Answer:
a. The expected return on the market is 10.89%
b. The risk-free rate is 1.52%
Explanation:
In order to calcuate the expected return on the market and the he risk-free rate we would have to use the following formulas:
Expected return=risk-free rate +Beta*(market rate- risk-free rate )
13.23=Rf+1.25*(Rm-Rf)
13.23=1.25Rm-0.25Rf
Rm=(13.23+0.25Rf)/1.25
To calculate the risk free rate, we use the following:
9.67=Rf+0.87*(Rm-Rf)
9.67=0.13Rf+0.87Rm
9.67=0.13Rf+0.87*(13.23+0.25Rf)/1.25
9.67=0.13Rf+9.20808+0.174Rf
Rf=(9.67-9.20808)/(0.13+0.174)
=1.52%(Approx)=risk free rate
Rm=(13.23+0.25Rf)/1.25
=10.89%(Approx)=market rate
Final answer:
The expected return on the market and the risk-free rate can be calculated using the CAPM formula and the provided beta and expected return of two securities. Comparing betas helps determine the relative risk of investments. Bond pricing involves discounting the expected payments by the current market interest rate.
Explanation:
Calculating Expected Market Return and Risk-Free Rate Using CAPM
To derive the expected return on the market (E(Rm)) using the Capital Asset Pricing Model (CAPM), we make use of the provided beta (ß) and expected return (E(Ri)) of each security. For Pete Corp., the formula based on CAPM is E(Ri) = Rf + ß(E(Rm) - Rf), and plugging in the values gives us 0.1323 = Rf + 1.25(E(Rm) - Rf). For Repete Co., plugging in the values gives us 0.0967 = Rf + 0.87(E(Rm) - Rf). By solving the set of these two linear equations, we can find both the expected return on the market and the risk-free rate (Rf).
To identify which investment is the safest or riskiest, we compare their betas. A lower beta indicates an investment is less volatile compared to the market and, thus safer. The highest expected return is reflected in the investment with the higher beta, however, this also comes with higher risk.
Estimating the Bond's Price
When a bond's interest rate is less than the current market interest rate, the bond's price will be discounted. For example, if a bond will pay $1,080 in one year, and the current market interest rate is 12%, the present value of the bond's payment is calculated using the formula PV = Expected Payment / (1 + Market Interest Rate). Therefore, the bond price would be calculated as $964.
Black Diamond Company produces snow skis. Each ski requires 2 pounds of carbon fiber. The company’s management predicts that 6,400 skis and 7,400 pounds of carbon fiber will be in inventory on June 30 of the current year and that 164,000 skis will be sold during the next (third) quarter. A set of two skis sells for $440. Management wants to end the third quarter with 4,900 skis and 5,400 pounds of carbon fiber in inventory. Carbon fiber can be purchased for $13 per pound. Each ski requires 0.5 hours of direct labor at $18 per hour. Variable overhead is applied at the rate of $8 per direct labor hour. The company budgets fixed overhead of $1,796,000 for the quarter. Required:
1. Prepare the third-quarter production budget for skis.
2. Prepare the third-quarter direct materials (carbon fiber) budget; include the dollar cost of purchases.
3. Prepare the direct labor budget for the third quarter.
4. Prepare the factory overhead budget for the third quarter.
Answer:
1. Production budget for third quarter for skis - 162,500 skis
2. Direct materials budget for Carbon Fiber for quarter 3 - 323,000 pounds
Cost of carbon Fiber purchases - $ 4,199,000
3. Direct Labor budget for quarter 3 - $ 1,462,500
4. Factory overhead budget for quarter 3 - $ 2,446,000
Explanation:
Computation of Production budget for quarter 3 for skis
Closing inventory- skis end of quarter 3 4,900 skis
Add: Sales for quarter 3 - skis 164,000 skis
Less: Opening inventory - skis ( 6,400) skis
Production for skis in units 162,500 skis
Computation of direct material budget for quarter 3
Closing inventory Carbon fiber 5,400 pounds
Add: Consumption of Carbon fiber in production
162,500 skis * 2 pounds 325,000 pounds
Less: Closing inventory Carbon fiber ( 7,400) pounds
Direct Materials carbon Fiber Budgeted Purchases 323,000 pounds
Cost of Carbon Fiber Purchases ($ 13*323,000 pounds) $ 4,199,000
Computation of direct labor budget for quarter 3
Production of skis for quarter 3 162,500 skis
Direct Labor hours per unit 0.5 hours
Cost per Direct Labor Hours $ 18 per hour
Total Direct Labor Budget (162,500 skis* 0.5 hours * $ 18 ) $ 1,462,500
Computation of Factory overhead budget for quarter 3
Production of skis for quarter 3 162,500 skis
Variable costs $ 8 per labor hours ( 81,250 hours * $ 8) $ 650,000
Fixed overhead per quarter $ 1,796,000
Total overhead for quarter 3 $ 2,446,000
Answer:
June 30:
estimated inventory of skis = 6,400
estimated inventory of carbon fiber = 7,400
164,000 skis will be sold during next quarter
each pair of skis sells for $440
Inventory for September 30:
estimated inventory of skis = 4,900
estimated inventory of carbon fiber = 5,400
cost of carbon fiber = $13 per pound x 2 = $26 per ski
direct labor = $9 per ski
variable overhead per ski = $4
fixed overhead = $1,796,000
1 ) Production budget:
expected sales 164,000 units
- beginning inventory 6,400 units
+ ending inventory 4,900 units
budgeted production 162,500 units
2) Materials budget
budgeted production 162,500 units
materials required per unit 2 pounds
total materials need for Px 325,000 lbs.
+ lbs. ending inventory 5,400 lbs.
total materials needed 330,400 lbs.
- beginning inventory 7,400 lbs.
purchase requirement 323,000 lbs.
cost per pound $13
total materials budget $4,199,000
3) Direct labor budget
budgeted production 162,500 units
direct labor per unit 0.5 hours
total direct labor hours 81,250 hours
cost per direct labor hour $18
total direct labor budget $1,462,500
4) Factory overhead budget
total direct labor hours 81,250 hours
cost per direct labor hour $8
total factory overhead $650,000
fixed overhead $1,796,000
total factory overhead budget $2,446,000
Identifying cash flows (LO 1) Mighty Vita produces a wide range of herbal supplements sold nationwide through independent distributors. In response to an increasing demand for its products, the company is considering the purchase of a new packaging machine to replace the seven-year-old machine currently in use. The new machine will cost $160,000, and installation will require an additional $15,000. The machine has a useful life of 10 years and is expected to have a salvage value of $8,000 at that time. The variable cost to operate the new machine is $10 per carton compared to the current machine's variable cost of $10.10 per carton, and Mighty Vita expects to pack 250,000 cartons each year. If the new machine is purchased, Mighty Vita will avoid a required $11,050 overhaul of the current machine in three years. The current machine has a market value of $12,850. Identify the amount and timing of all cash flows related to the acquisition of the new packaging machine. Cash Flow Timing Amount Purchase price $ Installation Salvage of old equipment Salvage of new equipment Variable cost savings Avoided overhaul
Answer:
Mighty Vita
Cashflow and timing
Year 0. Machine cost = -$160,000 (outflow)
Year 0. Set up costs = -$15,000 (outflow)
Year 0. Salvage of Old equipment = $12,850 (inflow)
Year 3. Savings on Overhaul of old machine = $11,050 (inflow)
Year 1 - 10. Variable Costs Savings = ($0.10 x 250,000) = $25,000 (inflow)
Year 10. Salvage value = $8,000 (inflow)
Karim Corp. requires a minimum $8,000 cash balance. Loans taken to meet this requirement cost 1% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $8,400, and the company has no outstanding loans. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) follow. July August September Cash receipts $ 20,000 $ 26,000 $ 40,000 Cash payments 28,000 30,000 22,000 Prepare a cash budget for July, August, and September. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.)
Answer and Explanation:
The preparation of cash budget for July, August and September is shown below:-
July August September
Beginning cash balance $8,400 $8,000 $8,000
Add:
Cash receipts $20,000 $26,000 $40,000
Total cash available $28,400 $34000 $48000
Less:-
Cash payments $28,000 $30,000 $22,000
Less:-
Interest on bank loan 0 $76 $117
Preliminary cash balance $400 $3,924 $25,883
Additional loan(loan repayment) $7,600 $4,076 -$11,676
Ending cash balance $8,000 $8,000 $14,207
Loan balance
Loan balance -Beginning of month 0 $7,600 $11,676
Additional loan(loan repayment) $7,600 $4,076 -$11,676
loan balance-end of month $7,600 $11,676 0
Working note
Interest = $7600 × 1% = $76
Interest = $11,676 × 1% = $117
Therefore for making cash budget we simply added all the receipts and less all the payments.
A monthly cash budget for Karim Corp is prepared by tracking the beginning balance, forecasted receipts, forecasted payments, any necessary loans, and interest, and then calculating the ending balance. For July and August, loans are necessary to maintain the $8,000 minimum balance. In September, a surplus allows repayment of the loans.
Explanation:For the cash budget, let's go month by month July begins with a cash balance of $8,400. Adding the forecasted receipts of $20,000 and subtracting the forecasted payments of $28,000 leaves us with an ending balance of $400. However, Karim Corp requires a minimum balance of $8,000, so you will have to take out a loan for $7,600 to meet this requirement. The loan costs 1% interest per month or $76 for July.
Moving on to August, we begin with our balance of $8,000 (the loaned amount). We add receipts of $26,000 and subtract payments of $30,000, leaving a balance of $4,000. Again, we need to maintain a balance of $8,000, so we need another loan. This time the loan is for $4,000, and the interest cost is $40. Adding this to the July interest gives a total interest cost of $116.
In September, we start with our balance of $8,000, add receipts of $40,000 and subtract payments of $22,000. This gives us an ending balance of $26,000. With this surplus, we can pay off the total loan amount of $11,600 (loans of $7,600 and $4,000 plus the total interest of $116). This leaves us with a final September balance of $14,234.
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The Welding Department of Sunland Company has the following production and manufacturing cost data for February 2020. All materials are added at the beginning of the process. Manufacturing Costs Production Data Beginning work in process Beginning work in process 14,800 units, 1/10 complete Materials $18,500 Units transferred out 55,400 Conversion costs 14,760 $33,260 Units started 51,400 Materials 239,680 Ending work in process 10,800 units, 1/5 complete Labor 67,000 Overhead 62,140 Prepare a production cost report for the Welding Department for the month of February.
Answer:
Explanation:
The file attached shows all the necessary explanation. I hope it helps. Thank you
Manganese Company makes frames. A customer wants to place a special order for 750 frames in green with the company logo painted on the frame, to be priced at $60 each. Normally, Manganese would charge $100 per frame for this type of order. Manganese figures that wood and glass will cost $15 per frame, variable overhead (machining, electricity) is $5 per frame, direct labor is $11.5 per frame, and one setup will be required at $1,500 per setup. The set-up charge costs are 100% labor. Currently, the workers needed to set up for and make the frames are working at Manganese. Their wages will be paid whether or not the special order is accepted. Manganese’s policy is to avoid layoffs to the extent possible. If Manganese accepts the special order, by how much will operating income increase or decrease?
Final answer:
The operating income of Manganese Company will increase by $21,375 if it accepts the special order of 750 frames at $60 each, given that setup costs are sunk and the workers' wages are unaffected by the order.
Explanation:
To determine how much the operating income will increase or decrease if Manganese Company accepts the special order, we need to analyze the relevant costs and revenues associated with the order. The total revenue from the special order would be 750 frames × $60/frame, while total variable costs would be the sum of wood and glass costs, variable overhead, and direct labor, all multiplied by 750 frames. Since the setup cost is a sunk cost because the workers' wages will be paid whether or not the special order is accepted, it should not be included in the calculation.
Calculation
Total Revenue:
750 frames × $60/frame = $45,000
Total Variable Costs:
(Wood and glass $15/frame + Variable overhead $5/frame + Direct labor $11.5/frame) × 750 frames = $23,625
Operating Income Increase:
Total Revenue - Total Variable Costs = $45,000 - $23,625 = $21,375
The operating income will increase by $21,375 if the special order is accepted.
Turrubiates Corporation makes a product that uses a material with the following standards: Standard quantity 7.9 liters per unit Standard price $ 2.40 per liter Standard cost $ 18.96 per unit The company budgeted for production of 3,700 units in April, but actual production was 3,800 units. The company used 30,700 liters of direct material to produce this output. The company purchased 20,000 liters of the direct material at $2.5 per liter. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for April is:
The materials quantity variance for April is an unfavorable variance of -$1,632, calculated by taking the actual quantity of materials used minus the standard quantity for actual production and multiplying by the standard price per unit.
The materials quantity variance is the difference between the standard quantity of materials that should have been used for the actual production and the actual quantity of materials used, multiplied by the standard price per unit. First, we need to calculate the standard quantity of materials for the actual production. Since the standard quantity is 7.9 liters per unit and the actual production was 3,800 units, the standard quantity is 7.9 liters/unit imes 3,800 units = 30,020 liters.
Now, we can calculate the variance. The actual quantity used was 30,700 liters. Therefore, the materials quantity variance is (30,020 liters - 30,700 liters) imes $2.40/liter = (-680 liters) imes $2.40/liter = -$1,632. Hence, the company used 680 liters more than the standard quantity, leading to a $1,632 unfavorable variance because more materials were consumed than expected at the standard cost.
Assume the market for cell phones is an oligopoly. Further assume that cell phone consumption and production generate no negative externalities. Imagine that all the companies in the oligopoly agree to collude and charge a single price for their cell phones.
Which of the following is true?
A. This agreement is in the best interest of society because the price of cell phones will be higher than if there had been no collusive agreement.
B. This agreement is in the best interest of society because the quantity of cell phones sold will be significantly less than the quantity that would be sold if the cell phone market were perfectly competitive
C. This agreement is not in the best interest of society, because there will be less competition and the price of cell phones will be significantly above marginal cost.
D. This agreement is not in the best interest of society, because there will be less competition and the price of cell phones will be significantly below marginal cost.
Answer:
D. This agreement is not in the best interest of society, because there will be less competition and the price of cell phones will be significantly below marginal cost.
Explanation:
If the market for cell phones is an oligopoly market(Oligopoly market is a market situation where few firms are dominating the market), and the consumption and production of cell phone generate no negative externalizes and the major companies desired to collude and charge a single price for their product then this agreement is not in the best interest of society, because there will be less competition and the price of cell phones will be significantly below marginal cost.
Use the Washington Post article Why We've Been Hugely Underestimating the Overfishing of the Oceans to answer the question. Which statement would best explain Daniel Pauly's prediction in the last paragraph of the article regarding the change in catch size in the future? Demand for fish is decreasing, so lower prices are driving suppliers from the market. Fish are a public good and best provided by the government instead of a market. The supply of fish is increasing at a decreasing rate, which is leading to more sustainable fishing practices. Fish are a common resource and susceptible to the phenomenon known as tragedy of the commons.
Answer & Explanation:
Fish is a common resource not a public good because it is subject to rivalry in consumption.Tragedy of commons results when property right aren't assigned for the common resource.
Daniel Pauly's prediction is that fish is a common resource susceptible to the tragedy of the commons, where people overfish to maximize profits.
What does this lead to?This leads to the depletion of the resource, which Pauly predicts will happen in the future.
However, other statements are not as accurate. Demand for fish is not decreasing, and the supply is increasing at a decreasing rate, but this does not lead to sustainable fishing practices. Pauly's prediction implies that catch size will continue to decline due to the tragedy of the commons, a serious issue that must be addressed to ensure ocean sustainability.
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Riverbed Company designated Jill Holland as petty cash custodian and established a petty cash fund of $236. The fund is reimbursed when the cash in the fund is at $31, which it is. Petty cash receipts indicate funds were disbursed for office supplies $94 and miscellaneous expense $89. Prepare journal entries for the establishment of the fund and the reimbursement
To establish the petty cash fund, debit petty cash and credit cash. When the fund is reimbursed, debit the expenses (office supplies and miscellaneous expenses), the cash over and short (if any), and credit cash.
Explanation:The journal entries to establish the fund and the reimbursement would be as follows:
Firstly, when the Riverbed Company established the petty cash fund, the journal entries would be: Petty Cash $236, with the corresponding entry being Cash $236. This debits the petty cash and credits the cash, indicating the funding of the petty cash fund.When it's time to reimburse the fund, we add up the receipts to determine the total expenditure, which is $94 (office supplies) + $89 (miscellaneous expense) = $183. The entries would be: Office Supplies $94, Miscellaneous Expense $89, and Cash Over and Short $2 (because $236 - $31 - $183 = $22 which is the amount unaccounted for, this is considered a cash over and short), with the corresponding entry being Cash $205 (the amount to bring the petty cash back to the established limit of $236).Learn more about journal entries here:https://brainly.com/question/33762471
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You are a newspaper publisher. You are in the middle of a one-year rental contract for your factory that requires you to pay $500,000 per month, and you have contractual labor obligations of $1,000,000 per month that you can’t get out of. You also have a marginal printing cost of $0.35 per paper as well as a marginal delivery cost of $0.10 per paper. Instructions: Round your answers to 2 decimal places. a. If sales fall by 20 percent from 1,000,000 papers per month to 800,000 papers per month, what happens to the AFC per paper? It from $ per paper to $ per paper. b. What happens to the MC per paper? . c. What happens to the minimum amount that you must charge to break even on these costs? It from $ per paper to $ per paper.
Answer:
1) fixed cot increase to $1,875 from $1.5
2) the marginal contribution per paper do not change as the change in volume do not make a change in the variable cost nor sales price.
3)
minimum to break-even at 1,000,000 units = $1.95
at 800,000 units: $2.4375
Explanation:
rent expense 500,000
labor 1,000,000
total fixed 1,500,000
variable cost:
0.35 printing and 0.10 delivery = 0.45
Fixed cost:
1,500,000 / 1,000,000 = 1.5
new fixed cost:
1,500,000 / 800,000 = 1,875
to break even:
[tex]\frac{Fixed\:Cost}{Contribution \:Margin} = Break\: Even\: Point_{units}[/tex]
1,500,000 / (selling price - 0.45 variale cost) = 1,000,000
selling price: (1,500,000 + 0.45 x 1,000,000) / 1,000,000
selling price: 1.95
1,500,000 / (selling price - 0.45 variale cost) = 800,000
selling price: (1,500,000 + 0.45 x 800,000) / 800,000
selling price: 2,4375
On January 1, Year 1, Weller Company issued bonds with a $260,000 face value, a stated rate of interest of 10.00%, and a 10-year term to maturity. Weller uses the effective interest method to amortize bond discounts and premiums. The market rate of interest on the date of issuance was 8.00%. Interest is paid annually on December 31. Assuming Weller issued the bonds for $280,640, what is the carrying value of the bonds on the December 31, Year 3?
Answer:
The carrying value of the loan in year 3 is $269,119.18
Explanation:
The carrying of the bond in year 3 comprises the loan opening book value in year 3 plus interest calculated on the opening balance using the yield to maturity less the coupon payment calculated as a percentage of face value as computed in the attached excel file.
You would notice that the carrying values in years 1, 2 and 3 are $277,091.20,$273,258.50 and $269,119.18
Kindly find attached.
Marston Manufacturing Company is considering a project that requires an investment in new equipment of $3,600,000, with an additional $180,000 in shipping and installation costs. Marston estimates that its accounts receivable and inventories need to increase by $720,000 to support the new project, some of which is financed by a $288,000 increase in spontaneous liabilities (accounts payable and accruals).
The total cost of Martson's new equipment is ___________
Answer:
These are the missing multiple choices:
a. $3,780,000, b. $4,212,000, c. $720,000
The correct option is A,$3,780,000
Explanation:
The total cost of Martson's new equipment comprises of the invoice price of the equipment of $3,600,000 plus the cost of installation and shipping costs of $180,000.
The rationale for the shipping and installation is that costs of asset should include costs incurred in bringing the asset to its present location and condition such as installation and shipping costs.
The costs of the assets is $3,780,000($3,600,000+$180,000)
Cars from an online service were examined to see how fuel efficiency (highway mpg) relates to cost (in dollars). According to the regression equation, a used car that costs $13,000 is predicted to get about 30.24 miles per gallon. According to the data, the car got 35 miles per gallon. What is the value of the residual for this car?
Answer:
The correct answer is 4.76.
Explanation:
According to the scenario, the computation of the given data are as follows:
Actual value = 35 Miles
Predicted value = 30.24 Miles
So, we can calculate the residual value of the car by using following formula:
Residual Value = Actual Value - predicted value from independent variables
By putting the value in the formula, we get
Residual value = 35 - 30.24
= 4.76
Bond Premium, Entries for Bonds Payable Transactions Campbell Inc. produces and sells outdoor equipment. On July 1, Year 1, Campbell issued $32,000,000 of 10-year, 13% bonds at a market (effective) interest rate of 11%, receiving cash of $35,824,150. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: If an amount box does not require an entry, leave it blank. 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) 3. Determine the total interest expense for Year 1. Round to the nearest dollar. $ 4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? 5. Compute the price of $35,824,150 received for the bonds by using Exhibit 5 and Exhibit 7. (Round to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences. Present value of the face amount $ Present value of the semi-annual interest payments $ Price received for the bonds $ Check My Work
Answer:
Using effective -rate:
Cash 35,824,122 debit
Bonds Payable 32,000,000 credit
premium on bonds payable 3,824,122 credit
--to record issuance--
Interest expense 1,970,326.73 debit
premium on BP 109,673.27 debit
cash 2,080,000 credit
--to record first interest payment--
Interest expense 1,976,358.76 debit
premium on BP 103,641.24 debit
interest payable 2,080,000 credit
--to record accrued interest to Dec 31th--
interest expense on first year:
1,970,326.73 + 1,976,358.76 = 3.946.685,49
Using Straight line:
interest expense 1.888.793,9 debit
premium on BP 191.206,1 debit
cash 2,080,000 credit
--to record first interest payment--
interest expense 1.888.793,9 debit
premium on BP 191.206,1 debit
interest payable 2,080,000 credit
--to record accrued interest for the second payment--
total interest expense:
1.888.793,9 + 1.888.793,9 = 3.777.587,8
4) Yes as investor will be willing to purchase at a higher price until get the market yield
5)
PV coupon payment $ 24,856,795.5687
PV maturity $ 10,967,326.8265
Total $ 35,824,122.3952
Explanation:
Present value of the bond is the discounted value of the coupon payment and maturity.
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 2,080,000.000
time 20
rate 0.055
[tex]2080000 \times \frac{1-(1+0.055)^{-20} }{0.055} = PV\\[/tex]
PV $24,856,795.5687
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 32,000,000.00
time 20.00
rate 0.055
[tex]\frac{32000000}{(1 + 0.055)^{20} } = PV[/tex]
PV 10,967,326.83
PV c $24,856,795.5687
PV m $10,967,326.8265
Total $35,824,122.3952
Then we solve for the effective rate doing carrying value times market:
$35,824,122.3952 x 0.055 = 1,970,326.73
And the cash outlay:
32,000,000 x 0.065 = 2,080,000 debit
The difference is the amortization on premium
The striaght-line will distribute the premium over time equally:
3,824,122 / 20 = 191.206,1
this will be subtracted from the cash outlay to determinatethe interest expense.
The bathtub theory of operations management is being promoted as the next breakthrough for global competitiveness. The factory is a bathtub with 60 gallons of capacity. The drain is the outlet to the market and can output 5.5 gallons per hour when wide open. The faucet is the raw material input and can let material in at a rate of seven gallons per hour. Now, to test your comprehension of the intricacies of operations (assume the bathtub is empty to begin with): a-1. What is the maximum rate (gallons per hour) at which the market can be served if all valves are set to maximum? (Round your answer to 1 decimal place.) a-2. If the faucet is running at maximum and the drain is wide open, in how many hours will the bathtub completely fill and start to overflow? (Round your answer to 1 decimal place.) b. Suppose that instead of a faucet, a eight-gallon container is used for filling the bathtub (assume a full container is next to the tub to begin with); it takes two hours to refill the container and return it to the bathtub. What is the average output rate (gallons per hour)? (Round your answer to 1 decimal place.)
Answer:
Explanation
question solve below
The maximum rate the market can be served is determined by the maximum output which is 5.5 gallons per hour. If the faucet and drain are working at maximum capacity, the bathtub will start to overflow after 40 hours. When filling with an eight-gallon container that takes two hours to refill, the average output rate is 4 gallons per hour.
Explanation:The operations management scenario involving the 'bathtub theory' can be understood in terms of rate of input (faucet), storage capacity (bathtub) and rate of output (drain).
For question a-1, the maximum rate at which the market can be served is equivalent to the rate at which the drain (outlet to the market) can operate. Given that the drain can output a maximum of 5.5 gallons per hour, the maximum rate at which the market can be served is 5.5 gallons per hour.
For question a-2, with the drain wide open (5.5 gallons per hour) and the faucet running at maximum (7 gallons per hour), the bathtub will start to fill because the input rate is greater than the output rate. The difference between the input and output rate is 7 - 5.5 = 1.5 gallons per hour. Therefore, the tub will start to overflow after 60 (total capacity) divided by 1.5 (rate of increase) equals 40 hours.
For question b, if we use an eight-gallon container for filling and it takes two hours to refill and return it to the bathtub, the average output rate is 8 gallons per 2 hours, or 4 gallons per hour.
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Farmer and Taylor formed a partnership with capital contributions of $250,000 and $300,000, respectively. Their partnership agreement calls for Farmer to receive a $90,000 per year salary. The remaining income or loss is to be divided equally. Assuming net loss for the current year is $25,000, the journal entry to allocate the net loss is:
a. Debit Income Summary, $31,000; Debit Farmer, Capital, $35,500; Credit Taylor, Capital, $66,500.
b. Debit Income Summary, $31,000; Credit Farmer, Capital, $15,500; Credit Taylor, Capital, $15,500.
c. Debit Taylor, Capital, $66,500; Credit Income Summary, $31,000; Credit Farmer, Capital, $35,500.
d. Debit Income Summary, $31,000; DebitTaylor, Capital, $35,500; Credit Taylor, Capital, $66,500.
e. Debit Income Summary, $31,000; Credit Taylor, Capital, $15,500; Credit Farmer, Capital, $15,500.
Answer:
Taylor's capital $57,500
To Income summary $25,000
To Farmer's capital $32,500
(Being the allocation of the net loss is recorded)
Explanation:
Before passing the journal entry we need to do the calculations which is shown below:
Since the net loss for the current year is $25,000
And, the amount receiver per year is $90,000
So , the total amount is
= $25,000 + $90,000
= $115,000
Now it is equally dividend i.e $57,500 each
So, the farmer amount credited by
= $90,000 - $57,500
= $32,500
And, the taylor account debited by $57,500
So, the journal entry is
Taylor's capital $57,500
To Income summary $25,000
To Farmer's capital $32,500
(Being the allocation of the net loss is recorded)
This is the answer but the same is not provided in the given options
Which of the following best demonstrates a key metric in the innovation category of a balanced scorecard? Multiple Choice Satisfying faculty and staff Approaching donors to cover current operational expenses Increasing the number of students Collaborating with a community-based college Developing new course offerings
Answer:
D. Developing new course offerings.
Explanation:
The balanced scorecard of innovation can be measured based on four key metrics which border on input, processes, outputs, and outcome. Organizations want to improve the way they are seen by their customers. Different organizations have to develop scorecards that suit them.
For an educational institution, developing new course offerings is an innovative idea which can improve the value the school in question has to offer.
The balanced scorecard has four categories: financial, customer, internal process, innovation. Within the innovation category, the key metric that would best demonstrate innovation is 'Developing new course offerings', as it shows ability to learn, improve and innovate.
Explanation:The balanced scorecard is a system of performance indicators that provides a rounded view of an organization's performance. It comprises of four categories: financial, customer, internal process, and learning and growth which is sometimes referred to as innovation.
From the multiple choices given, the best demonstration of a key metric in the innovation category of a balanced scorecard would be: 'Developing new course offerings'. The innovation category typically captures the ability of the organization to learn, improve and change - innovate - to meet its mission, goals, and demands in its environment. Therefore, developing new course offerings align with the innovation category as it embodies creating something new and different, and implies a commitment to continued learning and growth.
Metrics in this category usually measure things like new programs or services launched, improvement in processes, or staff learning new skills.
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Suppose that solar-powered car technology advances to the point that solar-powered cars become affordable for the average consumer. Which type of externality is likely to result from a consumer's decision to purchase a solar-powered vehicle instead of a gas-powered vehicle, and how does it arise? This decision generates a negative externality because companies that do not produce solar-powered cars will be put out of business. positive externality because the replacement of gas-powered vehicles with solar-powered vehicles will result in less environmental pollution. positive externality because individuals can use the money they save on gasoline to help the local community. negative externality because including new technology in the cars will drive up the market price. Suppose the government is interested in moving the market closer to the socially optimal quantity. Which policy would likely result in the desired outcome? a subsidy to consumers who choose to purchase solar-powered vehicles granting one firm monopoly rights to produce solar-powered vehicles a new tax levied on the makers of solar-powered cars a price floor above the observed average price for a solar-powered car
Answer:
This decision generates a positive externality because the replacement of gas-powered vehicles with solar-powered vehicles will result in less environmental pollution.
A subsidy to consumers who choose to purchase solar-powered vehicles.
Explanation:
Positive externality is when the benefits of economic activities to third parties exceeds the costs. If consumers switch to solar powered cars, the reduced population is a benefit to third parties. Thus, the switch causes postive externality.
One way the government can encourage the purchase of solar powered cars is to grant subsidies to consumers. Subsidies reduces the cost of purchase of the solar powered cars and encourages consumers to purchase the cars
I hope my answer helps you
1. The correct option is b. The type of externality is likely to result is This decision generates a positive externality because the replacement of gas-powered vehicles with solar-powered vehicles will result in less environmental pollution.
2. The correct option is a. The policy would likely result in the desired outcome is a subsidy to consumers who choose to purchase solar-powered vehicles.
1. Suppose that solar-powered car technology advances to the point that solar-powered cars become affordable for the average consumer.
b. This decision generates a positive externality because the replacement of gas-powered vehicles with solar-powered vehicles will result in less environmental pollution.
Positive Externality:
When consumers choose solar-powered cars over gas-powered ones, they reduce the demand for fossil fuels and decrease emissions, which benefits the environment. This is a positive externality because the benefits extend beyond the individual consumer to society as a whole, including improved air quality and reduced greenhouse gas emissions.2. Suppose the government is interested in moving the market closer to the socially optimal quantity.
a. A subsidy to consumers who choose to purchase solar-powered vehicles
Subsidy to Consumers: Providing a subsidy to consumers for purchasing solar-powered vehicles can help to increase their adoption. By lowering the effective price of solar-powered cars, the government encourages more consumers to choose them over gas-powered vehicles. This helps move the market closer to the socially optimal quantity by aligning individual incentives with the positive externalities created by reduced pollution and environmental benefits.Other Options:
Granting Monopoly Rights (b): This could reduce competition and potentially increase prices, which is not beneficial for achieving the socially optimal quantity.New Tax (c): A tax on solar-powered car makers might discourage production and hinder the adoption of solar-powered vehicles.Price Floor (d): Setting a price floor above the average price could result in a surplus of cars and potentially drive up costs, which does not promote the desired outcome of increasing adoption.The complete question is-
1. Suppose that solar-powered car technology advances to the point that solar-powered cars become affordable for the average consumer.
Which type of externality is likely to result from a consumer's decision to purchase a solar-powered vehicle instead of a gas-powered vehicle, and how does it arise?
a. This decision generates a negative externality because companies that do not produce solar-powered cars will be put out of business.
b. This decision generates a positive externality because the replacement of gas-powered vehicles with solar-powered vehicles will result in less environmental pollution.
c. This decision generates a positive externality because individuals can use the money they save on gasoline to help the local community.
d. This decision generates a negative externality because including new technology in the cars will drive up the market price.
2. Suppose the government is interested in moving the market closer to the socially optimal quantity.
Which policy would likely result in the desired outcome?
a. a subsidy to consumers who choose to purchase solar-powered vehicles
b. granting one firm monopoly rights to produce solar-powered vehicles
c. a new tax levied on the makers of solar-powered cars
d. a price floor above the observed average price for a solar-powered car
Your investment portfolio consists of $15 comma 000 invested in only one stocklong dashAmazon. Suppose the risk-free rate is 5 %, Amazon stock has an expected return of 12 % and a volatility of 40 %, and the market portfolio has an expected return of 10 % and a volatility of 18 %. Under the CAPM assumptions, a. What alternative investment has the lowest possible volatility while having the same expected return as Amazon? What is the volatility of this investment? b. What investment has the highest possible expected return while having the same volatility as Amazon? What is the expected return of this investment? Hint: Make sure to round all intermediate calculations to at least five decimal places.
Answer:
a)
The CAPM hypothesis states that the effective market is utilized place in the market and has the maximum eminent expected return of any assortment for a given randomness and the smallest variability for a assumed expected return. By allotment utilized place in the market assortment, you can achieve a standard return,
Thus,
Expected Rate of Return = [Risk free Rate + Beta × (Market Risk - Risk free Rate)]
Beta = [Expected Rate of Return – Risk Free Rate] / [Market Risk - Risk free Rate]
Beta = [12% - 5%] / [10% -5%]
Beta = 7/5
Beta =1.4
The final possible instability while taking the same estimated rate of return as Amazon is $21,000 ($15,000 × 1.4) which indicate that it borrows $6,000 ($21,000 - $15,000). Now the -$6,000 is specified as strength benefit. So the volatility of the asset is,
Volatility = [Volatility of Asset x Beta]
Volatility = [18% × 1.4]
Volatility = 0.252 or 25.20%
Therefore the volatility is less than the volatility of Amazon.
b)
The market share has a instability of "n". The corresponding instability of Amazon will be 2.22 (40%/18%). So the assortment with the most notable predictable give back that has a faint variability from Amazon is $33,333.33 ($15,000x 2.22) which will be the market assortment and it also uses $18,333.33 ($33,333.33 - $15,000). Here the -$18,333.33 is specified as strength asset. So the return is,
Expected Return = [Risk free Rate + Beta × (Market Risk – Risk free Rate)]
Expected Return = [5%+ 122 × (10% - 5%)]
Expected Return = [5%+ 122 × 5%]
Expected Return = [0.05+0.111111]
Expected Return = 0.161111 or1 6.11%
Therefore the volatility is higher than the expected return of Amazon.
Donald and Hanes shared net income and losses in the ratio of 3:2, respectively. The partners agreed to admit May to the partnership with a 35% interest in partnership capital and net income. May invested $100,000 cash, and no goodwill was recognized. What is the new total balance of the partnership accounts?
Answer: Donald - $176,000, May $100,000 and Hanes $84,000.
For a total of $360,000
Explanation:
The question was incomplete so I took the liberty of attaching the original question.
From the question, we see that the total amount becomes,
= 200,000 + 100,000 + 100,000
= $400,000
However, May was supposed to invest enough to give him 35% which would have been,
= 35% * 400,000
= $140,000
This means that May put in $40,000 less (140,000 - 100,000)
This $40,000 must therefore be withdrawn by the 2 other partners to balance it off.
They shall be withdrawn in the original proportion.
Donald
= 3/5 * 40,000
= $24,000
Hanes
= 2/5 * 40,000
= $16,000
Reducing their balanced we have,
Donald.
= 200,000 - 24,000
= $176,000
Hanes
= 100,000 - 16,000
= $84,000
Therefore the new total balance of the partnership accounts are Donald - $176,000, May $100,000 and Hanes $84,000.
For a total of $360,000
The type and frequency of security awareness training is contingent on the type of user. For instance, all users might be required to attend refresher training courses on an annual basis, whereas a vendor should be required to attend outside training only as outlined in the vendor-company contract.
a. True
b. False
The statement is true; The type and frequency of security awareness training depend on the type of user, with all users attending annual refresher courses and vendors attending training as outlined in their contracts.
The type and frequency of security awareness training indeed depend on the type of user. Different roles within an organization have varying levels of access and responsibilities, and thus, their training needs differ. For example, all users might need annual refresher training to stay updated on security topics, while vendors might only need to participate in training as specified in their contracts.
Security awareness training should cover important subjects such as:
Recent developments in security fieldsSocial engineering techniquesAnti-vulnerability best practicesRecognizing danger signs of phishing and other threatsCareful consideration must ensure that all employees, including maintenance and contract employees, receive current and updated training. Changes in processes must be communicated effectively to the affected employees, and their understanding evaluated to determine the need for further training.
Ultimately, recognizing the inherent vulnerabilities of human behavior is crucial, and being forewarned helps in being forearmed against security threats.
5 years ago you purchased a small apartment complex for $1 million. You borrowed $700,000 at 7% for 25 years with monthly payments. The original depreciable basis was $750,000 and you have used 27 1/2 years of straight line depreciation over the 5 year holding period. Assume no CAPX have been made since the property was acquired. If you sell the property today for $1,270,000 in a fully taxable sale. What will be the taxes due on sale
Final answer:
The taxes due on sale of the property are based on the capital gain and accumulated depreciation recapture. The capitalized gain is calculated to be $406,365, which would be subject to capital gains tax, and the depreciation recapture at a standard rate for real estate would be 25% of $136,365.
Explanation:
To calculate the taxes due on sale of the property, we must first determine the gain on sale and the depreciable basis after accounting for the amortization. The property was purchased for $1 million and sold for $1.27 million, resulting in a gross gain of $270,000. Over the 5 year holding period using straight-line depreciation, the depreciable basis of $750,000 is reduced by the depreciation taken ($750,000 divided by 27.5 years equals approximately $27,273 per year, multiplied by 5 years equals roughly $136,365 in total depreciation).
This means the adjusted basis of the property at the time of sale is $1,000,000 (purchase price) minus $136,365 (accumulated depreciation), which equals $863,635. Subtracting this from the sale price of $1,270,000, we get a capital gain of $406,365. This gain would be subject to capital gains tax, and the accumulated depreciation recaptured at a 25% rate for real estate. Without specific tax rates for the individual's income, we cannot calculate the exact tax amount, but we have the necessary information to do so with those rates.
Trio Company sells three products, Do, Ra, and Mi, for prices of $8, $7, and $5, respectively. They also offer combinations of the products for reduced overall prices. The following packages are available: (1) a package containing Do and Ra sells for $13.50, (2) a package of Do and Mi sells for $11.50, (3) a package containing Ra and Mi sells for $10.50, and (4) a package of all three products, Do, Ra, and Mi, sells for $17.00.
1. If Trio Company uses the incremental-revenues allocation method and has designated Ra as the primary product, the amount of revenues from a bundled package of all three products to be allocated to Ra would be
a. $7.00.
b. $6.80.
c. $5.95.
d. $4.25.
Answer:
Option A is correct one.
$7.00
Explanation:
Bundle package price (or) Suite price of all the 3 products is 17. This is more than the stand alone price of primary product Ra. Hence as per the rule of Incremental revenue allocation, 100% of stand alone revenue to be allocated to primary product in such case.
When using the incremental-revenues allocation method and designating Ra as the primary product, the amount of revenues from a bundled package of all three products to be allocated to Ra is $7.00.
The correct option is 'a'.
The student's question involves the allocation of revenues from bundled product packages using the incremental-revenues allocation method. Specifically, the student wants to know how much of the revenue from a package of all three products should be allocated to the product designated as the primary product (i.e., Ra).
In this scenario, the individual prices of Do, Ra, and Mi are $8, $7, and $5 respectively, and the package price of all three is $17.00. To determine the amount allocated to Ra, we subtract from the bundle price ($17.00) the sum of the incremental prices for the other two products based on their combination prices with Ra. This is calculated as follows:
Price of Do and Ra combined package: $13.50 (implies Do's incremental price: $13.50 - Ra's price).Price of Ra and Mi combined package: $10.50 (implies Mi's incremental price: $10.50 - Ra's price).After calculating the incremental prices of Do and Mi relative to Ra, sum these incremental amounts and subtract from the total package price to find the allocation to Ra:
Ra's allocation = $17.00 - (Incremental price of Do relative to Ra + Incremental price of Mi relative to Ra).Ra's allocation = $17.00 - (($13.50 - $7.00) + ($10.50 - $7.00)).Ra's allocation = $17.00 - ($6.50 + $3.50).Ra's allocation = $17.00 - $10.00.Ra's allocation = $7.00.The correct answer for the revenue allocated to Ra when applying the incremental-revenues allocation method for a package of Do, Ra, and Mi is $7.00 (option a).
Wildhorse Corporation has collected the following information after its first year of sales. Sales were $1,250,000 on 125,000 units, selling expenses $250,000 (40% variable and 60% fixed), direct materials $496,000, direct labor $34,900, administrative expenses $280,000 (20% variable and 80% fixed), and manufacturing overhead $358,000 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10% next year. Collapse question part (a) Compute (1) the contribution margin for the current year and the projected year, and (2) the fixed costs for the current year. (Assume that fixed costs will remain the same in the projected year.) (1) Contribution margin for current year $ Contribution margin for projected year $ (2) Fixed Costs
Answer:
1. Contribution margin for current year = $ 382,500
Contribution margin for projected year = $ 420,750
2. Fixed costs for current year - $ 451,400
Explanation:
Computation of fixed costs
Fixed selling expenses ( 60 % of $ 250,000) $ 150,000
Fixed administrative expenses ( 80 % of $ 280,000) $ 224,000
Fixed manufacturing overhead ( 30 % of $ 358,000) $ 77,400
Total Fixed costs $ 451,400
Computation of variable costs and contribution margin for current year
Direct Materials cost for current year $ 496,000
Direct Labor costs for current year $ 34,900
Variable selling expenses ( 40 % of $ 250,000) $ 100,000
Variable administrative expenses ( 20 % of $ 280,000) $ 56,000
Variable manufacturing overhead ( 70 % of $ 358,000) $ 180,600
Total Variable costs for current year $ 867,500
Contribution margin for current year =
Sales Revenue - Variable costs
$ 1,250,000 - $ 867,500 = $ 382,500
Computation of variable costs and contribution margin for projected year
Direct Material cost for projected year( $ 496,000 * 110 %)= $ 545,600
Direct Labor costs for projected year ( $ 34,900 * 110 %) = $ 38,390
Variable selling expenses ( 110 % of $ 100,000) $ 110,000
Variable administrative expenses ( 110 % of $ 56,000) $ 61,600
Variable manufacturing overhead ( 110 % of $ 180,600) $ 198,660
Total Variable costs for current year $ 954,250
Contribution margin for current year =
Sales Revenue - Variable costs
$ 1,375,000 ($ 1,250,000* 110 %) - $ 954,250 = $ 420,750
Answer:
Contribution Margin for current year $312,500
Total Fixed Costs 481,400
Contribution Margin for projected year $373,450
Fixed Costs for the projected year will remain same 481,400
Explanation:
Wildhorse Corporation
Sales $1,250,000
Direct materials $496,000,
Direct labor $34,900,
Manufacturing overhead
Variable (70% ) of $358,000= 250,600
Manufacturing Margin 468,500
Administrative expenses
Variable (20% )of $280,000= 56,000
Selling expenses
Variable (40% )of $250,000= 100,00
Total Variable Costs 910,500
Contribution Margin for current year $312,500
Total Fixed Costs 481,400
Selling expenses
Fixed 60% of ,$250,000= 150,00
Administrative expenses
Fixed 80% of $280,000= 224,000
Manufacturing overhead
Fixed 30% of $358,000 = 107,400
Wildhorse Corporation
Sales $1, 375,000
Costs / no of units = ( $1,250,000/125,000= $10 per unit )
( 125000+12500= 137,500 units * units price = $ 10 = 13750,000)
Total Variable Costs 910,500 for 125,000 units
Unit Variable Costs =910,500/ 125,000 units =$ 7.284
Total variable costs for 137,500 units = $ 1001550
Contribution Margin for projected year $373,450
We calculate the total variable costs and get the unit variable costs by dividing with the number of units given. Now we multiply it with additional 10 % increase in the units to get the Contribution Margin for projected year .
Fixed Costs for the projected year will remain same 481,400
Selling expenses
Fixed 60% of ,$250,000= 150,00
Administrative expenses
Fixed 80% of $280,000= 224,000
Manufacturing overhead
Fixed 30% of $358,000 = 107,400
Bonaime, Inc., has 7.4 million shares of common stock outstanding. The current share price is $62.40, and the book value per share is $5.40. The company also has two bond issues outstanding. The first bond issue has a face value of $71.4 million, a coupon rate of 7.4 percent, and sells for 91 percent of par. The second issue has a face value of $36.4 million, a coupon rate of 7.9 percent, and sells for 90 percent of par. The first issue matures in 18 years, the second in 10 years. The most recent dividend was $3.55 and the dividend growth rate is 5 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 40 percent.
Answer:
The missing requirement is found below:
What is the company’s cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Cost of equity % is 10.97%
What is the company’s aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Aftertax cost of debt % is 5.24%
What is the company’s equity weight? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)
Equity weight is 0.83
What is the company’s weight of debt? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)
Debt weight is 0.17
What is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
WACC % is 10.00%
Explanation:
share price =Do*(1+g)/r-g
g is the dividend growth rate of 5 %
Do is the dividend just paid $3.55
share price is $62.40
r is the cost of equity that is unknown
r=Do*(1+g)/share price+g
r=3.55*(1+5%)/62.40+5%
r=(3.7275 /62.40)+5%
r=10.97%
First debt:
=rate(nper,pmt,-pv,fv)
nper is the number of coupon interest the bond would pay 18*2=36
pmt is the semi-annual coupon interest=$1000*7.4%/2=$37
pv is the current price of the bond which is 91%*$1000=$910
fv is the face value of $1000
=rate(36,37,-910,1000)
rate=4.19% (semi-annually)
rate=8.38%(annually)
Second debt:
=rate(nper,pmt,-pv,fv)
nper is the number of coupon interest the bond would pay 10*2=20
pmt is the semi-annual coupon interest=$1000*7.9%/2=$39.5
pv is the current price of the bond which is 90%*$1000=$900
fv is the face value of $1000
=rate(20,39.5,-900,1000)
rate=4.73% (semi-annually)
rate=9.46%(annually)
Weights:
Debt 1 91%*$71,400,000 i.e $64,974,000.00
Debt 2 90%*$36,400,000 i,e $32,760,000.00
Total debt $ 97,734,000.00
Equity 7,400,000*62.4= $461,760,000.00
Total capital $559,494,000.00
debt weight $ 97,734,000.00/$559,494,000.00 =0.17
equity weight $461,760,000.00/ $559,494,000.00 =0.83
Cost of debt=8.38%*$64,974,000.00/$ 97,734,000.00 =5.57%
=9.46* $32,760,000.00/$ 97,734,000.00 =3.17%
cost of debt=8.74%
After tax cost of debt =pretax tax cost *(1-t)
t is tax rate at 40% 0r 0.40
after tax cost of debt=8.74%*(1-0.40)=5.24%
WACC=Ke*equity weight+Kd(after tax)*debt weight
WACC=(10.97%*0.83)+(5.24%*0.17)=10.00%
Over and Under, Inc. manufactures weaving looms.
Before the period began, the company prepared the following manufacturing overhead budget for an expected activity level of 15,000 direct labor hours (DL hrs):
Variable Manufacturing Overhead Costs $322,500
Fixed Manufacturing Overhead Costs $205,000
By the end of the period, the company noted that 3,000 fewer direct labor hours were logged than expected. The total actual manufacturing overhead costs incurred during the period was $545,000, of which, $325,000 was fixed.
1. Which of the following statements is correct for the above data?
A. The company’s flexible budget variance for total manufacturing overhead costs during the period equals $64,500.
B. The master budget variance related to fixed manufacturing overhead costs for the period equals $17,500.
C. The flexible budget variance for variable manufacturing overhead costs is favorable because fewer DL hrs were logged during production than expected.
D. The total volume variance can be calculated by multiplying$21.50 by the difference between the expected DL hrs and the actual DL hrs.
E. The volume variance for fixed manufacturing overhead costs is negative.
Answer:
The answer is C.
The flexible budget variance for variable manufacturing overhead costs is favorable because fewer DL hrs were logged during production than expected.
Explanation:
The flexible budget variance for manufacturing overhead =
(Actual DL hrs * OAR) - Actual Overhead
= ( 12,000* $21.50 ) - ( $545,000 - $325,000)
= $258,000 - $220,000
= $38,500 Fav.
You are the supervising engineer in the construction of an offshore oil drilling platform that is fabricated by welding stainless steel pipes in a climate in which the ambient temperature is 86 F. Quality control tests indicate that the weld is brittle, and hence, deemed defective. What is the problem in your professional opinion
Answer: this is to render a heat solution of about 1070 degree Celsius with water to quench, so as to retain the carbides solution in the defective steel for re use.
Explanation:
With the climate condition in the off shore oil drilling platform, it won't rake long for the fabricated steels to collapse and cause the loses of multiple lives and properties.
As an expert I will suggest we deconstruct the steels and use Austenitic stainless steel, because of its corrosion resistance.
We might as well sensitised the steels before use. Because the sensitisation occurs in the region that has seen temperature close to 600 and 900°C.
My possible solution to overcome this defect stated by the quality control and as a result spend less, is that we undergo a HEAT SOLUTION TREATMENT at a 1070°C followed by a water quench to help retain the carbides solution on a rapid cooling in those defective still, and also make it resistance to the climate condition of the area and also commence the project.
The brittleness of the weld on the offshore oil drilling platform likely stems from cold cracking, which can occur when hydrogen becomes trapped in the metal structure as it cools during welding. This issue can be mitigated by preheating the weld area or using a lower hydrogen process or filler material.
Explanation:In professional opinion, the problem with the weld being brittle, despite being performed in an ambient temperature of 86 F for an offshore oil drilling platform, likely has to do with a phenomenon known as cold cracking. Cold cracking is a major risk in welding, especially with high carbon and alloyed steels like stainless steel. It occurs when hydrogen, often introduced into the metal during welding, is trapped within the metal structure as it cools, creating pressure that can result in cracking. The brittleness of the weld suggests that this might be what's happening.
To prevent this, the weld area could be preheated before welding to slow the cooling rate and allow the hydrogen to escape before it becomes trapped. You could also use a lower hydrogen process or filler material.
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During the month of March, Olinger Company’s employees earned wages of $65,400. Withholdings related to these wages were $5,003 for Social Security (FICA), $7,664 for federal income tax, $3,168 for state income tax, and $409 for union dues. The company incurred no cost related to these earnings for federal unemployment tax but incurred $715 for state unemployment tax.-Prepare the necessary March 31 journal entry to record salaries and wages expense and salaries and wages payable. Assume that wages earned during March will be paid during April. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)Date Account Titles and Explanation Debit CreditMar. 31 -Prepare the entry to record the company’s payroll tax expense.Date Account Titles and Explanation Debit CreditMar. 31
Answer and Explanation:
The journal entries are shown below:
1. Salaries and Wages Expense $65,400
To Wages Payable $49,156
To Federal Withholding Payable $7,664
To FICA Payable $5,003
To State Withholding Payable $3,168
To Union Dues Payable $409
(Being the salaries and wages expense and salaries and wages payable is recorded)
2.
Payroll Tax Expense $5,718
To FICA Payable $5,003
To State Unemployment Payable $715
(Being the payroll expense is recorded)
During a recent lengthy strike at Morell Manufacturing Company, management replaced striking assembly line workers with office workers. The assembly line workers had been paid $18 per hour while the office workers are only paid $10 per hour. What is the most likely effect on the labor variances in the first month of this strike? Labor Rate Variance Labor Efficiency Variance A) Unfavorable No effect B) No effect Unfavorable C) Unfavorable Favorable D) Favorable Unfavorable
Answer: D) Favorable Unfavorable
Explanation:
To begin, it is worthy of note that in Variance, if something is said to be Favourable, it means a negative Variance because less resources than planned were spent. When it is Unfavourable, it means a positive balance variance.
Now, The formula for Labour Rate Variance is as follows,
LABOUR RATE VARIANCE=(ACTUAL RATE-STANDARD RATE)*ACTUAL HOURS WORKED
Seeing as the old workers were being paid $18, and the new office ones were paid $10, we can see that to be the actual rate was less than the standard rate. This would mean that there was a FAVOURABLE balance.
Labour Efficiency is calculated in a similar way,
LABOUR EFFICIENCY VARIANCE=(ACTUAL HOURS WORKED-STANDARD HOURS)*STANDARD RATE.
Now, these are Office workers not assemblyline workers. They do not have the experience to work in such a way that they produce as fast or as efficiently as their striking Assemblyline colleagues.
This would then mean that their actual hours will be MORE than the standard rate which can only lead to an UNFAVOURABLE BALANCE.
The most likely effect on the labor variances in the first month of the strike at Morell Manufacturing Company is unfavorable labor rate variance and favorable labor efficiency variance.
Explanation:The most likely effect on the labor variances in the first month of this strike is Option C) Unfavorable Favorable. The labor rate variance would be unfavorable because the new office workers are paid a lower wage of $10 per hour compared to the previous wage of $18 for the assembly line workers. However, the labor efficiency variance would be favorable because the management has replaced the striking workers with office workers who may be more productive and efficient, resulting in lower labor costs.
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Ware Co. produces and sells motorcycle parts. On the first day of its fiscal year, Ware issued $35,000,000 of five-year, 12% bonds at a market (effective) interest rate of 10%, with interest payable semiannually. Compute the following, presenting figures used in your computations: a. The amount of cash proceeds from the sale of the bonds. Use the tables of present values in Exhibit 5 and Exhibit 7. Round to the nearest dollar. $ b. The amount of premium to be amortized for the first semiannual interest payment period, using the interest method. Round to the nearest dollar. $ c. The amount of premium to be amortized for the second semiannual interest payment period, using the interest method. Round to the nearest dollar. $ d. The amount of the bond interest expense for the first year. Round to the nearest dollar.
Final answer:
The process for calculating cash proceeds, premium amortization, and bond interest expense involves understanding the relationship between the bond's coupon rate and the market interest rate, as well as applying the effective interest method for premium amortization. Without specific details and present value tables, numerical answers cannot be provided, but the conceptual methodology has been outlined.
Explanation:
The question involves calculating several financial metrics related to the issuance of a bond by Ware Co. not provided in the details but related to the context given. Typically, when a company issues bonds, the cash proceeds from the sale of these bonds depend on the relationship between the interest rate specified on the bond (coupon rate) and the prevailing market interest rate (also known as the effective or yield rate). If the market interest rate is lower than the coupon rate, the bonds are usually sold at a premium, and vice versa.
Without the specific tables of present values (Exhibit 5 and Exhibit 7) and exact formulas provided, general steps to calculate these amounts include:
Cash proceeds from the sale of bonds can be calculated by determining the present value of the future cash flows (interest payments and principal repayment) discounted at the market rate of interest at the time of issuance.
Premium amortization for the first semiannual period using the effective interest method involves calculating the interest expense based on the market rate of interest and comparing this to the actual interest paid based on the coupon rate. The difference adjusts the carrying amount of the bond.
For subsequent periods, the same method applies; however, the carrying amount of the bond changes as the premium is amortized over time.
The bond interest expense for the first year is calculated by applying the market rate of interest to the carrying amount of the bond at the beginning of each period.
Without exact figures and the present value tables, providing specific numerical answers is not feasible. However, these steps outline the conceptual approach.