Answer:
Total variation= $363 favorable
Explanation:
Giving the following information:
Sheridan Company’s standard labor cost per unit of output is $33.00 (3.00 hours x $11.00 per hour). During August, the company incurs 2,970 hours of direct labor at an hourly cost of $12.10 per hour in making 1,100 units of finished product.
Direct labor efficiency variance= (SQ - AQ)*standard rate
Direct labor efficiency variance= (3,300 - 2,970)*11= 3,630 favorable
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Direct labor rate variance= (11 - 12.1)*2,970= 3,267 unfavorable
Total variation= 363 favorable
Which of the following is a disadvantage of establishing a wholly owned subsidiary?
a. Establishing a wholly owned subsidiary is generally the most costly method.
b. Firms will typically lose control over any technological competence.
c. A firm engaging in this strategy will have little control over operations in the foreign country.
d. Firms will face difficulties in building a certain organizational culture in greenfield ventures.
Answer:
The answer is letter A
Explanation:
Establishing a wholly owned subsidiary is generally the most costly method.
When Nintendo sets a relatively low price on game units to stimulate more demand for its game cartridges, it is using
A) complementary product pricing.
B) product-bundle pricing.
C) price lining.
D) bait pricing.
E) cost-plus pricing.
Answer:
Letter A is correct. Complementary product pricing.
Explanation:
Organizations use the strategy of adopting a complementary product pricing to increase the total profit of a product group.
This strategy is used when the company sells products that are complementary, ie the use of one is complemented by the use of the other, so the company substantially decreases the price of a product, usually just to cover costs, and guarantees gains from a product with a high price and very high profit margin.
The benefits added to the complementary price of a product are market gain, competitors' entry barriers and retention and attraction of new consumers.
Lakeland, Inc. has 25,000 shares of 6%, $100 par value, noncumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2018. There were no dividends declared in 2017. The board of directors declares and pays a $250,000 dividend in 2018. What is the amount of dividends received by the common stockholders in 2018? $0 $150,000 $250,000 $100,000
Answer:
$100000
Explanation:
Given: Total Dividend paid= $250000.
Preferred stock is 25000 shares of 6%, $100 par value.
First, lets calculate preferred stock.
Preferred stock= [tex][25000\times \$ 100\times 6%][/tex]
∴ Preferred stock= $150000
Now, calculating the amount of dividends received by common stockholder.
Dividend received by stockholder= [tex](Total\ Dividend\ paid \ by \ company - preferred\ dividend)[/tex]
Common stockholder´s dividend= ([tex](250000-150000)= \$ 100000[/tex]
∴ Common stockholder´s dividend is $100000.
On January 1, 2017, Bensen Company leased equipment to Flynn Corporation. The following information pertains to this lease.
The term of the non-cancelable lease is 6 years. At the end of the lease term, Flynn has the option to purchase the equipment for $1,000, while the expected residual value at the end of the lease is $5,000.
Equal rental payments are due on January 1 of each year, beginning in 2017.
The fair value of the equipment on January 1, 2017, is $150,000, and its cost is $120,000.
The equipment has an economic life of 8 years. Flynn depreciates all of its equipment on a straight-line basis.
Bensen set the annual rental to ensure a 5% rate of return. Flynn's incremental borrowing rate is 6%, and the implicit rate of the lessor is unknown.
Collectibility of lease payments by the lessor is probable. (Both the lessor and the lessee's accounting periods end on December 31.)
(a) Discuss the nature of this lease to Bensen and Flynn.
(b) Calculate the amount of the annual rental payment.
(c) Prepare all the necessary journal entries for Bensen for 2017.
(d) Suppose the collectibility of the lease payments was not probable for Bensen. Prepare all necessary journal entries for the company in 2017.
(e) Prepare all the necessary journal entries for Flynn for 2017.
(f) Discuss the effect on the journal entry for Flynn at lease commencement, assuming initial direct costs of $2,000 are incurred by Flynn to negotiate the lease.
This lease is a capital lease for Flynn and a sales-type lease for Bensen, due to the specific conditions of the lease. The annual rental payment comes out to be $29,841 using the formula PMT = PVOA / [(1 - (1 + r) ^ -n ) / r ]. Bensen and Flynn's journal entries differ based on their respective roles and if collectibility is not probable, Bensen would account for possible bad debts.
Explanation:The nature of this lease indicates that it's a capital lease for Flynn and a sales-type lease for Bensen, since the lease term is lesser than 75% of the economic life of the equipment and Flynn has an option to purchase the equipment below its expected residual value at the end of the lease term. In this situation, Flynn is effectively financing the acquisition of the equipment, while Bensen is playing the role of a financiers.
To calculate the annual rental payment, we need to use Bensen's rate of return (5%). This would equate to the present value of an annuity formula. The present value of an annuity formula is PVOA = PMT [(1 - (1 + r) ^ -n ) / r], where PMT is the annual payment, r is the interest rate, and n is the number of periods. Rearranging to solve for PMT, we get PMT = PVOA / [(1 - (1 + r) ^ -n ) / r ]. Here, PVOA is the fair value of the equipment, which is $150,000, r is 5% or 0.05, and n is the lease term, which is 6 years. Hence, the annual rental payment comes out to be around $29,840.90.
The journal entries in 2017 for Bensen would be: 1) Debit Lease Receivable for $150,000 and Credit Equipment for $120,000 and Gain on Sale for $30,000 (to record the lease agreement) 2) Debit Cash for $29,841 and Credit Lease Receivable for $29,841 (to record the collection of the lease payment) 3) Debit Interest Receivable ($120,159*0.05) and Credit Interest Revenue for the same amount (to record the recognition of interest).
If the collectibility of the lease payments wasn't probable, Bensen would have recorded a Allowance for Doubtful Accounts and would have made additional entries to record bad debt expenses. Flynn's 2017 journal entries would be: 1) Debit Leased Equipment for $150,000 and Credit Lease Obligation for the same amount (to record the lease) 2) Debit Lease Obligation for $29,841 and Credit Cash for the same amount (to make the lease payment) 3) Debit Interest Expense for $(120,159 - 29,841)*0.06) and Credit Lease Obligation for the same amount (to record interest).
If there were initial direct costs, Flynn would have included these costs in the initial measurement of the lease liability. Therefore, the journal entry would be: Debit Leased Equipment for $152,000 and Credit Lease Obligation for the same amount.
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Treasury stock shares are________________.a. unissued shares that are held by the treasurer of the corporation.b. part of the total outstanding shares but not part of the total issued shares of a corporation.c. shares held by the U.S. Treasury Department.d. issued shares that have been reacquired by a corporation.
Answer:
The correct answer is letter "D": issued shares that have been reacquired by a corporation.
Explanation:
Treasury stock is a company's own stock that is held in its treasury for later years. Often, a company purchases its treasury stocks on the open market. Treasury stocks may also exist because the issuing company did not sell all of its outstanding shares. Some were held back for later years to raise additional cash or to prevent a hostile takeover.
For the past 50 days, daily sales of a specialty product in a large grocery store have been recorded:Units Sold Number of Times10 820 1830 1040 850 61.What is the average number of units sold?2.What is the standard deviation?3.What is a 68.26% confidence interval? Please interpret.4.Suppose that the following random numbers were obtained:.86 .23 .73 .40 .95 Use these random numbers to simulate 5 days of sales.a.What is the average number of units sold?b.Can we conclude that the sales are random? Discuss.
Answer:
(A) what is the average number of units sold for 50 days: 820, 1830, 1040, 850, 6
(B) what is the standard deviation
(C) what is the average number of units sold for 5 days: 86, 23, 73, 40, 95
(D) can we conclude that the sales are random?
Explanation:
(A)
(820×10) + (1830×10) + (1040×10) + (850×10) + (6×10) = 45,460
45,460÷50 = 909.2units
(B)
(909.2-820)^2 × 10 = total squared mean deviation of the first 10 sales or 10days - sales of 820 per day
Doing same for the other 4 values, the total of squared mean deviation for the 5 days is
16922128÷50 = 338442.56 = Variance of the set of sales values
Standard Deviation is the square root of Variance so it is 581.758
(C) Mean of random units sold in 5 days: 317÷5 = 63.4
(D) for 50 days, mean sale was 909.2 units
For 5 days, random mean sale was 63.4
50÷5=10
909.2÷63.4=14.34
Yes, we can conclude that the sales are random
: Management of ProCor, a biotech firm, forecasted the following growth rates for the next three years: 35 percent, 28 percent, and 22 percent. Management then expects the company to grow at a constant rate of 9 percent forever. The company paid a dividend of $1.75 last week. If the required rate of return is 20 percent, what is the value of this stock?
The stock value is calculated using the Gordon Growth Model that incorporates forecasted growth rates, recent dividends, and the required rate of return. It includes calculating dividends for the first three years, discounting these dividends to the present, calculating a terminal price from Year 3 onwards reflecting a constant growth rate, discounting this terminal price to the present, and adding up these value for the current stock price.
Explanation:The value of a stock can be calculated using the Gordon Growth Model, which takes into account future dividends and growth rates. The model considers the company's growth rates for the first three years (35%, 28%, and 22%, respectively), an indefinite growth rate of 9%, and a dividend of $1.75 paid last week. Using these figures, calculate the dividends for each of the first three years by growing the most recent dividend by each year's growth rate. Once you have the dividends for each of the first three years, discount them by dividing each by (1+the required rate of return)the year. Keep in mind the required rate of return is 20%. After the 3rd year, the dividend grows at a constant rate of 9% indefinitely. The present value of these future dividends is called the terminal price. Find this by taking the Year 3 dividends and multiplying by 1+the constant growth rate, then dividing by the required rate of return minus the constant growth rate. Discount this back to the present by dividing by (1+the required rate of return)3. The current stock price is the sum of the discounted dividends and the discounted terminal price.
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Gilberto lives in San Francisco and runs a business that sells guitars. In an average year, he receives $842,000 from selling guitars. Of this sales revenue, he must pay the manufacturer a wholesale cost of $452,000; he also pays wages and utility bills totaling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $38,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Gilberto does not operate this guitar business, he can work as an accountant, receive an annual salary of $48,000 with no additional monetary costs, and rent out his showroom at the $38,000 per year rate. No other costs are incurred in running this guitar business.
Answer:
Gilberto is NOT earning a normal profit
Explanation:
Salary Gilberto could earn = implicit.
Wholesale cost = explicit
wages and bills = explicit
rental income = implicit
Explicit cost = 45.200 + 301.000 = 753.000
Implicit cost = 38.000 + 48.000 = 86.000
revenue = 842.000
accounting profit = 842.000 -753.000 = 89.000
Economic profit = 89.000 - 86.000 = 3.000
Carlson Company uses a predetermined rate to apply overhead. At the beginning of the year, Carlson estimated its overhead costs at $240,000, direct labor hours at 40,000, and machine hours at 10,000. Actual overhead costs incurred were $249,280, actual direct labor hours were 41,000, and actual machine hours were 11,000.
Answer:
The estimated rate based on labour hour==6
The actual rate based on labour hour=6.08
The rate based on machine hour=24
The rate based on machine hour= 22.66
Explanation:
Given that Carlson estimated its overhead costs to be $240,000,direct labor hours at 40,000 and machine hours at 10,000 as well as the actual overhead costs incurred of $249,280, actual direct labor hours of 41,000, and actual machine hours of 11,000.We can calculate the to apply .
The estimated rate based on labour hour=240000/40000=6
The actual rate based on labour hour=249280/41000=6.08
The rate based on machine hour=240000/10000=24
The rate based on machine hour=249280/11000=22.66
Hector's wealth is zero, he expects to work for another 45 years at a constant salary of $80,000 and live for another 60 years. If Hector receives a $20,000 bonus during his first year of work and he completely smooths consumption over his lifetime, his marginal propensity to consume out of a transitory increase in income is
A. $67,500.
B. $75,000.
C. $80,000.
D. $111,111.
His marginal propensity to consume out of a transitory increase in income is [tex]\$67,500[/tex].
Explanation:
In financial aspects, the minimal penchant to expend (MPC) is a metric that measures actuated utilization, the idea that the expansion in close to home shopper spending (utilization) happens with an increment in discretionary cash flow (pay after expenses and moves).
The extent of extra cash which people spend on utilization is known as penchant to expend. MPC is the extent of extra pay that an individual expends.
For instance, if a family unit procures one additional dollar of discretionary cashflow, and the minor affinity to expend is 0.65, at that point of that dollar, the family unit will burn through 65 pennies and spare 35 pennies. Clearly, the family unit can't spend more than the additional dollar (without getting).
As indicated by John Maynard Keynes, minimal affinity to devour is short of what one.
On July 1, 2013, Farm Fresh Industries purchased a specialized delivery truck for $126,000. At the time, Farm Fresh estimated the truck to have a useful life of eight years and a residual value of $30,000.
On March 1, 2018, the truck was sold for $58,000.
Farm Fresh uses the straight-line depreciation method for all of its plant and equipment.
Partial-year depreciation is calculated based on the number of months the asset is in service.
Required:
1. Prepare the journal entry to update depreciation in 2018.
2. Prepare the journal entry to record the sale of the truck.
3. Assuming that the truck was sold for $80,000, prepare the journal entry to record the sale.
Answer:
I think last option
Answer:
1.
Debit Depreciation Expense $2,000
Credit Accumulated depreciation $2,000
2.
Debit Cash $58,000
Debit Accumulated depreciation account $56,000
Debit Loss on asset disposal $12,000
Credit Delivery truck asset $126,000
3.
Debit Cash $80,000
Debit Accumulated depreciation account $56,000
Credit Gain on asset disposal $10,000
Credit Delivery truck asset $126,000
Explanation:
Farm Fresh uses straight-line depreciation, Depreciation Expense each year is calculated by following formula:
Annual Depreciation Expense = (Cost of asset − Residual Value )/Useful Life = ($126,000-$30,000)/8 = $12,000
Depreciation Expense in 2013 = ($12,000/12)x6 = $6,000
1. From January 1, 2018 to March 1, 2018, the truck was in service for 2 months
Depreciation Expense in 2018 = ($12,000/12)x2 = $2,000
The entry:
Debit Depreciation Expense $2,000
Credit Accumulated depreciation $2,000
2.
From July 1, 2013 to March 1, 2018, the truck was in service for 4years and 8 months
Accumulated depreciation = $6,000 + $12,000 x 4 + $2,000 = $56,000
Carrying amount of the asset = Cost of asset - Accumulated depreciation = $126,000 - $56,000 = $70,000
Sale price - Carrying amount of the asset = $58,000-$70,000 = -$12,000
The company recognized loss on the sale $12,000.
The entry:
Debit Cash $58,000
Debit Accumulated depreciation account $56,000
Debit Loss on asset disposal $12,000
Credit Delivery truck asset $126,000
3.
Sale price - Carrying amount of the asset = $80,000-$70,000 = $10,000
The company recognized gain on the sale $10,000
The entry:
Debit Cash $80,000
Debit Accumulated depreciation account $56,000
Credit Gain on asset disposal $10,000
Credit Delivery truck asset $126,000
Everly Corporation acquires a coal mine at a cost of $479,200. Intangible development costs total $119,800. After extraction has occurred, Everly must restore the property (estimated fair value of the obligation is $95,840), after which it can be sold for $191,680. Everly estimates that 4,792 tons of coal can be extracted. If 839 tons are extracted the first year, prepare the journal entry to record depletion.
Required:
a. Restoration costs Inventory Accumulated depletion Development costs.
b. Restoration costs Development costs Accumulated depletion Inventory
Answer
The answer and procedures of the exercise are attached in a microsoft excel document.
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.
On January 1, 2021, Canseco Plumbing Fixtures purchased equipment for $44,000. Residual value at the end of an estimated four-year service life is expected to be $8,000. The company expects the equipment to operate for 20,000 hours. The equipment operated for 2,900 and 3,700 hours in 2021 and 2022, respectively.Required:a. Calculate depreciation expense for 2021 and 2022 using straight line method.b. Calculate depreciation expense for 2021 and 2022 using double-declining balance method.c. Calculate depreciation expense for 2021 and 2022 using units-of-production using hours operated.
Answer:
a.
Depreciation expense for 2021: $9,000
Depreciation expense for 2022: $9,000
b.
Depreciation expense for 2021: $18,000
Depreciation expense for 2022: $9,000
c.
Depreciation expense for 2021: $5,220
Depreciation expense for 2022: $6,660
Explanation:
a. Canseco Plumbing Fixtures uses Straight-line method
Annual Depreciation Expense = (Cost of asset − Residual value Value)/Useful Life = ($44,000 - $8,000)/4 = $9,000
Depreciation expense for 2021: $9,000
Depreciation expense for 2022: $9,000
b. Canseco Plumbing Fixtures uses Double-declining-balance method
Under the straight-line method, useful life is 4 years, so the equipment's annual depreciation will be 25% of the Depreciable cost.
Depreciable cost = Total asset cost - Residual value = $44,000-$8,000 = $36,000
Under the double-declining-balance method the 25% straight line rate is doubled to 50% - multiplied times the Depreciable cost's book value at the beginning of the year.
In 2021, depreciation expense = 50% x $36,000 = $18,000
At the beginning 2022, the Depreciable cost's book value is $36,000-$18,000 = $18,000
Depreciation expense in 2022 = 50% x $18,000 = $9,000
c. Canseco Plumbing Fixtures uses Units-of-activity method
The Units-of-activity depreciation method is calculated by using the following formula:
Depreciation Expense = [(Cost of asset − Residual value)/Life in Number of hours Operated]x Number of hours Operated] = Depreciation Expense per hour x Number of hours Operated
Depreciation Expense per hour = ($44,000-$8,000)/20,000 = $1.8
Depreciation expense each year = Actual hours Operated x Depreciation Expense per hour.
Depreciation expense for 2021 = 2,900 x $1.8 = $5,220
Depreciation expense for 2022 = 3,700 x $1.8 = $6,660
Using different methods - straight line, double declining, and units of production, the depreciation for Canseco Plumbing Fixtures' equipment was calculated for the years 2021 and 2022. Each method uses different calculations and factors thereby providing differing amounts of depreciation.
Explanation:
This question revolves around the concept of depreciation. Depreciation allows companies to reduce the value of an asset over time due to its usage, wear and tear.
For calculating the depreciation expense for 2021 and 2022, we would use three different methods as per the request.
Straight-Line MethodThe formula for Straight-Line Depreciation is (Cost - Residual Value) / Useful life. Plugging the values in, we get ($44,000 - $8,000) / 4 years = $9,000 per year. Hence, depreciation expense for both 2021 and 2022 is $9,000 per year.
Double Declining BalanceIn Double Declining Balance method, the depreciation rate is double the rate of straight line method. So the rate is 2 x 25% = 50%. For 2021, the depreciation is $44,000 x 50% = $22,000. For 2022, we depreciate the remaining book value, so the depreciation is ($44,000 - $22,000) x 50% = $11,000.
Units-of-ProductionIn Units of Production method, depreciation is based on the actual usage of the asset. First, calculate the depreciation per hour: ($44,000 - $8,000) / 20,000 hours = $1.80 per hour. For 2021, the depreciation is $1.80 x 2,900 hours = $5,220. For 2022, depreciation is $1.80 x 3,700 hours = $6,660.
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A city's Enterprise Fund issued revenue bonds with a face value of $10,000,000. The bonds were issued with a 2% premium and the issuance costs totaled $150,000. When the bonds are issued, the Enterprise Fund will report total other financing sources in the amount of $0. $9,850,000. $10,000,000. $10,200,000.
Answer:
The correct answer is $9,850,000
Explanation:
The Enterprise fund which will be reported, total other financing sources of the amount is computed as:
= Face Value - Cost of issuance
where
Face Value is $10,000,000
Cost of issuance is $150,000
Putting the values above:
= $10,000,000 - $150,000
= $9,850,000
Note: Premium will not be considered as it is asked for when the bonds are issued.
The total other financing sources reported by the Enterprise Fund would be $9,850,000.
Explanation:The correct answer is $9,850,000.
When the city's Enterprise Fund issued revenue bonds with a face value of $10,000,000, it added a 2% premium to the face value. The premium is calculated by multiplying the face value by the premium rate, which is 2% in this case. So, the premium amount is $10,000,000 * 2% = $200,000.
The issuance costs are additional expenses incurred in the process of issuing the bonds. In this case, the issuance costs totaled $150,000.
Therefore, the total other financing sources reported by the Enterprise Fund would be $10,000,000 - $200,000 - $150,000 = $9,850,000.
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X-Tel budgets sales of $70,000 for April, $120,000 for May, and $80,000 for June. In addition, sales commissions are 10% of sales dollars and the company pays a sales manager a salary of $7,000 per month. Sales commissions and salaries are paid in the month incurred. Prepare a selling expense budget for April, May, and June.
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
X-Tel budgets sales of $70,000 for April, $120,000 for May, and $80,000 for June. In addition, sales commissions are 10% of sales dollars and the company pays a sales manager a salary of $7,000 per month. Sales commissions and salaries are paid in the month incurred.
April:
Sales comission= 0.10*70,000= 7,000
Sales manager salary= 7,000
Total= 14,000
June:
Sales comission= 0.10*120,000= 12,000
Sales manager salary= 7,000
Total= 19,000
July:
Sales comission= 0.10*70,000= 8,000
Sales manager salary= 7,000
Total= 15,000
Listed below are certain costs or discounts incurred in the purchase or construction of new plant assets.1. Indicate whether the costs should be expensed or capitalized.2. For costs that should be included in plant assets, indicate in which category of plant assets (Equipment, Building, or Land) the related costs should be recorded on the balance sheet.1. Charges incured to train employees to use new equipment.2. Invoice cost to purchase new equipment3. Deduction for an earl payment discount taken on the puchase of new equipment.4. Real estate commissions incurred on land purchased for a new plant.5. Property taxes on land incurred after it was purchased6. Costs of tune-up for the truck used to deliver new equipment7. Costs to lay foundation for a new building8. Insurance on a new building during the construction phase.
Answer
The answer and procedures of the exercise are attached in a 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.
The costs that should be expensed or capitalized are indicated as follows:
1. The cost of training employees so that they can use new equipment should be expensed.
2. The cost of purchasing new equipment should be capitalized as Equipment.
3. The early payment discount received for the purchase of new equipment should be capitalized (reducing the cost of Equipment).
4. The real estate commissions incurred on land purchased for a new plant should be capitalized as Land.
5. Property taxes on Land incurred after the land purchase should be expensed, not capitalized.
6. The costs of tune-up for the truck used to deliver new equipment should be expensed because it was not wholly incurred for the new equipment.
7. The costs to lay the foundation for a new building should be capitalized as Building.
8. The insurance expense on a new building during the construction phase should be capitalized as Building.
Thus, the costs that should be expensed do not add to the costs of the plant assets.
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Compared with a competitive market, a cartel as a whole will produce: more output in order to increase prices. less output in order to increase prices. less output in order to decrease prices. more output in order to decrease prices.
Answer:
less output in order to increase prices.
Explanation:
A cartel is basically formed by a group of independent market people, who usually supply the same type of goods, in order to dominate the market.
They usually aim to find the point where they can maximize the profit.
For this the performers of market, in order to price it more and earn more profit, increase the price, and decrease the quantity to be produced.
This results in no choice left with the buyers or consumers other than buying at higher prices.
This then results in profit for the participants forming the cartel.
The Delta Co. owns retail stores that market home building supplies. Largo, Inc. builds single family homes in residential developments. Delta has a beta of 1.22 and Largo has a beta of 1.34. The riskminus free rate of return is 4 percent and the market risk premium is 6.5 percent. What should Delta use as their cost of equity if they decide to purchase some land and create a new residential community?
Answer:
12.71%
Explanation:
In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
= 4% + 1.34 × 6.5%
= 4% + 8.71%
= 12.71%
The (Market rate of return - Risk-free rate of return) is also called market risk premium and the same is used in the computation part. We ignored the bets of Delta
Final answer:
The cost of equity for Delta Co., calculated using the Capital Asset Pricing Model (CAPM), should be 11.93% for their new residential community project.
Explanation:
The student is asking about the cost of equity for Delta Co. in case it decides to venture into a new residential community project. To calculate the cost of equity, the Capital Asset Pricing Model (CAPM) is used, which is represented by the formula: Cost of Equity = Risk-Free Rate + (Beta x Market Risk Premium). Given Delta's beta is 1.22, the risk-free rate is 4 percent, and the market risk premium is 6.5 percent, Delta's cost of equity would be calculated as follows:
Cost of Equity = 4% + (1.22 x 6.5%)
Cost of Equity = 4% + 7.93%
Cost of Equity = 11.93%
Therefore, Delta should use 11.93% as their cost of equity for the new residential community project.
On its 2011 balance sheet, Bank of America Corporation reports marketable debt securities of $311,416 million. The footnotes disclose that these securities have an amortized cost of $306,437 million. Which of the following is true?1) These are available-for-sale securities2) These are trading securities3) There are net unrealized gains of $4,979 on these securities4) Both A and C5) Both B and C
Answer:5. Both B & C
Explanation:
This security have an unrealized gain which the company expect to realize by selling at the market price in the nearest future. The availability of the carrying amount and the recoverable price shows that it's a trading security inclusive of other information. The inherent gain will be recognized once the sales is made.
Bank of America Corporation's marketable debt securities scenario indicates that these are available-for-sale securities with net unrealized gains of $4,979 million, based on the difference between the amortized cost and market value.
The question presents a scenario involving Bank of America Corporation's marketable debt securities, featuring the data of amortized cost and market value. Based on the provided numbers, the amortized cost is $306,437 million and the market value is $311,416 million. This reveals that there are net unrealized gains of $4,979 million ($311,416 million - $306,437 million).
Securities that are reported at market value and exhibit net unrealized gains or losses typically fall into the available-for-sale category, as they are not actively traded but are also not held to maturity. Thus, the correct option is "Both A and C," indicating these are available-for-sale securities with net unrealized gains.
Dextra Computing sells merchandise for $17,000 cash on September 30 (cost of merchandise is $11,900). Dextra collects 3% sales tax. Record the entry for the $17,000 sale and its sales tax. Also record the entry that shows Dextra sending the sales tax on this sale to the government on October 15.
A. Record the cash sales and 3% sales tax.
B. record the cost of sept. 30th sales.
C. record the entry that shows the remittance of the 3% tax on this sale to the state government on october 15.
D. please show the calculations as well.
Answer:
Explanation:
The journal entries are shown below:
A. On September 30
Cash A/c Dr $17,510
To Sales $17,000
To Sales tax payable $510 ($17,000 × 3%)
(Being goods are sold on credit with sales tax)
B. On September 30
Cost of goods sold A/c Dr $11,600
To Inventory A/c $11,600
(Being goods are sold at cost)
C. On October 15
Sales tax payable $510
To Cash A/c
(Being sale tax is recorded)
The master budget of Vaughn Manufacturing shows that the planned activity level for next year is expected to be 50000 machine hours. At this level of activity, the following manufacturing overhead costs are expected:
Indirect labor $810000
Machine supplies 130000
Indirect materials 300000
Depreciation on factory building 140000
Total manufacturing overhead
$1380000
A flexible budget for a level of activity of 60000 machine hours would show total manufacturing overhead costs of
Entry field with correct answer
$1628000.
$1656000.
$1516000.
$1380000.
Answer:
$1,628,000
Explanation:
The computation of the total manufacturing overhead costs is shown below:
= (Indirect labor + machine supplies + Indirect materials) ÷ planned activity level × flexible activity level + depreciation on factory building
= ($810,000 + $130,000 + $300,000) ÷ 50,000 machine hours × 60,000 machine hours + $140,000
= ($1,240,000) ÷ 50,000 machine hours × 60,000 machine hours + $140,000
= $1,488,000 + $140,000
= $1,628,000
On January 1, Eagle, Inc., issued $800,000 of ten percent, 20-year bonds for $958,342, yielding an effective interest rate of eight percent. Semiannual interest is payable on June 30 and December 31 each year. The firm uses the effective interest method to amortize the premium. Required
Prepare an amortization schedule showing the necessary information for the first two interest periods. Round amounts to the nearest dollar.
Answer
The answer and procedures of the exercise are attached in the two images below.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in 2 single sheets with the formulas indications.
A department has budgeted monthly manufacturing overhead cost of $540,000 plus $3 per direct labor hour. If a flexible budget report reflects $1,044,000 for total budgeted manufacturing cost for the month, the actual level of activity achieved during the month was: a) 348,000 direct labor hours b) 168,000 direct labor hours c) 528,000 direct labor hours d) Cannot be determined from the information provided
Answer:
b) 168,000 direct labor hours
Explanation:
The computation of the actual level of activity achieved is shown below:
= (Total budgeted manufacturing cost - budgeted monthly manufacturing overhead cost) ÷ (Rate per direct labor hour)
= ($1,044,000 - $540,000) ÷ ($3)
= $504,000 ÷ $3
= 168,000 direct labor hours
Simply we deduct the budgeted monthly manufacturing overhead cost from the total budgeted manufacturing cost and then divide it by the rate per direct labor hour so that the accurate direct labor hours could be computed
Which of the following taxes are paid by the employee and the employer?a. FUTAb. SUTAc. FICAd. Federal withholding taxes
Answer:
The correct answer is letter "C": FICA.
Explanation:
FICA (Federal Insurance Contributions Act) tax is a mandatory deduction taken from employees' payment to cover elder American's Social Security and Medicare. It is a 12,4% deduction financed by two parts: half of that amount is taken from the worker's paycheck and the other half is paid by the employer.
Sam is an experienced engineer, but he works as a draftsperson. His company has a pleasant work atmosphere. Though he is well paid, he is frustrated with his job as he does not get a sense of meaning or accomplishment. He decides to quit his job by the end of that month. In the context of Herzberg's two-factor theory, which of the following factors is missing in Sam's company
Answer:
Motivators
Explanation:
The motivating factor for Sam was an appropriate and suitable job profile for him. The other factors were covered well by the Hygiene factors and also the Extrinsic rewards were well in place. However, the motivator for him was his contents of the job profile itself which was prominently missing in Sam’s company which raised his levels of dissatisfaction.
As the price level rises, the cost of borrowing money will , causing the quantity of output demanded to . This phenomenon is known as the effect. Additionally, as the price level rises, the impact on the domestic interest rate will cause the real value of the dollar to in foreign exchange markets. The number of domestic products purchased by foreigners (exports) will therefore , and the number of foreign products purchased by domestic consumers and fir
Answer:
Increase; decrease; interest rate effect; increase; decline; rise.
Explanation:
As the price level increases, the purchasing power of money declines. People will need more money to make transactions. As a result, the demand for money increases.
This increase in demand for money will cause the interest rate to increase. This implies that the cost of borrowing is rising. They will cause a decrease in investment and thus output level.
This phenomenon of fall in output level because of the rise in the cost of borrowing as a result of inflation is called the interest-rate effect.
The higher interest rate will attract capital from abroad. This inflow of capital will cause the demand for the domestic currency to increase. As a result, the value of the domestic currency in the foreign exchange market will increase.
This appreciation in the value of the domestic currency will make exports expensive and imports cheaper. This will cause the export demand to fall and imports to increase. Consequently, net exports will decrease.
Firm A manufactures brake pads, a component of a braking system, and sells them to Firm B, who sells braking systems used in vehicles. Firm A is best described as a:
(A) Tier 2 supplier
(B) Tier 1 supplier
(C) manufacturer
(D) retailer
(E) distributor
Answer:
Letter B is correct. Tier 1 supplier.
Explanation:
A tier 1 supplier is one whose manufacturer usually markets its products to a large distributor who can operate both wholesale and retail, where the products are sold directly to the end consumer.
This is what happens in this issue, where company 1 manufactures and sells brake pads for company 2 to produce brake systems that are used in vehicles.
Final answer:
Firm A, which manufactures brake pads for Firm B, is best described as a Tier 2 supplier because they provide components to a firm that then supplies the completed product to the OEM. The term Tier 2 highlights the firm's position in the supply chain hierarchy.
Explanation:
Firm A manufactures brake pads and sells them to Firm B, which assembles them into braking systems for vehicles. In the hierarchy of supply chain management, Firm A would be considered a Tier 2 supplier, because they provide a component to a firm (Firm B) that would then be considered a Tier 1 supplier, since they directly supply the finished product to the original equipment manufacturer (OEM).
Firm A could indeed be described as a manufacturer, but within the context of the question that specifically refers to the supply chain positioning, Tier 2 supplier is the most accurate description. Such supply chains often include long-term agreements to ensure reliable exchanges, such as being exclusive suppliers or buyers, or setting conditions for product distribution to protect the interests of both upstream and downstream firms. The location can also be a competitive advantage for suppliers, especially when proximity enhances the efficiency of supply to the customer.
The Cats and Dogs League was organized as a nongovernmental not-for-profit organization. The League received a pledge of $10,000 to be used to build an addition to the kennel. This donation will not be received for three years. How should this pledge be recorded?
Answer:It should be only be disclose in their financial statement.
Explanation:
This is the case of a contingent asset in which it's probable that a presently determined future benefits will be available to a firm as a result of the occurrence or non occurence of certain future actions which are beyond the control of the firm.
The duty to donate is not binding on the donor though the amount is specified and neither is with whiting the power of league to command donation but it's only probable they will get the donation.
All Kiwi Ltd (a New Zealand-based company) has a wholly-owned subsidiary in Malaysia whose manager is being evaluated on the basis of the variance between actual profit and budgeted profit in New Zealand dollars (NZD). Relevant information in Malaysian ringgit (MYR) for the current year is as follows: Budget Actual Revenues MYR 12,000,000 MYR 11,000,000 Expenses 9,000,000 9,000,000 Current year actual and projected exchange rates between the New Zealand dollar (NZD) and the Malaysian ringgit (MYR) are as follows: Actual at time of budget preparation NZD 0.312 per MYR 1 Projected ending at time of budget preparation NZD 0.340 per MYR 1 Actual at end of budget period NZD 0.357 per MYR 1
Required: Calculate the total budget variance for the current year using the exchange rate that exists at the time the budget is prepared.
Required: Calculate the total budget variance for the current year using the exchange rate that exists at the end of the budget period. Required: Calculate the total budget variance for the current year using a projected exchange rate (projected at the time the budget is prepared).
Answer
The answer and procedures of the exercise are attached in a microsoft excel document.
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.
Suppose a gift shop in Myrtle Beach has an annual demand for 15,000 units for a souvenir kitchen magnet that it buys for $0.50 per unit. Assume it costs $10 to place an order and the inventory carrying cost is 25% of the item's unit cost. Use Solver to determine the optimal order quantity if the company wants to minimize the total cost of procuring this item.
a. What is the optimal order quantity? If necessary, round your answer to a whole number.
Answer:
1,549 units
Explanation:
a. 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,
Annual demand is 15,000 units
Ordering cost is $10 per unit
And, the carrying cost = $0.50 per unit × 25% = 0.125
= [tex]\sqrt{\frac{2\times \text{15,000}\times \text{\$10}}{\text{\$0.125}}}[/tex]
= 1,549 units
We considered all the things i.e annual demand, ordering cost and the carrying cost so that the correct quantity can come.