Answer:
$100,000 sales revenue and $5,833 interest revenue
Explanation:
The computation is shown below:
For interest revenue
= (Face value - fair value of the equipment) × number of months ÷ total number of months in a year
= ($110,000 - $100,000) × 7 months ÷ 12 months
= $5,833
The seven months is calculated from June 1 to December 31
And, the fair value of the equipment on the sale date i.e $100,000 is also recognized
Top-Ten Inc. is considering replacing its existing machine that is used to produce musical CDs. This existing machine was purchase 3 years ago at a base price of $60,000. Installation costs at the time for the machine were $1,000. The existing machine is considered a 3-year class for MACRS. The existing machine can be sold today for $40,000 and for $10,000 in 3 years. The new machine has a purchase price of $80,000 and is also considered a 3-year class for MACRS. Installation costs for the new machine are $7,000. The estimated salvage value of the new machine is $20,000. This new machine is more efficient than the existing one and thus savings before taxes using the new machine are $8,000 a year. The company's marginal tax rate is 30% and the cost of capital is 12%. For this project, what is the incremental cash flow in year 1?
Answer: $12,943.10
Explanation:
To answer let us begin with knowing the MACRS percentages.
Both machines are considered a 3 year class for MACRS.
3 Year MACRS percentages are as follows,
Year 1= 33.33%
Year 2=44.45%
Year 3=14.81%
Year 4=7.41%
To calculate the Incremental cash flow we would need to subtract the tax on the Pre-tax savings as well as the depreciation tax shield.
DEPRECIATION TAX SHIELD.
Depreciation on New Machine is,
= First year MACRS * purchase price.
= 33.33% * 87,000 ( include installation price)
= $28,997.10
Subtract depreciation on original machine which is now in FOURTH year so we use the 4 year depreciation rate,
= 61,000 * 7.41%
= $4,520.10
Subtracting them would give,
= 28,997.10 - 4,520.10
= $24,477
This is the Additional depreciation.
We need to calculate the tax shield on it.
= 24,477 * 30%
= $7,341.10 is the tax shield.
Now to calculate the Incremental Cash flow.
= Pre-tax Savings - (tax on Pre-tax Savings) + Depreciation tax shield
= 8,000 - (8,000 * 30%) + 7,341.10
= $12,943.10
$12,943.10 is the Incremental Cash flow in year 1.
A marketing manager had a goal to improve market share for his paper plates by 2 percent in the coming year, and he felt he’d need to run television ads for two months as well as create a social media campaign in order to accomplish this. He priced the advertising he planned to use and set the budget accordingly, using which promotional budgeting technique?
Answer:
OBJECTIVE AND TASK BUDGETING.
Explanation:
Objective and task budgeting is an effective budgeting strategy which considers the firm’s overall promotional objectives. The budgeting is then done according to the requirements for meeting these goals.
By running television ads and a social media campaign, the marketing manager has created a means to meet his objective or goal which is to improve market share for his paper plates by 2 percent in the coming year. He then proceeds to price how much the advertising would cost him and then sets the budget. This budgeting is done by OBJECTIVE AND TASK BUDGETING. This allows the marketing manager to allocate a certain amount of money to its marketing budget based on his objectives, rather than choosing an arbitrary amount.
The operations of Bridgeton Corporation are divided into the Adams Division and the Carter Division. Projections for the next year are as follows: Adams Division Carter Division Total Sales$575,000 $342,000 $917,000 Variable costs 199,000 157,000 356,000 Contribution margin$376,000 $185,000 $561,000 Direct fixed costs 171,000 143,000 314,000 Segment margin$205,000 $42,000 $247,000 Allocated common costs 82,000 66,000 148,000 Operating income (loss)$123,000 $(24,000) $99,000 Operating income for Bridgeton Corporation as a whole if the Carter Division were dropped would be:
Answer:
$57,000
Explanation:
The computation of the operating income for Bridgeton Corporation dropped by
= Sales of Adams division - variable cost of Adams division - direct fixed cost of Adams division - allocated common cost of Adams division - allocated common cost of Carter Division
= $575,000 - $199,000 - $171,000 - $82,000 - $66,000
= $57,000
Since we have to determine the reduced operating income so we take the total of allocated common stock and rest of the items are taken from Adams division
the rapidly evolving world of HR will increasingly require HR professionals to ________. focus exclusively on learning new trends in the HR profession thoroughly understand all aspects of what the companies they work for do integrate their operations with the finance department operations focus their attention on compliance with government regulation
Answer:
The correct answer is letter "B": thoroughly understand all aspects of what the companies they work for do.
Explanation:
Human Resources (HR) representatives usually have an overall scope of what departments constitute a company and what are the duties of each employee in each of those units. However, they are not involved in the activities of each employee or have a direct influence on the performance of workers meaning they do not follow a personalized approach to keeping employees' improvement.
That situation requires change. Nowadays, companies place more attention to the specialization of employees to take advantage of their skills as much as possible. Therefore, HR representatives will have to be more involved in every aspect of what the firms do to have more detailed information about the operations of the business and identify improvement areas if any.
It costs Glenwood, Inc. $82 per unit to manufacture 1,000 units per month of a product that it can sell for $122 each. Alternatively, Glenwood could process the units further into a more complex product, which would cost an additional $36 per unit. Glenwood could sell the more complex product for $162 each. How would processing the product further affect Glenwood's profit?
Explanation:
Total number of units to be manufactured = 1000
(i) The cost price of 1 unit = $ 82
The cost price of 1000 units = 82 * 1000 = $ 82000
Selling price of 1 unit = $ 122
The selling price of 1000 units = 122 * 1000 = $ 122000
Profit earned = 122000 - 82000 = $ 40000
(ii)To produce a complex product,
The cost price of 1 unit = $ 82 + $ 36 = $ 118
The cost price of 1000 units = 118 * 1000 = $ 118000
Selling price of 1 unit = $ 162
The selling price of 1000 units = 162 * 1000 = $ 162000
Profiy earned = 162000 - 118000 = $ 44000
Therefore, the profit would increase by $ 4000 if complex product was produced.
Noric Cruises Inc. began the month of October with the following balances: Common Stock, $150,000; Additional Paid-In Capital, $3,225,000; and Retained Earnings, $12,400,000. During June, Noric issued for cash 50,000 shares of common stock (with a stated value of $1) at $16 per share. Noric reported the following results for the month ended October 31: Net income $2,350,000 Cash dividends declared 475,000 Prepare a statement of stockholders’ equity for the month ended October 31. If there is a net loss or there has been a decrease in stockholders' equity, enter that amount as a negative number using a minus sign. If an amount box does not require an entry, leave it blank.
Answer:
The statement of stockholders’ equity for the month ended October 31 is $18,450,000.
Explanation:
Noric Cruises Inc.
Statement of stockholders’ equity for the month ended October 31
Common stock Paid-In Capital Retained Earnings
Opening balance $150,000 $3,225,000 $12,400,000
Addition 800,000 - -
Net income - - $2,350,000
Cash dividends - - (475,000)
Balance at Oct 31 $950,000 $3,225,000 $14,275,000
Noric Cruises Inc.
Statement of Stockholders' Equity
For the Month Ended October 31
Common
Stock Additional
Paid-In
Capital
Retained
Earnings
Total
Balances, October 1
$fill in the blank 2
150,000
$fill in the blank 3
3,225,000
$fill in the blank 4
12,400,000
$fill in the blank 5
15,775,000
Issued Common Stock
fill in the blank 7
50,000
fill in the blank 8
750,000
fill in the blank 9
0
fill in the blank 10
800,000
Net Income
fill in the blank 12
0
fill in the blank 13
0
fill in the blank 14
2,350,000
fill in the blank 15
2,350,000
Dividends
fill in the blank 17
fill in the blank 18
fill in the blank 19
fill in the blank 20
Balances, October 31
$fill in the blank 22
200,000
$fill in the blank 23
3,975,000
$fill in the blank 24
14,275,000
$fill in the blank 25
18,450,000
True or False: In some cases, individuals who start a business have special voting rights that help them exercise more control over the firm. They own a special class of stock called founders’ shares. True False
Answer:
The correct answer is true.
Explanation:
Founders' share is the stock issued to the founders of the company. These stocks are different from the usual common stocks in the sense that the founder's shares are only at par. It also comes with a vesting schedule which gives a firm the right to buy back unvested shares. Founders shares does not receive any returns till a dividend is payable to the stockholders.
QUESTION 10 Cyclical unemployment is caused by: a. cyclical changes in the job skills among workers. b. shifts in the job skills required in the economy. c. declines in real GDP. d. seasonal layoffs.
Answer:
d. seasonal layoffs
Explanation:
When a business cycle changes, certain employees relevant in previous cycle may not be relevant in the next cycle, hence, leading to cyclical unemployment. This happens mostly in businesses that are highly seasonal.
Final answer:
Cyclical unemployment occurs due to insufficient aggregate demand in the economy, which happens during economic downturns or recessions. This leads to a decline in production and fewer workers being needed, increasing unemployment.
Explanation:
Cyclical unemployment occurs when there is insufficient aggregate demand in the economy to provide jobs for everyone willing to work. This type of unemployment is closely linked to the economic business cycles. During periods of recession, aggregate demand decreases, which leads to reduced production, and consequently, fewer workers are required. This results in a rise in cyclical unemployment where the number of unemployed individuals exceeds the number of job vacancies available.
Cyclical unemployment is different from other types such as structural or frictional unemployment. Structural unemployment is due to a mismatch between the workers' skills and the skills needed for available jobs, whereas frictional unemployment involves workers transitioning between jobs or entering the workforce.
Answering the student's question, cyclical unemployment is caused by: c. declines in real GDP, given that during such declines, demand for goods and services falls, leading to reduced production needs and a decrease in labor demand.
Below are transactions related to Impala Company.
(a)
The City of Pebble Beach gives the company 5 acres of land as a plant site. The fair value of this land is determined to be $82,400.
(b)
14,000 shares of common stock with a par value of $54 per share are issued in exchange for land and buildings. The property has been appraised at a fair value of $824,000, of which $182,900 has been allocated to land and $641,100 to buildings. The stock of Impala Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $70 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $62 per share.
(c)
No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed.
Materials used
$12,820
Factory supplies used
980
Direct labor incurred
16,230
Additional overhead (over regular) caused by construction of
machinery, excluding factory supplies used
2,720
Fixed overhead rate applied to regular manufacturing operations
60% of direct labor cost
Cost of similar machinery if it had been purchased from
outside suppliers
44,960
Prepare journal entries on the books of Impala Company to record these transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer:
(a)
Dr Land 82,400
Cr Grant Revenue 82,400
(b)
Dr Buildings 641,100
Dr Land 182,900
Cr Share Capital—Ordinary 756,000
Cr Share Premium—Ordinary 68,000
(c)
Dr Machinery 42,488
Cr Direct Labor 16,230
Cr Factory Overhead 13,438
Cr Materials 12,820
Explanation:
City of Pebble Beach Journal entries
(a)
Dr Land 82,400
Cr Grant Revenue 82,400
(b)
Dr Buildings 641,100
Dr Land 182,900
Cr Share Capital—Ordinary 756,000
($54×$14,000)
Cr Share Premium—Ordinary 68,000
(c)
Dr Machinery 42,488
Cr Direct Labor 16,230
Cr Factory Overhead 13,438
Cr Materials 12,820
Fixed overhead applied (60% × $16,230) $9,738
Additional overhead 2,720
Factory supplies used 980
$13,438
Entry, Exit, and Long Run Profitability — End of Chapter Problem A year ago, you graduated from college and decided to open your own computer software company. Over the past year, your firm generated $500,000 in revenue. You hired two software engineers and paid each of them $150,000 over the past year. You also purchased computer equipment that cost a total of $30,000. To save money, you decided to use the basement of your house for the business. Previously, you had rented this space to a tenant for $6,000 per year. Instead of opening your own business, you could have gone to work for Microsoft and earned $200,000 over the past year. a. What were your accounting profits of your firm over the past year? 170000 b. What were the economic profits of your firm over the past year? $ 506000 should not have c. Given this information, you launched your own business.
Answer:
$-36,000
Explanation:
Accounting profit = revenue - salary paid - equipment purchased
= 500,000 - (2 x 150,000) - 30,000
= 470,000 - 300,000
= 170,000
(a)
Computing for Economic profit = Accounting profit - Rent foregone - Salary given up
= 170,000 - 6,000 - 200,000
= - 36,000
(c) Since economic profit < 0, you should not have opened the business. You invited losses instead of gains, you should bit have started this at all
The firm's accounting profit is calculated as total revenues minus explicit costs resulting in $50,000. The software company's accounting profit is $170,000, but after considering implicit costs, the economic profit is -$36,000, indicating that the business is not economically profitable.
Explanation:Understanding Accounting and Economic ProfitsTo answer the question about the firm's accounting profit, we need to calculate the difference between total revenues and explicit costs. In the given example, the firm had sales revenue of $1 million and expenses including $600,000 on labor, $150,000 on capital, and $200,000 on materials. Using the formula for accounting profit (total revenues minus explicit costs), the calculation would be $1,000,000 - ($600,000 + $150,000 + $200,000), resulting in $50,000 in accounting profit.
Regarding the scenario provided earlier in the question, your software company's accounting profit would be calculated as revenue ($500,000) minus explicit costs (wages of $300,000 and equipment cost of $30,000), which equals $170,000. However, to accurately measure the economic profit, we must also consider implicit costs such as the foregone rent of $6,000 and the alternative salary at Microsoft of $200,000. Subtracting these implicit costs from the accounting profit, the economic profit is actually -$36,000, suggesting that your business is not economically profitable.
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McDonnell-Myer Corporation reported net income of $3,410 million. The company had 594 million common shares outstanding at January 1 and sold 36 million shares on February 28. As part of an annual share repurchase plan, 6 million shares were retired on April 30 for $44 per share. Calculate McDonnell-Myer's earnings per share for the year. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
To calculate the earnings per share for McDonnell-Myer Corporation, we need to find the weighted average number of shares outstanding and then divide the net income by this number. With the given share transactions throughout the year, the EPS comes out to $5.46.
To calculate earnings per share (EPS) for McDonnell-Myer Corporation, we must consider the weighted average of shares outstanding throughout the year. Here are the steps to calculate EPS:
Determine total shares outstanding at the beginning of the year: 594 million.Account for shares sold: An additional 36 million shares from February 28, or 11 months of the year.Subtract shares repurchased: 6 million shares were retired on April 30, so they were outstanding for 4 months of the year.Calculate the weighted average number of shares: (594 million * 12/12) + (36 million * 11/12) - (6 million * 4/12).Divide the net income by the weighted average number of shares to find the EPS.Here is the calculation:
594 million + 33 million (36 × 11/12) - 2 million (6 × 4/12) = 625 million weighted average shares.Net income / Weighted average number of shares = $3,410 million / 625 million.EPS = $5.46 per share (rounded to two decimal places).Therefore, the EPS for McDonnell-Myer is $5.46.
Vegas Company has the following unit costs: Variable manufacturing overhead $ 40 Direct materials 35 Direct labor 34 Fixed manufacturing overhead 27 Variable marketing and administrative 22 Vegas produced and sold 13,000 units. If the product sells for $190, what is the operating profit under full absorption costing?
Answer:
$702,000
Explanation:
The computation of operating profit is shown below:-
Direct material = $35
Direct labor = $34
Variable manufacturing Overheads = $40
Fixed manufacturing overheads = $27
Product cost in units = Direct material + Direct labor + Variable manufacturing Overheads + Fixed manufacturing overheads
= $35 + $34 + $40 + $27
= $136
Total expenses = 13,000 × $136
= $1,768,000
Sales revenue = 13,000 × $190
= $2,470,000
So total operating profit = Total expenses - Sales revenue
= $1,768,000 - $2,470,000
= $702,000
Therefore, in this method we ignore the variable marketing and administrative cost in the question for determining the operating profit.
The operating profit under full absorption costing is $161.54.
Explanation:To calculate the operating profit under full absorption costing, we need to consider the total manufacturing costs and the total marketing and administrative costs. The total manufacturing costs per unit can be calculated by adding the variable manufacturing overhead, direct materials, direct labor, and fixed manufacturing overhead. The total manufacturing costs per unit are $((40 + 35 + 34 + 27) / 13000) = $6.46.
The total marketing and administrative costs per unit are given as $22. To calculate the operating profit, we subtract the total costs per unit from the selling price per unit:
Operating Profit = Selling Price per Unit - (Total Manufacturing Costs per Unit + Total Marketing and Administrative Costs per Unit)
Operating Profit = $190 - ($6.46 + $22) = $190 - $28.46 = $161.54.
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In a Fox News Poll conducted in October 2011, 904 registered voters nationwide answered the following question: "Do you think illegal immigrants who have lived in the United States since they were children should be eligible for legal citizenship, or not?" 63% answered "should be" eligible for legal citizenship with a margin of error of 3% at a 95% level of confidence.
Which of the following statements is correct?
a) We are 95% confident that 63% of all registered voters nationwide will answer "should be."
b) We are 95% confident that between 60% and 66% of all registered voters nationwide will answer "should be."
c) We are 95% confident that between 63% and 66% of all registered voters nationwide will answer "should be."
d) 95% of the 904 registered voters in the sample answered "should be."
Answer:
The correct answer is Option B .
Explanation:
As per the data given in the question,
Eligible for legal citizenship = 63%
Error = 3%
Level of confidence = 95%
Here, the CI is 63% ± 3% , which means 60% to 66% and this indicates that with 95% confidence, the true proportion lies between this interval
This is shown by option B
Hence, option B is correct answer
The correct interpretation of the poll results, with a 63% response rate and a 3% margin of error at a 95% confidence level, is that between 60% and 66% of all registered voters nationwide think illegal immigrants who have lived in the U.S. since they were children should be eligible for legal citizenship.
The question asks to determine which statement accurately interprets the results of a Fox News Poll regarding the opinion of registered voters about whether illegal immigrants who have lived in the U.S. since they were children should be eligible for legal citizenship. The poll found that 63% answered "should be" eligible for legal citizenship, with a margin of error of 3% at a 95% level of confidence.
The correct interpretation of this poll's result is Option b: We are 95% confident that between 60% and 66% of all registered voters nationwide will answer "should be." This is because the margin of error provides a range that is above and below the observed percentage, covering a total of 6 percentage points around the observed value (63% ± 3%). This range indicates where the true percentage of the entire population's opinion is likely to fall 95% of the time.
McCoy's Fish House purchases a tract of land and an existing building for $910,000. The company plans to remove the old building and construct a new restaurant on the site. In addition to the purchase price, McCoy pays closing costs, including title insurance of $2,100. The company also pays $12,200 in property taxes, which includes $8,100 of back taxes (unpaid taxes from previous years) paid by McCoy on behalf of the seller and $4,100 due for the current fiscal year after the purchase date. Shortly after closing, the company pays a contractor $45,500 to tear down the old building and remove it from the site. McCoy is able to sell salvaged materials from the old building for $3,200 and pays an additional $10,100 to level the land.
Answer:
SOLUTION FOUND IN THE ATTACHMENT BELOW.
Total cost of Land = $ 972,600
A problem that arises in markets where one party knows more about attributes of the good being sold than the other. Sellers of used goods, for example, know about their goods' defects, while buyers do not.eg. Tim would like to buy a used plasma television, but he is not an electronics expert and, thus, cannot assess the quality of a TV directly before owning it. Tim believes that owners of the worst TVs are more willing to sell their TVs than owners of the best TVs. Because of this, Tim believes that used TVs for sale are probably of low quality.Adverse SelectionDiverse SelectionNone of above
Answer: Adverse Selection.
Explanation:
The above situation described Adverse Selection because Adverse Selection refers to a situation where there is information asymmetry between buyers and sellers of a good or service. This means that a party involved has more information about the transaction than the other and this can lead to the person who has more information engaging in a transaction that is sure to benefit them at the expense of the person they are transacting with. A serious example is one of life insurance. Perhaps if a person knows that they will be dying soon but it won't show up on all medical scans and tests, they will get the life insurance and claim on it when they die. They had more information than the seller.
In the above scenario, Tim can make all the assumptions he wants to make but the fact is he simply will.not know what defects the television has because he is not the seller.
It is applaudible that he is approaching with caution though. He at least has a higher chance of success.
Answer:
Adverse selection
Explanation:
Adverse selection is a situation where buyers and sellers have access to different information, so they make decisions to buy and sell in transactions that benefits them the most. Other participants suffer as a result.
Tim has less information than the seller of second hand televisions, therefore he may not be able to make an informed decision that will benefit him.
The seller on the other hand knows all the defects on his second hand televisions. So he can sell at a price that will benefit him.
Suppose that you buy, and one year later sell, a foreign (British) bond under the following circumstances: When you buy the bond the exchange rate is $2.00 = pound£1. You pay pound£45 ($90) for the British bond. You sell the bond for pound£50. No interest payment was expected or received. When you sell the bond, the exchange rate is $1.50 = pound£1. What is your gain or loss in dollars $_______
- $15 loss is the answer
Solution:
Given,
The exchange rate is $2.00 = pound £1
The exchange rate is $1.50 = pound£1
You pay pound£45 ($90)
Now.
Buy ( $2.00 x 45 pounds = $90)
Sell ($1.50 x 50 pounds = $75)
=> $75 - $90 = - $15 loss
On December 31, 2018, a company had assets of $28 billion and stockholders' equity of $20 billion. That same company had assets of $56 billion and stockholders' equity of $18 billion as of December 31, 2019. During 2019, the company reported total sales revenue of $21 billion and total expenses of $19 billion. What is the company's debt-to-assets ratio on December 31, 2019
Answer: 0.68
Explanation:
The Debt-to-Assets ratio is a leverage ratio in financial Analysis that is intended to show how much of the company's assets are funded by debt.
It is calculated by dividing the Company's entire debt by it's Total Assets.
We have the Assets as at the 31st of December 2019 as well as the Equity. Now we need to find debt.
Remember the Accounting Equation,
Assets = Equity + Liability
So,
Liability = Assets - Equity
= 56 billion - 18 billion
= $38 billion.
Using the Debt-to-Assets ratio formula then we have,
= Debt /Assets
= 38/56
= 0.67857142857
= 0.68
0.68 is the company's debt-to-assets ratio on December 31, 2019.
KLA Company provided the following data for 2018: sales, $800,000; beginning inventory, $40,000; ending inventory, $45,000; and gross profit, $150,000. What was the amount of inventory that KLA purchased during 2018
Answer:
$655,000= cost of goods purchased
Explanation:
Giving the following information:
sales, $800,000
beginning inventory, $40,000
ending inventory, $45,000
gross profit, $150,000
First, we need to calculate the cost of goods sold.
Gross profit= sales - cost of goods sold
Cost fo goods sold= sales - gross profit
COGS= $650,000
Now, we can determine the purchases using the following formula:
COGS= beginning finished inventory + cost of goods purchased - ending finished inventory
650,000= 40,000 + cost of goods purchased - 45,000
655,000= cost of goods purchased
Suppose the rate of return on a 10-year T-bond is currently 5.00% and that on a 10-year Treasury Inflation Protected Security (TIPS) is 2.10%. Suppose further that the maturity risk premium on a 10-year T-bond is 1.0%, that no maturity risk premium is required on TIPS, and that no liquidity premiums are required on any T-bonds. Given this data, what is the expected rate of inflation over the next 10 years
Answer:
1.90%
Explanation:
For TIPS provide rate of real rate,
Inflation rate=return on T bond-return on TIPS-maturity risk premium and it is equal to
= 5%-2.10%-1%=1.90%.
Therefore the expected rate of inflation over the next 10 years is 1.90%
Answer:
The inflation rate over the next 10 years = 1.90%.
Explanation:
Nominal interest rate = real risk-free rate + inflation premium + default risk premium + liquidity premium +maturity risk premium.
Making Inflation premium the subject of the formula, we have:
Inflation premium = Nominal interest rate - real risk-free rate -inflation premium - default risk premium - liquidity premium - maturity risk premium.
Inflation premium = 5% - 2.10% - 0 -0 -1.0% = 1.90%.
Therefore, the inflation rate over the next 10 years = 1.90%.
In the London market, Rolls-Royce stock closed at £0.875 per share. On the same day, the British Pound sterling to the U.S. dollar spot exchange rate was £0.6366/$1.00. Rolls Royce trades as an ADR in the OTC market in the United States. Five underlying Rolls-Royce shares are packaged into one ADR. If the Rolls Royce ADRs were trading at $5.75 when the underlying shares were trading in London at £0.875, ignoring transaction costs, the arbitrage trading profit would be A. $0.00. B. $1.12. C. $2.12. D. $3.12.
Answer:
B. $1.12
Explanation:
The computation of arbitrage trading profit is shown below:-
Euro Share price = £0.875
Spot rate R = £0.6366/$1.00
1 ADR Share price in US = $5.75
1 ADR = 5 share of shares
Now, The actual price of 1 ADR P1 = 5 × Euro Share price ÷ Share price in US
= 5 × £0.875 ÷ £0.6366
= $6.87
Therefore, The Arbitrage profit = Actual price - trading price
= Actual price - Price in US
= $6.87 - $5.75
= $1.12
Therefore for computing the arbitrage trading profit we simply applied the above formula.
Baird Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $135,000 and $104,000, respectively. The present value of cash inflows and outflows for the second alternative is $310,000 and $267,500, respectively. Required Calculate the net present value of each investment opportunity. (Negative amounts should be indicated by a minus sign.) 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:
Investment A:
NPV = $31,000
PVI = 1.298
Investment B:
NPV = $42,500
PVI = 1.1588
Investment A should produce a higher return as it has a higher present value index
Explanation:
INVESTMENT A:
Present value of cash inflows = $135,000
Present value of cash outflows = $104,000
Net present value (NPV) = (present value of inflows - present value of outflows)
NPV = $135,000 - $104,000
NPV = $31,000
PRESENT VALUE INDEX(PVI) = (present value of cash inflow ÷ present value of cash outflow)
PVI = ($135,000/$104,000)
PVI = 1.298
INVESTMENT B:
INVESTMENT A:
Present value of cash inflows = $310,000
Present value of cash outflows = $267,500
Net present value (NPV) = (present value of inflows - present value of outflows)
NPV = $310,000 - $267,500
NPV = $42,500
PRESENT VALUE INDEX(PVI) = (present value of cash inflow ÷ present value of cash outflow)
PVI = ($310,000/$267,500)
PVI = 1.159
A division's return on investment may be improved by increasing:
A. capital turnover or sales margin.
B. sales margin and cost of capital.
C. cost of goods sold and expenses.
D. capital turnover or cost of capital.
E. sales revenue and cost of capital.
Answer:
The correct answer is letter "A": capital turnover or sales margin.
Explanation:
Return on Investment, or ROI, measures the amount of return on an investment relative to the cost of investment. The return of an investment is divided by its cost to calculate ROI. The result is expressed as a percentage or as a ratio. Investments with positive ROI are likely to be successful while those with negative figures are possible to end up in losses.
To increase a division's ROI, the firm can increase the capital turnover (capital assets that allow the company to profit) or the sales margin (the difference between costs and the net profit of selling a unit of a product).
A division's return on investment can be improved by increasing capital turnover or sales margin. Higher capital turnover indicates efficient use of capital to generate income, while higher sales margin indicates more profit made from sales.
Explanation:A division's return on investment (ROI) can be improved by increasing capital turnover or sales margin. ROI is a key performance metric used to measure the probability of gaining a return from an investment. It measures the efficiency of an investment or compares the efficiency of a number of different investments.
Capital turnover is the ratio of how capital is used to generate revenue. The higher the capital turnover ratio, the more effective a company is in using its capital to generate income. A high capital turnover can indicate higher ROI because it shows that the company is effectively using its capital.
On the other hand, sales margin, is the profit made from selling products or services after all costs associated with producing them are deducted. The higher the sales margin, the more profit per dollar of sales a company makes, and therefore, the higher the ROI.
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Bonita Printing Corp. uses a job order cost system. The following data summarize the operations related to the first quarter’s production. 1. Materials purchased on account $197,000, and factory wages incurred $90,200. 2. Materials requisitioned and factory labor used by job: Job Number Materials Factory Labor A20 $38,240 $19,500 A21 44,120 22,200 A22 37,600 15,100 A23 41,870 25,800 General factory use 4,970 7,600 $166,800 $90,200 3. Manufacturing overhead costs incurred on account $51,000. 4. Depreciation on factory equipment $16,850. 5. Depreciation on the company’s office building was $15,300. 6. Manufacturing overhead rate is 80% of direct labor cost. 7. Jobs completed during the quarter: A20, A21, and A23. Prepare a schedule showing the individual cost elements and total cost for each job in item 7. Job Direct Materials Direct Labor Manufacturing Overhead Total A20 $Entry field with correct answer 38240 $Entry field with correct answer 19500 $Entry field with incorrect answer $Entry field with incorrect answer A21 Entry field with correct answer 44120 Entry field with correct answer 22200 Entry field with incorrect answer Entry field with incorrect answer A23 Entry field with correct answer 41870 Entry field with correct answer 25800 Entry field with incorrect answer Entry field with incorrect answer $Entry field with incorrect answer
Answer:
Check the explanation
Explanation:
The journal entry (which can comprise of a number of different item recordings, each of the items to be recorded will is either a credit or a debit. The overall figure in the debit side of the journal must be equal the overall figure in the credit side, or the journal entry will be considered unbalanced.) to the above question can be seen in the attached image below.
The total cost for each job in item 7 is calculated by considering the direct materials, direct labor, and manufacturing overhead costs. Job A20 has a total cost of $73,340, job A21 has a total cost of $86,080, and job A23 has a total cost of $88,310.
Explanation:To calculate the total cost for each job in item 7, we need to consider the direct materials, direct labor, and manufacturing overhead costs.
For job A20, the direct materials cost is $38,240, the direct labor cost is $19,500, and the manufacturing overhead cost is calculated as 80% of the direct labor cost, which is $15,600. Therefore, the total cost for job A20 is $38,240 + $19,500 + $15,600 = $73,340.
Similarly, for job A21, the total cost is $46,120 + $22,200 + $17,760 = $86,080, and for job A23, the total cost is $41,870 + $25,800 + $20,640 = $88,310.
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Erie Company manufactures a mobile fitness device called the Jogging Mate. The company uses standards to control its costs. The labor standards that have been set for one Jogging Mate are as follows: Standard Hours Standard Rate per Hour Standard Cost 27 minutes $5.80 $2.61 During August, 9,565 hours of direct labor time were needed to make 19,700 units of the Jogging Mate. The direct labor cost totaled $54,521 for the month. Required: 1. What is the standard labor-hours allowed (SH) to makes 19,700 Jogging Mates? 2. What is the standard labor cost allowed (SH × SR) to make 19,700 Jogging Mates? 3. What is the labor spending variance? 4. What is the labor rate variance and the labor efficiency variance? 5. The budgeted variable manufacturing overhead rate is $4.10 per direct labor-hour. During August, the company incurred $43,999 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month.
1. The standard labor hours allowed to make 19,700 Jogging Mates is approximately 9198.33 hours. 2. The standard labor cost allowed to make 19,700 Jogging Mates is approximately $53,344.33. 3. The labor spending variance is approximately -$1,176.67. 4. The labor rate variance is $0 and the labor efficiency variance is $1,176.67. 5. The variable overhead rate variance is $0 and the variable overhead efficiency variance is approximately -$1,516.60.
Explanation:1. The standard labor hours allowed (SH) to make 19,700 Jogging Mates can be calculated by multiplying the number of units produced by the standard labor time per unit:
Standard labor hours allowed = Number of units produced × Standard labor time per unit
Standard labor-hours allowed = 19,700 units × 27 minutes / 60 minutes per hour = 9198.33 hours
Therefore, the standard labor hours allowed to make 19,700 Jogging Mates is approximately 9198.33 hours.
2. The standard labor cost allowed (SH × SR) to make 19,700 Jogging Mates can be calculated by multiplying the standard labor hours allowed by the standard rate per hour:
Standard labor cost allowed = Standard labor hours allowed × Standard rate per hour
Standard labor cost allowed = 9198.33 hours × $5.80 per hour = $53,344.33
Therefore, the standard labor cost allowed to make 19,700 Jogging Mates is approximately $53,344.33.
3. The labor spending variance can be calculated by subtracting the actual labor cost from the standard labor cost allowed:
Labor spending variance = Standard labor cost allowed - Actual labor cost
Labor spending variance = $53,344.33 - $54,521 = -$1,176.67
Therefore, the labor spending variance is approximately -$1,176.67.
4. The labor rate variance can be calculated by multiplying the actual hours of direct labor by the difference between the actual rate per hour and the standard rate per hour:
Labor rate variance = Actual hours of direct labor × (Actual rate per hour - Standard rate per hour)
Labor rate variance = 9,565 hours × ($5.80 per hour - $5.80 per hour) = $0
Therefore, the labor rate variance is $0.
The labor efficiency variance can be calculated by subtracting the standard labor cost allowed from the actual labor cost:
Labor efficiency variance = Actual labor cost - Standard labor cost allowed
Labor efficiency variance = $54,521 - $53,344.33 = $1,176.67
Therefore, the labor efficiency variance is $1,176.67.
5. The variable overhead rate variance can be calculated by multiplying the actual hours of direct labor by the difference between the actual variable overhead rate and the budgeted variable manufacturing overhead rate:
Variable overhead rate variance = Actual hours of direct labor × (Actual variable overhead rate - Budgeted variable manufacturing overhead rate)
Variable overhead rate variance = 9,565 hours × ($4.10 per hour - $4.10 per hour) = $0
Therefore, the variable overhead rate variance is $0.
The variable overhead efficiency variance can be calculated by subtracting the standard hours allowed from the actual hours of direct labor and multiplying by the budgeted variable manufacturing overhead rate:
Variable overhead efficiency variance = (Actual hours of direct labor - Standard hours allowed) × Budgeted variable manufacturing overhead rate
Variable overhead efficiency variance = (9,565 hours - 9198.33 hours) × $4.10 per hour = -$1,516.60
Therefore, the variable overhead efficiency variance is approximately -$1,516.60.
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Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $220 million of 8% bonds, dated January 1, on January 1, 2021. Management intends to include the investment in a short-term, active trading portfolio. For bonds of similar risk and maturity the market yield was 10%. The price paid for the bonds was $201 million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, the fair value of the bonds at December 31, 2021, was $210 million.
Answer and Explanation:
Journal Entries - Fuzzy Monkey Technologiesn Inc
Debit (In Million) Credit (In Million)
1. 1-Jan-21
Dr Investment in Bond $220.00
Cr To Cash $201.00
Cr To Discount on bond investment $19.00
(Being investment in bond recorded)
2. 30-Jun-21
Dr Cash ($220 *8% * 6/12) $8.80
Dr Discount on bond investment
$1.25
Cr To Interest revenue
($201*10%*6/12) $10.05
(Being revenue recoginition for bond interest and discount amortized)
3. 31-Dec-21
Dr Cash ($220 *8% * 6/12) $8.80
Dr Discount on bond investment $1.31
Cr To Interest revenue
($202.25*10%*6/12) $10.11
(Being revenue recoginition for bond interest and discount amortized)
4a:
Fuzzy monkey report its investment on December 31, 2021 balance sheet at fair value which is $210 million
4b:
Journal Entries - Fuzzy Monkey Technologies Inc.
Debit (In Million) Credit (In Million)
1 31-Dec-21
Dr Fair value adjustment ($210 - $201 - $1.25 - $1.31) $6.44
Cr To Unrealized holding gain or loss - OCI $6.44
(Being adjusting entry to record investment at fair value)
5:
Statement of cash flows (Partial)
For 2021
Amount (In million)
Cash flow from operating activities:
Interest received $17.60 Inflow
Cash flow from investing activities:
Cash paid for purchase of investment $201.00 Outflow
When you purchased your house, you took out a 30-year annual-payment mortgage with an interest rate of 6 percent per year (compounded annually). The annual payment on the mortgage is $12,000, paid at the end of each year. You have just made a payment and have now decided to pay the mortgage off by repaying the outstanding balance. What is the payoff amount if you have lived in the house for 12 years (so there are 18 years left on the mortgage)
Answer: $129,931.24
Explanation:
Annuity is a stream of equal cash flows that has a specified number of periods. To get the payoff amount for living in the house for 12 years, we calculate the present value of the annuity.
The payoff amount for living in the house for 12 years is $129,931.24.
Check the attached document for the calculation.
Annual Payments refers to the total amount of payments expected to be paid or received, as applicable, under Material Contract divided by the total number of years the Material Contract is expected to be in effect.
A stream of equal cash flows with a set number of periods is known as an annuity.
We calculate the present value of the annuity to determine the payback amount for living in the house for 12 years. For staying in the house for 12 years, the payment amount is $129,931.24.
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Silicon Valley in California is the world center for the computer and semiconductor industry and has many of the world's major computer and semiconductor companies located close to each other, thus offering the location-specific advantage of Group of answer choices. a. a multipoint competition. b. an oligopolyc. a first mover. d. externalities
Answer:
The correct answer is D. externalities.
Explanation:
An externality is defined as that situation or group of situations that determine that a service good is not reflected at its real market price. In this example, the computer industry is so close that they do not know for sure the benefits they have when offering their goods, and it becomes an advantage in the sense that due to its close location it is possible to establish agreements to manage prices and not enter into direct market competition.
Shadee Corp. expects to sell 550 sun visors in May and 380 in June. Each visor sells for $12. Shadee’s beginning and ending finished goods inventories for May are 85 and 45 units, respectively. Ending finished goods inventory for June will be 65 units. It expects the following unit sales for the third quarter: July 545 August 460 September 470 Sixty percent of Shadee’s sales are cash. Of the credit sales, 54 percent is collected in the month of the sale, 37 percent is collected during the following month, and 9 percent is never collected. Required: Calculate Shadee’s total cash receipts for August and September. (Do not round your intermediate calculations. Round your answers to the nearest whole dollar.)
Answer:
August = $5, 472
September = $5,419
Explanation:
Shadee Corporation
Cash Receipt Budget
For the month of August & September
August September
Sales Volume 460 470
Price per unit 12 12
Total Sales $5,520 $5,640
60% Cash Sales $3,312 $3,384
Credit Sales:
54% collected in the month of sales
$1,192 $1,218
37% collected in the following month
$968 (1) $817
Total budgeted cash receipt
$5,472 $5,419
Note: (1)
37% of July's credit sale will be collected in the month of August. Therefore,
July's total sales = 545 × 12 = $6540
60% of them is cash = $3,924
Remaining is credit = $2,616
37% of credit sales = $2,616 × 37% = $968
When The Total cash receipts for August and also September
The Total cash receipts for August are = $5,472
The Total cash receipts for September are = $5,419
Calculation of Cash Receipts
Shade Corporation
Then the Cash Receipt Budget
For August & September
August September
Then Sales Volume 460 470
Price per unit 12 12
Therefore, The Total Sales of $5,520 $5,640
60% Cash Sales $3,312 $3,384
Then the Credit Sales:
54% collected in the month of sales
$1,192 $1,218
Then, 37% were collected in the following month
$968 (1) $817
The Total budgeted cash receipt
$5,472 $5,419
Note: (1)
37% of July's credit sale will be collected in August. Therefore,
July's total sales = 545 × 12 = $6540
60% of them is cash = $3,924
Remaining is credit = $2,616
Therefore, 37% of credit sales = $2,616 × 37% = $968
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Kindzi Co. has preferred stock outstanding that is expected to pay an annual dividend of $4.67 every year in perpetuity. If the required return is 4.54 percent, what is the current stock price
Kindzi Co. has preferred stock outstanding that is expected to pay an annual dividend of $4.67 every year in perpetuity. If the required return is 4.54 percent- The current stock price is $102.86
Explanation:
From the question the below mentioned information is given
Annual Dividend = $4.67
The required return =$4.54%=$0.0454
Let assume the current stock price be x
Current stock price= Annual Dividend/return required
x=$4.67/$0.0454=102.86
Therefore the current stock price is $102.86
Kindzi Co. has preferred stock outstanding that is expected to pay an annual dividend of $4.67 every year in perpetuity. If the required return is 4.54 percent- The current stock price is $102.86
Scarlett Corp. uses no debt. The weighted average cost of capital is 8.4 percent. If the current market value of the equity is $25 million and there are no taxes, what is EBIT?
Answer:
EBIT $2,100,000
Explanation:
WACC=EBIT/(V+D)
8.4%=EBIT/$25,000,000
EBIT=25,000,000*8.4%
EBIT=$2,100,000