Answer:
account receivable debit 110,500
sales revenue credit 110,500
freight-out debit 1,900
cash credit 1,900
COGS debit 66,300
inventory credit 66,300
Explanation:
the sales will be recorded as nominal, because there is no information about the customer taking the discount or paying within this period.
Because term are FOB shipping point, the freight corespond to shore Co
Which one of the following financial statements is not required by GAAP regarding a voluntary health and welfare organization? Statement of Financial Position. Statement of Functional Expense. Statement of Activities and Changes in Net Assets. Statement of Cash Flows. Statement of Operations.
Answer:
Statement of Operations. ( last choice)
Statement of Operations is not required by GAAP regarding a voluntary health and welfare organization.
Scott's Lawn Care has hired Henry Associates to find out whether home improvement warehouse stores communicate the benefits of various brands of lawn care products differently than smaller stores. Henry Associates needs to know what is communicated to consumers in the actual settings of the stores and wants to ensure that the message isn't filtered. Only behavioral data is required. Which type of data collection method is most appropriate in this situation? A. CommunicationB. ObservationC. SurveysD. ExperimentalE. Causal
Answer:
The correct answer is option B. observation.
Explanation:
Observation is a method of data collection which involves the use of all the senses to study people in their natural setting. The process involve gathering knowledge about a phenomena by making observations. The aim here is to focus on human behavior, human interaction with phenomenon and the use of phenomenon..
In the above example, actual setting and behavioral data is required. So, the most appropriate method for data collection here will be observation.
national Mining Corp. purchased a mine, which holds an estimated 031,000 tons of iron ore, on January 1, 2018, for $ 526,000. The mine is expected to have zero residual value. The business extracted and sold 12,500 tons of ore in 2018 and 11,800 tons of ore in 2019. What is the depletion expense for 2018? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)
The depletion expense for National Mining Corp. for the year 2018, given the mine purchase cost and the amount of iron extracted and sold in that time, is calculated to be approximately $212,125.
Explanation:To find out the depletion expense for 2018, we first need to determine the depletion rate. The depletion rate is the cost of the mine divided by the estimated total extractable amount of iron ore. In this case, it will be $526,000 divided by 31,000 tons, which equals $16.97 per ton (rounded to two decimal places).
Then, we multiply the depletion rate by the amount of iron ore that was extracted and sold in 2018. So, the depletion expense would be $16.97 per ton times 12,500 tons, equaling $212,125 (rounding to the nearest dollar).
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If a project's discounted payback period is less than its useful life, _____.
a. the terminal value of its future cash inflows is less than the future value of its initial cost
b. the present value of its future cash inflows is greater that the future value of its initial cost
c. the present value of its future cash flows exceeds its initial cost
d. its future cash inflows are less than its initial cost
e. its cost-recovery time should exceed the maximum cost-recovery time established by the firm
Answer:
e. Its cost-recovery time should exceed the maximum cost-recovery time established by the firm
Explanation:
If a project's discounted payback period is less than its useful life, its cost-recovery time should exceed the maximum cost-recovery time established by the firm.
At a volume of 11,000 units, Pwerson Company incurred $33,000 in factory overhead costs, including $11,000 in fixed costs. If volume increases to 13,000 units and both 11,000 units and 13,000 units are within the relevant range, then the company would expect to incur total factory overhead costs of:
Answer:
$37,000.00
Explanation:
Total fixed overhead costs = $11,000.00
Variable overhead cost at 11,000 units of production
=Total overheads - Fixed overheads
=$33,000 -$11,000 = $22,000
Variable cost per unit = [tex]\frac{22000}{11000}[/tex] = $2 per unit
When production increased to 13,000 units then overheads costs will be
Fixed Costs = $11,000 Remains constant up to certain activity level, here 13,000 units is acceptable level
Variable costs = 13,000 units X $2 per unit = $26,000
Total Overhead costs = Fixed + Variable
= $11,000 + $26,000 = $37,000
Total = $37,000
Which of the following statements are true regarding profit-maximizing firms?A.They will attempt to maximize the difference between total revenues and total costs.B.They will use more of a resource as long as the marginal resource cost (MRC) is greater than the marginal revenue product (MRP).C.They will only produce where MRP is positive and MRC is negative.D.none of the above.
Answer:
For a profit maximizing firm , the statement that will be true is A) they will attempt to maximize the difference between total revenues and total costs.
Explanation:
The basic formula that is used to calculate profit is -
Profit = Total revenue - Total cost
Profit maximization is a concept according to which a firm who is looking for maximizing its profits, should choose that optima level of output where its marginal cost ( cost that is incurred because of producing one additional unit of good ) and marginal revenue ( change in revenue because of change in sales ) are same.
When the marginal revenue is greater than the marginal cost , it means that the revenues generated by producing additional quantity of goods is greater than the cost incurred on producing them, so hence we can say that for maximizing profit , a firm would want that the gap between revenue and cost is higher.
Before Maria starts her first year of college, Fred promises to give her $5,000 when she graduates. She goes to college, borrowing and spending far more than $5,000. At the beginning of the spring semester of her senior year, she reminds Fred of the promise. Fred sends her a note that says, “I revoke the promise.” Is Fred's promise binding? Explain.
Final answer:
Fred's promise to Maria is likely binding, as Maria's attendance in college constitutes substantial performance. In contract law, once substantial performance is underway, a promisor typically cannot revoke the promise. Therefore, Fred is expected to honor his initial promise to Maria.
Explanation:
The question of whether Fred's promise is binding revolves around the concept of a unilateral contract. In a unilateral contract, one party makes a promise in exchange for a specific action by another party. Fred promised Maria $5,000 upon her graduation, but he attempted to revoke the promise before she fulfilled the condition. Traditionally, once the action that fulfills the conditions of the promise is underway—a concept referred to as substantial performance—the promisor cannot revoke the promise. Maria going through college can be seen as substantial performance, and thus Fred may be expected to honor his promise regardless of his intent to revoke it. This is consistent with principles from contract law, which might be exemplified by texts such as "LibreTexts™", where the importance of fulfilling contract terms and recognizing substantial performance is affirmed.
Which of the following is correct? a. U.S. exports as a percentage of GDP have about tripled since 1950. The U.S. currently has a trade deficit. b. U.S. exports as a percentage of GDP have about doubled since 1950. The U.S. currently has a trade deficit. c. U.S. exports as a percentage of GDP have about doubled since 1950. The U.S. currently has a trade surplus. d. U.S. exports as a percentage of GDP have about tripled since 1950. The U.S. currently has a trade surplus.
Answer: Option (b) is correct.
Explanation:
U.S. exports as a percentage of GDP have about doubled since 1950. The U.S. currently has a trade deficit.
The moving of a portion of the manufacturing facilities from US to other minimal effort Asian nations, because of which US has begun import from those nations rather producing at home.
The US individuals don't spare much, yet the economy needs capital for venture purposes because of which US has been net shipper of capital streams. This net import of capital streams makes it to pay for the imports of items and administrations from different nations.
Freberg Company, a division of Dudge Cars, produces automotive batteries. Freberg sells the batteries to its customers for $92 per unit. The variable cost per unit is $55, and fixed costs per unit are $16. Top management of Dudge Cars would like Freberg to transfer 30,000 batteries to another division within the company at a price of $61. Freberg has sufficient excess capacity to provide the 30,000 batteries to the other division. Compute the minimum transfer price that Freberg should accept.
The minimum transfer price that Freberg Company should accept for the transfer of batteries to another division within Dudge Cars is the variable cost per unit, which is $55.
Explanation:The minimum transfer price that Freberg should accept is the variable cost per unit because that is the cost that Freberg would incur to produce an extra unit for the other division. Fixed costs are not included in the transfer price calculation because they are not directly tied to the production of the specific 30,000 batteries. Therefore, the minimum transfer price would be the variable cost of $55 per unit.
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The answer is minimum transfer price that Freberg should accept is $55 per unit.
To compute the minimum transfer price that Freberg should accept, we need to consider the variable cost per unit and the fixed costs per unit.
Variable cost per unit = $55Fixed cost per unit = $16Total cost per unit = Variable cost + Fixed cost
= $55 + $16
= $71
Since Freberg has excess capacity and the variable cost per unit represents the incremental cost of producing additional units, the minimum transfer price should be equal to the variable cost per unit, which is $55.
Therefore, the minimum transfer price that Freberg should accept is $55 per unit.
Many organizations, such as Google, Zappos, Salesforce, and Yahoo!, are designing the work environment to encourage casual conversations among employees who don't generally work together. They also are "installing playful prompts, like trivia games, to get workers talking in traditional conversational dead zones, such as elevators." It is thought that ________ demonstrate a form of social support for employees, leading them to put more effort into creative behaviors.
Answer:
The correct answer would be, Low stress work environments.
Explanation:
Many big organizations like Google, Yahoo, Salesforce, etc are now a days designing the work environments for employees like something that encourages the casual conversations between employees who don't get in touch with each other generally, for example, employees from different departments. They are also installing playful prompts like trivia games to get workers talking with each other on dead zones. Such type of arrangements will make a low stress environment for employees to work in, and due to low stress work environments, employees would work more efficiently and be progressive for the organization. Employees will have a sense of bond and support from other employees. So it is thought that low stress work environments demonstrate a form of social support for employees, leading them to put more effort into creative behaviors.
It is thought that casual conversations and playful prompts to demonstrate a form of social support for employees, leading them to put more effort into creative behaviors.
Explanation:The blank in the sentence can be filled with 'casual conversations and playful prompts'. Many organizations are nurturing an environment that promotes interactions between employees who wouldn't usually work together. This strategy involves playful interventions like trivia games in typical non-conversational areas. These interventions act as a catalyst for dialogue, which is seen as a form of social support. This support is thought to encourage employees to exert more effort into exhibiting creative behaviors within the workforce.
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If you draw a card with a value of three or less from a standard deck of cards, I will pay you $146. If not, you pay me $24. (Aces are considered the highest card in the deck.)Step 1 of 2 :Find the expected value of the proposition. Round your answer to two decimal places. Losses must be expressed as negative values.
Answer: Expected value = $2.034
Explanation:
Total outcome = 52
Favorable Outcome = 8
Probability of drawing a card with a value of three or less = [tex]\frac{Favorable\ outcome}{Total\ outcome}[/tex]
= [tex]\frac{8}{52}[/tex]
= [tex]\frac{2}{13}[/tex]
Probability of drawing a card with a value of more than three = 1 - [tex]\frac{2}{13}[/tex]
= [tex]\frac{11}{13}[/tex]
Hence,
Expected value = [tex]146 \times \frac{2}{13} + (-24) \times \frac{11}{13}[/tex]
= 22.338 - 20.304
= $2.034
The outstanding bonds of The Purple Fiddle are priced at $898 and mature in nine years. These bonds have a 6 percent coupon and pay interest annually. The firm's tax rate is 35 percent. What is the firm's after tax cost of debt?
Answer : 4.34 %
Explanation: The effective interest rate a company pays on its debt obligation is called cost of debt. The cost of debt is denoted by [k]x_{d}[/tex] . As there is a tax shield available on debt interest it is generally calculated by subtracting the marginal tax rate from before tax cost of debt .
.
[tex]k_{d}=\frac{c}{p}\times\left ( 1-t \right ) [/tex]
where,
c= coupon payment = 1000 * 6% = 60
p = current market price = $898
t= marginal tax rate
therefore :-
= [tex]\frac{60}{898}\times \left ( 1-0.35 \right )[/tex]
= 4.34 %
A dozen eggs cost $0.96 in December 2000 and $2.75 in December 2015. The average wage for workers in private industries was $14.28 per hour in December 2000 and $21.26 in December 2015. By what percentage did the price of a dozen eggs rise? 65% 179% 186% By what percentage did the wage rise?
Answer:
By 186% the price of a dozen eggs rise.
Explanation:
Given that,
Cost in December 2000 = $0.96
Cost in December 2015 = $2.75
Average wage for December 2000 = $14.28 per hour
Average wage for December 2015 = $21.26
By considering these information, we are able to calculate the increase price percentage of a dozen eggs. The calculation is shown below:
= (December 2015 price - December 2000 price ) ÷ (December 2000 price) × 100
= ($2.75 - $0.96) ÷ ($0.96) × 100
= ($1.79) ÷ ($0.96) × 100
= 186%
Thus, by 186% the price of a dozen eggs rise.
Final answer:
The price of a dozen eggs increased by approximately 186% from December 2000 to December 2015, while the average wage for workers in private industries rose by approximately 49% over the same period.
Explanation:
To calculate the percentage increase in the price of a dozen eggs from December 2000 to December 2015, first determine the initial and final prices. The price rose from $0.96 to $2.75. Use the formula for percentage increase: Percentage Increase = (New Price - Original Price) / Original Price \ imes 100%.
Plugging in the values gives us: (2.75 - 0.96) / 0.96 \ imes 100% = 1.79 / 0.96 \ imes 100% \\approx 186%.
The average wage increase is similarly calculated: (21.26 - 14.28) / 14.28 \ imes 100% \\\approx 49%.
On March 1, 2015, Landon Company acquired real estate on which it planned to construct a small office building. The company paid $90,000 in cash. An old warehouse on the property was razed at a cost of $7,600; the salvaged materials were sold for $1,700. Additional expenditures before construction began included $1,100 attorney's fee for work concerning the land purchase, $4,000 real estate broker's fee, $7,800 architect's fee, and $14,000 to put in driveways and a parking lot. Determine the amount to be reported as the cost of the land.
Answer:
The amount to be reported as the cost of the land is $101,000
Explanation:
Given information
Paid cash - $90,000
Cost of property $7,600
Salvaged materials - $1,700
Attorney's fee for work concerning the land purchase - $1,100
Real estate broker's fee - $4,000
Architect's fee - $7,800
Put in driveways and a parking lot - $14,000
For computing the amount of the cost of the land, the Architect's fee and Put in driveways and a parking lot is not considered as it is not related to the land expenses. The computation is shown below
= Cash amount + Cost of property - Salvaged materials + Attorney's fee + Real estate broker's fee
= $90,000 + $7,600 - $1,700 + $1,100 + $4,000
= $101,000
Thus, the amount to be reported as the cost of the land is $101,000
Tom’s Electrical had the following information: Total Assets, December 31, 2016 $160,000 Total Assets, December 31, 2017 170,000 For Year Ended December 31, 2017: Interest Expense 2,000 Net Income 48,000 What is the rate of return on total assets?
Answer:
ROA = 30.3030%
Explanation:
ROA = operating income / average assets
were average assets = ( beginning assets + ending assets ) / 2
operating income = net income + interest expense
= 48,000 + 2,000 = 50,000 income generate by assets
average assets = (160,000 + 170,000) / 2 = 165,000
ROA = 50,000 / 165,000 = 0.303030 = 30.3030%
Remember:
If you are given with the net income value and the list of expenses, look out for interest expenses, because those are generate by the liabilities ofthe company, so to clean up the income we add them to the net income to show the ammount generate by assets
The rate of return on total assets for Tom's Electrical for the year ended December 31, 2017, is calculated by dividing the net income by the average total assets for the period. The rate of return is approximately 29.1%.
Explanation:The rate of return on total assets can be calculated using the formula:
Return on Assets (ROA) = Net Income / Average Total Assets
We calculate the Average Total Assets by adding the Total Assets at the beginning of the period to the Total Assets at the end of the period and dividing by 2:
Average Total Assets = (Total Assets 2016 + Total Assets 2017)/2 = ($160,000 + $170,000)/2 = $165,000
Then we can calculate the ROA:
ROA = Net Income / Average Total Assets = $48,000 / $165,000 = 0.291
Therefore, the rate of return on total assets for Tom's Electrical for the year ended December 31, 2017, is approximately 29.1%.
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Mart's Boutique has sales of $820,000 and costs of $540,000. Interest expense is $36,000 and depreciation is $59,000. The tax rate is 21 percent. What is the net income? $146,150 221,200 105,000 139,050
Answer:
$146,150.00
Explanation:
Net income is net of taxes.
Here,
Sales = $820,000.00
Less: Costs = -$540,000.00
Gross profit = $280,000.00
Less: Finance Costs
Interest = -$36,000.00
Depreciation = -$59,000.00
Net profit before Tax = $185,000.00
Less: Tax @ 21% of $185,000.00 = - $38,850.00
Net Income (after tax) = $146,150
Net income is always computed after tax.
$146,150.00
Final answer:
To find Mart's Boutique net income, subtract the costs and depreciation from sales, then subtract interest expense and taxes. The boutique's net income is $146,150.
Explanation:
To calculate the net income for Mart's Boutique, we begin with sales and subtract the costs:
Sales: $820,000Costs: $540,000Depreciation: $59,000Interest Expense: $36,000The operating profit is calculated as Sales minus Costs and Depreciation. Then we subtract the Interest Expense to get the pre-tax income:
Operating Profit = Sales - Costs - DepreciationOperating Profit = $820,000 - $540,000 - $59,000Operating Profit = $221,000Pre-tax Income = Operating Profit - Interest ExpensePre-tax Income = $221,000 - $36,000Pre-tax Income = $185,000Finally, we calculate the net income by subtracting the tax, which is 21% of the pre-tax income:
Tax = Pre-tax Income × Tax RateTax = $185,000 × 0.21Tax = $38,850Net Income = Pre-tax Income - TaxNet Income = $185,000 - $38,850Net Income = $146,150Mart's Boutique has a net income of $146,150.Pierre left a message on Shayna’s voicemail stating, “Hey Shayna. Regarding that painting we talked about. I changed my mind and I do want to sell it. So I’ll let you have it for a steal at $350. There are lots of people that want it so let me know if you don’t ASAP. I’ll assume you do want it if I don’t hear from you within an hour. Thanks!” This is not a valid contract and Shayna would not be required to purchase painting due to the lack of a(n):
The contract between Pierre and Shayna is not a valid contract due to the lack of acceptance from Shayna.
Further Explanation:
Contract:
A legally enforced agreement is considered a contract. An agreement is a promise between two parties to perform tasks for each other for some consideration. When an agreement becomes legally enforced, then it is considered as a contract. So the contract is a legally enforced promise between two parties for considerations. Both parties should get consideration and have a performance obligation.
Following factors are required for the contract:
Offer: A person should offer some consideration to another person for performing any activity or in the exchange of goods.
Acceptance of offer: The other person should accept the offer made by the first person.
Valuable consideration: There should be valuable consideration for both the parties.
Mutual obligation: Parties should promise to execute their obligated activities.
The performance capacity of the parties: Parties should be capable of performing the contract.
Legally enforcement: The contracts should be legally enforced.
These are the basic elements of a contract. If any contracts lack any of the given factors, then it will not be considered as a valid contract.
The contract between Pierre and Shayna:
In the current case, Pierre makes an offer to sell the painting to Shayna. Pierre leaves a message in the voicemail of Shayna, stating that if Shayna does not contact Pierre within one hour, then Pierre would consider that the Shayna wants to purchase the painting.
It is not a valid contract as it lacks the acceptance of the offer from Shayna.
Pierre enters the contract to sell the painting without considering the acceptance of the offer by Shayna. Pierre puts a condition that if she does not receive any revert from Shayna within one hour, then she would consider that Shayna has accepted the offer. For a valid contract, the promisee should accept the offer but the condition of acceptance (revert within one hour) does not state for the acceptance of Shayna. So, it will not be considered a valid contract.
Thus, the contract between Pierre and Shayna is not a valid contract due to non-acceptence.
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Answer details:
Grade: Senior School
Subject: Business Law
Chapter: Contract Act
Keywords: Pierre, message, Shayna, voicemail, painting, mind, sell, steal, people, ASAP, hear, within an hour, not a valid contract, purchase a painting, lack of a(n), contract act, agreement, law, business law, promise, valid contract.
Company J must choose between two alternate business expenditures. Expenditure 1 would require a $30,000 cash outlay and Expenditure 2 requires a $28,500 cash outlay. Determine the marginal tax rate at which the after-tax cash flows from the two expenditures are equal assuming that Expenditure 1 is fully deductible and Expenditure 2 is nondeductible. Determine the marginal tax rate at which the after-tax cash flows from the two expenditures are equal assuming that Expenditure 1 is 50% deductible and Expenditure 2 is nondeductible. Determine the marginal tax rate at which the after-tax cash flows from the two expenditures are equal assuming that Expenditure 1 is fully deductible and Expenditure 2 is 50 percent deductible.
Hey there!:
case 1 :
Above statement means that Expenditure 1 = 30000 shall be reduced by an amount of tax saving ( since fully deductible) but expenditure - 2 = 28500 is final. ( since no tax saved)
Let............ r = tax rate. To convert any expenditure to after tax by reducing tax saving, we will multiply that expenditure with (1 - r)
So .............. 30000(1- r) = 28500
( 1 - r ) = 28500/30000 = 0.95
1 - r = 0.95 => ............r = 0.05
So Marginal tax rate must be 5%
_________________________________________________
case 2 :
30000 ( 1 - 50%(r) ) = 28500
( 1 - 50%(r) ) = 28500/30000 = 0.95
- 50%(r) = 0.95 - 1 = - 0.05
0.50 * r = 0.05 ( negative cancelled on either sides)
r = 0.05 / 0.5 = 0.10 ..............(or) 10%
Thus marginal tax rate must be 10%
__________________________________________________
Case 3 :
30000 ( 1 - r ) = 28500 ( 1 - 50%( r ) )
Expanding .......... 30000 - 30000*r = 28500 - 28500*50%*r
30000 * r - 14250 * r = 30000 - 28500
15750 * r = 1500
r = 1500/15750 = 0.0952 .(or) 9.52%
So Marginal tax rate must be 9.52%
_________________________________________________________
Hope this helps!
To determine the marginal tax rate at which the after-tax cash flows from the two expenditures are equal, we need to compare the after-tax cash flows for each expenditure. We can calculate the cash flows after tax for different scenarios and set them equal to find the marginal tax rate. This can be done for various combinations of deductible and nondeductible expenditures.
Explanation:To determine the marginal tax rate at which the after-tax cash flows from the two expenditures are equal, we first need to calculate the after-tax cash flows for each expenditure.
Case 1: Expenditure 1 is fully deductible and Expenditure 2 is nondeductible:Expenditure 1: $30,000 (fully deductible) -> Cash flow after tax = $30,000
Expenditure 2: $28,500 (nondeductible) -> Cash flow after tax = $28,500 * (1 - marginal tax rate)
To find the marginal tax rate at which the after-tax cash flows are equal, we set the two cash flows equal to each other and solve for the marginal tax rate:
$30,000 = $28,500 * (1 - marginal tax rate)
By solving this equation, we can find the marginal tax rate.
Case 2: Expenditure 1 is 50% deductible and Expenditure 2 is nondeductible:Expenditure 1: $30,000 * 50% (deductible) -> Cash flow after tax = $15,000
Expenditure 2: $28,500 (nondeductible) -> Cash flow after tax = $28,500 * (1 - marginal tax rate)
Again, we set the two cash flows equal to each other and solve for the marginal tax rate to find the point of equality.
Case 3: Expenditure 1 is fully deductible and Expenditure 2 is 50% deductible:Expenditure 1: $30,000 (fully deductible) -> Cash flow after tax = $30,000
Expenditure 2: $28,500 * 50% (deductible) -> Cash flow after tax = $14,250
Again, we set the two cash flows equal to each other and solve for the marginal tax rate to find the point of equality.
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Two methods are under consideration for producing the case for a portable hazardous material photoionization monitor. A plastic case will require an initial investment of $75,000 and will have an annual operating cost of $27,000 with no salvage after 2 years. An aluminum case will require an investment of $125,000 and will have annual costs of $12,000. Some of the equipment can be sold for $30,000 after its 3-year life. At an interest rate of 10% per year, which case should be used on the basis of a present worth analysis?
Based on the present worth analysis, the plastic case has a present worth of -$28,141, while the aluminum case has a present worth of -$74,498.
To determine which case should be used based on a present worth analysis, we need to calculate the present worth of each option and compare them.
The present worth is the current value of all the cash flows associated with each case, considering the interest rate.
Let's calculate the present worth for each case:
Plastic Case:Initial investment: $75,000
Annual operating cost: $27,000 (for 2 years)
Salvage value: $0
Using the present worth formula, the present worth of the plastic case is:
[tex]PW_{plastic} = -Initial \ investment + (Annual \ operating \ cost / (1 + interest \ rate)^1) + (Annual \ operating \ cost / (1 + interest \ rate)^2)\\= -$75,000 + ($27,000 / (1 + 0.10)^1) + ($27,000 / (1 + 0.10)^2)\\= -$75,000 + ($27,000 / 1.10) + ($27,000 / 1.10^2)\\= -$75,000 + $24,545 + $22,314\\= -$28,141[/tex]
Aluminum Case:Initial investment: $125,000
Annual operating cost: $12,000 (for 3 years)
Salvage value: $30,000
Using the present worth formula, the present worth of the aluminum case is:
[tex]PW_{aluminum} = -Initial \ investment + (Annual \ operating \ cost / (1 + interest \ rate)^1) + (Annual \ operating \ cost / (1 + interest \ rate)^2) + (Annual \ operating \ cost / (1 + interest \ rate)^3) + Salvage \ value / (1 + interest \ rate)^3\\[/tex]
[tex]= -$125,000 + ($12,000 / (1 + 0.10)^1) + ($12,000 / (1 + 0.10)^2) + ($12,000 / (1 + 0.10)^3) + $30,000 / (1 + 0.10)^3\\= -$125,000 + ($12,000 / 1.10) + ($12,000 / 1.10^2) + ($12,000 / 1.10^3) + $30,000 / 1.10^3\\= -$125,000 + $10,909 + $9,917 + $9,015 + $20,661\\= -$74,498[/tex]
Based on the present worth analysis, the plastic case has a present worth of -$28,141, while the aluminum case has a present worth of -$74,498.
Since the present worth of the plastic case is less negative than the present worth of the aluminum case, the plastic case should be chosen based on a present worth analysis at an interest rate of 10% per year.
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Final answer:
Based on the present worth analysis, the aluminum case should be used over the plastic case for the portable hazardous material photoionization monitor. The correct present worth ($133,132) which compared to the plastic case is ($126,080).
Explanation:
In order to determine which case should be used based on a present worth analysis, we need to calculate the present worth of each case and compare them. A present worth analysis accounts for the time value of money by discounting future costs and benefits back to their present values.
For the plastic case:
Calculate the present worth of the initial investment: $75,000 / [tex](1 + 0.10)^0[/tex] = $75,000
Calculate the present worth of the annual operating costs over 2 years: $27,000 * ((1 - [tex](1 + 0.10)^{-2}[/tex]) / 0.10) = $51,080
The total present worth of the plastic case is $75,000 + $51,080 = $126,080
For the aluminum case:
Calculate the present worth of the initial investment: $125,000 / [tex](1 + 0.10)^0[/tex] = $125,000
Calculate the present worth of the annual operating costs over 3 years: $12,000 * ((1 - [tex](1 + 0.10)^{-3}[/tex]) / 0.10) = $32,520
Account for the salvage value of $30,000 at the end of 3 years: $30,000 / [tex](1 + 0.10)^3[/tex] = $24,388
The total present worth of the aluminum case is $125,000 + $32,520 - $24,388 = $133,132
Based on the present worth analysis, the aluminum case should be used since it has a higher present worth ($133,132) compared to the plastic case ($126,080).
Christine is an artist who creates custom cookie jars. Her annual revenue from selling the cookie jars is $90,000. The annual explicit costs of the materials used to make the cookie jars are $54,000. Refer to Scenario 13-13. Christine used $5,000 from her personal savings account to buy pottery tools for her business. The savings account paid 1% annual interest. Christine could earn $6,000 per year as a tax preparer. What is the annual economic profit of her cookie jar business?
Answer: $29,950
Explanation: As we know that,
Economic profit = Total revenues - (explicit cost + implicit cost)
where,
Explicit costs are payments made to others for running operations of business.
Implicit cost or opportunity cost can be defined as the cost of loosing profits for choosing one alternative instead of other.
In the given case the interest of $50 on savings and $6000 salary is the implicit cost.
Economic profit = $90,000 - ($54,000 + $50 + $6,000)
= $29,950
Christine's economic profit, which accounts for both explicit and implicit costs, is $24,950 per year.
Explanation:Calculating the annual economic profit for Christine’s cookie jar business
To calculate Christine's economic profit, we need to consider both explicit and implicit costs. Explicit costs are the actual out-of-pocket costs, such as the cost of materials for the jars ($54,000), and the cost of pottery tools she bought for her business ($5,000). So the total explicit cost is $54,000 + $5,000 = $59,000.
Implicit costs are the opportunity costs that are foregone by not using the resources in their next best alternative. In this scenario, Christine's implicit costs include the foregone interest on her savings ($5,000 x 0.01 = $50) and the income she could have earned as a tax preparer ($6,000). So, the total implicit cost is $50 + $6,000 = $6,050.
The Economic profit is calculated by subtracting both explicit and implicit costs from the total revenue. Therefore, Christine's economic profit is $90,000 (revenue) - $59,000 (explicit cost) - $6,050 (implicit cost) = $24,950.
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Raymond Financing leases airplanes to airline companies. Raymond has just signed a 20-year lease agreement that requires annual year-end lease payments of $900,000. What is the present value of the lease using a 10% interest rate?
Answer:
7662207.35
Explanation:
We are asked to find the present value of a 20 years annuity at rate equal 10%
[tex]present \: value = annuity \times \frac{1 - {(1 + rate)}^{ - time} }{rate} [/tex]
[tex]900000 \times \frac{1 - {1.1}^{ - 20} }{.1} = 7662207.35[/tex]
Remember:
on present time: power is negative and the 1 comes first
[tex]1 - {(1 + rate)}^{ - time} [/tex]
on future value: the power is positive and comes first then you subtract 1
[tex] {(1 + rate)}^{time} - 1[/tex]
A company has a selling price of $2,000 each for its printers. Each printer has a 2 year warranty that covers replacement of defective parts. It is estimated that 3% of all printers sold will be returned under the warranty at an average cost of $154 each. During November, the company sold 34,000 printers, and 440 printers were serviced under the warranty at a total cost of $59,000. The balance in the Estimated Warranty Liability account at November 1 was $31,000. What is the company's warranty expense for the month of November?
Answer:The company's warranty expense for the month of November is $157,080.
Explanation:
When the estimated amount is recognized-
Warranties expense A/c (Dr.) = $157,080
Estimated Warranty Liability (Cr.) = $157,080
When the repairs are actually paid, Estimated Warranty Liability will be Debited and Cash will be credited.so, The company's warranty expense for the month of November is $157,080.
i.e. (34,000 × 3% × $154 = $157,080)
Suppose that you want to create a "college fund" for your newborn child and place $300 in a bank account at the end of each of the next 20 years. If that account earns an annual rate of return of 7%, how much will be in that account at the end of the twentieth year?
Answer:
Amount at the end of twentieth year is $12,300
Explanation:
Annuity means a set of fixed amount of payments either made to you or paid by you , at a fixed number of times over a course of defined period.
The case given in the question is of ordinary annuity , where fixed amount of payment are required at the end of each period.
FORMULA FOR FUTURE VALUE ORDINARY ANNUITY =
Where, C(cash flow) = $300,
I(interest rate) = 7%
N(number of period) = 20
FV ( Future value)
[tex]FUTURE\ VALUE(FV)\ OF\ ORDINARY\ ANNUITY= CASH\ FLOW(C)\times \left [ \frac{1+I^{N}-1}{I} \right ])[/tex]
[tex]FUTURE\ VALUE(FV)\ OF\ ORDINARY\ ANNUITY= \$300\times \left [ \frac{1+7\%^{20}-1}{7\%} \right ])[/tex]
[tex]FUTURE\ VALUE(FV)\ OF\ ORDINARY\ ANNUITY= \$300\times \left [ \frac{\ 1.07\ ^{20}-1}{7\%} \right ])[/tex]
[tex]FUTURE\ VALUE(FV)\ OF\ ORDINARY\ ANNUITY= \$300\times \left [ \frac{\ 3.87\ -1}{7\%} \right ])[/tex]
[tex]FUTURE\ VALUE(FV)\ OF\ ORDINARY\ ANNUITY= \$300\times \left [ \frac{\ 2.87}{7\%} \right ])[/tex]
= 861/7%
= $12,300
Final answer:
The student's question involves computing the future value of a series of payments (an annuity) made into a college fund that earns 7% interest annually for 20 years. The future value calculation is based on the formula FV = P * [((1 + r)^n - 1) / r], involving periodic payments, interest rate, and number of payments.
Explanation:
The student is asking about calculating the future value of a series of regular payments, also known as an annuity, in a college fund with a 7% annual rate of return. This requires the formula for the future value of an annuity:
FV = P * [((1 + r)^n - 1) / r]
where FV is the future value of the annuity, P is the periodic payment, r is the periodic interest rate, and n is the number of payments.
In this scenario, we're dealing with P = $300, r = 0.07 (7% annual interest), and n = 20 years.
To calculate the future value of the college fund, the following steps are taken:
Identify the periodic payment (P): $300.
Determine the periodic interest rate (r): 7% or 0.07 as a decimal.
Find the number of periods (n): 20 years.
Apply the annuity formula to compute the future value of the series of payments.
By plugging the values into the formula, we get the total amount available in the college fund after 20 years.
Interest versus dividend expense Michaels Corporation expects earnings before in- terest and taxes to be $50,000 for the current period. Assuming an ordinary tax rate of 35%, compute the firm’s earnings after taxes and earnings available for common stockholders (earnings after taxes and preferred stock dividends, if any) under the following conditions: a. The firm pays $12,000 in interest. b. The firm pays $12,000 in preferred stock dividends.
Answer:
a. In case of interest paid = $24,700.
b. In Case Preferred Dividend is Paid = $20,500
Explanation:
Earnings before Interest And Taxes (EBIT) = $50,000
a. In case of interest paid
EBIT = $50,000
Less: Interest = $12,000
Earnings Before Taxes = $50,000 - $12,000 = $38,000
Less: Tax @35% = $38,000 X 0.35 = $13,300
Earnings After Tax =$38,000 - $13,300 = $24,700.
This is the value available for common stock.
b. In Case Preferred Dividend is Paid
EBIT = $50,000
Less: Taxes @ 35 % = $50,000 X 0.35 = $17,500
Earnings After Tax = $50,000 - $17,500 = $32,500
Less: Preference Dividend = $12,000
Earnings available for equity or common stock = $32,500 - $12,000 = $20,500
The difference is of tax benefit on payment of interest as that is taxable and preference dividend is not taxable.
a. In case of interest paid = $24,700.
b. In Case Preferred Dividend is Paid = $20,500
Final answer:
The Michaels Corporation will have earnings after taxes of $24,700 and earnings available for common stockholders also of $24,700 when paying $12,000 in interest. If paying $12,000 in preferred stock dividends instead, the earnings after taxes would be $32,500, with $20,500 available for common stockholders.
Explanation:
The Michaels Corporation expects earnings before interest and taxes (EBIT) of $50,000. With a tax rate of 35%, we will calculate the firm's after-tax earnings and the earnings available to common stockholders under two scenarios: one involving interest payments, and the other involving preferred stock dividends.
Case a: Paying Interest
Calculate earnings after interest: EBIT - Interest = $50,000 - $12,000 = $38,000.Compute taxes: $38,000 * 35% = $13,300.Deduct taxes to find earnings after taxes (EAT): $38,000 - $13,300 = $24,700.Since there are no preferred dividends in this scenario, earnings available for common stockholders is also $24,700.Case b: Paying Dividends
Since preferred stock dividends are paid from after-tax earnings, we first calculate EAT: EBIT - Taxes. Taxes = $50,000 * 35% = $17,500.Earnings after taxes: $50,000 - $17,500 = $32,500.Subtract preferred stock dividends: $32,500 - $12,000 = $20,500, which is the earnings available for common stockholders.In both cases, the difference in earnings after taxes and earnings available for common stockholders reflects the financial decisions made by the firm, whether to service debt through interest payments or reward shareholders through dividends.
Rolla Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $125,000 and $100,000, respectively. The present value of cash inflows and outflows for the second alternative is $300,000 and $262,500, respectively.
Required
Calculate the net present value of each investment opportunity
Calculate the present value index for each investment opportunity. (Round "PVI" to 2 decimal places.)
Indicate which investment will produce the higher rate of return.
Answer:
Alternative A will produce the best return.
It has a better present value index which means, the investment yield a better rate.
Explanation:
ALTERNATIVE (a)
125,000 - 100,000 = 25,000 NPV
ALTERNATIVE (b)
300,000 - 262,500 = 37,500 NPV
[tex]\frac{CashFlows \: PV}{initial \: investment} = PVI[/tex]
ALTERNATIVE (a)
125.000/100,000 = 1.25
ALTERNATIVE (b)
300,000/262,500 = 1.1429
To calculate the net present value of each investment alternative, subtract the present value of cash outflows from the present value of cash inflows. The present value index is calculated by dividing the present value of cash inflows by the present value of cash outflows. The second investment alternative offers a higher rate of return.
Explanation:The net present value (NPV) of an investment opportunity is the difference between the present value of cash inflows and the present value of cash outflows. To calculate the NPV, subtract the present value of cash outflows from the present value of cash inflows. For the first alternative, the NPV is $125,000 - $100,000 = $25,000. For the second alternative, the NPV is $300,000 - $262,500 = $37,500.
The present value index (PVI) is a measure of investment efficiency. It is calculated by dividing the present value of cash inflows by the present value of cash outflows. For the first alternative, the PVI is $125,000 / $100,000 = 1.25. For the second alternative, the PVI is $300,000 / $262,500 = 1.14.
The investment with the higher rate of return can be determined by comparing the NPVs or PVIs. In this case, the second alternative has a higher NPV and a higher PVI, indicating that it will provide a higher rate of return.
Nov. 1 Dollar Store purchases merchandise for $1,600 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1. 5 Dollar Store pays cash for the November 1 purchase. 7 Dollar Store discovers and returns $100 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund. 10 Dollar Store pays $80 cash for transportation costs for the November 1 purchase. 13 Dollar Store sells merchandise for $1,728 with terms n/30. The cost of the merchandise is $864. 16 Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $200 and cost $100; the items were not damaged and were returned to inventory. Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the gross method.
Answer:
NOV 1
Inventory 1,600
Account Payable 1,600
Nov 5
Account Payable 1,600
Discount received 32
Cash 1,568
Nov 7
Cash 100
Inventory 100
Nov 10
Freight In 80
Cash 80
Nov 13
Account receivable 1,728
Sales Revenues 1,728
Nov 13
COGS 864
Inventory 864
Nov 16
Sales Revenue 200
Account receivable 200
Nov 16
Inventory 100
COGS 100
Explanation:
The changes in inventory valuation must be done imediatly under perpetual inventory system.
Answer:
NOV 1
Inventory 1,600
Account Payable 1,600
Nov 5
Account Payable 1,600
Discount received 32
Cash 1,568
Nov 7
Cash 100
Inventory 100
Nov 10
Freight In 80
Cash 80
Nov 13
Account receivable 1,728
Sales Revenues 1,728
Nov 13
COGS 864
Inventory 864
Nov 16
Sales Revenue 200
Account receivable 200
Nov 16
Inventory 100
COGS 100
Explanation:
Estimated manufacturing overhead for the year $ 32,550 Estimated direct labor hours for the year 2,100 Two jobs were worked on during the year: Job A-101 and Job A-102. The number of direct labor-hours spent on Job A-101 and Job A-102 were 1,230 and 1,050, respectively. The actual manufacturing overhead was $39,000. What is the amount of the under- or overapplied manufacturing overhead? Overhead is applied on the basis of direct labor hours. $2,610 overapplied. $3,660 underapplied. $870 underapplied. $6,450 overapplied.
Answer:
Underapplied for 3,660
Explanation:
MO 32,550
DLH 2,100
rate: MO/DLH = 32,550/2,100 = 15.5 MO per DLH
Applied MO:
job 101 : 1,230 hours x 15.5 = 19,065job 102: 1,050 hours x 15.5 = 16,275Total MO 19,065 + 16,275 = 35,340
Actual Overhead 39,000
Underapplied for 3,660
Green Woods sells specialty equipment for mountain climbers. Its sales for last year included $238,000 of tents and $411,000 of climbing gear. For next year, management has decided to sell specialty sleeping bags also. As a result of this change, sales projections for next year are $264,000 of tents, $426,000 of climbing gear, and $51,000 of sleeping bags. How much of next year's sales are derived from the side effects of adding the new product to its sales offerings?
Answer:
By $41,000 the next year's sales are derived from the side effects of adding the new product to its sales offerings.
Explanation:
For calculating the sale for next year, the tent expense and climbing gear is to be considered. With the help of these, the next year sale from the side effects can be derived. The sleeping bag cost is not to be considered so it would not be taken for calculation. The computation is shown below:
= (Tent Expense Next year + Climbing gear Next year ) - (Tent Expense Previous year + Climbing gear Previous year )
= ( $264,000 + $426,000) - ( $238,000 + $411,000)
= ($690,000 - $649,000)
= $41,000
Thus, by $41,000 the next year's sales are derived from the side effects of adding the new product to its sales offerings.
Momentum Rollerblades has three product lineslong dashD, E, and F. The following information is available: D E F Sales revenue $ 80 comma 000 $ 40 comma 000 $ 30 comma 000 Variable costs (20 comma 000) (15 comma 000) (12 comma 000) Contribution margin $ 60 comma 000 $ 25 comma 000 $18 comma 000 Fixed costs (15 comma 000) (10 comma 000) (23 comma 000) Operating income (loss) $ 45 comma 000 $ 15 comma 000 $(5 comma 000) The company is deciding whether to drop product line F because it has an operating loss. Assume that $ 21 comma 000 of total fixed costs could be eliminated by dropping F. What effect would this decision have on operating income
Final answer:
Dropping product line F, with an operating loss of $5,000, would actually increase Momentum Rollerblades' operating income by $16,000 because there would be $21,000 of fixed costs savings, which is more than the current contribution margin from product F.
Explanation:
When considering whether to drop product line F, which has an operating loss, we should examine the impact on the overall operating income for Momentum Rollerblades. Currently, product line F has a loss of $5,000. However, if $21,000 of its fixed costs can be eliminated by dropping the line, then the total operating income could potentially increase. Here is the calculation:
Operating loss of product line F: $(5,000)Fixed costs savings by dropping F: $ +21,000Net effect on operating income: $ +21,000 - $ 5,000 = $ +16,000By dropping product line F, Momentum Rollerblades would increase its operating income by $ +16,000 since the savings in fixed costs exceed the contribution margin that would be lost by eliminating the product.
Which of the following activities are credits? The impact on accounts receivable from a $10 million collection from a customer. The impact on treasury stock from a company repurchasing $32 million in shares. The impact on inventory from a company recognizing $15 million in cost of goods sold expense. The impact on debt from a $15 million principal paydown.
Final answer:
Credits are recorded for the collection from a customer (decreasing Accounts Receivable) and the principal paydown on debt (decreasing liability). Both activities decrease respective accounts, which are naturally debit accounts, so a credit is used to record the decrease.
Explanation:
Among the given activities, the following represent credits: collection from a customer impacting accounts receivable and principal paydown impacting debt. Additionally, the repurchase of shares affects treasury stock but represents a debit rather than a credit. Recognizing cost of goods sold expense affects inventory and also results in a debit instead of a credit.
Explanation:
Collection from a Customer: When a company collects $10 million from a customer, this decreases Accounts Receivable (an asset) and increases Cash (another asset). The decrease in Accounts Receivable is credited because it reduces the asset account.
Principal Paydown: On payment of a $15 million loan principal, the liability account (Debt) decreases. Since liabilities have a credit balance, to reduce them, we debit the account and credit the Cash account to represent the outflow of cash.