Answer:
The contribution margin is 531 972
Explanation:
Computation of contribution margin
The contribution margin is revenues - Variable costs
Sales Revenue ( 2 111 * 628) 1 325 708
Variable manufacturing costs ( 2 111 * 352) 743 072
Variable Selling and Administrative costs ( 2 111 * 24) 50 664
Contribution Margin 531 972
All costs of a fixed nature in manufacturing or selling and administrative expenses are not considered in determining the contribution margin
Wendell’s Donut Shoppe is investigating the purchase of a new $18,600 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $3,800 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 1,000 dozen more donuts each year. The company realizes a contribution margin of $1.20 per dozen donuts sold. The new machine would have a six-year useful life. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes? (Round your final answer to the nearest whole dollar amount.) 2. What discount factor should be used to compute the new machine’s internal rate of return? (Round your answers to 3 decimal places.) 3. What is the new machine’s internal rate of return? (Round your final answer to the nearest whole percentage.) 4. In addition to the data given previously, assume that the machine will have a $9,125 salvage value at the end of six years. Under these conditions, what is the internal rate of return? (Hint: You may find it helpful to use the net present value approach; find the discount rate that will cause the net present value to be closest to zero.) (Round your final answer to the nearest whole percentage.)
Answer:
1. Total Annual Cash Inflows = 5000
2. Discount Factor = 3.72
3. New Machine's internal rate of return = 16%
Explanation:
Note: the question is incomplete and it lacks essential data to be used in part 4. Without the exhibits mentioned in the questions, it is not possible to solve this question completely. We will be solving it till part 3.
1) What would be the total annual cash inflows associated with the new machine for capital budgeting purposes?
Answer:
In this we have to calculate the total annual cash inflows and the formula to calculate it is mentioned below:
Total Annual Cash Inflows = Savings in Part Time help annually + Additional contribution Margin from Expected Sales.
Total Annual Cash Inflows = 3800 + ( 1000 x 1.20)
Total Annual Cash Inflows = 3800 + 1200
Total Annual Cash Inflows = 5000
2. What discount factor should be used to compute the new machine’s internal rate of return?
Answer:
Formula to calculate the Discount factor:
Discount Factor = Price of new machine/ annual cash inflow
Price of new machine = 18600 USD
Annual cash inflow = 5000
Discount Factor = 18600 /5000
Discount Factor = 3.72
3. What is the new machine’s internal rate of return?
Answer:
As, it can be seen from the exhibits (which are missing from this question) that the discount factor for 6 years is nearly closest to 16%, hence the new machine's internal rate of return = 16%
Note: the question is incomplete and it lacks essential data to be used in part 4. without the exhibits mentioned in the questions. It is impossible to solve further.
The total annual cash inflow is $5,000. There isn't enough information provided to calculate the discount factor and the Internal Rate of Return (IRR). The salvage value will also change the calculation.
Explanation:1. To calculate the total annual cash inflows, we add the cost savings from reducing part-time help and the additional contribution from the sale of new donuts. The cost saving is $3,800. The additional contribution is the number of dozens of new donuts (1,000) times the contribution margin per dozen ($1.20), which is $1,200. So, the total annual cash inflows are $3,800+$1,200=$5,000.
2. The question does not provide enough information to determine the discount factor. Normally, it would either be provided or calculated based on a given discount rate (interest rate).
3. The Internal Rate of Return (IRR) also cannot be determined without either the net present value at a specific discount rate or the cash inflows for each year given. The IRR is the discount rate that makes the Net Present Value (NPV) of a project zero.
4. With a salvage value, the calculation would change, as the salvage value is a one-time cash inflow at the end of the machine’s life. Again, without specific annual cash inflows, it is impossible to accurately calculate the IRR.
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7) You are thinking of building a new machine that will save you $50,000 in the first year. The machine will then begin to wear out so that the savings decline at a rate of 2.5 percent per year forever. What is the present value of the savings if the discount rate is 8 percent per year?\
Answer:
$476190.47
Explanation:
Given,
Annual Saving = $50,000.
Growth = -2.5%
Interest rate = 8%
Present value of savings = Annual Saving / (Interest rate- Growth)
= $50,000 / (0.08-(-0.025)
= $50,000 / (0.08+0.025)
= $50,000 / 0.105
= $476190.47.
Therefore, the present vaue of the savings is $14,285.71.
Macroeconomics is: the study of individual choice and how that choice is influenced by economic forces. the study of aggregate economic relationships. the study of the pricing policies of firms and the purchasing decisions of households. an analysis of economic reality that proceeds from the parts to the whole.
Answer:
The study of how human beings COORDINATE their WANTS and DESIRES, given the decision making mechanisms, social customs, and political realities of the society
On January 1, 2017, Flying High Airlines leased a new airplane for a term of 10 years The expected life of the airplane is 20 years. There are no rights to purchase the asset at the end of the term, no bargain purchase option, and no residual value guarantee. The lease stipulates that Flying High makes annual payments of S650,000 beginning at the end of the first year (December 31, 2017). Flying High has an incremental borrowing rate of 4.5% and the fair market value ofthe airplane on January 1, 2017 is $6,250,000 (for simplicity, assume the lessors implicit rate is greater than 45%) a. What journal entries related to thelease arrangement should be recorded during 2017 (assume Flying High's fiscal year end is December 31) b. Identify any effects the lease arrangement and the associated reporting would have on the balance sheet, income statement, and statement of cash flows for 2017 c. What is the annual lease payment that results in a present value ofminimum lease payments equal to 90% of the fair market value of the airplane ($6,250,000)?
Answer:
a. The journal entry would be as follows:
Debit Credit
December 31, 2017 Lease Rent Expense $650,000
Cash $650,000
b. The Lease rent expense of $ 650,000 will be reported on the 2017 income statement as an operating expense for computation of net operating income.
c. The annual lease payment that results in a present value ofminimum lease payments equal to 90% of the fair market value of the airplane is $710,883
Regarding The cash outflow of $ 650,000 will be reported in the Operating Activities section of the Statement of Cash Flows for the year ended December 31, 2017.
Explanation:
In order to know what journal entries related to thelease arrangement should be recorded during 2017, first we need to calculate the Present Value Annuity as follows:
Present Value Annuity = [1-(1+r)^-n]/r
=[1-(1+.045)^-10]/0.045 = $7.9127
Hence, Present value of the minimum lease payments = $ 650,000 x 7.9127 = $ 5,143,255
a. The journal entry would be as follows:
Debit Credit
December 31, 2017 Lease Rent Expense $650,000
Cash $650,000
b. The Lease rent expense of $ 650,000 will be reported on the 2017 income statement as an operating expense for computation of net operating income.
Regarding The cash outflow of $ 650,000 will be reported in the Operating Activities section of the Statement of Cash Flows for the year ended December 31, 2017.
c. In order to calculate the annual lease payment that results in a present value ofminimum lease payments equal to 90% of the fair market value of the airplane we would have to use the following formula:
Annual lease payments that would result in present value of minimum lease payments of 90 % of the fair market value of the airplane = $ (6,250,000 x 90% ) / 7.9127 = $ 710,883
In Draco Corporation’s first year of business, the following transactions affected its equity accounts. Issued 6,800 shares of $2 par value common stock for $46. It authorized 20,000 shares. Issued 1,700 shares of 12%, $10 par value preferred stock for $51. It authorized 3,000 shares. Reacquired 340 shares of common stock for $58 each. Retained earnings is impacted by reported net income of $78,000 and cash dividends of $29,000. Prepare the stockholders’ equity section of Draco’s balance sheet as of December 31.
Answer:
$428,780
Explanation:
DRACO CORPORATION
Stockholders' Equity Section of the Balance Sheet as at December 31
Preferred stock- $10 par value
($6,800×$2) $13,600
Paid in capital in excess of par- Preferred stock ($6,800 ×$44) $299,200
($46-$2)
Preferred stock- $10 par value
($1,700×$10) $17,000
Paid in capital in excess of par- Common stock ($1,700×$41) $69,700
($51-$10)
Retained earnings($78,000-$29,000) $49,000
Less: Treasury stock($340×$58) ($19,720)
Total stockholders' equity $428,780
($448,500-$19,720)
The stockholders’ equity section of Draco’s balance sheet as of December 31 is $428,780.
Preferred stock = $6800 × 2 = $13600Add: Paid on capital = ($6800 × 44) = $299200Add preferred stock par value = ($1700 × 10) = $17000Add: Paid in capital excess of par = $1700 × $41 = $69700Add: Retained earnings = $78000 - $29000 = $49000Less: Treasury stock = $340 × $58 = $19720Total stockholders equity = $428780Therefore, the stockholders equity is $428780.
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Flex Co. just paid total dividends of $1,100,000 and reported additions to retained earnings of $3,300,000. The company has 725,000 shares of stock outstanding and a benchmark PE of 17.4 times. What stock price would you consider appropriate
Answer:
$105.60
Explanation:
Given: Total dividend paid= $1100000.
Retained earning= $3300000.
Number of outstanding shares= 725000.
PE ratio= 17.4 times.
First finding earning per share.
Formula; [tex]EPS= \frac{(paid\ dividend+ additional\ retained\ earning)}{number\ of\ outstanding\ shares}[/tex]
⇒ [tex]EPS= \frac{(1100000+3300000)}{725000}[/tex]
⇒ [tex]EPS= \frac{4400000}{725000}[/tex]
∴ [tex]EPS= \$ 6.0689 \approx \$ 6.07[/tex]
Hence, earning per share (EPS)= $6.07.
Now, finding the appropriate stock price.
Price of stock= [tex]EPS\times PE[/tex]
⇒ Price of stock= [tex]\$ 6.07\times 17.4[/tex]
∴ Price of stock= [tex]\$ 105.60[/tex]
Hence, $105.60 would be the appropriate price of stock.
Final answer:
The appropriate stock price for Flex Co., using the benchmark P/E ratio and the company's total earnings divided by the number of shares, is approximately $105.62.
Explanation:
To determine an appropriate stock price for Flex Co., we must first calculate the company's earnings per share (EPS). To do this, we use the total dividends paid and the reported additions to retained earnings. The total earnings can be found by adding the dividends and retained earnings together, which is $1,100,000 + $3,300,000 = $4,400,000. Now, we can find the EPS by dividing the total earnings by the number of shares outstanding:
$4,400,000 / 725,000 shares = $6.07 per share.Next, we use the benchmark P/E ratio to determine the stock price. If the P/E ratio is 17.4 times, then we multiply the EPS by this ratio to find the stock price:
$6.07 per share * 17.4 = $105.62.Therefore, based on the provided information, we would consider an appropriate stock price for Flex Co. to be approximately $105.62.
A firm derives revenue from two sources: goods X and Y. Annual revenues from good X and Y are $10,000 and $20,000, respectively.
If the price elasticity of demand for good X is -4.0 and the cross-price elasticity of demand between Y and X is 2.0, then a 2 percent decrease in the price of X will _______.
Answer:
X demand would rise by 8% ; Y demand would fall by 4%
Explanation:
Price Elasticity of Demand is the responsiveness in demand quantity, due to change in good's price
P.Ed = % change in demand / % change in own price
Cross Price Elasticity is the responsiveness in a good's demand quantity, due to change in other good's price
C.Ed = % change in demand (Y) / % change in other good's price (X)
Given {Good X Elasticities} : P.Ed = (-) 4 ; C.Ed = 2
Price of X decrease = 2%
P.Ed = 4 = % change in demand / 2
% change in demand of X = 2 x 4 = 8%
P.Ed absolute value ignoring negative has been taken due to law of demand price - demand inverse relationship already depicting it. So, 2% fall in price of X increases it's quantity demanded by 8%
C.Ed = 2 = % change in Y demand / 2
% change in Y demand = 2 x 2 = 4%
Cross Price Elasticity of demand is positive in case of substitute goods. These goods can be interchange-ably used to satisfy a particular want. Substitutes price & demand are directly related;- as price fall of a good makes it relatively cheap, increases its demand, decreases other good's demand. So, 2% decrease in good X price decreases good Y demand by 4%
Regan runs her own hot dog stand on the U of A campus. The monthly cost of the cart rental and business permit is $200. Regan's contribution margin per unit is $2.00 and contribution margin ratio is 50%. 1. How many hot dogs does Regan need to sell each month to earn a target profit of $ 900 a month? 2. How much sales revenue does Regan need to generate each month to break even each month to earn a target profit of $ 900 a month?
Answer:
1. 550 units of hot dogs
2. $2200
Explanation:
1. Computation of Number of hot dogs need to sell each month to earn a target profit of $900 is shown below:-
Monthly fixed cost = $200 (Cart rental and business permit)
Sale price per unit = Contribution margin per unit ÷ Contribution margin ratio
= $2 ÷ 50%
= $4
Variable cost per unit = $2 × (4 × 50%)
Number of units to be sold = Fixed cost + Target profit ÷ Contribution margin
= $200 + $900 ÷ 2
= 550 units of hot dogs
2. Calculation of sales revenue to earn a target profit of $900 :
Break even sales revenue = Fixed cost ÷ Contribution margin ratio
= $200 ÷ 50%
= $400
Sales revenue to be generated = Fixed cost + Target profit ÷ Contribution margin ratio
= $200 + $900 ÷ 50%
= $2,200
Final answer:
Regan needs to sell 450 hot dogs each month to earn a target profit of $900. Regan needs to generate $2000 in sales revenue each month to break even and earn a target profit of $900.
Explanation:
To calculate the number of hot dogs Regan needs to sell each month to earn a target profit of $ 900, we can use the formula:
Target Profit = (Number of Hot Dogs Sold) x (Contribution Margin per Unit)
We know that the contribution margin per unit is $2.00, so we can rearrange the formula to find the number of hot dogs:
Number of Hot Dogs = Target Profit / Contribution Margin per Unit
Number of Hot Dogs = $900 / $2.00 = 450 hot dogs
Therefore, Regan needs to sell 450 hot dogs each month to earn a target profit of $900.
To calculate the sales revenue Regan needs to generate each month to break even and earn a target profit of $900, we can use the formula:
Sales Revenue = Fixed Costs + (Target Profit / Contribution Margin Ratio)
We know that the fixed costs are $200 and the contribution margin ratio is 50%, so we can substitute these values into
the formula:
Sales Revenue = $200 + ($900 / 0.50) = $200 + $1800 = $2000
Therefore, Regan needs to generate $2000 in sales revenue each month to break even and earn a target profit of $900.
Sub Station and Planet Sub reported the following selected financial data ($ in thousands). Sub Station's business strategy is to sell the best tasting sandwich with the highest quality ingredients. Planet Sub's business strategy is to sell the lowest cost sub on the planet.
Sub Station Planet Sub
Net sales $108,249 $62,071
Net Income 25,922 3.492
Total assets, beginning 75,183 38,599
Total assets, ending 116,371 44,533
Required:
1. Calculate Sub Station's return on assets, profit margin, and asset turnover ratio.
Answer:
The computations are shown below:
Explanation:
Return On Assets = Net income ÷ Average Total Assets × 100
where,
Average of Assets = (Beginning Total Assets + Ending Total Assets) ÷ 2
= ($75,183 + $116,371) ÷ 2
= $191,554 ÷ 2
= $95,777
So, the return on investment is
=$25,922 ÷ $95,777 × 100
= 27.06%
Profit Margin = Net income ÷ Sales × 100
= $25,922 ÷ $108,249 × 100
= 23.95%
Assets Turnover = Sales ÷ Average of Total Assets
= $108,249 ÷$95,777
= 1.13
To calculate Sub Station's financial ratios, we found its return on assets to be 27.07%, profit margin to be 23.94%, and asset turnover ratio to be 1.13.
Here’s a step-by-step explanation:
1. Return on Assets (ROA)
Return on Assets measures how efficiently a company uses its assets to generate profit.
ROA = (Net Income / Average Total Assets) x 100
Average Total Assets = (Total assets, beginning + Total assets, ending) / 2
For Sub Station:
Average Total Assets = ($75,183 + $116,371) / 2 = $95,777
ROA = ($25,922 / $95,777) x 100 = 27.07%
2. Profit Margin
The Profit Margin indicates the percentage of revenue that has turned into profit.
Profit Margin = (Net Income / Net Sales) x 100
For Sub Station:
Profit Margin = ($25,922 / $108,249) x 100 = 23.94%
3. Asset Turnover Ratio
The Asset Turnover Ratio measures the efficiency of a company's use of its assets to generate sales.
Asset Turnover Ratio = Net Sales / Average Total Assets
For Sub Station:
Asset Turnover Ratio = $108,249 / $95,777 = 1.13
Debbie works as a floor representative at a cellular phone company. Her job is to receive information from potential customers about their needs and interests and enter it into a computer system that passes the information on to the appropriate specialized technician in order to meet customer needs. The computer system is the metaphorical _____ of the firm.
Answer:
The correct answer is letter "D": nucleus.
Explanation:
In neurology, the nucleus is the part of the neuron that contains the genetic material in the form of chromosomes. Neurons need to produce a great number of proteins and most of the neuronal proteins are synthesized in the nucleus. The nucleus is usually in the center of a neuron and is the most visible part of it.
Therefore, in the metaphor of the example the computer system that stores the information of prospective clients will act as the nucleus of a neuron.
The computer system used by Debbie in her role of linking customers to specialized technicians is analogous to a nerve center, a term used in business to represent a hub that receives, processes, and directs information.
Explanation:In the context of this scenario, the computer system that Debbie uses in her job as a floor representative at the cellular phone company can be considered the metaphorical
nerve center
of the firm. This term is often used in business to describe a centralized point in an organization where information is received, processed, and then directed to the proper channels. In this case, Debbie collects information from potential customers, which is then processed by the computer system and passed on for further action by the appropriate specialized technicians.
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. Use a business directory to identify several
nonprofit corporations in your area. What public service is each providing? Why do you
think each is a public rather than a private
corporation?
Nonprofit organizations are businesses that aim to provide charitable, religious, or educational purposes rather than making a profit. They may provide public services such as healthcare, education, or social support. These organizations are considered public corporations because they serve the public good and rely on funding or donations to fulfill their mission.
Explanation:A nonprofit organization is a business entity that has a primary mission of providing charitable, religious, or educational purposes, rather than making a profit.
Some examples of nonprofit corporations in your area might include a nonprofit health organization, a private hospital, or a governmental agency like Health and Social Services.
A nonprofit health organization, for example, provides public health services such as medical research, health education, or access to affordable healthcare for disadvantaged populations.
These organizations are considered public rather than private corporations because their main goal is to serve the public good rather than generating profit for shareholders or owners. They may receive government funding, rely on donations, or operate using volunteer labor to fulfill their mission.
During 2020, the Beach Restaurant had sales revenues and food costs of $700,000 and $500,000, respectively. During 2021, Beach plans to introduce a new menu item that is expected to increase sales revenues by $90,000 and food costs by $41,000. Assuming no changes are expected for the other food items, operating profits for 2021 are expected to increase by:
Answer:
$49,000
Explanation:
Operating profit is the difference between the sales revenue from regular business activities and the operating cost incurred in the process of generating such sales.
Given that the introduction of a new menu is expected to increase sales revenues by $90,000 and food costs by $41,000, the effect on operating profit is
= $90,000 - $41,000
= $49,000
The operating profits for 2021 are expected to increase by $49,000
Answer:
49,000 DOLLARS
Explanation:
Operating profit is a financial metric used to calculate the profits a company make from core businesses which excludes other side investments, taxes and interests.
The formula for calculating operating profit is;
Operating profit = operating revenue - cost of goods
increase in operating profit for the year 2021 = increase in sales revenue - increase in food costs
increase in OP (2021) = 90,000 - 41,000 = 49,000 dollars.
The specific identification method of inventory costing may enable management to manipulate net income. always minimizes a company's net income. has no effect on a company's net income. always maximizes a company's net income.
Answer: May enable management to manipulate net income
Explanation:
The Specific Identification method does in fact allow for some manipulation most especially when there are items that are identical but yet are not of the same cost.
To most customers, the items will be the same and therefore the retailer or management could just report selling an item of higher cost in order to lower paper profit and by extension net income.
If you need further clarification do react or comment.
Specific Identification method in inventory costing can influence a company's net income by allowing executives to selectively assign values to inventory items and therefore affecting reported profits.
Inventory costing methods like Specific Identification can impact a company's net income as it involves assigning values to inventory assets. The specific identification method entails identifying and valuing each individual item in the inventory.
Executives can potentially use this method to manipulate net income by choosing which items to value higher or lower, affecting the reported profits. Therefore, it allows for discretion in valuing inventory which can impact the company's bottom line.
Suppose you invest a sum of $ 1500 in an interest-bearing account at the rate of 12% per year. What will the investment be worth six years from now? (Round your answer to the nearest whole dollar.) In six years the investment will be worth $ .
After six years, the investment will be worth approximately $2925.
To calculate the value of the investment after six years, we can use the formula for compound interest:
[tex]A = P(1 + r/n)^{(nt)}[/tex]
Where:
A = future value
P = the initial principal amount ($1500 in this case)
r = the annual interest rate (12% or 0.12 in decimal form)
n = the number of times the interest is compounded per year (assuming it is compounded annually, n would be 1)
t = the number of years the money is invested for (6 years in this case)
we get:
[tex]A = 1500(1 + 0.12/1)^{(1*6)}\\A = 1500(1 + 0.12)^6\\A = 1500(1.12)^6[/tex]
Calculating the value inside the parentheses first:
[tex](1.12)^6[/tex] = 1.95 (rounded to two decimal places)
A = 1500 * 1.95
A ≈ 2925
Therefore, after six years, the investment will be worth approximately $2925.
The money supply increases when the Fed a. lowers the discount rate. The increase will be larger the larger the reserve ratio is. b. raises the discount rate. The increase will be larger the smaller the reserve ratio is. c. raises the discount rate. The increase will be larger the larger the reserve ratio is. d. lowers the discount rate. The increase will be larger the smaller the reserve ratio is.
Answer: d. lowers the discount rate. The increase will be larger the smaller the reserve ratio is
Explanation: The money supply is given as the total amount of money (bills, coins, loans, credit, and other liquid instruments) in a particular economy (in circulation or in existence).
The Fed has a number of tools for managing the money supply which include: changing the discount rate, changing the reserve requirement, conducting open market operations and redeeming Federal Reserve notes.
Using the discount rate, which is the interest rate the Federal Reserve charges on loans from the Federal Reserve, to increase money supply, the Fed lowers the discount rate which basically increases excess reserves in commercial banks across the economy thus increasing the money supply. The increase in the money supply will be significantly larger the smaller the reserve ratio is.
Sun Industries' budgeted sales and direct materials purchases are as follows: Budgeted Sales Budgeted DM Purchases January $200,000 $30,000 February $220,000 $36,000 March $250,000 $38,000 Sales are 30% cash and 70% credit. Credit sales are collected in the month following sale. Direct materials purchases are paid 40% cash in the month of purchase and 60% in the month following purchase. What are budgeted cash payments for DM purchases for the month of February?
Answer:
Total cash payments in February : $32400
Explanation:
Purchases on cash are generally collected immediately, hence if the purchase occurs in February, it would be collected in February itself. Purchases on credit on the other hand, is where the debtor can pay for the goods or services on a later date. In this case, part is paid at the time of purchase and another part is paid in the next month after the sale.
According to the information, in February $36,000 worth of purchase were made. Of this, 40% would be paid in February itself. 60% in March. At the same time, the business would also have to pay for the remainder of the $30,000 of purchases made in January in February. Hence, total cash payments in February are:
$36000 x 40% = $14400
$30000 x 60% = $18000
Total cash payments in February: $14400 + $18000 = $32400
You need to have $34,000 in 11 years. You can earn an annual interest rate of 3 percent for the first 6 years, and 3.6 percent for the next 5 years. How much do you have to deposit today?
Answer:
$23,859.25
Explanation:
As we know that
Future value = Present value × (1 + interest rate)^number of years
where,
Future value = $34,000
Interest rate and the number of years are different to each other
So, the present value is
$34,000 = Present value × (1.03)^6 × (1.036)^5
$34,000 = Present value × 1.4250238247
So, the present value is $23,859.25
We simply applied the above formula so that the approximate today deposited value or present value could come
To determine the present value required to meet the future goal of $34,000 in 11 years at two different interest rates, you must perform a two-step calculation involving the compound interest formula. First, calculate the amount $34,000 would be equivalent to after 5 years at 3.6% interest, and then determine its equivalent after another 6 years at 3% interest, thereby revealing the initial deposit needed today.
To calculate how much you would need to deposit today to have $34,000 in 11 years with different interest rates for different periods, you would use the compound interest formula and present value calculations. Let's first find the future value of the deposit after the first 6 years using the first interest rate of 3 percent. Then, we'll need to grow that amount for the next 5 years at the 3.6 percent rate.
The compound interest formula is A = P(1 + r/n)nt, where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or borrowed for
For the first 6 years at 3 percent:
P = unknown
r = 0.03
n = 1 (compounded annually)
t = 6
Then, for the next 5 years at 3.6 percent:
r = 0.036
t = 5
First, calculate the amount after 6 years.
P(1 + 0.03)6 = X, where X is the amount we'll have after 6 years.
Next, we will grow X for another 5 years at 3.6%
X(1 + 0.036)5 = $34,000
Now, we must work backwards to find X and then P using the reverse of the compound interest formula (in this case considering it as the present value), which ultimately needs to be solved for P.
Ultimately, to find out how much to deposit today, we calculate the present value of $34,000 discounted back 5 years at 3.6%, and then the result further discounted back 6 years at 3%.
Suppose that the market equilibrium price for a basic medical check-up is $50, in a market in which there is no health insurance. To encourage more people to get a check-up, the local government mandates that the price of a check-up cannot be more than $40. Would the number of check-ups in this market, increase, decrease, or remain unchanged, relative to the market equilibrium
Answer:
The number of check-ups in this market would decrease.
Explanation:
This is an example of price ceiling.
Price ceiling refers to a legal maximum price that is set by the government for a commodity to be sold.
Price ceiling set below the equilibrium price will result in a supply shortage as it will be effective and binding, while price ceiling set above the equilibrium price will not affect quantity supplied in the market as it will not be effective and binding.
Since the $40 price of heck-up is below $50 equilibrium price, it will result in shortage supply and the number of check-ups in this market would decrease.
Although ultimate responsibility for implementing and executing strategy falls upon the shoulders of senior executives,
a. the success or failure of the implementation/execution effort hinges chiefly on a company's reward system and whether its policies and procedures are strategy-supportive.
b. top-level managers still have to rely on the active support and cooperation of middle and lower-level managers in pushing needed changes in functional areas and operating units.
c. the pivotal and most decisive strategy-implementing actions are carried out by frontline supervisors who have the day-to-day responsibility of seeing that key activities are done properly.
d. the success or failure of the implementation/execution effort hinges chiefly on doing an effective job of empowering employees to make day-to-day operating decisions that support good strategy execution.
e. it is a company's employees who most determine whether the drive for good strategy execution will succeed or fail.
Answer: top-level managers still have to rely on the active support and cooperation of middle and lower-level managers in pushing needed changes in functional areas and operating units
Explanation:
The senior executives in organizations are responsible for the implementation and execution of directives to achieve organizational goals. For them to achieve this, top-level managers have to rely on the cooperation and active support of the middle and lower-level managers for organizational success.
The top level managers are in charge of planning and directing the group of individuals as they monitor their work and implement needed changes.
The Draper Corporation is considering dropping its Doombug toy due to continuing losses. Data on the toy for the past year follow:
Sales of 15,000 units $ 150,000 Variable expenses 120,000 Contribution margin 30,000 Fixed expenses 40,000 Net operating loss $ (10,000 ) If the toy were discontinued, Draper could avoid $8,000 per year in fixed costs. The remainder of the fixed costs are not avoidable. Assuming all other conditions stay the same, at what level of annual sales of Doombugs (in units) should Draper be indifferent between discontinuing Doombugs or continuing the production and sale of Doombugs?
To find the break-even point for continuing the Doombug toy line, Draper Corporation needs to equate the unavoidable fixed costs with the contribution margin per unit. They would need to sell 16,000 units after dropping the avoidable fixed costs to break even.
The question from the Draper Corporation case relates to the analysis of whether to continue or discontinue the Doombug toy line. This situation can be evaluated using break-even analysis in a managerial accounting context. The calculation must factor in the unavoidable fixed costs that Draper Corporation would continue to incur and the avoidable fixed costs saved if the production ceases.
To find the sales level at which the company should be indifferent between continuing or discontinuing the Doombug, we need the contribution margin per unit and the avoidable fixed costs. The contribution margin per unit is calculated by taking the total contribution margin ($30,000) and dividing it by the number of units sold (15,000 units), giving $2 per unit. To cover the remaining fixed costs ($32,000, which is $40,000 total fixed costs minus $8,000 avoidable costs), divide these costs by the contribution margin per unit:
Breakeven Units = [tex]\frac{Total Fixed Costs - Avoidable Fixed Costs}{Contribution Margin per Unit}[/tex] =[tex]\frac{\$32,000}{\$2}[/tex] = 16,000 units $$
Thus, the Draper Corporation would need to sell 16,000 units of the Doombug after dropping the avoidable fixed costs to break even and be indifferent to the decision to stop production.
Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data.
BUSINESS SOLUTIONS
Income Statement
For Three Months Ended March 31, 2020
Computer services revenue $ 25,307
Net sales 18,693
Total revenue 44,000
Cost of goods sold $ 14,052
Depreciation expense—Office equipment 400
Depreciation expense—Computer equipment 1,250
Wages expense 3,250
Insurance expense 555
Rent expense 2,475
Computer supplies expense 1,305
Advertising expense 600
Mileage expense 320
Repairs expense—Computer 960
Total expenses 25,167
Net income $ 18,833
BUSINESS SOLUTIONS
Comparative Balance Sheets
December 31, 2019, and March 31, 2020
Mar. 31, 2020 Dec. 31, 2019
Assets
Cash $ 68,057 $ 48,372
Accounts receivable 22,867 5,668
Inventory 704 0
Computer supplies 2,005 580
Prepaid Insurance 1,110 1,665
Prepaid rent 825 825
Total current assets 95,568 57,110
Office equipment 8,000 8,000
Accumulated depreciation—Office equipment (800 ) (400 )
Computer equipment 20,000 20,000
Accumulated depreciation—Computer equipment (2,500 ) (1,250 )
Total assets $ 120,268 $ 83,460
Liabilities and Equity
Accounts payable $ 0 $ 1,100
Wages payable 875 500
Unearned computer service revenue 0 1,500
Total current liabilities 875 3,100
Equity
Common stock 98,000 73,000
Retained earnings 21,393 7,360
Total liabilities and equity $ 120,268 $ 83,460
Required:
Prepare a statement of cash flows for Business Solutions using the indirect method for the three months ended March 31, 2020. Owner Santana Rey contributed $25,000 to the business in exchange for additional stock in the first quarter of 2020 and has received $4,800 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)
To prepare the statement of cash flows using the indirect method, start with the net income and then adjust it for non-cash expenses and changes in operating assets and liabilities. Santana Rey's equity contribution and dividends were also taken into account to determine the overall increase in cash.
Explanation:To prepare a statement of cash flows for Business Solutions using the indirect method, we begin with the net income and adjust it for non-cash charges (depreciation) and changes in operating assets and liabilities. Here is the breakdown:
Net Income: $18,833Add back Depreciation Expense (Office and Computer Equipment) = $1,650Adjustments for changes in operating assets and liabilities: Increase in Accounts Receivable = -$17,199, Increase in Inventory = -$704, Decrease in Prepaid Insurance = $555, Decrease in Prepaid Rent = $0, Decrease in Accounts Payable = $1,100, Increase in Wages Payable = -$375, Decrease in Unearned Service Revenue = $1,500Cash Flows from Operations (=Net Income + Depreciation + Adjustments) = $5,860Fundamental financing activities: Rey's Equity Contribution = $25,000, Rey's Dividends = -$4,800. Hence, Net Cash Provided by Financing = $20,200.At the end, the increase in cash is Cash Flow from Operations + Cash Flow from Financing = $26,060.Learn more about Statement of Cash Flows here:https://brainly.com/question/32701049
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Explain precisely why ‘Opportunity Cost’ is always a RELATIVE concept and is never to be construed in ABSOLUTE terms. In addition, why is the PPF function never strictly convex -what is the economic implication of strict convexity? You are free to provide appropriate examples of your choice.
Answer:
Opportunity costs are defined as the additional costs or benefits lost from choosing one activity or investment over another alternative. It is a relative concept because you cannot be 100% sure that the other investments or activities would have yielded a specific gain.
For example, when you calculate the economic cost of starting your own business, you consider your current salary as an opportunity cost. But what happens if you get fired (or the company closes), your opportunity cost would have been $0? Or how can you exactly measure your future salaries? Maybe in a couple of years you get promoted to manager, or maybe not?
The same applies to economies, since the opportunity cost of producing certain tradable goods is not always fixed, it might decrease or increase due to productivity or efficiency changes. But in order to calculate or determine we must include the most probable option.
In microeconomics, a strictly convex production possibilities frontier function must include a combination of both goods. In strict convexity, the second derivative f''(x) ˃ 0, so the PFF curve cannot be straight, it must have a slope.
When we calculate the opportunity costs of PPF, we usually try to determine which product has the lowest opportunity cost, but that is not an interior solution because both goods are not being produced (the curve is not strictly convex). On a strictly convex curve, as you approach the extremes the opportunity cost of producing one good is high, but on the center the opportunity cost is much lower.
Fruit First produces and sells baskets of dried fruit for $20 each. It receives a special order from Carol Costellano for 150 fruit baskets at a special price of $16. The company incurs a variable cost of $11 and a fixed manufacturing overhead of $6 per unit of fruit basket. The company is operating at full capacity and will have to cancel its existing orders to fill this special order. What will be the total opportunity cost that must be considered in the incremental analysis for this decision?
Answer:
$600
Explanation:
Normal selling price for baskets of dried fruits = $20
No. of baskets ordered = 150
At this price, the total selling revenue will be =$20*150 =$3000
Variable cost = $11*150 =$1650
Manufacturing overhead cost = $6*150 =$900
Income at a selling price of $20 = $3000-$(1650+900)=$450
For the special order
Selling price= $20
Total selling revenue =$16*150=$2400
Income at a selling price of $16 = $2400-$2550 = -$150 loss
The opportunity cost of this decision will be leaving a profit of $450 and obtaining a loss of $150
Total opportunity cost that must be considered in the incremental analysis for this decision =$450 +$150 =$600
The total opportunity cost for Fruit First is the lost profit on the displaced orders, which is 150 baskets x $9 lost contribution margin per basket, amounting to $1350.
The total opportunity cost for Fruit First in accepting Carol Costellano's special order at a special price involves calculating the loss from the reduced price per unit and the cost of cancelling existing orders. To fill the special order at $16 per unit instead of the regular $20, the company already incurs a lost contribution margin of $4 per unit (the difference between the usual selling price and the special order price). Since the variable cost is $11 per unit, the contribution margin on the regular orders would have been $9 per unit ($20 - $11). However, because the company is operating at full capacity, the opportunity cost also includes the profit forgone from the orders that must be canceled to accommodate this special order. If the fixed manufacturing overhead is $6 per unit and is unrecoverable, this cost should not figure into the incremental analysis for the special order as it is a sunk cost, assuming the fixed overhead does not increase because of the special order.
For 150 baskets, the total opportunity cost would therefore involve the lost profit on the displaced regular orders: 150 baskets imes $9 lost contribution margin per basket = $1350. The opportunity cost is the foregone profit from the orders that are cancelled to take on the special order.
In economics, the cost of something is a. always measured in units of time given up to get it. b. the dollar amount of obtaining it. c. what you give up to get it. d. often impossible to quantify, even in principle. 1
Answer:
The correct answer is C
Explanation:
Economies is the study of how the society uses the resources which are limited and it deals with the consumption, production as well as distribution of the goods and services.
And under the economics the cost of something like or product is defined as what the person give up in order to get something.
For example, a person wants to purchase to product, he needs to give up the money against it in order to have the product or item with him.
Company X has net sales revenue of $1,259,000, cost of goods sold of $776,500, and all other expenses of $301,000. The beginning balance of stockholders' equity is $510,000 and the beginning balance of fixed assets is $372,000. The ending balance of stockholders' equity is $875,000 and the ending balance of fixed assets is $400,000. Required: Compute the return on equity (ROE) ratio.
Answer:
The answer is 0,5739.
Explanation:
If we subtract the cost of goods and other expenses from the net sales revenue, we get $181,500.
The balance of fixed assets at the end is $400,000 and the stockholders' equity is $875,000.
The difference in the balance of fixed assets is $28,000 and the difference in the stockholders' equity is $365,000.
So the return on equity ratio can be computed as follows;
(181,500+28,000) / 365,000 = 0,5739.
I hope this answer helps.
Chavez Corporation reported the following data for the month of July: Inventories: Beginning Ending Raw materials $ 31,000 $ 32,000 Work in process $ 18,000 $ 21,000 Finished goods $ 34,000 $ 49,000 Additional information: Raw materials purchases $ 68,000 Direct labor cost $ 93,000 Manufacturing overhead cost incurred $ 61,000 Indirect materials included in manufacturing overhead cost incurred $ 8,800 Manufacturing overhead cost applied to Work in Process $ 60,000 Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold. The cost of goods manufactured for July is:
Answer:
cost of goods manufactured= $217,000
Explanation:
Giving the following information:
Inventories:
Beginning Ending
Raw materials $ 31,000 $ 32,000
Work in process $ 18,000 $ 21,000
Additional information:
Raw materials purchases $68,000
Direct labor cost $ 93,000
Manufacturing overhead cost applied to Work in Process $ 60,000
To calculate the cost of goods manufactured, we need to use the following formula:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
First, we need to calculate the direct material used in production.
Direct material used= beginning inventory + purchases - ending inventory
Direct material used= 31,000 + 68,000 - 32,000= 67,000
Now, we can calculate the cost of goods manufactured:
cost of goods manufactured= 18,000 + 67,000 + 93,000 + 60,000 - 21,000
cost of goods manufactured= $217,000
Exercise 15-19 (LO. 3,4) Henry, a freelance driver, finds passengers using various platforms such as Uber and Grubhub. He is single and has no other sources of income. In 2018, Henry's net income from driving is $61,000. Assume Henry takes the standard deduction of $12,000 Click here to access the 2018 individual tax rate schedule to use for this problem. Compute Henry's QBI deduction and his tax liability. Bl deduction: 12,200 x Tax liability (round to the nearest dollar): 10,736X Feedback Check My Work With the reduction in the corporate income tax rate to 21 percent in 2018, Congress needed to provide a means of reducing the taxes on businesses that operate in different business forms (e.g., sole proprietors, partnerships, and S corporations). Congress accomplished this with the creation of the deduction for qualified business income (§ 199A), which applies to noncorporate taxpayers. To determine the "qualified business income deduction," one has to understand the definition of a "qualified trade or business" and "qualified business income."
Answer:
Qualified Business Income Deduction is $9,800
Tax liability = $4,564
Explanation:
Qualified business income is calculated by subtracting an individual's ordinary deduction from a qualified business or trade from the individual's ordinary income.
Net income = $61,000
Standard deduction = $12,000
Modified taxable income;
$61,000 - $12,000 = $49,000
QBI Deduction (Sec 199A) is the lesser of:
[0.2 × 49,000 < 0.2 × 61,000]
$9,800 < $12,200
Therefore Qualified Business Income Deduction is $9,800
Taxable income = $(49,000 - 9800) =$39,200
Answer:
henry grubs what he loves
A manager doing performance appraisals gives more weight to recent employee behaviors than to behaviors of 6 or 9 months earlier. This shows that the manager's perception is affected by a(n) ________ bias.
Answer:
The correct answer is letter "B": availability.
Explanation:
Availability bias or availability heuristic refers to individuals tending to relate the easiest judgment they can recall about a certain matter as its most suitable metric and even a metric that could predict future behavior on that topic. This happens because those people make assumptions based on what they can remember of that matter which might not be necessarily the most accurate input about it.
Therefore, if a manager is measuring performance only placing focus on employees' recent and not past behavior, the manager is implementing availability bias.
It takes 30 minutes of direct labor time to make one unit. Direct labor wages average $17 per hour. Variable overhead is applied at the rate of $5 per direct labor hour. Fixed overhead is budgeted at $56,500 per month. What is the budgeted overhead for November
Answer:
$404,000
Explanation:
Overheads includes all indirect cost incurred to product the units to be sold. Indirect costs are those costs which are not directly traceable / attributable to the product. These cost are variable and fixed.
Time for each unit = 30 minutes = 0.5 hours
Budgeted production in November = Closing Inventory + Sales in November - Opening Inventory.
Budgeted production in November = (180,000 x 10% ) + 135,000 - 14,000 = 139,000
Budgeted production overhead Included all the variable and fixed overheads incurred to produce the budgeted production.
Variable overhead = 139,000 x 5 X 0.5 = $347,500
Total budgeted Overhead = $347,500 + $56,500 = $404,000
The next dividend payment by Hoffman, Inc., will be $2.65 per share. The dividends are anticipated to maintain a growth rate of 4.5 percent forever. If the stock currently sells for $43.15 per share, what is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Hoffman, Inc. will distribute $2.65 per share as its subsequent dividend. It is expected that the dividend growth rate would always be 4.5 percent. The needed return per share is 10.64% if the company now trades for $43.15 per share.
R=(D1/P0)+g R=(2.65/43.15)+.045 R=.1064, or 10.64%
What is meant by dividend payment?A dividend payment made by a company to its shareholders out of its profits. A corporation is allowed to pay shareholders a portion of its profit as a dividend when it has a profit or surplus dividend payment.
Any unused funds are retained and reinvested back into the company (called retained earnings). Both the profit from the current year and the retained earnings from prior years are available for distribution; a corporation is typically not allowed to pay a dividend out of its capital.
The sum that is distributed to shareholders may be paid in cash (often a deposit into a bank account) or, if the company has a dividend reinvestment plan
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