Answer:
4.74%
Explanation:
Data provided in the question:
Total receivables = $3,160
Day's sales in receivables = 20
Total assets = $73,000
Operating profit margin = 6.0%
Now,
Total sales = Total receivables × [365 ÷ Day's sales in receivables ]
= 3,160 × [ 365 ÷ 20 ]
= $57,670
Assets turnover ratio = Total sales ÷ Total assets
= $57,670 ÷ $73,000
= 0.79
Therefore,
ROA = Assets Turnover ratio × Profit margin
= 0.79 × 6.0%
= 4.74%
Fuqua Company's sales budget projects unit sales of part 198Z of 10,000 units in January, 12,000 units in February, and 13,000 units in March. Each unit of part 198Z requires 4 pounds of materials, which cost $2 per pound. Fuqua Company desires its ending raw materials inventory to equal 40% of the next month's production requirements, and its ending finished goods inventory to equal 20% of the next month's expected unit sales. These goals were met at December 31, 2016.
The production budget for January and February 2017 follow:
FUQUA COMPANY
Production Budget
For the Two Months Ending February 28, 2017
January February
Expected units sales 10,000 12,000
Add: Desired ending finished goods inventory 2,400 2,600
Total required units 12,400 14,600
Less: Beginning finished goods inventory 2,000 2,400
Required production units 10,400 12,200
Prepare a direct materials budget for January 2017.
FUQUA COMPANY
Direct Materials Budget
For the Month Ending January 31, 2017
January
Units to be produced 10,400
Direct material pounds per unit 4
Total pounds needed for production 41,600
Add: Desired pounds in ending materials inventory
Total materials required
Less: Beginning direct materials
Direct materials purchases
Cost per pound $2
Total cost of direct materials purchased
Direct Materials Budget:
Budgets are used by companies for planning purposes and for comparison purposes after to see how their expectations compare to what they actually spent. A direct materials budget is used to predict how much direct materials will need to be purchased and what the predicted cost will be.
Answer
The answer and procedures of the exercise are attached in the following archives.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
The preparation of the Direct Materials Budget for Fuqua Company is as follows:
FUQUA COMPANY
Direct Materials BudgetFor the Month Ending January 31, 2017
January
Units to be produced 10,400
Direct material pounds per unit 4
Total pounds needed for production 41,600 (10,400 x 4)
Add: Desired pounds in
ending materials inventory 4,880 (12,200 x 40%)
Total materials required 46,480 (41,600 + 4,880)
Less: Beginning direct materials 4,160 (10,400 x 40%)
Direct materials purchase 42,320 (46,480 - 4,160)
Cost per pound $2
The total cost of direct materials
purchased $84,640 (42,320 x $2)
What is a direct materials budget?The direct materials budget is a budget of the number of materials that must be purchased within a period, to fulfill the requirements of the production budget.
The direct materials budget helps management to estimate the quantity of raw materials to be purchased for each period.
The overall purpose of the direct materials budget is to fulfill the production requirements and to provide adequate inventories.
Data and Calculations:
January February March
Budgeted sales units 10,000 12,000 13,000
Materials required per unit = 4 pounds
Cost per pound = $2
Desired ending raw materials inventory = 40% of next month's production requirements.
Desired ending finished goods inventory = 20% of next month's sales
FUQUA COMPANY
Production BudgetFor the Two Months Ending February 28, 2017
January February
Expected units sales 10,000 12,000
Add: Desired ending finished goods inventory 2,400 2,600
Total required units 12,400 14,600
Less: Beginning finished goods inventory 2,000 2,400
Required production units 10,400 12,200
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The demand for subassembly S is 100 units in week 7. Each unit of S requires 1 unit of T and 2 units of U. Each unit of T requires 1 unit of V, 2 units of W, and 1 unit of X. Finally, each unit of U requires 2 units of Y and 3 units of Z. One firm manufactures all items. It takes 2 weeks to make S, 1 week to make T, 2 weeks to make U, 2 weeks to make V, 3 weeks to make W, 1 week to make X, 2 weeks to make Y, and 1 week to make Z. a) Construct a product structure. Identify all levels, parents, and components. b) Prepare a time-phased product structure. 14.4 Using the information in Problem 14.3, construct a gross material requirements plan. 14.5 Using the information in Problem 14.3, construct a net material requirements plan using the following on-hand inventory. ITEM ON-HAND INVENTORY ITEM ON-HAND INVENTORY S 20 W 30 T 20 X 25 U 40 Y 240 V 30 Z 40
Answer
The answer and procedures of the exercise are attached in the following image.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
The product structure is as follows: Level 0: S, Level 1: T and U, Level 2: V, W, X and Y, Z. The time-phased product structure and materials requirements are established from Week 5 backward. Subtracting the on-hand inventory from the gross requirements yields the net material requirements plan.
Explanation:This question deals with material requirements planning in a manufacturing setting, which uses deep product structures. Let's break down each part of it:
a) Product Structure:
Level 0: S Level 1: T and U (parent is S) Level 2: V, W, X (parent is T) and Y, Z (parent is U)
b) Time-phased Product Structure:
Week 5: Begin production of 100 units of T (for S) and 200 units of U (for S) Week 4: Begin production of 100 units each of V, W, X (for T) and 400 units of Y and 600 units of Z (for U)
14.4) Gross Material Requirements Plan: The S component needs 100 units, the T needs 100 units, U needs 200 units, V needs 100 units, W needs 200 units, X needs 100 units, Y needs 400 units and Z needs 600 units.
14.5) Net Material Requirements Plan: Considering the on-hand inventory, we subtract the on-hand inventory from the gross requirements to get the net requirements. Therefore, S needs 80 units, T needs 80 units, U needs 160 units, V needs 70 units, W needs 170 units, X needs 75 units, Y needs 160 units and Z needs 560 units.
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Schwartz Industry is an industrial company with 100 million shares outstanding and a market capitalization (equity value) of $4 billion. It has $2 billion of debt outstanding. Management have decided to delever the firm by issuing new equity to repay all outstanding debt.
a) How many new shares must the firm issue?
b1) Suppose you are a shareholder holding 100 shares, and you disagree with this decision. Assuming a perfect capital market, how much should you borrow to hold the same amount of levered equity?
b2) How many new shares should you buy?
Farmer Corp. owned 20,000 shares of Eaton Corp. purchased in 2009 for $300,000. On December 15, 2012, Farmer declared a property dividend of all of its Eaton Corp. shares on the basis of one share of Eaton for every 10 shares of Farmer common stock held by its stockholders. The property dividend was distributed on January 15, 2013. On the declaration date, the aggregate market price of the Eaton shares held by Farmer was $500,000. The entry to record the declaration of the dividend would include a debit to Retained Earnings of
Answer:
Debited to Retained Earnings of $500,000.
Explanation:
At the time of declaration of the dividend, the journal entry is recorded which is shown below:
Retained earning A/c Dr $500,000
To Dividend payable A/c $500,000
(Being cash dividend declared)
On the declaration date, the dividend amount is recorded. So while recording we debited the retained earning account and credited the dividend payable account
All other information which is given is not relevant. Hence, ignored it
Demand for a certain product is forecast to be 800 units per month, averaged over all 12 months of the year. The product follows a seasonal pattern, for which the January monthly index is 0.8. What is the seasonally-adjusted sales forecast for January?
(A) 798.75 units
(B) 640 units
(C) 83.33 units
(D) 801.25 units
(E) 1000 units
Answer:
(E) 1000 units
Explanation:
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
Answer: b.640 units
Explanation:
Seasonally Adjusted Forecast=Forecasted Demand×Seasonal Index
Given:
Forecasted demand = 800 units
January seasonal index = 0.8
Using the formula:
Seasonally Adjusted Forecast for January=800×0.8=640 units
So, the correct answer is:
b. 640 units
Sheridan Company uses a periodic inventory system. For April, when the company sold 450 units, the following information is available. Units Unit Cost Total Cost April 1 inventory 280 $17 $ 4,760 April 15 purchase 420 20 8,400 April 23 purchase 300 22 6,600 1,000 $19,760 Compute the April 30 inventory and the April cost of goods sold using the LIFO method.
Answer:
Closing inventory - $10,160
Costs of goods sold - $9,600
Explanation:
Under the LIFO Method, the cost of good sold equals to
= April 23 units × cost per unit + Remaining units × cost per unit
= 300 units × $22 + 150 units × $20
= $6,600 + $3,000
= $9,600
Since the firm has sold 450 units, so out of which 300 units sold at a price of $22 and the remaining 150 units sold at a price of $20
The ending inventory equals to
= Remaining units × cost per unit + April 1 × cost per unit
= 270 units × $20 + 280 units × $17
= $5,400 + $4,760
= $10,160
Since on April 23, the 420 units were purchase, out of which 150 units are transferred to the cost of good sold and the remaining units 270 units at $20 is transferred to the ending inventory
Final answer:
Using LIFO, the April cost of goods sold for the Sheridan Company is $9,600, and the ending inventory at April 30 is valued at $10,160.
Explanation:
When using the Last In, First Out (LIFO) inventory valuation method, Sheridan Company will calculate the cost of goods sold (COGS) and ending inventory based on the assumption that the most recently purchased items are sold first. The April cost of goods sold is calculated by adding the cost of the units sold, starting with the most recent purchase, until reaching the total number of units sold (450 units). The April 30 inventory is then determined by subtracting the sold units' cost from the total cost of available inventory.
Let's calculate:
COGS for the 300 units from April 23 purchase: 300 units x $22 = $6,600The remaining 150 units sold come from the April 15 purchase: 150 units x $20 = $3,000Total COGS for April (sum of #1 and #2): $6,600 + $3,000 = $9,600April 30 inventory calculation starts with the total cost of inventory: $19,760Subtract the total COGS from the total cost of inventory for the end of the month inventory: $19,760 - $9,600 = $10,160Thus, the April 30 inventory is $10,160, and the April cost of goods sold is $9,600.
While ________ seems to be a reasonable measure of risk when evaluating a large portfolio, the
________ of an individual security does not explain the size of its average return.
A) volatility, volatility
B) the mean return, standard deviation
C) mode, volatility
D) mode, mean return
Answer:
A) volatility, volatility
Explanation:
Volatility refers to the change in returns as measured with the standard deviation with change in trading price series.
When we evaluate a large portfolio with various kinds of securities and investment, the volatility helps the best to access the risk factor present in it.
Whereas the risk can not be measured through the volatility of an individual security, as there will not be major effect of change in prices, on other securities.
As the volatility factor is in correspondence of other factors, as well.
Embassy Club Condominium, located on the west coast of Florida, is undertaking a summer renovation of its main building. The project is scheduled to begin May 1, and a September 1 (17-week) completion date is desired. The condominium manager identified the following renovation activities and their estimated times:
Draw a project network. What are the critical activities? What activity has the most slack time? Will the project be completed by September 1?
Answer
The answer and procedures of the exercise are attached in the following images.
Explanation
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Critical activities are those with zero slack time in a project. Slack time is task flexibility and the task with most slack time has the greatest difference between earliest and latest start times. Whether a project finishes by a certain date depends on if the longest path (critical path) is equal to or less than the total available project time.
Explanation:The scenario described pertains to project management, a topic within business studies, specifically focusing on project scheduling and network analysis. The specific instance involves the Embassy Club Condominium's renovation project. To solve this we first create a project network from the activities and their estimated times, then identify the critical activities (those with zero slack time), which are steps in the project that cannot be delayed without delaying the entire project. Slack time is the total time that you can delay a task without delaying the project. More slack time means that project scheduling is more flexible.
However, without the specific activity list and their estimated times, I can't provide a detailed solution. But in general, to identify which activity has the most slack time, you would look for the task with the greatest difference between its earliest and latest start times.
Finally, if the longest path (the critical path) through the network is shorter than or equal to the total project time available (17 weeks in this scenario), the project can be completed by the desired date (September 1). If it's longer than the available time, the project won't be completed by the desired date without changes to the project plan.
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Fixed costs are irrelevant in the decision about whether to shut down production in the short run because fixed costs:
A. do not affect, and are not affected by, the quantity the firm produces
B. only charge when production changes
C. only change in the short run
D. affect, and are affected by, the quantity the firm produces
Answer:
A. do not affect, and are not affected by, the quantity the firm produces
Explanation:
In a short run shutdown, regardless of the production of volume or if there is any production at all, fixed costs still have to be paid in full and therefore are irrelevant in the decision about whether to shut down production in the short run.
Thus, the answer is A. do not affect, and are not affected by, the quantity the firm produces.
Nieto Company's budgeted sales and direct materials purchases are as follows. Budgeted Sales Budgeted D.M. Purchases January $200,000 $30,000 February 220,000 36,000 March 250,000 38,000 Nieto's sales are 30% cash and 70% credit. Credit sales are collected 10% in the month of sale, 50% in the month following sale, and 36% in the second month following sale; 4% are uncollectible. Nieto's purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month of purchase, and 60% in the month following purchase.
Instructions
(a) Prepare a schedule of expected collections from customers for March.
(b) Prepare a schedule of expected payments for direct materials for March
Answer
The answer and procedures of the exercise are attached in the folllowing image.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
The schedule of expected collections from customers for March is $219,900 and the schedule of expected payments for direct materials for March is $37,400.
Schedule of expected collections from customersa.Schedule of expected cash collection
Cash sales $75,000
($250,000×30%)
Collection from credit sales
January $50,400
($200,000×70%×36%)
February $77,000
($220,000×70%×50%)
March $17,500
($250,000×70%×10%)
Toatl cash collection $219,900
b. Schedule of expected payment for direct materials
Cash purchases $19,000
($38,000×50%)
Payment for credit sales
January $10,800
($36,000×50%×60%)
February $7,600
($38,000×50%×40%)
Total cash payment $37,400
Inconclusion the schedule of expected collections from customers for March is $219,900 and the schedule of expected payments for direct materials for March is $37,400.
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True or False? Given that so many countries around the world already use care management and evidence-based medicine in their health systems, there is little interest in US MCOs' expertise in this area.
The answer Is false I'm 93% positive that's the answer
A group of manufacturers of LCD screens for computers and cell phones met together monthly in private conference rooms in hotels to discuss their markets and kept notes with phrases such as "Must act together with the Korean makers in order to reap success," and "Extremely confidential. Must not distribute." The result was that the LCD screen producers were able to command high prices for their products, prices that were non-negotiable. Which of the following statements is correct about their conduct?
a. The manufacturers had engaged in a per se violation of antitrust laws.
b. The manufacturers violated the Sherman Act.
c. The manufacturers violated the Clayton Act.
d. both a and b
e. all of the above
Answer: a. The manufacturers had engaged in a per se violation of antitrust laws.
Explanation: The Sherman and Clayton Acts would apply to US companies. The group of manufacturers of LCD screens were not specified as US companies. But by virtue of the fact of colluding with Korean makers they would have per se been violating the the Monopoly Regulation and Fair Trade Act (MRFTA) of Korea.
You are a bidder in an independent private values auction, and you value the object at $4,000. Each bidder perceives that valuations are uniformly distributed between $1,000 and $7,000
Determine your optimal bidding strategy in a first-price, sealed-bid auction when the total number of bidders (including you) is:
a. 2 bidders.
b. 10 bidders.
c. 100 bidders.
Answer:
Please see attachment
Explanation:
Please see attachment
Final answer:
In a first-price, sealed-bid auction, the optimal bidding strategy with independent private values suggests bidding a fraction of your valuation, with the fraction being (n-1)/n where n is the number of bidders. For 2 bidders, bid $2,000; for 10 bidders, bid $3,600; for 100 bidders, bid $3,960.
Explanation:
In a first-price, sealed-bid auction, bidders submit one bid without knowing the others' bids, and the highest bidder wins but pays their bid amount. The optimal bidding strategy depends on the number of bidders, as it influences the probability of winning. According to auction theory, under the assumption of independent private values where bidders' valuations are uniformly distributed, the equilibrium strategy recommends bidding a fraction of your valuation, determined by the formula (n-1)/n, where n is the number of bidders.
With 2 bidders, the fraction is 1/2, so the bid should be $4,000 * (1/2) = $2,000.
With 10 bidders, the fraction is 9/10, so the bid should be $4,000 * (9/10) = $3,600.
With 100 bidders, the fraction is 99/100, the bid should be $4,000 * (99/100) = $3,960.
The strategy evolves as the number of bidders increases; with more competitors, one should bid closer to the valuation since the winning bid is likely to be higher. Additionally, due to statistical independence and revenue equivalence, the strategy to bid a fraction of valuation also ensures that on average, the revenue the seller obtains from any auction type remains the same.
GDP: Is It Counted and Where? For each of the following items, write one of the following in the space provided: C if the item is counted as consumption spending, T if the item is counted as investment spending, G if the item is counted as government spending, NX if the item is counted as net exports, and NC if the item is not counted in GDP. 1. You spend $7.00 to attend a movie. __ 2. A family pays a contractor $100,000 for a house he built for them this year. __ 3. A family pays $75,000 for a house built three years ago. __ 4. An accountant pays a tailor $175 to sew a suit for her. __ 5. The government increases its defense expenditures by $1,000,000,000. __ 6. The government makes a $300 Social Security payment to a retired person. __ 7. You buy General Motors Corp. stock for $1,000 in the stock market. __ 8. At the end of a year, a flour-milling firm finds that its inventories of grain and flour are $10,000 above the amounts of its inventories at the beginning of the year. __ 9. A homemaker works hard caring for her spouse and two children. __ 10. Ford Motor Co. buys new auto-making robots. __ 11. You pay $300 a month to rent an apartment. __ 12. Apple Computer Co. builds a new factory in the United States. __ 13. R.J. Reynolds Co. buys control of Nabisco. __ 14. You buy a new Toyota that was made in Japan. __ 15. You pay tuition to attend college. __ We count only the final retail price of a new good or service in GDP. Why? A purely financial transaction will not be counted in GDP. Why? When a homeowner does home-improvement work, the value of the labor is not counted in GDP. Why?
Answer:
Check the following solutions.
Explanation:
(1) C
Money spent for movie ticket is personal consumption.
(2) I
Purchase of new residential house is included in GDP under fixed residential investment.
(3) NC
Purchase of used good is not counted (to avoid double counting).
(4) C
Money spent for suit is personal consumption.
(5) G
Defense spending is included in government purchase of goods and services.
(6) NC
Social security, being a transfer payment, is excluded from GDP.
(7) NC
Purchase of stocks is excluded from GDP.
(8) I
Unintended inventory is included under Gross private domestic investment.
(9) NC
Unpaid services are excluded from GDP since market value cannot be precisely computed.
(10) I
The robots are physical capital for Ford's business.
(11) C
Rental payment is personal consumption.
(12) I
Building new factory is fixed non-residential business investment.
(13) NC
Transfer of corporate ownership is excluded from GDP.
(14) NX
Purchase of Japanese car is an Import, included under NX.
(15) C
Tuition payment is personal consumption.
Eric has another get-rich-quick idea, but needs funding to support it. He chooses an all-debt funding scenario. He will borrow $2 comma 000 from Wendy, who will charge him 6% on the loan. He will also borrow $1 comma 500 from Bebe, who will charge him 8% on the loan, and $800 from Shelly, who will charge him 14% on the loan. What is the weighted average cost of capital for Eric?
Answer:
Cost of Capital = 8.186
Explanation:
given data
borrow $2,000
charge = 6%
borrow = $1,500
charge = 8%
borrow = $800
charge = 814%
to find out
weighted average cost of capital for Eric
solution
we get first Total Capital value that is
Total Capital value = Value of Wendy + Value of Bebe + Value of Shelly
Total Capital value =$ 2000 + $1500 + $800
Total Capital value = $4300
and
Weight of Wendy will be = Value of Wendy ÷ Total Capital Value
Weight of Wendy = [tex]\frac{2000}{4300}[/tex]
Weight of Wendy =0.4651
and
Weight of Bebe will be = Value of Bebe/Total Capital Value
Weight of Bebe = [tex]\frac{1500}{4300}[/tex]
Weight of Bebe = 0.3488
and
Weight of Shelly will be = Value of Shelly/Total Capital Value
Weight of Shelly = [tex]\frac{800}{4300}[/tex]
Weight of Shelly = 0.186
so
Cost of Capital is here = Weight of Wendy × Cost of Wendy + Weight of Bebe × Cost of Bebe + Weight of Shelly × Cost of Shelly
put here value
Cost of Capital = 6 × 0.4651 + 8 × 0.3488 + 14 × 0.186
Cost of Capital = 8.186
The weighted average cost of capital (WACC) is calculated based on the proportion of each loan and its respective interest rate. In this scenario, Eric borrows money from three sources at different interest rates. The WACC for Eric's funding is 8.19%.
Explanation:The weighted average cost of capital (WACC) is used to calculate the average cost of capital for a company. In Eric's scenario, he is borrowing money from three different sources, each with a different interest rate. To calculate the WACC, we need to determine the proportion of each loan and multiply it by the respective interest rate.
Let's calculate:
Loan from Wendy: $2,000 at 6% = $120Loan from Bebe: $1,500 at 8% = $120Loan from Shelly: $800 at 14% = $112Next, we sum up the total amount borrowed: $2,000 + $1,500 + $800 = $4,300. The weighted average cost of capital is then the total interest paid divided by the total amount borrowed:
Total interest paid = $120 + $120 + $112 = $352
WACC = $352 / $4,300 = 8.19%
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Blanchard Company manufactures a single product that sells for $280 per unit and whose total variable costs are $224 per unit. The company's annual fixed costs are $879,200. Management targets an annual pretax income of $1,400,000. Assume that fixed costs remain at $879,200.
1) Compute the unit sales to earn the target income.
2) Compute the dellar sales to earn the target income?
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Blanchard Company manufactures a single product that sells for $280 per unit and whose total variable costs are $224 per unit. The company's annual fixed costs are $879,200. Management targets an annual pretax income of $1,400,000. Assume that fixed costs remain at $879,200.
A) Break-even point= (fixed costs + profit)/ contribution margin
Break-even point= (879,200 + 1,400,000)/(280 - 224)= 40,700 units
B) Break-even point (dollars)= (fixed costs + profit)/ contribution margin ratio
Break-even point (dollars)= 2,279,200/ (56/280)= $11,396,000
Brinker accepts all major bank credit cards, including First Savings Bank's, which assesses a 4.5% charge on sales for using its card. On May 26, Brinker had $5,000 in First Savings Bank Card credit sales. What entry should Brinker make on May 26 to record the deposit
A)On July 9, Mifflin Company receives a $8,900, 90-day, 12% note from customer Payton Summers as payment on account. Compute the amount due at maturity for the note. (Use 360 days a year.)
B)On November 1, Orpheum Company accepted a $11,300, 90-day, 12% note from a customer to settle an account. What entry should be made on the November 1 to record the note acceptance
C)Jervis sells $2,700 of its accounts receivable to Northern Bank in order to obtain necessary cash. Northern Bank charges a 4% factoring fee. What entry should Jervis make to record the transaction
D) Craigmont uses the allowance method to account for uncollectible accounts. Its year-end unadjusted trial balance shows Accounts Receivable of $142,500, allowance for doubtful accounts of $1,045 (credit) and sales of $1,115,000. If uncollectible accounts are estimated to be 8% of accounts receivable, what is the amount of the bad debts expense adjusting entry?
E) On February 1, a customer's account balance of $4,200 was deemed to be uncollectible. What entry should be recorded on February 1 to record the write-off assuming the company uses the allowance method
F) On December 31 of the current year, the unadjusted trial balance of a company using the percent of receivables method to estimate bad debt included the following: Accounts Receivable, debit balance of $98,100; Allowance for Doubtful Accounts, credit balance of $1,051. What amount should be debited to Bad Debts Expense, assuming 4% of outstanding accounts receivable at the end of the current year are estimated to be uncollectible
Answer:
Dr Cash $4,775
Dr Credit Card Expense 225
Cr Credit Sales 5,000
Explanation:
5,000 x 4.5% = $225 credit card expense
5,000 - 225 = $4,775 debit to cash
Dr Cash $4,775
Dr Credit Card Expense 225
Cr Credit Sales 5,000
A) $8,900 * (90/360) * (12/100) = $267
= $8,900 + $267
= $9,167
B) Dr Note Receivable $11,300;
Cr Accounts Receivable $11,300.
C) Dr cash $2,592;
Dr factoring fee expense $108;
Cr Accounts receivable $2,700
D) $142,500 x 8/100 = 11,400.00
= $11,400.00 + $1,045
= $12,445.00
E) Dr Allowance for doubtful debt - $4,200
Cr Account Receivable - $4,200
F) $98,100 x 4/100 = $3,924.00
= $3,924.00 - $1,051
= $2,873.00
In general, it is possible to eliminate ________ risk by holding a large portfolio of assets.
A) unsystematic
B) systematic
C) unsystematic and systematic
D) market specific
Answer:
Letter A is correct. Unsystematic.
Explanation:
Unsystematic risk is that inherent in a specific sector of the market or company. The inherent risks of investing in only one company or industry may include the entry of new competitors, which may cause market loss, regulatory changes, managerial changes, withdrawal from the market and other uncertainties that are not always foreseeable by investors. .
Ideally to avoid this kind of risk is to invest in a diversified equity portfolio.
The standard number of hours that should have been worked for the output attained is 8000 direct labor hours and the actual number of direct labor hours worked was 8300. If the direct labor price variance was $4150 unfavorable, and the standard rate of pay was $9 per direct labor hour, what was the actual rate of pay for direct labor?
A. $9.00 per direct labor hourB. $9.50 per direct labor hourC. $8.50 per direct labor hourD. $7.50 per direct labor hour
Answer:
B. $9.50 per direct labor hour
Explanation:
Expected labor hours (EL) = 8000
Actual labor hours (AL) = 8300
Labor price variance (LV) = $4150 unfavorable
Standard rate (r) = $9 per hour
The expected labor price (LP) is given by
[tex]ELP = AL*r = 8300*9\\ELP = \$74700[/tex]
Since thre is an unfavorable labor price variance, the actual labor price (ALP) is:
[tex]ALP = ELP + LV\\ALP = 74700+4150\\ALP=78850[/tex]
The actual rate of pay is:
[tex]AR = \frac{ALP}{AL} =\frac{78,850}{8300}\\AR=\$9.50[/tex]
The actual rate of pay for direct labor is $9.50 per direct labor hour.
Your investment department has researched possible investments in corporate debt securities. Among the available investments are the following $100 million bond issues, each dated January 1, 2016. Prices were determined by underwriters at different times during the last few weeks.
(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Company Bond Price Stated Rate
1. BB Corp. $108 million 13%
2. DD Corp. $100 million 12%
3. GG Corp. $ 90 million 11%
Each of the bond issues matures on December 31, 2035, and pays interest semiannually on June 30 and December 31. For bonds of similar risk and maturity, the market yield at January 1, 2016, is 12%.
Required:
Other things being equal, which of the bond issues offers the most attractive investment opportunity if it can be purchased at the prices stated? the least attractive?
Answer
The answer and procedures of the exercise are attached in the following image.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
To determine the most attractive investment opportunity among the bond issues, we need to calculate the present value (PV) of each bond and compare them. The bond with the highest PV will be the most attractive.
Explanation:Analysis:To determine the most attractive investment opportunity, we need to calculate the present value (PV) of each bond and compare them. The bond with the highest PV will offer the most attractive investment opportunity.
Solution:BB Corp: PV = $108 million × (PV of $1 at 12%, 40 periods) = $108 million × 0.1246 = $13,462,800DD Corp: PV = $100 million × (PV of $1 at 12%, 40 periods) = $100 million × 0.1246 = $12,460,000GG Corp: PV = $90 million × (PV of $1 at 12%, 40 periods) = $90 million × 0.1246 = $11,214,600Therefore, the bond issued by BB Corp offers the most attractive investment opportunity, while the bond issued by GG Corp offers the least attractive opportunity.
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Barbara made a contract to sell a house to Bolton. The agreement stated that it was contingent upon the buyer being able to secure a loan at nine percent interest. The buyer obtained the loan and sought to enforce the contract. Barbara then claimed that the contract was not binding because the contract did not impose an obligation on both parties because of the loan provision. Was the contract binding? Explain your answer.
Answer and Explanation:
A due on sale clause is simply a stipulation in the mortagage agreement that the
"borrower if he wants to sell the property to some other person, first of all he (borrower) shall repay the entire outstanding mortagage amount and then only it is possible to sell the property which is secured under Mortagage agreement.
Hence in essence, the borrower must repay before selling it to some other person which will result in paying the sale proceeds of house to the lender first and the Borrower again has to take loan sometimes from the same lender.
Hence it is imperative that the mortagage obligation cannot be transferred to any other person. That is any subsequent buyer cannot ASSUME the mortagage. Therefore due on sale
Clause prevents assuming of mortagages.
1. Executive Chalk is financed solely by common stock and has outstanding 25m shares with a market price of $10 per share. It now announces that it intends to issue $160m old debt and to use the proceeds to buy back common stock (from Brealey, Myers, and Allen.) a. How is the market price of the stock affected by the announcement? b. How many shares can the company buy back with the $160m of new debt that it issues? c. What is the market value of the firm (equity plus debt) after the change in capital structure? d. What is the debt ratio (D/E) after the change in structure? e. Who (if anyone) gains or loses?
Answer:
a. $10 per share
b. 16 million shares
c. $250 million
d. 64%
e. No one gain or loss
Explanation:
a. The expected market price of the common stock is same as given in the question i.e $10 per share
b. The buy back shares would be
= New debt value ÷ market price per share
= $160 million ÷ $10
= 16 million shares
c. The market value of the firm would be
= (Outstanding shares - buy back shares) × market price per share + debt value
= (25 million shares - 16 million shares) × $10 + $160 million
= $90 million + $1260 million
= $250 million
d. The debt ratio would be
= Debt value ÷ market value of the firm
= $160 million ÷ 250 million
= 64%
e. No one gain or loss
Southern Hydraulic Supply is undertaking a review of their inventory policies. A typical product is a small hydraulic fitting. Currently, Southern orders 1,000 of these fittings at a time from their supplier. The demand for the fittings is 52,000 per year, the ordering cost is $50 per order, and the cost to hold one fitting in inventory for one year is $1.25. Each unit costs $8. What is the total annual cost of Southern’s current inventory policy? Group of answer choices $2039 $300,000 $418,550 $419,225
Answer:
$418,550
Explanation:
Steps are shown below:
a. The computation of the economic order quantity is shown below:
= [tex]\sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
= [tex]\sqrt{\frac{2\times \text{52,000}\times \text{\$50}}{\text{\$1.25}}}[/tex]
= 2,040 units
b. The number of orders would be equal to
= Annual demand ÷ economic order quantity
= $52,000 ÷ 2,040 units
= 25.49 orders
c. The average inventory would equal to
= Economic order quantity ÷ 2
= 2040 units ÷ 2
= 1,020 units
d. The total cost of ordering cost and carrying cost equals to
Ordering cost = Number of orders × ordering cost per order
= 25.49 orders × $50
= $1,275
Carrying cost = average inventory × carrying cost per unit
= 1,020 units × $1.25
= $1,275
So, the total annual cost would be
= Purchase cost + ordering cost + carrying cost
= $416,000 + $1,275 + $1,275
= $418,550
Purchase cost = Annual demand × cost per unit
= 52,000 × $8
= $416,000
A project has an installed cost of $500,000 and requires an additional working capital investment of $100,000. The project replaces an existing piece of equipment that has an estimated salvage value of $7000 and has a book value of $2000. The firm’s marginal tax rate is 40 percent. What is the Initial Outlay for this project?
Answer:
Please see attachment .
Explanation:
Please see attachment
A shirt manufacturer buys cloth by the 100-yard roll from a supplier. For setting up a control chart to manage the irregularities (e.g., loose threads and tears), the following data were collected froma sample provided by the supplier.Sample: 1 2 3 4 5 6 7 8 9 10Irregularities: 3 5 2 6 5 4 6 3 4 5(a) Using these data, set up a c-chart with z = 2.(b) Suppose the next five rolls from the supplier had three, two, five, three, and seven irregularitiies. Is the supplier process under control?
Answer:
Please see attachment
Explanation:
Please see attachment
To set up a c-chart, calculate the average number of irregularities and control limits. The supplier process is under control if the number of irregularities falls within the control limits.
Explanation:To set up a c-chart, we need to calculate the average number of irregularities in the sample and the control limits. The average number of irregularities in the sample is obtained by summing up the number of irregularities and dividing by the sample size. The control limits are calculated using the formula:
UCL = average number of irregularities + z(sqrt(average number of irregularities))
LCL = average number of irregularities - z(sqrt(average number of irregularities))
Using the given data, the average number of irregularities is 4.4. With z = 2, the control limits are UCL = 4.4 + 2(sqrt(4.4)) = 8.12 and LCL = 4.4 - 2(sqrt(4.4)) = 0.68. So, the control chart is set up.
To determine if the supplier process is under control, we need to check if the number of irregularities in the next five rolls falls within the control limits. The number of irregularities in the next five rolls is 3, 2, 5, 3, and 7. All of these values fall within the control limits, so the supplier process is considered to be under control.
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Olivia is single, 66 years old, and not blind.
She paid all the cost of keeping up her home. She earned $55,000 in wages for 2019.
Olivia provided all the support for her two grandchildren who lived with her all year. Cora is 11 years old and Jack is 15 years old.
She does not have enough deductions to itemize.
Olivia, Cora, and Jack are all U.S. citizens with valid Social Security numbers.
2. The maximum amount of child tax credit that Olivia is able to claim per qualifying child for 2019 is:
A. $500
B. $1,000
C. $1,400
D. $2,000
Option D, The maximum amount of child tax credit that Olivia is able to claim per qualifying child for 2019 is $2000
Explanation:
The child's tax credit amounts to up to $2,000 for each child qualified and $500 for each qualifying worker. It is one of three children-oriented federal tax credits that make your tax bill the most effective.
The child's additional tax credit was the reimbursable part of the child's tax debt. Families who pay to the Treasury less than Child Tax Credit sum will assert it. Because the child tax credit was not refundable, the extra child tax credit has been reimbursed to the taxpayer to repay a proportion of the withheld child tax credit.
For 2018 to 2025, the 2019 tax bill abolished this provision the present credit for Child Tax does; however, include a small amount of the refundable credit clause.
Accounting Equation Shannon Cook is the stockholder and operator of Personality Shine LLC, a motivational consulting business. At the end of its accounting period, December 31, 2017, Personality Shine has assets of $836,000 and liabilities of $201,000. Using the accounting equation, determine the following amounts:a. Stockholders' equity as of December 31, 2017?b. b. Stockholders' equity as of December 31, 2018, assuming that assets decreased by $159,000 and liabilities decreased by $48,000 during 2018
Answer:
a. Stockholders' equity as of December 31, 2017: $635,000
b. Stockholders' equity as of December 31, 2018: $524,000
Explanation:
Please find the below for detailed explanation and calculations:
We have the Accounting Equation as: Total Asset = Total Liabilities + Total Equity <=> Total Equity = Total Asset - Total Liabilities
Applying the Accounting Equation to find the Stockholder's Equity at the two point of time require, we have the calculation as below:
* December 31, 2017:
Total Asset = $836,000; Total Liabilities = $201,000
=> Total Stockholder's Equity = $836,000 - $201,000 =$635,000
*December 2018:
Total Asset = $836,000 - $159,000 = $677,000; Total Liabilities = $201,000 - $48,000 = $153,000
=> Total Stockholder's equity = $677,000 - $153,000 = $524,000
Ivorycoast, Inc. purchased a van on January 1, 2017, for $890,000. Estimated life of the van was five years, and its estimated residual value was $98,000. Ivorycoast uses the straight-line method of depreciation. Calculate the book value of the van at the end of 2017.
Answer:
$731,600
Explanation:
For computing the book value, first we have to determine the depreciation expense which is shown below:
So, under the straight-line method, the depreciation expense would be
= (Original cost - residual value) ÷ (useful life)
= ($890,000- $98,000) ÷ (5 years)
= ($792,000) ÷ (5 years)
= $158,400
In this method, the depreciation is same for all the remaining useful life
Now the book value would be
= Acquired value of an asset - depreciation expense
= $890,000 - $158,400
= $731,600
Emma Peterson is a worker for ABC Inc. She has an effort cost function of C = 2e^2 and a monthly reservation wage of $3,500. Her wage function is W = 3,500 + 0.4Q. If the incentive coefficient is equal to 0.4 then Q = 400e. Q is Emma’s output. Assume that the incentive coefficient increases from 0.4 to 0.5 and Emma’s base salary decreases from $3,500 to $3,000.
a. What will happen to her level of effort?
b. How will this change XYZ Company’s profits?
Answer:
a.If p=1 ,the profit of ABC company = 6100
b. The profit of ABC company increased because the effort level increased and the wage rate also increased but the output increased faster than the wage rate .
Explanation:
Please see attachment
Consider a market of risk averse decision makers, each with a utility function U=√I Each decision maker has an income of $90,000, but faces the possibility of a catastrophic loss of $50,000 in income. Each decision maker can purchase an insurance policy that fully compensates her for her loss. This insurance policy has a cost of $5,900. Suppose each decision maker potentially has a different probability p of experiencing the loss.a. What is the smallest value of p so that a decision maker purchases insurance? Show your work.b. What would happen to this smallest value of p if the insurance company were to raise the insurance premium from $5,900 to $27,500?
Answer:
Please see attachment .
Explanation:
Please see attachment .
Final answer:
The smallest value of probability p for which a decision maker purchases insurance is found by comparing the expected utility of having insurance versus not having it, based on their utility function and the costs involved. The value of p at which insurance becomes beneficial increases as the cost of the premium increases, suggesting that higher premiums make insurance appealing only to those expecting a higher risk of loss.
Explanation:
Considering a market of risk-averse decision makers, where each has a utility function U=√I and faces a risk of catastrophic loss, we aim to find the smallest value of probability p that makes purchasing insurance worthwhile, and how this value changes with an increase in insurance premium.
Let I represent income and p the probability of experiencing the loss. The expected utility without insurance is E[U_without] = pU($40,000) + (1-p)U($90,000). With insurance costing $5,900, the expected utility becomes E[U_with] = U($84,100). A decision maker will purchase insurance if E[U_with] ≥ E[U_without]. This inequality allows us to solve for the minimum p at which buying insurance becomes beneficial.
If the insurance premium increases to $27,500, resulting in a new insured income of $62,500, the decision makers’ willingness to purchase insurance would be affected due to the significantly higher cost. Generally, as the premium increases, the minimum p at which insurance makes sense increases as well, meaning only those with a higher perceived risk of loss would find the insurance worth its cost.