the aggregate supply (AS) curve
1. In the 1990s, the technology revolution caused the wide-spread use of information technology in all areas of production, thus improving productivity and lowering costs; illustrate the effect of this by shifting the aggregate supply (AS) curve in the appropriate direction.
2. Suppose that a new labor law increases the minimum required number of paid vacation days for all full-time employees; illustrate the effect of this by shifting the aggregate supply (AS) curve in the appropriate direction.
Answers
Answer: Please refer to Explanation
Explanation:
1. In the 1990s, the technology revolution caused the wide-spread use of information technology in all areas of production, thus improving productivity and lowering costs.
As a result of higher productivity and lower costs, companies were able to produces more.
This led to an increase in supply which then shifted the Supply Curve TO THE RIGHT. See the first graph. This also led to a drop in price.
2. Suppose that a new labor law increases the minimum required number of paid vacation days for all full-time employees.
An increase in the minimum required number of paid vacation days would have the effect of increasing labor costs. Labor is an input in Production so that would mean that production is now more expensive. This would shift the Supply Curve TO THE LEFT as suppliers will react by producing less to maintain profitability. See the second graph.
If you need any clarification do react or comment.
Related Questions
Problem 8-2A Record notes payable and notes receivable (LO8-2) [The following information applies to the questions displayed below.] Precision Castparts, a manufacturer of processed engine parts in the automotive and airline industries, borrows $41 million cash on October 1, 2021, to provide working capital for anticipated expansion. Precision signs a one-year, 9% promissory note to Midwest Bank under a prearranged short-term line of credit. Interest on the note is payable at maturity. Each firm has a December 31 year-end. Problem 8-2A Part 3 3. Prepare the journal entries on September 30, 2022, to record payment of the notes payable at maturity. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions. For example, $5.5 million should be entered as 5,500,000.)
Answers
To record the payment of the notes payable at maturity, you would need to make journal entries that debit Notes Payable and credit Cash for the principal amount, and debit Interest Expense and credit Interest Payable for the interest payment.
Explanation:To record the payment of the notes payable at maturity, you would need to make the following journal entries:
Debit Notes Payable and credit Cash for $41 million to record the repayment of the principal amount.Debit Interest Expense and Credit Interest Payable for the interest payment.These entries reflect the payment of the loan principal and the interest.
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Selling price per unit $ 59 Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials $ 11 Direct labor $ 6 Variable manufacturing overhead $ 4 Fixed manufacturing overhead per year $ 88,000 Selling and administrative expenses: Variable selling and administrative expense per unit sold $ 4 Fixed selling and administrative expense per year $ 80,000 Year 1 Year 2 Units in beginning inventory 0 1,000 Units produced during the year 11,000 8,000 Units sold during the year 10,000 5,000 Units in ending inventory 1,000 4,000 The net operating income (loss) under variable costing in Year 1 is closest to:Multiple Choice a. $380,000 b. $340,000 c. $180,000 d. $172,000
Answers
Answer:
b. $340,000
Explanation:
Given
Selling price per unit $ 59
Manufacturing costs:
Variable manufacturing cost per unit produced:
Direct materials $ 11
Direct labor $ 6
Variable manufacturing overhead $ 4
Fixed manufacturing overhead per year $ 88,000
Selling and administrative expenses:
Variable selling and administrative expense per unit sold $ 4
Fixed selling and administrative expense per year $ 80,000
We calculate the Variable Cost of Goods sold by the variable costs allocated to the units sold.For this we deduct the ending inventory costs from the unit produced costs.
Year 1
Units sold during the year 10,000
Sales Price $59
Sales $ 590,000
Units in beginning inventory 0
Units produced during the year 11,000
Manufacturing Variable Costs per unit (11+6+4)= $ 21
Variable Manufacturing Costs= $231,000
Less Ending Inventory (1,000 *21)= 21,000
Variable Cost of Goods Sold = $210,000
Add Variable selling and administrative expenses ( 4*10,000)= 40,000
Total Variable Costs = $250,000
Contribution Margin $340,000
Answer:
The correct answer is D. $ 172,000
Explanation:
Variable costing Year 1
Sales (10,000 * $ 59) (A) $ 590,000
Variable manufacturing costs
Direct materials (11,00 * $ 11) $ 121,000
Direct labor (11,000 * $ 6) $ 66,000
Variable overhead $ 4 (11,000 * $ 4) $ 44,000
******************************************************************
Cost of goods available for sale (B) $ 231,000
Ending inventory (1,000 * $ 21) (C) $ 21,000
*******************************************************************
Gross contribution margin (A - B + C) $ 380,000
Variable selling & admin expense $ 40,000
********************************************************************
Contribution margin $ 340,000
Less fixed costs
Fixed manufacturing overhead $ 88,000
Fixed selling and administrative expense $ 80,000
***********************************************************************
Net operating income $ 172,000
Two countries, Great Britain and the United States, produce just one good: beef. Suppose the price of beef in the United States is $2.80 per pound and in Britain it is £3.70 per pound.
(a) According to PPP theory, what should the $/£ spot exchange rate be?
(b) Suppose the price of beef is expected to rise to $3.10 in the U.S., and to £4.65 in Britain. What should the one-year forward $/£ exchange rate be?
(c) Given your answers to parts (a) and (b), and given that the current interest rate in the United States is 10 percent, what would you expect the current interest rate to be in Britain?
Answers
Answer:
Step 1
a) The exchange rate is $2.80=3.70 pounds. Divide both sides by 2.8
$1= 1.32 pounds
STEP 2
b) The exchange rate is $3.10=4.65 pounds. Divide both sides by 3.1
$1=1.5 pounds
STEP 3
(S₁-S₂/S₂) * 100 = i(s) - i(w)
S1 is the original exchange rate or 1.32 pounds per dollar. S2 is the end exchange rate or 1.5. i$ is listed as 10%, solve for iW.
[(1.32-1.5)/1.5] * 100 = 10 - i(w)
22%
Kier Company issued $660,000 in bonds on January 1, Year 1. The bonds were issued at face value and carried a 5-year term to maturity. The bonds have a 6.00% stated rate of interest and interest is payable in cash on December 31 each year. Based on this information alone, what are the amounts of interest expense and cash flows from operating activities, respectively, that will be reported in the financial statements for the year ending December 31, Year 1?
Answers
Answer:
Interest Expense $39,600
Cash Flow from Operating Activities $39,600
Explanation:
Payment of Interest Expense is the cash expense paid during the year which is deducted from the operating profit in the calculation of net income which is used to determine the cash flow from operating activities.
Interest on the Bond = $660,000 x 6% = $39,600
At the time of payment Journal Entry will be as follow
Dr. Interest Expense $39,600
Cr. Cash $39,600
As the cash is paid against the operating activities.
Which of the following would NOT generally be a motive for a firm to hold inventories? to hedge against inflation to decouple various parts of the production process to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand to minimize reordering costs
Answers
Answer:
The answer is to minimize the reodering cost
Explanation:
We have three motives for holding inventory
1. Transaction motives of holding inventory This is to enable day to day transaction running of inventories.
2. Precautionary motives of holding inventory: Holding inventory to guard against unforeseen circumstances or to meet emergencies. For example, unexpected increase in demand.
3. Speculative motives of holding inventory. This is the holding of inventory in order to take advantage of any potential Investments. For example, to hedge against risk, take advantage of discounts.
All the options EXCEPT 'to minimize reodering cost' option are the reasons holding inventories.
ncentive Corporation was authorized to issue 12,000 shares of common stock, each with a $2 par value. During its first year, the following selected transactions were completed:
a.Issued 5,100 shares of common stock for cash at $21 per share.
b. Issued 1,100 shares of common stock for cash at $24 per share.
Prepare the journal entry required for each of these transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Answers
Answer and Explanation:
The journal entries are as follows
a. Cash A/c Dr $107,100 (5,100 shares × $21)
To Common Stock $10,200 (5,100 shares × $2)
To Additional Paid-in Capital in excess of par - Common Stock $96,900
(Being the issuance of stock is recorded and the remaining balance is credited to the additional paid-in capital account)
b. Cash A/c Dr $26,400 (1,100 shares × $24)
To Common Stock $2,200 (1,100 shares × $2)
To Additional Paid-in Capital in excess of par - Common Stock $24,200
(Being the issuance of stock is recorded and the remaining balance is credited to the additional paid-in capital account)
It increased the both cash and common stock stock and the additional paid in capital account as well
Net present value LO P3 Beyer Company is considering the purchase of an asset for $250,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 12% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
Year 1 Year 2 Year 3 Year 4 Year 5 Total
Net cash flows $83,000 $43,000 $76,000 $127,000 $49,000 $378,000
Required:
a. Compute the net present value of this investment.
b. Should Beyer accept the investment?
Answers
Answer:
$20,996.49
Yes
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
NPV can be found using a financial calculator.
Cash flow in year 0 = $-250,000
Cash flow in year 1 = $83,000
Cash flow in year 2 = $43,000
Cash flow in year 3 = $76,000
Cash flow in year 4 = $127,000
Cash flow in year 5 = $49,000
I = 12%
NPV = $20,996.49
The company should accept the project because the NPV is postive.
To find the NPV using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
I hope my answer helps you
Answer:
a. NPV = $20,996
b. Beyer should accept the investment
Explanation:
Net Present Value is Calculated by Taking the Present Day (discounted) value of all future net cash flow based on the Business Cost of Capital and Subtracting the Initial Cost of the Investment.
Accept only Project that give a Positive Net Present Value.
Using a financial Calculator the Net Present Value computations will be as follows :
CF0 = ($250,000)
CF0 = $83,000
CF0 = $43,000
CF0 = $76,000
CF0 = $127,000
CF0 = $49,000
i = 12%
NPV = ?
NPV = $20,996
Conclusion
Beyer should accept the investment since it gives a positive Net Present Value
Free-Flo Pipes & Plumbing Corporation is a private employer involved in an employment discrimination suit under the Civil Rights Act of 1964. Punitive damages may be recovered against Free-Flo only if the employer a. acted with malice or reckless indifference. b. can easily afford to pay the amount. c. has one hundred or more employe
Answers
Answer:
acted with malice or reckless indifference.
Explanation:
Employment discrimination.is one that is as a result of am employer's race, gender, religion, national origin, disability, age, sex, orientation, and gender by an employer.
Under the Civil rights act of 1964 Free-Flo Pipes & Plumbing Corporation will be liable if they acted with malice or reckless indifference.
All employees must be able to express themselves and work freely without being targeted in a wrong way by employers.
The Blue Bird LTD has total assets of $223 500, a debt- equity ratio of 0.45, and return on equity is 12%. What is the net income?
Answers
The Net Income For Blue Bird LTD. is $69362.
Explanation:
As per Accounting Equation;
Total Asset = total equity + total liabilities
as we are don't have equity so we will take it as x and liabilities as y
Now our equation will be,
$223500 = x+y ........................................................................(i) equation
we are also given a debt equity ratio = [tex]\frac{Total of Debt}{Total of equity}[/tex]
Debt Equity Ratio = [tex]\frac{Y}{X}[/tex]
.45x = y................................................... (ii) equation
so now putting y of (ii) equation into (i) equation, we will get
$223500 = x+ .45x
x =[tex]\frac{223500}{1.45}[/tex]
x (i.e equity) = $154,138
and, y (debt ) = $69362
to find net income , where Return on equity (ROE) =[tex]\frac{net income}{shareholder equity}[/tex]
net income = .12×$154138
net income = $18497
Roberts Corp. reports pretax accounting income of $208,000, but due to a single temporary difference, taxable income is only $154,000. At the beginning of the year, no temporary differences existed. Roberts is subject to a tax rate of 25%. Required: Prepare the compound journal entry to record Roberts Corp.'s income taxes. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answers
Debit Income Tax Expense $102,000 (calculated as $78,000 + $24,000, the deferred tax liability increase). Credit Deferred Tax Liability $12,000 and Income Tax Payable $90,000 (computed as $260,000 × 30%).
Given:
Pretax accounting income = $300,000
Taxable income = $260,000
Tax rate = 30%
The temporary difference is $40,000 ($300,000 - $260,000).
As there were no temporary differences at the beginning of the year, the entire $40,000 difference is attributable to temporary differences.
Since temporary differences will reverse in the future, we calculate the deferred tax liability:
Deferred Tax Liability = Temporary Difference × Tax Rate
Deferred Tax Liability = $40,000 × 30% = $12,000
Now, let's prepare the compound journal entry to record income taxes:
| Account | Debit | Credit |
| Income Tax Expense (P&L) | $78,000 | |
| Deferred Tax Liability (BS) | | $12,000 |
| Income Tax Payable (BS) | | $90,000 |
Explanation:
Income Tax Expense is calculated as the sum of taxes payable ($90,000) and the increase in the deferred tax liability ($12,000), totaling $102,000 ($90,000 + $12,000).
Deferred Tax Liability increases by $12,000 due to the temporary differences that will lead to higher taxable income in the future.
Income Tax Payable represents the actual tax liability to be paid, calculated as the taxable income ($260,000) multiplied by the tax rate of 30%, which equals $78,000.
This journal entry reflects the tax provision, recognizing both the current tax expense and the change in the deferred tax liability on the balance sheet.
complete the question
ABC Corp. has reported pretax accounting income of $300,000 for the year. Due to certain temporary differences, the taxable income amounts to $260,000. At the beginning of the year, no temporary differences existed. ABC Corp. is subject to a tax rate of 30%.
Question:
Prepare the compound journal entry to record ABC Corp.'s income taxes based on the given information. Include the necessary calculations for deferred tax liability or asset if applicable. If no entry is required, indicate "No journal entry required."
The Gorman Group issued $870,000 of 11% bonds on June 30, 2021, for $944,646. The bonds were dated on June 30 and mature on June 30, 2041 (20 years). The market yield for bonds of similar risk and maturity is 10%. Interest is paid semiannually on December 31 and June 30. Required: Complete the below table to record the company's journal entry. 1. to 3. Prepare the journal entries to record their issuance by The Gorman Group on June 30, 2021, interest on December 31, 2021 and interest on June 30, 2022 (at the effective rate). Calculation Req 1 to 3 Complete the below table to record the company's journal entry. (Round intermediate calculations and final answers to the nearest whole dollar. Enter interest rate to 1 decimal place. (i.e. 0.123 should be entered as 12.3).)
Answers
Answer:
Explanation:
December 31, 2018 Amount. Interest Rate Total Interest expense $944,646 x 5.0% = $47,232.3 Cash. $870,000 x 5.5% = $47,850 of premium on bonds $618
June 30, 2019AmountInterest Rate
Total Interest expense $944,646 x 5.0% = $47,232.3
Cash$870,000 x 5.5% = $47,850
of premium on bonds $ 464 No Date General Journal Debit Credit 1 June 30, 2018 Cash 944,646 Bonds payable 870,000 Premium on bonds payable 74,646 December 31,2018 Interest expense 47,232.3 Premium on bonds payable 618 Cash 47,850 June 30, 2019 Interest expense 47,232.2 Premium on bonds payable 618 Cash 47,850 Record the issuance of the bond on June 30, 2018.Record the interest on December 31, 2018 (at the effective rate). Record the interest on June 30, 2019 (at the effective rate). Explanation 2. December 31, 2018 Interest expense (5% × $944,646) = $47,232.3 Cash (5.5% × $870,000) = $47,850 3.June 30, 2019Interest expense (5% × [$944,646 – $618]) = $47,201.4
Cash (5.5% × $870,000) = $47,850
BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $128,400 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to its employee.
Gross Pay through August 31 Gross Pay for September
a. $ 5,100 $2,200
b. 2,300 2,400
c. 122,700 8,600
Required:
1. Assuming situation (a), prepare the employer's September 30 journal entries to record salary expense and its related payroll liabilities for this employee. The employee's federal income taxes withheld by the employer are $90 for this pay period. (Round your answers to 2 decimal places.)
Answers
Final answer:
The business calculation involves preparing journal entries to reflect the employer's payroll taxes and liabilities for an employee's salary in September. This includes FICA Social Security and Medicare taxes, federal income tax withholding, FUTA, and SUTA taxes, resulting in total payroll liabilities and net payable amounts.
Explanation:
The subject in question is concerned with the calculation and recording of taxes and payroll liabilities for an employee in a business context. It requires an understanding of how FICA, FUTA, and SUTA taxes are applied to an employee's gross pay.
For situation (a), we calculate and prepare the journal entries as follows:
Gross Pay for September: $2,200 Salary Expense: Debit $2,200FICA Social Security taxes: (6.2% of $2,200) = Debit $136.40FICA Medicare taxes: (1.45% of $2,200) = Debit $31.90Federal Income Tax Withholding: Debit $90FUTA taxes: (0.6% of $2,200, not exceeding $7,000) = Debit $13.20SUTA taxes: (5.4% of $2,200, not exceeding $7,000) = Debit $118.80Payroll Liabilities: Credit $390.30 (Sum of all tax liabilities)Cash or Salaries Payable: Credit $1,809.70 (Gross pay minus liabilities)
The entries should reflect the expenses and liabilities associated with the salary for September, including various taxes to be remitted on behalf of the employee.
Final answer:
For the given scenario (a), the employer's journal entries would include a debit to Salary Expense for $2,200, and credits to Federal Income Taxes Payable ($90), FICA Social Security Payable ($136.40), and FICA Medicare Payable ($31.90).
Explanation:
Journal Entry for Payroll Taxes:
When recording the employer's September 30 journal entries for BMX Company, assuming situation (a), the total gross pay for the employee for September is $2,200. The employee's federal income taxes withheld are $90 for this period. We need to calculate the employer's Social Security and Medicare taxes as part of the payroll liabilities.
The September payroll taxes are calculated as follows:
FICA Social Security taxes: 6.2% of $2,200 = $136.40FICA Medicare taxes: 1.45% of $2,200 = $31.90Since the gross pay through August was $5,100 and the September gross is $2,200, the year-to-date gross is $7,300, which exceeds the $7,000 limit for FUTA and SUTA, no further FUTA and SUTA taxes are due.
Based on these calculations, the journal entries to record September's salary expense and payroll liabilities would be as follows:
Debit Salary Expense: $2,200Credit Federal Income Taxes Payable: $90Credit FICA Social Security Payable: $136.40Credit FICA Medicare Payable: $31.90The remaining balance after deductions is credited to Wages Payable or Cash, depending on if the wages have been paid or not.
George decided to open a health club. His girlfriend Lydia, a marketing manager at a small company, tried to convince him to do some marketing research, but he said, "I know what I don't like about health clubs; that's all the information I need. Besides, I can't afford an expensive research project." He opened the club in a shopping center about 15 miles from his home. Six months later, his club had very few members and he was running out of cash. List some key types of primary and secondary data George could have collected before opening his club that might have helped him be more successful, keeping in mind his limited budget.
Answers
Answer:
1) Identify a wellness speciality - conventional or a claim to fame wellness focus - and its ROI
2) The capital required and ROI on different areas accessible
3) Buy versus Lease on supplies
4) The opposition investigation in the region
5) demography of the area
6) promoting methods that are most appropriate to the area - individual or family focused.
7) Hiring talented staff, and sources for substitution of staff
On July 1, a bank loaned $10,000 to a company in the form of a note receivable. The note requires interest at an annual rate of 10%, and all interest is payable (due) at maturity. The amount of interest revenue that the bank should accrue at the end of December is:
Answers
Answer:
$500
Explanation:
Annual interest revenue = $10,000 × 10% = $1,000
Interest revenue earned from July 1 to December 31 = $1,000 × (6/12) = $500.
Therefore, amount of interest revenue that the bank should accrue at the end of December is $500.
During August, Boxer Company sells $358,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a credit balance of $12,600 before adjustment. Customers returned merchandise for warranty repairs during the month that used $9,200 in parts for repairs. The entry to record the estimated warranty expense for the month is:
Answers
Answer:
The entry to record is Debit Warranty Expense $17,900 and credit Estimated Warranty Liability $17,900
Debit Credit
Warranty expense $17,900
Warranty payable $17,900
Explanation:
In order to prepare the entry to record, first we would have to calculate how much would be the warranty expense for the month, this would be calculated as follows according to the given data:
warranty expense=$358,000×5%=$17,900
Therefore, the entry to record is the following:
Debit Warranty Expense $17,900 and credit Estimated Warranty Liability $17,900
Debit Credit
Warranty expense $17,900
Warranty payable $17,900
Total Materials VarianceYoung Inc. produces plastic bottles. Production of 16-ounce bottles has a standard unit quantity of 0.45 ounce of plastic per bottle. During the month of June, 240,000 bottles were produced using 110,000 ounces of plastic. The actual cost of plastic was $0.042 per ounce, and the standard price was $0.045 per ounce. There is no beginning or ending inventories of plastic.
Calculate the materials price and usage variances using the columnar and formula approaches.
Answers
Answer:
Price variance = $330 Favorable
Usage variance = $90 Unfavorable
Explanation:
Formula approach
Material price variance
$(0.045-0.042)× 110,000 = $330 Favorable
Material Usage Variance
(110,000)-(0.45×240,000) × 0.045 = $90 unfavorable
Columnar Approach
Price variance $
Standard cost (0.045 × 110,000 ) = 4950
Actual cost (0.042 × 110,000 ) = 4620
Variance 330 Favorable
Usage Variance
Ounce
Standard quantity (0.45×240,000) = 108000
Actual quantity 110,000
Variance in ounce 2000 unfavourable
× Standard price 0.045
Variance $90 Unfavorable
XYZ, Inc., has issued 11 million new shares of stock. An investment bank agrees to underwrite these shares on a best efforts basis. The investment bank is able to sell 8.8 million shares for $31 per share, and it charges XYZ $0.695 per share sold.a.How much money does XYZ receive after commission
Answers
Answer:
$266,684,000 ( or can say $266.7 million)
Explanation:
XYZ receive after commission = number of shares sold * (price per share – commission charged per share)
= 8,800,000 * ($31 - $0.695)
= $266,684,000
Answer:
Cash amount received by XYZ Inc after commission is $266,684,000.00
Explanation:
The total cash received by the investment bank=shares sold*issue price
shares sold is 8.8 million
issue price is $31
total cash received by the investment bank=8,800,000*$31
=$272,800,000
Net proceeds received by XYZ=gross proceeds-underwriting charges
underwriting charges=shares sold*charge per share
=8,800,000*$0.695
=$6,116,000
Net proceeds received by XYZ=$272,800,000 -$6,116,000
=$266,684,000.00
The cash proceeds received by XYZ Inc after the deduction of investment bank charges is =$266,684,000.00
Last week, Weschler Paint Corp. completed a 3-for-1 stock split. Immediately prior to the split, its stock sold for $150 per share. The firm's total market value was unchanged by the split. Other things held constant, what is the best estimate of the stock's post-split price? a. $52.50 b. $50.00 c. $60.78 d. $57.88 e. $55.13
Answers
Answer:
The answer is B..
Explanation:
Stock split is the issuing of new shares to existing shareholders according to their current holdings from the total outstanding shares. It increases the number of outstanding shares.
Post-split stock price = Current price/new per old
Number of new shares = 3
Number of old shares = 1
Pre-split stock price = $150
Therefore, post-split stock price is:
1/3 x $150
=$50
Current assets: Cash and cash equivalents $ 346 $ 265 Current investments 5 443 Net receivables 594 186 Inventory 10,592 8,409 Other current assets 1,230 235 Total current assets $ 12,767 $ 9,538 Current liabilities: Current debt $ 8,421 $ 4,026 Accounts payable 1,787 1,041 Other current liabilities 1,091 2,343 Total current liabilities $ 11,299 $ 7,410 Required: 1-a. Calculate the current ratio for ACME Corporation and Wayne Enterprises.
Answers
Answer:
For ACME Corporation = 1.12 times
For Wayne Enterprises = 1.29 times
Explanation:
The computation of current ratio is shown below:-
For ACME Corporation
Current Ratio = Total Current Assets ÷ Current Liabilities
= $12,767 ÷ $11,299
= 1.12 times
For Wayne Enterprises
Current Ratio = Total Current Assets ÷ Current Liabilities
= $9,538 ÷ $7,410
= 1.29 times
Here, we assume first figure for ACME Corporation and second figure for Wayne Enterprises
You are the manager of a marketing company. The company recently hired a new writer who suggested the company order noise-reduction headphones so writers can concentrate. You think this is a good idea, and you don’t expect there will be resistance to the request. However, you need to write a recommendation report to the president before ordering the headphones.
What should you include in your report you are using a direct approach?
A. An explanation of the pros, cons, and costs
B. A description of alternative solutions with the most promising first
C. A general reference to the problem in the subject line
Answers
Answer:
A
Explanation:
Remember, a marketing manager has limited functions. The best things to include in the report is the pros, cons and cost of the noise reduction headphones.
The pros should highlight how it increases the writers customers service delivery which goes a long way to increase the marketing success of the firm.
Also, the cost as it pertains to the overall marketing cost the company should be mentioned, while also including the cons if any.
Pinewood Company purchased two buildings on four acres of land. The lump-sum purchase price was $900,000. According to independent appraisals, the fair values were $450,000 (building A) and $250,000 (building B) for the buildings and $300,000 for the land. Required: Determine the initial valuation of the buildings and the land.
Answers
Answer:
Buildings = $630,000
Land = $270,000
Explanation:
When a lump purchase price is given on buildings and land, the costs of Building and Land must be determined separately using fair values.
This is because Depreciation on Land and Building is different.
Buildings
Cost = (450,000+250,000)/ 1000,000 × $900,000
= $630,000
Land
Cost = (300,000)/ 1000,000 × $900,000
= $270,000
Joseph Gallo, the founder of the famous wine company that bears his name, said that when he first started selling wine right after Prohibition (laws outlawing the sale of alcohol), he poured two glasses of wine from the same bottle and put a price of 10 cents a bottle on one and 5 cents a bottle on the other. He let people test both and asked them which they wanted. Most wanted the 10-cent bottle, even though they were the same wine.
What does this tell us about people?
Can you think of other areas where that may be the case?
What does this suggest about pricing?
As a reminder, see below regarding my course policies on "Discussion" (Also located in the Course Syllabus).
Answers
Answer to Question 1: What does this tell us about people?
The experiment shows us that people always associate higher prices with higher quality. But this is not always the case.
According to a research in 2008 by Goldstein and his team it was established that people do not derive more satisfaction or utility from more expensive wine when they don’t know much the wine cost.
In a more recent but similar study, results showed that there is a clear correlation between price and perceived value.
When participants were told that a wine had a high price, participants gave that wine higher ratings.
So in summary:
when people know the cost or the value of things, they tend to appreciate it more.When people are presented with options involving cheap and expensive items of the same function they'd always attribute the expensive one to be of higher quality.Answer to Question 2: Can you think of other areas where that may be the case?
A similar research was carried out by Dan Ariely.
This scenario was tested on drugs and how people reported to have felt when they were given an information about the drug they are taking.
It was discovered that students who paid more for cold medicine said they felt better than students who purchased the same medicine at a discounted price.
Answer to Question 3: What does this suggest about pricing?
Pricing goes beyond numbers. Its all about how clients perceive your product in relation to the problem they are trying to solve or the pain point, or pleasure point they are trying to satisfy.
Cheers!
Poodle Company owns 80 percent of the common stock of Shepherd Inc. Poodle acquires some of Shepherd's bonds from an unrelated party for less than the carrying value on Shepherd's books and holds them as a long-term investment. For consolidated reporting purposes, how is the acquisition of Shepherd's bonds treated?
Answers
Complete Question:
Poodle Company owns 80 percent of the common stock of Sheperd Inc. Poodle acquires some of Sheperds' bonds from an unrelated party for less than the carrying value on Sheperds' books and holds them as a long-term investment. For consolidated reporting purposes, how is the acquisition of Sheperds' bonds treated?
As a decrease in the Bonds Payable account on Sheperds' books.
As an increase in noncurrent assets.
Everything related to the bonds is eliminated in the consolidation worksheet, and nothing related to the bonds appears in the consolidated financial statements.
As a retirement of bonds.
A loss on the constructive retirement of a parent's bonds by a subsidiary is effectively recognized in the individual accounting records of the parent and its subsidiary:
I. at the date of constructive retirement.
II. over the remaining term of the bonds.
I
II
Both I and II
Neither I nor II
When one company purchases the debt of an affiliate from an unrelated party, a gain or loss on the constructive retirement of debt is recognized by which of the following?
Issuing Affiliate Purchasing Affiliate Consolidated Entity
A. No No Yes
B. Yes Yes No
C. No No No
D. Yes Yes Yes
Option A
Option B
Option C
Option D
Which of the following statements is(are) correct?
I. The amount assigned to the noncontrolling interest may be affected by a constructive retirement of bonds.
II. A constructive retirement of bonds normally results in an extraordinary gain or loss.
III. In constructive retirement, the entity would still consider the bonds outstanding, even though they are treated as if they were retired in preparing consolidated financial statements.
I
II
I and III
I, II, and III
Answer:
1. For consolidated reporting purposes, Company M's bonds will be treated as a retirement of bonds.
2. For consolidated reporting purposes, everything related to the intercompany bonds is eliminated in the consolidation worksheet, and nothing related to the bonds appears in the consolidated financial statements.
3. A loss on the constructive retirement of a parent's bonds by a subsidiary is effectively recognized in the individual accounting records of the parent and its subsidiary:
I. at the date of constructive retirement.
II. over the remaining term of the bonds.
Both I and II
4. When one company purchases the debt of an affiliate from an unrelated party, a gain or loss on the constructive retirement of debt is recognized by
Option A
5. The incorrect statement is:
I. The amount assigned to the noncontrolling interest may be affected by a constructive retirement of bonds.
Final answer:
For consolidated reporting, Poodle Company's acquisition of Shepherd Inc.'s bonds at less than carrying value is treated by eliminating the investment and corresponding liability from the consolidated balance sheet, and any related gain is also eliminated.
Explanation:
When Poodle Company, which owns 80 percent of Shepherd Inc.'s common stock, acquires some of Shepherd's bonds for less than the carrying value and holds them as a long-term investment, the acquisition of these bonds is accounted for in consolidated financial statements. Consolidation requires elimination of intercompany balances and transactions because they are internal to the corporate group. Hence, this intra-group bond acquisition would involve eliminating the investment in the bonds from the assets of Poodle Company and the corresponding liability from the balance sheet of Shepherd Inc., to the extent of the ownership percentage. This adjustment ensures that the consolidated financial statements only reflect external transactions and balances. Any gain from purchasing the bonds below their carrying value will be eliminated in the consolidated financial statements, as the gain is considered unrealized from the perspective of the corporate group.
The following income statement and additional year-end information is provided. SONAD COMPANY Income Statement For Year Ended December 31 Sales $ 1,805,000 Cost of goods sold 884,450 Gross profit 920,550 Operating expenses Salaries expense $ 247,285 Depreciation expense 43,320 Rent expense 48,735 Amortization expenses—Patents 5,415 Utilities expense 19,855 364,610 555,940 Gain on sale of equipment 7,220 Net income $ 563,160 Accounts receivable $ 15,100 increase Accounts payable $ 10,275 decrease Inventory 37,925 increase Salaries payable 3,050 decrease Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
Answers
Answer:
$538,325
Explanation:
The computation is shown below:
Cash flow from Operating activities - Indirect method
Net income $563,160
Add : Depreciation expense $43,320
Add: Amortization expenses - Patents 5,415
Less: Gain on sale of equipment -$7,220
Less: Increase in account receivable - $15,100
Less: Decrease in account payable -$102,75
Less: Increase in inventory -$37,925
Less: Decrease in salaries payable -$3,050
Net Cash flow from Operating activities $538,325
The negative amount shows the cash outflow while the positive amount shows the cash inflow
A consultant has recommended that you modernize a production line. Costs include $650,000 in equipment, a $10,000 investment in net working capital at the time of installation, and $5,000 in delivery and installation costs. The consultant has billed the firm for $7,500 for her analysis of the project. If the project is undertaken, an employee training program costing $8,000 would be required. The old machinery has no book value but can be sold for $100,000. Your firm's marginal tax rate is 34%. What is the initial outlay associated with the project?
a. $619,500
b. $612,000
c. $570,000
d. $578,000
e. $607,000
Answers
Answer:
The initial outlay associated with the project is $607,000
Explanation:
According to the given data we have the following:
Cost of new equipment= $650,000
delivery and installation costs=$5,000
investment in net working capital at the time of installation=$10,000
employee training program=$8,000
The firm's marginal tax rate is 34%, hence, the after tax sale value of old machine=-$100,000×(1-0.34)=-$66,000
Therefore, the initial outlay associated with the project= $650,000+$5,000+$10,000+$8,000-$66,000=$607,000
At its $34 selling price, Atlantic Company has sales of $17,000, variable manufacturing costs of $6,000, fixed manufacturing costs of $1,000, variable selling and administrative costs of $2,000 and fixed selling and administrative costs of $1,000. What is the company's contribution margin per unit? Multiple Choice $16 $14 $18 $30
Answers
Answer:
The correct option is $18
Explanation:
Contribution margin calculation starts with selling price per unit,then deduct variable cost per unit ,the resulting amount is the contribution margin per unit,which is the contribution towards fixed costs and eventual profit made by one unit of output.
The computation of contribution margin per unit is found below:
selling price $34
variable cost per unit ($16)
contribution margin per unit $18
Variable cost per unit:
Variable manufacturing costs $6,000
variable selling and administrative costs $2,000
total variable costs $8000
Sales volume =sales/selling price =$17,000/$34=500
variable cost per unit=total variable cost/volume=$8,000/500=$16
Answer:
Contribution margin per unit is $22
Explanation:
Atlantic company
Income statement
Sales $17,000
Less Variable Manufacturing cost $6,000
Contribution Margin $11,000
Less Fixed Manufacturing cost $1,000
Gross Profit = $10,000
Less Variable selling & admin expense $2,000
Less Fixed selling & admin expense $1,000
Net profit $7,000
Volume = sales divided by unit sales price
= $17,000/34
= 500 units
Contribution Margin per unit = $11,000/500 units
= $22
E16-25 (EPS with Convertible Bonds and Preferred Stock) On January 1, 2014, Crocker Company issued10-year, $2,000,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of Crockercommon stock. Crocker�s net income in 2014 was $300,000, and its tax rate was 40%. The company had100,000 shares of common stock outstanding throughout 2014. None of the bonds were converted in 2014.Instructions(a) Compute diluted earnings per share for 2014.(b) Compute diluted earnings per share for 2014, assuming the same facts as above, except that$1,000,000 of 6% convertible preferred stock was issued instead of the bonds. Each $100 preferredshare is convertible into 5 shares of Crocker common stock.
Answers
Answer:
The answer is given below;
Explanation:
EPS=Net income-preferred dividends/Weighted average shares outstanding
a.Net income=$300,000*(1-30%)=$210,000
Common stocks 100,000
Bonds assumed to be converted into common stocks =$2,000,000/$1,000=2,000*15=30,000
Total common stocks=100,000+30,000=130,000
Diluted EPS=$210,000/130,000=$1.615
b.
*Net income=210,000-(1,000,000*6%)=$150,000
Common stocks=100,000
Bonds =$1,000,000/$1,000=1,000*15=15,000
Preferred stocks=$1,000,000/$100=10,000*5=50,000
Total weighted average shares=100,000+15,000+50,000=165,000
Diluted EPS=Net income-preferred dividends/Weighted average shares
EPS=*$150,000/165,000=$.909
Which of the following statements is true of retailing? A) All retail stores are full-service retail stores. B) A department store has a narrow product line with a deep assortment. C) The largest type of retail outlet is a supermarket. D) Services like hotels, banks, airlines, restaurants, colleges, and hospitals can be retailed. E) A feature common to all types of retail stores is the use of the everyday low pricing strategy.
Answers
Retailing refers to the activity of selling large quantities of goods to as many consumers as possible usually in units or small amounts. Services can be also retailed.
In an attempt to boost sales, hotels and airlines tend to sell stays or flight tickets in large quantities to agencies for them later to resell them to individuals.
The correct answer is "D": Services like hotels, banks, airlines, restaurants, colleges, and hospitals can be retailed.
Option "D": Services like hotels, banks, airlines, restaurants, colleges, and hospitals can be retailed is correct because it is the true statement regarding the retailing services in the market.
Options:
A) All retail stores are full-service retail stores.
B) A department store has a narrow product line with a deep assortment.
C) The largest type of retail outlet is a supermarket.
E) A feature common to all types of retail stores is the use of the everyday low pricing strategy
These options are wrong because they do not provide specific or true verification for the validity of the retailing services in the market.
To know more about the retailing services, refer to the link below:
https://brainly.com/question/18563423
The true statement about retailing is that D) services like hotels, banks, airlines, restaurants, colleges, and hospitals can be retailed.
Explanation:Retailing refers to the process of selling goods and services to consumers through various channels, such as physical stores, online platforms, or direct sales. It involves activities like product selection, pricing, marketing, and customer service. Retailers cater to the end consumer, and the industry plays a crucial role in the supply chain by connecting manufacturers or wholesalers with the final buyers.
The true statement about retailing is Services like hotels, banks, airlines, restaurants, colleges, and hospitals can be retailed. Retailing refers to the process of selling goods and services directly to consumers. Retail stores can vary in terms of their offerings and strategies, but they all involve selling products or services to customers.
Learn more about Retailing here:https://brainly.com/question/31402865
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In addition to risk-free securities, you are currently invested in the Tanglewood Fund, a broad-based fund of stocks and other securities with an expected return of 12.00 % and a volatility of 25.00 %. Currently, the risk-free rate of interest is 4.00 %. Your broker suggests that you add a venture capital fund to your current portfolio. The venture capital fund has an expected return of 20.00 %, a volatility of 80.00 %, and a correlation of 0.20 with the Tanglewood Fund. Calculate the required return and use it to decide whether you should add the venture capital fund to your portfolio.
Answers
Answer:
The answer is 9.12%
Explanation:
From the question stated, we calculate for the required return and use it to decide whether you should add the venture capital fund to your portfolio
Now,
For the calculation of required return
Required return =[(risk free) + (correlation * Volatility venture/Volatility fund) (Expected return - Risk free)]
[ 4.00% + ( 0.20 * 80.00%/ 25.00%) * (12.00% - 4.00%)]
[ 4.00% + (0.20 * 320%) * (8%)]
[4.00% + ( 0.64) * (8%)]
[ 4.00% + 0.0512]
= 0.0912 =9.12
Therefore the required return is = 9.12%
Payson Manufacturing is considering an investment in a new automated manufacturing system. The new system requires an investment of $1,200,000 and either has: Even cash flows of $300,000 per year or The following expected annual cash flows: $150,000, $150,000, $400,000, $400,000, and $100,000.
Calculate the payback period for each case.
Answers
Answer:
The payback period for even cash flow is 4 years
The payback period for uneven cash flows is 5 years
Explanation:
The payback period is a term used in capital budgeting and is one of the ways of assessing a project. It calculates the time required to recover the total cost invested in the project initially.
Payback period for Even cash flows
Payback period = Number of years till last period + Unrecovered cost at the beginning of the last period for payback / Total cash flows during the last period
The last period here refers to the period in which the cost will be recovered.
The initial cost is $1200000
Recovery till last year of payback = 300000 + 300000 + 300000 = $900000
Payback period = 3 + 300000 / 300000 = 4 years
Payback under uneven cash flows
Initial cost = $1200000
Recovery till last year of payback = 150000 + 150000 + 400000 +400000 = 1100000
Payback period = 4 + 100000 / 100000 = 5 years