Answer:
Cost of equity from retained earning is 11.84 %
Explanation:
We have given dividend [tex]D_0=$0.80[/tex]
Price at the beginning [tex]P_0=$22.50[/tex]
Growth rate g = 8 %
We have to find the cost of equity from retained earning
Now dividend at the end of year [tex]D_1[/tex] = $0.80×1.08 = 0.864
We know that cost of equity is given by
[tex]Ke=\frac{D_1}{P_O}+g=\frac{0.864}{22.50}+0.08=0.1184=11.84%[/tex]
So cost of equity from retained earning is 11.84 %
A machine cost $1,200,000, has annual depreciation of $200,000, and has accumulated depreciation of $950,000 on December 31, 2020. On April 1, 2021, when the machine has a fair value of $275,000, it is exchanged for a machine with a fair value of $1,350,000 and the proper amount of cash is paid. The exchange had commercial substance. The new machine should be recorded at:
a. $0.b. $25,000c. $50,000d. $150,000
The cost of the new machine is $1,325,000.
Cost of old machine: $1,200,000
Accumulated depreciation on old machine as of December 31, 2020: $950,000
Book value of old machine on April 1, 2021: $1,200,000 (cost) - $950,000 (accumulated depreciation) = $250,000
Fair value of old machine on April 1, 2021: $275,000
Gain on exchange: $275,000 (fair value) - $250,000 (book value) = $25,000
Since the exchange has commercial substance (fair value of exchanged assets differ significantly), the new machine should be recorded at its fair value of $1,350,000. However, we need to adjust for the gain recognized on the exchange:
Debit New Machine for $1,350,000 (fair value)
Credit Cash for $1,350,000 - $25,000 (gain on exchange) = $1,325,000
Therefore, the new machine is recorded at $1,325,000, not $0, $50,000, or $150,000.
Buerhle Company needs to determine if its indefinite-life intangibles other than goodwill have been impaired and should be reduced or written off on its balance sheet. The impairment test(s) to be used is (are) ______________.
A. Both recoverability test and fair value test
B. Recoverability test but not fair value test
C. Not recoverability test but fair value test
D. Neither recoverability test nor fair value test
Answer: The correct answer is "C. Not recoverability test but fair value test".
Explanation: The impairment test to be used is Not recoverability test but fair value test. To determine whether intangibles of indefinite life have deteriorated and must present another value in their balance sheet, they must implement the fair value test.
On March 31, 2011, M. Belotti purchased the right to remove gravel from an old rock quarry. The gravel is to be sold as roadbed for highway construction. The cost of the quarry rights was $164,000, with estimated salable rock of 20,000 tons.
During 2011, Belotti loaded and sold 4,000 tons of rock and estimated that 16,000 tons remained at December 31, 2011.
At January 1, 2012, Belotti estimated that 20,000 tons still remained.
During 2012, Belotti loaded and sold 8,000 tons.
Belotti would record depletion in 2012 of:
(A) $54,667. (B) $65,600. (C) $52,480. (D) $55,760.
Answer:
Belotti would record depletion in 2012 of:
(C) $52,480.
Explanation:
The cost of the quarry rights was $164,000.Estimated salable rock of 20,000 tonsUnits Cost for Depletion : $ 8,20During 2011, Belotti loaded and sold 4,000 tons, it means a depletion during 2011 of $32,800.
At December 2011 the monetary balance of the quarry was $131.200
At January 1, 2012, Belotti estimated that 20,000 tons still remained.
The new unit cost of the quarry is $6,56
During 2012, Belotti loaded and sold 8,000 tons, it means a depletion during 2012 of $52,480, 8,000 tons * $6,56 = $52,480
Which of the following are effective means of aligning management goals with shareholder interests?
I. Employee stock options
II. Threat of a takeover
III. Management bonuses tied to performance goals
IV. Threat of a proxy fight
A. I and III only
B. II and IV only
C. I, II, and III only
D. I, III, and IV only
E. I, II, III, and IV
Answer:
E. I, II, III, and IV
Explanation:
All of the mentioned strategies would work.
Employee stock option provides the enthusiasm and energy to perform good among employees. This is beneficial for the company and shareholders as well.
The threat of takeover, scares the shareholders in losing their share, and effective voting right. Also the management feels threaten as the new company might replace them with the management personnel they desire.
Management bonuses help management to get a boost in energy and accordingly motivates to work good, also the shareholders desiring performance will find it effective.
The threat of proxy fight engages both the parties to behave properly towards each other and respect each other.
Managerial leaders: Group of answer choices
build a strategic vision to change the organization.
act as change agents in the organization.
support and guide the performance and well-being of individual employees.
possess all of the competencies of great leaders.
engage in participative leadership.
Answer:
Support and guide the performance and well-being of individual employees.
Explanation:
A managerial leader is responsible for making his or her subordinates perform their tasks accordingly and effectively to achieve the expected organizational goals and results.
The main function of a manager is to manage, control and coordinate employee actions always with a focus on organizational results.
A good managerial leader must be flexible, have a vision of organizational systems and processes, set a schedule and know his subordinates, their expectations and motivations, in order to be always available to help improve their competencies and skills that will be essential to achieve. of goals and results.
Sundance Motor Lodge has 5600 bonds outstanding with a face value of $1,000 each and a coupon rate of 6.7 percent. The interest is paid semi-annually. What is the present value of the interest tax shield if the tax rate is 32 percent? (That is, how much does the tax shield add to the value of the firm?)
Answer:
$1,792,000
Explanation:
The computation of the present value of the interest tax shield is shown below:
= Number of bonds outstanding × face value × tax rate
= 5,600 bonds × $1,000 × 32%
= $1,792,000
We simply multiply the number of bonds outstanding with the face value and the tax rate so that the correct amount can come.
All other information which is given is not relevant. Hence, ignored it
Clothing Frontiers began operations on January 1 and engages in the following transactions during the year related to stockholders’ equity.January 1 Issues 700 shares of common stock for $34 per share.April 1 Issues 110 additional shares of common stock for $38 per share.Record the transactions, assuming Clothing Frontiers has either $1 par value common stock or $1 stated value stock. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)1. Record the issuance of 700 shares of common stock for $34 per share.2. Record the issuance of 110 additional shares of common stock for $38 per share.
The two transactions related to the issuance of shares by Clothing Frontiers should be recorded by debiting cash for the total amount received, crediting common stock for the amount equal to number of shares times the par or stated value, and crediting 'Paid-In Capital in Excess of Par – Common Stock' for the remaining amount. This applies to both the original 700 shares and the 110 additional shares.
Explanation:When a corporation issues stock, an entry is made to recognize this transaction in the books. Assuming Clothing Frontiers has either $1 par value common stock or $1 stated value stock, the entries would be recorded as follows:
1. The issuance of 700 shares of common stock for $34 per share would be:
Debit: Cash (700 shares * $34)= $23,800
Credit: Common Stock (700 shares * $1)= $700
Credit: Paid-In Capital in Excess of Par – Common Stock=$23,100
2. The issuance of 110 additional shares of common stock for $38 per share would be:
Debit: Cash (110 shares * $38)= $4,180
Credit: Common Stock (110 shares * $1)= $110
Credit: Paid-In Capital in Excess of Par – Common Stock=$4,070
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Clothing Frontiers' common stock issuances are recorded by debiting Cash for the total funds received, crediting Common Stock for the par or stated value, and crediting Additional Paid-in Capital for the excess received over par value.
Explanation:The transactions occurring in Clothing Frontiers during the year are related to the issuance of common stock. Assuming the company has either $1 par value or $1 stated value common stock, the recording of these transactions in the ledger would look as follows:
Issuance of 700 shares of common stock for $34 per share: Debit Cash for $23,800 (700 shares * $34) and credit Common Stock for $700 (the par or stated value, which is $1 * 700 shares) and Additional Paid-in Capital for $23,100 (the difference between cash received and par value).Issuance of 110 additional shares of common stock for $38 per share: Debit Cash for $4,180 (110 shares * $38) and credit Common Stock for $110 (the par or stated value, which is $1 * 110 shares) and Additional Paid-in Capital for $4,070 (the difference between cash received and par value).Learn more about Common Stock Issuance here:https://brainly.com/question/33537295
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The major problem addressed by the warehouse layout strategy is: O requiring frequent close contact between forklift drivers and item pickers. O balancing product flow from one work station to the next. O locating the docks near a convenient access point to the closest highway minimizing difficulties caused by material flow varying with each product. O addressing trade-offs between space and material handling.
Answer:
addressing trade-offs between space and material handling.
Explanation:
Warehouses are the one which store goods for the daily needs and that of every nature, raw material, work in process or finished. It basically targets to store goods so that there is no shortage of goods in case of need.
Since the cost of warehouses are huge because of the area and other facilities they offer, there is a standard planning which a company performs to meet the requirements of goods and also shall be cost effective.
There for the warehouses face this problem of balancing in between the cost related to material handling and that of space available.
The primary challenge addressed by warehouse layout strategy is managing the trade-offs between storage space and material handling. Just-in-time delivery systems and trade site locations heavily influence warehouse positioning due to factors such as proximity to suppliers and transportation hubs.
Explanation:The major problem addressed by the warehouse layout strategy is addressing trade-offs between space and material handling. A well-designed warehouse layout should ensure that there is a balance in the use of space and the efficiency of moving materials around. Central to this issue is how the docks are positioned in relation to access points to highways, optimizing material flow, and how close or far suppliers are in terms of just-in-time delivery systems. Warehouses have to be designed to handle the varying material flow that comes with different products, which includes understanding Weber's Location Model and considering land costs and transportation methods.
Advanced technology, transportation methods, and effective labor policies play a crucial role in reducing congestion in shipping networks and maintaining effective supply chains, particularly in times of national emergencies. The practice of just-in-time delivery, such as used by car manufacturers, indicates the importance of having parts delivered when needed, which influences the location of suppliers and warehouses.
Trade site locations are also a critical consideration, as historically cities that offer multiple transportation modes grow larger due to the convenience of breaking bulk. Therefore, considering site factors such as transportation intersections is key for business logistics.
Kando Company incurs a $11.00 per unit cost for Product A, which it currently manufactures and sells for $13.50 per unit. Instead of manufacturing and selling this product, the company can purchase it for $6.00 per unit and sell it for $11.30 per unit. If it does so, unit sales would remain unchanged and $6.00 of the $11.00 per unit costs of Product A would be eliminated.
1. Prepare Incremental cost analysis. Should the company continue to manufacture Product A or purchase it for resale? (Round your answers to 2 decimal places.)
In the format below:
Manufacture A Purchase Product B
sales
costs
aviodable cost
unavoidable costs
cost to purchase
totals costs
sales
The company should...
Manufacture A:
- Sales: $13.50 per unit
- Costs: $11.00 per unit
- Avoidable costs: $6.00 per unit
- Unavoidable costs: $5.00 per unit ([$11.00 - $6.00] per unit)
- Total costs: $11.00 per unit
Purchase Product B for Resale:
- Sales: $11.30 per unit
- Cost to purchase: $6.00 per unit
- Total costs: $6.00 per unit
The company should purchase Product B for resale rather than manufacturing Product A, as the total cost per unit for Product B is lower compared to the total cost per unit for manufacturing Product A.
Explanation:The incremental cost analysis compares the costs and revenues associated with manufacturing Product A against purchasing and reselling Product B. For manufacturing Product A, the sales price is $13.50 per unit, with a cost of $11.00 per unit. However, $6.00 per unit of these costs can be avoided, leaving $5.00 per unit as unavoidable costs. Thus, the total cost of manufacturing Product A remains at $11.00 per unit.
On the other hand, purchasing Product B for resale incurs a cost of $6.00 per unit but allows sales at $11.30 per unit. In this scenario, the total cost per unit for Product B is $6.00, which is lower than the $11.00 total cost per unit for manufacturing Product A. As a result, opting to purchase Product B for resale would be more beneficial for Kando Company, offering a lower total cost per unit and potentially increasing overall profitability compared to manufacturing Product A.
Initially, three firms A, B, and C share the market for a certain commodity. Firm A has 30% of the market, Firm B has 45%, and C has 25%. Each year, the following changes occur:
• A keeps 75% of its customers, while losing 15% to B and 10% to C.
• B keeps 60% of its customers, while losing 5% to A and 35% to C.
• C keeps 65% of its customers, while losing 15% to A and 20% to B.
(a) What is the current market share vector (ordered for A, B, and C)?
(b) Find the transition matrix for this scenario.
(c) Find the share of the market that each company has after two years.
Final answer:
The current market share vector is (30%, 45%, 25%) for firms A, B, and C respectively. The transition matrix is [[0.75, 0.15, 0.10], [0.05, 0.60, 0.35], [0.15, 0.20, 0.65]]. To find the market shares after two years, one needs to perform matrix multiplication of the current market share vector with the transition matrix twice.
Explanation:
The student is presented with a scenario where three firms (A, B, and C) share the market for a commodity, and the dynamics of their market shares are defined by the given yearly customer retention and loss percentages. We will address the three parts of the question using the information provided.
a) Current Market Share Vector
The current market share vector, ordered for firms A, B, and C, is as follows:
Firm A: 30%
Firm B: 45%
Firm C: 25%
b) Transition Matrix
The transition matrix for the scenario where each firm keeps a certain percentage of its customers and loses some to the others is given by:
A B C
A 0.75 0.15 0.10
B 0.05 0.60 0.35
C 0.15 0.20 0.65
c) Market Share After Two Years
To find the share of the market after two years, we multiply the current market share vector by the transition matrix twice (representing two years). This calculation would yield the market shares of firms A, B, and C after two years, which can then be presented as a new vector.
Without performing the decimal operations this cannot be done completely here, but the process involves matrix multiplication, and the student should apply it to get the exact values.
Ted’s wallet is as empty as his bank account, and he needs $3,500 immediately.Fortunately, he has three gold coins that he inherited from his grandfather.Each is worth $2,500, but it is Sunday, and the local rare-coin store is closed. When approached, Ted’s neighbor Andreaagrees to buy the first coin for $2,300. Another neighbor, Cami, agrees to buy the second for $1,100. A final neighbor,Lorne, offers 'all the money I have on me"—SlOO—for the last coin. Desperate, Ted agrees to the proposal. Which of thedeals is supported by consideration? (a) Ted’s agreement with Andrea, only(b) Ted’s agreements with Andrea and Cami, only(c) All three ofthe agreements(d) None ofthe agreements
Answer:B. Teddy's agreement with Andrea and Cami, only.
Explanation:
Consideration is anything of value that moves from both parties to a contract, it must equally be specific and devoid of ambiguity.
The agreement with Andrea and Camil both meet these requirements. However the agreement with Lorne is not devoid of ambiguity because we are not sure of the amount of his consideration.
Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $10; direct labor, $14, variable overhead $3 and fixed overhead, $8. An outside supplier has offered to sell the product to Paxton for $32. Compute the net incremental cost or savings of buying the component.
Answer:
$5 per unit
Explanation:
In this question, we compare the total cost and outside supplier cost which are shown below:
Total cost = Direct material per unit + direct labor per unit + variable overhead per unit
= $10 + $14 + $3
= $27
And, the outside supplier cost is $32
So, the incremental cost would be
= $32 - $27
= $5 per unit
The fixed cost would remain unchanged. So, we do not consider it.
Hotel Cortez is an all-equity firm that has 125000 shares of stock outstanding at a market price of $44.46 per share. The firm's management has decided to issue $80000 worth of debt and use the funds to repurchase shares of the outstanding stock. The interest rate on the debt will be 4.2 percent. What is the break-even EBIT? Ignore taxes.
Answer:
EBIT = $3387.42
Explanation:
At break even EBIT, both EPS are the same
EPS in case of all equity firm = EPS of leverd firm
EPS in case of all equity firm = EBIT/ 125.000
EPS of leverd firm = (EBIT-Interest) / Shares outstanding
(Shares outstanding= 125.000-80.000/44.46 = 1012.14 )
EPS of leverd firm = (EBIT - 4.2 %* 80.000 )/ 1012
=(EBIT - 3360)/ 1012
Hence
EBIT/ 125.000= (EBIT - 3.360)/ 1.012
1012 EBIT = 125.000 EBIT - 420.000.000
EBIT = $3387.42
In long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true? All firms in perfectly competitive industries earn zero economic profit in the long run because A. firms are price takers, maximizing profit by producing where total revenue equals total cost. B. if profit were positive, then firms would produce more, increasing price, and if profit were negative, then firms would produce less, decreasing price. C. firms are price takers, maximizing profit by producing where price equals marginal cost. D. if profit were positive, then firms would enter, decreasing price, and if profit were negative, then firms would exit, increasing price. E. barriers to entry and exit prevent firms from earning positive or negative economic profit.
Answer:
D. if profit were positive, then firms would enter, decreasing price, and if profit were negative, then firms would exit, increasing price.
Explanation:
Perfectly competitive firms are price takers, hence they cannot influence the price of their products.
Perfectly competitive industries have no barriers to entry or exist of firms ,so if in the short run, firms are earning economic profit, then firms would enter into the industry , decreasing price, and if profit were negative, then firms would exit, increasing price. This makes perfect competitive firms to earn zero economic profit in the long run.
Bet'R Bilt Bikes just announced that its annual dividend for this coming year will be $2.42 a share and that all future dividends are expected to increase by 2.5% annually. What is the market rate of return if this stock is currently selling for $22 a share?
Answer:
13.50%
Explanation:
The computation of the market rate of return is shown below:
Current selling price for share = Annual dividend ÷ (Market rate of return - growth rate)
$22 = $2.42 ÷ (Market rate of return - 2.5%)
(Market rate of return - 2.5%) = $2.42 ÷ $22
(Market rate of return - 2.5%) = 11%
So, the market rate of return would be
= 11% + 2.5%
= 13.50%
The market rate of return for Bet'R Bilt Bikes, given the current annual dividend of $2.42 per share, an expected annual dividend growth rate of 2.5% and the current share price of $22, is calculated to be approximately 13.5%.
Explanation:Your question is about determining the market rate of return for Bet'R Bilt Bikes, given the annual dividend and the expected annual dividend growth. To do this, we use the Gordon Growth Model, also known as the Dividend Discount Model (DDM). The formula is as follows:
Market Rate of Return = (Annual Dividend payment/Price per share) + Annual Growth Rate
Plugging in the values from your question, we get:
Market Rate of Return = (2.42 / 22) + 0.025 = 0.135 or 13.5%
So, the market rate of return for Bet'R Bilt Bikes, given the information provided, is approximately 13.5%.
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Which of the following formulas is accurate for calculating gross rating points (GRP)? Multiple Choice A. impressions multiplied by frequency reach multiplied by B. impressions reach multiplied by frequency reach divided by C. impressions reach divided by frequency
Answer:
The correct answer is : reach multiplied by frequency.
Explanation:
In marketing, the Gross Rating Point or GRP measures the size of an ad campaign during a given medium or schedule. The concept is typically confused with the measure of the size of potential consumers reached but GRP is not in charge of that matter. The GRP is calculated in percent of the target market reached multiplied by the exposure frequency.
The Bigelow Company has a cost of equity of 12 percent, a pre-tax cost of debt of 7 percent, and a tax rate of 35 percent.
What is the firm's weighted average cost of capital if the debt-equity ratio is .60?
A. 6.58 percent
B. 9.21 percent
C. 10.01 percent
D. 10.13 percent
E. 11.11 percent
Answer:
B. 9.21 percent
Explanation:
The formula to compute WACC is shown below:
= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of common stock) × (cost of common stock)
where,
Weighted of debt = Debt ÷ total firm
The total firm includes debt, and the equity which equals to
= 0.60 + 1 = 1.60
So, Weighted of debt = (0.60 ÷ 1.60) =0.3 75
And, the weighted of common stock = (Common stock ÷ total firm)
= 1 ÷ 1.60
= 0.625
Now put these values to the above formula
So, the value would equal to
= (0.375 × 7%) × ( 1 - 35%) + (0.625 × 12%)
= 1.71% + 7.5%
= 9.21%
To produce espressos, a coffee shop has fixed costs of 200 dollars each day and variable costs of one dollar per espresso. The number of espressos that the coffee shop sells on a given day depends linearly on the price of each espresso: If the price is $1.00, then they sell 200 espressos, and if the price is $2.00, then they sell 100 espressos. What is the choice of price that will maximize their profit?
Answer
The answer and procedures of the exercise are attached in the following image.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
First, figure out what the price of each espresso is in relation to the number of espressos the shop sells. $2 per expresso is the correct answer.
What is the best price option for them to maximize their profit?
[tex]\text{N} = -100 \text{ x }\text{P}+300\\\text{Profit} = \text{Revenue - Cost}\\\text{Profit} = \text{P} \text{ x } \text{N} - 200\\\text{Profit} = \text{P} \text{x} (-100 \text{ x } \text{P} +300)-200-(-100 \text{x} \text{P}+300) \\= -100 \text{ x } \text{P}^2+400\text{P}-500\\\text{P} = 2, \\\text{Profit} = -300\\[/tex]
The choice of the price will be $2/ coffee to maximize their profit.
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A firm is considering three capacity alternatives: A, B, and C. Alternative A would have an annual fixed cost of $100,000 and variable costs of $22 per unit. Alternative B would have annual fixed costs of $120,000 and variable costs of $20 per unit. Alternative C would have fixed costs of $80,000 and variable costs of $30 per unit. Revenue is expected to be $50 per unit. A) Which alternative has the lowest break-even quantity? B) Which alternative will produce the highest profits for an annual output of 10,000 units? C) At what volumes of output would the company be indifferent between each pair of choices? Path: p Words:0
Answer:
A) Alternative A has the lowest preak-even point at 3,572 units
B) Both alternatives A and B will produce the highest profit of $180,000.
C) 10,000 units between A and B
2,500 units between A and C
4,000 units between B and C
Explanation:
The revenue functions for each of the alternatives are:
[tex]R_A = (\$50-\$22)n - \$100,000\\R_B = (\$50-\$20)n - \$120,000\\R_C = (\$50-\$30)n - \$80,000[/tex]
Where 'n' is the annual output, in units produced.
A) At the break-even point, revenue is equal to zero. The break-even outputs for each alternative are:
[tex]0 = (\$50-\$22)n_A - \$100,000\\n_A = 3,572\\0 = (\$50-\$20)n_B - \$120,000\\n_B = 4,000\\0 = (\$50-\$30)n_C - \$80,000\\n_A = 4,000\\[/tex]
Alternative A has the lowest preak-even point at 3,572 units.
B) The revenues for each alternative at n=10,000 units are:
[tex]R_A = (\$50-\$22)10,000 - \$100,000\\R_A = \$180,000R_B = (\$50-\$20)10,000 - \$120,000\\R_B= \$180,000\\R_C = (\$50-\$30)10,000 - \$80,000\\R_C = \$120,000[/tex]
Both alternatives A and B will produce the highest profit of $180,000.
C) As seen above, for n=10,000 the company would be indifferent between A and B.
Between A and C:
[tex]R_A = R_C\\ (\$50-\$22)n - \$100,000 = (\$50-\$30)n - \$80,000\\n=\frac{100,000-80,000}{28-20} \\n=2,500[/tex]
Between B and C:
[tex]R_B = R_C\\ (\$50-\$20)n - \$120,000 = (\$50-\$30)n - \$80,000\\n=\frac{120,000-80,000}{30-20} \\n=4,000[/tex]
The break-even quantity, highest profits for an annual output of 10,000 units, and volumes of output where the company would be indifferent between each pair of options can be calculated using principles of cost-analysis and revenue. These involve the calculation of break-even points, profits and equality of total costs.
Explanation:In order to calculate the break-even quantities for alternatives A, B, and C, we need to figure out the point at which the total revenue equals the total costs. This can be done using the formula for break-even point: Break-even quantity = Fixed costs / (Price - Variable costs per unit).
To find the highest profits for an annual output of 10,000 units, we need to calculate the total costs for each option and subtract these from the total revenue. This yields the profit for each option: Profit = Total revenue - Total costs.
Lastly, to determine at what volumes of output the company would be indifferent between each pair of choices, we need to set the total costs for each option equal to each other and solve for the quantity: Total costs_A = Total costs_B = Total costs_C.
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Crane WaterWorks manufactures snorkel gear. During the past month, Washington purchased 4,160 pounds of plastic to use in its dive masks, at a cost of $6,684. The standard price for the plastic is $1.581 per pound. The company actually used 3,940 pounds of the plastic to produce 19,900 dive masks. Calculate Crane’s direct materials price variance for the month.
Answer:
$107.04 unfavorable
Explanation:
The computation of the material price variance is shown below:
= Actual Quantity × Actual price - Actual Quantity × Standard Price
= $6,684 - (4,160 pounds × $1.581 per pound)
= $6,684 - $6576.96
= $107.04 unfavorable
The $6,684 represents the actual quantity and the actual price.
All other information which is given is not relevant. Hence, ignored it
Yellow Press, Inc., buys paper in 1,500-pound rolls for printing. Annual demand is 3 comma 000 3,000 rolls. The cost per roll is $ 875 875, and the annual holding cost is 20 20 percent of the cost. Each order costs $ 75 75. a. How many rolls should Yellow Press order at a time?
Answer:
59 orders
Explanation:
For computing the how many rolls should order at a time, first we have to determine the economic order quantity which is shown below:
The computation of the economic order quantity is shown below:
= [tex]\sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
where,
Carrying cost = $875 × 20% = $175
And, other items values would remain the same
ow put these values to the above formula
So, the value would be equal to
= [tex]\sqrt{\frac{2\times \text{3,000}\times \text{\$75}}{\text{\$175}}}[/tex]
= 50.71 units
Now The number of orders would be equal to
= Annual demand ÷ economic order quantity
= $3,000 ÷ 50.71 units
= 59 orders
Using the Economic Order Quantity (EOQ) formula, it's determined that Yellow Press should order approximately 51 rolls at a time to minimize costs.
Explanation:
To determine how many rolls Yellow Press should order at a time, we apply the Economic Order Quantity (EOQ) model. The EOQ formula is given as:
EOQ = √(2DS)/H}
where:
D is the annual demand (in this case, 3,000 rolls),
S is the cost per order (in this case, $75),
H is the annual holding cost per unit (which is 20% of the cost per roll, so 0.20 x $875 = $175).
Plugging the numbers into the EOQ formula, we get:
EOQ =√{(2 × 3000 rolls × $75) / $175}
EOQ = √{(450,000) / $175}
EOQ = √{2,571.43}
EOQ ≈ 50.71 rolls
Since Yellow Press cannot order a fraction of a roll, it should order 51 rolls at a time to minimize the combined costs of ordering and holding inventory.
Your neighbor Bob has two annuities. The first annuity will pay him $10,000 per month for the next 10 years. The second annuity will pay him $15,000 per month for the following 10 years (years 11 through 20). Assuming a discount rate of 6%, what is the present value of the annuities?
Answer:
$1,643,344.308
Explanation:
These are Ordinary annuities because if it is not mentioned that the payments are made at the beginning of the year which is the case for Annuity Due.
You can use a financial calculator to find the Present value of these two ordinary annuities.
PV of Annuity 1 from (yr1-yr10)
Recurring payment; PMT = 10,000
Total duration ; N = 10 *12 = 120 months
Monthly interest rate in this case ; I/Y = 6%/12 = 0.50%
Future value ; FV = 0 (use 0 if annuity variable is not given )
then CPT PV= $900,734.533
PV of Annuity 1 from (yr11-yr20)
This will happen in 2 steps sice it is a forward-starting annuity;
Recurring payment; PMT = 15,000
Total duration ; N = 10 *12 = 120 months
Monthly interest rate in this case ; I/Y = 6%/12 = 0.50%
Future value ; FV = 0 (use 0 if annuity variable is not given )
then CPT PV( at t=10)= $1,351,101.80
Next find the PV of $1,351,101.80 at t=0;
$1,351,101.80 /(1.005^120) = $742,609.7754
Next, find the sum of these two PVs to find the answer;
=$900,734.533 + $742,609.7754
PV = $1,643,344.308
The present value of Bob's two annuities, given a discount rate of 6%, is approximately $1,637,896. This is calculated by discounting the future payments of each annuity back to their value in today's dollars.
Explanation:The subject of this question is annuities, specifically the concept of the present value of future cash flows. The present value calculation discounts future cash flows back to today's dollars using a specific discount rate, in this case, 6%. In this example, Bob's first annuity pays $10,000 per month for the next 10 years and is calculated using the present value of an ordinary annuity formula: PV = Pmt * [(1 - (1 + r)^-n) / r], where 'Pmt' is the monthly payment, 'r' is the monthly interest rate, and 'n' is the number of periods. For Bob's first annuity, this results in a present value of approximately $890,471. The second annuity's present value needs to be calculated with a delay of 10 years as it starts in the 11th year. The calculation is first done as if it starts today (resulting in approximately $1,335,707), then discounted back an additional 10 years, giving a present value of approximately $747,425. Summing these two amounts provides the total present value of approximately $1,637,896.
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National Geographic is replacing an old printing press with a new one. The old press is being sold for $350,000 and it has a net book value of $75,000. Assume that National Geographic is in the 30% income tax bracket. What is the tax implication of the proceed of the sale of the old press? Round to the nearest penny. If tax liabilities, type a negative sign in front. Do not include a dollar sign in your answer. (i.e. If your answer is tax liabilites of $8,765,43, type -8765.43; if tax shield of $8,765.43, type 8765.43).
Answer:
$82,500
Explanation:
The computation of the tax implication on proceed on sale is shown below:
= (Sale value of old press - net book value) × income tax rate
= ($350,000 - $75,000) × 30%
= $275,000 × 30%
= $82,500
We simply deduct the net book value from the sale value of the old press and then multiply it with the income tax rate so that the correct amount can come.
Final answer:
The tax implication of the sale of National Geographic's old printing press is a tax liability of $82,500, calculated as 30% of the gain realized from the sale.
Explanation:
The tax implication of the sale of the old printing press for National Geographic involves calculating the gain on the sale and then applying the corporate income tax rate to determine the tax owed. The sold price of the old press is $350,000, and its net book value is $75,000, resulting in a gain of $275,000 ($350,000 - $75,000). Since National Geographic is in the 30% income tax bracket, the tax liability on the gain is 30% of $275,000, which is $82,500.
On June 1, Harding Co. purchased a machine for $14,000 and estimates it will use the machine for five-years with a $2,000 salvage value. Using the straight-line depreciation method, compute the machine's first year (partial) depreciation expense for June 1st through December 31st.
Answer:
The machine's first year (partial) depreciation expense was $1,400
Explanation:
Harding Co. uses straight-line depreciation method, Depreciation Expense each year is calculated by following formula:
Annual Depreciation Expense = (Cost of machine − Salvage Value )/Useful Life = ($14,000 - $2,000)/5 = $2,400
Depreciation Expense of each month = $2,400/12 = $200
In the first year, from June 1st through December 31st, the machine had been used for 7 months.
Depreciation Expense = Depreciation expense of each month x 7 = $200 x 7 = $1,400
Answer:
$1400
Explanation:
The financial statements for Highland Corporation included the following selected information: Common stock $ 1,600,000 Retained earnings $ 900,000 Net income $ 1,000,000 Shares issued 90,000 Shares outstanding 80,000 Dividends declared and paid $ 800,000 The common stock was sold at a price of $30 per share. What is the amount o f additional paid-in capital?
What was the amount of retained earnings at the beginning of the year?
How many shares are in treasury stock?
Answer:
Please see attachment .
Explanation:
Please see attachment .
The amount of retained earnings at the beginning of the year is $700,000 and numbers of shares that are in treasury stock is 10,000 shares.
Retained earningsa. Beginning Retained earnings:
Beginning Retained earnings=Endingn retained earnings-Net income+Dividends
Beginning Retained earnings=$900,000-$1,000,000+$800,000
Beginning Retained earnings=$700,000
b. Number of shares:
Treasury stock=Issued shares-Outstanding shares
Treasury stock=90,000-80,000
Treasury stock=10,000 shares
Inconclusion the amount of retained earnings at the beginning of the year is $700,000 and numbers of shares that are in treasury stock is 10,000 shares.
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Which of the following statements is FALSE?
A) Expected return should rise proportionately with volatility.
B) Investors would not choose to hold a portfolio that is more volatile unless they expected to
earn a higher return.
C) Smaller stocks have lower volatility than larger stocks.
D) The largest stocks are typically more volatile than a portfolio of large stocks
Answer:C. Smaller stock have lower volatility than larger stock.
Explanation:
Volatility refers to the prones of a stock price to changes in market conditions. The higher the impact of changes in market conditions on a stock the higher the volatility level and the lower the impact of changes in market conditions on a stock price the lower the volatility. However the size of a stock does not necessarily determine the level of his volatility, a
stock may be small but still have a large volatility level and stock may be large and have low volatility level.
Rogue Motors Inc. has a 11% required rate of return. The firm does not expect to initiate dividends for 10 years, at which time it will pay $2.00 per share in dividends. At that time, the firm expects its dividends to grow at 6% forever. What is an estimate of the firms' price in 10 years (P10) if its dividend at the end of year 10 is $2.00?Group of answer choicesa. $31.20b. $42.40c. $42.80d. $33.40
Answer:
The correct answer is B that is $42.40
Explanation:
As per the dividend discount model, present price of the share is the present value of future dividend is computed as:
Price of the firm in 10 years = Dividend at the end of the year 10 × (1 + Growth rate in dividends) / (Required return - Growth rate in dividends)
where
Dividend at the end of the year 10 is $2.00
Growth rate in dividends is 6%
Required return is 11%
Putting the value above,
= $2.00 × (1 + 6%) / (11% - 6%)
= $2.00 × (1 + 0.06) / 5%
= $2.00 × 1.06 / 0.05
= $ 2.12 / 0.05
= $42.4
Hugo has been working on his company’s new marketing campaign for the past few weeks. He is now looking at the target market and the message, trying to decide between using an email marketing campaign or a guerilla marketing campaign. Which step of the marketing planning process is Hugo struggling with at the moment? a. the fourth step: defining the message b. the eighth step: measuring the results and refining the approach as needed c. the sixth step: determining the promotional mix: which tools to use, when, and how much
Answer:C. the sixth step determining the promotional mix: which tools to use, when and how much.
Explanation:
By working on his product, the market, the message content, advertising methods,the target market, all this show that he his in the sixth step.
Buttner Company borrows $88,500 on September 1, 2014, from Harrington State Bank by signing an $88,500, 12%, one-year note.
How much is accrued interest at December 31, 2014?A.) $2,655
B.) $10,620
C.) $3,540
D.) $4,425
Answer:
C.) $3,540
Explanation:
The loan borrowed is the Principal = $88,500
Interest rate per year = 12% or 0.012 as a decimal
Interest accrued formula = Principal * rate * time
Note: time will be from Sep1 - Dec 31 = 4 months or [tex]\frac{4}{12}[/tex]years
Interest accrued = 88,500 * 0.012 * [tex]\frac{4}{12}[/tex]
Interest accrued = 3,540
Therefore, as of December 31st, 2014, $3,540 would be the interest accrued hence choice C is correct.
Grover Corporation purchased a truck at the beginning of 2017 for $109,200. The truck is estimated to have a salvage value of $4,200 and a useful life of 120,000 miles. It was driven 21,000 miles in 2017 and 29,000 miles in 2018. What is the depreciation expense for 2018?a. $27,405b. $7,000c. $25,375d. $43,750
Answer:
The depreciation expense for 2018: c. $25,375
Explanation:
Grover Corporation uses the units-of-production depreciation method. Depreciation expense is calculated by the following formula:
Depreciation Expense = [(Cost of asset − Salvage Value )/Life in Number of Units
] x Number of Units Produced = Depreciation Expense per unit x Number of Units Produced
In the company,
Depreciation Expense per mile = ($109,200-$4,200)/120,000= $0.875
The truck was driven 29,000 miles in 2018, so the depreciation expense for 2018: $0.875 x 29,000 = $25,375