Final answer:
To find the equilibrium price and quantity for Nalgene bottles, set the demand and supply functions equal and solve for the price, then plug that into either function. Consumer surplus is the difference between what consumers are willing to pay versus what they pay, while producer surplus is what producers get over their minimum acceptable price.
Explanation:
To find the equilibrium price and quantity for 32-oz. wide mouth Nalgene bottles, we need to set the market demand function Q = 50,000p^-1.076 equal to the market supply function Q = 0.01p^7.208 and solve for p. Once we find the equilibrium price, we substitute it back into either the demand or supply function to find the equilibrium quantity.
Consumer surplus is the difference between what consumers are willing to pay and what they actually pay, and producer surplus is the difference between the price at which producers are willing to sell and the price they actually receive.
To calculate consumer and producer surplus, we would need to determine the area above the supply curve and below the demand curve up to the equilibrium price. This involves integrating the demand function from zero to the equilibrium price for consumer surplus and integrating the supply function from zero to the equilibrium price for producer surplus.
Monczka-Trent Shipping is the logistics vendor for Handfield Manufacturing Co. in Ohio. Handfield has daily shipments of a power-steering pump from its Ohio plant to an auto assembly line in Alabama. The value of the standard shipment is $271 comma 590. Monczka-Trent has two options: (1) its standard 2-day shipment or (2) a subcontractor who will team drive overnight with an effective delivery of 1 day. The extra driver costs $180. Hadfield's holding cost is 35% annually for this kind of inventory. a) ▼ is more economical, with a daily cost of $ nothing. (Enter your response as a whole number.)
Answer:
$260 per day
Explanation:
Handfield Manufacturing Co.
Holding cost = 35% annually = 0.35
Standard Cost = $271,590
Number of Days in a Year = 365 days
Hence;
Daily Holding Cost = (Standard Cost x Holding Cost) / Number of Days in a Year
Daily Holding Cost = ($271,590 x 0.35) / 365
Daily Holding Cost = $260 per day
Extra Driver Cost = $180
Hence the benefit of subcontractor who will team with an effective delivery of 1 day can be calculated as follows;
Daily Holding Cost - Extra Driver Cost
= $260 - $180
= $80
Therefore, the use of subcontracting the team who will drive overnight is more economical, with a daily cost of $260 per day.
The question is about evaluating the cost and efficiency of different shipping options for a company in the field of business.
Explanation:The subject of this question is business, specifically logistics and supply chain management. The question involves evaluating the cost and efficiency of different shipping options for a company. The company has two options: a standard 2-day shipment or a subcontractor who will team drive overnight with a delivery time of 1 day.
To determine which option is more economical, we need to calculate the daily cost of each option. The holding cost for inventory is given as 35% annually, and the value of the standard shipment is $271,590. By calculating the daily holding cost and comparing it to the cost of the extra driver for the subcontractor option, we can determine which option is more economical.
The answer to part (a) of the question is that the subcontractor option is more economical with a daily cost of $180.
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g The La Salle Bus Company has decided to purchase a new bus for $95,000 with a trade-in of their old bus. The old bus has a BV of $10,000 at the time of the trade-in. The new bus will be kept for 10 years before being sold. Its estimated SV at that time is expected to be $15,000. a. Determine which asset class of the bus. b. Determine annual Straight-Line Depreciation charge'
Answer:
The new bus is rolling stock asset
depreciation is $8,000
Explanation:
Rolling stock asset in the U.S is a conveyance vehicle such a buses,vans ,locomotives,ferryboats and so on.
annual depreciation =(cost-salvage value)/useful life
cost of the new bus is $95,000
salvage value is $15,000
useful life is 10 years
yearly depreciation charge =($95,000-$15,000)/10 years
=$8,000
Note that the $10,000 trade-in value is relevant when computing the cash payable to the car dealer,it is not deducted here since it forms part of asset cost.
GG Products, Inc., prepares tips and stems from a joint process using asparagus. It produced 215,000 units of tips having a sales value at the split-off point of $75,600. It produced 215,000 units of stems having a sales value at split-off of $32,400. Using the net realizable value method, the portion of the total joint product costs allocated to tips was $45,500. Required: Compute the total joint product costs before allocation. (Do not round intermediate calculations.)
Answer:
The correct answer is $65,000.
Explanation:
According to the scenario, the computation of the given data are as follows:
Total joint product costs of Tip = $45,500
Sales value of tip at split-off = $75,600
NRV of total production = $75,600 +$32,400 = $108,000
So, we can calculate the total joint cost by using following data:
Total joint cost = $45,500 × ($108,000 ÷ $75,600)
= $45,500 × 1.43
= $65,000
Dermody Snow Removal's cost formula for its vehicle operating cost is $2,930 per month plus $323 per snow-day. For the month of December, the company planned for activity of 17 snow-days, but the actual level of activity was 16 snow-days. The actual vehicle operating cost for the month was $8,700. The spending variance for vehicle operating cost in December would be closest to: rev: 11_08_2017_QC_CS-108685, 11_29_2017_QC_CS-110702 Multiple Choice $279 U $279 F $602 U
Answer:
602 U
Explanation:
Dermody Snow Removal's
Vehicle operating cost is $2,930 per month plus $323 per snow-day
Actual level of activity was 16 snow-days
Spending variance for vehicle operating cost = Flexible budget-actual
Hence;
= (323*16+2930)-8,700
=(5,168+2,930)-8,700
=8,098-8,700
=602 U
Therefore the spending variance for vehicle operating cost in December would be closest to 602 U
Miles Company, a wholesaler, budgeted the following sales for the indicated months: June July August Sales on account $2700000 $2760000 $2850000 Cash sales 270000 300000 390000 Total sales $2970000 $3060000 $3240000 All merchandise is marked up to sell at its invoice cost plus 20%. Merchandise inventories at the beginning of each month are at 30% of that month's projected cost of goods sold. The cost of goods sold for the month of June is anticipated to be $2079000. $2376000. $2475000. $2284615.
Answer:
$2475000
Explanation:
The computation of the cost of goods sold for the June month is shown below:
As it is given that total sales of June is $2,970,000
And, the marked up is cost plus 20%
So based on the above information, the cost of goods sold is
= $2,970,000 × 100 ÷ 120
= $2,475,000
Therefore, all the other information which is given is not relevant. Hence, ignored it
The cost of goods sold for the month of June can be calculated by finding 70% of the projected cost of goods sold. The projected cost of goods sold for June is $2079000, so 70% of that is $1455300.
Explanation:The cost of goods sold for the month of June can be calculated by finding 70% of the projected cost of goods sold. The projected cost of goods sold for June is $2079000, so 70% of that is $2079000 x 0.7 = $1455300. This is the cost of goods sold for the month of June.
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The following market information was gathered for the corporation. The firm has 1,000 bonds outstanding, each selling for $1,100 with a required return of 8%. It has 5,000 shares of preferred stock outstanding selling for $40.00 per share and 50,000 shares of common stock outstanding selling for $18 per share. If the the preferred stock has a required return of 11%, and the common stock requires a 14% return, and the firm has a corporate tax rate of 30%, then calculate the firm's WACC adjusted for taxes.
Answer:
9.127%
Explanation:
For calculating the WACC we need to do following calculations which are shown below:
value of debt = 1,000 × $1,100 = $1,100,000
cost of debt = 8% × (1 - 0.3) = 4.8%
value of equity = 50,000 shares × $18 = $900,000
value of preferred stock = 5,000 × $40 = $200,000
Now
Market value of firm = $1,100,000 + $900,000 + $200,000 = $2,200,000
The formula is shown below:
= Weightage of debt × cost of debt + (Weightage of common stock) × (cost of common stock) + (Weightage of preferred stock) × (cost of preferred stock)
WACC = ($1,100,000 ÷ $2,200,000) × 4.8% + ($900,000 ÷ $2,200,000) × 14% + ($200,000 ÷ $2,200,000) × 11%
= 9.127%
In a general partnership: no partner can be held legally responsible for decisions since the partnership itself is a legal entity. each partner is held responsible for an agreement/decision made by any one of the partners. partners can be held responsible only for decisions they make personally. no decision is binding unless all partners agree to it in writing.
Answer:
Each partner is held responsible for an agreement/decision made by any one of the partner.
Explanation:
Partnership can be defined as a business agreement between two or more individuals. This individuals share ownership of the business and as such are responsible for managing the activities of the company. The profit gotten from the company are shared among the business partners.
General partnership is a form of partnership in which all the partners involved contribute significantly to the daily activities of the organization.
General partnership is very easy to establish and it does not require any form of taxes on profits generated from the business.
During 2013, Company A has the following transactions involving its common and preferred stock:
Issued 20,000 shares of $8 par common stock for $26 a share; brings total shares outstanding to 50,000 shares
Issued 6,000 shares of $100 par, 6%, cumulative preferred stock for $150 per share
When market value of the common stock reached $15 a share, Company A declared a 3-for-1 stock split, reducing the par value to $188 per share
The following is required:
Prepare a journal entry for each transaction.
Answer:
Explanation:
Issued 20,000 shares of $8 par common stock for $26 a share; brings total shares outstanding to 50,000 shares
Bank A/c………Dr. 520000
To Share Capital A/c. 160000
To Paid in excess of par 360000
Issued 6,000 shares of $100 par, 6%, cumulative preferred stock for $150 per share
Bank A/c………Dr. 900000
To Preferred Stock A/c. 600000
To Paid in excess of par. 300000
When the market value of the common stock reached $15 a share, company A declared a 3-for-1 stock split reducing the par value to $188 per share.
Share Capital (par value at 8) 400000
To Share Capital (par value at 2.67)
400000
Many people have argued that an income tax should be "marriage neutral," that is, two people should pay the same total tax whether they are married or they are single. Suppose Amanda earns nothing, Ben earns $60,000, and Cathy and Dylan each earn $30,000. They are all single. Amanda pays no tax because she has no income. If they all live in a country that has a progressive income tax, which will be higher: the tax that Ben pays or the sum of the taxes Cathy and Dylan pay?
Answer:
Ben would pay more in taxes.
Explanation:
A progressive income tax increases the tax rate as the taxpayer earns more money.
In this case, Ben would be taxed as earnings $60,000 which is probably a much higher tax rate than the applicable one for $30,000. If we use the current tax brackets for 2020, Ben would fall under the 22% tax bracket while both Cathy and Dylan would fall under the 12% tax bracket. Obviously Ben would pay much more in taxes.
On December 31, 2020, Dow Steel Corporation had 670,000 shares of common stock and 37,000 shares of 7%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $470,000 and $76,000 to common and preferred shareholders, respectively, on December 15, 2021.
On February 28, 2021, Dow sold 51,000 common shares. In keeping with its long-term share repurchase plan, 4,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2021, was $2,450,000. The income tax rate is 25%.
Required:
Compute Dow's earnings per share for the year ended December 31, 2021. (Do not round intermediate calculations. Enter your answers in thousands. Round "Earnings per share" answer to 2 decimal places.)
Answer:
Earnings per share is $3.21
Explanation:
The calculation of weighted average number of shares to be used in EPS computation is provided thus:
Initial shares 670,000*1.04*12/12 696,800.00
share issued in February 51,000*1.04*10/12 44,200.00
shares repurchased 4000*6/12 (2,000.00)
Weighted average number of shares 739,000.00
earnings attributable to common stock=net income-preferred shares dividends
net income is $2,450,000
preferred shares dividends is $76,000
earnings attributable to common stock=$2,450,000-$76,000
=$2,374,000.00
Earnings per share =earnings attributable to common stock/Weighted average number of shares
Earnings per share=$2,374,000.00/739,000.00
=$3.21
Dow's earnings per share (EPS) for the year ended December 31, 2021 is $3.44. This was determined by first calculating the weighted average number of shares outstanding throughout the year (including new issues and those retired), adjusting for the stock dividend, and then dividing the company's net income (minus dividends paid to preferred shareholders) by this adjusted count.
Explanation:To calculate Dow's earnings per share (EPS), we first need to compute the weighted average number of shares outstanding for the year. Starting with 670,000 shares, Dow issued 51,000 new shares on February 28th which are thus in circulation for about 10 months (or 10/12 of the year), and retired 4,000 shares on July 1st that are out for about 6 months (or 6/12 of the year).
The weighted average number of outstanding shares is therefore: 670,000+(51,000*10/12)-(4,000*6/12)=717,500.
Now, we also need to account for the 4% common stock dividend issued on May 15. Because a stock dividend does not change the overall value of the company, the number of actual shares increases but the EPS is calculated as if no such dividend was issued.
Thus, our adjusted weighted number of average shares is: 717,500/1.04=689,904.
The net income of the company was $2,450,000, but we need to subtract the dividends paid to the preferred shareholders: $2,450,000 - $76,000 = $2,374,000.
Finally, we can calculate the EPS: $2,374,000 / 689,904 = $3.44 (rounded to two decimals).
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(a) Compare the EUAC for the following plans using a MARR of 8%, and an analysis period of 50 years..
(b)What assumptions were made that should be considered before deciding between Plans A and B?
Data Plan A Plan B Equipment First Cost $50,000 $75,000 Annual Operation & Maintenance Cost $3,000 $2,500 Salvage Value $10,000 $0 Service Life, Years) 25 50
Answer:
The EUAC of A & B respectively are:
$4,497.10 and $6,335.07 (decision should be to go with Plan A as it costs less on an annualized assessment
B.
We considered the purchase costs against the time value of the costs and interest rate.
We also considered the operational costs and benefits of salvage costs
Explanation:
Equivalent uniform annual cost (EUAC)
This is an approach adopted when faced with an option of outright investment in an item or rentals or lease of similar or same item over a period of time.
It helps in converting the costs of the acquisition into equivalent uniform annual costs which can then be compared to the rentals uniform cost to help with easy decision making
Step 1.
You will need a rate (possible a rate of opportunity cost)
Step 2
Add 1 to the interest rate
Step 3
Raise the answer to the power of n (n is the useful life of the purchase)
....let's call d result (a)
Step 4.
Take (a) - 1
.....let's call this (b)
Step 5.
(a) divided by (b)
Let's call the result (c)
Step 6.
(C) multiply by the interest rate in step 1.
Let's call this (d)
Step 7.
(d) multiply by the purchase price of the item
The result you get is the EUAC....let's call it (e)
Where the item has a salvage value after its useful life, this counts as an inflow and benefit to the purchaser. This is how we factor that in:
Step 8.
Multiply the salvage value by our (b) above.
Let's call that (f)
Step 9
Multiply (f) by the interest rate in step 1
This is the Uniform salvage benefits
Let's call it (g)
Step 12.
Now deduct (g) from (e), this becomes the adjusted EUAC which can be compared to the periodic rental cost to help with decision making.
You may please refer to the attached for a detailed presentation of the answer.
What is Free Cash Flow to the Firm (FCFF) primarily used for?
Estimating cash flow available to the firm's finance org.
Estimating cash flow available to shareholders only.
Estimating cash flow available to invest in firm-specific projects.
Estimating cash flow available to creditors and shareholders.
Answer: Estimating cash flow available to creditors and shareholders.
Explanation: Free cash flow to the firm (FCFF) is the cash available to shareholders and bondholders (creditors to the bond issuer) after depreciation expenses, taxes, working capital, and investments are accounted for and paid. It is a measurement of a company's profitability after all expenses and reinvestments and thus is useful in comparing and analyzing a company's financial health. Positive free cash flow to firm value indicates that the company has cash remaining after expenses while a negative value indicates that the firm has not generated enough revenue to cover its costs and investment activities.
McGregor argues that ___ is self-fulfilling. If management expects little from its workers, little is what they’ll get.
Theory X
Theory Y
Theory A
Theory B
McGregor argues that theory Y is self fulfilling. If management expects little from its workers, little is what they will get.
Explanation:
The Theory Y states that most of the people wants to work and they are self sirected and motivated , creative in undergoing their individual goals. These people use their full potential to make decisions. This theory is mainly applied to small business owners, and independent professionals.
The managers are often self fulfilling. These employees take full responsibility for their work and to create a quality product. They perform the task and wait for the managers approval. The work is efficient and productive based on company standards.
Company H345's cost formula for its wages and salaries is $2,280 per month plus $348 per birth. For the month of August, the company planned for activity of 118 births, but the actual level of activity was 116 births. The actual wages and salaries for the month was $44,120. The wages and salaries in the planning budget for August would be closest to:
Answer:
The wages and salaries in the planning budget for August would be closest to: $46,824
Explanation:
The planning Budget is Based on the Actual level of Activity for this question,This is known as flexing the budget.
Calculation of Planning budget for August based on 116 births
Wages and Salaries = $2,280 + $348×116 births
= $46,824
Kingbird Construction Company changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2021. For tax purposes, the company employs the completed-contract method and will continue this approach in the future. (Hint: Adjust all tax consequences through the Deferred Tax Liability account.) The appropriate information related to this change is as follows.
Pretax Income from:
Percentage-of-Completion Completed-Contract Difference
2020 $752,200 $586,700 $165,500
2021 683,500 444,700 238,800
(a) Assuming that the tax rate is 30%, what is the amount of net income that would be reported in 2021?
(b) What entry(ies) are necessary to adjust the accounting records for the change in accounting principle?
Answer:
a) 2021 year income: 526,540
b) journal entries
income tax expense 225.660 debit
income tax deferred liability (*1) 49.650 debit
income tax payable 176.010 credit
Explanation:
Year Accounting Tax purpose Difference
2020 752200 586700 165500
2021 683500 444700 238800
2021
752,200 x 30% = 225,660
after tax income: 526.540
2022
683,500 x 30% = 205,050
after tax income: 478.450
We recognize the income tax expense n the accounting method of revenue/expense recognizition
while, the payable will use the goverment purposes.
Then, the differnce wi considered either income tax deferred.
*1 it is a liability as the company is paying lower taxes to day to pay more than before.
.. Attitude formation is based on cognitive and affective factors * true or false
Martinez Company reports the following financial information before adjustments. Dr. Cr. Accounts Receivable $165,800 Allowance for Doubtful Accounts $3,730 Sales Revenue (all on credit) 840,900 Sales Returns and Allowances 52,650 Prepare the journal entry to record bad debt expense assuming Martinez Company estimates bad debts at (a) 5% of accounts receivable and (b) 5% of accounts receivable but Allowance for Doubtful Accounts had a $1,380 debit balance.
Answer:
a. Debit Bad debt expense $4,560
Credit Allowance for doubtful debt $4,560
Being entries to recognize bad debt expense
b. Debit Bad debt expense $9,670
Credit Allowance for doubtful debt $9,670
Being entries to recognize bad debt expense
Explanation:
When a company makes sales on account, debit accounts receivable and credit sales. Based on assessment, some or all of the receivables may be uncollectible.
To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i.e go bad), debit allowance for doubtful debt and credit accounts receivable.
Where a debit that had previously been determined to have gone bad gets settled, debit cash and credit bad debt expense.
Net sales
= $840,900 - $ 52,650
= $788,250
Allowance for doubtful debt
= 5% * $165,800
= $8,290
a. the difference to be posted
= $8,290 - $3,730
= $4,560
b. the difference to be posted
= $8,290 + $1,380
= $9,670
Oaktree Company purchased new equipment and made the following expenditures: Purchase price $ 45,000 Sales tax 2,200 Freight charges for shipment of equipment 700 Insurance on the equipment for the first year 900 Installation of equipment 1,000 The equipment, including sales tax, was purchased on open account, with payment due in 30 days. The other expenditures listed above were paid in cash. Required: Prepare the necessary journal entries to record the above expenditures. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer and Explanation:
The journal entries are shown below:
1. Equipment($45,000 + $2,200 + $700 + $1,000) $48,900
To Accounts payable $47,200 ($45,000 + $2,200)
To Cash $1,700
(Being the equipment is purchased on cash and credit)
Since the equipment is purchased so it would be debited and the other two accounts i.e account payable and the cash is credited
2.Prepaid insurance $900
To Cash $900
(Being the payment is recorded)
Since there is a prepaid insurance and the same is increased in assets so it would be debited and the cash is paid so it would be credited
Haberdashery Company has a beginning Work-in-Process Inventory of 37,000 units (40% complete). During the period, 122,000 units were started and the ending Work-in-Process Inventory consisted of 32,000 units (80% complete). What are the equivalent units for conversion costs using weighted-average process costing
Answer:
152,600 units
Explanation:
Weighted average costing adds the value of beginning inventory in the period cost to calculate the average cost per unit.
According to this method the equivalent units formula is as follow
Equivalent Units = Unit completed and transferred to Finished goods + Units in Work in Process x Completion percentage
Units Completed in the period = 37,000 + 122,000 - 32,000 = 127,000
Equivalent Units = 127,000 + (32,000 x 80%) = 152,600 units
If Negan Corp. common stock is valued at $40 per share, dividends are paid quarterly and expected to grow quarterly by 1.2% forever, and the next dividend is due in 3 months and expected to be $3, then what is the expected annual return on Negan Corp. stock?
Answer:
= 33.37%
Explanation:
The computation of expected annual return is given below:-
Price of common stock today = Dividend next year ÷ (Required rate of return - Growth rate)
= $42 = $3 ÷ (required rate of return - 1.2%)
= (required rate of return -1.2%) = 0.071429
= (required rate of return - 1.2%) = 7.1429%
Required rate of return = 8.3429%
Expected of Annual Return = Required rate of return × Quarterly
= 8.3429% × 4
= 33.3716%
or
= 33.37%
So, for computing the expected of annual return we simply multiply the required rate of return with quarterly.
The fixed overhead volume variance is a measure of a. the cost of unused activity capacity acquired. b. the effect of the actual output differing from the output used to calculate the predetermined fixed overhead rate. c. both the effect of the actual output differing from the output used to calculate the predetermined fixed overhead rate and the cost of unused activity capacity. d. both the cost of overspending on fixed overhead items and the effect of the actual output differing from the output used to calculate predetermined fixed overhead rate. e. the cost of overspending on fixed overhead items.
Answer:
d. both the cost of overspending on fixed overhead items and the effect of the actual output differing from the output used to calculate predetermined fixed overhead rate.
Explanation:
Fixed overhead volume variance is a measure of difference between actual fixed overheads applied based to production volume and the budgeted fixed overhead based on production volume. The variance can be favorable or unfavorable. The unfavorable variance indicates that the fixed overheads actually applied based on production volume are less than budgeted fixed overhead cost based on production volume.
Final answer:
The fixed overhead volume variance is primarily a measure of the effect of actual output differing from the output anticipated during the calculation of the predetermined fixed overhead rate. It helps in understanding the utilization of capacity and the potential inefficiencies in spreading fixed costs over the actual production volume.
Explanation:
The fixed overhead volume variance is a measure of b. the effect of the actual output differing from the output used to calculate the predetermined fixed overhead rate. This variance helps businesses assess whether they are utilizing their capacity efficiently. It represents the difference between the budgeted and the actual fixed costs incurred due to a difference in actual production volume compared to the expected production volume. When production volumes are lower than expected, the average fixed cost per unit increases, because the total fixed costs are spread over fewer units, which is often referred to as spreading the overhead.
Fixed costs, such as rent or management salaries, do not change with the level of production in the short term. However, in the long term, all costs become variable. The fixed overhead volume variance is crucial in understanding how these fixed costs affect the overall cost structure of a company and its profitability. It is important to consider opportunity costs as well, which represents the cost of a foregone alternative that might have been chosen.
Auditing standards don't specifically discuss the audit procedures that should be applied to a client's pension-related financial statement amounts. Identify five audit procedures that would be relevant to those items. For each audit procedure that you list, identify the related audit objective.
Answer:
Explanation:
(a). Audit Procedure (b) . Audit Objective
1.a Take note of trading/order paperwork with the pension (b). Existence of investment/accounts.
2a. Movement of funds within accounts. (b. Examine plan document for investment objectives
3a.make sure that investments agree with plan objectives and allowed risk level (b. Take note of current investment holdings
4a. Make sure that funds are held at updated market fair value(mark to market) (b. Take note of contracts, meeting minutes etc. Confirm that purchases/sales have been approved and falls into plan polices
5a. Extra examination of any significant plan holdings (b. Verify existence and appropriate value . This is important if the plan invest in non-public assets , example is assets are private, equity.
Auditing pension-related financial statement amounts involves a variety of procedures including reviewing actuarial assumptions, verifying plan assets, analyzing contributions and payments, examining regulatory compliance, and assessing disclosures to ensure accuracy, valuation, completeness, existence, compliance, and appropriate presentation and disclosure.
Audit standards may not specify procedures for every situation, including those involving pension-related financial statement amounts. However, auditors can apply various procedures tailored to addressing those items effectively. Below are five audit procedures relevant to pension-related amounts, along with their related audit objectives.
Review of Actuarial Assumptions and Calculations: Evaluate the appropriateness of assumptions used in pension calculations, such as discount rates, expected return on plan assets, and demographic factors. Objective: Accuracy and valuation.Verification of Plan Assets: Inspect the plan's investment to confirm existence and determine whether the valuation complies with relevant standards. Objective: Existence and valuation.Analysis of Plan Contributions and Payments: Examine transaction records for contributions to and payments from the pension plan to ensure they are correctly recorded and authorised. Objective: Completeness and occurrence.Examination of Regulatory Compliance: Assess compliance with laws and regulations governing pension plans. Objective: Compliance.Assessment of Disclosures: Review the financial statement disclosures related to the pension plan for completeness and accuracy. Objective: Presentation and disclosure.Each of these procedures addresses a different aspect of auditing pension-related amounts, ensuring a thorough assessment of the pension plan's financial presentation.
A company reports basic earnings per share of $5.10, cash dividends per share of $2.05, and a market price per share of $65.55. The company's dividend yield equals:
Answer:
3.13%
Explanation:
The dividend yield refers to the payment by a company to its shareholders for their shareholding divided by current stock price of the company. This is usually expressed as a percentage and can be calculated for this question as follows:
Dividend yield = Dividends per share (DPS) ÷ Market price per share (MPS) = $2.05 ÷ $65.55 = 0.0313, or 3.13%.
Answer:
The company's dividend yield equals: 3.13%
Explanation:
Let's recall the formula of the dividend yield:
Dividend yield = Annual dividend/Current stock price
Replacing with the values provided, we have:
Dividend yield = 2.05/65.55
Dividend yield = 0.0313
Dividend yield = 3.13%
Interpretation:
Dividend yield is a way to compare the level of attractiveness of any dividend-paying stock. It shows an investor the yield he/she can expect on an annual basis by purchasing a stock.
Assume again that Andretti Company has sufficient capacity to produce 120,150 Daks each year. A customer in a foreign market wants to purchase 31,150 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $3.70 per unit and an additional $18,690 for permits and licenses. The only selling costs that would be associated with the order would be $2.40 per unit shipping cost. What is the break-even price per unit on this order? (Round your answers to 2 decimal places.)
Final answer:
The break-even price per unit for Andretti Company's order of 31,150 Daks, after accounting for import duties, permits and licenses, and shipping, is $6.70, rounded to two decimal places.
Explanation:
To calculate the break-even price per unit for the Andretti Company's order of 31,150 Daks, we need to consider both fixed costs and variable costs associated with this order. Fixed costs include import duties ($3.70 per unit) and the cost for permits and licenses ($18,690). Variable costs consist of the shipping cost ($2.40 per unit).
The total fixed costs are $18,690 (permits and licenses) + ($3.70 × 31,150 units in import duties) = $18,690 + $115,255 = $133,945. The total variable costs are $2.40 × 31,150 units = $74,760. To find the break-even price per unit, we add the fixed and variable costs and divide by the number of units. So, the break-even price per unit is ($133,945 + $74,760) ÷ 31,150 units = $208,705 ÷ 31,150 units = $6.70 per unit (rounded to two decimal places).
The break-even price per unit for the order is approximately $6.70.
The break-even price per unit for the order is calculated by considering all the additional costs associated with the order and dividing them by the number of units in the order. The additional costs include the import duties and the shipping costs per unit, as well as the fixed costs for permits and licenses.
First, we calculate the total variable costs for the order:
- Import duties: $3.70 per unit for 31,150 units = $3.70 * 31,150
- Shipping costs: $2.40 per unit for 31,150 units = $2.40 * 31,150
Next, we add the fixed costs for permits and licenses:
- Fixed costs: $18,690
Now, we sum the total variable costs and the fixed costs to find the total additional costs:
- Total variable costs = Import duties + Shipping costs
- Total additional costs = Total variable costs + Fixed costs
Finally, we divide the total additional costs by the number of units to find the break-even price per unit:
- Break-even price per unit = Total additional costs / Number of units
Let's perform the calculations:
- Import duties = $3.70 * 31,150 = $115,355
- Shipping costs = $2.40 * 31,150 = $74,760
- Total variable costs = $115,355 + $74,760 = $190,115
- Total additional costs = $190,115 + $18,690 = $208,805
- Break-even price per unit = $208,805 / 31,150 units = $6.70 per unit
You expect KT industries (KTI) will have earnings per share of $ 6 $6 this year and expect that they will pay out $ 1.25 $1.25 of these earnings to shareholders in the form of a dividend. KTI's return on new investments is 13 13% and their equity cost of capital is 14 14%. The value of a share of KTI's stock is closest to:
Answer:
$8.93
Explanation:
The payment made to the stockholders is known as dividend.
Price of the stock can be determined by calculating the present value of all future expected dividends using cost of capital.
In this question $1.25 per share dividend is paid and rate of return / cost of capital is 14%, so price of stock will be calculated as follow.
Price of the share = Dividend / Cost of Capital = $8.93
Price of the share = $1.25 / 14% = $8.93
Free Corporation had the following transactions occur in the current year: 1. Cash sale of merchandise inventory. 2. Sale of delivery truck at book value. 3. Sale of Xanthe common stock for cash. 4. Issuance of a note payable to a bank for cash. 5. Sale of a security held as an available-for-sale investment. 6. Collection of loan receivable.
Answer:
The requirement was to determine of the listed items would feature under investing activities in cash flows Statement
The correct option is A,3
Explanation:
Sales of truck at book value is a cash inflow under the investing activities the same way purchase of truck would a cash outflow under investing activities.
The sale of security held a an available-for-sale investment is an investing activities inflow same way purchase of such investment would be an investing activities outflow.
Collection of loan receivable is also an investing activities inflow,the loan would have been treated as an outflow when it was made initially.
When machine-hours are used as an overhead cost-allocation base, the MOST likely cause of a favorablevariable overhead spending variance is: A. the production scheduler efficiently scheduled jobs B. excessive machine breakdowns C. strengthened demand for the product D. a decline in the cost of energy
Answer:
D. a decline in the cost of energy
Explanation:
As per definition, A variable overhead spending variance is favorable that means the the actual rate per hour is less in this case as machine hours is the allocation base so any decline in cost of energy.
Firms that operate internationally are able to do all of the following EXCEPT: A. realize location economies. B. benefit from producing more standardized products and services. C. realize greater cost economies from experience effects. D. earn a greater return by leveraging any valuable skills developed in foreign operations and transferring them to other entities.
Answer:
The incorrect statement is letter "B": benefit from producing more standardized products and services.
Explanation:
Companies that broaden their operations are most likely in need to adapt their products or services to local markets. All consumers around the world do not have the same preferences and expectations because of different factors mainly cultural. Therefore, the greater the presence of a firm in foreign countries, the more diverse their products will be according to each region of operations.
Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $ 1 comma 000, and a coupon rate of 7.7 % (annual payments). The yield to maturity on this bond when it was issued was 5.7 %. What was the price of this bond when it was issued?
Answer:
The correct answer is $1,149.32.
Explanation:
According to the scenario, the computation of the given data are as follows:
Face value FV = $1,000
Coupon rate = 7.7%
So, Payment = 7.7% × $1,000 = $77
YTM (rate ) = 5.7%
Time period = 10 years
So, we can calculate the present value by using financial calculator:
The attachment is attached.
So, PV = $1,149.32
Ivanhoe, Inc. received the following information from its pension plan trustee concerning the operation of the company's defined-benefit pension plan for the year ended December 31, 2021. 1/1/21 12/31/21 Accumulated benefit obligation 3600000 1660000 Net (gains) and losses $ 6670000 $ 148000 Projected benefit obligation 1450000 6855000 Pension assets (at fair value) 0 4036000 The service cost component of pension expense for 2021 is $523000 and the amortization of prior service cost due to an increase in benefits is $113000. The settlement rate is 11% and the expected rate of return is 7%. What is the amount of pension expense for 2021
Final answer:
The amount of pension expense for 2021 is $795,500.
Explanation:
The amount of pension expense for 2021 can be calculated using the following formula:
Pension Expense = Service Cost + Interest Cost - Actual Return on Plan Assets + Amortization of Prior Service Cost
Given the information provided, the service cost component of pension expense for 2021 is $523,000 and the amortization of prior service cost is $113,000. The interest cost can be calculated by multiplying the projected benefit obligation at the beginning of the year by the settlement rate. The actual return on plan assets can be calculated by multiplying the pension assets at the beginning of the year by the expected rate of return.
Let's calculate each component:
Interest Cost = 1,450,000 * 0.11 = $159,500
Actual Return on Plan Assets = 0 * 0.07 = $0
Substituting the values into the formula:
Pension Expense = $523,000 + $159,500 - $0 + $113,000 = $795,500