Answer:
The answer is attached for ready reference.
Explanation:
Consider Boeing (a producer of jet aircraft), General Mills (a producer of breakfast cereals), and Wacky Jack's (which claims to be the largest U.S. provider of singing telegrams). For which of these firms is the long run the longest period of time? For which is the long run the shortest? Explain. The long run is longest for 0 A Boeing because aircraft production is relatively expensive and shortest or acky Jack's because providing singing te egrams is relatively cheap. O B. Boeing because aircraft production is labor-intensive and shortest for Wacky Jack's because providing singing telegrams is capital-intensive. O C. Boeing because aircraft production requires large, specialized machines and shortest for Wacky Jack's because providing singing telegrams requires primarily labor O D. Boeing because aircraft production is most profitable and shortest for Wacky Jack's because providing singing telegrams is least profitable. E. Boeing because it is the largest provider of aircraft and shortest for General Mills because it is a relatively small cereal producer
Answer:
Option C - The firm, in the long run, is the longest for Boeing because aircraft production requires large, specialized machines and shortest for Wacky Jack's, is the correct answer choice.
Explanation:
Given that Boeing (a producer of jet aircraft), General Mills (a producer of breakfast cereals), and Wacky Jack's (which claims to be the largest U.S. provider of singing telegrams).
The firm, in the long run, is the longest for Boeing because aircraft production requires large, specialized machines and shortest for Wacky Jack's. The reason is that the provision of singing telegrams requires primarily labor.
Therefore, option C is the correct answer choice.
You are considering acquiring a common share of Sahali Shopping Center Corporation that you would like to hold for 1 year. You expect to receive both $1.35 in dividends and $45 from the sale of the share at the end of the year. The maximum price you would pay for a share today is __________ if you wanted to earn a 10% return.
Answer:
$42.13
Explanation:
HPR = [ Income + Vn - V0 ] / V0
Where
HPR = Holding Period Return = 10%
I = Income / Dividend = $1.35
Vn = Ending value of Investment = $45
V0 = Beginning Value of Investment = ?
Placing Value in the formula
10% = [ $1.34 + $45 - V0 ] / V0
0.1 V0 = $1.34 + $45 - V0
0.1V0 + V0 = $46.34
1.1V0 = $46.34
V0 = $46.34 / 1.1 = $42.13
The maximum price you would pay for a share today is $42.14 if you wanted to earn a 10% return.
Given that you want a 10% return, we need to calculate the present value of the expected future cash flows. You expect to receive $1.35 in dividends and a sale price of $45 at the end of the year.
Calculate the expected total future cash flows:Therefore, the maximum price you would be willing to pay for a share today, to achieve a 10% return, is $42.14.
A stock market crash will cause Group of answer choices aggregate demand to decrease, which the Fed could offset by purchasing bonds. aggregate demand to decrease, which the Fed could offset by selling bonds. aggregate demand to increase, which the Fed could offset by selling bonds. aggregate demand to increase, which the Fed could offset by purchasing the money supply.
Answer:
A stock market crash will cause aggregate demand to decrease, which the Fed could offset by purchasing bonds.
Explanation:
A stock market crash happens when the prices of stocks fall generally and suddenly that investors are taken unawares. It triggers some reactions which further threatens the market overall and depresses aggregate demand. It also weakens investors' confidence, reduces productivity, consumption, and the ability of firms to fund their activities, and leads the economy to recession.
Stock market crashes are triggered by unexpected economic event, catastrophe, or crisis. For example, the collapse of Lehman brothers as a result of bankruptcy. They are further exacerbated by panic reactions, underlying economic underperformance, and investors' fear.
The Fed as the US central bank in charge of the monetary policy can try to stem the downward spiral caused by a stock market crash by purchasing bonds. This makes more money available in the economy for consumption.
Before the crash, the Fed can decide to bail out the institution, e.g. an airline or a financial institution, that could trigger a crash. But, most stock market crashes are not foreseen.
On December 29, 2019, Patel Products, Inc., sells a delivery van that cost $20,000. After recording the entry to bring the accumulated depreciation up-to-date, the delivery van had accumulated depreciation of $18,000. Patel received $2,000 cash from the purchaser of the delivery van. Complete the necessary journal entry to record the sale by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
Answer:
On disposal, the carrying amount of the asset is derecognized by
Debit Other income/disposal account (p/l) $20,000
Credit Asset account $20,000
Being entries to derecognize the cost of the delivery van
Debit Accumulated depreciation account $18,000
Credit Other income/disposal account (p/l) $18,000
Being entries to derecognize the accumulated depreciation of the asset at the date of disposal,
Furthermore,
Debit Cash account $2,000
Credit Other income/disposal account (p/l) $2,000
Being entries to record cash collected on disposal of the asset
Explanation:
When the amount received from the disposal of an asset is higher than the carrying value of the asset, the company makes a gain on disposal. The proceed from the disposal of an asset may be recorded in the disposal or other income account.
On disposal, the carrying amount of the asset is derecognized by
Debit Other income/disposal account (p/l)
Credit Asset account
with the cost of the asset, then,
Debit Accumulated depreciation account
Credit Other income/disposal account (p/l)
With the accumulated depreciation of the asset at the date of disposal,
Furthermore,
Debit Cash account
Credit Other income/disposal account (p/l)
with the amount received from the disposal or sale of the asset
Final answer:
To record the sale of Patel Products, Inc.'s delivery van, a journal entry with a debit to 'Accumulated Depreciation' for $18,000 and a debit to 'Cash' for $2,000, along with a credit to 'Delivery Van' for $20,000, is required. There is no gain or loss as the sale proceeds match the book value of the van.
Explanation:
On December 29, 2019, Patel Products, Inc., completed the sale of a delivery van. The journal entry for this transaction involves several accounts. The van had an original cost of $20,000 and after updating for accumulated depreciation, it had a remaining book value of $2,000 ($20,000 cost - $18,000 accumulated depreciation). Patel Products received $2,000 in cash, which equals the remaining book value, indicating that there is no gain or loss on the sale.
The journal entry to record the sale is as follows:
Debit 'Accumulated Depreciation' for $18,000 to remove the accumulated depreciation against the asset.
Debit 'Cash' for $2,000 to record the receipt of cash from the sale.
Credit 'Delivery Van' (vehicle asset account) for $20,000 to remove the van from the company's asset records.
Since the cash received equals the remaining book value of the van, there is no additional debit for loss or credit for gain in this transaction.
In the absence of market failures, when the government taxes market participants, the effect is to move the market: Group of answer choices away from the competitive equilibrium, thereby enhancing social efficiency. closer to the competitive equilibrium, thereby enhancing social efficiency. closer to the competitive equilibrium, thereby reducing social efficiency. away from the competitive equilibrium, thereby reducing social efficiency.
Answer:
Closer to the competitive equilibrium, thereby reducing social efficiency.
Explanation:
The market is not failed itself, so there is no need of taxes to clear it but to arrange revenue for government taxes some of the luxurious products the tax shifts supply curve to left and decrease equilibrium quantity which makes the dead weight loss in the market and the quantity get away from the efficient level.
In absence of market failures, when the government taxes market participants, the effect is to move the market :
Denton Company had the following department information for the month of September: Total materials costs, $50,000; equivalent units of materials, 20,000; total conversion costs, $30,000; and equivalent units of conversion costs, 10,000. What is the total manufacturing cost per unit for the month of September
Answer:
$5.50
Explanation:
Material cost per unit = $50,000/20,000 = $2.50
Conversion costs = $30,000/10,000 = $3.00
Total manufacturing cost per unit = Material cost per unit + Conversion costs = $2.5$ + $3 = $5.50
Therefore, the total manufacturing cost per unit for the month of September is $5.50.
Currently, Warren Industries can sell 15-year, $1,000-par-value bonds paying annual interest at a 12% coupon rate. Because current market rates for similar bonds are just under 12%, Warren can sell its bonds for $1 comma 050 each; Warren will incur flotation costs of $20 per bond. The firm is in the 22% tax bracket.A. CalCulate the bond's yield to maturity (YTM) to estimate the before-tax and after- tax cost of debt.
B. Use the approximation formula to estimate the before-tax and after-tax costs of debt.
Answer:
11.57% and 9.02%
Explanation:
For computing the before-tax and after- tax cost of debt we use the RATE formula i.e to be shown in the attachment below:
Given that,
Present value = $1,050 - $20 = $1,030
Future value or Face value = $1,000
PMT = 1,000 × 12% = $120
NPER = 15 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this,
1. The pretax cost of debt is 11.57%
2. And, the after tax cost of debt would be
= Pretax cost of debt × ( 1 - tax rate)
= 11.57% × ( 1 - 0.22)
= 9.02%
The income from operations and the amount of invested assets in each division of Beck Industries are as follows: Income from Operations Invested Assets Retail Division $5,400,000 $30,000,000 Commercial Division 6,250,000 25,000,000 Internet Division 1,800,000 12,000,000 Assume that management has established a 9% minimum acceptable return for invested assets. a. Determine the residual income for each division. Retail Division Commercial Division Internet Division Income from operations $5,400,000 $6,250,000 $1,800,000 Minimum acceptable of income from operations Residual income $ $ $ b. Which division has the most residual income?
Answer:
a. Residual income $2,700,000 $4,000,000 $720,000
b. Commercial division
Explanation:
The computation is shown below:
As we know that
Residual income = Income from operations - Minimum income from operations
And, the same is applied below
a. Particulars Retail Commercial Internet
Income from operations $5,400,000 $6,250,000 $1,800,000
Minimum amount of income from operations
$2,700,000 $2,250,000 $1,080,000
($30,000,000 × 9%) ($25,000,000 × 9%) ($12,000,000 × 9%)
Residual income $2,700,000 $4,000,000 $720,000
b. As we can see that the commercial has highest residual income than retail and internet division
The multiplier for a futures contract on a stock market index is $50. The maturity of the contract is 1 year, the current level of the index is 1,800, and the risk-free interest rate is 0.5% per month. The dividend yield on the index is 0.2% per month. Suppose that after 1 month, the stock index is at 1,820. a. Find the cash flow from the mark-to-market proceeds on the contract. Assume that the parity condition always holds exactly
Answer:Cash Flow mark to market proceeds = $754.45
Explanation:
given :
stock market index = $50
current stock index= 1800
risk free interest rate= 0.5%
dividend yield=0.2%
Contract=1 year=12 month
Solution
The Current Index value after 12 months ie for future price = Current Stock Index * (1 + Risk Free - Dividend Yield)^12
Current Index value after 12 months = 1800 * (1 + 0.50% - 0.20%)^12
Current Index value after 12 months = 1865.88
Also, Future Index value after 1 month = Future Stock Index * (1 + Risk Free - Dividend Yield)^12-1
Future Index value after 1 month= 1820 * (1 + 0.50% - 0.20%)^11
Future Index value after 1 month = 1880.97
Therefore, Cash Flow mark to market proceeds = (Future Index Future Value - Current Index Future value) * Multiplier which when variables are imputed gives us
Cash Flow mark to market proceeds = (1880.97 - 1865.88) * 50
Cash Flow mark to market proceeds = $754.45
Answer:
$754.5
Explanation:
Given that
S0 = 1800
Interest rate = 5% = 0.05
Dividend yield = 2% = 0.02
Recall that
The initial futures price is:
F0 = S0 (1 + rf - d)
Thus,
= 1800 x (1 + .005 - .002)12
= 1865.88
Again,
In one month, the futures price will be:
F0 = 1820x (1 + .005 - .002)11 = 1880.97
The increase in the futures price is 15.09, that is 1880.97 - 1865.88, so the cash flow will be:
15.0 x $ 50
= $754.5
Exercise 169 Yates Manufacturing Company incurs the following manufacturing costs and expenses during the month of May. 1. Assembly line wages 2. Raw materials used directly in product 3. Depreciation on office equipment 4. Property taxes on factory building 5. Rent on factory building 6. Sales commissions 7. Depreciation on factory equipment 8. Factory utilities 9. Wages for factory maintenance workers 10. Advertising 11. Indirect materials used in production 12. Factory manager's salary
Answer:
1. Assembly line wages - Direct labor, manufacturing cost
2. Raw material used directly in product - Direct material, manufacturing cost
3. Depreciation on office equipment - In direct, Administrative cost
4. Property tax on factory building - Indirect, Manufacturing cost
6. Sales commission - Selling cost
7. Depreciation on factory equipment - Direct, Manufacturing cost
8. Factory utilities - Administrative cost
9. Wages for factory maintenance workers - Direct, Manufacturing cost
10. Advertising - Selling cost
11. Indirect material used in production - Indirect, Manufacturing cost
12. Factory manager's salary - Administrative cost
Explanation:
The cost which is affected by the production of units is known as variable cost. The cost which does not vary with the units produced is fixed cost.
The costs which are related to selling and storage of the finished goods is selling cost. The cost which is not affected by units produced and is related to office premises and controlling an organization is administrative cost. The cost which varies with the production of units and is incurred to convert raw material into finished goods is manufacturing cost.
There is a 2 percent defect rate at a specific point in a production process. If an inspector is placed at this point, all the defects can be detected and eliminated. The inspector would cost $11 per hour and could inspect units in the process at the current production rate of 53 per hour. If no inspector is hired and defects are allowed to pass this point, there is a cost of $10 per defective unit to correct the defects later on. Assume that the line will operate at the same rate (i.e., the current production rate) regardless of whether the inspector is hired or not.
a. If an inspector is hired, what will be the inspection cost per unit? (Round your answer to 3 decimal places.)
b. If an inspector is not hired, what will be the defective cost per unit? (Round your answer to 3 decimal places.)
c. Should an inspector be hired based on costs alone?
Final answer:
After calculating the costs, hiring an inspector results in a slightly higher per unit cost ($0.208) compared to allowing defects and correcting them later ($0.20 per unit). Nevertheless, the benefits of ensuring quality might outweigh these costs.
Explanation:
The questions deal with analyzing the cost-effectiveness of hiring an inspector in a production process with a 2% defect rate. To answer these, we consider the given defect rate, costs associated with hiring an inspector and correcting defects, and the production rate.
a. Inspection Cost Per Unit
The inspector costs $11 per hour and inspects 53 units per hour. Therefore, the inspection cost per unit is calculated as $11 divided by 53 units, resulting in approximately $0.208 per unit (rounded to three decimal places).
b. Defective Cost Per Unit
With a 2% defect rate and a $10 cost to correct each defect later, for every 100 units produced, we expect 2 defects. So, the cost per unit due to defects is (2 units * $10) / 100 units, which equals $0.20 per unit (rounded to three decimal places).
c. Should an Inspector be Hired Based on Costs Alone?
Comparing the two costs, the inspection cost per unit ($0.208) is slightly higher than the defective cost per unit ($0.20). However, the difference is minimal, and hiring an inspector might be beneficial considering potential savings in rework time and preservation of product quality and brand reputation, which are not captured in the immediate cost comparison.
An investor will pay $2,318.63 for an n-year $2,000 par bond with a coupon rate of 10% compounded semiannually or he will pay $2,531.05 for an nyear $2,000 par bond with a coupon rate of 11% compounded semiannually. Assuming that the investor gets the same yield on the two bonds, find this yield rate expressed as a nominal rate convertible two times per year. Also find n.
Answer:
28 years
Explanation:
check the pictures attached below for the explanation and i hope it helps. Thank you
The yield rate for both bonds is approximately 8.02% annually, compounded semiannually. The number of periods n is found to be 20 periods or 10 years. These results are obtained by equating the present value equations for both bonds and solving for the yield rate and period.
To solve this, we can use the present value formula for bonds:
1. Identify Variables:
Bond 1:Price = $2,318.63Coupon Rate = 10% semiannual (5% per period)Face Value = $2,000Bond 2:Price = $2,531.05Coupon Rate = 11% semiannual (5.5% per period)Face Value = $2,0002. Present Value (PV) Formula:
We use: [tex]PV = C * (1 - (1 + r)^-n) / r + F / (1 + r)^n[/tex]
PV = Present Value (Price of Bond)C = Coupon Payment = Face Value * Coupon Rater = Yield Rate per periodn = Number of periodsF = Face Value3. Equate Present Value Equations:
For Bond 1: $2,318.63 = $100 * (1 - (1 + r)²ⁿ) / r + $2,000 / (1 + r)²ⁿ
For Bond 2: $2,531.05 = $110 * (1 - (1 + r)²ⁿ ) / r + $2,000 / (1 + r)²ⁿ
4. Solving for Yield Rate (r) and Number of Periods (2n):
Using a financial calculator or solving via iterations, you will find:
r ≈ 0.0401 (4.01% semiannually)
5. Nominal Annual Yield Rate:
Nominal Yield Rate = 2 * r = 2 * 0.0401 = 0.0802 or 8.02%
6. Solving for Number of Periods (n):
Substitute r back into one of the equations to solve for n:
$2,318.63 = $100 * (1 - (1 + 0.0401)²ⁿ ) / 0.0401 + $2,000 / (1 + 0.0401)²ⁿ
Solving this equation, n = 10 years or 20 periods.
On January 1, 2009, AML company issues bonds maturing in 5 years. The par value of the bonds is $10,000, the annual coupon rate is 4-percent, and the compounding period is semiannually. The market initially prices these bonds using annual market interest rate 6-percent. The market interest rate on June 30, 2010 was 5% and the market interest rate on Dec. 31, 2012 was 8%.1. Were the bonds issued at par, a discount or a premium?2. Calculate the issue price.3. Record journal entry on the date of issuance.4. Will the interest expense increase or decrease over the years?5. Calculate the interest expense on Jun 30, 2010.6. Record journal entry on the interest expense on Jun 30, 2010.
Answer:
Explanation:
Solution is attached below
A corporation has issued $100 par, 6 1/2% cumulative convertible preferred stock, callable at par. The preferred is convertible into 2 shares of common stock. Currently, the preferred stock is trading at $100 while the common stock is trading at $50. If a customer buys 100 preferred shares, converts, and then sells the common stock in the market, the profit or loss is (ignoring commissions):
Answer:
$0
Explanation:
Amount paid by the customer for 100 preferred stock = 100 * $100 = $10,000
Number of preferred stock when converted to common stock = 100 * 2 = 200 shares
Revenue from selling the 200 shares = 200 * $50 = $10,000
Profit or loss to customer = Revenue from selling the 200 shares - Amount paid by the customer for 100 preferred stock = $10,000 - $10,000 = $0
Therefore, the customer made no profit nor loss.
Final answer:
There is no profit or loss when a customer buys 100 preferred shares at $100 each, converts them into 200 common shares, and sells the common stock at the market price of $50 per share, as the total amount received from selling the common stock equals the initial investment.
Explanation:
To determine the profit or loss when a customer buys 100 preferred shares, converts them, and then sells the common stock in the market, we need to follow these steps:
Firstly, the customer buys 100 preferred shares at $100 each. Since they are convertible into 2 shares of common stock per preferred share, after conversion, the customer would have 200 shares of common stock.
Next, the common stock is currently trading at $50 per share. If the customer sells all 200 shares of common stock at this market price, they would receive $10,000 (200 shares x $50/share).
The initial investment for the preferred shares was $10,000 (100 shares x $100/share). As the selling price of the common stock is also $10,000, once converted and sold, there is no profit or loss from this transaction (ignoring commissions and other possible fees).
Characteristics of competitive markets
The model of competitive markets relies on these three core assumptions:
1. There must be many buyers and sellers a few players can't dominate the market.
2. Firms must produce an identical product buyers must regard all sellers' products as equivalent.
3. Firms and resources must be fully mobile, allowing for free entry into and exit from the industry.
The first two conditions imply that all consumers and firms are price takers. While the third is not necessary for price-taking behavior, assume for this problem that a market cannot maintain competition in the long run without free entry.
Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not.
The government has granted a patent to a pharmaceutical company for an experimental AIDS drug. That company is the only firm permitted to sell the drug.
A. yes,meets all assumptions
B.no,no free entry
C.no, not many sellers
D.No, not an identical product
In a small town, there are two providers of broadband Internet access: a cable company and the phone company. The Internet access offered by both providers is of the same speed.
A.yes,meets all assumptions
B.no,no free entry
C.no, not many sellers
D.No, not an identical product
In a major metropolitan area, one chain of coffee shops has gained a large market share because customers feel its coffee tastes better than that of its competitors.
A.yes,meets all assumptions
B.no,no free entry
C.no, not many sellers
D.No, not an identical product
Dozens of companies produce plain white socks. Consumers regard plain white socks as identical and don't care who manufactures their socks.
A. yes,meets all assumptions
B.no,no free entry
C.no, not many sellers
D.No, not an identical product
Answer:
Explanation:
First scenario: The answer is No, not many sellers. The drug of the pharmaceutical company has patent right and it is the only firm selling this product. This makes the company a monopolist (single seller)
Second scenario: No, not an identical product. Cable company and phone company produce different products. Cable companies majorly deal with television access.
Third Scenario: no, not many sellers. One firm is dominating the market and customers prefers this. Its product has been differentiated and it can charge its own price.
Fourth scenario: yes,meets all assumptions. The socks are identical and consumers do not care about the seller because the same utility will be derived from the socks.
Knowledge Check 01 During the current year, Armstrong Corporation reported net income of $18 million and EPS of $5.00 per share. The average number of common shares outstanding during the year was 3.6 million. The price of a share of its common stock was $2.50 at the beginning of the year and $5.00 at the end of the year. What is the company’s price/earnings (P/E) ratio at the end of the year?
Answer:
PE ratio is 1
Explanation:
Price earning ratio determines the ratio of price of a share by the earning per share . It measures the times value which a investor pays for each $1 earning of the shares.
To calculate the price earning ratio at the end of the year, we will use the price of the share at the end of the year.
Price Earning Ratio = Market Price / Earning Per share
Price Earning Ratio = $5 / $5
Price Earning Ratio = 1 times
Answer:
P/E = 1
Explanation:
The price earnings (P/E ) can be used to determine the value of a stock , The ratio relates the price of a stock to its earning. A stock with a higher P/R indicates a high potent for growth.
The price earning ratio is computed as follows:
P/E = price per share/EPS
P/E = 5/5 = 1
A bakery makes a limited number of croissants each day for sale in its coffee shop. The croissants cost $1.00 each to produce and sell for $2.00 each. Leftover croissants are sold in the bakery the following day for $0.60 each, and all of those are sold
The excess cost is:
The shortage cost is:
The optimal service level is
Answer:
$0.40 ; $1 and $71.43%
Explanation:
The computation is shown below:
Excess cost is
= Unit cost - Salvage Value
= $1 - $0.60
= $0.40
The shortage cost is
= Selling value - unit cost
= $2 - $1
= $1
And, the optimal service level is
= Shortage cost ÷ (Shortage cost + excess cost)
= $1 ÷ $1.60
= 71.43%
Basically we applied the above formulas
Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales.
The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $68,000 of manufacturing overhead for an estimated activity level of $40,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows:
Raw materials $ 10,400
Work in process $ 4,900
Finished goods $ 8,900
During the year, the following transactions were completed:
a. Raw materials purchased on account, $ 169,000.
b. Raw materials used in production, $147,000 (materials costing $126,000 were charged directly to jobs; the remaining materials were indirect).
c. Costs for employee services were incurred as follows:
Direct labor $ 156,000
Indirect labor $ 182,000
Sales commissions $ 25,000
Administrative salaries $ 45,000
d. Rent for the year was $18,900 ($13,900 of this amount related to factory operations, and the remainder related to selling and administrative activities).
e. Utility costs incurred in the factory, $20,000.
f. Advertising costs incurred, $15,000.
g. Depreciation recorded on equipment, $21,000.($15,000 of this amount related to equipment used in factory operations; the remaining $6,000 related to equipment used in selling and administrative activities.)
h. Record the manufacturing overhead cost applied to jobs.
i. Goods that had cost $226,000 to manufacture according to their job cost sheets were completed.
j. Sales for the year (all paid in cash) totaled $509,000. The total cost to manufacture these goods according to their job cost sheets was $218,000.
Required:
1. Prepare journal entries to record the transactions for the year.
2. Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don't forget to enter the beginning balances in your inventory accounts).
3A. Is Manufacturing Overhead underapplied or overapplied for the year?
3B. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.
4. Prepare an income statement for the year. All of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.
Answer:
Goldnest company
A. Journal entries
1.Raw Materials Purchased.
Debit Direct Raw materials Account with $ 169,000
Credit Accounts Payable Account with $ 169,000
2.Labour Costs incurred
Debit Direct labor with $ 156,000
Debit Indirect labor with $ 182,000
Debit Sales commissions with $ 25,000
Debit Administrative salaries with $ 45,000
Credit Cash with $ 408,000
3.Rentals Costs for the year
Debit Factory Rent for the year with $13,900
Debit Office Rent for the year with $5,900
Credit Cash Account with $18,900
4. Utility costs incurred in the factory
Debit Factory Utility Account with $20,000
Credit Cash Account with $20,000
5.Advertising Expense Incurred
Debit Advertising Expense Account with $15,000
Credit Cash Account with $15,000
6. Depreciation recorded on equipment
Debit Depreciation on Factory equipment with $15,000
Debit Depreciation on Office equipment with $6,000
Credit Accumulated depreciation with $21,000
7.Sales in the Year
Debit Cash Account with $509,000
Credit Sales with $509,000
B. T Accounts are included in the attached for your understanding
C. Manufacturing overhead has been over applied by $34,300. Workings of this has been attached for your understanding
D.income statement closes with a net profit of $195,000. Refer to attached for detailed breakdown
Explanation:
Which of the following is NOT a macroeconomic statement? A. The price of cell phones decreased by 18 percent last year. B. Aggregate worker productivity decreased by three percent in 2012. C. Gross domestic product in Peru increased 4 percent from 2011 to 2012. D. The U.S. inflation rate was two percent in 2012.
Answer:
A. The price of cell phones decreased by 18 percent last year
Explanation:
Macro Economics is the study of economy at aggregate level, as a whole. It gives an overview top view of economy. So, Macro Economic statements are about the entire (whole) economy, at an aggregate level.
B] Stating about - aggregate worker productivity ; C] Stating about - Gross domestic product, being a national income estimate (depicting level of economic activity in the economy) ; D] Stating about - US inflation rate (depicting about general price level in the economy). These are all Macro Economic Statements.
However, A] The price of cell phones decreased by 18 percent last year : is just a statement of particular cell phones market. It is not about entire economy as a whole. So, it is not a macro economic statement
Kei, a senior marketing manager of a pizzeria in North Florida, is currently researching electronic collections of consumer information within the company network to arrive at crucial marketing decisions. In this instance, Kei is using ________. A. data warehouses B. descriptive research C. ethnographic research D. causal research E. internal databases
Answer: Internal databases
Explanation:
Internal databases are electronic collections of the consumers and market information which are obtained from data sources that are within the company's network.
Marketing managers access and work with the information in the database in order to identify marketing opportunities and challenges, evaluate performance and plan programs.
These are selected 2017 transactions for Swifty Corporation: Jan. 1 Purchased a copyright for $122,750. The copyright has a useful life of 5 years and a remaining legal life of 30 years. Mar. 1 Purchased a patent with an estimated useful life of 4 years and a legal life of 26 years for $51,120. Sept. 1 Purchased a small company and recorded goodwill of $154,200. Its useful life is indefinite.prepare all the adjusting enteries at dec 31st to record amortization required by event.
Answer:
Dr Amortization expense $24,550
Cr Copyright asset $24,550
Dr Amortization $10,650
Cr Patent asset $10,650
Explanation:
It is noteworthy that an intangible such as patents,copyrights ,goodwill and so on whose useful life is infinite is not amortized,hence the goodwill would not be amortized as a result there is adjusting entries in respect of goodwill.
However, it is also imperative that an intangible asset is amortized using the lower of useful life and legal life,as a result copyright would be amortized over 5 years and patent over 4 years.
Copyright yearly amortization=$122,750/5 years=$24,550
Patent's apportioned amortization=$51,120/4 years*10/12=$10,650
The amortization in each case is debited to amortization expense account and credited to individual asset account.
Lion Corp. has a $4,000 par value bond outstanding with a coupon rate of 4.6 percent paid semiannually and 20 years to maturity. The yield to maturity on this bond is 2.1 percent. What is the dollar price of the bond
Answer:
$5,627
Explanation:
Price of the bond is the present value of all cash flows of the bond. These cash flows include the coupon payment and the maturity payment of the bond. Both of these cash flows discounted and added to calculate the value of the bond.
According to given data
Face value of the bond is $4,000
Coupon payment = C = $4,000 x 4.6% = $184 annually = $92 semiannually
Number of periods = n = 20 years x 2 = 40 period
Market Rate = 2.1% annually = 1.05% semiannually
Price of the bond is calculated by following formula:
Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]
Price of the Bond = 92 x [ ( 1 - ( 1 + 1.05% )^-40 ) / 1.05% ] + [ $4,000 / ( 1 + 1.05% )^40 ]
Price of the Bond = $2,992.30 + $2,634.95
Price of the Bond = $5,627.25
Answer:
Price of the bond =$5626.2518
Explanation:
The price of a bond is the present value (PV) of the future cash inflows expected from the bond discounted using the yield to maturity.
The price of the bond can be calculated as follows:
PV of interest payment + PV of redemption Value
Step 1
PV of interest payment
Interest payment =( 4.6%× $4000)/2
=$ 92
Semi annual yield = 2.1/2 = 1.05 %
PV of interest payment
= 92× (1-(1.0105)^(-20×2))/0.0105)
= 2992.30
Step 2
PV of redemption value
= 4,000 × (1+0.0105)^(-20×2)
= 2633.948
Step 3
Price of bond
= $12992.30+ $2633.94
=$5626.2518
On April 30, 2017, Tilton Products purchased machinery for $88,000. The useful life of this machinery is estimated at 8 years, with an $8,000 residual value. Assume that in its financial statements, Tilton Products uses straight-line depreciation and rounds depreciation for fractional years to the nearest month. Depreciation expense recognized on this machinery in 2017 and 2018 will be:
Answer:
$6,666.67 and $10,000
Explanation:
The computation of the depreciation expense for the year 2017 and 2018 is shown below:
= (Original cost - residual value) ÷ (useful life)
= ($88,000 - $8,000) ÷ (8 years)
= ($80,000) ÷ (8 years)
= $10,000
Since the machinery is purchased on April 30 and we assume the books are closed on December 31 so the number of months calculated is 8 months
Therefore for the year 2017 the depreciation expense is
= $10,000 × 8 months ÷ 12 months
= $6,666.67
And, for the year 2018 the depreciation expense is same i.e $10,000
The Depreciation expense recognized on this machinery in 2017 and 2018 will be: $6,667 ;$10,000.
Tilton Products Depreciation expense
2017 Depreciation expense=[($88,000 − $8,000)/8 ]×8/12
2017 Depreciation expense=($80,000/8)×8/12
2017 Depreciation expense= $10,000×8/12
2017 Depreciation expense= $6,667
2018 Depreciation expense=[($88,000 − $8,000)/8 ]
2018 Depreciation expense=($80,000/8)
2018 Depreciation expense= $10,000
Inconclusion the depreciation expense recognized on this machinery in 2017 and 2018 will be:$6,667 ; $10,000.
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You are considering buying common stock in Grow On, Inc. You have projected that the next dividend the company will pay will equal $3.90 and that dividends will grow at a rate of 6.0% per year thereafter. If you would want an annual return of 25.0% to invest in this stock, what is the most you should pay for the stock now?
Answer:
$20.52
Explanation:
Given that
Estimated dividends for next period = $3.90
Required rate of return = 25%
Growth rate = 6%
The computation of Price of stock is given below:-
Price of stock = Estimated dividends for next period ÷ (Required rate of return - Growth rate)
= $3.90 ÷ (0.25 - 0.06)
= $3.90 ÷ 0.19
= $20.52
Therefore for computing the price of stock we simply applied the above formula.
A market is in long-run equilibrium and firms in this market have identical cost structures. Suppose demand in this market decreases. Which of the following are correct descriptions of what happens to the individual firms and the whole market as the market first leaves and then returns to long-run equilibrium?
Answer:
It will cause Market price to decrease in the short-run. There will be short-run decrease on Individual firms' profit-maximizing output .A good number of Firms will exit the market in the long run. Finally, market quantity will decrease in the long-run.A decrease in demand in a market in long-run equilibrium causes a fall in price and output, leading to economic losses that force firms to exit. The market eventually returns to the long-run equilibrium, where all firms earn zero economic profits. The process of reaching this state is influenced by firms' decisions to enter or exit the market.
Explanation:When the demand in a market decreases, the immediate result is a reduction in market price and output. This causes economic losses that lead to firms exiting the market, thereby reducing the overall market supply. This process continues until the point where the remaining firms are only earning normal profits, and the market has returned to the state of long-run equilibrium.
In long-run equilibrium, all firms in perfectly competitive markets earn zero economic profits. This is because as long as a firm is earning positive economic profits, other firms will enter the market and increase supply, which then lower the price and eventually the profit to zero.
Consequently, entry and exit decisions play an essential role in the adjustment process to long-run equilibrium. When firms are making profits, new firms will enter, enlarging the industry and driving down prices until no further firms want to enter because there are no more profits above the normal. Conversely, if firms are making losses, firms will exit, shrinking the industry and driving up prices until firms no longer want to exit because all remaining firms are making normal profit.
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DLW, Inc just started its business. DLW purchased factory equipment for $800,000 on January 1. It is estimated that the equipment will have a $30,000 salvage value at the end of its estimated 10-year useful life. If the company uses the straight-line method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be:
Answer:
Annual depreciation= $77,000
Explanation:
Giving the following information:
Purchase price= $800,000
Salvage value= $30,000
Useful life= 10 year
Under the straight-line method of depreciation, the depreciation expense is constant along the useful life.
We need to use the following formula:
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (800,000 - 30,000)/10
Annual depreciation= $77,000
The Berwin Company established a master budget volume of 35,000 units for April. Actual overhead costs incurred amounted to $98,500. Actual production for the month was 34,000 units. The standard variable overhead rate was $1.75 per direct labor hour. The standard fixed overhead rate was $1.50 per direct labor hour. One direct labor hour is the standard quantity per finished unit. Assume the allocation base for fixed overhead costs is the number of direct labor hours. SR1a. A. Compute the total manufacturing overhead cost variance.
Answer:
$12,000 Favorable
Explanation:
Given that,
Actual overhead costs incurred = $98,500
Actual production for the month = 34,000 units
Standard variable overhead rate = $1.75 per direct labor hour
Standard fixed overhead rate = $1.50 per direct labor hour
One direct labor hour is the standard quantity per finished unit.
Firstly, we need to find out the overhead applied by multiplying the actual production units with the standard overhead rate and standard quantity per finished unit.
Total standard overhead rate:
= Standard variable overhead rate + Standard fixed overhead rate
= $1.75 + $1.50
= $3.25
Overhead applied:
= Actual production × standard quantity per finished unit × Total standard overhead rate
= 34,000 × 1 × $3.25
= $110,500
Therefore, the total manufacturing overhead cost variance is determined by deducting the Actual overhead costs from the overhead applied.
It is calculated as follows:
= Overhead applied - Actual overhead costs incurred
= $110,500 - $98,500
= $12,000 Favorable
A company issues 10%, 5-year bonds with a par value of $270,000 on January 1 at a price of $280,682, when the market rate of interest was 9%. The bonds pay interest semiannually. The amount of each semiannual interest payment is:
Answer:
$13,500 semiannually
Explanation:
The Interest payment of a bond is calculated using the par value and the coupon rate of the bond. It is calculated by multiplying par value with coupon rate of the bond. Premium or Discount is amortized separately and added in the interest expense value.
As per given data
Par value = $270,000
Coupon Rate = 10%
Interest Payment = $270,000 x 10% = $27,000 annually = $13,500
The company pay $13,500 semiannually as interest payment
Barbara Bright is the purchasing agent for West Value Company. West Valve sells industrial values and fluid control devices. One of the most popular values is the Western, which has an annual demand of 4,000 units. The cost of each value is $90, and the inventory carrying cost is estimated to be 10% of the cost of each value. Barbara has made a study of the costs involved in placing an order for any of the values that West Valve stocks and she has concluded that the average ordering cost is $25 per order. Furthermore, it take about two weeks for an order to arrive from the supplier, and during this time the demand per week for West values is approximately 80.
a) What is the EOQ?
(b) What is the ROP?
Answer:
EOQ = 149.07 units
Re-order Point (ROP) = 160 units
Explanation:
The Economic Order Quantity (EOQ) is the order size that minimizes the balance of ordering cost and holding cost. At the EOQ, the carrying cost is equal to the holding cost.
It is computed using he formulae below
EOQ = √ (2× Co× D)/Ch
EOQ = √ (2× 25× 4000)/(10%× 90)
EOQ = 149.07 units
Re-order Point (ROP)
The level of stock at which are replenishment order will be placed
Maximum consumption × maximum lead time
= 80× 2 = 160 units
A company’s past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale; the remainder is never collected. Budgeted credit sales were: Ch7_Q181 The cash inflow in the month of June is expected to be $282,500. $213,750. $225,000. $270,000.
Answer:
$213,250
Explanation:
The calculation of cash inflow is shown below:-
Expected cash collections
For the month of June
Months Sales Percentage Expected collections
April $282,500 5% $14,125
May $213,750 30% $64,125
June $225,000 60% $135,000
Total collection in the month of June $213,250
Here we assume Sales for April$282,500, May $213,750 and June $225,000.
Please ignore the last value as it is not relevant to the question