Answer: The statement is TRUE.
Explanation: The theory of purchasing-power parity is an economic theory that tries to calculate the exchange rate between the currencies of two countries necessary so that the same basket of goods and services can be purchased in the currency of each one, that is, so that the purchasing power (or purchasing power) ) of both currencies is equivalent.
The fire chief of a medium-sized city has estimated that the initial cost of a new fire station will be $4 million. Annual upkeep costs are estimated at $300,000. Benefits to citizens of $550,000 per year and disbenefits of $90,000 per year have also been identified. Use a discount rate of 4% per year to determine if the station is economically justified by the conventional B/C ratio.
Answer: So B/C ratio = PW(B)/PW(C) = [tex]\frac{11500000}{11500000}[/tex]= 1
So economically there is no befit and no loss of new fire station.
Explanation:
Net annual benefit B = Benefit-Disbenefit = 550000-90000 = 460000
I = 4000000
O&M(Annual keep up cost) = 300000
i = 0.04
As n is not given so assuming this project to be perceptual.
P.V of perpetuity = [tex]\frac{A}{i}[/tex]
Now;
PW(B)=tex]\frac{460000}{0.04}[/tex] = $11500000
PW (C) = I +PW[tex]\times[/tex](O&M) = [tex]4000000+\frac{300000}{0.04}[/tex] = $11500000
So B/C ratio =[tex]\frac{PW(B)}{PW(C)}[/tex]=[tex]\frac{11500000}{11500000}[/tex] = 1
So economically there is no befit and no loss of new fire station.
SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the company’s products is grilled salmon in dill sauce with baby new potatoes and spring vegetables. During the most recent week, the company prepared 4,000 of these meals using 960 direct labor-hours. The company paid these direct labor workers a total of $9,600 for this work, or $10.00 per hour. According to the standard cost card for this meal, it should require 0.25 direct labor-hours at a cost of $9.75 per hour. Required: 1. According to the standards, what direct labor cost should have been incurred to prepare 4,000 meals? How much does this differ from the actual direct labor cost?
Final answer:
According to the standards, the direct labor cost should have been $9,750 to prepare 4,000 meals. The actual direct labor cost was $9,600, which is $150 less than the standard direct labor cost.
Explanation:
To calculate the direct labor cost that should have been incurred to prepare 4,000 meals, we can multiply the standard direct labor-hours per meal by the number of meals. According to the standard cost card, 1 meal should require 0.25 direct labor-hours, so 4,000 meals would require 1,000 direct labor-hours (4,000 x 0.25). Next, we can multiply the standard labor cost per hour by the number of direct labor-hours to get the standard direct labor cost. According to the standard, the labor cost per hour is $9.75, so the standard direct labor cost would be $9,750 (1,000 x $9.75).
To find the difference between the standard and actual direct labor costs, we subtract the actual direct labor cost from the standard direct labor cost. The actual direct labor cost is given as $9,600. Subtracting this from the standard direct labor cost of $9,750 gives us a difference of -$150. This means that the actual direct labor cost is $150 less than the standard direct labor cost.
View each of the below-listed provisions that are often contained in bond indentures alone. Which of these provisions would tend to REDUCE the yield to maturity that investors would otherwise require on a newly issued bond?1. Fixed assets are used as security for a bond.2. A given bond is subordinated to other classes of debt.3. The bond can be converted into the firm's common stock.4. The bond has a sinking fund.5. The bond has a call provision.6. The indenture contains covenants that restrict the use of additional debt.A. 1, 3, 4, 6B. 1, 4, 6C. 1, 2, 3, 4, 6D. 1, 3, 4, 5, 6E. 1, 2, 3, 4, 5, 6
Final answer:
Provisions in a bond indenture impact the risk and therefore the yield required by investors. Provisions that secure the debt, allow conversion to stock, provide for a sinking fund, or limit additional debt issuance tend to reduce the required yield.
Explanation:
Bonds are debt securities that provide an avenue for corporations to raise capital. Bond provisions influence investor perception of risk, which in turn affects the yield to maturity that investors require. The yield to maturity is the total return anticipated on a bond if the bond is held until it matures. Let's examine the given bond provisions and their potential impact on yield to maturity:
Fixed assets as security (1) provide a guarantee which reduces risk, thereby likely reducing the yield required by investors.A subordinated bond (2) ranks lower in claim than other debts in the case of a liquidation, increasing risk and thus, typically requiring a higher yield.A convertible bond (3) allows investors to convert the bond into stock, often above the bond's nominal value, which is an attractive option that can reduce the required yield.A bond with a sinking fund (4) provides for periodic repayment before maturity, reducing risk and potentially the yield required.A bond with a call provision (5) can be retired early by the issuer, often in a lower interest rate environment, which increases risk for investors and the expected yield.Restrictive covenants (6) limit the issuer's ability to take on additional debt, protecting the bondholder's interests and possibly reducing the yield required.Considering the provisions that would tend to reduce the yield to maturity, we can conclude that options 1, 3, 4, and 6 would have this effect. Therefore, the correct choice of provisions is A. 1, 3, 4, 6.
A firm has fixed costs (FC) of $10,000. Its variable costs (VC) to produce 5,000 widgets are $2,000 and to produce 10,000 widgets are $3,000. What is the firm's total cost (TC) to produce 5,000 widgets?
Answer:
The firm's total cost (TC) to produce 5,000 widgets is $12,000.
Explanation:
Total Cost : It is the sum of Fixed cost and Variable cost
where,
Variable cost is the cost which is change when production level changes. while, fixed cost is the cost which is fixed whether production level change or not.
The following information is given in the question:
1. Fixed cost = $10,000
2. Variable cost for 5,000 widgets = $2,000
3. Variable cost for 10,000 widgets = $3,000
The formula for calculating Total Cost to produce 5,000 widgets is shown below:
Total cost = Fixed cost + Variable cost
= $10,000 + $2,0000
= $12,000
Since, the question is asking for only $5,000 widgets and in the given question, the variable cost is given for $5,000 widgets is $2,000 . So, this variable cost is used and for the fixed cost the amount will be same.
Thus, The firm's total cost (TC) to produce 5,000 widgets is $12,000.
6. A promoter: A. may have liability on the contracts he negotiates on behalf of the prospective corporation. B. does not hold any liability to third parties on preincorporation contracts. C. automatically becomes one of the initial directors of the corporation. D. is not liable on a preincorporation contract after the corporation’s adoption of the contract.
Answer:
The correct answer is A. may have liability on the contracts he negotiates on behalf of the prospective corporation.
Explanation:
The function of the promoter is basically to do a preliminary work incidental to the formation of a company, in which it is included the promotion, incorporation, and flotation, and this person is also in charge of soliciting people to invest money in the company, usually when the company is starting the business.
A grocery store chain recently rolled out a customer loyalty program that sends the customer a $5 coupon towards their next purchase for every $250 they spend at the store. This is an example of strategic use of bargaining power of suppliers True False
Answer:
False
Explanation:
The bargaining power of suppliers (Term of Michael Porter) is a force that shapes the competitive structure of a market.
It represents the way of put pressure by raising the prices or lowering the quality or quantity of the product. This power makes the buyer profits decrease.
In your case, this is a policy set to the customer, and it is not increasing the price, decreasing quantity or lowering the quality.
It is more policy to induct loyalty from the customer to purchase again from the grocery store.
A grocery store chain recently rolled out a customer loyalty program that sends the customer a $5 coupon towards their next purchase for every $250 they spend at the store. This is an example of strategic use of bargaining power of suppliers is the false statement.
Supplier bargaining power, to use Michael Porter's term, is a factor that affects how a market is competitively structured.
It stands for the method of applying pressure by raising prices or diminishing the product's quality or quantity. The buyer earnings fall as a result of this power. In this case, this is a customer-set policy; a price increase, a decrease in supply, or a drop in quality are not involved.
It is increasingly common practice to reward customers for their loyalty by having them make additional grocery purchases.
Thus, it is a false statement.
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On January 1, Puckett Company paid $2.01 million for 67,000 shares of Harrison’s voting common stock, which represents a 40 percent investment. No allocation to goodwill or other specific account was made. Significant influence over Harrison is achieved by this acquisition and so Puckett applies the equity method. Harrison distributed a dividend of $2 per share during the year and reported net income of $595,000. What is the balance in the Investment in Harrison account found in Puckett’s financial records as of December 31?
Answer:
The $2,114,000 is the balance in the Investment in Harrison account found in Puckett’s financial records as of December 31.
Explanation:
Given that,
Purchase amount in respect for 67,000 shares = $2,010,000
Investment percentage = 40%
Dividend = $2 per share
Net income = $595,000
Through these information which is shown above, we can calculate the balance in Investment in Harrison account. The steps for computation is shown below:
Step 1: Purchase amount
Step 2: Add Investment percentage income = Net income × Investment percentage
Step 3 : Less Dividend (Number of Shares × Dividend per share)
Now,
Purchase amount = $2,010,000
Add - $595,000 × 40% = $238,000
Less - 67000 × $2 = $134,000
So, the final amount is $2,114,000
Thus, the $2,114,000 is the balance in the Investment in Harrison account found in Puckett’s financial records as of December 31.
Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $85,400. The machine's useful life is estimated at 20 years, or 402,000 units of product, with a $5,000 salvage value. During its second year, the machine produces 34,200 units of product. Determine the machine’s second-year depreciation and year end book value under the straight-line method.
The machine’s second-year depreciation and year end book value under the straight-line method is $4020 and $77,360 respectively.
The straight line depreciation method is used by companies to calculate amortization and depreciation. It is good method to determine the loss of value of an asset over a given period.
Further ExplanationYou can calculate straight line depreciation by subtracting assets cost from expected salvage value and then divide the derived value by the expected number of years to be used.
This can be expressed as:
Initial cost – salvage value / useful life
From the given question,
Initial cost = $85,400 Salvage value = $5000 Useful life = 20If you substitute the values into the equation, then you have:
$85,400 - $5000 / 20
= $80400 / 20
= $4020
To determine the book value for the second year, then you should subtract the initial value from the derived value when you multiply the years (2) and the depreciation.
This can be expressed as:
Book value = Initial value - (years x depreciation)
= $85,400 - (2 x $4020)
= $77,360
Thus, the machine’s second-year depreciation and year end book value under the straight-line method is $4020 and $77,360 respectively.
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Sarita Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $67,000 https://brainly.com/question/14209516Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $85,400. https://brainly.com/question/13018775KEYWORDS:
ramirez companysalvage valuesecond - year depreciation yearstraight line methodbook valueuseful lifeThe machine’s second-year depreciation is $4,020 and the book value is $77,360.
The straight line depreciation method is used to determine the loss of value of an asset over a given period.
The formulae for straight line depreciation is [(Initial cost - Salvage value) / Useful life]Given question,
Initial cost = $85,400
Salvage value = $5000
Useful life = 20
Depreciation Expenses = [$85,400 - $5000 / 20]
Depreciation Expenses = $80400 / 20
Depreciation Expenses = $4,020
We have to subtract the initial value from the derived value when you multiply the years (2) and the depreciation to derive the Book value
The formulae for Book value is [Initial value - (Years x Depreciation)]Book value = $85,400 - (2 x $4020)
Book value = $85,400 - $8,040
Book value = $77,360
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LBC Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 3.0 hours of direct labor at the rate of $26.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June. The company plans to sell 49,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 610 and 170 units, respectively. Budgeted direct labor costs for June would be:
Answer:
The Budgeted direct labor costs for June would be $1,262,560
Explanation:
For computing the direct labor cost, first we have to calculate how many units of production is used. The equation is shown below :
Total Production Units = Ending finished goods inventories + sales units - opening finished goods inventories
= 170 + 49,000 - 610
= 48,560 units
Now, multiply these units with direct labor hour rate which equals to
= Units produced × direct labor hour rate
= 48,560 × $26.00
= $1,262,560
Thus, Budgeted direct labor costs for June would be $1,262,560
On September 30, World Co. borrowed $1,000,000 on a 9% note payable. World paid the first of four quarterly payments of $264,200 when due on December 30. In its income statement for the year, what amount should World report as interest expense?
Answer:
It would report 21,778 on interest expense
Explanation:
Because it is the first payment, we can use the compoun interest formula
[tex]Principal * (1+ r)^{time} = Amount[/tex]
[tex]$Amount - Principal = Interest Paid[/tex]
[tex]1,000,000 * (1+ 0.09)^{1/4} =1,021,778 [/tex]
[tex]1,021,778- 1,000,000= 21,778[/tex]
The rest of the cuota would be amortization of the principal
It is important to do not split the interest in four because the interest are decreasing over the course of the note life. That's because along with the interest accrued during the period World Co. is also paying a portion of the principal
The interest expense reported at the end of the year by World Co. would be $14,200, which is the interest portion of the first quarterly payment. Only this payment is considered as this is the only payment made in the year.
Explanation:The question asks for the amount that World Co. should report as an interest expense in its income statement for the year. World Co. borrowed $1,000,000 on a 9% note payable. This results in a total of $90,000 in interest for the year ( $1,000,000 * 0.09). Each quarterly payment includes both principal and interest. If the first payment was $264,200, subtracting the principal repayment ($1,000,000/4, which is $250,000), we get an interest payment of $14,200 ($264,200 - $250,000) for the first quarter. As World Co. only made a payment in the first quarter, the interest expense reported at the end of the year would be $14,200.
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Wiley Consulting purchased $7,800 worth of supplies and paid cash immediately. Which of the following general journal entries will Wiley Consulting make to record this transaction? Assume the company’s policy is to initially record prepaid and unearned items in balance sheet accounts.
Answer:
Supplies 7,800 debit
Cash 7,800 credit
Explanation:
It will increase their supplies valuation by the amount purchased, the suppliesexpense will be recognize over time by comparing the book value with the current existence at the end of the period.
Becasue it was paid, you use cash account.
George's Chemicals allocates overhead based on machine hours. Selected data for the most recent year follow. Estimated manufacturing overhead cost $235,300 Actual manufacturing overhead cost $244,800 Estimated machine hours 20,000 Actual machine hours 22,700 The estimates were made as of the beginning of the year, while the actual results were for the entire year. The predetermined manufacturing overhead rate per machine hour is closest to (Round your answer to the nearest cent.)
Answer:
Overehad Rate $11.765
Explanation:
[tex]\frac{Cost\: Of \:Manufacturing \:Overhead}{Cost \:Driver}= Overhead \:Rate[/tex]
Estimated manufacturing overhead cost $235,300
Estimated machine hours 20,000
Overehad Rate $11.765
This means for every hours the machine are working, 11.76 dollars of MOH are generated.
The question if for the predeterminated rate, all the actual data is irrelevant.
Remember : The overhead rate is done by the dividision of the cost over a cost driver, which generally is labor hours or cost or machine hours.
The predetermined manufacturing overhead rate per machine hour is calculated by dividing the estimated manufacturing overhead cost by the estimated machine hours, which in this case is $11.77 per machine hour.
The question is asking to calculate the predetermined manufacturing overhead rate per machine hour. To find this, we need to divide the estimated manufacturing overhead cost by the estimated machine hours.
The formula to calculate the predetermined overhead rate is:
Estimated Manufacturing Overhead Cost ÷ Estimated Machine Hours = Predetermined Overhead Rate
Using the data provided:
$235,300 ÷ 20,000 hours = $11.77 per machine hour
Therefore, the predetermined manufacturing overhead rate per machine hour is $11.77, rounded to the nearest cent.
At the beginning of the accounting period, Nutrition Incorporated estimated that total fixed overhead cost would be $50,600 and that sales volume would be 10,000 units. At the end of the accounting period actual fixed overhead cost amounted to $56,100 and actual sales volume was 11,000 units. Nutrition uses a predetermined overhead rate and a cost plus pricing model to establish its sales price. Based on this information the predetermined overhead rate is
Answer:
$ 5.06 per unit
Explanation:
Given data:
Estimated fixed overhead cost = $ 50600
Estimated sales volume = 10000 units
Actual fixed overhead cost = $ 56100
Actual sales volume = 11000 units
Now,
the predetermined overhead rate is given as:
Predetermined overhead rate = (Estimated Fixed Overhead Cost) / (Number of estimated sales Volume)
on substituting the values in the above formula, we get
Predetermined overhead rate = $ 50600 / 10000
or
Predetermined overhead rate = $ 5.06 per unit
I am buying a firm with an expected perpetual cash flow of $1,450 but am unsure of its risk. If I think the beta of the firm is 0, when the beta is really 1, how much more will I offer for the firm than it is truly worth? Assume the risk-free rate is 5% and the expected rate of return on the market is 20%. (Input the amount as a positive value.)
Answer:
Thus amount extra offered = $29,000 - $7,250 = $21,750
Explanation:
Calculating true worth of company
Cash flow = Rf + beta(Rm - Rf)
Where Cash flow = $1,450
Rf = Risk free rate of return = 5%
Rm = Rate of return of market = 20%
Calculating true worth of company
$1450 = 5% + 1 X (20% - 5%)
$1450 = 5% + 15%
$1450 = 20%
Value of company = $1450/20% = $7,250
In case value of Beta is taken as 0 then
$1450 = 5% + 0(20% - 5%)
$1450 = 5%
Value of company = $1450/5% = $29,000
Thus amount extra offered = $29,000 - $7,250 = $21,750
In this scenario, you would end up offering $19,333 more for the firm than its true worth if you wrongly assumed that the beta was 0 instead of 1.
Explanation:To solve this problem, we need to use the Capital Asset Pricing Model (CAPM) to calculate the expected return on the investment. The CAPM formula is the risk-free rate plus the beta times the difference between the market return and the risk-free rate.
If you underestimate the beta as 0, you would assume that the expected return is equal to the risk-free rate, which is 5%. Using the perpetuity formula (Perpetuity = Cash flow / Discount rate), the value of the firm would be $1,450 / 0.05 = $29,000.
However, with the real beta of 1, we should use the correct market risk rate, which is 20%. Using the CAPM, the correct discount rate would be 5% + 1 * (20% - 5%) = 15%. Thus, the true value of the firm would be $1,450 / 0.15 = $9,667.
Hence, if you believe the beta was 0 when it was actually 1, you would offer $29,000 - $9,667 = $19,333 more than the firm is truly worth.
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Analysis reveals that a company had a net increase in cash of $21,650 for the current year. Net cash provided by operating activities was $19,500; net cash used in investing activities was $10,750 and net cash provided by financing activities was $12,900. If the year-end cash balance is $26,250, the beginning cash balance was _______.
Answer:
the beginning cash balance was $4,600
Explanation:
Beginning Cash Flow + net increase in cash of for the current year =
Equals year-end cash balance
We put the know values:
beginning + $21,650 = $26,250
and now solve for the beginning cash balance:
beginning = $26,250 - $21,650 = $4,600
Resuming:
Always keep in mind the idea that account or balance have the following reasoning:
there is a begining balance
there are transaction or event that modifies them
and creaste a new or ending balance
beginning + increase - decrease = ending
you start the day with 4 apples (begining balance)
you end up with 7 apples (ending balance)
the change would be 3
beginning 4 + X = ending 7
The beginning cash balance was $4,600, calculated by subtracting the net cash movements from the year-end cash balance.
Explanation:To calculate the beginning cash balance of the company, we need to consider the net change in cash throughout the year in conjunction with the year-end cash balance. The net increase in cash for the year was $21,650, which gives us a starting formula: Beginning Cash Balance + Net Cash Provided by Operating Activities - Net Cash Used in Investing Activities + Net Cash Provided by Financing Activities = Year-End Cash Balance.
We can plug the provided numbers into this formula:
Net Cash Provided by Operating Activities: $19,500Net Cash Used in Investing Activities: -$10,750 (note the negative because this is cash used, not provided)Net Cash Provided by Financing Activities: $12,900Year-End Cash Balance: $26,250Using these figures, the formula transforms to:
Beginning Cash Balance + $19,500 - $10,750 + $12,900 = $26,250
Therefore:
Beginning Cash Balance = $26,250 - ($19,500 - $10,750 + $12,900)
Beginning Cash Balance = $4,600
The beginning cash balance was $4,600.
Clothing Emporium was organized on January 1, 2018. The firm was authorized to issue 100,000 shares of $5 par value common stock. During 2018, Clothing Emporium had the following transactions relating to shareholders' equity: Issued 30,000 shares of common stock at $7 per share. Issued 20,000 shares of common stock at $8 per share. Reported a net income of $100,000. Paid dividends of $50,000. What is total paid-in capital at the end of 2018? a. $370,000. b. $420,000. c. $320,000. d. $470,000.
Answer:
a. $370,000.
Explanation:
The first would be to define additional paid-in that would be the amount paid over face value if the face value is 100 and the share at issued at 105 then there is a 5$ additional paid-in per share.
With that in noticed we are going to check the transaction during 2018:
30,000 at $7 ($5 face value $2 additional paid in)20,000 at $8 ($5 face value $3 additional paid in)Common stock
we got 50,000 issued with their face of $5 = 250,000
additional paid-in capital would be
30,000 shares at $2 = $60,000
and 20,000 shares at $3 = $60,000
additional paid-in $120,000
The total paid-in would be
250,000 common stock
+ 120,000 additional paid-in
Equal to 370,000
Easter Egg and Poultry Company has $1,710,000 in assets and $698,000 of debt. It reports net income of $196,000. a. What is the firm’s return on assets? (Enter your answer as a percent rounded to 2 decimal places.) b. What is its return on stockholders’ equity? (Enter your answer as a percent rounded to 2 decimal places.) c. If the firm has an asset turnover ratio of 3.5 times, what is the profit margin (return on sales)? (Enter your answer as a percent rounded to 2 decimal places.)
Answer:
a) Firm’s return on assets = 11.46 %
b) Return on stockholders’ equity = 19.37%
c) Profit margin = 3.27%
Explanation:
a) Return on assets = [tex]\frac{Net Income}{Total Assets} X 100[/tex]
= [tex]\frac{196,000}{1,710,000} X 100 = 11.46 percent[/tex]
b) Return on stockholder's equity = [tex]\frac{Net income}{Equity} X 100[/tex]
Equity =Total assets - Debt = $1,710,000 - $698,000 = $1,012,000
Return on equity = [tex]\frac{196,000}{1,012,000} X100 = 19.37 percent[/tex]
c) Asset Turnover ratio = [tex]\frac{Net Sales}{Total Assets}[/tex] = 3.5
then Net sales = 3.5 X Total Assets = = 3.5 X $1,710,000 = $5,985,000
Profit margin = [tex]\frac{Net profit}{Net sales} X 100 [tex]= \frac{196,000}{5,985,000} X 100 = 3.27 percent[/tex]
a) Firm’s return on assets = 11.46 %
b) Return on stockholders’ equity = 19.37%
c) Profit margin = 3.27%
Final answer:
The firm's return on assets is 11.46%, its return on stockholders' equity is 19.37%, and the profit margin is 3.28% Approx.
Explanation:
To calculate the return on assets (ROA) for Easter Egg and Poultry Company, we divide the net income by the total assets and multiply by 100 to get a percentage:
ROA = (Net Income / Total Assets) × 100
ROA = ($196,000 / $1,710,000) × 100
ROA = 11.46%
To calculate the return on stockholders' equity (ROSE), we first need to determine the stockholders' equity by subtracting total debt from total assets. Then divide the net income by the stockholders' equity and multiply by 100 to get a percentage:
Stockholders' Equity = Total Assets - Total Debt
Stockholders' Equity = $1,710,000 - $698,000
Stockholders' Equity = $1,012,000
ROSE = (Net Income / Stockholders' Equity) × 100
ROSE = ($196,000 / $1,012,000) × 100
ROSE = 19.37%
For the asset turnover ratio, we have the formula:
Asset Turnover Ratio = Sales / Total Assets
Given an asset turnover ratio of 3.5 times, to find the profit margin (or return on sales), we need to divide net income by sales. We have the ratio of assets to sales, so we can use it to find sales:
Sales = Asset Turnover Ratio × Total Assets
Sales = 3.5 × $1,710,000
Sales = $5,985,000
Profit Margin = (Net Income / Sales) × 100
Profit Margin = ($196,000 / $5,985,000) × 100
Profit Margin = 3.28% Approx.
If the real wage falls the:a. marginal cost of labor falls.b. firm will hire additional labor.c. marginal benefit of the worker decreases.d. All of the above.e. A and B only.
Answer: The correct answer is "D. All of the above".
Explanation:
Marginal cost of labor: It is the additional cost of hiring an additional worker. Normally the workers' salary is the same, so the marginal cost of labor will always be the same.
The correct answer is "D" because if the real wage falls, the cost of hiring a worker for the company is lower, therefore companies will hire additional workers.
And if workers' wages decrease, their marginal benefit also decreases because they will have less income.
Under the FIFO method, unit costs would: a) result from costs in the beginning inventory being added in with current period costs. b) contain some element of cost from the prior period. c) not contain some elements of cost from the prior period. d) not include costs incurred to complete beginning inventory.
Answer:
a) result from costs in the beginning inventory being added in with current period costs.
Explanation:
Because the FIFO means First In First Out
the beginning inventory AKA cost from prior period will be include to determinate the cost of the units that made first in. Then the remaining cost added to finish this units will be assing to calculate the cost of units under FIFO
example
100 units BI WIP $5,000
cost added to finish this units $10,000
Total cost $15,000
units cost $15,000/100 = $150
If there are more units finsihed during the period, they may have a diferent units cost.
Department A had no work in process at the beginning of the period, 16,000 units were started during the period, 2,000 units were 40% completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period (assuming the company uses FIFO): Assuming that all direct materials are placed in process at the beginning of production, what are the conversion cost equivalent units?
Answer:
Conversion Cost Equivalent Units = 14,800
Explanation:
Beginning WIP = 0
Started 16,000
Ending 2,000 at 40%
Equivalent cost for conversion
[tex]Started\: Units - Ending \: units \times (1-completion)[/tex]
[tex]16,000 - 2,000 \times (1-0.40) = 16,000 - 2,000 \times 0.6 = \\16,000 - 1,200 = 14,800[/tex]
There was none beginning inventory and the direct materials information is not relevant to calculate the conversion cost.
In 2018, the Barton and Barton Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 2017, B & B's inventories were $32.6 million (FIFO). B & B's records indicated that the inventories would have totaled $24.1 million at December 31, 2017, if determined on an average cost basisIgnoring income taxes, what journal entry will B & B use to record the adjustment in 2018?
Answer: The journal entry is as follows:
Explanation:
Given that,
Barton and Barton company's inventories were $32.6 million at December 31st, 2017
But the records of B and B's company indicated that inventories would have totaled $24.1 million December 31st, 2017
Therefore, the journal entry for the adjustment in the records of B and B's company in 2018 is as follows:
Debit Credit
Retained Earnings A\c $8.5 million
To Inventory $8.5 million
Retained Earnings = $32.6 million - $24.1 million
= $8.5 million
Final answer:
To adjust for the change from FIFO to average cost method, B & B would debit the Inventory Valuation Adjustment Account and credit the Inventory Account by $8.5 million, reducing inventory value on the balance sheet.
Explanation:
The Barton and Barton Company switched inventory valuation from the FIFO (First-In, First-Out) method to the average cost method. Due to this change, the inventory's value also changed. As of December 31, 2017, using FIFO, inventory was valued at $32.6 million, but at the same time, had B & B used the Average Cost method, the inventory would be valued at $24.1 million. This indicates an $8.5 million overstatement in its inventory value using FIFO.
The journal entry to record the adjustment in 2018 would be as follows:
Debit Inventory Valuation Adjustment Account for $8.5 millionCredit Inventory Account for $8.5 millionThis entry would reduce the inventory value on the balance sheet to reflect the valuation change. Ignoring income taxes, there are no associated tax effects to consider in this journal entry.
An increase in cost (fixed cost or variable cost) tends to increase the operating breakeven point, whereas an increase in the sales price per unit will decrease the operating breakeven point.
True or false ?
Answer:
TRUE
Explanation:
Let's see the BEP formula:
[tex]\frac{Fixed Cost}{Sales - Variable Cost} = BEP[/tex]
Notice that Fixed cost are being divide by the contribution margin, which is sales - variable cost
Let's see each statment and check if there is true.
Remember all of them must be true
if fixed cost increase, then the ammount to cover is higher, so the BEP increase:
Imagine you are sharing candies to some kinds and suddently 10 more kind arrives, you are gonna need more candies to share to each children the same ammount.
TRUE
IF variable cost decrease:
the contribution margin decrease, because more portion of the sale is used to pay the variable cost, which makes the effort of paying the fixed cost higher.
like when you are saving for a certain ammount, let's say $100 per month to achieve $1,000 If an unexpected expense happens and you save $50 per month, you going to take more time.
TRUE
If Sales Increase, then the contribution margin increase, so it makes the effort to pay the fixed cost more easy, like if in the previous example instead of going down we went up to $200. The 1,000 goal would be more achievable.
TRUE
All statment are true so the sentence is TRUE
Georgette was making $4,000 per month, but her work cut her hours, so she is now making $2,500 per month. What do you expect to happen to Georgette’s demand curve for powdered cheese (an inferior good) as a result of this income change?
Answer:
The demand curve of an inferior good increase when the income decrease.
Explanation:
Georgette will decrease their demand for normal goods and move towards inferior goods. So the powdered cheese among other inferior goods demand will increase for her.
Inferior goods have a negative income elasticity, which means their demand drop when income rises and increases when income drops.
If she takes another job or receives her hours back, Georgette will be more willing to spend on more costly substitutes. Decreasing their demand for inferior goods.
On its 2017 balance sheet, Walgreens Boot Alliance, Inc., reports treasury stock at cost of $4,934 million. The company has a total of 1,172,513,618 shares issued and 1,082,986,591 shares outstanding. What average price did Walgreens pay for treasury shares?
Answer:
$57.02 Average price per share in treasury Stock
Explanation:
Treasury Stock in dollars 4,934M
[tex]\frac{Treasury \: Stock_{dollars}}{Treasury \: Stock_{shares}} \\Where:\\issued - outstanding = Treasury \: Stock_{shares}[/tex]
1,172,513,618 - 1,082,986,591 = 89,527,027 TS in shares
4,934,000,000/89,527,027 = 57.02264565
$57.02 Average price per share in treasury Stock
Walgreens Boot Alliance, Inc. paid an average price of $55.10 for each treasury share, calculated by dividing the total treasury stock cost of $4,934 million by the number of treasury shares, which is 89,527,027.
For calculating the average price Walgreens paid for its treasury shares. Walgreens Boot Alliance, Inc. reports treasury stock for $4,934 million and has 89,527,027 treasury shares (calculated as 1,172,513,618 issued shares minus 1,082,986,591 outstanding shares). To find the average price paid for treasury shares, divide the total cost by the number of treasury shares.
Average price paid for treasury shares = Total Treasury Stock Cost / Number of Treasury Shares
= $4,934 million / 89,527,027 shares
= $55.10 per share (rounded to two decimal places)
Therefore, Walgreens paid an average of $55.10 for each treasury share it purchased.
The unemployment rate:A. is measured by the number of people who are unemployed divided by the labor force.B. is never zero.C. measures what percentage of our population is currently looking for a job and can't find one.D. All of these are true.
The unemployment rate measures the percentage of the population that is actively seeking employment but can't find a job.The correct option is D.
Explanation:The correct answer is D. All of these are true.The unemployment rate is a measure of the number of people who are unemployed divided by the labor force. It is never zero because there will always be some level of unemployment in an economy.
It also represents the percentage of the population that is currently looking for a job but can't find one.
This means that it does not include people who are not actively seeking employment, such as retired individuals or those who have given up searching for work.The correct option is D.
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The unemployment rate is A. measured by the number of people who are unemployed divided by the labor force and it is never zero. It reflects the percentage of the population currently looking for a job and unable to find one.
Explanation:The unemployment rate is a key economic indicator that measures the percentage of the labor force without a job and actively seeking employment. It reflects the health of the job market and overall economy. The rate is calculated by dividing the number of unemployed individuals by the total labor force and is often reported monthly by government agencies.
Different types of unemployment, such as frictional, structural, and cyclical, can affect the overall rate, influencing government policy and economic decision-making. The unemployment rate is measured by the number of people who are unemployed divided by the labor force. It is never zero and measures what percentage of our population is currently looking for a job and can't find one.
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Warner Company’s year-end unadjusted trial balance shows accounts receivable of $99,000, allowance for doubtful accounts of $600 (credit), and sales of $280,000. Uncollectibles are estimated to be 1.5% of accounts receivable. 1. Prepare the December 31 year-end adjusting entry for uncollectibles.
Answer:
bad debt expense 885 debit
allowance for doubtful accounts 885 credit
Explanation:
expected uncollectibles
1.5% of AR = 99,000 x 1.5% = 1,485
current balance credit (600)
Adjustment 885
When calculating over account receivable, we stimated the allowance so we have to adjsut for the diference.
The year-end adjusting entry for uncollectibles is given in the image below.
What is journal entry?Journal entry is the systematic record of all the financial transactions, that shows all the transactions of the business incurred in a particular period of time.
It is the primary recording of all the transactions related to the money only.
Computation of amount of expected uncollectibles:
According to the given information,
The amount of expected uncollectibles are:
[tex]1.5\% \text{of} \text{Accounts Receivable}- \text{Currect Balance Credit}[/tex]
[tex]= 1.5\% \times \$99,000- 600\\=\$885[/tex]
Therefore, the amount of expected uncollectibles are 885.
Refer, the image given below for the adjustment entry of the expected uncollectibles.
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Assume the demand function for basketballs is given by QD = 150 −3P + 0.1I, where P = price of a basketball, and I = average income of consumers. Also, assume the supply of basketballs is given by QS = 2P. If the market for basketballs is perfectly competitive, and the average income is equal to $1,500, what is the equilibrium price and quantity? What if a 20 percent income tax is introduced?
Answer: (1) Equilibrium price = 60 and Equilibrium quantity = 120, when I = $1500.
(2) Equilibrium price = 54 and Equilibrium quantity = 108, when I = $1200.
Explanation:
(1) When Average income (I) = $1500
At equilibrium, QD = QS
150 - 3p + 0.1I = 2p
150 - 3p + 0.1 × 1500 = 2p
5p = 300
p = [tex]\frac{300}{5}[/tex]
p = 60
q = 2p ⇒ 2 × 60 = 120
Hence, p and q are equilibrium price and equilibrium quantity, respectively.
(2) If 20% income tax is introduced then Average income (I) = $1500 - 20% of $1500 ⇒ $1500 - $300 = $1200
At equilibrium, QD = QS
150 - 3p + 0.1I = 2p
150 - 3p + 0.1 × 1200 = 2p
5p = 270
p = [tex]\frac{270}{5}[/tex]
p = 54
q = 2p ⇒ 2 × 54 = 108
Hence, p and q are equilibrium price and equilibrium quantity, respectively.
Final answer:
To calculate the equilibrium price and quantity for basketballs, we set the demand function equal to the supply function, using the provided income. Initially, with no tax, the equilibrium price is $60, and the quantity is 120 basketballs. Introducing a 20% income tax affects consumers' income and demand, thereby potentially adjusting the equilibrium again.
Explanation:
To find the equilibrium price and quantity for basketballs, given the demand function QD = 150 −3P + 0.1I where I is income ($1500), and the supply function QS = 2P, we set QD equal to QS to solve for the equilibrium. Plugging the average income value into the demand function yields QD = 150 −3P + 0.1(1500), simplifying to QD = 150 −3P + 150. Setting this equal to the supply function gives 150 −3P + 150 = 2P, leading to 5P = 300, so P = 60. The equilibrium quantity (Q) is found by plugging the price back into either the supply or demand equation, resulting in QS = 2(60) = 120, thus, the equilibrium price is $60, and the equilibrium quantity is 120 basketballs.
Introducing a 20 percent income tax on the average income of $1500 reduces this to $1200 (after tax income). Re-calculating with the new income in the demand function gives QD = 150 −3P + 0.1(1200) or QD = 150 −3P + 120. Setting this equal to the supply again gives a new equilibrium. However, without explicit calculations for the new equilibrium with the tax, we understand the process involves substituting the adjusted income into the demand function, solving for P and Q as before. The introduction of the tax essentially shifts the demand curve leftward, likely lowering the equilibrium quantity and potentially changing the equilibrium price depending on the degree of the shift.
Brown Corp., a calendar-year taxpayer, was organized and actively began operations on July 1, 2013, and incurred the following costs:Legal fees to obtain corporate charter$45,000Commission paid to underwriter30,000Other stock issue costs15,000Brown wishes to amortize its organizational costs over the shortest period allowed for tax purposes. In 2013, what amount should Brown deduct for the amortization of organizational expenses (excluding any immediate expensing allowed)?
Answer:
The amount of amortized organizational expenses for the year 2013 would be $6,333 ( approximately )
Explanation:
First of all the important point here to note is that while calculating the amortized organizational cost we only include the legal fee for drafting the corporate charter and not the commission paid to underwriter or cost incurred while selling the stock.
In the legal fee for corporate charter too there are limitations , as only $50,000 are allowed as total expenditure to be amortized over a period of 15 years or 180 months. Where for the first year the limitation allowed is $5000 and rest of the amount would be amortized over 180 months.
So $45,000 - $5000 = $40,000
$40000 / 180 = $222.22
Now multiplying this by 6 months as the operations of company began on 1 July , 2013,
$222.22 x 6 = $1333.32
Now adding this amount to $5000 will give us the total amortized organizational expense,
$5000 + $1333.32 = $6,333.32
= $6,333 ( approximately )
hich of the following statements is CORRECT? a. A corporation is a legal entity created by a state, and it has a life and existence that is separate from the lives and existence of its owners and managers. b. A hostile takeover is the main method of transferring ownership interest in a corporation. c. Limited liability is an advantage of the corporate form of organization to its owners (stockholders), but corporations have more trouble raising money in financial markets because of the complexity of this form of organization. d. Unlimited liability and limited life are two key advantages of the corporate form over other forms of business organization. e. Although the stockholders of the corporation are insulated by limited legal liability, the legal status of the corporation does not protect the firm's managers in the same way, i.e., bondholders can sue the firm's managers if the firm defaults on its debt.
The correct answer is a, stating that a corporation is a legal entity separate from its owners and managers. Hostile takeovers are not the primary method of ownership transfer, and the ability to raise funds is an advantage, not a disadvantage, of corporations. Limited liability applies to stockholders, but not necessarily to firm managers in all situations.
Explanation:The correct statement is a. A corporation is indeed a legal entity created by a state and has a life and existence that is separate from the lives and existence of its owners and managers. This means that although the individual shareholders own parts of the company, the corporation itself is recognized by law as a separate entity with its own rights and liabilities.
Hostile takeovers are not the main method of transferring ownership interest in a corporation; they are just one of several methods, and not the most common. The ability to raise funds is actually an advantage of the corporate form of organization because corporations can issue stock or bonds, not a disadvantage due to complexity.
While limited liability is indeed an advantage for the stockholders, the corporate form does not necessarily provide the same legal protection to its managers in the case of the firm's default on its debts. In certain circumstances, managers can be held personally liable if they violate the law or engage in misconduct.
Common stock value long dash Variable growth Personal Finance Problem Home Place Hotels, Inc., is entering into a 3-year remodeling and expansion project. The construction will have a limiting effect on earnings during that time, but when it is complete, it should allow the company to enjoy much improved growth in earnings and dividends. Last year, the company paid a dividend of $2.30. It expects zero growth in the next year. In years 2 and 3, 3% growth is expected, and in year 4, 16% growth. In year 5 and thereafter, growth should be a constant 11% per year. What is the maximum price per share that an investor who requires a return of 15% should pay for Home Place Hotels common stock
Answer: Current stock price ([tex]P_{0}[/tex]) = $ 51.71
Explanation:
First we'll calculate the dividends for the next 5 years and the respective Terminal value in [tex]5^{th}[/tex] year .
i.e. ,
[tex]D_{0}[/tex] = $ 2.30
[tex]D_{1}[/tex] = [tex]D_{0}[/tex] [tex]\times[/tex] (1 + [tex]Growth rate_{year 1}[/tex])
[tex]D_{1}[/tex] = $ 2.30 × ( 1 + 0%) = $ 2.30
[tex]D_{2}[/tex] = [tex]D_{1}[/tex] [tex]\times[/tex] (1 + [tex]Growth rate_{year 2}[/tex])
[tex]D_{2}[/tex] = $ 2.30 × ( 1 + 3%) = $ 2.36
[tex]D_{3}[/tex] = [tex]D_{2}[/tex] [tex]\times[/tex] (1 + [tex]Growth rate_{year 3}[/tex])
[tex]D_{3}[/tex] = $ 2.36 × ( 1 + 3%) = $ 2.43
[tex]D_{4}[/tex] = [tex]D_{3}[/tex] [tex]\times[/tex] (1 + [tex]Growth rate_{year 4}[/tex])
[tex]D_{4}[/tex] = $ 2.43 × ( 1 + 16%) = $ 2.819
[tex]D_{5}[/tex] = [tex]D_{4}[/tex] [tex]\times[/tex] (1 + [tex]Growth rate_{year 5}[/tex])
[tex]D_{5}[/tex] = $ 2.819 × ( 1 + 11%) = $ 3.129
∵ The growth rate after [tex]5^{th}[/tex] year = 11%
Required rate of return (r) = 15%
∴ Terminal value ([tex]P_{5}[/tex]) = [tex]\frac{D_{5} \times (1 + Growth rate)}{Required rate of return - Growth rate}[/tex]
Terminal value ([tex]P_{5}[/tex]) = [tex]\frac{ 3.129 \times (1 + 0.11)}{0.15 - 0.11}[/tex]
Terminal value ([tex]P_{5}[/tex]) = $ 86.85
Now, we'll compute the price per share :
Current stock price ([tex]P_{0}[/tex]) = [tex]\left [ \frac{D_{1}}{(1 + r)^{n}} + \frac{D_{2}}{(1 + r)^{n}} +\frac{D_{3}}{(1 + r)^{n}} + \frac{D_{4}}{(1 + r)^{n}} + \frac{D_{5}}{(1 + r)^{n}} + \frac{P_{5}}{(1 + r)^{n}}\right ][/tex]
where;
n = respective years
r = required rate of return
∴ Current stock price ([tex]P_{0}[/tex]) = [tex]\left [ \frac{2.30}{(1 + 0.15)^{1}} + \frac{2.36}{(1 + 0.15)^{2}} +\frac{2.43}{(1 + 0.15)^{3}} + \frac{2.819}{(1 + 0.15)^{4}} + \frac{3.129}{(1 + 0.15)^{5}} + \frac{86.85}{(1 + 0.15)^{5}}\right ][/tex]
Current stock price ([tex]P_{0}[/tex]) = ( 2 + 1.78 + 1.59 + 1.611 + 1.55 + 43.18)
Current stock price ([tex]P_{0}[/tex]) = $ 51.71
Final answer:
To determine the maximum price per share, present value calculations using the Dividend Discount Model (DDM) for the expected dividends with variable growth rates are needed. Since not all details are provided, a numerical answer cannot be given.
Explanation:
To calculate the maximum price per share that an investor who requires a return of 15% should pay for Home Place Hotels common stock, we would need to discount the future dividends at the investor's required rate of return and then sum these present values. The dividends are expected to be $2.30 with no growth in the first year, followed by 3% growth for the next two years, then a jump to 16% growth in the fourth year, and finally stabilizing at 11% growth from the fifth year onwards. We use the dividend discount model (DDM) for variable growth rates to calculate the present value of dividends, adjusting for growth, and then discount those values back to the present at the investor's required rate of return.
However, as the detailed information needed to perform these calculations is not provided in the question, we cannot provide a numerical answer. Accordingly, an investor's willingness to pay for a share would depend on their required rate of return and the dividends forecasted by Home Place Hotels common stock, taking into account the various growth stages of the company's expansion project. In practice, factors such as market conditions, the company's overall financial health, investor sentiment, and external economic events would also impact the stock's value.