Answer:
Consider the following calculations
Explanation:
The amounts of advertising, sales salaries and commissions, and shipping expenses would be included in the company’s flexible budget for March are calculated below.
Flexible budgetAdvertising = 200.000
Sales salaries and commissions [100.000 + (12.00 * 30.000 )] = 460.000
Shipping expenses [(3.00 * 30.000)]= 90.000
The flexible budget for March for Preble Company would account for $200,000 in advertising, $360,000 in sales salaries and commissions and $90,000 in shipping expenses.
Explanation:The flexible budget adjusts with the level of activity and in this case, it's based on the number of units being produced and sold.
In Preble Company, the advertising expense is fixed at $200,000, so in calculating the flexible budget for March, the advertising cost will still be $200,000.
The variable costs such as sales salaries, commissions and shipping expenses change with the level of activity. Since these costs are $12 per unit sold, the sales salaries and commissions for March will amount to $12 * 30,000 units = $360,000. The shipping expenses are $3 per unit sold, which will amount to $3 * 30,000 = $90,000.
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Each of the following parts describes a firm that was an early mover in its market. In light of the information provided, indicate whether the firm’s position as an early mover is likely to be the basis of a sustainable competitive advantage, and explain why or why not.A firm has a 60% share of T3MP, a commodity chemical used to make industrial solvents. Minimum efficient scale is thought to be 50% of current market demand. Recently, a change in environmental regulation has dramatically raised the price of a substitute chemical that indirectly competes with T3MP. This undermines the market for the substitute, which is about twice the size of the market for T3MP.
Answer:
Check the following explanation
Explanation:
Let us consider Porter’s Five forces strategy, in analyzing the particular scenario of Bank and that of the firm which produces T3MP chemical.
As the bank is an early mover in the issuance of ATM cards, the bank definitely got the competitive advantage. As an early mover, the bank faced very low threat of new entrants with regard to distribution of ATM cards. Therefore, the bank could capture a large area of urban region. Also, the switching cost for bank customers is quite high and in the case of banks, generally the individual customers prefer to stick to one or two banks. As an early mover, this was definitely an advantage to the bank. As a result, the bank also got a loyal customer base in the long run. When the brand loyalty was combined with the high switching cost of bank products; in terms of ATM, the entry of a potential competitor was difficult for the bank. Since the ATM cards are unique to each customer and bank, the ATM products adopts a generic differentiation strategy in terms of technology and point of locations. The place is definitely a competitive advantage of bank ATMs and being an early mover, they could capture a large share of customers in the urban areas.
As the ATM cards are specially made for the particular banks, they are definitely a tool for gaining advantage over the competitors. Hence the bank enjoys a definitive leadership in terms of its competitive advantage as an early mover where it could capture a large urban area, and in terms of technology where one bank’s ATM card doesn’t fit into another.
In the case of second firm, which has a 60 percent share of T3MP, faces the threat from substitute products. But T3MP has got the competitive advantage over its substitute product, due to the low bargaining power of customers. T3MP seems to have only a major substitute, whose market share seemed to have dented by the increase in price of the substitute. The low price of T3MP compared to the substitute is definitely a competitive advantage for the firm. This would decrease the competition from the substitute product which in turn will increase the sale of T3MP. Further, the substitute won’t be able to limit the growth of T3MP by setting a sealing price. The firm could increase its marginal returns through increased sale of T3MP. Thus the firm could capture the market share of the substitute which is twice as that of T3MP and could increase its revenue and earning potential.
As the manager of a workforce with particularly stressful jobs, you plan to present techniques to help your workforce more effectively regulate emotions. Recognizing that these are individuals working in situations where they are not able to control the sources of stress, what technique would be most appropriate to teach your workforce?
Answer:
The most appropriate technique to teach the workforce would be "Cognitive Reappraisal".
Explanation:
"Cognitive Reappraisal" is a technique for managing emotions that involves an individual, realizing and accepting he has no control over a situation, and then choosing to think about the situation in a way which helps to create a positive emotional response rather than a negative one.
This technique will help the workforce regulate emotions more effectively.
Jensen Company reports the following:
Direct materials used $345,000
Direct labor incurred 250,000
Factory overhead incurred 400,000
Operating expenses 175,000
Jensen Company’s period costs are
a. $345,000
b. $250,000
c. $400,000
d. $175,000
Answer:
d. $175,000
Explanation:
The computation of the period cost is shown below:
Period costs = Operating expenses
= $175,000
It records only that expenses which are incurred during the particular year. Examples - Salaries expense, Depreciation, Repairs, and maintenance, Advertising expense, sales commission, etc
All other information which is given is not relevant. Hence, ignored it
Final answer:
The Jensen Company's period costs are its operating expenses, which are not directly tied to production. The correct period cost given in the question is $175,000, representing the operating expenses.
Explanation:
The student asked what Jensen Company's period costs are, given a breakdown of expenses including direct materials, direct labor, factory overhead, and operating expenses. Period costs are those costs that are not directly tied to the production process and are expensed in the period they are incurred. From the options given, the correct answer is d. $175,000, which represents the operating expenses. These costs are not involved in manufacturing but rather in non-production activities of the company.
Carmel Corporation is considering the purchase of a machine costing $41,000 with a 8-year useful life and no salvage value. Carmel uses straight-line depreciation and assumes that the annual cash inflow from the machine will be received uniformly throughout each year. In calculating the accounting rate of return, what is Carmel's average investment? Multiple Choice
A. $5,125.
B. $23,063.
C. $41,000.
D. $5,766.
E. $20,500.
Answer:
E. $20,500
Explanation:
The average investment is defined as the average between the initial investment and the salvage value of the equipment.
In this situation, Carmel Corporation had an initial investment of $41,000 for the machine and its salvage value is zero. Therefore, Carmel's average investment is:
[tex]AI = \frac{\$41,000+0}{2} \\AI = \$20,500[/tex]
The answer is alternative E. $20,500
Jiffy Co. expects to pay a dividend of $3.00 per share in one year. The current price of Jiffy common stock is $60 per share. Flotation costs are $3.00 per share when Jiffy issues new stock. What is the cost of internal common equity (retained earnings) if the longminusterm growth in dividends is projected to be 8 percent indefinitely
Answer:
B13%, explained below:
Explanation:
Flotaion cost doesn't impact the cost of existing equity and it only impact the cost of new equity. The question asks about cost of existing equity, hence
Cost of equity ={ Expected dividend in one year/ Stock price} + growth rate = 3 /60% + 8%
Cost of existing equity (Retained earnings) = 13%
Throughout history, all sorts of interesting things have been used as money, including fresh fish and cattle. Fresh fish is not an effective form of money. What essential characteristic of money does fresh fish lack that most makes it ineffective? allocated by the government store of value medium of exchange stackablity unit of account Cattle is not an effective form of money. What essential characteristic of money does cattle lack that most makes it ineffective? store of value medium of exchange stackability unit of account allocated by the government
Answer: Medium of exchange
Explanation:
The most essential quality of money lacked by both Fish and Cattle is medium of exchange which implies having an item that will help in determining the rate of exchange for different products. Both cannot be used for this purpose for lack of homogeneity, divisibility, portability etc.
Both items can be allocated by the Government, used in storing value, they are stackable and can both work as units of accounts.
The SP Corporation makes 40,000 motors to be used in the production of its sewing machines. The average cost per motor at this level of activity is:
Direct materials $ 9.90
Direct labor $ 8.90
Variable manufacturing overhead $ 3.65
Fixed manufacturing overhead $ 4.60
An outside supplier recently began producing a comparable motor that could be used in the sewing machine. The price offered to SP Corporation for this motor is $25.15. If SP Corporation decides not to make the motors, there would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided. Direct labor is a variable cost in this company. The annual financial advantage (disadvantage) for the company as a result of making the motors rather than buying them from the outside supplier would be:
Multiple Choice
($76,000)
$254,000
108,000
$184,000
Answer:
c) 108,000 dollars
Explanation:
Buy option:
Purchase: 40,000 motors at 25.15 = 1,006,000
unavoidable fixed cost: 40,000 x 4.60 = 184,000
1,190,000.00
Produce option:
Manufacturing Cost (9.9 + 8.9 + 3.65) x 40,000 = 898,000.00
Fixed cost: 184,000.00
Total Cost 1,082,000.00
Differential: 1,190,000 - 1,082,000.00 = 108,000.00
It is advantageous to continue the production as the unavoidable cost will make the buy option a worse deal
On September 1, 2020, Pina Corporation acquired Kingbird Enterprises for a cash payment of $690,000. At the time of purchase, Kingbird’s balance sheet showed assets of $570,000, liabilities of $230,000, and owners’ equity of $340,000. The fair value of Kingbird’s assets is estimated to be $880,000.
Final answer:
When Pina Corporation acquired Kingbird Enterprises, the journal entry would be recorded in the balance sheet. The fair value of Kingbird's assets is higher than the book value, resulting in an increase in the total assets of Pina Corporation.
Explanation:
When Pina Corporation acquired Kingbird Enterprises on September 1, 2020, the journal entry would be:
Dr: Assets $570,000
Cr: Cash $690,000
The fair value of Kingbird's assets is $880,000, which is higher than the book value of $570,000. This implies that the total assets of Pina Corporation would increase by $310,000. The entry to record the increase in value would be:
Dr: Fair Value Adjustment $310,000
Cr: Gain on Bargain Purchase $310,000
As a result, the total assets of Pina Corporation will be $880,000 after the acquisition.
Indicate whether each of the following is an example of an automatic stabilizer or discretionary fiscal policy.
1. The government increases the top income tax bracket to 35%.
2. The tax rate paid by an individual falls from 20% to 15% when his pay is reduced during a recession.
3. A person qualifies for unemployment compensation when she loses her job during a recession.
4. The government votes to increase military spending.
5. The government collects more tax revenue during an expansion because the stock market is booming.
Answer:1. Discretionary fiscal policy.
2. Automatic stabilizer.
3 Automatic stabilizer
4. Discretionary fiscal policy
5. Discretionary fiscal policy
Explanation:
Automatic stabilizer are already existing Government legislation built in to stabilize the economy without direct goverments intervention. E.g the progressive tax system which takes more tax as income increases and less tax as it decreases, the bottom line is that this policy already exists in the Government system in controlling the economy.
Discretionary fiscal policy are new and direct Goverments policy to control the economy like new spending, new tax etc.
A firm is considering taking a project that will produce $12 million of revenue per year. Cash expenses will be $5 million, and depreciation expenses will be $1 million per year. The project would also reduce the cash revenues of an existing project by $2 million. What is the free cash flow on the project, per year, if the firm is in the 40 percent marginal tax rate?
The project's annual free cash flow, considering the impact on the other project and the 40% marginal tax rate, is $2.6 million.
Explanation:The subject pertains to the determination of the annual free cash flow of a project. Free cash flow is calculated by subtracting cash expenses, tax, and the impact on revenues from other projects from the total revenue it produces.
Here's how it's done:
Determine the operating income, which is the total revenue minus cash expenses and depreciation expenses. Subtract $5 million and $1 million from $12 million, which yields $6 million.Calculate the tax by multiplying the operating income by the tax rate. Hence, $6 million multiplied by 40% (or 0.40) amounts to $2.4 million.Compute for the net operating profit after taxes (NOPAT) by subtracting the tax from the operating income. Thus, $6 million minus $2.4 million equals $3.6 million.Add back the depreciation to the NOPAT since it is a non-cash expense. So, $3.6 million plus $1 million results to $4.6 million.Finally, incorporate the impact on other projects, which in this case is a decrease in cash revenues of $2 million. Therefore, $4.6 million minus $2 million gives us a free cash flow of $2.6 million per year.Learn more about Free Cash Flow here:https://brainly.com/question/34881412
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To calculate the annual free cash flow, you subtract cash expenses and opportunity costs from revenue, add non-cash expenses, then subtract taxes on the remaining amount. The annual free cash flow for the project is $4 million.
In order to calculate the free cash flow for the project, we need to account for the operating cash flows, changes in net working capital, and expenditures. The operating cash flows can be derived from the project's revenue, expenses, and taxes. Depreciation is non-cash, so we add it back after deducting taxes. Additionally, the reduction in cash revenue from an existing project is considered an opportunity cost and must be subtracted to reflect the true incremental cash flows from the project.
Here is the step-by-step calculation:
Calculate total revenue: $12 million.Subtract cash expenses: $12 million - $5 million = $7 million.Account for the opportunity cost: $7 million - $2 million = $5 million.Add back depreciation (since it's a non-cash expense): $5 million + $1 million = $6 million.Calculate taxes (we apply the tax rate to revenue minus cash expenses, not including depreciation): ($7 million - $2 million) * 40% = $2 million tax expense.Get the after-tax operating cash flow: $6 million - $2 million = $4 million.The annual free cash flow of the project is $4 million.
Sales-oriented pricing objectives:
A. may include market share targets as well as dollar or unit sales targets.
B. might be achieved and still result in losses.
C. are especially risky during times when a firm's costs are rising rapidly.
D. All of the above are true.
E. None of the above is true.
Sales-oriented pricing objectives can include market share and sales targets but may result in losses, especially risky when firm's costs are rising rapidly.
The question pertains to the application of sales-oriented pricing objectives in the business environment. Option D, All of the above are true, is correct. Sales-oriented pricing objectives may include market share targets, and dollar or unit sales targets (A), meaning the goal is to generate a certain volume of sales, regardless of profitability. These objectives might still result in losses (B) if the revenue generated from the sales doesn't cover the costs of the business. Additionally, pursuing these objectives are especially risky during times when a firm's costs are rising rapidly (C), as it could lead to even higher losses if prices aren't adjusted appropriately.
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Sales-oriented pricing objectives may include market share targets as well as dollar or unit sales targets. Achieving these objectives doesn't guarantee profitability and a company can still experience losses. Pursuing sales-oriented pricing objectives can be particularly risky during periods when a firm's costs are rising rapidly.
Explanation:D. All of the above are true.
Sales-oriented pricing objectives may include market share targets as well as dollar or unit sales targets. Achieving these objectives doesn't guarantee profitability and a company can still experience losses.
Additionally, during periods when a firm's costs are rising rapidly, pursuing sales-oriented pricing objectives can be particularly risky.
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The common stock of Ecolab pays an annual dividend of $1.84 a share. The company has promised to maintain a constant dividend regardless of economic conditions. How much would investors be willing to pay for one share of Ecolab's stock assuming an equity cost of capital of 13.6%?
Answer:
$13.53
Explanation:
Data provided in the question:
Annual dividend per share, D0 = $1.84
Cost of capital, ke = 13.6% = 0.136
Now,
since,
the dividend remains the constant, the growth rate (g) of the dividend will be 0%
Also,
Current price = [ D0 × ( 1 + g ) ] ÷ [ ke - g ]
= [ $1.84 × ( 1 + 0% ) ] ÷ [ 13.6% - 0% ]
= $1.84 ÷ 0.136
= $13.53
Last year, the House of Orange had sales of $826,650, net operating income of $81,000, and operating assets of $84,000 at the beginning of the year and $90,000 at the end of the year.
What was the company's turnover rounded to the nearest tenth?
A) 9.8
B) 10.2
C) 9.5
D) 9.2
Answer:
The company's turnover rounded to the nearest tenth: C) 9.5
Explanation:
Asset turnover helps investors understand how effectively companies are using their assets to generate sales. Asset turnover is calculated by using following formula:
Asset Turnover = Total Sales or Revenue/ Average Total Assets
where:
Average Total Assets = (Beginning Assets + Ending Assets )/2 = (Assets at the beginning of year +Assets at end of year )/2
In the House of Orange:
Average Total Assets = ($84,000 + $90,000)/2 = $87,000
Asset Turnover = $826,650/$87,000 = 9.5
Final answer:
The company's turnover is found by dividing sales by average operating assets. Sales were $826,650 and the average operating assets were $87,000, resulting in a turnover of approximately 9.5 when rounded to the nearest tenth.
Explanation:
To find the company's turnover, we need to use the formula for asset turnover ratio, which is calculated by dividing sales by average operating assets. For the House of Orange, the sales were $826,650, and the average operating assets are the average of the beginning and end of year assets, which are $84,000 at the beginning and $90,000 at the end. Thus, the average operating assets are calculated as ($84,000 + $90,000) / 2 = $87,000.
Now, we use the sales and average operating assets to find the turnover: Turnover = Sales / Average Operating Assets = $826,650 / $87,000 ≈ 9.506, which rounded to the nearest tenth is 9.5. So, the correct answer would be (C) 9.5.
Keren Wiseman is an employee of Dimensionworks Designs in New Mexico. She received the following achievement awards from her employer during 2017: Best Design, Santa Fe County: $1,340 Top Graphic Layout, New Mexico: $1,775 Employee of the Year: $785Required:How much of her achievement award income is taxable? ____
Answer:
$2,300
Explanation:
Assuming that the requirements for qualified plan awards are otherwise satisfied, each award by itself would be excluded from income.
The excludable amount or deduction is $1,600 out of total amount of awards.
Total amount of awards = Design + Graphic + Employee of the year
= $1,340 + $1,775 + $785
= $3,900
Taxable awards = Total amount of awards – Excludable amount
= $3,900 – $1,600
= $2,300
However, because the $3,900 total value of the awards is more than $1,600, Keren must include $2,300 in his taxable income.
Net income was $470,000. Issued common stock for $72,000 cash. Paid cash dividend of $11,000. Paid $125,000 cash to settle a note payable at its $125,000 maturity value. Paid $121,000 cash to acquire its treasury stock. Purchased equipment for $87,000 cash.Use the above information to determine this company's cash flows from financing activities. (Amounts to be deducted should be indicated with a minus sign. Omit the "$" sign in your response.)Statement of Cash FlowsCash flows from financing activities$ ...... ............. ............. ............ ........
Answer:
310500.
Explanation:
Given: Net income= 470000
Issued common stock= 72000
Paid cash dividend= 11000
Paid cash to settle a note payable= 125000
Paid for treasury stock= 121000
Purchased equipment= 87000
Cash flow from financial activities are the cash inflow that are used to fund company. Here we consider all financial activities which involve cash.
We add all cash inflow from issuing debt and equity then deduct all cash outflow from stock repurchase, cash paid in dividend and other financial activities.
Cash flow from financial activities (CFF)= [tex](470000+72000)-11000-125000-121000-87000[/tex]
Cash flow from financial activities (CFF)= [tex](542000)-(231500)= 310500[/tex]
∴ Cash flow from financial activities is 310500.
Greg purchased stock in Bear Stearns and Co. at a price of $88 per share one year ago. The
company was acquired by JP Morgan at a price of $11 per share. What is Gregʹs return on his
investment?
A) -87.50%
B) -113.75%
C) -100.62%
D) -96.25%
Answer:
A) -87.50%
Explanation:
The computation of the return on the investment is shown below:
= (Acquired price by JB Morgon - purchase price per share) ÷ (purchase price per share)
= ($11 per share - $88 per share) ÷ (88 per share)
= - ($77 per share) ÷ (88 per share)
= -87.50%
We simply take the difference of the price and then divide it with the purchase price per share so that the correct percentage can come.
Final answer:
Greg experienced a return on investment of -87.50% when Bear Stearns and Co. was acquired by JP Morgan at a much lower price than his original purchase price.
Explanation:
Greg's return on investment (ROI) is calculated by finding the percentage change from the original purchase price to the acquisition price. To find the ROI, we use the following formula:
ROI = ((Final Value of Investment - Initial Value of Investment) / Initial Value of Investment) * 100
Using the numbers given:
Initial Value = $88 per share
Final Value = $11 per share
ROI = (($11 - $88) / $88) * 100
Thus, ROI = ((-$77) / $88) * 100 = -87.5%
Therefore, Greg's return on his investment is -87.50%, which means he suffered a significant loss on his investment after the company was acquired.
For the year ended December 31, 2021, Norstar Industries reported net income of $975,000. At January 1, 2021, the company had 1,110,000 common shares outstanding. The following changes in the number of shares occurred during 2021: Apr. 30 Sold 95,000 shares in a public offering. May 24 Declared and distributed a 5% stock dividend. June 1 Issued 108,000 shares as part of the consideration for the purchase of assets from a subsidiary. Required: Compute Norstar's earnings per share for the year ended December 31, 2021. (Enter your answers in thousands. Round "EPS" answer to 2 decimal places. Do not round intermediate calculations.)
To calculate Norstar Industries' earnings per share (EPS), we need to determine the weighted average number of common shares outstanding and divide the net income by this number.
Explanation:The first step in calculating Norstar Industries' earnings per share (EPS) is to determine the weighted average number of common shares outstanding.
To do this, we start with the number of shares at the beginning of the year, add any shares issued or sold, and subtract any shares repurchased or retired. In this case, we have 1,110,000 shares at the beginning of the year, sold 95,000 shares in April, issued 108,000 shares in June, and no shares repurchased or retired.
Next, we divide the net income of $975,000 by the weighted average number of shares outstanding to calculate the EPS. The weighted average number of shares is (1,110,000 * 12) + (95,000 * 8) + (108,000 * 7) = 22,320,000 shares. Therefore, the EPS is $975,000 / 22,320,000 = $0.0436 per share.
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You are an economic adviser to a candidate for national office. She asks you for a summary of the economic consequences of a balanced-budget rule for the federal government and for your recommendation on whether she should support such a rule. How do you respond?
Answer:
Recommendation: Do not support such rule
Explanation:
This type of budget rules restrain governments from employing taxes and transfers as automatic stabilizers. This due to the fact that these rules tend to bring deficits and surpluses.
Use the theory of comparative advantage to explain the way in which Logitech has configured its global operations. Why does the company manufacture in China and Taiwan, undertake basic R&D in California and Switzerland, design products in Ireland, and coordinate marketing and operations from California?
Answer:
Comparative advantage is defined as the quality of a firm or country to produce something at a lower economic oportunity cost than other firm.
These operations can be easily explained by defining the comparative advantages of each country.
Manufacturing in China and Taiwan - This two countries have a comparative advantage in manufacturing because of low labor costs, and great infraestructure (ports, trains, airports, facilities).
Basic R$D in California and Switzerland - Both regions have a comparative advantage in human capital. They have prestigious universities, and are at the forefront of scientific and technological research.
Design products in Ireland - Ireland also has good human capital, but perhaps not as good as California or Switzerland. Therefore, product design, which usually comes after basic research, is undertaken there.
Coordinates marketing and operations in California - California is a huge market, and being close to potential customers is always a comparative advantage for marketing and managerial operations.
Logitech has configured its global operations based on the theory of comparative advantage by allocating different stages of its production process to countries where they can be performed most efficiently and effectively.
Logitech manufactures its products in China and Taiwan because these countries offer a comparative advantage in manufacturing due to lower labor costs, established supply chains, and high production capacities. This allows Logitech to produce goods at a lower cost, which is crucial for price-competitive electronics.
Basic R D activities are conducted in California and Switzerland because these locations have a comparative advantage in research and development, with access to highly skilled labor, innovative environments, and strong intellectual property protection. California's Silicon Valley is a hub for technology innovation, while Switzerland has a reputation for high-quality research institutions.
Product design is centered in Ireland, which likely reflects Ireland's comparative advantage in design talent, possibly due to a favorable business environment, a skilled workforce, and government incentives for design and innovation. Ireland's corporate tax policies may also play a role in attracting such activities.
Marketing and operations are coordinated from California, where Logitech's headquarters are located. This centralization allows for better coordination and control of global operations. California's diverse and large market, along with its proximity to Silicon Valley's talent pool, provides a comparative advantage for managing global marketing and supply chain operations.
By leveraging the comparative advantages of different regions, Logitech maximizes its efficiency, reduces costs, and maintains a competitive edge in the global market. This strategic distribution of tasks across the globe enables the company to benefit from the unique strengths of each location, ultimately contributing to its overall success."
Lumeris Inc., an automobile manufacturer, has an inflexible work schedule and requires its workers to work nine hours a day and six days a week. Its laborers do not have adequate skills to perform their job efficiently. The inflexible work schedule and inadequate labor skills are examples of _____.
a. physical constraints
b. nonphysical constraints
c. bottleneck activities
d. work order
Answer:
The correct answer is letter "B": nonphysical constraints.
Explanation:
According to the Theory of Constraints (TOC) a constraint is a limiting factor that does not enable companies to perform their work at their maximum capacity for their goals' achievement. In the same sense, nonphysical constraints are not material factors negatively influencing employees' actions. Wages cuts, reduction of benefits, unclear lines of command are examples of that kind of constraint.
The population of deer in a certain area of Stanly county grows proportional to itself. The population of deer in 2000 was found to be 145, and by 2010 the population had frown to 185. Find the growth constant k (rounded to 6 decimal places), and the expected deer population in 2013.
Answer
The answer and procedures of the exercise are attached in the following archives.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
The Z Corporation is considering an investment with the following data (Ignore income taxes.): Year 1 Year 2 Year 3 Year 4 Year 5 Investment $ (32,000) $ (12,000) Cash inflow $ 8,000 $ 8,000 $ 20,000 $ 16,000 $ 16,000 Cash inflows occur evenly throughout the year. The payback period for this investment is:
Answer:
3.5 yeas
Explanation:
In the payback, we analyze in how many years the invested amount is recovered. The computation is shown below:
In year 0 = $32,000
In year 0 = $12,000
In year 1 = $8,000
In year 2 = $8,000
In year 3 = $20,000
In year 4 = $16,000
In year 5 = $16,000
If we sum the first 3 year cash inflows than it would be $36,000
Now we deduct the $36,000 from the $44,000 , so the amount would be $8,000 as if we added the fourth year cash inflow so the total amount exceed to the initial investment. So, we deduct it
And, the next year cash inflow is $16,000
So, the payback period equal to
= 3 years + $8,000 ÷ $16,000
= 3.5 yeas
In 3.5 yeas, the invested amount is recovered.
Cardinal Company s considering a project that would require a $2,782,000 Investment in equlpment with a useful life of five years. At the end of five years, the project would terminate and the equlpment would be sold for its salvage value of $200,000 The company's discount rate ls 18%. The project would provide net operating income each year as follows: 2,873,000 Sales Variable expenses 1,019,000 1,854,000 Contribution margin Fixed expenses: Advertising, salaries, and other 754,000 fixed out-of-pocket costs 516,400 Depreciation Total fixed expenses 1,270,400 583,600 Net operating income13. Assume a postaudit showed that all estimates (including total sales) were exactly correct except for the variable expense ratio, which actually turned out to be 45%. What was the project’s actual net present value? (Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate calculations and final answer to the nearest whole dollar amount.)
Answer:
Project's net present value is: $-1,725,937.
Explanation:
Project actual variable cost = 45% x sales = $1,292,850 ( as variable expense ratio post-audit turns out to be 45%).
Actual net operating income each year = Sales - Variable cost - total fixed expenses = $309,750.
Thus, cash flows of the project will be:
Year 0: $-2,782,000.
Year 1 to Year 4: $309,750.
Year 5: 309,750 + 200,000 (salvage value of equipment) = $509,750
NPV of the project = -2,782,000 + [ (309,750/18%) x ( 1 - 1.18^-4) ] + 509,750/1.18^5 = $-1,725,937.
The Cardinal Company's project's actual net present value (NPV), considering the actual variable expense ratio of 45%, turns out to be -$1,743,727. This is calculated by revising the net operating income (NOI), calculating its present value over five years, and subtracting the net initial investment.
Explanation:In this scenario, Cardinal Company needs to evaluate its project using the actual variable expense ratio to find out the project's actual net present value (NPV). The initial variable expenses are $1,019,000, but with a new variable expense ratio of 45%, the actual variable expenses turn out to be $2,873,000 * 45% = $1,292,850. This change would decrease the contribution margin and thus the net operating income (NOI). The altered NOI is $2,873,000 - $1,292,850 - $1,270,400 = $309,750.
We need to calculate the present value of this annual NOI for five years and then subtract the net initial investment to find the actual NPV. Using a discount rate of 18%, the present value of the NOI over the five years is $309,750 * (1 - (1 + 18%)^-5) / 18% = $838,273. The net initial investment is $2,782,000 - $200,000 (salvage value) = $2,582,000. Hence, the actual NPV of the project is $838,273 - $2,582,000 = -$1,743,727, indicating a substantial loss to the company.
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The investments of Steelers Inc. include a single investment: 42,730 shares of Bengals Inc. common stock purchased on September 12, Year 1, for $14 per share including brokerage commission. These shares were classified as available-for-sale securities. As of the December 31, Year 1, balance sheet date, the share price declined to $12 per share.
Required:
A. Journalize the entries to acquire the investment on September 12 and record the adjustment to fair value on December 31, Year 1. Refer to the Chart of Accounts for exact wording of account titles.
B. How is the unrealized gain or loss for available-for-sale investments disclosed on the financial statements?
Answer:
Explanation:
A. The journal entries are shown below:
On September 12
Investment A/c - Bengals Inc A/c Dr $598,220 (42,730 × $14)
To Cash A/c $598,220
(Being the acquired investment including brokerage commission is recorded)
On December 31
Unrealized gain or loss on available-for-sale securities A/c Dr $85,460
To Valuation allowance for available-for-sale securities $85,460
(Being decline in share value is recorded)
The computation is shown below:
= 42,730 shares × ($14 per share - $12 per share)
= 42,730 shares × $2 per share
= $85,460
B. The unrealized gain or loss for available-for-sale investments is shown in the Stockholder equity section on the balance sheet. It is to be shown in the negative item in the equity section.
Sevenbergen Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Budgeted selling price per unit $ 92 Budgeted unit sales (all on credit): July 9,000 August 11,300 September 10,400 October 10,800 Raw materials requirement per unit of output 4 pounds Raw materials cost $ 1.00 per pound Direct labor requirement per unit of output 2.8 direct labor-hours Direct labor wage rate $ 22.00 per direct labor-hour Variable selling and administrative expense $ 1.50 per unit sold Fixed selling and administrative expense $ 70,000 per month Credit sales are collected: 40% in the month of the sale 60% in the following month Raw materials purchases are paid: 30% in the month of purchase 70% in the following month The ending finished goods inventory should equal 20% of the following month's sales. The ending raw materials inventory should equal 30% of the following month’s raw materials production needs. If 41,920 pounds of raw materials are required for production in September, then the budgeted raw material purchases for August is closest to: Multiple Choice 57,056 pounds 44,480 pounds 43,712 pounds 70,400 pounds
Answer:
The answer is 43,712
Explanation:
We have:
Beginning finished good of August: 20% of budgeted sales in August = 20% x 11,300 = 2,260 units
Ending finished good of August : 20% of budgeted units required in September = 20% x 10,400 = 2,080 units
=> Units of finished goods to be produced in August = Unit sold - Beginning Inventory + Ending Inventory = 11,300 - 2,260 + 2,080 = 11,120 => Raw material for finished good in August = 4 * 11,120 = 44,480
Beginning Raw material for August = Raw material needed for August x 30% = 44,480 * 30% = 13,344
Ending Raw Material for August = Raw material needed for September x 30% = 41,920 x 30% = 12,576
=> Purchases of raw material in August = Raw material for finished good in August - Beginning Raw material for August + Ending Raw Material for August) = 44,480 - 13,344 + 12,576 = 43,712 pounds
Changes in governments or ruling political parties can affect businesses. The main concern of a multinational corporation is
Multiple Choice
A. change in the economic risk.
B. access to open markets.
C. the continuity of the set of rules, codes of behaviors, and the rule of law.
D. which government is in power.
E. the exchange rate and trade policies.
Answer:
D. which government is in power.
Explanation:
In a democratic system of ruling when one party come into power after getting majority votes the main concern of the corporation unit is to know which government is in power or which political party has a chance to gain majority votes.
Every government that takes oath for next five year or defined year has its own policy on economic or for business. This predefined rules and policy may be differ from exciting government or may be followed the path of previous government. therefore corporation unit are always in a mood to go with coordination with new government to have maximum advantage
The following present value factors are provided for use in this problem. Periods Present Value Present Value of an of $1 at 8% Annuity of $1 at 8% 1 0.9259 0.9259 2 0.8573 1.7833 3 0.7938 2.5771 4 0.7350 3.3121 Xavier Co. wants to purchase a machine for $37,000 with a four year life and a $1,000 salvage value. Xavier requires an 8% return on investment. The expected year-end net cash flows are $12,000 in each of the four years. What is the machine's net present value (round to the nearest whole dollar)? a. $3,480.b. $2,745.c. $40,480d. none of the above
Answer:
a. $3,480
Explanation:
Please see attachment.
Effect of Transactions on Cash Flows State the effect (cash receipt or payment and amount) of each of the following transactions, considered individually, on cash flows: Retired $190,000 of bonds, on which there was $1,900 of unamortized discount, for $198,000. Sold 7,000 shares of $30 par common stock for $69 per share. Sold equipment with a book value of $45,100 for $64,900. Purchased land for $417,000 cash. Purchased a building by paying $85,000 cash and issuing a $100,000 mortgage note payable. Sold a new issue of $320,000 of bonds at 99. Purchased 5,400 shares of $20 par common stock as treasury stock at $39 per share. Paid dividends of $2.00 per share. There were 33,000 shares issued and 5,000 shares of treasury stock.
Answer:
Explanation:
The effects of (cash receipt or payment and amount) is shown below:
Retired $190,000 of bonds, on which there was $1,900 of unamortized discount, for $198,000. - cash payment of $198,000
Sold 7,000 shares of $30 par common stock for $69 per share - cash receipts for $483,000 (7,000 shares × $69)
Sold equipment with a book value of $45,100 for $64,900 - cash receipts for $64,900
Purchased land for $417,000 cash - cash payment for $417,000
Purchased a building by paying $85,000 cash and issuing a $100,000 mortgage note payable - cash payment for $85,000
Sold a new issue of $320,000 of bonds at 99 - cash receipts for $316,800 ($320,000 × 0.99)
Purchased 5,400 shares of $20 par common stock as treasury stock at $39 per share - $210,600 (5,400 shares × $39)
Paid dividends of $2.00 per share. There were 33,000 shares issued and 5,000 shares of treasury stock - cash payment for $52,000
(33,000 shares - 5,000 shares) × $2
A firm recently issued $1,000 par value, 20-year bonds with a coupon rate of 6% and semi-annual payments. The bonds sold at par value, but flotation costs amounted to 5% of par value. The firm has a marginal tax rate of 21%. What is the firm's cost of debt for these bonds?
a) 5.09%
b) 6.00%
c) 4.74%
d) 9.48%
e) 6.45%
Answer:
e) 6.45%
Explanation:
Since the coupons are paid semiannually, adjust the coupon payment(PMT), the time (N) of the bond.
You can solve for cost of debt using financial calculator with the following inputs;
Maturity of the bond; N = 20 *2 = 40
Face value; FV = 1000
Coupon payment; PMT = (6%/2) *1000 = 30
Price ; PV = -(1000 - floatation cost) = -(1000 - (5%*1000) = -950
then compute semiannual interest rate; CPT I/Y = 3.224%
Convert semiannual interest rate to annual rate to find the cost of debt;
3.224% *2 = 6.45%
Which of the following reports filter data before it is presented to the manager as information, and only includes information about records that are out of the ordinary or not according to some standard?A) summaryB) exceptionC) externalD) detailedE) none of these
Answer: Option A
Explanation: In wimples words, a summary report refers to the statement that is prepared by the organisation with the sole objective of helping the executive level managers in their decision making.
Such reports go through various phases and is converted from a detailed explanation to the points that are most relevant to the organisation. It provides a short form detail of the factors that needs most attention of top managers.
As the top managers have to attend a number of sues they will be unable to make any step from detailed information as that will be time consuming for them.