Answer:
THE VALUE OF THE STOCK TODAY IS $35.63
Explanation:
The dividend discount model bases the value of the stock on the present value of the expected future dividends from the stock. Using the three stage growth model of DDM, we can calculate the price of this stock today. The price/value of this stock today is,
P0 = 3.1 * (1+0.04) / (1+0.12) + 3.1 * (1+0.04) * (1+0.08) / (1+0.12)^2 +
3.1 * (1+0.04) * (1+0.08)^2 / (1+0.12)^3 +
[ (3.1 * (1+0.04) * (1+0.08)^2 * (1+0.02) / (0.12 - 0.02)) / (1+0.12)^3 ]
P0 = $35.63
Presented below is information related to Bramble Enterprises.
Jan. 31 Feb. 28 Mar. 31 Apr. 30
Inventory at cost $17,100 $17,214 $19,380 $15,960
Inventory at LCNRV 16,530 14,364 17,784 15,162
Purchases for the month 19,380 27,360 30,210
Sales for the month 33,060 39,900 45,600
From the information, prepare (as far as the data permit) monthly income statements in columnar form for February, March, and April. The inventory is to be shown in the statement at cost; the gain or loss due to market fluctuations is to be shown separately (using a valuation account).
Answer:
Bramble Enterprises' Income Statement is attached.
Explanation:
The inventory valuation losses determined by comparing the inventory at cost with inventory at the lower of cost and net realizable value.
In all cases, the net realizable values were lower than the costs. Therefore, the total costs were adjusted to show the loss in income.
Answer:
The valuation of inventory at Lower of costs or net realizable value always calls for adjustments to our inventory balances.
As a standard, the impact of this valuation must go against the costs of sales as an added cost if the valuation is lower than the inventory costs. but a benefit by way of lowering the cost of sales if the valuation is higher than the cost of inventory.
For the 3 months respectively we see valued costs lower than the inventory costs, therefore cost of sales will go up by these adjustments:
Feb $2,850
March $1,596
April $798
See attached document for the complete presentation
.
sing the preceding information, answer the following questions: (Note: Round your answers to the nearest millionth dollar.) • What is the net cash inflow that Mooney expects in the fourth quarter (Q4)? • If Mooney is beginning this year with a cash balance of $39 million and expects to maintain a minimum target cash balance of at least $16 million, what will be its likely cash balance at the end of the year (after Q4)? • What is the maximum investable funds that the firm expects to have in the next year? • What is the largest cash deficit that the firm expects to suffer in the next year? True or False: If a firm changes its credit policy and allows customers to pay in 90 days instead of 60 days, and everything else remains the same, the net cash flow in the next quarter is likely to decrease. True False
Answer:
$20 million is expected to have cash balance at the end of the year.
$39 million is the maximum possible investment funds that company is expected to invest.
Yes it is true net cash flow is likely to decrease in the next quarter if the company allows customer to pay in 90 days instead of 60 days.
Fast Co. produces its product through two processing departments. Direct materials are added at the start of production in the Cutting department, and conversion costs are added evenly throughout each process. The company uses monthly reporting periods for its weighted-average process costing system. The Work in Process Inventory-Cutting account has a balance of $98,300 as of October 1, which consists of $21,300 of direct materials and $77,000 of conversion costs.
During the month, the Cutting department incurred the following costs:
Direct materials $ 204,050
Conversion 837,960
At the beginning of the month, 39,000 units were in process. During October, the company started 158,000 units and transferred 168,000 units to the Assembly department. At the end of the month, the Cutting department's work in process inventory consisted of 29,000 units that were 80% complete with respect to conversion costs.
Prepare the Cutting department's process cost summary for October using the weighted average method.
Answer:
First we find the Equivalent units, Then total costs and then allocate the costs to the different units such as finished Goods and WIP ending.
Explanation:
Fast Co.
Process Cost Summary
Particulars Units %of Completion Equivalent Units
Mat. Con. Costs Mat. Con. Costs
Units Transferred 168,000 100 100 168,000 168,000
Ending Inventory 29,000 100 80 29,000 23,200
Total Equivalent Units 197,000 191,200
Materials Conversion Costs Total
WIP Opening $21,300 $ 77,000 98300
Costs Added $ 204,050 $ 835,960 1040010
Total Costs $ 225,350 $ 912,960 1138310 (a)
Material Cost Per unit = $ 225,350/197,000= $ 1.144
Conversion Costs Per Unit = $ 912,960/ 191,200 = $ 4.77
Total Units Transferred to Finished Goods = 168,000
Total Cost of F.G = Materials $ 1.144* 168,000= $ 191520
Total Cost of F.G = Conversion $ 4.77* 168,000= $ 801360
Costs Transferred To Finished Goods = $191520+$ 801360= $ 992880
Cost oF ending WIP units
Materials 29000*$ 1.144= $33 176
Conversion 23,200 * $4.77= 110664
Total Costs= $ 1443840
Total Costs Of Cutting Department= Costs Of Finished Goods + Costs Of WIP Ending
Total Costs Of Cutting Department=$ 992880+$ 1443840=$1136720(b)
If we see we find that $1138310 (a) and $1136720(b) are almost equal . There is a slight difference( 1590) because of the rounding off decimal numbers.
"icrosoft announced a 2 for 1 stock split. Before the split they had 5.4b shares outstanding and par value was $0.0000125. Before the split the balance in the Common Stock account was: $ After the split shares outstanding are (in billions): After the split par value is: After the split the balance in Common Stock is $"
Answer: Balance before Split - $67,500
After Split No. of shares - 10.8 billion
After Split Par Value - $0.00000625
After Split Balance - $67,500
Explanation:
Microsoft had 5.4b shares outstanding and par value was $0.0000125.
Before the split the balance in the Common Stock account was:
We will multiply the no. Of shares outstanding by the par value.
= 5.4 billion * $0.0000125
= $67,500
After the split shares outstanding are (in billions):
The split was a 2 for 1 split meaning the shares doubled. That would mean,
= 5.4b * 2
= 10.8 billion shares outstanding
After the split par value is:
It was a 2 for 1 split. That would mean that prices had to have halved. Calculating therefore,
= $0.0000125/2
= $0.00000625
After the split the balance in Common Stock is
= 10.8 billion shares * $0.00000625
= $67,500
Balance remained the same showing that total equity remains the same. Only no of shares and price changes.
Answer:
Before the split the balance in the Common Stock account was: $67,500
After the split shares outstanding are (in billions): 10.8
After the split par value is: $0.00000625
After the split the balance in Common Stock is $67,500
Explanation:
Stock split increase the numbers of shares with a specific given ratio but the common equity value remains same that's why the par value of the share decreases with respective ratio.
Before the split the balance in the Common Stock account was:
Common Stock = 5,400,000,000 shares x 0.0000125 = $67,500
After the split shares outstanding are (in billions):
2 for 1 split will double the Outstanding numbers of shares
Outstanding numbers of shares = 5.4b shares x 2/1 = 10.8b shares
After the split par value is:
Total value of stock remains same after the split
Par value = Total value / Outstanding numbers of shares after split
Par value = $67,500 / 10,800,000,000 = $0.00000625
After the split the balance in Common Stock is $"
Balance in the common stock will remain same as $67,500
Suzuki Supply reports the following amounts at the end of 2021 (before adjustment). Credit Sales for 2021 $ 260,000 Accounts Receivable, December 31, 2021 55,000 Allowance for Uncollectible Accounts, December 31, 2021 1,100 (Credit) 3. Calculate the effect on net income (before taxes) and total assets in 2021 for each method. Suzuki estimates 12% of receivables and 3% of credit sales respectively will not be collected.
Suzuki Supply would need to adjust its allowance for uncollectible accounts by an additional $5500 using the percentage of receivables method and by $7800 using the percentage of sales method. The adjustments are important as they affect the company's net income and total assets in 2021.
Explanation:The question is asking for the effect on net income (before taxes) and total assets in 2021 using two methods which are 12% of receivables and 3% of credit sales for the estimated uncollectible accounts. First, let's calculate using the percentage of receivables method. The estimate for the Allowance for Uncollectible Accounts will be 12% of the existing Accounts Receivable balance, or $6600 (0.12 * $55,000). According to this, the Allowance for Uncollectible Accounts should be $6600 at the end of the year, but this account already has a credit balance of $1100, so the company needs to adjust it by an additional $5500 ($6600-$1100). On the other hand, under the percentage of sales method, the company directly decides the uncollectible amount based on credit sales, which is $7800 (0.03 * $260,000). Hence, the adjustment amount to the Allowance for Uncollectible Accounts is $7800 under the sales method. Therefore, these calculated adjustments will affect the net income and total assets in 2021.
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Profit = -5 x2^1 + 38X1 - 5X2^2 +44 X2 +520
where x1 and x2 represent number of units of production of basic and advanced iPods, respectively.
Production time required for the basic iPod is 6 hours per unit, and production time required for the advanced iPod is 8 hours per unit. Currently, 50 hours are available. The cost of hours is already factored into the profit function. Formulate an optimization problem that can be used to find the optimal production quantity of basic and advanced iPods. Implement
Answer:
Explanation:
Attached is the solution
Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,060,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Per Undergarment Total Direct materials $2.04 $2,162,400 Direct labor 0.53 561,800 Variable manufacturing overhead 0.99 1,049,400 Fixed manufacturing overhead 1.41 1,494,600 Variable selling expenses 0.31 328,600 Totals $5.28 $5,596,800 The U.S. Army has approached Klean Fiber and expressed an interest in purchasing 249,800 Y-Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overhead costs. In addition, the Army has agreed to pay an additional $0.99 per undergarment to cover all other costs and provide a profit. Presently, Klean Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Klean Fiber accepts the Army’s offer, it will not incur any variable selling expenses related to this order.
Answer and Explanation:
The preparation of incremental analysis for the Klean Fiber is shown below:-
Reject order Accept order Net Increase/
Decrease
Revenue
($4.55 × 249,800) $1,136,590 $1,136,590
Less:
Variable costs
Direct material $509,592 $509,592
($2.04 × 249,800)
Direct labor $132,394 $132,394
($0.53 × 249,800)
Variable overhead $247,302 $247,302
($0.99 × 249,800)
Total variable cost $889,288 $889,288
Net income $247,302 $247,302
Therefore by accepting the order the net income increases by $247,302 which means the net income is increasing by accepting the order.
Working note
Selling price = Direct material + Direct labor + Variable overhead + Additional amount
= $2.04 + $0.53 + $0.99 + $0.99
= $4.55
In November 2013, a car dealer is trying to determine how many cars to order from the manufacturer for 2014. A car ordered in 2013 cost $10000. The dealer expects that each car ordered from the manufacturer will cost 4% to 8% more in 2014. The selling price for each car in 2013 was $15000 but the dealer expects he will have to give a discount because of heavy competition, and that the selling price in 2014 will be between 93% and 98% of the 2013 price. The dealer expects to sell between 700 and 900 cars. Refer to the Car Dealership Problem and start with the original values. The cost increase is 6.38%. If the dealer's profits are $2,734,980, what was the discount and how many cars did the dealer sell?
Answer:
The car dealer sold between 700 - 900 cars, and offered discount ed prices between 97% and 91.2% of 2013 price and ended the year with a profit of $2,734,980
Explanation:
This problem leaves us with 3 unknowns. The Volume sold, the price sold and of course the discount offered.
In this instance we should also respond the same way the question was given. By offering ranges to either unknowns.
The attached file shows the full workings and helps with better presentation
Which of these statements about a business plan is true?
A. Businesses do not need to document a business plan.
B. Established businesses do not create a business plan.
C. A business plan is a business’s roadmap for the future.
D. A business plan guarantees a business’s success.
True statement for a business plan among following :
(C)Business Plan Provide Road map for future plan true statement for a business plan .
A business plan is a written description of your business's future.
Explanation:
Business plan a document that describes what you plan to do and how you plan to do it.
Every Business whether established or new all require business plan
A Business Plan provide detail instruction and provide road map for future business section to avoid bumps in road.
Business plan detail about finance required, forecast about future performance, and future marketing plan for business.However it doesn't guarantee success but provide a better road map for future.
Answer:
c is answer got 100
Explanation:
Presented here are the original overhead budget and the actual costs incurred during April for Piccolo Inc. Piccolo’s managers relate overhead to direct labor hours for planning, control, and product costing purposes. The original budget is based on budgeted production of 20,000 units in 4,000 standard direct labor hours. Actual production of 21,600 units required 4,500 actual direct labor hours.
Answer:
Question might be incomplete but a KEY is: Piccolo's managers relate Overhead Production to Direct Labour Hours; for the sake or purpose of PLANNING, CONTROL, and PRODUCT COSTING.
If this be the reason for the numerical data within, then we analyze thus:
Explanation:
Let's see how the actual data differs from the budgeted data.
20,000 ~ 4,000
21,600 ~ X
Cross multiplying,
X = (21,600×4,000) ÷ 20,000
X = 4,320 direct labour hours
This means that if the actual production followed the budgeted production proportionally, a lesser amount - 4,320 DLH - of direct labour hours would have been used eventually.
How can this information influence the planning, control, and product costing in Piccolo Inc.?
In planning for the next financial period, maybe the month of May, Piccolo's managers can:
(A) Cut down on direct labour hours because the marginal product of actual labour is less than the marginal product of the standard/budgeted labour effort
(B) Control (reduce) the actual units produced if they would spend less on cost/payment for labour
(C) Increase the unit cost or price of goods produced, in order to make more profit and/or offset the increased expenses on direct labour hours.
Shutterstock/Rowpel.com Knowledge Check 01 Voluntary deductions from employee pay can include all of the following: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)
a. Medicare taxes
b. Pension contributions
c. Life insurance premiums
d. Social Security taxes
e. Union dues
Answer: Pension contributions.
Life insurance premiums
Union dues.
Explanation:
The employee is the one who decides if they want to pay Pension contributions, Life insurance premiums or Union dues as these are considered Voluntary deductions meaning that they have to elect for them to be subtracted from gross pay for it to actually happen. If they do not wish for them to be deducted it is their own prerogative.
Medicare Taxes and Social Security Taxes are however mandatory and have to be paid from employee salary.
Voluntary deductions from an employee's pay can include contributions to a pension plan like a 401(k), life insurance premiums, and union dues. Medicare taxes and Social Security taxes are mandatory and not considered voluntary deductions.
Voluntary deductions from employee pay can include several different types of payments that the employee elects to have withheld from their paycheck.
These are not the same as compulsory payroll taxes like Social Security taxes and Medicare. Voluntary payroll deductions can include pension contributions, such as a 401(k) plan, where employees authorize a payroll deduction, often matched by the employer, which is valuable as those deductions are tax-deferred. Another example of voluntary deductions includes payments for life insurance premiums, which provide financial benefits to a designated beneficiary upon the employee's death. Additionally, employees who are members of labor unions might have union dues automatically deducted from their pay.
However, Medicare taxes and Social Security taxes are not considered voluntary deductions. They are mandatory payroll taxes, both of which have fixed rates and are deducted from an employee's wages. Employers also pay a portion of these taxes on behalf of their employees directly from the employer's own funds.
The automobile industry in both Brazil and Mexico is thriving. If you were a government official from an African country (such as Morocco, Nigeria, or South Africa) who has visited both countries and has been very impressed, which approach would you recommend to your own government interested in attracting FDI from global automakers: the Brazilian approach or the Mexican approach? Why
Answer:
The Brazilian approach
Explanation:
Since the countries approach successful and have grown very well. I have to but into consideration the African conditions to make business go internationally. As a official in the government of africa, i will use the approach Brazil , Mexico has a great location to make business. Especially being a neighbor of U.S. is providing agreat opportunity. In an African country, location will be of no benefit to you. This will affect negatively to make business with other countries such as Asia and European Union . All this will make it hard for an African country to be in a market that is competitive . When your competitors get low materials and provide low shipping costs, you need to handle to reduce your production cost to be in the market for the same amount of money.
Comparing the Brazilian and Mexican approaches to attracting FDI from global automakers and recommending the best approach for an African country.
The Brazilian Approach:
Brazil has a stable economy and government incentives that attract foreign automakers. The country's focus on producing SUV-like cars with flex-fuel engines caters to consumer demands and aligns with the biofuel industry.
The Mexican Approach:
Mexico offers cost savings for automakers due to lower wages and is part of a free trade bloc with the United States, allowing for easier access to markets. Multinationals like Volkswagen and Toyota have established assembly plants in Mexico to benefit from these advantages.
Recommendation:
Considering the stable economy, consumer demands, and government incentives, the Brazilian approach may be more suitable for attracting FDI from global automakers for an African country looking to boost its automotive industry.
Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 21,880 hours and the total estimated manufacturing overhead was $516,368. At the end of the year, actual direct labor-hours for the year were 21,700 hours and the actual manufacturing overhead for the year was $516,368. Overhead at the end of the year was: (Round your intermediate calculations to 2 decimal places.)
Answer:
$4,248 under applied
Explanation:
For computing the ending overhead amount we need to do following calculations which are shown below:
Predetermined overhead rate is
= Total estimated manufacturing overhead ÷ estimated direct labor-hours
= $516,368 ÷ 21,880 hours
= $23.6 per hour
Now
Actual overhead applied is
= $23.6 × 21,700 hours
= $512,120
Therefore,
Overhead under applied is
= Manufacturing overhead - Actual overhead applied
= $516,368 - $512,120
= $4,248 under applied
Cash equivalents meet all of the following criteria except: Multiple Choice Readily convertible to a known cash amount. Short-term investments purchased within 3 months of their maturity dates. Have a market value that is not sensitive to interest rate changes. Short-term U.S. treasury bills. More liquid than cash.
Answer:
More liquid than cash is the correct option
Explanation:
Cash equivalents are cash or other short term assets can be converted into cash in no distant time without losing significant portion of its value.
All the options enumerated met the criteria cited above except the last option,cash equivalents are more liquid than cash.
Cash equivalents cannot be more liquid than cash since cash equivalents at best cash and at worst short term easily convertible assets.
The correct option therefore is the last option,more liquid than cash
Whispering Company purchased equipment for $286,800 on October 1, 2020. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $13,200. Estimated production is 48,000 units and estimated working hours are 20,000. During 2020, Whispering uses the equipment for 550 hours and the equipment produces 1,000 units. Compute depreciation expense under each of the following methods. Whispering is on a calendar-year basis ending December 31. (Round rate per hour and rate per unit to 2 decimal places, e.g. 5.35 and final answers to 0 decimal places, e.g. 45,892.) (a) Straight-line method for 2020 $enter a dollar amount (b) Activity method (units of output) for 2020 $enter a dollar amount (c) Activity method (working hours) for 2020 $enter a dollar amount (d) Sum-of-the-years'-digits method for 2022 $enter a dollar amount (e) Double-declining-balance method for 2021 $enter a dollar amount
(a) $8,600
(b) $5,700
(c) $7,524
(d) $51,300 and
(e) $67,219
Explanation:
Given information's are
value of Equipment = $286,800 on October 1, 2020.
Accounting base = on a calendar-year basis ending December 31
(a) Straight-line method for 2020
Depreciation = value of Equipment - salvage value ÷ life span of Equipment
Depreciation = $286,800 - $13,200 ÷ 8 = $34,400
For 3 months from October 1st to 31st December 2020
= $34,400 ÷ 12 × 3 = $8,600
(b) Activity method (units of output) for 2020
Depreciation =Amount of Depreciation ÷ Total estimated production × unit produced during 2020
= $273,600 ÷ 48,000 = $5.7 × 1000 = $5,700
(c) Activity method (working hours) for 2020
Depreciation =Amount of Depreciation ÷ Total estimated working hours × working hours during 2020
= $273,600 ÷ 20,000 = $13.68 × 550 = $7,524
(d) Sum-of-the-years'-digits method for 2022
Instead of adding the individual digits in the years of the asset's useful life, the following formula can be used to compute the sum of the digits: n(n+1) divided by 2, where n = the useful life in years
Depreciate Cost = Original Cost - Salvage Value = (Cost - Salvage)
Fraction for a Given Period = (Life - Period + 1) / ((Life × (Life + 1)) / 2)
depreciation for 2022 is $51,300
(e) Double-declining-balance method for 2021
Double declining balance method is a form of an accelerated depreciation method in which the asset value is depreciated at twice the rate it is done in the straight-line method
Double Declining Balance = 2 X Cost of the asset X Depreciation rate
= 2 × $286,800 × 12.5 ÷100 = $67,219
To find the best production method, the total costs are calculated based on labor and capital costs. Initially, Method 1 is the most cost-effective. When labor costs rise, Method 1 is still the most economical choice.
Explanation:To determine the best production method, we calculate the total cost for each method by multiplying the number of units of labor and capital required by their respective costs. Initially, the cost of labor is $100/unit, and the cost of capital is $400/unit.
Method 1: (50 units of labor × $100) + (10 units of capital × $400) = $5,000 + $4,000 = $9,000Method 2: (20 units of labor × $100) + (40 units of capital × $400) = $2,000 + $16,000 = $18,000Method 3: (10 units of labor × $100) + (70 units of capital × $400) = $1,000 + $28,000 = $29,000Thus, Method 1 is the most cost-effective at the initial labor cost.
When the cost of labor rises to $200/unit, the calculations are:
Method 1: (50 units of labor × $200) + (10 units of capital × $400) = $10,000 + $4,000 = $14,000Method 2: (20 units of labor × $200) + (40 units of capital × $400) = $4,000 + $16,000 = $20,000Method 3: (10 units of labor × $200) + (70 units of capital × $400) = $2,000 + $28,000 = $30,000With the increased labor cost, Method 1 remains the most economical choice. Although Method 1's cost has increased, it has not surpassed the total cost of the other methods.
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Garcon Inc. manufactures electronic products, with two operating divisions, Consumer and Commercial. Condensed divisional income statements, which involve no intracompany transfers and which include a breakdown of expenses into variable and fixed components, are as follows:
Garcon Inc.
Divisional Income Statements
For the Year Ended December 31, 20Y2
1. Consumer Division Commercial Division Total
2. Sales:
3. 14,400 units × $144 per unit $2,073,600.00 $2,073,600.00
4. 21,600 units × $275 per unit $5,940,000.00 5,940,000.00
5. Total sales $2,073,600.00 $5,940,000.00 $8,013,600.00
6. Expenses:
7. Variable:
8. 14,400 units × $104 per unit $1,497,600.00 $1,497,600.00
9. 21,600 units × $193* per unit $4,168,800.00 4,168,800.00
10. Fixed 200,000.00 520,000.00 720,000.00
11. Total expenses $1,697,600.00 $4,688,800.00 $6,386,400.00
12. Income from operations $376,000.00 $1,251,200.00 $1,627,200.00
*$150 of the $193 per unit represents materials costs, and the remaining $43 per unit represents other variable conversion expenses incurred within the Commercial Division.The Consumer Division is presently producing 14,400 units out of a total capacity of 17,280 units. Materials used in producing the Commercial Division’s product are currently purchased from outside suppliers at a price of $150 per unit. The Consumer Division is able to produce the materials used by the Commercial Division. Except for the possible transfer of materials between divisions, no changes are expected in sales and expenses.Required:1. Would the market price of $150 per unit be an appropriate transfer price for Garcon Inc.? Explain.2. If the Commercial Division purchases 2,880 units from the Consumer Division, rather than externally, at a negotiated transfer price of $115 per unit, how much would the income from operations of each division and the total company income from operations increase?3. Prepare condensed divisional income statements for Garcon Inc. based on the data in Requirement 2.4. If a transfer price of $126 per unit is negotiated, how much would the income from operations of each division and the total company income from operations increase?
Answer:
1.Since there is spare capacity in the consumer division, the acceptable transfer prices are variable cost per unit - market price per unit
i.e. $104-$150
The transfer price should be set in between the two. However, $150 is an appropriate price
2. Income will increase as follows:
Consumer Division = (115-104)*2880 = $31,680
Commercial Division = (150-115)*2880 = $100,800
Company = $132,480
3) check the attached file
4.Income will increase as follows:
Consumer Division = (126-104)*2880 = $63,360
Commercial Division = (150-126)*2880 = $69,120
Company = $132,480
Explanation:
check attached files for explanation well detailed.
The transfer price of $150 could be appropriate for Garcon Inc., but it's important to ensure that it allows for profitability in both divisions. Purchasing units internally at a lower price could increase overall company profits. Adjustments in the transfer price can show different potential increases in income from operations.
Explanation:1. Evaluating the possibility of utilizing an internal transfer price of $150 per unit, we see that this can be an appropriate transfer price for Garcon Inc. given it is the price at which the Commercial Division is currently purchasing from external suppliers. However, it's important to consider whether this price covers the costs and provides a reasonable profit margin for the Consumer Division.
2. If the Commercial Division purchases 2,880 units from the Consumer Division at a transfer price of $115 per unit, then the total cost for the Commercial Division would decrease by ($150-$115)*2,880=$100,800. The sales and income from operations for the Consumer Division would increase by $115*2,880=$331,200, resulting in an overall increase in company income.
3. New divisional income statements would reflect these changes, showing an increase in income from operations for both divisions and for the company as a whole.
4. If a transfer price of $126 per unit is negotiated, the income increase can be calculated in a similar way, resulting in higher company income from operations.
It's important for Garcon Inc. to maintain a balance ensuring both divisions are profitable and can cover their costs.
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Mel’s Diner owns a single restaurant, which has a cantina primarily used to seat patrons while they wait on their tables. The company is considering eliminating the cantina. Segmented contribution income statements are as follows and fixed costs applicable to both segments are allocated on the basis of square footage.
Restaurant Cantina Total
Sales $800,000 $200,000 $1,000,000
Variable costs 475,000 160,000 635,000
Direct fixed costs 50,000 15,000 65,000
Allocated fixed costs 212,500 37,500 250,000
Net income $ 62,500 ($ 12,500) $50,000
1. What effect will occur if Mel’s Diner eliminates the cantina if there is no effect on restaurant sales?
a. Net income will be $62,500.
b. Net income will increase by $12,500.
c. Net income will decrease to $37,500.
d. Net income will decline by $25,000.
Answer: Thecorrect answer is b
For the past year, Teddy has had a part-time job at which he is willing to work 30 hours each week. During Teddy's annual review, his boss grants him an 8 percent increase in his wage. As a result of the wage increase, Teddy is now willing to work 25 hours each week. Teddy's opportunity cost of ________ has risen and because for Teddy the substitution effect of the wage hike is ________ than the income effect.
Answer:
Teddy's opportunity cost of leisure has risen and because for Teddy the substitution effect of the wage hike is greater than the income effect.
Explanation:
Wage rate is considered as the opportunity cost of leisure.
Along these lines, increment in wage rate infers an expansion in circumstance cost of recreation.
In the event that a laborer works progressively after pay increment, at that point replacement impact of compensation increment overwhelms or is more prominent than salary impact of pay increment and the other way around.
Final answer:
Teddy's willingness to work fewer hours after a wage increase indicates that the opportunity cost of leisure has increased and the income effect is stronger than the substitution effect in his labor supply decision.
Explanation:
The question pertains to the economics concepts of substitution and income effects as they apply to labor supply decisions following a wage increase. When Teddy gets an 8 percent increase in his wage and decides to work 25 hours each week, we can say that Teddy's opportunity cost of leisure has risen. This is because leisure has become relatively more expensive due to the higher wage, and if he chose to work, he could earn more. However, Teddy decides to work fewer hours, indicating that for him, the income effect is stronger than the substitution effect.
The income effect refers to Teddy having the ability to maintain his standard of living with fewer working hours due to increased wages. As Teddy is now willing to work fewer hours, the income effect, which is the desire to enjoy more leisure time as one's income increases, outweighs the substitution effect - the tendency to work more as wages increase because other uses of time become relatively more expensive.
In Teddy's case, despite the potential to earn more due to increased hourly wage, the preference for leisure time dominates his labor supply decision. The income effect's dominance over the substitution effect means that the overall quantity of labor he is willing to supply has decreased.
Creative Sound Systems sold investments, land, and its own common stock for $39 million, $15.9 million, and $41.8 million, respectively. Creative Sound Systems also purchased treasury stock, equipment, and a patent for $21.9 million, $25.9 million, and $12.9 million, respectively. What amount should Creative Sound Systems report as net cash flows from financing activities?
Answer:
Creative Sound Systems should report $15,9 million as net cash flows from financing activities.
Explanation:
Consider only items relating to financing activities.
Cash flow from financing activities
Proceeds from Sale of common stock $41.8 million
Purchased of treasury stock ( $25.9 million)
Net Cash flow from Financing Activities $15,9 million
Answer:
The net cash flows from financing activities is $19.9 million
Explanation:
The net cash flows from financing activities comprises of cash inflows from the issue of common stocks of $41.8 million and the cash outflow expended on purchase of treasury stock of $21.9 million,hence the net cash flows from financing activities is $19.9 million ($41,8 million minus $21.9 million)
Cash inflows and outflows from the sale of land ,equipment ,investments as well as that of patents relate to investing activities of Creative Sound Systems,hence are not included in the calculation of net cash flows from financing activities
For its inspecting cost pool, Ellsworth, Inc. expected overhead cost of $520000 and 4000 inspections. The actual overhead cost for that cost pool was $600000 for 5000 inspections. The activity-based overhead rate used to assign the costs of the inspecting cost pool to products is
Final answer:
To calculate the activity-based overhead rate for Ellsworth, Inc., divide the expected overhead cost by the expected number of inspections, resulting in $130 per inspection. Spreading the overhead implies that as more units are produced, the average fixed cost per unit decreases, leading to the hyperbolic shape of the average fixed cost curve.
Explanation:
The student's question pertains to the calculation of the activity-based overhead rate within a managerial accounting context.
First, we need to understand that the activity-based overhead rate is calculated by dividing the expected overhead cost by the expected level of activity, which in this case is the number of inspections. So, for Ellsworth, Inc., the activity-based overhead rate is calculated as follows:
Activity-Based Overhead Rate = Expected Overhead Cost / Expected Number of Inspections
Activity-Based Overhead Rate = $520,000 / 4,000 inspections
The result is an activity-based overhead rate of $130 per inspection.
The concept of spreading the overhead refers to the distribution of fixed costs over the units produced. As more goods or services are produced, the average fixed cost per unit decreases because the total fixed costs are being spread over more units.
For example, suppose the fixed cost is $1,000. If only one unit is produced, the average fixed cost is the entire $1,000. However, if 100 units are produced, the average fixed cost drops to $10 per unit. Thus, the average fixed cost curve would be a hyperbola that approaches zero as the quantity of output increases. This demonstrates how fixed costs per unit decrease as production rises, a concept known as spreading the overhead.
The correct option is a. 120. The activity-based overhead rate used to assign the costs of the inspecting cost pool to products is $120 per inspection.
To determine the activity-based overhead rate for the inspecting cost pool, we need to calculate the cost per inspection. This is done by dividing the total overhead cost by the number of inspections.
First, we calculate the expected overhead rate:
Expected overhead rate = Expected overhead cost / Expected number of inspections
Expected overhead rate = $520,000 / 4,000 inspections
Expected overhead rate = $130 per inspection
Next, we calculate the actual overhead rate:
Actual overhead rate = Actual overhead cost / Actual number of inspections
Actual overhead rate = $600,000 / 5,000 inspections
Actual overhead rate = $120 per inspection
The complete question is- For its inspecting cost pool, Ellsworth, Inc. expected overhead cost of $520000 and 4000 inspections. The actual overhead cost for that cost pool was $600000 for 5000 inspections. The activity-based overhead rate used to assign the costs of the inspecting cost pool to products is:
a. $120 per inspection.
b. $80 per inspection.
c. $96 per inspection.
d. $100 per inspection.
The information below pertains to Barkley Company for 2015.
Net income for the year $1,200,000
7% convertible bonds issued at par ($1,000 per bond); each bond is convertible into 30 shares of common stock $2,000,000
6% convertible, cumulative preferred stock, $4,000,000
$100 par value; each share is convertible into 3 shares of common stock
Common stock, $10 par value $6,000,000
Tax rate for 2015 40%
Average market price of common stock $25 per share
There were no changes during 2015 in the number of common shares, preferred shares, or convertible bonds outstanding. There is no treasury stock. The company also has common stock options (granted in a prior year) to purchase 75,000 shares of common stock at $20 per share.
Instructions:
(a) Compute basic earnings per share for 2015. (b) Compute diluted earnings per share for 2015.
Answer:
(a) Compute basic earnings per share for 2015 = 1. 6
b) Compute diluted earnings per share for 2015. = 1.55
Explanation:
Peter heads the communications department of Xenon Inc. He shows concern for the personal needs of his followers and helps them with work wherever required. He inspires his employees to work with enthusiasm and assigns projects with reasonable timelines. He also defines job responsibilities, sets targets, and inspects quality of work on a regular basis. Peter's behavior implies that he is most likely a(n):
Answer:
a supportive leader
Explanation:
A supportive leader is a leader who is able to identify changes and assistance that are needed to promote the well-being of his team members and timely resolve all unnecessary issues with the aim of delivering a high standard of performance.
A supportive leader is usually kind, friendly, and concerned about the personal needs and welfare of his followers. He also leaves his door open to be approached by many people for advice and help, and also inspires them perform tasks assigned to them with enthusiasm.
Therefore, Peter's behavior implies that he is most likely a supportive leader.
n a recent annual report, Rosh Corporation disclosed that 60,000,000 shares of common stock have been authorized. At the beginning of the fiscal year, a total of 36,356,357 shares had been issued and the number of shares in treasury stock was 7,171,269. During the year, 558,765 additional shares were issued, and the number of treasury shares increased by 3,034,188. Determine the number of shares outstanding at the end of the year. (
Final answer:
Rosh Corporation has 26,709,665 shares outstanding at the end of the year, taking into account issued shares and treasury stock. Regarding the Darkroom Window shade Company, a majority vote is needed to change management, and investors 1 and 2 together do not have a majority, as they control 38,000 out of 100,000 shares.
Explanation:
To determine the number of shares outstanding at the end of the year for Rosh Corporation, we need to account for the shares that were both issued and those that were moved to treasury stock. Initially, there were 36,356,357 shares issued. During the year, an additional 558,765 shares were issued, resulting in a total of 36,915,122 shares issued. However, treasury stocks increased by 3,034,188 shares, so these are subtracted from the issued shares to determine the amount of outstanding shares. Thus, the calculation for the outstanding shares is as follows:
Calculate total issued shares: 36,356,357 initially issued + 558,765 additional issued = 36,915,122 total issued shares.Adjust for treasury shares: 7,171,269 initial treasury shares + 3,034,188 additional treasury shares = 10,205,457 total treasury shares.Subtract total treasury shares from total issued shares to get outstanding shares: 36,915,122 total issued shares - 10,205,457 total treasury shares = 26,709,665 shares outstanding.The Darkroom Windowshade Company problem deals with the concept of majority voting in corporate governance. In this case, to change the company's top management, a majority of the shares need to vote in favor. As majority is typically considered to be more than 50%, the combined total shares to change the management would need to be over 50,000.
For investors 1 and 2 to always get their way in how the company is run, they would need to control over 50% of the voting power. Together, they have 20,000 + 18,000 = 38,000 shares, which is less than the needed majority of 50,001 shares. Therefore, they cannot be certain of getting their way and would require additional investor(s) to join them to ensure a majority vote .
Your brother has asked you for a loan and has promised to pay you $7,100 at the end of three years. If you normally invest to earn 8.50 percent per year, how much will you be willing to lend to your brother if you view this purely as a financial transaction (i.e., you don’t give your brother a special deal)?
Answer:
$5,559
Explanation:
$7,100 is the future value of the loan which is paid by my brother. I have to calculate the present value of this value to determine the loan value by discounting at the rate of 8.5%.
Use following formula to calculate the present value of the amount.
Present value = Future value / ( 1 + r )^n
Where
r = rate of interest = 8.5%
n = numbers of years = 3 years
Future value = Loan amount paid back = $7,100
Placing values in the formula
PV = $7,100 / ( 1 + 8.5% )^3
PV = $5,558.65
PV = $5,559
Using the present value calculation with an 8.50% interest rate and a 3-year term, you would be willing to lend your brother approximately $5,585.45 today in exchange for a promise of $7,100 at the end of three years.
To compute how much you would be willing to lend to your brother today, given that he will pay you $7,100 at the end of three years, assuming an 8.50% annual interest rate, you would use the present value formula. The present value (PV) determines how much a future sum of money is worth in today's dollars, given a specific interest rate over a certain period of time.
The formula for the present value is PV = FV / (1 + r)n, where FV is the future value of the money, r is the annual interest rate, and n is the number of years until the amount is received. In this case, FV is $7,100, r is 8.50% or 0.085, and n is 3 years.
Using this formula:
PV = $7,100 / (1 + 0.085)3
PV = $7,100 / (1.085)3
PV = $7,100 / 1.271
PV = $5,585.45 (approximately)
Therefore, you would be willing to lend your brother approximately $5,585.45 today if you view this purely as a financial transaction.
7. On May 1, Jennings, a car dealer, emails Wheeler and says, "I have a 1955 Thunderbird convertible in mint condition that I will sell you for $13,500 at any time before June 9. [Signed] David Jennings." By May 15, having heard nothing from Wheeler, Jennings sells the car to another. On May 29, Wheeler accepts Jennings’ offer and tenders $13,500. When told that Jennings had sold the car to another, Wheeler claims Jennings has breached their contract. Did Jennings breach? Explain.
Answer:
Jennings breached the contract
Explanation:
A merchant firm offer is one that is irrevocable, the offeror makes an offer to sell goods within a given time frame and signs off on it.
Even without consideration (acceptance) from the other party, the contract is irrevocable.
A merchant firm offer that does not have a stated time frame rains open for a reasonable time.
In this instance Jennings made a merchant firm offer. Even if Wheeler had not accepted the offer it is irrevocable till June 9.
So by selling the car on May 15 he has breached the contract.
Yes, Jennings breached the contract with Wheeler by selling the car to someone else after Wheeler accepted the offer.
Explanation:Yes, Jennings breached the contract with Wheeler. In this case, an offer was made by Jennings to Wheeler through email. Wheeler accepted the offer by tendering the correct amount of money, but Jennings had already sold the car to someone else. However, the key factor here is whether there was a valid contract in place between the parties.
In contract law, an offer becomes effective upon the communication of the offer to the offeree. In this case, by emailing Wheeler with the offer, Jennings effectively communicated the offer to Wheeler. Upon receiving the offer, Wheeler had the option to accept or reject it.
By tendering the money, Wheeler accepted the offer, and a contract was formed. However, since Jennings had already sold the car to someone else, he breached the contract with Wheeler. Therefore, Jennings is legally responsible for breaching the contract.
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On September 1, 2017 Magna Highend Vehicles a New York based sole proprietorship needed funds to expand to New Jersey and Connecticut so the company incorporated in New York State. New York State, by its charter, authorized Magna Vehicles to issue 20,000 shares of $50 par value, preferred stock and 50,000 shares of no-par common stock. The Board of Directors assigned a $0.50 stated value to the common stock. Prepare journal entries to record the following transactions:
7 On October 3, 2017 an investor agreed to exchange a building assessed and valued by the City of New York at $800,000 for 15,000 of the preferred stock. The market price of the preferred stock is not known.
8 On Nov 8, the remaining 5000 preferred stock were sold cash at $70 per share.
9 On Dec. 3, 2017 the 50,000 common stock were sold for cash at a market price of $15 per share QC Delila Catering is authorized to issue 45,000 no-par shares on January 1, 2016. Prepare journal entries to record the following transactions
10 On March 1, 2016 Delila Catering issued 15,000 shares with a Market price of $18 per share
11 On April 15, 2016 Delila Catering issued 5,000 shares with a Market price of $10 per share in settlement of a legal fee of $6,500
12 On June 10, 2016 the company sold the remaining 25,000 shares for cash at a market price of $22 per share
Answer:
a) Journal Entries for 2017: Magna Highend Vehicles
October 3, 2017:
Debit Building with $800,000
Credit Preferred Stock with $750,000
Credit Share Premium (Preferred Stock) with $50,000
Being issue of 15,000 preferred stock in exchange for building.
November 8, 2017:
Debit Cash with $350,000
Credit Preferred Stock with $250,000
Credit Share Premium (Preferred Stock) with $100,000
Being issue of 5,000 preferred stock in cash at $70 per share.
December 3, 2017:
Debit Cash with $750,000
Credit Common Stock with $25,000
Credit Share Premium with $725,000
Being issue of 50,000 common stock at $15 per share.
b) 2016 Journal Entries for QC Delila Catering:
March 1, 2016:
Debit Cash with $270,000
Credit Stock with $270,000
Being issue of 15,000 shares at $18 per share.
April 15, 2016:
Debit Legal Fee with $6,500
Debit Stock Discount with $43,500
Credit Stock with $50,000
Being issue of 5,000 shares worth $10 per share in settlement of a legal fee.
June 10, 2016:
Debit Cash with $550,000
Credit Stock with $550,000
Being issue of 25,000 shares at $22 per share.
Explanation:
Shares at be issued in exchange for cash or other assets, and even in settlement of a liability.
Some shares are issued at a discount while some are issued at a premium or at par. A share issued at a discount means that the stock was sold for less than its market value or par value. For example, the issue of stock worth $50,000 in settlement of a legal fee of $6,500.
Shares issued at a premium are sold for more than their par values. The par value of a stock is the stated nominal value as against the market price. Usually, if a stock is doing well in the market, the market price is more than the par value.
Outose Concept manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to nondetectible materials defects. Inspection occurs when units are 50% converted. Spoiled units generally constitute 5% of the good units. Data for December 2015 are as follows:WIP, beginning inventory 12/1/2015 23,000 unitsDirect materials (100% complete)conversion costs (45% complete)Started in December 76,500 unitsCompleted and transferred out 12/31/2015 72,100 unitsWIP, ending inventory 12/31/2015 19,000 unitsDirect materials (100% complete)Conversion costs (40% complete)Costs for December:WIP, beginning inventory:Direct materials $153,000Conversion costs 77,100Direct materials added 223,400Conversion costs added 294,000Abnormal spoilage totals ________.8400 units4845 units3605 units4025 units
Answer:
8,400 units
Explanation:
Abnormal spoilage is amount of units which are wasted or destroyed during production. Units that do not meet the standard can also be a part of abnormal spoilage. To calculate abnormal spoilage we will use formula below;
Abnormal Spoilage units = (Work in process beginning inventory + Units completed and transferred out) - (Units in work in process + Ending inventory units)
Abnormal Spoilage Units = (23,000 + 76,500) - (72,100 + 19,000) = 8,400 units.
Lowe’s learned that 25 percent of the time its customers buy a garden hose, they also purchase a sprinkler. Patterns and relationships like this are discovered through a technique called
Answer: Data mining
Explanation: Patterns and relationships as indicated are discovered through a technique known as data mining, which is defined as the use of a variety of statistical analysis tools in marketing research to uncover previously unknown patterns in data or relationships among variables. It is also given as a technique for searching large scale databases for patterns; used mainly to find previously unknown correlations between variables that may be commercially useful.
Answer:
Data mining
Explanation:
Data mining deals with companies converting raw data into useful information. This is achieved by using softwares to look for consistent patterns in large volumes of data.
It is useful in business as they learn more about their customers and develop more effective marketing strategies which in turn increases sales and decreases costs.
Henry Crouch's law office has traditionally ordered ink refills 50 units at a time. The firm estimates that carrying cost is 40% of the $9 unit cost and that annual demand is about 235 units per year. The assumptions of the basic EOQ model are thought to apply. For what value of ordering cost would its action be optimal? a) For what value of ordering cost would its action be optimal? Its action would be optimal given an ordering cost of $ 19.15 per order (round your response to two decimal places). b) If the true ordering cost turns out to be much greater than your answer to part (a), what is the impact on the firm's ordering policy? A. The order quantity should be increased. Your answer is correct.B. The order quantity should be decreased. C. The order quantity should not be changed.
Answer:
a. $19.15
b. A. The order quantity should be increased. Your answer is correct.
Explanation:
a) For what value of ordering cost would its action be optimal?
Carrying cost = 40% * $9 = $3.60
Optimal ordering cost = (50^2 × 3.60) ÷ (2 × 235) = $19.15.
Therefore, the optimal ordering cost of $ 19.15 per order will make his action to be optimal
b) If the true ordering cost turns out to be much greater than your answer to part (a), what is the impact on the firm's ordering policy?
A. The order quantity should be increased.
The reason is that any ordering cost higher than $19.15 will not be optimal and result to a loss. The best to avoid this is to reduce order quantity.
Final answer:
The answer explains how to determine the optimal ordering cost using the EOQ model and the impact of a higher ordering cost on the firm's policy.
Explanation:
Crouch's law office traditionally orders ink refills 50 units at a time. To find the optimal ordering cost, we can use the Economic Order Quantity (EOQ) model. Given an annual demand of 235 units, a unit cost of $9, and a carrying cost of 40%, the optimal ordering cost for the firm would be $19.15 per order.
If the true ordering cost is much greater than $19.15, the impact on the firm's ordering policy would be that the order quantity should be decreased to minimize costs.
You invest in a piece of equipment costing $40,000. The equipment will be used for two years, and it will be worth $15,000 at the end of two years. The machine will be used for 4,000 hours during the first year and 6,000 hours during the second year. The expected savings associated with the use of the piece of equipment will be $28,000 during the first year and $40,000 during the second year. Your interest rate is 10%. (a) What is the capital recovery cost
Answer:
The answer is given below;
Explanation:
Description 0 1 2
Equipment (40,000)
Depreciation
(40,000/10,000)*4,000 (16,000)
(40,000/10,000)*6,000 (24,000)
Savings 28,000 40,000
Salvage Value 15,000
Net Cash flows 12,000 31,000
PV factor 1/1.1 =.91 1/1.1^2=.83
Net present value
PV factor*net cash flows 10,920 25,730
(10,920+25,730) 36,650
Net present value (40,000)+36,650=(3,350)