Answer:
Total cost for Job P123 = $1,400
Explanation:
For Job P123 we have following information
Total labor hours = 20
Direct Materials = $710
Direct Labor cost = $500
Manufacturing Overhead cost = 20 hours X $3.8 per labor hour = $76
Fixed Manufacturing Overhead Cost Allocated to this job =
($285,000 / 50,000 ) X 20 hours = $114
The total cost for Job P123 = $710 + $500 + $76 + $114 = $1,400
Note: Fixed Manufacturing cost is allocated based on number of actual direct labor hours, as the entire activity of the organisation is not provided.
The total cost for Job P123 = $1,400
Two methods are under consideration for producing the case for a portable hazardous material photoionization monitor. A plastic case will require an initial investment of $75,000 and will have an annual operating cost of $27,000 with no salvage after 2 years. An aluminum case will require an investment of $125,000 and will have annual costs of $12,000. Some of the equipment can be sold for $30,000 after its 3-year life. At an interest rate of 10% per year, which case should be used on the basis of a present worth analysis?
Based on the present worth analysis, the plastic case has a present worth of -$28,141, while the aluminum case has a present worth of -$74,498.
To determine which case should be used based on a present worth analysis, we need to calculate the present worth of each option and compare them.
The present worth is the current value of all the cash flows associated with each case, considering the interest rate.
Let's calculate the present worth for each case:
Plastic Case:Initial investment: $75,000
Annual operating cost: $27,000 (for 2 years)
Salvage value: $0
Using the present worth formula, the present worth of the plastic case is:
[tex]PW_{plastic} = -Initial \ investment + (Annual \ operating \ cost / (1 + interest \ rate)^1) + (Annual \ operating \ cost / (1 + interest \ rate)^2)\\= -$75,000 + ($27,000 / (1 + 0.10)^1) + ($27,000 / (1 + 0.10)^2)\\= -$75,000 + ($27,000 / 1.10) + ($27,000 / 1.10^2)\\= -$75,000 + $24,545 + $22,314\\= -$28,141[/tex]
Aluminum Case:Initial investment: $125,000
Annual operating cost: $12,000 (for 3 years)
Salvage value: $30,000
Using the present worth formula, the present worth of the aluminum case is:
[tex]PW_{aluminum} = -Initial \ investment + (Annual \ operating \ cost / (1 + interest \ rate)^1) + (Annual \ operating \ cost / (1 + interest \ rate)^2) + (Annual \ operating \ cost / (1 + interest \ rate)^3) + Salvage \ value / (1 + interest \ rate)^3\\[/tex]
[tex]= -$125,000 + ($12,000 / (1 + 0.10)^1) + ($12,000 / (1 + 0.10)^2) + ($12,000 / (1 + 0.10)^3) + $30,000 / (1 + 0.10)^3\\= -$125,000 + ($12,000 / 1.10) + ($12,000 / 1.10^2) + ($12,000 / 1.10^3) + $30,000 / 1.10^3\\= -$125,000 + $10,909 + $9,917 + $9,015 + $20,661\\= -$74,498[/tex]
Based on the present worth analysis, the plastic case has a present worth of -$28,141, while the aluminum case has a present worth of -$74,498.
Since the present worth of the plastic case is less negative than the present worth of the aluminum case, the plastic case should be chosen based on a present worth analysis at an interest rate of 10% per year.
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Final answer:
Based on the present worth analysis, the aluminum case should be used over the plastic case for the portable hazardous material photoionization monitor. The correct present worth ($133,132) which compared to the plastic case is ($126,080).
Explanation:
In order to determine which case should be used based on a present worth analysis, we need to calculate the present worth of each case and compare them. A present worth analysis accounts for the time value of money by discounting future costs and benefits back to their present values.
For the plastic case:
Calculate the present worth of the initial investment: $75,000 / [tex](1 + 0.10)^0[/tex] = $75,000
Calculate the present worth of the annual operating costs over 2 years: $27,000 * ((1 - [tex](1 + 0.10)^{-2}[/tex]) / 0.10) = $51,080
The total present worth of the plastic case is $75,000 + $51,080 = $126,080
For the aluminum case:
Calculate the present worth of the initial investment: $125,000 / [tex](1 + 0.10)^0[/tex] = $125,000
Calculate the present worth of the annual operating costs over 3 years: $12,000 * ((1 - [tex](1 + 0.10)^{-3}[/tex]) / 0.10) = $32,520
Account for the salvage value of $30,000 at the end of 3 years: $30,000 / [tex](1 + 0.10)^3[/tex] = $24,388
The total present worth of the aluminum case is $125,000 + $32,520 - $24,388 = $133,132
Based on the present worth analysis, the aluminum case should be used since it has a higher present worth ($133,132) compared to the plastic case ($126,080).
Rolla Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $125,000 and $100,000, respectively. The present value of cash inflows and outflows for the second alternative is $300,000 and $262,500, respectively.
Required
Calculate the net present value of each investment opportunity
Calculate the present value index for each investment opportunity. (Round "PVI" to 2 decimal places.)
Indicate which investment will produce the higher rate of return.
Answer:
Alternative A will produce the best return.
It has a better present value index which means, the investment yield a better rate.
Explanation:
ALTERNATIVE (a)
125,000 - 100,000 = 25,000 NPV
ALTERNATIVE (b)
300,000 - 262,500 = 37,500 NPV
[tex]\frac{CashFlows \: PV}{initial \: investment} = PVI[/tex]
ALTERNATIVE (a)
125.000/100,000 = 1.25
ALTERNATIVE (b)
300,000/262,500 = 1.1429
To calculate the net present value of each investment alternative, subtract the present value of cash outflows from the present value of cash inflows. The present value index is calculated by dividing the present value of cash inflows by the present value of cash outflows. The second investment alternative offers a higher rate of return.
Explanation:The net present value (NPV) of an investment opportunity is the difference between the present value of cash inflows and the present value of cash outflows. To calculate the NPV, subtract the present value of cash outflows from the present value of cash inflows. For the first alternative, the NPV is $125,000 - $100,000 = $25,000. For the second alternative, the NPV is $300,000 - $262,500 = $37,500.
The present value index (PVI) is a measure of investment efficiency. It is calculated by dividing the present value of cash inflows by the present value of cash outflows. For the first alternative, the PVI is $125,000 / $100,000 = 1.25. For the second alternative, the PVI is $300,000 / $262,500 = 1.14.
The investment with the higher rate of return can be determined by comparing the NPVs or PVIs. In this case, the second alternative has a higher NPV and a higher PVI, indicating that it will provide a higher rate of return.
Kim Airedale, a manager of Waggers, Inc., was reviewing the water bills of a dog daycare and spa. She determined that its highest and lowest bills of $3600 and $2800 were incurred in the months of May and November, respectively. If 500 dogs were washed in May and 200 dogs were washed in November, what was the variable cost per dog associated with the company's water bill? (Round your answer to the nearest cent.) A. $7.20 B. $4.00 C. $14.00 D. $2.67
Answer:
D. $2.67
Explanation:
On the high-low method we compare the diference between the highest level and lowest level of activity.
highest 500 dogs 3,600 (fixed + variable cost)
less
lowest 200 dogs 2,800 (fixed + variable cost)
300 dogs 800 variable cost
800/300 = variable cost per dog = 2.6666667 = (2 + 2/3) variable cost of water bill
800 x (2 + 2/3) + fixed cost = 3,600
2133,3333 + fixed cost = 3600
fixed cost = 3,600 - 2,133.33 = 1,466.66667
The variable cost per dog is calculated by finding the difference in total cost between the two given months, then dividing that by the difference in the number of dogs washed. The answer is $2.67 per dog.
Explanation:To calculate the variable cost per unit, we first need to find the difference in total cost then divide by the difference in units. The total cost difference between May and November is $3600 - $2800 = $800. Now, the difference in the number of dogs washed in May and November is 500 dogs - 200 dogs = 300 dogs. The variable cost is therefore $800 / 300 dogs = $2.67 per dog. Hence, the correct answer is D. $2.67.
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All of the following are true with regards to activity-based costing for service businesses except a. the multiple department factory overhead rate method may lead to distortions of costs. b. activity-based costing is not applicable to service businesses. c. the single plantwide factory overhead rate method may lead to distortions of costs. d. All of these choices are true.
Answer:
b. activity-based costing is not applicable to service businesses.
Explanation:
b.- activity cost was created with the idea of being used for sercive business. It distribute the phases of the service in diferent activities and assing cost to them. This statment is FALSE ABC can be used for service business
Tom’s Electrical had the following information: Total Assets, December 31, 2016 $160,000 Total Assets, December 31, 2017 170,000 For Year Ended December 31, 2017: Interest Expense 2,000 Net Income 48,000 What is the rate of return on total assets?
Answer:
ROA = 30.3030%
Explanation:
ROA = operating income / average assets
were average assets = ( beginning assets + ending assets ) / 2
operating income = net income + interest expense
= 48,000 + 2,000 = 50,000 income generate by assets
average assets = (160,000 + 170,000) / 2 = 165,000
ROA = 50,000 / 165,000 = 0.303030 = 30.3030%
Remember:
If you are given with the net income value and the list of expenses, look out for interest expenses, because those are generate by the liabilities ofthe company, so to clean up the income we add them to the net income to show the ammount generate by assets
The rate of return on total assets for Tom's Electrical for the year ended December 31, 2017, is calculated by dividing the net income by the average total assets for the period. The rate of return is approximately 29.1%.
Explanation:The rate of return on total assets can be calculated using the formula:
Return on Assets (ROA) = Net Income / Average Total Assets
We calculate the Average Total Assets by adding the Total Assets at the beginning of the period to the Total Assets at the end of the period and dividing by 2:
Average Total Assets = (Total Assets 2016 + Total Assets 2017)/2 = ($160,000 + $170,000)/2 = $165,000
Then we can calculate the ROA:
ROA = Net Income / Average Total Assets = $48,000 / $165,000 = 0.291
Therefore, the rate of return on total assets for Tom's Electrical for the year ended December 31, 2017, is approximately 29.1%.
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Nov. 1 Dollar Store purchases merchandise for $1,600 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1. 5 Dollar Store pays cash for the November 1 purchase. 7 Dollar Store discovers and returns $100 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund. 10 Dollar Store pays $80 cash for transportation costs for the November 1 purchase. 13 Dollar Store sells merchandise for $1,728 with terms n/30. The cost of the merchandise is $864. 16 Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $200 and cost $100; the items were not damaged and were returned to inventory. Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the gross method.
Answer:
NOV 1
Inventory 1,600
Account Payable 1,600
Nov 5
Account Payable 1,600
Discount received 32
Cash 1,568
Nov 7
Cash 100
Inventory 100
Nov 10
Freight In 80
Cash 80
Nov 13
Account receivable 1,728
Sales Revenues 1,728
Nov 13
COGS 864
Inventory 864
Nov 16
Sales Revenue 200
Account receivable 200
Nov 16
Inventory 100
COGS 100
Explanation:
The changes in inventory valuation must be done imediatly under perpetual inventory system.
Answer:
NOV 1
Inventory 1,600
Account Payable 1,600
Nov 5
Account Payable 1,600
Discount received 32
Cash 1,568
Nov 7
Cash 100
Inventory 100
Nov 10
Freight In 80
Cash 80
Nov 13
Account receivable 1,728
Sales Revenues 1,728
Nov 13
COGS 864
Inventory 864
Nov 16
Sales Revenue 200
Account receivable 200
Nov 16
Inventory 100
COGS 100
Explanation:
Company J must choose between two alternate business expenditures. Expenditure 1 would require a $30,000 cash outlay and Expenditure 2 requires a $28,500 cash outlay. Determine the marginal tax rate at which the after-tax cash flows from the two expenditures are equal assuming that Expenditure 1 is fully deductible and Expenditure 2 is nondeductible. Determine the marginal tax rate at which the after-tax cash flows from the two expenditures are equal assuming that Expenditure 1 is 50% deductible and Expenditure 2 is nondeductible. Determine the marginal tax rate at which the after-tax cash flows from the two expenditures are equal assuming that Expenditure 1 is fully deductible and Expenditure 2 is 50 percent deductible.
Hey there!:
case 1 :
Above statement means that Expenditure 1 = 30000 shall be reduced by an amount of tax saving ( since fully deductible) but expenditure - 2 = 28500 is final. ( since no tax saved)
Let............ r = tax rate. To convert any expenditure to after tax by reducing tax saving, we will multiply that expenditure with (1 - r)
So .............. 30000(1- r) = 28500
( 1 - r ) = 28500/30000 = 0.95
1 - r = 0.95 => ............r = 0.05
So Marginal tax rate must be 5%
_________________________________________________
case 2 :
30000 ( 1 - 50%(r) ) = 28500
( 1 - 50%(r) ) = 28500/30000 = 0.95
- 50%(r) = 0.95 - 1 = - 0.05
0.50 * r = 0.05 ( negative cancelled on either sides)
r = 0.05 / 0.5 = 0.10 ..............(or) 10%
Thus marginal tax rate must be 10%
__________________________________________________
Case 3 :
30000 ( 1 - r ) = 28500 ( 1 - 50%( r ) )
Expanding .......... 30000 - 30000*r = 28500 - 28500*50%*r
30000 * r - 14250 * r = 30000 - 28500
15750 * r = 1500
r = 1500/15750 = 0.0952 .(or) 9.52%
So Marginal tax rate must be 9.52%
_________________________________________________________
Hope this helps!
To determine the marginal tax rate at which the after-tax cash flows from the two expenditures are equal, we need to compare the after-tax cash flows for each expenditure. We can calculate the cash flows after tax for different scenarios and set them equal to find the marginal tax rate. This can be done for various combinations of deductible and nondeductible expenditures.
Explanation:To determine the marginal tax rate at which the after-tax cash flows from the two expenditures are equal, we first need to calculate the after-tax cash flows for each expenditure.
Case 1: Expenditure 1 is fully deductible and Expenditure 2 is nondeductible:Expenditure 1: $30,000 (fully deductible) -> Cash flow after tax = $30,000
Expenditure 2: $28,500 (nondeductible) -> Cash flow after tax = $28,500 * (1 - marginal tax rate)
To find the marginal tax rate at which the after-tax cash flows are equal, we set the two cash flows equal to each other and solve for the marginal tax rate:
$30,000 = $28,500 * (1 - marginal tax rate)
By solving this equation, we can find the marginal tax rate.
Case 2: Expenditure 1 is 50% deductible and Expenditure 2 is nondeductible:Expenditure 1: $30,000 * 50% (deductible) -> Cash flow after tax = $15,000
Expenditure 2: $28,500 (nondeductible) -> Cash flow after tax = $28,500 * (1 - marginal tax rate)
Again, we set the two cash flows equal to each other and solve for the marginal tax rate to find the point of equality.
Case 3: Expenditure 1 is fully deductible and Expenditure 2 is 50% deductible:Expenditure 1: $30,000 (fully deductible) -> Cash flow after tax = $30,000
Expenditure 2: $28,500 * 50% (deductible) -> Cash flow after tax = $14,250
Again, we set the two cash flows equal to each other and solve for the marginal tax rate to find the point of equality.
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A dozen eggs cost $0.96 in December 2000 and $2.75 in December 2015. The average wage for workers in private industries was $14.28 per hour in December 2000 and $21.26 in December 2015. By what percentage did the price of a dozen eggs rise? 65% 179% 186% By what percentage did the wage rise?
Answer:
By 186% the price of a dozen eggs rise.
Explanation:
Given that,
Cost in December 2000 = $0.96
Cost in December 2015 = $2.75
Average wage for December 2000 = $14.28 per hour
Average wage for December 2015 = $21.26
By considering these information, we are able to calculate the increase price percentage of a dozen eggs. The calculation is shown below:
= (December 2015 price - December 2000 price ) ÷ (December 2000 price) × 100
= ($2.75 - $0.96) ÷ ($0.96) × 100
= ($1.79) ÷ ($0.96) × 100
= 186%
Thus, by 186% the price of a dozen eggs rise.
Final answer:
The price of a dozen eggs increased by approximately 186% from December 2000 to December 2015, while the average wage for workers in private industries rose by approximately 49% over the same period.
Explanation:
To calculate the percentage increase in the price of a dozen eggs from December 2000 to December 2015, first determine the initial and final prices. The price rose from $0.96 to $2.75. Use the formula for percentage increase: Percentage Increase = (New Price - Original Price) / Original Price \ imes 100%.
Plugging in the values gives us: (2.75 - 0.96) / 0.96 \ imes 100% = 1.79 / 0.96 \ imes 100% \\approx 186%.
The average wage increase is similarly calculated: (21.26 - 14.28) / 14.28 \ imes 100% \\\approx 49%.
A company has a selling price of $2,000 each for its printers. Each printer has a 2 year warranty that covers replacement of defective parts. It is estimated that 3% of all printers sold will be returned under the warranty at an average cost of $154 each. During November, the company sold 34,000 printers, and 440 printers were serviced under the warranty at a total cost of $59,000. The balance in the Estimated Warranty Liability account at November 1 was $31,000. What is the company's warranty expense for the month of November?
Answer:The company's warranty expense for the month of November is $157,080.
Explanation:
When the estimated amount is recognized-
Warranties expense A/c (Dr.) = $157,080
Estimated Warranty Liability (Cr.) = $157,080
When the repairs are actually paid, Estimated Warranty Liability will be Debited and Cash will be credited.so, The company's warranty expense for the month of November is $157,080.
i.e. (34,000 × 3% × $154 = $157,080)
At a volume of 11,000 units, Pwerson Company incurred $33,000 in factory overhead costs, including $11,000 in fixed costs. If volume increases to 13,000 units and both 11,000 units and 13,000 units are within the relevant range, then the company would expect to incur total factory overhead costs of:
Answer:
$37,000.00
Explanation:
Total fixed overhead costs = $11,000.00
Variable overhead cost at 11,000 units of production
=Total overheads - Fixed overheads
=$33,000 -$11,000 = $22,000
Variable cost per unit = [tex]\frac{22000}{11000}[/tex] = $2 per unit
When production increased to 13,000 units then overheads costs will be
Fixed Costs = $11,000 Remains constant up to certain activity level, here 13,000 units is acceptable level
Variable costs = 13,000 units X $2 per unit = $26,000
Total Overhead costs = Fixed + Variable
= $11,000 + $26,000 = $37,000
Total = $37,000
Green Woods sells specialty equipment for mountain climbers. Its sales for last year included $238,000 of tents and $411,000 of climbing gear. For next year, management has decided to sell specialty sleeping bags also. As a result of this change, sales projections for next year are $264,000 of tents, $426,000 of climbing gear, and $51,000 of sleeping bags. How much of next year's sales are derived from the side effects of adding the new product to its sales offerings?
Answer:
By $41,000 the next year's sales are derived from the side effects of adding the new product to its sales offerings.
Explanation:
For calculating the sale for next year, the tent expense and climbing gear is to be considered. With the help of these, the next year sale from the side effects can be derived. The sleeping bag cost is not to be considered so it would not be taken for calculation. The computation is shown below:
= (Tent Expense Next year + Climbing gear Next year ) - (Tent Expense Previous year + Climbing gear Previous year )
= ( $264,000 + $426,000) - ( $238,000 + $411,000)
= ($690,000 - $649,000)
= $41,000
Thus, by $41,000 the next year's sales are derived from the side effects of adding the new product to its sales offerings.
Raymond Financing leases airplanes to airline companies. Raymond has just signed a 20-year lease agreement that requires annual year-end lease payments of $900,000. What is the present value of the lease using a 10% interest rate?
Answer:
7662207.35
Explanation:
We are asked to find the present value of a 20 years annuity at rate equal 10%
[tex]present \: value = annuity \times \frac{1 - {(1 + rate)}^{ - time} }{rate} [/tex]
[tex]900000 \times \frac{1 - {1.1}^{ - 20} }{.1} = 7662207.35[/tex]
Remember:
on present time: power is negative and the 1 comes first
[tex]1 - {(1 + rate)}^{ - time} [/tex]
on future value: the power is positive and comes first then you subtract 1
[tex] {(1 + rate)}^{time} - 1[/tex]
Freberg Company, a division of Dudge Cars, produces automotive batteries. Freberg sells the batteries to its customers for $92 per unit. The variable cost per unit is $55, and fixed costs per unit are $16. Top management of Dudge Cars would like Freberg to transfer 30,000 batteries to another division within the company at a price of $61. Freberg has sufficient excess capacity to provide the 30,000 batteries to the other division. Compute the minimum transfer price that Freberg should accept.
The minimum transfer price that Freberg Company should accept for the transfer of batteries to another division within Dudge Cars is the variable cost per unit, which is $55.
Explanation:The minimum transfer price that Freberg should accept is the variable cost per unit because that is the cost that Freberg would incur to produce an extra unit for the other division. Fixed costs are not included in the transfer price calculation because they are not directly tied to the production of the specific 30,000 batteries. Therefore, the minimum transfer price would be the variable cost of $55 per unit.
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The answer is minimum transfer price that Freberg should accept is $55 per unit.
To compute the minimum transfer price that Freberg should accept, we need to consider the variable cost per unit and the fixed costs per unit.
Variable cost per unit = $55Fixed cost per unit = $16Total cost per unit = Variable cost + Fixed cost
= $55 + $16
= $71
Since Freberg has excess capacity and the variable cost per unit represents the incremental cost of producing additional units, the minimum transfer price should be equal to the variable cost per unit, which is $55.
Therefore, the minimum transfer price that Freberg should accept is $55 per unit.
Because of its importance in summarizing your strategy, the Introduction and Overview of your business plan should be
A. written before you begin your research. B. written last. C. lengthy and detailed. D. repeated in a cover letter .9
Answer:
Because of its importance in summarizing your strategy, the Introduction and Overview of your business plan should be written last-B.
Final answer:
The correct answer is B, as the Introduction and Overview of your business plan should ideally be written last to effectively summarize your strategy and research findings. It encapsulates the critical points of your business strategy in a concise manner and is not meant to be a detailed section or repeated in a cover letter.
Explanation:
The Introduction and Overview of your business plan should be written last. This is because it functions as a summary of your business strategy and plan, which means you need all the detailed information derived from your research to accurately encapsulate your business vision and approach. Managers and entrepreneurs commonly write the executive summary or introduction last, as it needs to be accurate, concise, and reflective of the entire document, whether it's a 100-page white paper or a 10-page summary analysis. Any key points and unique aspects of your business need to be clearly defined here, providing potential investors or stakeholders with a compelling high-level overview without unnecessary detail.
Furthermore, the Introduction is similar to an executive summary and typically presents the same type of information, though with slightly different focuses. It's often more detailed than a cover letter or abstract, both of which serve different purposes in the context of business communications. While a cover letter might introduce the business plan and its author, the introduction itself is designed to introduce the business concept.
Which one of the following financial statements is not required by GAAP regarding a voluntary health and welfare organization? Statement of Financial Position. Statement of Functional Expense. Statement of Activities and Changes in Net Assets. Statement of Cash Flows. Statement of Operations.
Answer:
Statement of Operations. ( last choice)
Statement of Operations is not required by GAAP regarding a voluntary health and welfare organization.
Interest versus dividend expense Michaels Corporation expects earnings before in- terest and taxes to be $50,000 for the current period. Assuming an ordinary tax rate of 35%, compute the firm’s earnings after taxes and earnings available for common stockholders (earnings after taxes and preferred stock dividends, if any) under the following conditions: a. The firm pays $12,000 in interest. b. The firm pays $12,000 in preferred stock dividends.
Answer:
a. In case of interest paid = $24,700.
b. In Case Preferred Dividend is Paid = $20,500
Explanation:
Earnings before Interest And Taxes (EBIT) = $50,000
a. In case of interest paid
EBIT = $50,000
Less: Interest = $12,000
Earnings Before Taxes = $50,000 - $12,000 = $38,000
Less: Tax @35% = $38,000 X 0.35 = $13,300
Earnings After Tax =$38,000 - $13,300 = $24,700.
This is the value available for common stock.
b. In Case Preferred Dividend is Paid
EBIT = $50,000
Less: Taxes @ 35 % = $50,000 X 0.35 = $17,500
Earnings After Tax = $50,000 - $17,500 = $32,500
Less: Preference Dividend = $12,000
Earnings available for equity or common stock = $32,500 - $12,000 = $20,500
The difference is of tax benefit on payment of interest as that is taxable and preference dividend is not taxable.
a. In case of interest paid = $24,700.
b. In Case Preferred Dividend is Paid = $20,500
Final answer:
The Michaels Corporation will have earnings after taxes of $24,700 and earnings available for common stockholders also of $24,700 when paying $12,000 in interest. If paying $12,000 in preferred stock dividends instead, the earnings after taxes would be $32,500, with $20,500 available for common stockholders.
Explanation:
The Michaels Corporation expects earnings before interest and taxes (EBIT) of $50,000. With a tax rate of 35%, we will calculate the firm's after-tax earnings and the earnings available to common stockholders under two scenarios: one involving interest payments, and the other involving preferred stock dividends.
Case a: Paying Interest
Calculate earnings after interest: EBIT - Interest = $50,000 - $12,000 = $38,000.Compute taxes: $38,000 * 35% = $13,300.Deduct taxes to find earnings after taxes (EAT): $38,000 - $13,300 = $24,700.Since there are no preferred dividends in this scenario, earnings available for common stockholders is also $24,700.Case b: Paying Dividends
Since preferred stock dividends are paid from after-tax earnings, we first calculate EAT: EBIT - Taxes. Taxes = $50,000 * 35% = $17,500.Earnings after taxes: $50,000 - $17,500 = $32,500.Subtract preferred stock dividends: $32,500 - $12,000 = $20,500, which is the earnings available for common stockholders.In both cases, the difference in earnings after taxes and earnings available for common stockholders reflects the financial decisions made by the firm, whether to service debt through interest payments or reward shareholders through dividends.
Christine is an artist who creates custom cookie jars. Her annual revenue from selling the cookie jars is $90,000. The annual explicit costs of the materials used to make the cookie jars are $54,000. Refer to Scenario 13-13. Christine used $5,000 from her personal savings account to buy pottery tools for her business. The savings account paid 1% annual interest. Christine could earn $6,000 per year as a tax preparer. What is the annual economic profit of her cookie jar business?
Answer: $29,950
Explanation: As we know that,
Economic profit = Total revenues - (explicit cost + implicit cost)
where,
Explicit costs are payments made to others for running operations of business.
Implicit cost or opportunity cost can be defined as the cost of loosing profits for choosing one alternative instead of other.
In the given case the interest of $50 on savings and $6000 salary is the implicit cost.
Economic profit = $90,000 - ($54,000 + $50 + $6,000)
= $29,950
Christine's economic profit, which accounts for both explicit and implicit costs, is $24,950 per year.
Explanation:Calculating the annual economic profit for Christine’s cookie jar business
To calculate Christine's economic profit, we need to consider both explicit and implicit costs. Explicit costs are the actual out-of-pocket costs, such as the cost of materials for the jars ($54,000), and the cost of pottery tools she bought for her business ($5,000). So the total explicit cost is $54,000 + $5,000 = $59,000.
Implicit costs are the opportunity costs that are foregone by not using the resources in their next best alternative. In this scenario, Christine's implicit costs include the foregone interest on her savings ($5,000 x 0.01 = $50) and the income she could have earned as a tax preparer ($6,000). So, the total implicit cost is $50 + $6,000 = $6,050.
The Economic profit is calculated by subtracting both explicit and implicit costs from the total revenue. Therefore, Christine's economic profit is $90,000 (revenue) - $59,000 (explicit cost) - $6,050 (implicit cost) = $24,950.
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If a project's discounted payback period is less than its useful life, _____.
a. the terminal value of its future cash inflows is less than the future value of its initial cost
b. the present value of its future cash inflows is greater that the future value of its initial cost
c. the present value of its future cash flows exceeds its initial cost
d. its future cash inflows are less than its initial cost
e. its cost-recovery time should exceed the maximum cost-recovery time established by the firm
Answer:
e. Its cost-recovery time should exceed the maximum cost-recovery time established by the firm
Explanation:
If a project's discounted payback period is less than its useful life, its cost-recovery time should exceed the maximum cost-recovery time established by the firm.
If you draw a card with a value of three or less from a standard deck of cards, I will pay you $146. If not, you pay me $24. (Aces are considered the highest card in the deck.)Step 1 of 2 :Find the expected value of the proposition. Round your answer to two decimal places. Losses must be expressed as negative values.
Answer: Expected value = $2.034
Explanation:
Total outcome = 52
Favorable Outcome = 8
Probability of drawing a card with a value of three or less = [tex]\frac{Favorable\ outcome}{Total\ outcome}[/tex]
= [tex]\frac{8}{52}[/tex]
= [tex]\frac{2}{13}[/tex]
Probability of drawing a card with a value of more than three = 1 - [tex]\frac{2}{13}[/tex]
= [tex]\frac{11}{13}[/tex]
Hence,
Expected value = [tex]146 \times \frac{2}{13} + (-24) \times \frac{11}{13}[/tex]
= 22.338 - 20.304
= $2.034
Which of the following is correct? a. U.S. exports as a percentage of GDP have about tripled since 1950. The U.S. currently has a trade deficit. b. U.S. exports as a percentage of GDP have about doubled since 1950. The U.S. currently has a trade deficit. c. U.S. exports as a percentage of GDP have about doubled since 1950. The U.S. currently has a trade surplus. d. U.S. exports as a percentage of GDP have about tripled since 1950. The U.S. currently has a trade surplus.
Answer: Option (b) is correct.
Explanation:
U.S. exports as a percentage of GDP have about doubled since 1950. The U.S. currently has a trade deficit.
The moving of a portion of the manufacturing facilities from US to other minimal effort Asian nations, because of which US has begun import from those nations rather producing at home.
The US individuals don't spare much, yet the economy needs capital for venture purposes because of which US has been net shipper of capital streams. This net import of capital streams makes it to pay for the imports of items and administrations from different nations.
The outstanding bonds of The Purple Fiddle are priced at $898 and mature in nine years. These bonds have a 6 percent coupon and pay interest annually. The firm's tax rate is 35 percent. What is the firm's after tax cost of debt?
Answer : 4.34 %
Explanation: The effective interest rate a company pays on its debt obligation is called cost of debt. The cost of debt is denoted by [k]x_{d}[/tex] . As there is a tax shield available on debt interest it is generally calculated by subtracting the marginal tax rate from before tax cost of debt .
.
[tex]k_{d}=\frac{c}{p}\times\left ( 1-t \right ) [/tex]
where,
c= coupon payment = 1000 * 6% = 60
p = current market price = $898
t= marginal tax rate
therefore :-
= [tex]\frac{60}{898}\times \left ( 1-0.35 \right )[/tex]
= 4.34 %
Wolf Inc. made a sale of $10,000 on August 1, accepting a 6-month 12% note. Wolf makes annual adjusting entries. On December 31st, Wolf will make an adjusting entry accruing how much interest?
Answer:
Interest receivable 500 debit
Interest revenue 500 credit
Explanation:
[tex]Principal\times rate \times time = Interest[/tex]
Important: rates and time must be express in the same unit.
In general rates are express as annual rate, so the time measurement should be in years to.
With that information, from August 1st to December 31th 5 months has past.
That represent 5/12 of a year so that is the amount to post in the formula.
10,000 * .12* 5/12 = 500 Interest accrued for the period
This interest are revenue So to recognzie the gain we credit it.
We also need to declare that we are going to receive interest in the future, so we use interest receivable account.
On March 1, 2015, Landon Company acquired real estate on which it planned to construct a small office building. The company paid $90,000 in cash. An old warehouse on the property was razed at a cost of $7,600; the salvaged materials were sold for $1,700. Additional expenditures before construction began included $1,100 attorney's fee for work concerning the land purchase, $4,000 real estate broker's fee, $7,800 architect's fee, and $14,000 to put in driveways and a parking lot. Determine the amount to be reported as the cost of the land.
Answer:
The amount to be reported as the cost of the land is $101,000
Explanation:
Given information
Paid cash - $90,000
Cost of property $7,600
Salvaged materials - $1,700
Attorney's fee for work concerning the land purchase - $1,100
Real estate broker's fee - $4,000
Architect's fee - $7,800
Put in driveways and a parking lot - $14,000
For computing the amount of the cost of the land, the Architect's fee and Put in driveways and a parking lot is not considered as it is not related to the land expenses. The computation is shown below
= Cash amount + Cost of property - Salvaged materials + Attorney's fee + Real estate broker's fee
= $90,000 + $7,600 - $1,700 + $1,100 + $4,000
= $101,000
Thus, the amount to be reported as the cost of the land is $101,000
Scott's Lawn Care has hired Henry Associates to find out whether home improvement warehouse stores communicate the benefits of various brands of lawn care products differently than smaller stores. Henry Associates needs to know what is communicated to consumers in the actual settings of the stores and wants to ensure that the message isn't filtered. Only behavioral data is required. Which type of data collection method is most appropriate in this situation? A. CommunicationB. ObservationC. SurveysD. ExperimentalE. Causal
Answer:
The correct answer is option B. observation.
Explanation:
Observation is a method of data collection which involves the use of all the senses to study people in their natural setting. The process involve gathering knowledge about a phenomena by making observations. The aim here is to focus on human behavior, human interaction with phenomenon and the use of phenomenon..
In the above example, actual setting and behavioral data is required. So, the most appropriate method for data collection here will be observation.
Pierre left a message on Shayna’s voicemail stating, “Hey Shayna. Regarding that painting we talked about. I changed my mind and I do want to sell it. So I’ll let you have it for a steal at $350. There are lots of people that want it so let me know if you don’t ASAP. I’ll assume you do want it if I don’t hear from you within an hour. Thanks!” This is not a valid contract and Shayna would not be required to purchase painting due to the lack of a(n):
The contract between Pierre and Shayna is not a valid contract due to the lack of acceptance from Shayna.
Further Explanation:
Contract:
A legally enforced agreement is considered a contract. An agreement is a promise between two parties to perform tasks for each other for some consideration. When an agreement becomes legally enforced, then it is considered as a contract. So the contract is a legally enforced promise between two parties for considerations. Both parties should get consideration and have a performance obligation.
Following factors are required for the contract:
Offer: A person should offer some consideration to another person for performing any activity or in the exchange of goods.
Acceptance of offer: The other person should accept the offer made by the first person.
Valuable consideration: There should be valuable consideration for both the parties.
Mutual obligation: Parties should promise to execute their obligated activities.
The performance capacity of the parties: Parties should be capable of performing the contract.
Legally enforcement: The contracts should be legally enforced.
These are the basic elements of a contract. If any contracts lack any of the given factors, then it will not be considered as a valid contract.
The contract between Pierre and Shayna:
In the current case, Pierre makes an offer to sell the painting to Shayna. Pierre leaves a message in the voicemail of Shayna, stating that if Shayna does not contact Pierre within one hour, then Pierre would consider that the Shayna wants to purchase the painting.
It is not a valid contract as it lacks the acceptance of the offer from Shayna.
Pierre enters the contract to sell the painting without considering the acceptance of the offer by Shayna. Pierre puts a condition that if she does not receive any revert from Shayna within one hour, then she would consider that Shayna has accepted the offer. For a valid contract, the promisee should accept the offer but the condition of acceptance (revert within one hour) does not state for the acceptance of Shayna. So, it will not be considered a valid contract.
Thus, the contract between Pierre and Shayna is not a valid contract due to non-acceptence.
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Answer details:
Grade: Senior School
Subject: Business Law
Chapter: Contract Act
Keywords: Pierre, message, Shayna, voicemail, painting, mind, sell, steal, people, ASAP, hear, within an hour, not a valid contract, purchase a painting, lack of a(n), contract act, agreement, law, business law, promise, valid contract.
national Mining Corp. purchased a mine, which holds an estimated 031,000 tons of iron ore, on January 1, 2018, for $ 526,000. The mine is expected to have zero residual value. The business extracted and sold 12,500 tons of ore in 2018 and 11,800 tons of ore in 2019. What is the depletion expense for 2018? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)
The depletion expense for National Mining Corp. for the year 2018, given the mine purchase cost and the amount of iron extracted and sold in that time, is calculated to be approximately $212,125.
Explanation:To find out the depletion expense for 2018, we first need to determine the depletion rate. The depletion rate is the cost of the mine divided by the estimated total extractable amount of iron ore. In this case, it will be $526,000 divided by 31,000 tons, which equals $16.97 per ton (rounded to two decimal places).
Then, we multiply the depletion rate by the amount of iron ore that was extracted and sold in 2018. So, the depletion expense would be $16.97 per ton times 12,500 tons, equaling $212,125 (rounding to the nearest dollar).
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________ is a method of inventory costing in which all variable manufacturing costs (direct and indirect) are included as inventoriable costs and all fixed manufacturing costs are excluded.A) Variable costing B) Mixed costing C) Absorption costing D) Standard costing
Answer:
A) variable costing
Explanation:
acording to a citated text the variable costing excluded all fixed manufacturing costs is the Variable costing
Suppose that you want to create a "college fund" for your newborn child and place $300 in a bank account at the end of each of the next 20 years. If that account earns an annual rate of return of 7%, how much will be in that account at the end of the twentieth year?
Answer:
Amount at the end of twentieth year is $12,300
Explanation:
Annuity means a set of fixed amount of payments either made to you or paid by you , at a fixed number of times over a course of defined period.
The case given in the question is of ordinary annuity , where fixed amount of payment are required at the end of each period.
FORMULA FOR FUTURE VALUE ORDINARY ANNUITY =
Where, C(cash flow) = $300,
I(interest rate) = 7%
N(number of period) = 20
FV ( Future value)
[tex]FUTURE\ VALUE(FV)\ OF\ ORDINARY\ ANNUITY= CASH\ FLOW(C)\times \left [ \frac{1+I^{N}-1}{I} \right ])[/tex]
[tex]FUTURE\ VALUE(FV)\ OF\ ORDINARY\ ANNUITY= \$300\times \left [ \frac{1+7\%^{20}-1}{7\%} \right ])[/tex]
[tex]FUTURE\ VALUE(FV)\ OF\ ORDINARY\ ANNUITY= \$300\times \left [ \frac{\ 1.07\ ^{20}-1}{7\%} \right ])[/tex]
[tex]FUTURE\ VALUE(FV)\ OF\ ORDINARY\ ANNUITY= \$300\times \left [ \frac{\ 3.87\ -1}{7\%} \right ])[/tex]
[tex]FUTURE\ VALUE(FV)\ OF\ ORDINARY\ ANNUITY= \$300\times \left [ \frac{\ 2.87}{7\%} \right ])[/tex]
= 861/7%
= $12,300
Final answer:
The student's question involves computing the future value of a series of payments (an annuity) made into a college fund that earns 7% interest annually for 20 years. The future value calculation is based on the formula FV = P * [((1 + r)^n - 1) / r], involving periodic payments, interest rate, and number of payments.
Explanation:
The student is asking about calculating the future value of a series of regular payments, also known as an annuity, in a college fund with a 7% annual rate of return. This requires the formula for the future value of an annuity:
FV = P * [((1 + r)^n - 1) / r]
where FV is the future value of the annuity, P is the periodic payment, r is the periodic interest rate, and n is the number of payments.
In this scenario, we're dealing with P = $300, r = 0.07 (7% annual interest), and n = 20 years.
To calculate the future value of the college fund, the following steps are taken:
Identify the periodic payment (P): $300.
Determine the periodic interest rate (r): 7% or 0.07 as a decimal.
Find the number of periods (n): 20 years.
Apply the annuity formula to compute the future value of the series of payments.
By plugging the values into the formula, we get the total amount available in the college fund after 20 years.
Suppose Ruston Company has the following results related to cash flows for 2018: Increase in Debt of $700,000 Dividends Paid of $500,000 Purchases of Property, Plant, & Equipment of $8,300,000 Other Adjustments from Financing Activities of $200,000 Other Adjustments from Investing Activities of $500,000 Assuming no other cash flow adjustments than those listed above, create a statement of cash flows for investing and financing activities with amounts in thousands. What is the Net Cash Flow from Investing and Financing Activities?
Answer:
Cash flow generated from financing activities 400,000
Cash flow used in Investing activities 7,800,000
Explanation:
700,000 debt receive
-500,000 dividends paid
200,000 other adjustment on Financing
400,000 TOTAL CASH GENERATED
-8,300,000 purchase of PPE
500,000 other adjustment on Inventing
-7,800,000 TOTAL CASH USED
Notice: There is no hint about the adjustment being related as negative, so it should be assuem are positive cashflow.
Momentum Rollerblades has three product lineslong dashD, E, and F. The following information is available: D E F Sales revenue $ 80 comma 000 $ 40 comma 000 $ 30 comma 000 Variable costs (20 comma 000) (15 comma 000) (12 comma 000) Contribution margin $ 60 comma 000 $ 25 comma 000 $18 comma 000 Fixed costs (15 comma 000) (10 comma 000) (23 comma 000) Operating income (loss) $ 45 comma 000 $ 15 comma 000 $(5 comma 000) The company is deciding whether to drop product line F because it has an operating loss. Assume that $ 21 comma 000 of total fixed costs could be eliminated by dropping F. What effect would this decision have on operating income
Final answer:
Dropping product line F, with an operating loss of $5,000, would actually increase Momentum Rollerblades' operating income by $16,000 because there would be $21,000 of fixed costs savings, which is more than the current contribution margin from product F.
Explanation:
When considering whether to drop product line F, which has an operating loss, we should examine the impact on the overall operating income for Momentum Rollerblades. Currently, product line F has a loss of $5,000. However, if $21,000 of its fixed costs can be eliminated by dropping the line, then the total operating income could potentially increase. Here is the calculation:
Operating loss of product line F: $(5,000)Fixed costs savings by dropping F: $ +21,000Net effect on operating income: $ +21,000 - $ 5,000 = $ +16,000By dropping product line F, Momentum Rollerblades would increase its operating income by $ +16,000 since the savings in fixed costs exceed the contribution margin that would be lost by eliminating the product.