same product or service.
Last-minute "rush" tickets can be purchased for most Broadway theater shows at a discounted price. They are typically distributed via lottery or on a first-come, first-served basis a few hours before the show. Assume that the theater in question does not hold seats in reserve for this purpose, but rather offers rush tickets only for seats not sold before the day of the performance......... YES PRICE DISCRIMINATION OCCURS
---.>In this case, the groups are segmented into those who paid earlier at normal price and those who paid in relation to the rush at discounted price, A case price discrimination arises because the people who have paid more than others for a same show, would not be reserved seats which means that the product was same for the two type of consumers but not the same price
Horizon Wireless offers various features "à la carte" that a customer may add to his or her calling plan, such as a text messaging package, a data package, and an Internet package. NO PRICE DISCRIMINATION
---->This is because Because Horizon Wireless is offering the different features with a la carte pricing, where every customer is subject to the same pricing irrespective of his or her calling plan.
If the price of a data package or internet were different for a customer with a more expensive calling plan, then Horizon Wireless might be attempting to identify thier different consumer types and try to exploit the differences in their willingness to pay.
Priya owns a small manufacturing operation and is reviewing her company's pricing strategy. She sees that her company's total variable expenses are $987,493 and its fixed expenses are $378,674. Her company's total revenue is $1,590,655. Suppose that Priya's company manufactures 84,000 units of the product. What is her company's breakeven selling price?
Answer:
$16.26
Explanation:
The break-even point is the level of sales at which the business incur no profit no loss.Fixed and variable costs are covered at this level of sales. Use following formula of break-even to calculate the fixed cost.
As we know that
Break-even price per unit = Variable cost per unit + Fixed cost per unit
Break-even price per unit = ($987,493/84,000) + ($378,674/84,000)
Break-even price per unit = $16.26 (Rounded to 2 decimal places )
The budgeted production of Taurus, Inc. is 13,000 units per month. Each unit requires 30 minutes of direct labor to complete. The direct labor rate is $80 per hour. Calculate the budgeted cost of direct labor for the month. (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.)
Answer:
Direct labor cost= $520,000
Explanation:
Giving the following information:
The budgeted production of Taurus, Inc. is 13,000 units per month. Each unit requires 30 minutes of direct labor to complete. The direct labor rate is $80 per hour.
First, we need to calculate the total direct labor hours:
Direct labor hours= 13,000*0.5= 6,500 hours
Now, we can calculate the direct labor cost:
Direct labor cost= 6,500*80= $520,000