The contribution margin ratio for Peeler's Smoothie Company is 0.69 or 69%, which means that for each dollar of sales, 69 cents contribute to covering fixed costs and profit.
Explanation:The contribution margin ratio is calculated as the difference between the selling price per unit and the variable cost per unit, divided by the selling price per unit. For Peeler's Smoothie Company, the contribution margin per unit is $6.50 (sales price per unit) - $2.00 (variable cost per unit) = $4.50. To find the contribution margin ratio, we divide the contribution margin per unit by the sales price per unit:
Contribution Margin Ratio = ($4.50 ÷ $6.50) = 0.6923
Rounded to two decimal places, the contribution margin ratio is 0.69 or 69%. This means that for each dollar of sales, the company contributes 69 cents to cover its fixed costs and profit.
________ is a method of inventory costing in which all variable manufacturing costs (direct and indirect) are included as inventoriable costs and all fixed manufacturing costs are excluded.A) Variable costing B) Mixed costing C) Absorption costing D) Standard costing
Answer:
A) variable costing
Explanation:
acording to a citated text the variable costing excluded all fixed manufacturing costs is the Variable costing
Suppose that you want to create a "college fund" for your newborn child and place $300 in a bank account at the end of each of the next 20 years. If that account earns an annual rate of return of 7%, how much will be in that account at the end of the twentieth year?
Answer:
Amount at the end of twentieth year is $12,300
Explanation:
Annuity means a set of fixed amount of payments either made to you or paid by you , at a fixed number of times over a course of defined period.
The case given in the question is of ordinary annuity , where fixed amount of payment are required at the end of each period.
FORMULA FOR FUTURE VALUE ORDINARY ANNUITY =
Where, C(cash flow) = $300,
I(interest rate) = 7%
N(number of period) = 20
FV ( Future value)
[tex]FUTURE\ VALUE(FV)\ OF\ ORDINARY\ ANNUITY= CASH\ FLOW(C)\times \left [ \frac{1+I^{N}-1}{I} \right ])[/tex]
[tex]FUTURE\ VALUE(FV)\ OF\ ORDINARY\ ANNUITY= \$300\times \left [ \frac{1+7\%^{20}-1}{7\%} \right ])[/tex]
[tex]FUTURE\ VALUE(FV)\ OF\ ORDINARY\ ANNUITY= \$300\times \left [ \frac{\ 1.07\ ^{20}-1}{7\%} \right ])[/tex]
[tex]FUTURE\ VALUE(FV)\ OF\ ORDINARY\ ANNUITY= \$300\times \left [ \frac{\ 3.87\ -1}{7\%} \right ])[/tex]
[tex]FUTURE\ VALUE(FV)\ OF\ ORDINARY\ ANNUITY= \$300\times \left [ \frac{\ 2.87}{7\%} \right ])[/tex]
= 861/7%
= $12,300
Final answer:
The student's question involves computing the future value of a series of payments (an annuity) made into a college fund that earns 7% interest annually for 20 years. The future value calculation is based on the formula FV = P * [((1 + r)^n - 1) / r], involving periodic payments, interest rate, and number of payments.
Explanation:
The student is asking about calculating the future value of a series of regular payments, also known as an annuity, in a college fund with a 7% annual rate of return. This requires the formula for the future value of an annuity:
FV = P * [((1 + r)^n - 1) / r]
where FV is the future value of the annuity, P is the periodic payment, r is the periodic interest rate, and n is the number of payments.
In this scenario, we're dealing with P = $300, r = 0.07 (7% annual interest), and n = 20 years.
To calculate the future value of the college fund, the following steps are taken:
Identify the periodic payment (P): $300.
Determine the periodic interest rate (r): 7% or 0.07 as a decimal.
Find the number of periods (n): 20 years.
Apply the annuity formula to compute the future value of the series of payments.
By plugging the values into the formula, we get the total amount available in the college fund after 20 years.
From 1970 to 2010, the real price of eggs decreased and the total annual consumption of eggs decreased. Which of the following would cause an unambiguous decrease in the real price of eggs and an unambiguous decrease in the quantity of eggs consumed? Select one:
a. A shift to the left in the supply curve for eggs and a shift to the right in the demand curve for eggs.
b. A shift to the left in the supply curve for eggs and a shift to the left in the demand curve for eggs.
c. none of the other choices is correct
d. A shift to the right in the supply curve for eggs and a shift to the right in the demand curve for eggs.
Answer:
The correct answer would be Option C, None of the other choices are correct.
Explanation:
Demand and supply curves are plotted on a graph containing quantity and price of the product on x axis and y axis respectively. The intersection of demand and supply curves give us the accurate quantity at an accurate price of the product. Any shift of the curve will result in the surplus or shortage of the product. So in this question, it is asked the reason for the decrease in the quantity of eggs consumed. So the answer is A shift to the right in the supply curve for eggs and a shift to the left in the demand curve for eggs will result in an unambiguous decrease in the quantity of eggs consumed.
The question asks for a scenario that would result in a decrease in both the real price of eggs and the total annual consumption of eggs. The correct answer is Option b: a simultaneous leftward shift in both the supply and demand curves, which leads to an unambiguous decrease in the equilibrium quantity and an ambiguous impact on price, but given the historical data on actual price decrease, this would be the cause.
Explanation:To determine the cause of an unambiguous decrease in both the real price of eggs and the total annual consumption of eggs, we need to consider the effects of shifts in both the supply and demand curves. Let's review the given options:
Option a: A leftward shift in the supply curve would typically increase the equilibrium price, while a rightward shift in the demand curve would increase both the equilibrium price and quantity.Option b: A leftward shift in the supply curve would increase the equilibrium price and decrease the equilibrium quantity. A leftward shift in the demand curve, however, would decrease both the equilibrium price and quantity. Therefore, a simultaneous leftward shift in both the supply and demand curves for eggs would result in an ambiguous change in the equilibrium price but an unambiguous decrease in the equilibrium quantity.Option c: This option suggests that none of the other choices would lead to both a decrease in the real price and quantity consumed of eggs, which aligns with our assessment of options a and b.Option d: A rightward shift in the supply curve would lead to a decrease in the equilibrium price and an increase in the equilibrium quantity, whereas a rightward shift in the demand curve would increase both the equilibrium price and quantity.Given these analyses, the correct answer is Option b: A shift to the left in the supply curve and a shift to the left in the demand curve for eggs. This is the only scenario provided that could lead to a decrease in both price and quantity consumed.
Ofarrell Corporation, a company that produces and sells a single product, has provided its contribution format income statement for March. Sales (6,800 units) $306,000; Variable expenses 149,600; Contribution margin 156,400; Fixed expenses 96,500; Net operating income $ 59,900. If the company sells 7,200 units, its net operating income should be closest to________.
Answer:
The net operating income should be $69,100 for 7,200 units.
Explanation:
Given,
Sales (6800) units - $306,000
Variable expense (6800) - 149,600
Contribution - 156,400 (Sales - Variable cost )
Less - Fixed Expense $96,500
Net operating Income - $59,900
Since, the sales and the variable expense is given for 6800 units. For computing the net operating income for 7200 units, it is important to calculate per unit price of both.
Per unit sales = Sales ÷ Number of units
= $306,000 ÷ 6800 units
= $45 per unit sale
Per unit variable expense = Variable expense ÷ Units
= 149,600 ÷ 6800 units
= 22 per unit expense.
Now, we can compute easily.
Sales = (7200 × $45) = $324,000
Less - Variable cost (7200 × $22) = 158,400
Contribution - $165,600
Less - Fixed expense - $ 96500
Net operating income - $69,100
The fixed expense would remain the same.
Thus, the net operating income should be $69,100 for 7,200 units.
During the year, credit sales amounted to $820,000. Cash collected on credit sales amounted to $780,000, and $15,000 has been written off. At the end of the year, the company adjusted for bad debts expense using the percent-of-sales method and applied a rate, based on past history, of 2.5%. The ending balance in the Allowance for Bad Debts is ________.
Answer:
The ending balance in the Allowance for Bad Debts is 20,500 CREDIT
Explanation:
The ending balance of Allowance for bad debts would be the 2.5% of sales
The adjustment is made to get the allowance for Bad Debt match the estimate uncollectible ammounts.
Notice it state "company adjusted for bad debt expense"
This means it debit this account as much as it needed to be to make allowance match the estimate allowance.
The write-off are transaction durign the period. They are irrelevant
So the ending balance is:
2.5% of credit sales of 820,000 = $20,500
It is important to remember that Allowance is a counter-asset account. His normal balance is credit, so the final balance is credit.
Greta is concerned that one of the potential market segments she has identified for her dog grooming service is too small and has too little income to have sufficient buying power. Greta is concerned with whether the segment is
Answer:
The answer is substantial.
Explanation:
Substantial, in the context of market segment, means that there are a number of people who are able to purchase the product based on the set price, and that there are a sufficient number of them for the business to make a worthwhile profit. Measuring how substantial a market segment is would help businesses determine market segments in a more effective manner, alongside criteria such as measurable, accessible, and actionable.
Which one of the following financial statements is not required by GAAP regarding a voluntary health and welfare organization? Statement of Financial Position. Statement of Functional Expense. Statement of Activities and Changes in Net Assets. Statement of Cash Flows. Statement of Operations.
Answer:
Statement of Operations. ( last choice)
Statement of Operations is not required by GAAP regarding a voluntary health and welfare organization.
One of the biggest problems with telephone surveys is that
A. it takes too long to collect the results. B. they're too impersonal. C. the cost is higher than other methods. D. people often refuse to participate..
2
.help please
Answer:
One of the biggest problems with telephone surveys is that people often refuse to participate. - D.
Answer:
D. people often refuse to participate.
Explanation:
One of the biggest problems with telephone surveys is that people often refuse to participate. Many people ignore the calls or block the caller because they are not interested or refuse.
How is job order and process costing similar?
Answer: The following are the similarities between job order and process costing:
Explanation:
Job order costing and process costing have significant similarities:
Both job and process cost frameworks have a similar objective: to decide the expense of items.
Both job and process cost frameworks have a similar cost streams. Bookkeepers record production in separate records for materials stock, work, and overhead. At that point, they move the expenses to a Work in Process Inventory account.
Both job and process cost frameworks used predetermined overhead rates to apply overhead.
Kim Airedale, a manager of Waggers, Inc., was reviewing the water bills of a dog daycare and spa. She determined that its highest and lowest bills of $3600 and $2800 were incurred in the months of May and November, respectively. If 500 dogs were washed in May and 200 dogs were washed in November, what was the variable cost per dog associated with the company's water bill? (Round your answer to the nearest cent.) A. $7.20 B. $4.00 C. $14.00 D. $2.67
Answer:
D. $2.67
Explanation:
On the high-low method we compare the diference between the highest level and lowest level of activity.
highest 500 dogs 3,600 (fixed + variable cost)
less
lowest 200 dogs 2,800 (fixed + variable cost)
300 dogs 800 variable cost
800/300 = variable cost per dog = 2.6666667 = (2 + 2/3) variable cost of water bill
800 x (2 + 2/3) + fixed cost = 3,600
2133,3333 + fixed cost = 3600
fixed cost = 3,600 - 2,133.33 = 1,466.66667
The variable cost per dog is calculated by finding the difference in total cost between the two given months, then dividing that by the difference in the number of dogs washed. The answer is $2.67 per dog.
Explanation:To calculate the variable cost per unit, we first need to find the difference in total cost then divide by the difference in units. The total cost difference between May and November is $3600 - $2800 = $800. Now, the difference in the number of dogs washed in May and November is 500 dogs - 200 dogs = 300 dogs. The variable cost is therefore $800 / 300 dogs = $2.67 per dog. Hence, the correct answer is D. $2.67.
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Momentum Rollerblades has three product lineslong dashD, E, and F. The following information is available: D E F Sales revenue $ 80 comma 000 $ 40 comma 000 $ 30 comma 000 Variable costs (20 comma 000) (15 comma 000) (12 comma 000) Contribution margin $ 60 comma 000 $ 25 comma 000 $18 comma 000 Fixed costs (15 comma 000) (10 comma 000) (23 comma 000) Operating income (loss) $ 45 comma 000 $ 15 comma 000 $(5 comma 000) The company is deciding whether to drop product line F because it has an operating loss. Assume that $ 21 comma 000 of total fixed costs could be eliminated by dropping F. What effect would this decision have on operating income
Final answer:
Dropping product line F, with an operating loss of $5,000, would actually increase Momentum Rollerblades' operating income by $16,000 because there would be $21,000 of fixed costs savings, which is more than the current contribution margin from product F.
Explanation:
When considering whether to drop product line F, which has an operating loss, we should examine the impact on the overall operating income for Momentum Rollerblades. Currently, product line F has a loss of $5,000. However, if $21,000 of its fixed costs can be eliminated by dropping the line, then the total operating income could potentially increase. Here is the calculation:
Operating loss of product line F: $(5,000)Fixed costs savings by dropping F: $ +21,000Net effect on operating income: $ +21,000 - $ 5,000 = $ +16,000By dropping product line F, Momentum Rollerblades would increase its operating income by $ +16,000 since the savings in fixed costs exceed the contribution margin that would be lost by eliminating the product.
A product sells for $135 per unit, and its variable costs are 60% of sales. The fixed costs are $428,000. What is the break-even point in sales dollars? (Do not round intermediate calculations.)
Answer:
$1,070,000.00
Explanation:
Break Even Point in Sales = Fixed Cost/ Contribution Margin Ratio
In case contribution margin is taken as a percentage then straight calculation can be done.
Since variable cost = 60%, contribution margin ratio = Sales - Variable costs = 40%
Break even point in sales = $428,000.00 / 40% = $1,070,000.00
Alternatively it can be calculated by taking contribution per unit, for this
Contribution per unit = Sales Value - Variable cost = $135 - 60% = $54
BEP in units = $428,000 / $54 = 7,925.925 units
BEP in sales = BEP in units X Selling price per unit = 7,925.925 X $135 = $1,069,999.875
Thus value in both cases is same the difference is of rounding off.
$1,070,000.00
Aspen Corporation has two divisions, East and West. Its corporate office is separate from these divisions and incurred $190,000 in administrative costs during the year. These costs are allocated to the divisions based on their individual revenues. During the year, the East and West divisions had revenues of $1,800,000 and $2,200,000, respectively. How much of the administrative cost should be assigned to the East division based on the cost allocation rule described?
Answer: the administrative cost that should be assigned to the East division is $85,500.
Explanation: The East division should be assigned with the 45% of the administrative revenues since the total revenues obtained by the two divisions is $1,800,000 plus $2,200,000 equals $4,000,000. $4,000,000 is the total and $1,800,000 is the 45% of the total ($1,800,000 times 100 divided by $4,000,000). 45% of $190,000 is $85,500.
The East division of Aspen Corporation should be assigned $72,500 of the administrative costs based on the cost allocation rule described.
Explanation:In this question, the administrative costs incurred by Aspen Corporation need to be allocated to the East and West divisions based on their individual revenues. To calculate the allocation for the East division, we can use the formula: (East division revenue / Total revenue) * Administrative costs. Using the provided information, the allocation for the East division would be:
((1,800,000 / (1,800,000 + 2,200,000)) * 190,000 = $72,500
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The value of any asset is the ________.
sum of all future cash flows it is expected to provide over the relevant time period
sum of the present values of all future cash flows it is expected to provide over the relevant time period
present value of the sum of all future cash flows it is expected to provide over the relevant time period
sum of all compounded future cash flows it is expected to provide over the relevant time period
Answer:
The value of any asset is the sum of the present values of all future cash flows it is expected to provide over the relevant time period
Explanation:
When valuing an asset, an investor should
1. First forecast the cash flows that he is likely to receive in each period during during the investment horizon.
2. Discount each of the periodic cash-flows at the relevant periodic required rate of return - i.e calculate the present value for each cash-flow
3. Sum the present values calculated in step 2. This total is the value of the asset.
Daniel, age 38, is single and has the following income and expenses in 2018:Salary income $60,000Net rent income 6,000Dividend income 3,500Payment of alimony in accordance with the separation agreement which was signed in 2018 12,000Mortgage interest on residence 9,900Property tax on residence 1,200Contribution to traditional IRA (assume the amount is fully deductible) 5,000Contribution to United Church 2,100Loss on the sale of real estate (held for investment) 2,000Medical expenses 3,250State income tax 300Federal income tax 7,0001) What is Daniel's gross income?2) What is Daniel's AGI?3) What is Daniel's Total itemized deductions (after any limitations)? This is all for 2018.
Answer:
Explanation:
Payment of Alimony ⇒ Deductible For AGI
Mortgage interest on residence ⇒ Deductible From AGI
Property Tax on Residence ⇒ Deductible From AGI
Contribution to traditional IRA ⇒ Deductible For AGI
Contribution to United Church ⇒ Deductible From AGI
Loss on sale of real estate ⇒ Deductible For AGI
Medical Expenses ⇒ Deductible From AGI
State Income Tax ⇒ Deductible From AGI
Federal Income Tax ⇒ Not Deductible
∴Gross Income:
Salary Income 60,000
Net Rent 6,000
Dividend Income 3,500 69,500
∴Deduction for AGI:
Payment of Alimony 12,000
Contribution to traditional IRA 5,000
Loss on sale of real estate 2,000 19,000
Adjusted Gross Income 50,500
∴ Itemized Deduction
Mortgage interest on residence 4,900
Property Tax on Residence 1,200
Contribution to United Church 2,100
State Income Tax 300
Medical Expenses[$3250 - ($50500× 7.50%)] ----
∴Total Itemized Deduction 8,500
Daniel's gross income for 2018 is $69,500, his Adjusted Gross Income (AGI) is $52,500, and his total itemized deductions are $13,500. The deductions include mortgage interest, property tax, state income tax, and charitable contributions. Medical expenses are not deductible in this case.
Daniel's Gross Income, Adjusted Gross Income (AGI), and Total Itemized Deductions
1. What is Daniel's gross income?
Daniel's gross income includes salary, net rent income, and dividend income.
Salary: $60,000Net Rent Income: $6,000Dividend Income: $3,500Total Gross Income = $60,000 + $6,000 + $3,500 = $69,500
2. What is Daniel's AGI?
To calculate Daniel's Adjusted Gross Income (AGI), we subtract the allowable adjustments from his gross income:
Gross Income: $69,500Alimony Payment: -$12,000IRA Contribution: -$5,000Total Adjustments = $12,000 + $5,000 = $17,000
AGI = $69,500 - $17,000 = $52,500
3. What is Daniel's Total Itemized Deductions (after any limitations)?
Daniel’s itemized deductions include the following:
Mortgage Interest on Residence: $9,900Property Tax on Residence: $1,200Medical Expenses: $3,250 (Only amounts exceeding 7.5% of AGI are deductible for 2018)State Income Tax: $300Contribution to United Church: $2,100Medical Expenses Deductible Amount: 7.5% of AGI ($52,500) = $3,937.50. Since $3,250 < $3,937.50, no medical expenses are deductible.
Total Itemized Deductions = $9,900 + $1,200 + $300 + $2,100 = $13,500.
All of the following are true with regards to activity-based costing for service businesses except a. the multiple department factory overhead rate method may lead to distortions of costs. b. activity-based costing is not applicable to service businesses. c. the single plantwide factory overhead rate method may lead to distortions of costs. d. All of these choices are true.
Answer:
b. activity-based costing is not applicable to service businesses.
Explanation:
b.- activity cost was created with the idea of being used for sercive business. It distribute the phases of the service in diferent activities and assing cost to them. This statment is FALSE ABC can be used for service business
Suppose a tax of $3 per unit is imposed on a good. The supply curve is a typical upward-sloping straight line, and the demand curve is a typical downward-sloping straight line. The tax decreases consumer surplus by $3,900 and decreases producer surplus by $3,000. The tax generates tax revenue of $6,000. The tax decreased the equilibrium quantity of the good from A. 2,400 to 2,000. B. 2,600 to 2,000. C. 3,000 to 2,400. D. 2,000 to 1,500.
Answer:
B. 2,600 to 2,000.
Explanation:
tax revenue = units x tax rate
units = tax revenue / tax rate = 6,000/3 = 2,000
2,000 will be the quantity after taxes.
6000 goverment revenue - 3900 consumer surplus - 3000 producer surplus
900 deathweight loss
(tax x ↓unit)/2 = deathweight loss
(3 x ↓unit)/2 = 900
(3 x ↓unit) = 900 *2
↓unit = 1800/3 = 600
It decrease to 2000 from 2600
A $3 per unit tax creates a wedge between the price paid by consumers and the price received by producers, representing a production cost increase. This results in a leftward shifted supply curve, with reduced consumer and producer surplus. The burden of the tax is shared, decreasing the equilibrium quantity of goods.
Explanation:When a $3 per unit tax is imposed on a good, the government creates a wedge between the price paid by consumers and the price received by producers. The distance between these prices equals the tax rate.
The new market price is the price paid by consumers, but sellers receive less per unit sold as they pay the difference (tax) to the government. This tax is akin to an increase in production cost, symbolized by a leftward shift of the supply curve. The new supply curve intercepts the demand at the new quantity.
The tax revenue is found by multiplying the tax per unit by the total quantity sold. The tax incidence, or burden, is shared by both consumers and sellers. In this case, the consumers' surplus decreased by $3,900 and the producers' surplus decreased by $3,000, causing a total tax revenue of $6,000 and a decrease in the equilibrium quantity of goods.
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Wolf Inc. made a sale of $10,000 on August 1, accepting a 6-month 12% note. Wolf makes annual adjusting entries. On December 31st, Wolf will make an adjusting entry accruing how much interest?
Answer:
Interest receivable 500 debit
Interest revenue 500 credit
Explanation:
[tex]Principal\times rate \times time = Interest[/tex]
Important: rates and time must be express in the same unit.
In general rates are express as annual rate, so the time measurement should be in years to.
With that information, from August 1st to December 31th 5 months has past.
That represent 5/12 of a year so that is the amount to post in the formula.
10,000 * .12* 5/12 = 500 Interest accrued for the period
This interest are revenue So to recognzie the gain we credit it.
We also need to declare that we are going to receive interest in the future, so we use interest receivable account.
Interest versus dividend expense Michaels Corporation expects earnings before in- terest and taxes to be $50,000 for the current period. Assuming an ordinary tax rate of 35%, compute the firm’s earnings after taxes and earnings available for common stockholders (earnings after taxes and preferred stock dividends, if any) under the following conditions: a. The firm pays $12,000 in interest. b. The firm pays $12,000 in preferred stock dividends.
Answer:
a. In case of interest paid = $24,700.
b. In Case Preferred Dividend is Paid = $20,500
Explanation:
Earnings before Interest And Taxes (EBIT) = $50,000
a. In case of interest paid
EBIT = $50,000
Less: Interest = $12,000
Earnings Before Taxes = $50,000 - $12,000 = $38,000
Less: Tax @35% = $38,000 X 0.35 = $13,300
Earnings After Tax =$38,000 - $13,300 = $24,700.
This is the value available for common stock.
b. In Case Preferred Dividend is Paid
EBIT = $50,000
Less: Taxes @ 35 % = $50,000 X 0.35 = $17,500
Earnings After Tax = $50,000 - $17,500 = $32,500
Less: Preference Dividend = $12,000
Earnings available for equity or common stock = $32,500 - $12,000 = $20,500
The difference is of tax benefit on payment of interest as that is taxable and preference dividend is not taxable.
a. In case of interest paid = $24,700.
b. In Case Preferred Dividend is Paid = $20,500
Final answer:
The Michaels Corporation will have earnings after taxes of $24,700 and earnings available for common stockholders also of $24,700 when paying $12,000 in interest. If paying $12,000 in preferred stock dividends instead, the earnings after taxes would be $32,500, with $20,500 available for common stockholders.
Explanation:
The Michaels Corporation expects earnings before interest and taxes (EBIT) of $50,000. With a tax rate of 35%, we will calculate the firm's after-tax earnings and the earnings available to common stockholders under two scenarios: one involving interest payments, and the other involving preferred stock dividends.
Case a: Paying Interest
Calculate earnings after interest: EBIT - Interest = $50,000 - $12,000 = $38,000.Compute taxes: $38,000 * 35% = $13,300.Deduct taxes to find earnings after taxes (EAT): $38,000 - $13,300 = $24,700.Since there are no preferred dividends in this scenario, earnings available for common stockholders is also $24,700.Case b: Paying Dividends
Since preferred stock dividends are paid from after-tax earnings, we first calculate EAT: EBIT - Taxes. Taxes = $50,000 * 35% = $17,500.Earnings after taxes: $50,000 - $17,500 = $32,500.Subtract preferred stock dividends: $32,500 - $12,000 = $20,500, which is the earnings available for common stockholders.In both cases, the difference in earnings after taxes and earnings available for common stockholders reflects the financial decisions made by the firm, whether to service debt through interest payments or reward shareholders through dividends.
Central Metals, Inc. is considering investing in a silver mine. An investment of $500,000 would be made for one year with the following potential outcomes: What's the expected rate of return? Rate of Return Probability of Outcome 150% .10 60% .25 35% .50 (100%) .15 15.2% 120% 50% 32.5%
Answer:
The expected rate of return is 32.5%
Explanation:
The expected rate of return is equal to the sum of all the outcomes. So, in order to obtain the rate of return, you have to multiply each possible outcome by its probability of occurrence. Note that the sum of [tex]0.10 + 0.25 + 0.50 + 0.15 = 1 = 100%[/tex], that means that the probability of all outcomes has to sum 100%.
The result of each outcome multiplied by its probability is:
[tex]150% * 0.10 = 0.15[/tex][tex]60% * 0.25 = 0.15[/tex][tex]35% * 0.50 = 0.175[/tex][tex](100%) * 0.15 = (0.15)[/tex]The result of the sum of those calculations is equal to 0.325, or 32.5%.
Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check all that apply. Professors required each student to buy 10 notebooks, regardless of the price. The quality and design of calculators improved dramatically from 2014 to 2016. For example, calculators made in 2016 accept memory cards, whereas those made in 2014 do not, but this quality change is hard to measure. A new, safe method of memory enhancement became available for purchase. As the price of textbooks increased, more and more students turned to the used-book market or chose not to buy textbooks at all, instead using the copies on reserve in the library.
Answer: The quality and design of calculators improved dramatically from 2014 to 2016.
A new, safe method of memory enhancement became available for purchase.
As the price of textbooks increased, more and more students turned to the used-book market or chose not to buy textbooks at all, instead using the copies on reserve in the library.
Explanation: If textbook price increases , it might overstate the inflation in cost of going to college.
A new safe memory enhancement will be costly because of it's superior quality and technological progress.
Similarly , new calculator will also be improved and superior.
Thus, the survey will reflect higher prices,
Price indexes like the CPI could overstate education-related inflation for reasons such as professors enforcing set purchase requirements, students finding alternate ways to acquire textbooks due to price increases, and difficulty accounting for improvements in product quality, such as calculators.
Explanation:Student, your question pertains to Consumer Price Indexes (CPI) and how they represent inflation in education costs. Such price indexes can sometimes overstate inflation due to various factors.
The first and fourth options can explain this overstatement because they regard changes in consumer behavior related to costs: professors requiring a set number of notebooks independent of price, and students finding alternative methods to buying textbooks due to price increases.
These examples indicate that because the CPI uses a fixed basket of goods and services, it does not accurately reflect substitutions or changes in purchasing behavior that consumers might make in response to price changes.
The second option, an improvement in calculator quality, is another potential instance of overstated inflation. The CPI often has difficulty adjusting for quality changes, and so might not account for any additional value an improved calculator provides, thereby potentially overstating the effect of inflation.
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Suppose Ruston Company has the following results related to cash flows for 2018: Increase in Debt of $700,000 Dividends Paid of $500,000 Purchases of Property, Plant, & Equipment of $8,300,000 Other Adjustments from Financing Activities of $200,000 Other Adjustments from Investing Activities of $500,000 Assuming no other cash flow adjustments than those listed above, create a statement of cash flows for investing and financing activities with amounts in thousands. What is the Net Cash Flow from Investing and Financing Activities?
Answer:
Cash flow generated from financing activities 400,000
Cash flow used in Investing activities 7,800,000
Explanation:
700,000 debt receive
-500,000 dividends paid
200,000 other adjustment on Financing
400,000 TOTAL CASH GENERATED
-8,300,000 purchase of PPE
500,000 other adjustment on Inventing
-7,800,000 TOTAL CASH USED
Notice: There is no hint about the adjustment being related as negative, so it should be assuem are positive cashflow.
Determine the following estimate without using a calculator. Then use a calculator to perform the computation necessary to obtain an exact answer. How reasonable is your estimate when compared to the actual answer? Estimate the total cost of six grocery items if their prices are $4.21, $7.19, $12.68, $2.02, $10.24, and $6.63, by rounding each price to the nearest dollar and then adding.
Answer:
Estimate: $43
Exact: $42.97
Explanation:
1. First we must identify the rules of rounding.
Any number you want to round to (ie: the nearest dollar, tenth, ect) you must look at the number behind it (ie: looking at the ones spot when asked to round to the nearest ten). This number behind is called the rounding digit.
If the rounding digit we are asked to round is a 0, 1, 2, 3, or 4, then we make the rounding digit and every number behind it a 0. This is call rounding down.
If the rounding digit we are asked to round to is a 5, 6, 7 , 8, or 9, then we make the rounding digit and every number behind it a 0. The number in front of the rounding digit (the place value we were asked to round to) becomes 1 digit higher. This is called rounding down.
2. We will now round all the numbers to the nearest dollar. So, our rounding digit will be the number behind the dollars, the tenths place.
4.21 → 4.21 → rounding down → 4.00 → 4
7.19 → 7.19 → rounding down → 7.00 → 7
12.68 → 12.68 → rounding up → 13.00 → 13
2.02 → 2.02 → rounding down → 2.00 → 2
10.24 → 10.24 → rounding down → 10.00 → 10
6.63 → 6.63 → rounding up → 7.00 → 7
3. Next, we will take all our rounded numbers and add them up.
4 + 7 = 11
↓
11 + 13 = 24
↓
24 + 2 = 26
↓
26 + 10 = 36
↓
36 + 7 = 43
4. Then, add up all the original prices.
4.21 + 7.19 = 11.40
↓
11.40 + 12.68 = 24.08
↓
24.08 + 2.02 = 26.10
↓
26.10 + 10.24 = 36.34
↓
36.34 + 6.63 = 42.97
5. The estimate, when compared to the actual answer, is very comparable because the estimate is only $0.03 more than the actual amount. The two are less than 10¢ away from each other. The efficiency had when rounding and the close proximity to the real answer makes the two very comparable.
To estimate the total cost of six grocery items, you round each price to the nearest dollar and add them which gives $43. The exact total calculated with a calculator is $42.97. The estimate is reasonable because it is very close to the exact total.
Explanation:To estimate the total cost of those six grocery items, you round the individual prices to the nearest dollar before adding them up. Here's how it's done:
$4.21 rounds to $4$7.19 rounds to $7$12.68 rounds to $13$2.02 rounds to $2$10.24 rounds to $10$6.63 rounds to $7The sum of those rounded numbers is $43 which is your estimated total cost.
To get the exact total cost, you add the original prices with a calculator:
$4.21 + $7.19 + $12.68 + $2.02 + $10.24 + $6.63 = $42.97The estimate is reasonable because it is very close to the exact total cost.
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A dozen eggs cost $0.96 in December 2000 and $2.75 in December 2015. The average wage for workers in private industries was $14.28 per hour in December 2000 and $21.26 in December 2015. By what percentage did the price of a dozen eggs rise? 65% 179% 186% By what percentage did the wage rise?
Answer:
By 186% the price of a dozen eggs rise.
Explanation:
Given that,
Cost in December 2000 = $0.96
Cost in December 2015 = $2.75
Average wage for December 2000 = $14.28 per hour
Average wage for December 2015 = $21.26
By considering these information, we are able to calculate the increase price percentage of a dozen eggs. The calculation is shown below:
= (December 2015 price - December 2000 price ) ÷ (December 2000 price) × 100
= ($2.75 - $0.96) ÷ ($0.96) × 100
= ($1.79) ÷ ($0.96) × 100
= 186%
Thus, by 186% the price of a dozen eggs rise.
Final answer:
The price of a dozen eggs increased by approximately 186% from December 2000 to December 2015, while the average wage for workers in private industries rose by approximately 49% over the same period.
Explanation:
To calculate the percentage increase in the price of a dozen eggs from December 2000 to December 2015, first determine the initial and final prices. The price rose from $0.96 to $2.75. Use the formula for percentage increase: Percentage Increase = (New Price - Original Price) / Original Price \ imes 100%.
Plugging in the values gives us: (2.75 - 0.96) / 0.96 \ imes 100% = 1.79 / 0.96 \ imes 100% \\approx 186%.
The average wage increase is similarly calculated: (21.26 - 14.28) / 14.28 \ imes 100% \\\approx 49%.
Two methods are under consideration for producing the case for a portable hazardous material photoionization monitor. A plastic case will require an initial investment of $75,000 and will have an annual operating cost of $27,000 with no salvage after 2 years. An aluminum case will require an investment of $125,000 and will have annual costs of $12,000. Some of the equipment can be sold for $30,000 after its 3-year life. At an interest rate of 10% per year, which case should be used on the basis of a present worth analysis?
Based on the present worth analysis, the plastic case has a present worth of -$28,141, while the aluminum case has a present worth of -$74,498.
To determine which case should be used based on a present worth analysis, we need to calculate the present worth of each option and compare them.
The present worth is the current value of all the cash flows associated with each case, considering the interest rate.
Let's calculate the present worth for each case:
Plastic Case:Initial investment: $75,000
Annual operating cost: $27,000 (for 2 years)
Salvage value: $0
Using the present worth formula, the present worth of the plastic case is:
[tex]PW_{plastic} = -Initial \ investment + (Annual \ operating \ cost / (1 + interest \ rate)^1) + (Annual \ operating \ cost / (1 + interest \ rate)^2)\\= -$75,000 + ($27,000 / (1 + 0.10)^1) + ($27,000 / (1 + 0.10)^2)\\= -$75,000 + ($27,000 / 1.10) + ($27,000 / 1.10^2)\\= -$75,000 + $24,545 + $22,314\\= -$28,141[/tex]
Aluminum Case:Initial investment: $125,000
Annual operating cost: $12,000 (for 3 years)
Salvage value: $30,000
Using the present worth formula, the present worth of the aluminum case is:
[tex]PW_{aluminum} = -Initial \ investment + (Annual \ operating \ cost / (1 + interest \ rate)^1) + (Annual \ operating \ cost / (1 + interest \ rate)^2) + (Annual \ operating \ cost / (1 + interest \ rate)^3) + Salvage \ value / (1 + interest \ rate)^3\\[/tex]
[tex]= -$125,000 + ($12,000 / (1 + 0.10)^1) + ($12,000 / (1 + 0.10)^2) + ($12,000 / (1 + 0.10)^3) + $30,000 / (1 + 0.10)^3\\= -$125,000 + ($12,000 / 1.10) + ($12,000 / 1.10^2) + ($12,000 / 1.10^3) + $30,000 / 1.10^3\\= -$125,000 + $10,909 + $9,917 + $9,015 + $20,661\\= -$74,498[/tex]
Based on the present worth analysis, the plastic case has a present worth of -$28,141, while the aluminum case has a present worth of -$74,498.
Since the present worth of the plastic case is less negative than the present worth of the aluminum case, the plastic case should be chosen based on a present worth analysis at an interest rate of 10% per year.
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Final answer:
Based on the present worth analysis, the aluminum case should be used over the plastic case for the portable hazardous material photoionization monitor. The correct present worth ($133,132) which compared to the plastic case is ($126,080).
Explanation:
In order to determine which case should be used based on a present worth analysis, we need to calculate the present worth of each case and compare them. A present worth analysis accounts for the time value of money by discounting future costs and benefits back to their present values.
For the plastic case:
Calculate the present worth of the initial investment: $75,000 / [tex](1 + 0.10)^0[/tex] = $75,000
Calculate the present worth of the annual operating costs over 2 years: $27,000 * ((1 - [tex](1 + 0.10)^{-2}[/tex]) / 0.10) = $51,080
The total present worth of the plastic case is $75,000 + $51,080 = $126,080
For the aluminum case:
Calculate the present worth of the initial investment: $125,000 / [tex](1 + 0.10)^0[/tex] = $125,000
Calculate the present worth of the annual operating costs over 3 years: $12,000 * ((1 - [tex](1 + 0.10)^{-3}[/tex]) / 0.10) = $32,520
Account for the salvage value of $30,000 at the end of 3 years: $30,000 / [tex](1 + 0.10)^3[/tex] = $24,388
The total present worth of the aluminum case is $125,000 + $32,520 - $24,388 = $133,132
Based on the present worth analysis, the aluminum case should be used since it has a higher present worth ($133,132) compared to the plastic case ($126,080).
If you draw a card with a value of three or less from a standard deck of cards, I will pay you $146. If not, you pay me $24. (Aces are considered the highest card in the deck.)Step 1 of 2 :Find the expected value of the proposition. Round your answer to two decimal places. Losses must be expressed as negative values.
Answer: Expected value = $2.034
Explanation:
Total outcome = 52
Favorable Outcome = 8
Probability of drawing a card with a value of three or less = [tex]\frac{Favorable\ outcome}{Total\ outcome}[/tex]
= [tex]\frac{8}{52}[/tex]
= [tex]\frac{2}{13}[/tex]
Probability of drawing a card with a value of more than three = 1 - [tex]\frac{2}{13}[/tex]
= [tex]\frac{11}{13}[/tex]
Hence,
Expected value = [tex]146 \times \frac{2}{13} + (-24) \times \frac{11}{13}[/tex]
= 22.338 - 20.304
= $2.034
Nov. 1 Dollar Store purchases merchandise for $1,600 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1. 5 Dollar Store pays cash for the November 1 purchase. 7 Dollar Store discovers and returns $100 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund. 10 Dollar Store pays $80 cash for transportation costs for the November 1 purchase. 13 Dollar Store sells merchandise for $1,728 with terms n/30. The cost of the merchandise is $864. 16 Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $200 and cost $100; the items were not damaged and were returned to inventory. Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the gross method.
Answer:
NOV 1
Inventory 1,600
Account Payable 1,600
Nov 5
Account Payable 1,600
Discount received 32
Cash 1,568
Nov 7
Cash 100
Inventory 100
Nov 10
Freight In 80
Cash 80
Nov 13
Account receivable 1,728
Sales Revenues 1,728
Nov 13
COGS 864
Inventory 864
Nov 16
Sales Revenue 200
Account receivable 200
Nov 16
Inventory 100
COGS 100
Explanation:
The changes in inventory valuation must be done imediatly under perpetual inventory system.
Answer:
NOV 1
Inventory 1,600
Account Payable 1,600
Nov 5
Account Payable 1,600
Discount received 32
Cash 1,568
Nov 7
Cash 100
Inventory 100
Nov 10
Freight In 80
Cash 80
Nov 13
Account receivable 1,728
Sales Revenues 1,728
Nov 13
COGS 864
Inventory 864
Nov 16
Sales Revenue 200
Account receivable 200
Nov 16
Inventory 100
COGS 100
Explanation:
Because of its importance in summarizing your strategy, the Introduction and Overview of your business plan should be
A. written before you begin your research. B. written last. C. lengthy and detailed. D. repeated in a cover letter .9
Answer:
Because of its importance in summarizing your strategy, the Introduction and Overview of your business plan should be written last-B.
Final answer:
The correct answer is B, as the Introduction and Overview of your business plan should ideally be written last to effectively summarize your strategy and research findings. It encapsulates the critical points of your business strategy in a concise manner and is not meant to be a detailed section or repeated in a cover letter.
Explanation:
The Introduction and Overview of your business plan should be written last. This is because it functions as a summary of your business strategy and plan, which means you need all the detailed information derived from your research to accurately encapsulate your business vision and approach. Managers and entrepreneurs commonly write the executive summary or introduction last, as it needs to be accurate, concise, and reflective of the entire document, whether it's a 100-page white paper or a 10-page summary analysis. Any key points and unique aspects of your business need to be clearly defined here, providing potential investors or stakeholders with a compelling high-level overview without unnecessary detail.
Furthermore, the Introduction is similar to an executive summary and typically presents the same type of information, though with slightly different focuses. It's often more detailed than a cover letter or abstract, both of which serve different purposes in the context of business communications. While a cover letter might introduce the business plan and its author, the introduction itself is designed to introduce the business concept.
Freberg Company, a division of Dudge Cars, produces automotive batteries. Freberg sells the batteries to its customers for $92 per unit. The variable cost per unit is $55, and fixed costs per unit are $16. Top management of Dudge Cars would like Freberg to transfer 30,000 batteries to another division within the company at a price of $61. Freberg has sufficient excess capacity to provide the 30,000 batteries to the other division. Compute the minimum transfer price that Freberg should accept.
The minimum transfer price that Freberg Company should accept for the transfer of batteries to another division within Dudge Cars is the variable cost per unit, which is $55.
Explanation:The minimum transfer price that Freberg should accept is the variable cost per unit because that is the cost that Freberg would incur to produce an extra unit for the other division. Fixed costs are not included in the transfer price calculation because they are not directly tied to the production of the specific 30,000 batteries. Therefore, the minimum transfer price would be the variable cost of $55 per unit.
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The answer is minimum transfer price that Freberg should accept is $55 per unit.
To compute the minimum transfer price that Freberg should accept, we need to consider the variable cost per unit and the fixed costs per unit.
Variable cost per unit = $55Fixed cost per unit = $16Total cost per unit = Variable cost + Fixed cost
= $55 + $16
= $71
Since Freberg has excess capacity and the variable cost per unit represents the incremental cost of producing additional units, the minimum transfer price should be equal to the variable cost per unit, which is $55.
Therefore, the minimum transfer price that Freberg should accept is $55 per unit.
Tom’s Electrical had the following information: Total Assets, December 31, 2016 $160,000 Total Assets, December 31, 2017 170,000 For Year Ended December 31, 2017: Interest Expense 2,000 Net Income 48,000 What is the rate of return on total assets?
Answer:
ROA = 30.3030%
Explanation:
ROA = operating income / average assets
were average assets = ( beginning assets + ending assets ) / 2
operating income = net income + interest expense
= 48,000 + 2,000 = 50,000 income generate by assets
average assets = (160,000 + 170,000) / 2 = 165,000
ROA = 50,000 / 165,000 = 0.303030 = 30.3030%
Remember:
If you are given with the net income value and the list of expenses, look out for interest expenses, because those are generate by the liabilities ofthe company, so to clean up the income we add them to the net income to show the ammount generate by assets
The rate of return on total assets for Tom's Electrical for the year ended December 31, 2017, is calculated by dividing the net income by the average total assets for the period. The rate of return is approximately 29.1%.
Explanation:The rate of return on total assets can be calculated using the formula:
Return on Assets (ROA) = Net Income / Average Total Assets
We calculate the Average Total Assets by adding the Total Assets at the beginning of the period to the Total Assets at the end of the period and dividing by 2:
Average Total Assets = (Total Assets 2016 + Total Assets 2017)/2 = ($160,000 + $170,000)/2 = $165,000
Then we can calculate the ROA:
ROA = Net Income / Average Total Assets = $48,000 / $165,000 = 0.291
Therefore, the rate of return on total assets for Tom's Electrical for the year ended December 31, 2017, is approximately 29.1%.
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