Answer:
The amount at which the truck should be recorded in the books is $56200
Explanation:
The cost of an a fixed asset to be recorded should include the cost incurred to purchase the asset along with any costs incurred to bring the asset to the location and in the condition necessary for use as intended by the management. The costs that are capitalized along with the purchase costs are usually of non recurring nature.
The cost at which the truck should be recorded is,
Purchase Price $48000
Sales Tax paid $3600
Shipping & preparation cost $4600
Total cost $56200
The sales tax, if it is not refundable, should be capitalized.
The transportation and site preparation costs are necessary to bring the asset to the location and condition necessary for use as intended by management. Thus, it should be capitalized.
The insurance is a revenue and recurring expenditure and asset can be used without it. Thus, it is not recorded.
The Turquoise Oasis Spa places orders for cases of bath salts through a nearby wholesaler. To summarize several orders worth of data, it may prove beneficial to determine how many orders of bath salts were for 1 to 10 cases, between 11 and 20 cases, 21 to 30 cases, 31 to 40 cases, and more than 40 cases. This is an example of ________.
Answer:
grouping the data into bins
Explanation:
Grouping the data into bins-
It refers to the method of grouping the objects according to the classification, into different bins, is referred to as the method of grouping the data into bin.
From the given scenario of the question,
The Turquoise Oasis Spa, classify the orders into various bins, according to the cases 1 to 10 , 11 to 20... and so on, it helps to make the process faster and easy to perform.
Hence, the scenario of the question, is an example of grouping the data into bins.
Final answer:
The Turquoise Oasis Spa's method of summarizing bath salt orders by the number of cases falls under the category of data classification, which is a part of statistics in mathematics.
Explanation:
The scenario described involving the Turquoise Oasis Spa summarizing orders of bath salts into groups is an example of data classification. Classifying the orders into distinct categories based on the number of cases is a way to organize data, which is a fundamental aspect of statistics, a branch of mathematics. By doing so, the spa can better understand the distribution of their orders and assess their inventory needs.
Sunland Company had $186,200 of net income in 2019 when the selling price per unit was $150, the variable costs per unit were $90, and the fixed costs were $575,800. Management expects per unit data and total fixed costs to remain the same in 2020. The president of Sunland Company is under pressure from stockholders to increase net income by $38,100 in 2020. Collapse question part (a) Incorrect answer. Your answer is incorrect. Try again. Compute the number of units sold in 2019. Entry field with incorrect answer 13335 units
Answer: 12,700 units.
Explanation:
We are to compute the number of units sold.
Let's get the important figures first,
Net Income earned = $186,200
Fixed costs =$575,800
We'd need the Contribution margin which is the difference between the sales and the variable costs.
Another way to calculate it will be to add the net income and fixed assets so,
Contribution Margin earned = $186,200 + $575,800
= $762,000
Now we need to find out the Contribution Margin per unit to divide the Contribution Margin by,
Contribution Margin per unit = Selling price per unit – variable cost per unit
= 150-90
= $60
Now we can calculate the number of units sold like,
Number of units sold = 762,000/60
= 12,700 units
12,700 units were sold in 2019
Chang Industries has 1,000 defective units of product that already cost $54 each to produce. A salvage company will purchase the defective units as is for $25 each. Chang's production manager reports that the defects can be corrected for $46 per unit, enabling them to be sold at their regular market price of $41. The $54 per unit is a:
Answer:
The $54 is a sunk cost. It won't vary whether you choose to sell them as it is or to continue processing. A sunk cost is a cost that already took place and has no weight in the decision process.
Explanation:
Giving the following information:
Chang Industries has 1,000 defective units of product that already cost $54 each to produce.
The $54 is a sunk cost. It won't vary whether you choose to sell them as it is or to continue processing. A sunk cost is a cost that already took place and has no weight in the decision process.
The marginal propensity to consume is the:
a. dollar amount that income increases by when consumption increases by $1.
b. dollar amount that consumption increases by when income increases.
c. proportion of total income that is consumed.
d. proportion of extra income that is consumed.
Answer: proportion of extra income that is consumed. (D)
Explanation:
The marginal propensity to consume is the proportion of an additional income that an individual consumes.
For example, if a household earns an extra dollar of disposable income, while the marginal propensity to consume is 0.60 this means that at that dollar, the household will spend 60 cents and save 40 cents.
Which of the following is not one of the strengths of the Cobb-Douglas production function?
a. Both marginal product and returns to scale can be estimated from it.
b. It can be converted into a linear function for ease of calculation.
c. It shows a production function passing through increasing returns to constant returns and then to decreasing returns.
d. The sum of the exponents indicates whether returns to scale are increasing, constant or decreasing.
Answer:
Option D is correct one.
In Cobb-Douglas production, the return to scale depends on the sum of the exponents.
Explanation:
It shows a production function passing through increasing returns to constant returns and then to decreasing returns.
Company A estimates that it needs 30% of sales in net working capital. In year 1, sales were $1 million and in year 2, sales were $2 million. Associated with the change in net working capital from year 1 to year 2 is a cash: inflow of $300,000. outflow of $300,000. inflow of $600,000. outflow of $600,000.
Answer:
There is an outflow of $300000
Explanation:
The net working capital is the net value of capital available to finance day to day operations of the business. It is calculated as current assets less current liabilities.
The Change in net working capital can be calculated by deducting the net working capital for the previous year from the net working capital for the current year.
The net working capital in year 1 was = 1m * 0.3 = $300000
The net working capital in year 2 was = 2m * 0.3 = $600000
The change in net working capital is = 600000 - 300000 = $300000
An increase in net working capital means more cash is tied up in inventory, accounts receivables and other assets. Thus, there is a cash outflow of $300000
Final answer:
The cash flow associated with the change in net working capital from year 1 to year 2 for Company A is a cash outflow of $300,000.
Explanation:
The student is asking how to calculate the change in net working capital between two consecutive years given the percentage of sales required for net working capital and the sales figures for each year. For year 1, the net working capital required would be 30% of $1 million, which equals $300,000. For year 2, the net working capital required would be 30% of $2 million, which equals $600,000. The change in net working capital from year 1 to year 2 is therefore an additional $300,000 needed. Since Company A needs more working capital in year 2, it implies that there is a cash outflow of $300,000 to meet the net working capital requirement.
Referencing the self-check question provided, if a firm had sales revenue of $1 million last year and spent $600,000 on labor, $150,000 on capital and $200,000 on materials, the firm's accounting profit would be calculated as follows:
Accounting profit = total revenues minus explicit costs = $1,000,000 - ($600,000 + $150,000 + $200,000) = $50,000.
Park Corporation is planning to issue bonds with a face value of $750,000 and a coupon rate of 7.5 percent. The bonds mature in 4 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Park uses the effective-interest amortization method and also uses a discount account. Assume an annual market rate of interest of 8.5 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answer to whole dollars.) Required:
1. Prepare the journal entry to record the issuance of the bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the issuance of bonds. Note: Enter debits before credits. Date General 3 Debit Credit January 01 Record entry Clear entry View general journal
Answer:
Debit cash with $750,000; and credit Bond payable also with $750,000.
Explanation:
The journal entry will appear as follows:
Date Details Dr ($) Cr ($)
Jan. 1 Cash 750,000
Bond Payable 750,000
To record the issuance of bond.
The income tax rate on all forms of income is 40 percent and there is a tax of 10 percent on all consumption expenditure. The nominal interest rate is 7 percent a year and the inflation rate is 5 percent a year. What is the size of the tax wedge on wages? What is the true tax rate on interest income?
Final answer:
The tax wedge on wages is 40 percent of the gross wage earned, and the true tax rate on interest income is 50 percent.
Explanation:
The tax wedge on wages is the difference between the gross wage earned by a worker and the net wage received after taxes. In this case, the income tax rate is 40 percent.
Therefore, the tax wedge on wages would be 40 percent of the gross wage earned.
The true tax rate on interest income accounts for both income tax and consumption tax.
The income tax rate is 40 percent, and there is a tax of 10 percent on all consumption expenditure.
So, the true tax rate on interest income would be the sum of the income tax rate and the consumption tax rate, which is 40 percent + 10 percent = 50 percent.
Determine whether each policy below is good or bad cash management; then identify the cash management strategy violated or followed for each policy.
a. The company regularly follows up with customers who pay late.
b. Excess cash is put into short-term investments to earn extra income.
c. Cash receipts and cash payments are regularly planned and reviewed.
d. Rarely used equipment is rented rather than purchased.
e. Bills are paid as soon as they are received.
Answer: Please refer to Explanation.
Explanation:
a. The company regularly follows up with customers who pay late.
This is GOOD.
Cash Management Strategy - Collection of Accounts Receivables on time to maintain cash balance.
b. Excess cash is put into short-term investments to earn extra income.
This is GOOD.
Cash Management Strategy - Earning extra income on idle cash by investing in short-term liquid investments.
c. Cash receipts and cash payments are regularly planned and reviewed.
This is GOOD.
Cash Management Strategy - Cash Planning to establish a correct balance between payments and receipts.
d. Rarely used equipment is rented rather than purchased.
This is GOOD
Cash Management Strategy - Saving money by spending economically only when needed.
e. Bills are paid as soon as they are received.
This is BAD
Cash Management Strategy - Paying bills when due to ensure that operating cash balance is maintained at a healthy level.
If you need any clarification do comment.
Cheers.
Final answer:
The provided policies largely reflect good cash management, emphasizing the importance of liquidity in business operations. Regularly following up on late payments, optimizing short-term investments, and planning cash flow are all effective strategies. However, paying bills immediately might not always be the best approach when considering liquidity needs.
Explanation:
Assessing the policies provided requires understanding cash management strategies and how effectively they utilize a company's liquidity. The notion of liquidity is significant in cash management as it determines how readily available funds can be for use.
a. The company regularly follows up with customers who pay late. This is good cash management. It demonstrates an active approach to accounts receivable management, ensuring that cash flow is maintained and credit risk is minimized.
b. Excess cash is put into short-term investments to earn extra income. This is also good cash management. It follows the strategy of maximizing returns on idle cash without sacrificing liquidity, as short-term investments can generally be liquidated quickly.
c. Cash receipts and cash payments are regularly planned and reviewed. This is indicative of good cash management, ensuring that the company has a solid understanding of its cash flow, which is essential for maintaining liquidity.
d. Rarely used equipment is rented rather than purchased. Renting equipment as opposed to purchasing can be considered good cash management because it avoids locking in capital in rarely used assets and keeps cash available for more liquid purposes.
e. Bills are paid as soon as they are received. While paying bills promptly is generally a good practice, it might not be the best cash management strategy if it leads to low liquidity. Timing payments to avoid late fees and maintain supplier relationships while keeping cash longer might be a better approach.
Each of these policies needs to be judged in context, but they all relate to effective cash management practices by either preserving or optimizing liquidity.
At the beginning of the month, the Forming Department of Martin Manufacturing had 30,000 units in inventory, 30% complete as to materials, and 10% complete as to conversion. During the month the department started 80,000 units and transferred 92,000 units to the next manufacturing department. At the end of the month, the department had 18,000 units in inventory, 80% complete as to materials and 70% complete as to conversion. If Martin Manufacturing uses the weighted average method of process costing, compute the equivalent units for materials and conversion respectively for the Forming Department.
Answer:
the equivalent units for :
materials = 106,400
conversion = 104,600
Explanation:
Calculation of the equivalent units for materials
Note : Units of Ending Work In Process are 80% complete as to materials
Units of Ending Work In Process (18,000×80%) = 14,400
Units Completed and Transferred (92,000×100%) = 92,000
Total =106,400
Calculation of the equivalent units for conversion
Note : Units of Ending Work In Process are 70% complete as to conversion
Units of Ending Work In Process (18,000×70%) = 12,600
Units Completed and Transferred (92,000×100%) = 92,000
Total =104,600
In 2010, bad freezes destroyed a large portion of Florida's grapefruit crop. Explain what happened in the grapefruit market using the concepts of supply and demand in your analysis. How did this affect the equilibrium price and quantity of grapefruit
Answer: Please refer to Explanation
Explanation:
The Grapefruit market will experience an acute shortage of grapefruits because the bad freeze destroyed most of the crop that was going to be supplied.
This shortage in supply will force the price up and therefore lead to a drop in Demand as a lot of people will decide that they can't spend the new amount.
This scenario would lead to an increase in the Equilibrium price because the supply curve will be forced to the left and the new intersect with the Supply curve will be higher. The Equilibrium Quantity will also reduce because of the shortage that is being experienced as a result of a large portion of the grapefruits being destroyed.
In the graph I attached, S2 refers to the supply curve AFTER the bad freezes. Notice how the price went up to P2 and the Quantity dropped to Q2.
If you need any clarification do comment. Cheers.
In an option contract: a. the offeree gives the offeror something of value in exchange for a promise not to revoke the offer for a stated period of time b. the offeree is free to accept or reject the offer c. all of the above d. a separate contract is created for the limited purpose of keeping the offer open
Answer:
d. a separate contract is created for the limited purpose of keeping the offer open
Explanation:
The contract defines that it is a contract between two or more persons in which the legal agreement, offers acceptance by the offeree is there and thus it is a lawful contract which is created by mutual agreement between the parties.
If the offeree offers the offeror some value in return for a commitment not to withdraw the offer for a given period of time, a contract option was established. A choice is a separate contract with the specific intention of holding the offer open.
The following information relates to last year's operations at the Legumes Division of Gervani Corporation: Minimum required rate of return 3 % Return on investment (ROI) 5 % Sales $ 730,000 Turnover (on operating assets) 2 times What was the Legume Division's net operating income last year
Answer:
$18,250
Explanation:
In this question, we are asked to calculate the net operating income for a division of a firm.
We proceed as follows;
Turnover=Sales/Average operating assets
Average operating assets=(730,000/2)=$365000
Return on investment=net operating income/Average operating assets
Hence Average operating assets=($365000*5%)
which is equal to
=$18250.
Second Link Services granted restricted stock units (RSUs) representing 16 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within four years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. The common shares had a market price of $10 per share on the grant date. 1. Ignoring taxes, what is the total compensation cost pertaining to the restricted stock units
Answer:
The total compensation cost pertaining to the restricted stock units is $160,000,000
Explanation:
In order to calculate the total compensation cost pertaining to the restricted stock units we would have to use the following formula:
Total compensation cost=Fair market value per share× Number of shares
pertaining to the restricted stock units awarded to executives
=$10×16,000,000 shares
=$160,000,000
The total compensation cost pertaining to the restricted stock units is $160,000,000
Airline Accessories has the following current assets: cash, $101 million; receivables, $93 million; inventory, $181 million; and other current assets, $17 million. Airline Accessories has the following liabilities: accounts payable, $96 million; current portion of long-term debt, $34 million; and long-term debt, $22 million. Based on these amounts, calculate the current ratio and the acid-test ratio for Airline Accessories. (Enter your answers in millions, not in dollars. For example, $5,500,000 should be entered as 5.5.)
Final answer:
The current ratio for Airline Accessories is 3.02 and the acid-test ratio is 1.62.
Explanation:
To calculate the current ratio for Airline Accessories, you need to divide the total current assets by the total current liabilities.
The total current assets for Airline Accessories is $101 million + $93 million + $181 million + $17 million = $392 million.
The total current liabilities for Airline Accessories is $96 million + $34 million = $130 million.
Therefore, the current ratio for Airline Accessories is $392 million / $130 million = 3.02.
To calculate the acid-test (or quick) ratio, you need to exclude the value of inventory from the current assets and divide the result by the total current liabilities.
The quick assets for Airline Accessories is $101 million + $93 million + $17 million = $211 million.
Therefore, the acid-test ratio for Airline Accessories is $211 million / $130 million = 1.62.
Paola Farms, Inc. produces a crop of chickens at a total cost of $66,000. The production generates 60,000 chickens which can be sold for $1 each to a slaughtering company, or the chickens can be slaughtered in house and then sold for $2.75 each. It costs $65,000 more to turn the annual chicken crop into chicken meat. If Paola Farms slaughters the chickens, determine how much incremental profit or loss it would report.
Answer: $40,000 incremental profit
Explanation:
Total Revenue if they sell the chickens as is to a slaughter house is,
= 60,000 * 1
= $60,000
If they decide to slaughter the chickens themselves then we have the following revenue
= 2.75 (selling price) * 60,000 chickens - 65,000 ( cost to turn into meat)
= $100,000
That's the profit if they process further. To get the Incremental Profit we subtract the profit if they just sell to the Slaughter house.
= 100,000 - 60,000
= $40,000
The Incremental profit if Paola Slaughters chickens is, $40,000
Final answer:
Paola Farms would report an incremental profit of $34,000 by slaughtering the chickens in-house, which is calculated by subtracting the combined costs of initial production and additional slaughtering from the revenue obtained after slaughtering.
Explanation:
To calculate the incremental profit or loss that Paola Farms would report if they decide to slaughter their chickens in-house, we first need to measure the additional revenue against the additional costs incurred from slaughtering.
If Paola Farms sells the chickens without slaughtering, they will make $60,000 in revenue (60,000 chickens at $1 each). If they decide to slaughter the chickens in-house, they can sell them for $2.75 each, resulting in total revenue of $165,000 (60,000 chickens at $2.75 each).
The extra cost to slaughter the chickens is $65,000. Therefore, we need to subtract the initial production cost of $66,000 and the additional slaughtering cost from the total revenue after the slaughter process:
Incremental Profit = Revenue from slaughtering - (Initial production cost + Additional slaughtering cost)
Incremental Profit = $165,000 - ($66,000 + $65,000) = $34,000
Hence, by slaughtering the chickens in-house, Paola Farms would report an incremental profit of $34,000.
Patrick Enterprises recently installed a parking lot. The paving costs were $38,750, and the lighting costs were $20,000. In addition, the company entered into a $1,000 annual agreement with Romero Cleaning to maintain the parking lot for 3 years. What is the total cost to be included in the Land Improvements account
Answer:
$58,750
Explanation:
Paving Costs $38,750
Lighting Costs $20,000
Total cost to be included in land improvement account $58,750
Please note that cleaning agreement cost is revenue expenditure,therefore should be charged to profit and loss account not in land improvement account.
Paid $7,000 of accrued taxes at the time the plant site was acquired. choose an account title 2. Paid $200 insurance to cover a possible accident loss on new factory machinery while the machinery was in transit. choose an account title 3. Paid $850 sales taxes on a new delivery truck. choose an account title 4. Paid $21,000 for parking lots and driveways on the new plant site. choose an account title 5. Paid $250 to have the company name and slogan painted on the new delivery truck. choose an account title 6. Paid $8,000 for installation of new factory machinery. choose an account title 7. Paid $900 for a 2-year accident insurance policy on the new delivery truck. choose an account title 8. Paid $75 motor vehicle license fee on the new truck.
Answer: Please refer to Explanation
Explanation:
Hello. Your question was not complete as it lacked certain options.
I have attached it to this answer.
1.Paid $7,000 of accrued taxes at the time the plant site was acquired. LAND because it was an expense that was needed to acquire the land so it is capitalized
2. Paid $200 insurance to cover a possible accident loss on new factory machinery while the machinery was in transit. EQUIPMENT
3. Paid $850 sales taxes on a new delivery truck. EQUIPMENT.
4. Paid $21,000 for parking lots and driveways on the new plant site. choose an account title. LAND IMPROVEMENTS.
5. Paid $250 to have the company name and slogan painted on the new delivery truck. choose an account title. EQUIPMENT
6. Paid $8,000 for installation of new factory machinery. choose an account title. EQUIPMENT
7. Paid $900 for a 2-year accident insurance policy on the new delivery truck. choose an account title. PREPAID INSURANCE
8. Paid $75 motor vehicle license fee on the new truck. LICENSE EXPENSE.
The company is currently selling 8,000 units per month. Fixed expenses are $719,000 per month. The marketing manager believes that a $20,000 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change
Answer:
The following data is missing in the question which is being reproduced;
Selling price $140
Variable Cost $28
Contribution Margin $112
Explanation:
Increase in sale 180*140 $25,200
Variable Cost 180*28 ($5,040)
Net contribution margin $20,160
Advertising expense-incremental ($20,000)
Net Increase in operating income $160
The net operating income will increase with just $160 because of this change.
Brooke owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home where she meets with clients, prepares bills, and performs other work-related tasks. The home office is 300 square feet and the entire house is 4,500 square feet. Brooke incurred the following home-related expenses during the year. Unless indicated otherwise, assume Brooke uses the actual expense method to compute home office expenses. Real property taxes $ 3,600 Interest on home mortgage 14,000 Operating expenses of home 5,000 Depreciation 12,000 Repairs to home theater room 1,000 e. Assume that Brooke uses the simplified method for computing home office expenses. If Brooke reported $2,000 of Schedule C net income before the home office expense deduction, what is the amount of her home office expense deduction and what home office expenses, if any, would she carry over to next year
Answer:
The Total expenses of the amount allocated to the home office is $35, 600, the total amount of the tier 1, 2, and 3 expenses were $2306, finally, Brooke may deduct $494 of depreciation expense and carry the remaining $306 over to the following year.
Explanation:
The first step is to know what amount each of this expenses is allocated to the home office.
Expense Amount Type Allocated to home office 6.6% of indirect
(300/4, 500 square feet.)
Real property taxes $3,600 Indirect $240
Interest on home
Mortage 14,000 Indirect 933
Operating expense
of home 5000 Indirect 333
Depreciation 12,000 Indirect 800
Repairs to home
theater room 1000 Unrelated 0
Total expenses $35,600 $2,306
The next step is to find the total amount of tier 1, tier 2, and tier 3 expenses allocated to the office.
expenses for Tier 1 : $1,173 which is $240 real property + $933 of interest home mortgage expenses for Tier 2: $333 (operating expenses of the home)expenses for ties 3 : $800 depreciation.For the last step thus saying we solve thus:
Now,
$2000 home office expense in total and $306 depreciation expense carry to the next year.
From her $2,000 of Schedule C net income before she would subtracts all $1,173 from tier 1 expenses and all $333 from tier 2 expenses. this leaves $494 ($2000- $1,173 - $333) of net income before depreciation (tier 3 expense)
Because the home office deduction can reduce net income to $0, brooke may deduct $494 of depreciation expense and carry the remaining $306 over to the following year.
For Brooke's actual expense method, after applying the proportion of the home used for her business to her home-related expenses, she can deduct $2,000 this year and carry over $308.4 to next year. Under the simplified method, she could deduct $1,500.
Explanation:To calculate Brook's home office expenses, we'll first need to determine the proportion of the house used for business purposes. In this case, it's 300 square feet out of 4,500 square feet, or 6.67% (300/4500). Next, we apply this percentage to each of her home-related expenses, but ignoring the repair costs to the home theater room as this does not apply to the business use of the home.
Her deductions would therefore be:
Real Property Taxes: $3,600 * 6.67% = $240.12 Interest on Home Mortgage: $14,000 * 6.67% = $934.38 Operating Expenses: $5,000 * 6.67% = $333.50 Depreciation: $12,000 * 6.67% = $800.40This totals $2,308.4 in deductible home office expenses. Nevertheless, since Brooke reported $2,000 of Schedule C net income before the home office expense deduction, she can only deduct up to $2,000. The remaining $308.4 can be carried over to the next year. However, if Brooke uses the simplified method for computing home office expenses, she would be able to deduct $5 per square foot of her home used for business, up to 300 square feet, the equivalent of $1,500.
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You must prepare a return on investment analysis for the regional manager of Fast & Great Burgers. This growing chain is trying to decide which outlet of two alternatives to open. The first location (A) requires a $1,000,000 average investment and is expected to yield annual net income of $160,000. The second location (B) requires a $600,000 average investment and is expected to yield annual net income of $108,000. Compute the return on investment for each Fast & Great Burgers alternative.
Answer:
ROI for location A = 16%
ROI for Location B = 18%
Explanation:
Return on Investment is the proportion of operating assets that an investment center earned as as net operating income.
It is calculated as follows
ROI = operating income/operating assets
ROI for Investment center for first location
= (160,000/1,000,000) × 100
=16%
ROI for Investment center for second location
=(108,000/600,000) × 100
= 18%
Answer:
First location ROI is 16%
Second location ROI is 18%
Explanation:
The formula for return on investment is given as the net income divided by the average investment that yielded the net income.
The ROI for the proposed first location is computed thus:
average investment required in the first location is $1,000,000
Annual net income expected from first location is $160,000
Return on investment=$160,000/$1000,000*100
=16.00%
The ROI for the proposed second location is computed thus:
average investment required in the first location is $600,000
Annual net income expected from first location is $108,000
Return on investment=$108,000/$600,000*100
=18.00%
Based on ROI , the second location is preferred since it results in a higher ROI with less average investment
The following information pertains to the Moline Facility for the month of May (all materials are added at the beginning of the process): Units Material Costs Beginning work in process 54,000 $ 148,500 Started in May 144,000 475,200 Units completed 153,000 Ending work in process 45,000 Required: Compute the cost per equivalent unit for materials using the weighted-average method. (Round "Cost per equivalent unit" answer to 2 decimal places.)
Answer:
$3.15
Explanation:
The computation of the cost per equivalent unit for material is shown below:
As we know that
Cost per equivalent unit of material is
= Total cost ÷ Total equivalent units
where,
Total cost is
= $148,500 + $475,200
= $623,700
And, the
Equivalent units of materials is
= 153,000 units + 100% of 45,000 units
= 198,000 units
So,
The Cost per equivalent unit for materials is
= $623,700 ÷ 198,000 units
= $3.15
By dividing the total cost with its Equivalent units of materials we can get the cost per equivalent unit for material
g Beginning WIP inventory Direct materials costs $ 31,300 Conversion costs 40,700 Current period costs Direct materials costs $ 290,950 Conversion costs 1,139,550 Required: a. Compute the cost equivalent units for the conversion cost calculation assuming Campo uses the weighted-average method. b. Compute the cost per equivalent unit for materials and conversion costs for November.
Answer:
conversion units 580,100
materials units 617,000
equivalent unit cost materials: $ 0.52
equivalent unit cost conversion: $ 2.03
Explanation:
MISSING INFORMATION:
Materials are added at the beginning
Beginning work in process (56% complete) 57,000
Started in November 560,000
Completed in November and transferred out 535,000
Ending work in process (55% complete) 82,000
Weighted-Average:
completed + percentage of completion
conversion:
535,000 + 82,000 x 55% = 580,100 units
materials:
535,000 + 82,000 x 100% = 617,000 units
Cost per EU:
Materials cost:
31,300 + 290,950 = 322.250
per unit 322,250 / 617,000 = $ 0,5222
Conversion cost
1,139,500 + 40,700 = 1,180,200
per unit $ 1,180,200 / 580,100 = $ 2,03
The Geller Company has projected the following quarterly sales amounts for the coming year: Q1 Q2 Q3 Q4 Sales $510 $540 $600 $750 a. Accounts receivable at the beginning of the year are $270. The company has a 45-day collection period. Calculate cash collections in each of the four quarters by completing the following: (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)
Answer:
The correct answer are $525, $525, $570 and $675 respectively.
Explanation:
According to the scenario, the computation of the given data are as follows:
Collection period = 45 days
Days in one quarter = 90 days
So, Amount collected during the quarter = ( 90 - 45) / 90 = 1/2 of current sales + Beginning Accounts receivables
So, we can calculated the cash collection as follows:
Q1 Q2 Q3 Q4
Beginning A/c. receivables $270 $255 $270 $300
Sales $510 $540 $600 $750
Cash Collections $525 $525 $570 $675
Ending A/c Balance $255 $270 $300 $375
Note: Ending balance is the beginning balance for next quarter.
The Geller Company's cash collections per quarter are calculated based on a 45-day collection period. Collections each quarter are calculated as half the sales of the current quarter plus half the sales of the previous quarter, or initial accounts receivable in Q1's case.
Explanation:The collection period for the Geller Company is 45 days, which represents half of a quarter because a quarter has 90 days. This means that the cash collected in a given quarter is the sum of half of the sales of the current quarter and half of the sales of the previous quarter.
So, the cash collections would be calculated as follows:
Q1: Half of Q1 sales + Half of initial accounts receivable = 0.5 * $510 + 0.5 * $270 = $390Q2: Half of Q1 sales + Half of Q2 sales = 0.5 * $510 + 0.5 * $540 = $525Q3: Half of Q2 sales + Half of Q3 sales = 0.5 * $540 + 0.5 * $600 = $570Q4: Half of Q3 sales + Half of Q4 sales = 0.5 * $600 + 0.5 * $750 = $675Please note that these calculations are based on the assumption that the company collects all payments on time, and there are no late or missed payments.
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Perry, a buyer for Superior Products Company, a manufacturer of bulletin boards and other office supplies, visits a lumberyard and is shown samples of cork by Monica, a salesperson. Perry agrees to buy a certain quantity based on Monica's statement that the shipment will match a selected sample. The statement is:________
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffing
Answer:
The correct answer is letter "A": an express warranty.
Explanation:
An express warranty is an arrangement established by a buyer and a seller so that the seller is in charge of repairs of a good sold by the seller in case it presents failures under certain circumstances. The warranty covers the product for a specified time in the contract and must be written in case the purchase value of the product is higher than $15.
Cullumber Company expects to have a cash balance of $138,000 on January 1, 2022. These are the relevant monthly budget data for the first two months of 2022. 1. Collections from customers: January $213,000, February $438,000. 2. Payments to suppliers: January $120,000, February $225,000. 3. Wages: January $90,000, February $120,000. Wages are paid in the month they are incurred. 4. Administrative expenses: January $63,000, February $72,000. These costs include depreciation of $3,000 per month. All other costs are paid as incurred. 5. Selling expenses: January $45,000, February $60,000. These costs are exclusive of depreciation. They are paid as incurred. 6. Sales of short-term investments in January are expected to realize $36,000 in cash. Cullumber Company has a line of credit at a local bank that enables it to borrow up to $75,000. The company wants to maintain a minimum monthly cash balance of $60,000.
Answer and Explanation:
The preparation of cash budget is shown below:-
Cash Budget
January February
Beginning cash balance $1,38,000 $72,000
Add: Receipts:-
Collections from customers$2,13,000 $4,38,000
Sale of marketable securities$36,000 $-
Total receipts $2,49,000 $4,38,000
Total available cash $3,87,000 $5,10,000
Less: Disbursements
Direct materials $1,20,000 $2,25,000
Direct labor $90,000 $1,20,000
Selling and administrative
expenses $1,05,000 $1,29,000
Total disbursements $3,15,000 $4,74,000
Excess
(deficiency of available cash
over cash disbursements) $72,000 $36,000
Financing:
Add: Borrowings $ - $24,000
Ending cash balance $72,000 $60,000
Final answer:
The question is focused on preparing a cash budget for Cullumber Company for January and February 2022. Key figures to consider include initial cash balance, collections, payments, wages, and expenses. Depreciation is excluded from the cash calculations as it's a non-cash expense.
Explanation:
Cullumber Company Cash Budget Analysis
The Cullumber Company is creating a cash budget for the first two months of 2022 and is analyzing various budget components to maintain a minimum monthly cash balance of $60,000. The components under consideration include collections from customers, payments to suppliers, wages, administrative expenses (including depreciation), selling expenses, and the sale of short-term investments. Calculations must account for the cash balance at the beginning of the period, expected inflows, and outflows to establish the end-of-month cash positions and the need for additional financing if required.
January Cash Budget
Beginning Cash Balance: $138,000
Collections from customers: $213,000
Payments to suppliers: $120,000
Wages: $90,000
Administrative expenses (excluding depreciation): $60,000
Selling expenses: $45,000
Sale of short-term investments: $36,000
February Cash Budget
Collections from customers: $438,000
Payments to suppliers: $225,000
Wages: $120,000
Administrative expenses (excluding depreciation): $69,000
Selling expenses: $60,000
Depreciation does not affect the cash budget as it is a non-cash expense. The company should compute its net cash flows for each month and determine if there is a need to draw from the line of credit to maintain the minimum cash balance. A detailed budget will help in decision-making and ensure financial stability.
A product has a contribution margin of $8 per unit and a selling price of $45 per unit. Fixed costs are $26,000. Assuming new technology increases the unit contribution margin by 40 percent but increases total fixed costs by $18,800, what is the new breakeven point in units? (Do not round intermediate calculations.) Multiple Choice 3,250 units 5,000 units 4,680 units 4,000 units
Answer:
New break even in units is 4000 units
Explanation:
The break even point in units is the number of units that must be sold to earn enough total revenue to cover total costs. This is the point where there will be no profit and no loss. The formula for break even in units is,
Break even in units = Fixed costs / Contribution margin per unit
The new contribution margin per unit = 8 * 140% = $11.2
New Fixed costs = 26000 + 18800 = $44800
New Break even in units = 44800 / 11.2 = 4000 units
Final answer:
The new breakeven point, after accounting for a 40% increase in the unit contribution margin and an additional $18,800 in fixed costs, is 4,000 units.
Explanation:
To calculate the new breakeven point in units after the changes in the contribution margin and fixed costs, we need to follow these steps:
Calculate the new unit contribution margin: Original contribution margin per unit is $8. Increase by 40% is $8 * 0.40 = $3.20. So, the new contribution margin per unit is $8 + $3.20 = $11.20.Calculate the new total fixed costs: Original total fixed costs are $26,000. The increase is $18,800. Therefore, new total fixed costs are $26,000 + $18,800 = $44,800.Determine the breakeven point in units: Divide the new total fixed costs by the new unit contribution margin. $44,800 / $11.20 = 4,000 unitsThe new breakeven point after the implementation of new technology, which increased the unit contribution margin by 40 percent and increased total fixed costs by $18,800, is 4,000 units.
The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 8.8 hours Standard variable overhead rate $ 15.20 per hour The following data pertain to operations for the last month: Actual hours 2,950 hours Actual total variable manufacturing overhead cost $ 45,610 Actual output 150 units What is the variable overhead efficiency variance for the month
Answer:
variable overhead efficiency variance= $24,776 unfavorable
Explanation:
Giving the following information:
Standard hours per unit of output 8.8 hours
Standard variable overhead rate $ 15.20 per hour
Actual hours 2,950 hours
Actual output 150 units
To calculate the variable overhead efficiency variance, we need to use the following formula:
variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate
Standard quantity= 150*8.8= 1,320 hours
variable overhead efficiency variance= (1,320 - 2,950)*15.2
variable overhead efficiency variance= $24,776 unfavorable
Consider two countries’ situations: Country A can produce either six automobiles or twelve movies with the same amount of resources. Country B, using the same resources, can produce either five automobiles or eight movies.
a- Which theory of international trade would maximize the total production?
b- Determine which country would produce automobiles and which country would produce movies.
c- Draw the production possibilities frontier for this case.
Answer:
Please refer explanation and attached diagram
Explanation:
A. Theory of international trade: Comparative advantage
This is referred to as an individual, company, region or country's ability to produce goods and services at a lower opportunity cost than that of its trade partners. The country with the least opportunity cost has comparative advantage in that product. This is different to absolute advantage which only takes into account the ability of a country to produce a greater number of output using the same resources.
B. In order to identify which country will produce what product, the opportunity cost for each product must be found. In other words, the benefit lost from the second best alternative.
In Country A, to produce 6 automobiles, 12 movies must be sacrificed. Hence, to produce 1 automobile, 2 movies are sacrificed (12/6). On the other hand, to produce 1 movie, 0.5 of an automobile is sacrificed (6/12).
When looking at Country B, it can produce either 5 automobiles or 8 movies. Hence, when producing a single automobile, the opportunity cost it incurs is being unable to produce 1.6 movies (8/5). Similarly, to produce 1 movie, it sacrifices 0.6 of automobiles (5/8).
Hence comparatively, Country A having the lower opportunity cost in movie production, will produce movies, whilst Country B having the lower opportunity cost in producing automobiles will produce automobiles.
C. The production possibility frontier has been attached.
In order to draw the lines, at least two points are required, but the question only provides one point for each Country. However, using the opportunity cost, the other points can be derived. For example, in country A, if 2 movies are sacrificed to produce 1 automobile, then when automobile production increases from 6 to 7, movie production falls from 12 to 10.
In country B, if 0.6 automobiles are sacrificed to produce 1 movie, then when movie production rises from 8 to 9, automobile production falls from 5 to 4.4. This method can be used to find other points and draw the PPF as has been done :)
Final answer:
Comparative Advantage theory would maximize total production by having each country specialize in the goods they produce efficiently.
Explanation:
Comparative Advantage theory would maximize total production. According to this concept, each country should specialize in producing the good where it has the lowest opportunity cost, leading to increased overall production.
Country A should specialize in producing movies, while Country B should focus on producing automobiles based on their comparative advantage.To draw the production possibilities frontier (PPF), Country A's PPF would show a steeper slope for automobiles, and Country B's PPF would have a steeper slope for movies.. The income elasticity of demand for medical care is 1.35. This implies that: a. if income decreases by 1%, the quantity demanded for medical care decreases by 1.35%. b. if the price of medical care increases by 1%, the quantity demanded for medical care decreases by 1.35%. c. if the income of the average consumer increases by 1 dollar, the quantity demanded for medical care will increase by 1.35 units of care. d. if income increases by 1%, the quantity demanded for medical care decreases by 1.35%.
Answer:
The correct answer is a).
Explanation:
The income elasticity of demand refers to the percentual variation of quantity demanded of a certaing good in response to a percentual variation in income.
If the income elasticity of demand for medical care is 1.35,
a. if income decreases by 1%, the quantity demanded for medical care decreases by 1.35%. TRUE, this is what the definition implies.
b. if the price of medical care increases by 1%, the quantity demanded for medical care decreases by 1.35%. FALSE. In this elasticity, the sign is relevant. This income elasticity implies that changes in income and medical care expenses have the same sign.
c. if the income of the average consumer increases by 1 dollar, the quantity demanded for medical care will increase by 1.35 units of care. FALSE. The elasticity relates percentual variations, not absolute value variations.
d. if income increases by 1%, the quantity demanded for medical care decreases by 1.35%. FALSE. The same as point b.
Final answer:
The income elasticity of 1.35 implies that a 1% increase in income leads to a 1.35% increase in the quantity demanded for medical care. Price elasticity of -0.2 for health care indicates that demand for health care is price inelastic, often due to its necessity and lack of substitutes.
Explanation:
The income elasticity of demand for medical care is 1.35. This implies that if income increases by 1%, the quantity demanded for medical care increases by 1.35%.
Therefore, the correct answer to the student's question is 'd. if income increases by 1%, the quantity demanded for medical care increases by 1.35%.' It is important to note that income elasticity of demand is different from price elasticity of demand, which relates to how demand changes with price changes.
The price elasticity of demand for health care has been estimated to be -0.2. This characterizes the demand for health care as being price inelastic since the absolute value of the elasticity is less than 1.
Despite health care being a substantial part of consumer budgets, the elasticity can be low because it is generally a necessity with few substitutes, implying consumers will continue to purchase it even when prices increase.