To calculate the number of pounds of foam The Porch Cushion Company needs to purchase in August, add the number of cushions planned for that month to the ending inventory of foam in August, and multiply by the foam needed for each cushion.
Explanation:To calculate the number of pounds of foam The Porch Cushion Company needs to purchase in August, we need to find the total number of foam cushions expected to be produced in the two following months (August and September) and multiply it by the amount of foam needed for each cushion.
In August, the company plans to produce 19,000 cushions. In September, they plan to produce 12,000 cushions. According to the company's policy, the ending inventory of foam in August should be 30% of the expected production in September, which is 0.3 * 12,000 = 3,600 cushions.
To find the total number of cushions for which foam needs to be purchased in August, we sum the cushions to be produced in August and the ending inventory of foam in August: 19,000 + 3,600 = 22,600 cushions.
Since each cushion requires 2 pounds of foam, the company needs to purchase 22,600 * 2 = 45,200 pounds of foam in August.
Pauline Found Manufacturing, Inc., is moving to kanbans to support its telephone switching-board assembly lines. Determine the size of the kanban for subassemblies and the number of kanbans needed. Setup cost $30 Annual holding cost $100 per subassembly Daily production 25 subassemblies Annual usage 4 comma 500 (50 weekstimes5 days eachtimesdaily usage of 18 subassemblies) Lead time 16 days Safety stock 2 days' production Kanban container size = 98 units (round your response to the nearest whole number). Number of kanbans needed = 3 kanbans (round your response to the nearest whole number).
Answer:
Container size = 52
Number of kanbans required ≈ 7 kanbans
Explanation:
Given the data in the question, to find the Kanban container size, we calculate the economic order quantity (EOQ) using the formula below :
[tex]EOQ = \sqrt{(2*annual usage A*setup cost S)/annual holding cost H}[/tex]
Where
Annual usage A = 4500
Setup cost S = $30
Annual holding cost H = $100
Container size = √{(2×4500×30)÷100} = √2700 = 51.96 ≈ 52
Container size = 52
Number of Kanbans required = (demand during lead time + safety stock) / container size
Where:
Demand during lead time = lead time (16) * daily usage (18)
Demand during lead time = 16*18 = 288
Safety stock = 2 days production, where daily production is 25 subassemblies.
Safety stock = 2*25 = 50 units
Container size = 52 units
Imputing the data into the equation, we obtain :
Number of kanbans required = (288 + 50)/52 = 338/50 = 6.5
Number of kanbans required ≈ 7 kanbans
Safety stock is a word used by logicians to define a quantity of additional stock kept on hand to avoid stock outs due to supply and demand fluctuations.
Container size = 52Number of kanbans required ≈ 7 kanbansGiven the data in the question, to find the Kanban container size, we calculate the economic order quantity (EOQ) using the formula below :
[tex]EOQ=\sqrt{(2*annualusage*setup cost)/annualholding cost}[/tex]
Where,
Annual usage A = 4500
Setup cost S = $30
Annual holding cost H = $100
Container size = √{(2×4500×30)÷100} = √2700 = 51.96 ≈ 52
Container size = 52
Number of Kanbans required = (demand during lead time + safety stock) / container size
Where,
Demand during lead time = lead time (16) * daily usage (18)
Demand during lead time = 16*18 = 288
Safety stock = 2 days production, where daily production is 25 sub assemblies.
Safety stock = 2*25 = 50 units
Container size = 52 units
Imputing the data into the equation, we obtain :
Number of kanbans required = (288 + 50)/52 = 338/50 = 6.5
Number of kanbans required ≈ 7 kanbans
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Bruce Corporation makes four products in a single facility. These products have the following unit product costs: Products A B C D Direct materials $ 15.10 $ 11.00 $ 11.80 $ 11.40 Direct labor 20.20 28.20 34.40 41.20 Variable manufacturing overhead 5.10 3.50 3.40 4.00 Fixed manufacturing overhead 27.30 35.60 27.40 38.00 Unit product cost $ 67.70 $ 78.30 $ 77.00 $ 94.60 Additional data concerning these products are listed below. Products A B C D Grinding minutes per unit 4.60 6.10 5.10 4.20 Selling price per unit $ 76.90 $ 94.30 $ 88.20 $ 105.00 Variable selling cost per unit $ 3.00 $ 2.00 $ 4.10 $ 2.40 Monthly demand in units 4,800 4,800 3,800 2,800 The grinding machines are potentially the constraint in the production facility. A total of 54,400 minutes are available per month on these machines. Direct labor is a variable cost in this company. How many minutes of grinding machine time would be required to satisfy demand for all four products? Multiple Choice 82,500 54,400 19,480 60,420
Answer:
82,500
Explanation:
The computation of the minutes of grinding machine required to satisfy demand is shown below
= (4,800 units × 4.60 + 4,800 units × 6.10 + 3,800 × 5.10 + 2,800 × 4.20)
= 22,080 + 29,280 + 19,380 + 11,760
= 82,500
We simply multiplied the Grinding minutes per unit with the Monthly demand in units and the same is to be considered above
Which of the following statements do not correctly describe push manufacturing? (1). The serial operations are independently optimized (2). Compared to pull, push manufacturing is a relatively new concept (3). Forecasts of demands is a significant factor in deciding on material flow (4). It focuses on maximizing inventory investment
Answer:
Option 3
Explanation:
Simply put, Push manufacturing doesn't even use consumer's demand for manufacture and continues to manufacture the content, thereby growing the inventory cost. Thus demand projections are not an important basis for determining on product flow. Hence, from the above we can conclude that the correct option is 3.
Wember Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports. The cost formula for catering supplies is $350 per month plus $89 per job plus $9 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company expected its activity in September to be 21 jobs and 144 meals, but the actual activity was 17 jobs and 141 meals. The actual cost for catering supplies in September was $3,035. The catering supplies in the planning budget for September would be closest to:
Answer:
$3,515
Explanation:
The computation of the catering supplies is shown below:
= Catering supplies per month + per job cost × expected number of jobs + per meal cost × expected number of meals
= $350 + $89 × 21 jobs + $9 × 144 meals
= $350 + $1,869 + $1,296
= $3,515
Since the question is asking for planning budget so we considered the expected units in terms of jobs and meals
Northwoods Backpackers is a retail catalog store in Vermont that specializes in outdoor clothing and camping equipment. Phone orders are taken each day by a large pool of computer operators, some of whom are permanent and some temporary. A permanent operator can process an average of 76 orders per day, whereas a temporary operator can process an average of 53 orders per day. The company averages at least 600 orders per day. The store has 10 computer workstations. A permanent operator processes about 1.3 orders with errors each day, whereas a temporary operator averages 4.1 orders with errors daily. The store wants to limit errors to 24 per day. A permanent operator is paid $81 per day, including benefits, and a temporary operator is paid $50 per day. The company wants to know the number of permanent and temporary operators to hire to minimize costs.
Formulate an integer programming model for this problem and solve it by using the computer.
The integer linear programming model for the question can be formed as Minimize Z = 81P + 50T subject to the constraints 76P + 53T >= 600, 1.3P + 4.1T <= 24, and P + T <= 10. This problem is then solved using a computer software tool.
Explanation:This problem can be approached with linear programming, a mathematical method used for optimizing resource allocation. In this case, the resources are the permanent and temporary operators, and the goal is to minimize costs while meeting business constraints.
Let 'P' represent the number of permanent operators and 'T' the number of temporary operators,The Constraint for orders: 76P + 53T >= 600,The Constraint for errors: 1.3P + 4.1T <= 24, andThe Constraint for Workstations: P + T <= 10.
A linear programming problem considering the above factors can be formed to minimize cost, i.e., Minimize Z = 81P + 50T Given the constraints.
You can then solve this integer linear programming problem using computer software like Excel Solver, LINGO, or similar tools to obtain optimal values of P and T, i.e., the number of permanent and temporary operators to hire.
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An integer programming model was formulated to minimize costs for Northwoods Backpackers. The model incorporates constraints for order processing, error limits, and workstations. Integer values for permanent and temporary operators are determined using a solver to find the optimal solution.
To determine the optimal number of permanent and temporary operators to minimize costs while meeting order and error constraints, we can set up an integer programming model:
Objective Function:
Minimize Cost: 81P + 50TConstraints:
Order capacity: 76P + 53T ≥ 600Error limit: 1.3P + 4.1T ≤ 24Workstation limit: P + T ≤ 10Non-negativity: P, T ≥ 0 (P and T are integers)Definitions:
P = number of permanent operatorsT = number of temporary operatorsUsing a solver or specialized software, find integer values of P and T that minimize the cost function, 81P + 50T, while satisfying all constraints.A fire destroyed a large percentage of the financial records of a health system. You have the task of piecing together information to prepare a financial report. You have found the profit margin to be 5.4 percent. The sales were $4 million on total assets of $2 million and the debt financing was $800,000. Using the Du Pont equation, what was the organization's return on equity?
Answer:
18.0
Explanation:
Net income = profit margin * sales = 5.4% * 4 million = 0.216 million
Equity = total assets - debt = 2 million - 800,000 = 1.2 million
ROE = net income / equity = 0.216 / 1.2 = 18%
So answer is 18.0%
Zellars, Inc. is considering two mutually exclusive projects. A and B. Project A costs $75,000 and is expected to generate $48,000 in year one and $45,000 in year two. Project B costs $80,000 and is expected to generate $34,000 in year one, $37,000 in year two, $26,000 in year three and $25,000 in year four. Zellars, Inc. required rate of return for these projects is 10%. The net present value for Project B is:
A. $18, 097
B. $42,000
C. $34,238
D.$21,378
Answer:
A. $18, 097
Explanation:
The net present value is the present value of after tax cash flows from an investment less the amount invested.
The npv can be calculated using a financial calculator
Cash flow in year 0 = $-80,000
Cash flow in year 1 = $34,000
Cash flow in year 2 = $37,000
Cash flow in year 3 = $26,000
Cash flow in year 4 = $25,000
I = 10%
NPV = $18,097.12
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
The money supply is $6,000,000, currency held by the public is $2,000,000 and the reserve-deposits ratio is 0.25. Find deposits, bank reserves, the monetary base and the money multiplier. PART 2: In a different economy, vault cash is 1,000,000, deposits by depository institutions at the central bank are 4,000,000 the monetary base is 10,000,000 and bank deposits are 20,000,000. Find bank reserves, the money supply, and the money multplier
Answer:
Please find the detailed answer below.
Explanation:
PART 1:.
a. Deposit = money supply - currency held
$6,000,000 - $2,000,000
= $4,000,000
b. Bank reserve is reserve-deposit ratio x deposit
0.25 x $4,000,000
=$1,000,000
c. Monetary base = currency held + bank reserve
$2,000,000 + $1,000,000
=$3,000,000
d. Money multiplier= money supply/monetary base
$6,000,000/$3,000,000
=2
PART 2.
a. Bank reserve
$4,000,000 + $1,000,000
=$5,000,000
b. Money supply= currency held + bank deposit
Currency held= base - reserve
$10,000,000 - $5,000,000
= $5,000,000
Therefore money supply is
$5,000,000 + $20,000,000
=$25,000,000
c. Money multiplier= money supply/monetary base
$25,000,000/$10,000,000
=2.5
When a recessionary gap occurs,
a. Real output exceeds the natural level of output, and unemployment exceeds its natural rate
b. Real output exceeds the natural level of output, and unemployment is less than its natural rate.
c. Real output is less than the natural level of output, and unemployment exceeds its natural rate.
d. Real output is less than the natural level of output, and unemployment is less than its natural rate.
Answer: Real output is less than the natural level of output, and unemployment exceeds its natural rate. (C)
Explanation:
The recessionary gap is a term in macroeconomic which describes an economy that is operating at a level which is below its full-employment equilibrium. The recessionary gap is also known as a contractionary gap, it is the difference between the potential gross domestic product of a country at full employment and its current employment level which puts pressure on the price in the long run.
The recessionary gap is seen during economic downturn and usually associated with increase in unemployment.
It is your responsibility, as the new head of the automotive section of Nichols Department Store, to ensure that reorder quantities for the various items have been correctly established. You decide to test one item and choose Michelin tires, XW size 185 x 14 BSW.
A perpetual inventory system has been used, so you examine this as well as other records and come up with the following data: Cost per tire $55 each
Holding cost 25 percent of tire cost per year
Demand 1,200 per year
Ordering cost $40 per order
Standard deviation of daily demand 4 tires
Delivery lead time 5 days
Because customers generally do not wait for tires but go elsewhere, you decide on a service probability of 90 percent. Assume the demand occurs 365 days per year.
a. Determine the order quantity. (Round your answer to the nearest whole number.) Order quantity tires
b. Determine the reorder point. (Round your answer to the nearest whole number.) Reorder point tires
Answer:
a. 84 units
b. 27.81
Explanation:
The computation is shown below:
a. For economic order quantity
[tex]= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
[tex]= \sqrt{\frac{2\times \text{1,200}\times \text{\$40}}{\text{\$13.75}}}[/tex]
= 84 units
The carrying cost or holding cost is calculated below:
= $55 × 25%
= $13.75
b. The reorder point is
= Demand × lead time + probability × standard deviation × square root of lead time
where, Demand equal to
= Expected demand ÷ total number of days in a year
= 1,200 ÷ 365 days
= 3.28
So, the reorder point would be
= 3.28 × 5 + 1.28 × 4 × sqrt(5)
= 16.4 + 11.41
= 27.81
The 1.28 is a service level of 90% probability
Final answer:
The order quantity for Michelin tires is calculated as 169 tires using the EOQ formula, and the reorder point is 28 tires, calculated by considering the average daily demand, lead time, and a service probability of 90%.
Explanation:
To calculate the order quantity and reorder point for Michelin tires, we will use the Economic Order Quantity (EOQ) formula and the reorder point formula considering the lead time and service level desired.
Economic Order Quantity (EOQ):
The formula for EOQ is √((2DS)/H), where D is the annual demand, S is the ordering cost per order, and H is the holding cost per unit per year. In this case:
D (Demand) = 1,200 tires per yearS (Ordering cost) = $40 per orderH (Holding cost) = 25% of $55 (cost per tire) = $13.75 per tire per yearTherefore, EOQ = √((2 × 1,200 × 40) / 13.75) ≈ 169 tires (rounded to the nearest whole number).
Reorder Point:
The reorder point is calculated as (average daily demand × delivery lead time) + safety stock. For a service probability of 90%, a z-score from the standard normal distribution is approximately 1.28.
Average daily demand = D/365 days = 1200/365 ≈ 3.29 tiresDelivery lead time = 5 daysStandard deviation of daily demand = 4 tiresSafety stock = z-score × standard deviation of daily demand × √(lead time) = 1.28 × 4 × √5 ≈ 11.44 tiresThus, reorder point = (3.29 × 5) + 11.44 ≈ 27.89 tires, rounded to 28 tires (rounded to the nearest whole number).
Goodday is merging with Baker, Inc. Goodday has debt with a face value of $80 and Baker has debt with a face value of $40. The pre-merger values of the firms given two economic states with equal probabilities of occurrence are as follows: Picture What will be the gain or loss to the current shareholders of Goodday if the merger provides no synergy?
Answer:
Therefore the gain or loss to the current shareholders of Goodday if the merger provides no synergy is -$10
Explanation:
Given:
The Total debt remains same after merger at Pre-merger value = $80 + $40 = $120
The Value of entities together in Economic state 1 = $160 + $20 = $180
Net equity in economic state 1 = Value of entities – total debt
= $180 - $120 = $60
Then,
The Value of entities in Economic state 2 = $40 + $80 = $120
Net equity in economic state 2 =
= $120 - $120 = $0
The Both states are equally possible.
Expected value of combined entity = ($60 + $0)/2 = $30
Market value of Goodday equity before merger = $40
Synergy effect = Expected value of combined entity - Market value of Goodday equity before merger= $30 - $40 = -$10
In May 2013, the value of the Consumer Price Index (CPI) in a certain country, Polonia, reached an all-time high of 239 index points and per capita nominal GDP was $52,200. In January 1950, the CPI was at its lowest at 45 index points. Per capita nominal GDP in 1950 was $10,300.
For the people of Polonia, satisfaction was likely higher in The level of satisfaction hinges on the correlation between happiness and real GDP per capita. Surveys done by social scientists indicate between satisfaction and real GDP per capita ______
A. an indeterminate relationship
B. a robust positive relationship
C. a weak positive relationship
D. a negative relationship
Answer:
B
Explanation:
In May 2013, the value of the Consumer Price Index (CPI) in a certain country, Polonia, reached an all-time high of 239 index points and per capita nominal GDP was $52,200. In January 1950, the CPI was at its lowest at 45 index points. Per capita nominal GDP in 1950 was $10,300.
For the people of Polonia, satisfaction was likely higher in The level of satisfaction hinges on the correlation between happiness and real GDP per capita. Surveys done by social scientists indicate between satisfaction and real GDP per capita a robust positive relationship.
Perry Corporation produces and sells a single product. Data for that product are:
Sales price per unit $250
Variable cost per unit $180
Fixed expenses for the month $600,000
Currently selling 12,000 units
Upper management is considering using a biodegradable packaging which costs $5 more per unit but it produces less waste in the long run. Management plans to increase advertising by $10,000 per month to advertise this new feature to their packaging. They believe that environmentally friendly people will switch to their product resulting in an increase in sales of 2,000 units per month.
How many units would the company have to sell to maintain current operating income if these changes are implemented? Round up to the nearest whole unit.
Answer:
13,077 units
Explanation:
Hint : Work from bottom to top
Current Operating Income = Sales - Expenses
= (12,000×$250) - ($180×12,000+$600,000)
= $3,000,000 - $2,760,000
= $240,000
Income Statement - New
Sales ( $250× 13077) $3,269,250
Less Variable Costs :
Current ( $180 × 13077) ($2,353,860)
Biodegradable packaging($5 × 13077) ($65,385)
Contribution $850,000
Less Fixed Costs :
Current ($600,000)
Advertising ($10,000)
Target Operating Income $240,000
Contribution per unit = 250-180-5
= $65
Number of Units = $850,000/ $65
= 13077
Final answer:
To maintain current operating income with the changes in packaging and advertising, Perry Corporation would need to sell approximately 11,385 units, when the anticipated increase in sales is included.
Explanation:
To calculate the number of units Perry Corporation needs to sell to maintain current operating income after the changes, we need to consider the increase in the variable cost per unit due to the new packaging and the increased advertising expenses. The current contribution margin per unit is the sales price per unit minus the variable cost per unit, which is $250 - $180 = $70. With the new packaging, the variable cost will be $180 + $5 = $185 per unit, reducing the contribution margin to $250 - $185 = $65 per unit.
The total fixed costs will be the original amount plus the additional advertising cost, $600,000 + $10,000 = $610,000. We can use the following formula to determine the new break-even point in units:
Break-even point in units = Total Fixed Costs / Contribution Margin per Unit
Plugging in the values:
Break-even point in units = $610,000 / $65 ≈ 9385 units (rounded up)
Since the company expects to increase sales by 2,000 units due to the environmentally friendly packaging, we need to add these to the break-even number:
New required sales to maintain income = 9385 + 2000 = 11,385 units (rounded up)
Franklin Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 185,000 shares of stock outstanding. Under Plan II, there would be 135,000 shares of stock outstanding and $1.92 million in debt outstanding. The interest rate on the debt is 7 percent and there are no taxes. Use MM Proposition I to find the price per share.
Answer:
The correct answer is $38.40.
Explanation:
According to the scenario, the computation of the given data are as follows:
Plan 1 shares = 185,000 shares
Plan 2 Shares = 135,000 shares
Debt = $1,920,000
So, we can calculate the price per share by using following formula:
Price per share = Debt ÷ ( Plan 1 shares - plan 2 shares)
= $1,920,000 ÷ ( 185,000 - 135,000)
= $1,920,000 ÷ 50,000
= $38.40
Explain whether the following government policies affect the aggregate demand curve or the short-run aggregate supply curve and how. a) The government reduces the minimum nominal wage. b) The government increases Temporary Assistance to Needy Families (TANF) payments, government transfers to families with dependent children. c) To reduce the budget deficit, the government announces that households will pay much higher taxes beginning next year. d) The government reduces military spending.
Answer: Please refer to Explanation
Explanation:
a) The government reduces the minimum nominal wage.
SHORT-RUN Aggregate Supply Curve shifts RIGHT.
By reducing the nominal minimum wage, the government has made one of the primary inputs in production, cheaper. They have reduced the cost of labour so suppliers can afford to produce more at a lesser cost and they will take advantage by doing just that. This increase will move the SRAS to the right.
b) The government increases Temporary Assistance to Needy Families (TANF) payments, government transfers to families with dependent children.
Aggregate Demand Curve shifts RIGHT.
By increasing Transfer Payments, the government is putting more money in the hands of people. This will mean that there is more money to spend on goods and services and this is what people will do. This will have the effect of increasing Aggregate Demand. This will shift the AD curve to the right.
c) To reduce the budget deficit, the government announces that households will pay much higher taxes beginning next year.
AD Curve shifts LEFT
By imposing higher taxes, the government is reducing the amount of income people have to spend on goods and services. This still translate to a reduction in Aggregate Demand and thus the AD curve shifts left.
d) The government reduces military spending.
Aggregate Demand Curve shifts LEFT
The Aggregate Demand Curve is essentially GDP. Government Spending is a major component of GDP so if the government reduces it, then GDP will reduce as well. This will shift the Aggregate Demand Curve LEFT to signify a reduction.
Final answer:
Government policies can impact either the aggregate demand curve or the short-run aggregate supply curve based on their implications, such as altering minimum wage, social assistance payments, taxes, or government spending.
Explanation:
Government policies can affect either the aggregate demand curve or the short-run aggregate supply curve depending on their nature.
a) Reducing the minimum nominal wage affects the short-run aggregate supply curve by lowering production costs and increasing the profitability of firms, which in turn leads to an increase in aggregate supply.
b) Increasing Temporary Assistance to Needy Families (TANF) payments affects the aggregate demand curve by directly affecting consumers' purchasing power, hence influencing consumption and overall demand in the economy.
c) To reduce the budget deficit by announcing higher taxes, it directly impacts aggregate demand by reducing consumers' disposable income, leading to a decrease in consumption and overall demand.
d) Reducing military spending affects the aggregate supply curve by potentially freeing up resources that could be redirected to other sectors, impacting production levels and supply in the economy.
During March, 80,000 units of a standard product were produced. The standard quantity of direct material allowed for one unit was two pounds at a standard price of $5 per pound. If there was a favorable direct material quantity variance of $40,000 for March, the actual quantity of direct material used must have been Multiple Choice 168,000 pounds 152,000 pounds 84,000 pounds 76,000 pounds
Answer: 152,000 pounds
Explanation:
Right. Variance is refered to as the difference between the Actual units it took to produce and the budgeted/ standard unit it took
When the Actual units are less than the standard units, the Variance is said to be Favourable. The reverse is true.
So first we will calculate the standard quantity of direct material.
The standard quantity of direct material allowed for one unit was two pounds at a standard price of $5 per pound with 80,000 units produced,
Calculating therefore would give us,
= 80,000 * 5 * 2
= $800,000
$800,000 was the standard variance.
It was said that the variance is favourable meaning that the Standard Variance is more than the actual.
So subtracting the variance we have,
= 800,000 - 40,000
= $760,000
$760,000 is the actual quantity amount so we have to convert to pounds,
= 760,000 / $5 per pound
= 152,000 pounds
The actual quantity of direct material used for March must have been $152,000 pounds.
A firm has 5,000,000 shares of common stock outstanding, each with a market price of $8.00 per share. It has 25,000 bonds outstanding, each selling for $1,100 with a $1,000 face value. The bonds mature in 12 years, have a coupon rate of 9 percent, and pay coupons semi-annually. The firm's equity has a beta of 1.4, and the expected market return is 15 percent. The tax rate is 35 percent and the WACC is 14 percent. Calculate the risk-free rate. Group of answer choices 2.05 percent 1.19 percent 20.18 percent 15.27 percent
Answer:
2.05 percent
Explanation:
WACC is given by:
= weight of equity*cost of equity + weight of debt*cost of debt
total = $67500000
weight of equity is given by:
= $40000000/(5000000*$8.00 + 25000*$1100)
= ($40000000/$67500000)*100
= 59.26%
weight of debt = ($27500000/$67500000)*100
= 40.74%
after tax cost of debt = cost of debt(1 - tax rate)
= 0.09(1 - 0.35)
= 5.85%
WACC = (0.5926*cost of equity) + (0.4074*5.85%)
0.14 = (0.5926*cost of equity) + 0.0238329
cost of equity = 0.14 - 0.0238329 /0.5926
= 19.60%
cost of equity = risk free rate + beta(market return - risk free rate)
19.60% = risk free rate + 1.4(15% - risk free rate)
19.60% = risk free rate +21% - 1.4*risk free rate
0.4*risk free rate = 1.40%
risk free rate = 1.40%/0.4
risk free rate = 2.05%
Therefore, The risk-free rate is 2.05%
Family Furniture Corporation incurred the following costs. Identify the costs as variable, fixed, or mixed. 1. Wood used in the production of furniture. 2. Fuel used in delivery trucks. 3. Straight-line depreciation on factory building. 4. Screws used in the production of furniture. 5. Sales staff salaries. 6. Sales commissions. 7. Property taxes. 8. Insurance on buildings. 9. Hourly wages of furniture craftsmen. 10. Salaries of factory supervisors. 11. Utilities expense. 12. Telephone bill.
Answer: Please refer to Explanation
Explanation:
1. Wood used in the production of furniture. VARIABLE COST
2. Fuel used in delivery trucks. VARIABLE COST
3. Straight-line depreciation on factory building. FIXED COST
4. Screws used in the production of furniture. VARIABLE COST
5. Sales staff salaries. FIXED COST
6. Sales commissions. VARIABLE COST
7. Property taxes. FIXED COST
8. Insurance on buildings. FIXED COST
9. Hourly wages of furniture craftsmen. VARIABLE COST
10. Salaries of factory supervisors. FIXED COST
11. Utilities expense. MIXED COST
12. Telephone bill. MIXED COST
Troy Engines, Ltd., Manufactures A Variety Of Engines For Use In Heavy Equipment. The Company Has Always Produced All Of The Necessary Parts For Its Engines, Including All Of The Carburetors. An Outside Supplier Has Offered To Sell One Type Of Carburetor To Troy Engines, Ltd., For A Cost Of $31 Per Unit. To Evaluate This Offer, Troy Engines, Ltd., ...
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Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its engines, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $31 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally:
Per Unit 15,000 Units
Per Year
Direct materials $ 9 $ 135,000
Direct labor 11 165,000
Variable manufacturing overhead 2 30,000
Fixed manufacturing overhead, traceable 6* 90,000
Fixed manufacturing overhead, allocated 13 195,000
Total cost $ 41 $ 615,000
*40% supervisory salaries; 60% depreciation of special equipment (no resale value).
Required:
1a.
Assuming that the company has no alternative use for the facilities that are now being used to produce the carburetors, compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to 2 decimals.)
Answer:
Total relevant cost for making the parts =$387,400
Total relevant cost for buying the parts = $465,000
Explanation:
The computation of total cost of making and buying the parts is shown below:-
Make Buy
Cost of purchasing 0 $465,000
(15,000 × $31)
Direct material $135,000 0
Direct labor $165,000 0
Variable manufacturing
overhead $30,000 0
Fixed manufacturing
overhead $57,240 0
Total relevant cost $387,400 $465,000
Suppose the 2014 financial statements of 3M Company report net sales of $21.9 billion. Accounts receivable (net) are $3.43 billion at the beginning of the year and $3.51 billion at the end of the year.1?Compute 3M’s receivable turnover. (Round answers to 1 decimal place, e.g. 12.5.)Accounts receivable turnover ratio ______Suppose the 2014 financial statements of 3M Ctimes2)Compute 3M’s average collection period for accounts receivable in days. (Round answer to 1 decimal place, e.g. 12.5. Use 365 days for calculation.)Average collection period Suppose the 2014 financial statements of 3M C________days
Answer:
The answer is attached for ready reference.
Explanation:
The menu at Joe's coffee shop consists of a variety of coffee drinks, pastries, and sandwiches. The marginal product of an additional worker can be defined as the number of customers that can be served by that worker in a given time period. Joe has been employing one worker, but is considering hiring a second and a third. Explain why the marginal product of the second and third workers might be higher than the first. The marginal product of the
Answer:
The marginal product of the second and third workers might be increasing because workers can take advantage of existing machinery which would cause output to increase at an alarming rate.
"The correct explanation is that the marginal product of the second and third workers might be higher than the first due to the concept of increasing marginal returns.
When Joe hires the first worker, that worker can only handle a certain number of tasks at once, given the constraints of time and resources. However, when a second worker is added, the two workers can specialize and divide tasks more efficiently, leading to an increase in the total output (number of customers served) that is greater than the output of the first worker alone. This is because the second worker not only contributes their own productivity but also enhances the productivity of the first worker by allowing for a better division of labor and reduced idle time.
Similarly, when a third worker is added, the potential for specialization and division of labor increases further. The third worker can take on additional tasks or support the first two workers in serving more customers, which can lead to another increase in total output. The marginal product of the third worker might still be high if there is enough work to be done and if the additional worker does not lead to overcrowding or coordination problems.
However, it's important to note that the principle of increasing marginal returns does not hold indefinitely. After a certain point, adding more workers will lead to diminishing marginal returns, where the additional output from each new worker starts to decrease. This happens because each new worker contributes less to the total output as the law of diminishing returns sets in due to factors such as limited space, equipment, and coordination challenges among a larger number of workers.
In summary, the marginal product of the second and third workers can be higher than the first due to the benefits of specialization and division of labor, which lead to increasing marginal returns up to a certain point. Beyond that point, the marginal product of additional workers will likely decrease due to the law of diminishing returns."
Waterway Industries records purchases at net amounts. On May 5 Waterway purchased merchandise on account, $82000, terms 2/10, n/30. Waterway returned $7000 of the May 5 purchase and received credit on account. At May 31 the balance had not been paid. By how much should the account payable be adjusted on May 31
Answer:
$1,500
Explanation:
The computation of the amount adjusted on May 31 is shown below:
= (Purchase value of the merchandise - returned goods) × discount rate
= ($82,000 - $7,000) × 2%
= $1,500
The terms 2/10, n/30 represent the 2% discount is given if the payment is made within 10 days and the net days provided is 30 days
So, the amount adjusted is $1,500
Bill Amends, owner of Bonita Estate Inc., buys and sells commercial properties. Recently, he sold land for $2,950,000 to the Blackhawk Group, a developer that plans to build a new shopping mall. In addition to the $2,950,000 sales price, Blackhawk Group agrees to pay Bonita Estate Inc. 1% of the retail sales of the mall for 10 years. Blackhawk estimates that retail sales in a typical mall project is $960,000 a year. Given the substantial increase in online sales that are occurring in the retail market, Bill had originally indicated that he would prefer a higher price for the land instead of the 1% royalty arrangement and suggested a price of $3,180,000. However, Blackhawk would not agree to those terms.
Required:
1. What is the transaction price for the land and related royalty payment that Bonita Estate Inc. should record?
Answer:
The transaction price for the land and related royalty payment is $2,950,000
Explanation:
Transaction cost is a fixed and certain cost where an exchange is made. Here the specific cost is $2,950,000 only, since this is the undefined selling cost. 1% commission ought not be considered here, on the grounds that it depends on deals and the deal figure may change in future. In this manner, the measure of commission isn't sure. Therefore, the transaction cost is $2,950,000
Answer: $3,046,000
Explanation: Selling price = $2,950,000
Annual sales in the mall = $960,000
Amount owed Bill in royalty = 1% of yearly sales in the next 10years
Amount proposed by bill instead of royalty based system = $3,180,000.
Royalty owed Bill yearly
= 1 × $960,000 / 100
= $9600
Royalty owed Bill in 10year
= Yearly royalty × 10years
= $9600 × 10
= $96,000
transaction price for the land and related royalty payment that Bonita Estate Inc. should record.
This would be selling price + royalty due for 10years
= $2,950,000 + $96,000
= $3,046,000
"An entity has two long-term construction contracts, one of which qualifies for revenue recognition over time and the other which does not (and so requires revenue recognition upon completion of the contract). For either of these two contracts, what account would be debited when preparing the journal entry to record billings
Qualifies Doesn't qualify
a. Billings Construction Receivable Cash
b. Construction Receivable Construction Receivable
C. Cash Billings Construction in Progress
d. Constructions in Progress Constructions in Progress
Pc Multiple Choice
A) Option a
B) Option c
C) Option d
Answer:
b. Construction Receivable Construction Receivable
Explanation:
Construction Receivable will be debited in both situations to record the billings.
Silver Crafts, Inc. purchases and sells bracelets. The following information summarizes the company's operating activities for the year: Selling and Administrative Expenses $ 5 comma 500 Purchases 159 comma 000 Sales Revenue 788 comma 000 Merchandise Inventory, January 1 2 comma 300 Merchandise Inventory, December 31 38 comma 900 If the company sold 7 comma 800 units of bracelets during the year, how much is the cost for one bracelet?
Answer:
$15.69
Explanation:
The computation of cost for one bracelet is shown below:-
Total cost = Beginning inventory + Purchases - Ending inventory
= $2,300 + $159,000 - $38,900
= $122,400
Now,
Cost for one bracelet = Total cost ÷ Units of Bracelets
= $122,400 ÷ $7,800
= $15.69
So, for computing the cost of one bracelet we simply divide total cost by units of bracelet.
Norma Company had 10,000 units in work in process at January 1 that were 50 percent complete. During January, 25,000 units were completed. At January 31, 6,000 units remained in work in process that were 80 percent complete. Using the average cost method, the equivalent units for January were:
a. 31,000.
b. 29,800.
c. 35,000.
d. 36,000.
Answer:
b. 29,800.
Explanation:
Number of units out in January = 25,000 units completed during month + 80% of 6,000 units completed at month end
= 25,000 + 4,800
= 29,800
Answer:
the equivalent units for January were: b. 29,800.
Explanation:
Equivalent units concept is the measurement of physical units of output in terms of their completion percentage on work done on them.
Calculation of equivalent units for January
Units were completed ( 25,000 units×100%) = 25,000
Units of ending work in process ( 6,000 units ×80%) = 4,800
Total = 29,800
Transactions for Jayne Company for the month of June are presented below.
June 1 Issues common stock to investors in exchange for $5,000 cash.
2 Buys equipment on account for $1,100.
3 Pays $740 to landlord for June rent.
12 Sends Wil Wheaton a bill for $700 after completing welding work done
Journalize the transactions.
Answer and Explanation:
The Journal entry is shown below:-
June 1
Cash Dr, $5000
To Common stock $5000
(Being issue of common stock for cash is recorded)
June 2
Equipment Dr, $1100
To Accounts payable $1100
(Being purchase of equipment on credit is recorded)
June 3
Rent expense Dr, $740
To Cash $740
(Being rent expense is recorded)
June 12
Accounts receivable Dr, $700
To Welding service revenue $700
(Being welding service revenue is recorded)
The given transactions can be journalized as common stock issuance, equipment purchase, rent payment, and bill sent for welding work.
Explanation:The given transactions can be journalized as follows:
June 1: Common Stock Dr. $5,000, Cash Cr. $5,000
June 2: Equipment Dr. $1,100, Accounts Payable Cr. $1,100
June 3: Rent Expense Dr. $740, Cash Cr. $740June 12: Accounts Receivable Dr. $700, Service Revenue Cr. $700
In the first transaction, common stock is issued in exchange for $5,000 in cash. In the second transaction, equipment is purchased on account for $1,100. In the third transaction, the rent of $740 is paid. Finally, in the fourth transaction, a bill for welding work done is sent to Wil Wheaton for $700.
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Sales returns: Multiple Choice Refer to merchandise that customers return to the seller after the sale. Refer to reductions in the selling price of merchandise sold to customers. Represent cash discounts. Represent trade discounts. Are not recorded under the perpetual inventory system until the end of each accounting period.
Answer:
Refer to the merchandise that customer return to the seller after the sale.
Explanation:
Sales return is a option given by a seller to its customers to return the product purchased due to some other reasons. The sales returns are received by sellers and the invoice is then adjusted. The seller records the sales return under the account sales return and allowances. Customers usually return the products to sellers if they are not satisfied with either the quality or quantity.
Prepare the journal entries to record the following transactions on Ivanhoe Company’s books using a perpetual inventory system. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) (a) On March 2, Ivanhoe Company sold $882,900 of merchandise to Metlock Company on account, terms 3/10, n/30. The cost of the merchandise sold was $527,900. (b) On March 6, Metlock Company returned $107,600 of the merchandise purchased on March 2. The cost of the merchandise returned was $66,800. (c) On March 12, Ivanhoe Company received the balance due from Metlock Company.
To record the transactions in Ivanhoe Company's books, you would make the following journal entries:
Accounts Receivable 882,900Sales Revenue 882,900
2. Cost of Goods Sold 527,900
Inventory 527,900
3. Metlock Company 107,600
Accounts Receivable 107,600
4. Inventory 66,800
Cost of Goods Sold 66,800
5. Cash 813,645
Sales Discount 21,255
Accounts Receivable 835,900
Explanation:(a) Journal entry to record the sale:https://brainly.com/question/28764701
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Cepeda Manufacturing Company is considering three new projects, each requiring an equipment investment of $22,000. Each project will last for 3 years and produce the following cash inflows.
Year AA BB CC
1 $ 7,000 $ 9,500 $11,000
2 9,000 9,500 10,000
3 15,000 9,500 9,000
Total $31,000 $28,500 $30,000
The equipment's salvage value is zero. Cepeda uses straight-line depreciation. Cepeda will not accept any project with a payback period over 2 years. Cepeda's minimum required rate of return is 12%.
Compute each project paybeck period.
Answer:
Payback period
Project AA= 2 years 4.8 months
Project BB = 2 years 3.8 months
Project CC = 2 years 1.3 months
Explanation:
Project AA
Cash inflow for after 2 years = 7000 + 9000 =16000
Balance to recover initial cost = 22,000 -16000 = 6,000
Payback period
= 2 years + (6000/15000)× 12 months
= 2 years 4.8 months
Project BB
Cash inflow for after 2 years = 9500 +9500 =19,000
Balance to recover initial cost = 22,000 -19000 = 3,000
Payback period
= 2 years + (3000/9,500)× 12 months
= 2 years 3.8 months
Project CC
Cash inflow for after 2 years = 11,000 + 10,000 =21,000
Balance to recover initial cost = 22,000 -21,000 = 1,000
Payback period
= 2 years + (1,000/9,000)× 12 months
= 2 years 1.3 months
The payback of project AA is 2.4 years.
The payback of project BB is 2.3 years.
The payback of project CC is 2.1 years.
Payback calculates how long it take to recover the investment ina project from its cumulative cash flows.
Project AA
Amount recovered in year 1 = $-22,000 + $7,000 = $-15,000
Amount recovered in year 2 = $-15,000 + $9,000 = $-6,000
Amount recovered in year 3 = 6000 / 15,000 = 4 years
Payback = 2.4 years
Project BB
Payback period = $22,000 / $9,500 = 2.3 years
Project CC
Amount recovered in year 1 = $-22,000 + $11,000 = $11,000
Amount recovered in year 2 = $-11,000 +$10,000 = $-1000
Amount recovered in year 3 = $-1,000 / $9000 = 0.11
Payback period = 2.1 years
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