The student should produce in batches of 1,000 units, the maximum inventory level is 1,000 units, there are 12.5 order cycles per year, and the total annual holding and setup costs are $4,375.
Explanation:To solve the student's question, we can use the Economic Order Quantity (EOQ) model, which is a method used in business to determine the ideal order quantity a company should purchase to minimize its inventory costs. It’s a formula that allows you to calculate the ideal quantity of inventory to order for a given product.
(a) The size of the batch can be determined using the EOQ formula: EOQ = sqrt((2DS)/H), where D is demand, S is setup cost, and H is holding cost. Thus: EOQ = sqrt((2*12500*150)/5) = 1,000 units.
(b) The maximum inventory level is simply the EOQ, so 1,000 units.
(c) The number of cycles per year is equal to the annual demand divided by the EOQ: 12500/1000 = 12.5 order cycles per year.
(d) The total annual holding and setup costs can be calculated as follows: Total cost = D* (S/EOQ) + (EOQ/2)*H = 12500*(150/1000) + (1000/2)*5 = 1875 + 2500 = $4,375.
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Final answer:
The optimal batch size for Montegut Manufacturing's economic production is approximately 866 units. The company's maximum inventory level and number of order cycles per year are 866 units and approximately 14.43, respectively. The total annual holding and setup costs amount to approximately $4,329.64.
Explanation:
The question involves calculating the economic order quantity (EOQ), maximum inventory level, number of order cycles per year, and total annual holding and setup costs for Montegut Manufacturing. To solve this, we will use the EOQ formula: EOQ = √((2DS)/H), where D is demand, S is setup cost, and H is holding cost.
(a) Using the provided data: D = 12,500 units/year, S = $150, and H = $5/unit/year, EOQ = √((2*12500*150)/5) = √(3750000/5) = √750000 ≈ 866 units.
(b) The maximum inventory level is the EOQ because that is the point right after production and before any demand has reduced the inventory, so it is 866 units.
(c) To find the number of order cycles per year, divide the total demand by EOQ: 12,500 units / 866 units/order ≈ 14.43 cycles/year.
(d) The total annual holding cost is (EOQ/2) * H, and the annual setup cost is (D/EOQ) * S. Therefore, total holding cost = (866/2) * 5 = $2,165, and total setup cost = (12500/866) * 150 ≈ $2,164.64. Adding them gives the total annual cost of $4,329.64 approximately.
Which of the following best describes the difference between a convertible bond and a warrant? Convertible bonds give the investor the option to exchange bonds for shares at a certain price, whereas warrants give the investor the option to buy shares at a certain price. Convertible bonds give the investor the option to buy shares at a certain price, whereas warrants give the investor the option to exchange bonds for shares at a certain price.
Answer: Statement A
Explanation: Convertible bonds is a type of bond security which gives its holder the right to convert each bond to a specified number of shares. These are hybrid securities having features of both equity and debt.
.
Warrants are securities that give their holder the right to purchase the common shares of the company at a specified price and before a certain time period.
.
Thus, from the above explanation we can conclude that statement A is correct.
The main difference between convertible bonds and warrants is that convertible bonds allow the investor to convert the bond into a set number of company shares, while warrants grant the right to purchase the shares at a specific price. Both provide a means to benefit from the company's growth through equity exposure, but with less risk compared to directly buying stocks.
Explanation:The difference between convertible bonds and warrants lies in the rights they confer to the investor. Convertible bonds allow the investor the option to exchange the bond for a predetermined number of shares of the issuing company's stock at a certain conversion price. Meanwhile, a warrant gives the investor the right to purchase shares of the company's stock at a specific price until the expiration date of the warrant. Both instruments are linked to the company's equity and provide a way for investors to potentially benefit from the company's growth without directly purchasing shares.
It's important to note that investing in corporate stocks carries more risk compared to bonds. While the market price of a stock can be volatile, a bond's return is contractually fixed unless the issuer defaults. Bonds, on the other hand, are subject to interest rate risk, which affects the market price of existing bonds if the general level of interest rates change.
Moreover, from a firm's point of view, issuing bonds is a form of borrowing directly from investors which can be cheaper than obtaining a bank loan. A bond is essentially an I.O.U., indicating that the firm owes a contractual amount of interest payments to bondholders and must repay the principal at maturity, regardless of the company's performance. Conversely, equity investors are entitled to a share of the corporation’s earnings, which are not guaranteed and are dependent on the company's success or failure.
The following is the adjusted trial balance of Wilson Trucking Company. Account Title Debit Credit Cash $ 8,000 Accounts receivable 17,500 Office supplies 3,000 Trucks 172,000 Accumulated depreciation — Trucks $ 36,000 Land 85,000 Accounts payable 12,000 Interest payable 4,000 Long-term notes payable 53,000 Common stock 30,000 Retained earnings 145,000 Dividends 20,000 Trucking fees earned 130,000 Depreciation expense — Trucks 23,500 Salaries expense 61,000 Office supplies expense 8,000 Repairs expense — Trucks 12,000 Totals $ 410,000 $ 410,000 The retained earnings account balance is $145,000 at December 31, 2012. (1) Prepare the income statement for the year ended December 31, 2013.
Answer:
The company earns a net profit of $25,500 for the year ended December 31, 2013
Explanation:
The income statement is that statement which records expenditure & income and gains. It is also known as profit or loss account.
The income statement either comes in net profit or net loss which reflects the profit or loss of the company for a particular year.
The profit is come when revenues is higher than expenses whereas losses come when revenue is less than expenses.
The income statement for the year ended December 31, 2013 is shown below:
= Trucking fee earned - Salaries expenses - Office supplies expenses - Repair expenses - depreciation expenses
= $130,000 - $61,000 - $8,000 - $12,000 - $23,500
= $25,500
Since, the positive amount is come.
So, the company earns a net profit of $25,500 for the year ended December 31, 2013.
To set up a T-account balance sheet for the bank, list the assets (deposits, reserves, and government bonds) and the liabilities (loans). Calculate the bank's net worth by subtracting the liabilities from the assets.
Explanation:To set up a T-account balance sheet for the bank, we list the assets and liabilities in separate columns. The assets include deposits ($400), reserves ($50), and government bonds ($70). The liabilities include loans ($500). The net worth of the bank, also known as equity, can be calculated by subtracting the liabilities from the assets. In this case, the net worth would be the sum of the assets ($400 + $50 + $70) minus the loans ($500), which equals $20.
Suppose Pete was looking for a job for so long that he decided to give up looking for a job altogether. Pete has decided to retire and live with his parents. In the official statistics, Pete would be counted as _______.
Answer: Marginally - attached worker
Explanation: While calculating the underemployment rate the government usually includes three groups these are : unemployed workers who are actively looking for work; involuntarily part-time workers and marginally attached workers who want and are available to work , but have given up actively looking.
Therefore Pete would lie under the category of marginally attached worker who want and are available to work , but have given up actively looking.
Two new wind-farm tower projects are proposed for a small company that installs them in south western Wisconsin. Project A will cost $250,000 to complete and is expected to have an annual net cash flow of $75,000. Project B will cost $150,000 to complete and should generate annual net cash flows of $52,000. As a small company, the owner and senior management team are very concerned about their cash flow. Use the payback period method and determine which project is better from a cash flow standpoint
Answer:
The Project B is better from a cash flow standpoint.
Explanation:
Payback period : The payback period is that period in which the investment amount is being repay to the company back in terms of profits or savings.
The formula to compute payback period is shown below
Payback period = Initial Investment ÷ Annual net cash inflows
For Project A = $250,000 ÷ $75,000
= 3.33 years
For Project B = $150,000 ÷ $52,000
= 2.88 years
By computing the payback period for both the projects, the Project B has less payback period than Project A.
Hence, the Project B is better from a cash flow standpoint.
To determine which wind-farm tower project is better from a cash flow standpoint, we need to calculate the payback period for each project. Project B has a shorter payback period and is therefore better from a cash flow standpoint.
Explanation:The payback period is a method used to evaluate investments based on when the initial investment is recovered through the project's net cash flows. To determine which wind-farm tower project is better from a cash flow standpoint, we need to calculate the payback period for each project.
For Project A, we divide the initial investment ($250,000) by the annual net cash flows ($75,000) to get a payback period of approximately 3.33 years.
For Project B, we divide the initial investment ($150,000) by the annual net cash flows ($52,000) to get a payback period of approximately 2.88 years.
Comparing the payback periods, we can conclude that Project B has a shorter payback period and is therefore better from a cash flow standpoint as it takes less time to recover the initial investment.
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Marginal cost–benefit analysis and the goal of the firm Ken Allen, capital budgeting analyst for Bally Gears, Inc., has been asked to evaluate a proposal. The manager of the automotive division believes that replacing the robotics used on the heavy truck gear line will produce total benefits of $560,000 (in today’s dollars) over the next 5 years. The existing robotics would produce benefits of $400,000 (also in today’s dollars) over that same time period. An initial cash investment of $220,000 would be required to install the new equipment. The manager estimates that the existing robotics can be sold for $70,000. Show how Ken will apply marginal cost–benefit analysis techniques to determine the following: a. The marginal (added) benefits of the proposed new robotics. b. The marginal (added) cost of the proposed new robotics. c. The net benefit of the proposed new robotics. d. What should Ken recommend that the company do? Why? e. What factors besides the costs and benefits should be considered before the final decision is made?
Answer:
a. The marginal (added) benefits of the proposed new robotics = $800,000
b. The marginal (added) cost of the proposed new robotics = $150,000
c. The net benefit of the proposed new robotics = $650,000
d. The company shall get the new robotics as there is net benefit of $650,000, and future benefits are more than current benefits.
e. Besides the costs and benefits the company shall consider the following factors also:
Time value of money,
Employees Training cost if required for new robotics.
Employees behavior towards this installation.
Environmental effects of such robotics, installed.
Explanation:
Provided details as follows:
Benefits every year with new robotics = $560,000
Benefits every year with old robotics = $400,000
Cost of new robotics = $220,000
Resale price of old robotics = $70,000
a. The marginal (added) benefits of the proposed new robotics
Marginal benefits are additional benefits
Benefits every year with new robotics = $560,000 per year
Less: Benefits every year with old robotics = $400,000 per year
Thus Marginal (added) Benefits = $160,000 for 5 years = $800,000
b. The marginal (added) cost of the proposed new robotics.
Marginal added cost will be additional cost
Cost of new robotics = $220,000
Less: Resale price of old robotics = $70,000
Marginal added cost = $150,000
c. The net benefit of the proposed new robotics
The net benefit of the proposed new robotics = Marginal (added) Benefits $800,000 - Marginal added cost $150,000 = $650,000
d. The company shall get the new robotics as there is net benefit of $650,000, and future benefits are more than current benefits.
e. Besides the costs and benefits the company shall consider the following factors also:
Time value of money,
Employees Training cost if required for new robotics.
Employees behavior towards this installation.
Environmental effects of such robotics, installed.
Final answer:
Ken Allen will perform a marginal cost-benefit analysis for replacing robotics at Bally Gears, Inc. The analysis reveals a marginal benefit of $160,000, marginal costs of $150,000, and a net benefit of $10,000, suggesting the investment is financially viable. Additional factors, such as technological obsolescence and operational impacts, should also be considered.
Explanation:
Ken Allen is tasked with performing a marginal cost-benefit analysis for Bally Gears, Inc., concerning the replacement of robotics on the heavy truck gear line. To assess this proposal effectively, Ken will calculate the marginal benefits, marginal costs, and the net benefit of the proposed new robotics and then make a recommendation based on these figures.
a. Marginal (added) benefits of the proposed new robotics
The marginal benefits are calculated by subtracting the total benefits of the existing robotics from the total benefits of the new robotics. Thus, $560,000 (new) - $400,000 (existing) = $160,000 as the marginal benefits.
b. Marginal (added) cost of the proposed new robotics
The marginal costs consider the initial cash investment required for the new equipment and the opportunity cost of selling the existing robotics. Therefore, $220,000 (new investment) - $70,000 (sale of existing) = $150,000 as the marginal costs.
c. Net benefit of the proposed new robotics
To find the net benefit, subtract the marginal costs from the marginal benefits: $160,000 - $150,000 = $10,000 as the net benefit.
d. Recommendation
Given that the marginal benefits exceed the marginal costs, resulting in a positive net benefit of $10,000, Ken should recommend proceeding with the replacement of the robotics. This investment is projected to improve the company's financial standing over the next five years.
e. Additional Factors to Consider
Beyond marginal costs and benefits, it's critical to consider factors like the potential for technological obsolescence, maintenance costs, operational disruptions during installation, and improvements in product quality or production efficiency that might influence the final decision.
The Supplies account had a balance at the beginning of year 3 of $8900 (before the reversing entry). Payments for purchases of supplies during year 3 amounted to $53300 and were recorded as expense. A physical count at the end of year 3 revealed supplies costing $14900 were on hand. Reversing entries are used by this company. The required adjusting entry at the end of year 3 will include a debit to:
Answer:
supplies expense 47,300 DEBIT
supplies 47,300 CREDIT
Explanation:
[tex]$$Beginning Inventory + Purchase = Ending Inventory + supplies Expense[/tex]
8,900 + 53,300 = 14,900 + supplies expense
8,900 + 53,300 - 14,900 = supplies expense
supplies expense = 47,300
Beginning and Purchase will be the supplies available during the period.
this supplies can be used or stored.
if the stored are 14,900 then the diference was used.
Final answer:
The required adjusting entry at the end of year 3 would include a debit to the Supplies Expense account for $47,300, which is the calculated value of supplies used during the year (beginning balance plus purchases minus the ending physical count).
Explanation:
The subject of this question is accounting, specifically related to the adjusting entries at year-end for the supplies account balance. When a physical count reveals that the supplies on hand at the end of the year cost $14,900, and the company had a beginning balance of supplies of $8,900, we need to account for the supplies used during the year. During year 3, payments for purchases of supplies amounted to $53,300 and were recorded as an expense. However, we need to adjust the expense to reflect the actual supplies used.
To do this, we would calculate the supplies used as follows:
Beginning balance of supplies: $8,900
Add: Purchases of supplies during the year: $53,300
Less: Ending balance of supplies: $14,900 (physical count)
Equals: Supplies expense for the year (supplies used): $47,300
The required adjusting entry at the end of year 3 would therefore include a debit to Supplies Expense for the value of supplies used ($47,300) and a credit to the Supplies account for the same amount, assuming the company had initially debited Supplies Expense when the supplies were purchased.
The reversing entry, typically done at the beginning of the new year, would reverse this process, making the books ready for the new year's transactions.
Most organizations with strong ethical climates usually focus on the core value of placing _____ interests first. customers' employees' stockholders' suppliers' distributors'
Final answer:
Organizations with a strong ethical climate prioritize customers' interests, leading to positive job attitudes and ethical behavior. These companies value fairness, supportiveness, and respect for individual rights, which promotes a culture where people are considered the greatest asset.
Explanation:
Most organizations with strong ethical climates usually focus on the core value of placing customers' interests first. This emphasis on customer-centric values aligns with fostering a set of shared values within the organization, ensuring that employees are encouraged and motivated to treat others the way they would like to be treated themselves. By prioritizing customers' needs and establishing an ethical foundation, companies can enhance job attitudes, behaviors, and overall ethics, leading to a work environment where people are happier, more committed, and demonstrate a stronger attachment to their organization. Moreover, a customer-focused approach contributes to long-term relationships based on ethics and trust, crucial for the sustained success of any business.
People-oriented cultures hold fairness, supportiveness, and respect for individual rights in high regard, and this is exemplified in the way they treat both their employees and customers. Companies that live by the principle that 'people are their greatest asset' create an atmosphere where employees do not feel compelled to choose between work and their personal lives, leading to healthier job attitudes and citizenship behaviors that benefit the organization as a whole. As Heineman (2007) asserts, when behaving ethically becomes part of the company's core values, it is reflected in the company's metrics and overall operations.
How will you save money by buying a franchise?
A. You're free to make your own decisions regarding finances and investments. B. Franchises require less investment than new businesses. C. You can get a volume discount on your products. D. Your employees will be paid by the corporation..10
Answer:
You can get a volume discount on your products.- C.
Answer:
C for pf students
Explanation:
Pf
Square Company purchases an equity investment in Tangle Company at a purchase price of $8 million, representing 40% of the book value of Tangle. During the current year, Tangle reports net income of $700,000 and pays cash dividends of $300,000. At the end of the year, the market value of Square's investment is $8.3 million. What amount of income does Square report relating to this investment in Tangle for the year?
Answer:
The $280,000 is the income which square report in Tangle for the year.
Explanation:
For computing the income relating to the investment in Tangle for the year, the net income and percentage is applied or we can say equity method is applied.
In mathematically,
Income = Net income × percentage
= $700,000 × 40%
=$280,000
All other cost like dividend, market value, purchase price is irrelevant while computing the investment income.
Hence, the $280,000 is the income which square report in Tangle for the year.
Pablo Management has ten part-time employees, each of whom earns $135 per day. They are paid on Fridays for work completed Monday through Friday of the same week. Near year-end, the ten employees worked Monday, December 31, and Wednesday through Friday, January 2, 3, and 4. New Year's Day. (January 1) was an unpaid holiday.
A) Prepare the adjusting entry that would be recorded on Monday, Dec 31.
B) Prepare the journal entry that would be made to record payment of the eployees' wages on Friday Jan 4.
Final answer:
The adjusting entry on December 31st for Pablo Management would be a debit to Wage Expense for $1,350 and a credit to Wages Payable for $1,350 to account for one day's wages. The journal entry on January 4th would include a debit to Wage Expense for $4,050 and Wages Payable for $1,350, with a credit to Cash for $5,400 to cover the wages for the four days worked, excluding the unpaid holiday.
Explanation:
To answer the student's question regarding the adjusting and journal entries to be made for Pablo Management's employee wages, we must consider the following:
Adjusting Entry on December 31
An adjusting entry is recorded to recognize expenses incurred but not yet paid. Since the employees worked on Monday, December 31st, but not on New Year's Day, we record the wages for one day.
The adjusting entry on December 31 would be:
This reflects the expense incurred for the day worked in December.
Journal Entry on January 4
The journal entry to record the payment of the employees' wages on Friday, January 4th, must account for the four days worked in the week after excluding the unpaid holiday on January 1st.
The total wages paid on January 4 account for both the payable recognized on December 31 and the wages earned from January 2 to January 4.
Montero Co. holds 100,000 common shares (40%) of ORD Corp. as a long-term investment. ORD Corp. paid a $100,000 dividend on November 1, 2017, and reported a net income of $700,000 for 2017. Prepare entry to record the receipt of the dividend and the December 31, 2017, year-end adjustment required for the investment account.
Answer:
Cash 40,000
ORD Corp 40,000
to record the cash payment of ORD Corp
ORD Corp 280,000
Gain on Investment/ ORD Corp 280,000
to record the proportional net income of ORD Corp
Explanation:
100,000 x 40% = 40,000
700,000 x 40% = 280,000
The cash is treated as moving money from one place to another
It is moving from the company you have a degree of control, from your company. It increase your cash and decrease the Investment
The net incoem will be the gain in the investment, adn will impact the invstment asset and the gain on investment
Stellan Manufacturing is considering the following two investment proposals: Proposal X Proposal Y Investment $ 720 comma 000 $ 512 comma 000 Useful life 5 years 4 years Estimated annual net cash inflows received at the end of each year $ 150 comma 000 $ 110 comma 000 Residual value $ 58 comma 000 $0 Depreciation method Straight Minusline Straight Minus Line Annual discount rate 10% 9% Present value of an ordinary annuity of $1: 8% 9% 10% 1 0.926 0.917 0.909 2 1.783 1.759 1.736 3 2.577 2.531 2.487 4 3.312 3.240 3.170 5 3.993 3.809 3.791 6 4.623 4.486 4.355 Compute the present value of the future cash inflows from Proposal Y.
Answer:
Present value of future cash inflows of Project Y = $110,000 X 3.240 = $356,400
Explanation:
Provided cost of Proposal Y = $512,000
Residual Value = $0
Depreciation will not be considered as we need to consider the present value of future cash flows, depreciation does not involve any cash flow.
Useful life = 4 years
Estimated cash inflow per year = $110,000
Discount rate = 9%
Present Value of an Ordinary Annuity = 3.240 @ 9% for 4 years
Thus present value of future cash inflows = $110,000 X 3.240 = $356,400
Note: Net Present Value = Present Value of Cash Inflows - Present Value of Cash Outflow = $356,400 - $512,000 = -$155,600
Final Answer
Present value of future cash inflows of Project Y = $110,000 X 3.240 = $356,400
The present value of future cash inflows for Proposal Y is computed by multiplying the annual net cash inflow ($110,000) by the present value of an ordinary annuity for 4 years at a 9% discount rate (3.240), which results in $356,400.
Explanation:Given the parameters for Proposal Y: the estimated annual net cash inflow is $110,000 for 4 years with an annual discount rate of 9%. To compute the present value (PV) of the future cash inflows from Proposal Y, we have to multiply the annual net cash inflow by the present value of an ordinary annuity for 4 years at 9%.
From the provided annuity table, the present value factor for 4 years at 9% discount rate is 3.240. Therefore, the present value of future cash inflows from Proposal Y is $110,000 * 3.240 = $356,400.
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Tyson is a 25% partner in the KT Partnership. On January 1, KT makes a proportionate distribution of $16,000 cash, inventory with a $16,000 fair value (inside basis $8,000), and land with a fair value of $8,000 (inside basis of $12,000) to Tyson. KT has no liabilities at the date of the distribution. Tyson's basis in his KT partnership interest is $24,000. What is Tyson's basis in the distributed inventory and land?
Answer:
Tyson's basis in the distributed inventory = $8,000 and land = $12,000
Explanation:
Total basis value of assets received by Tyson = Cash + Inventory + Land
= $16,000 + $8,000 + $12,000 = $36,000
For this Tyson's basis of interest in partnership = $24,000
Thus Tyson's Basis in Inventory = $8,000
Tyson's basis for Land = $12,000
Note: the basis is book value and not the market value even in case it is less than book value.
Tyson's basis in the distributed inventory = $8,000 and land = $12,000
Tyson's basis in the distributed inventory and land from KT Partnership is respectively $2,000 and $3,000, computed by taking his 25% ownership of the inside basis.
Explanation:In this business scenario involving partnership distribution, Tyson's basis in the distributed inventory and land can be calculated based on the inside basis. For the inventory, Tyson would take his ownership percentage (25%) of the inside basis which results in $2,000 ($8,000 * 0.25). Similarly, for the land, he would take 25% of the inside basis, amounting to $3,000 ($12,000 * 0.25). Therefore, Tyson's basis in the distributed inventory is $2,000 and $3,000 in the land.
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Childress Company produces three products, K1, S5, and G9. Each product uses the same type of direct material. K1 uses 4 pounds of the material, S5 uses 3 pounds of the material, and G9 uses 6 pounds of the material. Demand for all products is strong, but only 50,000 pounds of material are available. Information about the selling price per unit and variable cost per unit of each product follows. K1 S5 G91Selling price$160 $112 $210 Variable costs 96 85 144 1. Calculate the contribution margin per pound for each of the three products.
Answer:
The contribution per pound for K1, S5, and G9 is $64 per pound, $27 per pound, and $66 per pound respectively.
Explanation:
The contribution margin shows a difference between selling price per unit and the variable cost per unit.
In equation, it is displayed below:
Contribution per unit = Selling price per unit - Variable cost per unit
Since, in the question we have to calculate the contribution margin per pound for each of the three products. So by using the above equation, the calculation can be made which is shown below:
Contribution margin per pound for Product K1
= K1 Selling price per pound - K1 Variable cost per pound
= $160- $96
= $64 per pound
Contribution margin per pound for Product S5
= S5 Selling price per pound - S5 Variable cost per pound
= $112- $85
=$27 per pound
Contribution margin per pound for Product G9
= G9 Selling price per pound - G9 Variable cost per pound
= $210- $144
=$66 per pound
Other costs and production level is immaterial while calculating contribution margin for these three products.
Hence, the contribution per pound for K1, S5, and G9 is $64 per pound, $27 per pound, and $66 per pound respectively.
The U.S. Supreme Court ruled that cities could have school voucher programs that give money directly to parents, who could then choose among competing schools, public or private. The ideas was to create competition among schools. Like businesses, schools were expected to improve their services (e.g., how effectively they teach) to win students from competitors. The result would be improvement in all schools, private and public, to benefit many students. Do you believe that such economic principles apply in both private and public organizations?
Answer:
No, I don't beliave
Explanation:
The classic economic model is based on the price competition system. This is a beneficial system for consumers who will pay a lower price as a result of competition. This works well in some sectors, but not all, such as schools.
In my view, the school cannot be used as a commodity. Schools have different structures for the same purpose, so some differ in their educational approach. If a competitive system is in place, it will pressure schools to streamline education to lower costs and maximize school profit - just as companies do. It turns out that a school does not have the same purpose as companies. The company aims for profit while the school aims to educate.
Final answer:
School choice programs promote competition among schools, encouraging improvement in services to attract students, aligning with economic principles applicable to both private and public organizations.
Explanation:
School voucher programs were designed to create competition among schools, public and private, with the belief that schools would improve their services to attract students. This concept is rooted in economic principles applicable to both private and public organizations.
The idea behind vouchers is that increased competition among schools leads to improved educational outcomes. This competition encourages schools to strive for excellence in order to attract students, similar to how businesses operate in a competitive market.
Although the impact of school choice programs on academic achievement and public school funding is still being studied, the competitive nature of these programs mirrors the economic principles of competition and improvement seen in private and public organizations.
Skelton Brush Company sells standard hair brushes. The following information summarizes Skelton's operating activities for 2017. Selling and Administrative Expenses $44,000 Purchases 89,500 Net Sales Revenue 142,300 Merchandise Inventory, January 1, 2017 11,650 Merchandise Inventory, December 31, 2017 14,400 Calculate the operating income for 2017.
Answer:
The operating income for 2017 is $11,550
Explanation:
For computing the net income, first we have to calculate the cost of goods sold which is shown below:
Cost of goods sold = Opening merchandise inventory + Purchase - Closing inventory
= $11,650 + $89,500 - $14,400
= $86,750
Now, we know that if we deduct the cost of goods sold from sales, than gross profit is come.
So, Sales - Cost of goods sold = Gross profit
$142,300 - $86,750 = Gross Profit
Gross Profit = $55,550
Now deduct the Selling and Administrative Expenses from gross profit, so that net income can computed
So, Gross profit - Selling and Administrative Expenses = Net income
$55,550 - $44,000 = Net income
Net income = $11,550
Hence, the operating income for 2017 is $11,550
Macon Enterprises purchased land for $2,000,000 in 2001. In 2017, an independent appraiser assessed the value at $3,400,000. What amount should appear on the financial statements in 2017 with respect to the land and what accounting assumption or principle explains why?
Answer:
The financial statements balance for land will be 2,000,000
Under the Cost and conservatism principles.
Explanation:
Property, Plant and Equipment are valued at cost.
The financial statements balance for land will be 2,000,000
Under the GAAP this should be the principles to explaing this reasoning:
Conservatism principle: Revenues, Gains and assets only when you are sure that they will occur. The land is not for sale, and it is not expected to be sold so the potencial gain for selling or valuation should not be recorded.
Cost principle: The bookkepper should post at their original purchase costs.
A C corporation earns $ 7.90 per share before taxes and the company pays a dividend of $ 5.00 per share. The corporate tax rate is 39%, the personal tax rate on dividends is 15%, and the personal tax rate on non-dividend income is 36%. What is the after-tax amount an individual would receive from the dividend?
Answer:
$4.55
Explanation:
The corporate tax rate is applied to the net income, not the dividends
And the personal tax rate is applied to non-dividends income so it is not relevant here.
The stockholder would receive $5.00 before taxes. and it will pay 15% for this in taxes.
$5 x 15% = $0.45 dividend taxes
after tax $5 - $0.45 = $4.55
Workman Software has 8.8 percent coupon bonds on the market with 19 years to maturity. The bonds make semiannual payments and currently sell for 107.2 percent of par. a. What is the current yield on the bonds? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the YTM? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the effective annual yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
current yield 8.2089552%
YTM = 8.05%
effective annual yield = 4.92%
Explanation:
(A)
current yield = C/P
coupon payment / market price
8.8/107.2 = 0.082089552 = 8.2089552%
(B)
[tex]P = \frac{C}{2} \times\frac{1-(1+YTM/2)^{-2t} }{YTM/2} + \frac{CP}{(1+YTM/2)^{2t}}[/tex]
First par being the present value of the coupon payment and second the redeem of the face value at the end of the bond.
market price 107.2
face value 100
time = 19
rate 8.8%
C = annual coupon payment 100 x 8.8% = 8.8
You solve this using a financial calculation and get the semiannual rate
YTM/2 = 0.040268160
then multiply by 2 to get the annual YTM
0.040268160 x 2 =
YTM = 0.08053632 = 8.05%
(C)
Effective Annual Yield
[tex](1+HPR)^{365/time} -1 = EAY[/tex]
where:
Holding period return:
[tex]\frac{Net \: Return}{Investment} = HPR[/tex]
In this case:
coupon payment + redem - investment = net return
8.8 * 19 + 100 - 107.2 = 160
160/107.2 = 1.492537313
Then
[tex](1+HPR)^{365/time} -1 = EAY[/tex]
[tex](1+1.142537313)^{\frac{365}{19\times365}} -1 = EAY[/tex]
EAY = 0.049242509 = 4.9242509%
The properties of a bond, such as the coupon rate, maturity date and face value, are used to calculate the current yield, the yield to maturity (YTM), and the effective annual yield of a bond. The yield represents the return an investor will receive by holding the bond.
Explanation:A bond has several parts. It is an 'I owe you' note that an investor receives in exchange for capital or money which the borrower has to pay back at maturity. The specifics of a bond are usually given by the coupon rate or interest rate, its maturity date, and its face value, which is the amount the borrower agrees to pay the investor at maturity.
The current yield on a bond is calculated by the annual income (the interest payment) divided by the current market price. For the bond from Workman Software, the annual interest income is 8.8% of its face value and is currently sold for 107.2% of par. The yield to maturity or YTM represents the total returns expected on a bond if it is held until maturity. This considers both the coupon payments received semiannually and the face value received at the end of maturity. Finally, the effective annual yield takes into account the compounding of interest in a given year.
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Exercise 24-5 Bruno Corporation is involved in the business of injection molding of plastics. It is considering the purchase of a new computer-aided design and manufacturing machine for $436,900. The company believes that with this new machine it will improve productivity and increase quality, resulting in an increase in net annual cash flows of $103,273 for the next 6 years. Management requires a 10% rate of return on all new investments. (a) Calculate the internal rate of return on this new machine. Should the investment be accepted? (b) Calculate cash payback period, internal rate of return, and apply decision rules.
Answer:
The internal rate of return is 11%, the investment will be accepted.
Payback Period is 5
Explanation:
We use excel or a spreadsheet to calculate this ratio. See document attached.
We must use a cash flow to solve this problem.
At moment 0 we have the investment cost , in this case $436,900. From period 1 to period 6, we have incomes o benefits of $103,273. Then, we calculate the Net cash flow that is the difference between benefits and cost.
We use all the result (positive and negative) in Net cash flow to get the IRR.
The decision rules are 3:
Net Present Value (NPV)
Internal Rate of Return (IRR)
Payback Period
A game has an expected value to you of $600. It costs $600 to play, but if you win, you receive $100,000 (including your $600 bet) for a net gain of $99 comma 400. What is the probability of winning?
Given:
Expected value, E(X)= $600
Net Profit = $99400
Cost of playing once = $600
Solution:
Let the probability of winning be P(X) and that of losing [tex]P(\bar{X})[/tex]
[tex]P(\bar{X})[/tex] = 1 - P(X)
Now expected value, E(X) = [tex]Profit\times P(X) + loss\timesP(\bar{X}) [/tex]
E(X) = 99400P(X) + (-400)(1 - P(X))
600 = 99400P(X) -400 +400P(X)
P(X) = 0.01
Therefore, the probability of winning is P(X) = 0.01 or 1%
Final answer:
To find the probability of winning a game with an expected value of $600 and a cost to play of $600, we use the expected value formula. The gain from winning is $99,400, leading to a probability of winning of approximately 0.60%.
Explanation:
To calculate the probability of winning, we use the concept of expected value, which is the average amount one can expect to win per game over many plays. Here, the expected value of the game is given as $600, which is also the cost to play. To find the probability of winning, we assume that if you win, there is a net gain of $99,400 ($100,000 - $600 to play). Let's denote the probability of winning as P(win).
The expected value (EV) of the game can be calculated with the formula:
EV = (P(win) × Gain from Winning) - (P(loss) × Cost of Losing)
Since you either win or lose, P(loss) is 1 - P(win) and the Cost of Losing is $600. As the expected value is $600 and the cost of playing is $600:
$600 = (P(win) × $99,400) - ((1 - P(win)) × $600)
By solving for P(win), we find that:
P(win) = $600 / $99,400
P(win) ≈ 0.0060422956 ≈ 0.60%
Thus, the probability of winning the game is approximately 0.60%.
Suppose your company needs $13 million to build a new assembly line. Your target debt-equity ratio is .55. The flotation cost for new equity is 6 percent, but the flotation cost for debt is only 3 percent. Your boss has decided to fund the project by borrowing money because the flotation costs are lower and the needed funds are relatively small. a. What is your company’s weighted average flotation cost, assuming all equity is raised externally? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the true cost of building the new assembly line after taking flotation costs into account? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole dollar amount, e.g., 1,234,5667.)
Answer:True cost = [tex]\frac{cost of assembly}{1-weighted flotation cost }[/tex]
= [tex]\frac{13,000,000}{1- 0.049}[/tex]
= $ 13,669,821.2
Explanation:
Given :
Debt-Equity ratio = 0.55
Flotation cost for new equity = 6%
Flotation cost for debt = 3 %
∴ To compute the weighted flotation cost , we'll use the following formula:
Weighted Flotation cost =[tex]\left [ \frac{1}{1+Debt-Equity ratio}\times Flotation cost of equity \right ] + \left [ \frac{Debt-Equity ratio}{1+Debt-Equity ratio}\times Flotation cost of debt \right ][/tex]
= [tex]\left [ \frac{1}{1+0.55}\times 0.06 \right ] + \left [ \frac{0.55}{1+0.55}\times 0.03 \right ][/tex]
= 0.0387 + 0.0106
= 0.04934 or 4.93%
The true cost of building the new assembly line after taking flotation costs into account is evaluated using the following formula :
True cost = [tex]\frac{cost of assembly}{1-weighted flotation cost }[/tex]
= [tex]\frac{13,000,000}{1- 0.049}[/tex]
= $ 13,669,821.2
Martinez Corp. purchased a delivery van with a $57000 list price. The company was given a $5400 cash discount by the dealer, and paid $2600 sales tax. Annual insurance on the van is $1200. As a result of the purchase, by how much will Martinez Corp. increase its van account?
After purchasing a delivery van, Martinez Corp. will increase its van account by $55,400. This sum includes the net purchase cost, sales tax, and annual insurance.
Explanation:Martinez Corp. will increase its van account by the net purchase price of the van, additional costs related to the purchase such as sales tax, and any operational costs like insurance. First, we subtract the discount from the list price to get the net purchase price: $57,000 - $5,400 = $51,600. Next, we add the sales tax to the purchase price: $51,600 + $2,600 = $54,200. And finally, we add the annual insurance cost: $54,200 + $1,200 = $55,400.
Therefore, Martinez Corp. will increase its van account by $55,400.
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A quality control inspector has drawn a sample of 18 light bulbs from a recent production lot. If the number of defective bulbs is 2 or more, the lot fails inspection. Suppose 30% of the bulbs in the lot are defective. What is the probability that the lot will fail inspection? Round your answer to four decimal places.
Answer: 0.9858
Explanation:
Binomial distribution formula
[tex]P(X=x)=^nC_x\ p^x\ (1-p)^{n-x}[/tex], where P(x) is the probability of getting success in x trials , n is total number of trials and p is the probability of getting success in each trial.
Given : The probability that bulbs in the lot is defective = 0.30
Sample size = 18
If the number of defective bulbs is 2 or more, the lot fails inspection.
Then , the probability that the lot will fail inspection is given by :-
[tex]P(X\geq2)=1-(P(X<2))\\\\=1-(P(0)+P(1))\\\\=1-(^{18}C_0\ (0.3)^0 (1-0.3)^{18}+^{18}C_1\ (0.3)^1 (1-0.3)^{17})\\\\=1-((0.3)^0 (0.7)^{18}+18(0.3)^1 (0.7)^{17})\approx0.9858[/tex]
Hence, the probability that the lot will fail inspection =0.9858
Answer:
There is a 98.58% probability that the lot will fail inspection.
Explanation:
For each light bulb in the production lot, there are two possible outcomes. Either they are defective, or they are not. This means that we can solve this problem using concepts of the binomial probability distribution.
Binomial probability distribution
The binomial probability is the probability of exactly x successes on n repeated trials, and X can only have two outcomes.
[tex]P(X = x) = C_{n,x}.p^{x}.(1-p)^{n-x}[/tex]
In which [tex]C_{n,x}[/tex] is the number of different combinatios of x objects from a set of n elements, given by the following formula.
[tex]C_{n,x} = \frac{n!}{x!(n-x)!}[/tex]
And p is the probability of X happening.
In this problem we have that:
There are 18 light bulbs, so [tex]n = 18[/tex].
30% of the bulbs in the lot are defective. This means that [tex]p = 0.3[/tex].
If the number of defective bulbs is 2 or more, the lot fails inspection. Suppose 30% of the bulbs in the lot are defective. What is the probability that the lot will fail inspection?
This is [tex]P(X \geq 2)[/tex].
Either there are 2 or more defective bulbs, or there are less than two. The sum of the probabilities of these events is decimal 1. So:
[tex]P(X < 2) + P(X \geq 2) = 1[/tex]
[tex]P(X \geq 2) = 1 - P(X < 2)[/tex]
In which
[tex]P(X < 2) = P(X = 0) + P(X = 1)[/tex]
So
[tex]P(X = x) = C_{n,x}.p^{x}.(1-p)^{n-x}[/tex]
[tex]P(X = 0) = C_{18,0}.(0.30)^{0}.(0.70)^{18} = 0.0016[/tex]
[tex]P(X = 1) = C_{18,1}.(0.30)^{1}.(0.70)^{1t} = 0.0126[/tex]
[tex]P(X < 2) = P(X = 0) + P(X = 1) = 0.0016 + 0.0126 = 0.0142[/tex]
Finally
[tex]P(X \geq 2) = 1 - P(X < 2) = 1 - 0.0142 = 0.9858[/tex]
There is a 98.58% probability that the lot will fail inspection.
Beauty Island Corporation began operations on April 1 by issuing 55,000 shares of $5 par value common stock for cash at $13 per share. In addition, Beauty Island issued 1,000 shares of $1 par value preferred stock for $6 per share. Journalize the issuance of the common and preferred shares.
Answer:
The journal entry for issue of common shares is as follows :
1. Cash A/c $715 000 Dr ($55,000×$13)
To common stock $275,000 ($55,000×5)
To Additional paid up capital $4,40000 ($55000×8)
The journal entry for issue of Preference shares is as follows :
Cash A/c $6,000 Dr ($1,000×$6)
To Preferred Shares $1,000 ($1,000×1)
To Additional paid up capital $5,0000 ($1,000×5)
Explanation:
Mainly there are two types of shareholders in the company i.e. equity and preference shareholders. The equity shareholders is the shareholders who carry voting right in the company whereas preference shareholders are those who don't have voting right. The shares means a small part in the company which represent the ownership in the company according to their shares percentage. Whereas, stock represent the securities which are listed in stock exchange.
Following information is given in the question:
1. Issue of common shares = 55,000
2. Par value of common stock = $5
3. Cash for per share = $13
4. Issue of preference shares = 1,000
5. Par value of preference stock =$1
6. Per share for preference stock = $6
Journal Entry: The journal entry is the first stage to record the debit and credit side. Debit here means the expenditure incurred by the company whereas the Credit shows the income side which adds value to the company profit.
The journal entry for issue of common shares is as follows :
1. Cash A/c $715 000 Dr ($55,000×$13)
To common stock $275,000 ($55,000×5)
To Additional paid up capital $4,40000 ($55000×8)
The journal entry for issue of Preference shares is as follows :
Cash A/c $6,000 Dr ($1,000×$6)
To Preferred Shares $1,000 ($1,000×1)
To Additional paid up capital $5,0000 ($1,000×5)
Note: The remaining amount will be credited to additional paid up capital with remaining balance.
To journalize the issuance of common and preferred shares for Beauty Island Corporation, debit cash and credit common stock and additional paid-in capital for common stock issuance, and debit cash and credit preferred stock and additional paid-in capital for preferred stock issuance. The common stock issuance involves 55,000 shares of $5 par value stock sold at $13 per share, while the preferred stock issuance involves 1,000 shares of $1 par value stock sold at $6 per share.
Explanation:To journalize the issuance of the common and preferred shares for Beauty Island Corporation, we need to record the transaction in the company's accounting records. Let's start with the common stock issuance:
Debit Cash, $715,000 (55,000 shares x $13 per share)Credit Common Stock, $275,000 (55,000 shares x $5 par value)Credit Additional Paid-in Capital, $440,000 ($715,000 cash received - $275,000 par value)Now, let's move on to the preferred stock issuance:
Debit Cash, $6,000 (1,000 shares x $6 per share)Credit Preferred Stock, $1,000 (1,000 shares x $1 par value)Credit Additional Paid-in Capital, $5,000 ($6,000 cash received - $1,000 par value)Learn more about Journalizing a stock issuance here:https://brainly.com/question/32813276
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On December 31, 2018, Spearmint, Inc., issued $450,000 of 9 percent, 3-year bonds at a premium of $11,795. The bonds pay interest semiannually. Spearmint uses the straight-line bond amortization method. The entry to record each interest payment includes a debit to Bond Interest Expense for $18,284, a debit to Premium on Bonds Payable for $1,966, and a credit to Cash for $20,250. At June 30, 2019, the carrying value of the bonds will equal _____.
Answer:
a debit to Premium on Bonds Payable for $1,966, and a credit to Cash for $20,250.
Explanation:
450,000 bonds face vbalue
11,795 premium
450,000 x 0.09/2 = 20,250 cash procceds
11,795/ 6 = 1,965.83333 = 1,966 premium amortization
Given the following information about Elkridge Sporting Goods, Inc., construct a balance sheet for June 30, 2013. On that date the firm had cash and marketable securities of $25,135, accounts receivable of $43,758, inventory of $172,500, net fixed assets of $322,300, and other assets of $13,125. It had accounts payables of $67,855, notes payables of $36,454, long-term debt of $224,300, and common stock of $150,000. How much retained earnings did the firm have?
Answer:
Retained Earnings = 109,909
Explanation:
[tex]\left[\begin{array}{cccc}cash&25,135&AP&67,855\\AR&43,758&NP&36,454\\inventory&172,500&Long-term&222,300\\fixed \:assets&332,300&Common\: Stock&150,000\\other \: assets&13,125&RE&110,209\\Total Assets&586,818&Total L+E&586,818\\\end{array}\right][/tex]
First
We add all the assets together. 586,818
Then
we add the lliabilities and common stock. 476,909
Finally
We use the accounting equation to solve for RE
Assets = Liab + Equity
586,818 = sum of liab and equity accounts
we know that all the accounts, except RE add to 476,909
586,818 = 476,909 + RE
586,818 - 476,909 = RE
RE = 109,909
Abby purchased 100 shares of her dad’s favorite stock for $25.80 per share exactly 1 year ago, commission free. She sold it today for a total amount of $2865. She plans to invest the entire amount in a different corporation’s stock today, but must now pay a $50 commission fee. If she plans to sell this new stock exactly 1 year from now and realize the same return as she has just made, what must be the total amount she receives next year? Include the commission fee as a part of the purchase price, but neglect any tax effects.
Abby made a return of $285 on the first stock and then reinvested $2815 after taking a commission fee into account. To realize the same return, she needs to receive $3100 next year.
Explanation:Let's start by calculating the return Abby made on the first stock. She bought the stock for $25.80 per share, buying a total of 100 shares which leads to an investment of $25.80 * 100 = $2580. She then sold the stocks for a total of $2865, resulting in a return of $2865 - $2580 = $285.
Next, Abby plans to reinvest the total amount but now there is a $50 commission fee. So, the amount she actually invests is $2865 - $50 = $2815. To realize the same return as her first investment, she should add the return of $285 to her invested amount so the total amount she needs to receive next year would be $2815 + $285 = $3100.
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The business firm of Tinker, Evers and Chance had a level of inventory of $60 million on January 1, 1908, and ended up the year with an inventory of $70 million on December 31, 1908. The company's expenditures on new plant and equipment for the year was $120 million, while its depreciation on the plant and equipment was $90 million.How much was inventory investment for the year
Answer:
Tinker, Evers and Chance inventory investment 10 millions
Explanation:
Inventory investment:
Will be the diference in amount betwene the ending and beginning invnetory. It assumes that a company will use the revenue from sale to at least maintan ther inventory.
When the company invest on inventory, it meas it increase their stock of goods.
A company will disinvest if the ending is lower than beginning, because the sales proceeds were not used to purchase inventory.
Ending inventory - beginning inventory = inventory investment
70 - 60 = 10
For the employees who left the company before 3 years, what is an appropriate test of hypothesis to determine if the mean tenure of such employees equals 18 months in the population? One sample t test Paired samples t test Independent samples t test None of the above
Answer:
Here one sample t test would be the appropriate test of hypothesis to determine if the mean tenure of employees equals 18 months in the population.
Explanation:
Here we will use one sample t test because in this situation we are comparing a single sample mean to a determined constant and through this we are trying to find out whether there is any statistical difference between sample mean and a know population mean.
Final answer:
The appropriate test to determine if the mean tenure of employees who left the company before 3 years equals 18 months is the one sample t-test. This test compares the sample mean to a known value when the population standard deviation is unknown, and it is suitable for small samples or normally distributed populations.
Explanation:
To determine if the mean tenure of employees who left the company before 3 years equals 18 months, the appropriate test of hypothesis is the one sample t-test. This is because we are comparing the mean tenure of a single sample of employees to a known value (18 months) without comparing it to another sample. The one-sample t-test is especially useful when the population standard deviation is unknown the sample size is relatively small or the population is assumed to be normally distributed.
In conducting the one sample t-test, the null hypothesis (H0) posits that the mean tenure (µ) of employees equals 18 months, whereas the alternative hypothesis (Ha) suggests that the mean tenure is different from 18 months. This constitutes a two-tailed test because the alternative hypothesis does not specify whether the mean tenure is less than or greater than 18 months; it only states that it is not equal to 18 months.