Answer:Therefore the current stock price is [tex]P_{0}[/tex] = $44.384
Explanation:
Stock price for [tex]9^{th}[/tex] year or [tex]P_{9}[/tex] is as follows:
[tex]P_{9} = \frac{Next Dividend\left ( D_{10} \right )}{(Required Rate(r) - Growth rate(g))}[/tex]
[tex]P_{9}[/tex] = [tex][\frac{12}{(13-4)}][/tex]
[tex]P_{9}[/tex] = $133.33
The current stock price or [tex]P_{0}[/tex] is
[tex]P_{0}[/tex] = [tex]\frac{P_{9}}{(1 + Required rate of return)^9}[/tex]
[tex]P_{0}[/tex] = [tex]\frac{133.33}{(1 + 0.13)^9}[/tex]
[tex]P_{0}[/tex] = $44.384
Therefore the current stock price is [tex]P_{0}[/tex] = $44.384
PC Bell, a computer manufacturer that sells computer systems directly to customers, buys a computer chip for $180, software for $350, and a printer for $30. If the value added by PC Bell from selling this system (including the printer and the software) is $1,400 , what is the price at which the system is sold?
Answer:
At $1,960 price the system is sold.
Explanation:
All the expenses is to be considered while calculating the total cost because these cost is attached with the amount and the same price is to be charged by the customer. These costs which are given in the question is the part of the product. Hence, it would be added in the selling price. The computation is shown below.
The total selling price of the sold = computer chip + software + printer + Value added amount
= $180 + $350 + $30 + $1,400
= $1,960
Thus, at $1,960 price the system is sold.
Why does a surplus exist under a binding price floor? It encourages sellers to produce less of the product. It encourages buyers to purchase more of the product. It makes the price so high that the quantity supplied exceeds the quantity demanded in the legal market. It makes the price so low that the quantity demanded exceeds the quantity supplied on the legal market. It discourages sellers from increasing the quality of the product they sell, which, in turn, increases the quantity demanded.
A surplus exists under a binding price floor due to the price being set higher than the equilibrium, causing producers to increase supply and consumers to decrease demand, resulting in a surplus.
Explanation:A surplus exists under a binding price floor because it sets the price of a product or service at a higher level than the equilibrium price in a free market. In this scenario, producers are incentivized to supply more because the set price is higher than the market rate, while consumers are discouraged from buying because the price is more than they would be willing to pay at market level. Thus, the quantity supplied exceeds the quantity demanded, creating a surplus.
To illustrate, let's say the market equilibrium price for a loaf of bread is $2, but a binding price floor sets the minimum price at $3. Producers will be willing to make more loaves given the higher return, but consumers may see it as too expensive and choose to buy less, or perhaps none. As a result, there is excess supply, i.e., a 'surplus' of bread in the market.
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A surplus exists under a binding price floor because it sets the price above the equilibrium, which encourages producers to supply more, but discourages consumers from buying as much, leading to a surplus.
Explanation:A surplus exists under a binding price floor because it makes the price so high that the quantity supplied exceeds the quantity demanded in the legal market. When a price floor is set above the equilibrium price, it encourages sellers to produce more of the product, but it also discourages buyers from purchasing as much. As a result, there is an excess supply of the product, leading to a surplus.A surplus exists under a binding price floor because it sets a legal minimum price for a good or service above the equilibrium market price. This results in the quantity supplied exceeding the quantity demanded due to the higher price. Producers are interested in selling more because of the increased revenue they stand to gain (also known as producer surplus), however, consumers are discouraged from buying as much due to the higher price.A surplus exists under a binding price floor because it makes the price so high that the quantity supplied exceeds the quantity demanded in the legal market. When a price floor is set above the equilibrium price, it encourages sellers to produce more of the product, but it also discourages buyers from purchasing as much. As a result, there is an excess supply of the product, leading to a surplus.
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6) If a security pays $55 in one year and $133 in three years, its present value is $150 if the interest rate is A) 5 percent. B) 10 percent. C) 12.5 percent. D) 15 percent. Answer: B Ques Status: Previous Edition AACSB: Analytic
Which of the following is likely to improve a person's income?A. increased productivity B. investing in human capital C. being born into a wealthy family D. being highly motivated to succeedE. all of the above
Answer:
The correct option is e. all of the above.
Explanation:
Everyone wants to earn more and more. Many options are available. Like - doing side business in terms of renting a property, commission income. etc. Following are the reasons through which a person can improve his income.
A. Increased productivity : As by business point of view, or by working as a employee in any company, the productivity is matters. Almost every organization provides many incentive schemes, so that the employees or workers get motivated and do their best.
As more and more productivity increase, your earning capacity is also increase.
Thus, it shows a direct relationship
B. Investing in human capital : Here human capital means providing services in terms of education types, recruitment and selection, etc.
Through appointing the right candidate for right position helps the company to increase their productivity which ultimately helps the person to increase his income.
The better you perform, the better you can earn .
Thus, it shows a positive relationship.
C. Being born into a wealthy family : By which class the person belongs plays a vital role in improving his income. Here class means - Poor class, Middle class and rich class.
In the given case, the person born in wealthy family, so automatically the chances of increase his income is 100%.
Thus, it shows a direct relationship.
D. Being highly motivated to succeed : In this case, motivation plays a vital role to get succeed. Without motivation, no one can succeed.
Through encouraging peoples who are working in an organization, the chances of productivity is increase which helps the person to earn more and helps the company to achieve its goals and objectives in efficiently and effective manner.
Thus, it shows a positive relationship.
Hence, by giving above explanations, the correct option is e. all of the above.
Which of the following statements is correct with respect to a limited partnership?
a.A limited partner may not be an unsecured creditor of the limited partnership.
b.A general partner may not also be a limited partner at the same time.
c.A general partner may be a secured creditor of the limited partnership.
d.A limited partnership can be formed with limited liability for all partners.
Answer: option D
Explanation: A Limited liability partnership is an ownership style which exhibits characteristics of both partnership and corporations. This was implemented for the benefit of business entities and for the ease of owners.
a. In a limited liability a limited partner will never be personally liable for the debts.
b. A general partner can be a limited partner as long as there are two legal partners.
c. A general partner cannot be a secured creditor as he will always have unlimited liability.
d. A Limited liability partnership is the form of partnership in which some or all of the partners have limited liability.
A limited partnership is a type of partnership where general partners have unlimited liability, while limited partners have limited liability based on their initial investment.
Explanation:A limited partnership is a type of partnership where there are both general partners and limited partners. The general partners have unlimited liability and are personally responsible for the partnership's debts. On the other hand, limited partners have limited liability and are not personally responsible for the partnership's debts beyond their initial investment.
Based on this information, the correct statement is a. A limited partner may not be an unsecured creditor of the limited partnership. Limited partners are not considered creditors of the partnership, and their liability is limited to their investment in the business.
Alpha Industries is considering a project with an initial cost of $8 million. The project will produce cash inflows of $1.49 million per year for 8 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.61 percent and a cost of equity of 11.27 percent. The debt–equity ratio is .60 and the tax rate is 35 percent. What is the net present value of the project?
To find the net present value of a project in the business field, calculate the weighted average cost of capital (WACC) using the cost of equity, cost of debt, tax rate, and debt-equity ratio. Use the WACC as the discount rate to calculate the NPV. A positive NPV generally suggests the project could add value.
Explanation:The subject of this question pertains to the field of finances, more specifically to corporate finance and investment analysis in a business context. To calculate the net present value (NPV), we first need to calculate the weighted average cost of capital (WACC). The WACC incorporates the cost of equity and cost of debt adjusted for taxes, accounting for the debt-equity ratio. In this case, the WACC gets calculated as follows: Cost of Equity * Equity/(Debt+Equity) + Cost of Debt * (1-tax rate) * Debt/(Debt+Equity).
Substitute the given values to calculate the WACC, and then use the resulting WACC as the discount rate to calculate the NPV of the project by subtracting the initial investment from the sum of future cash inflows discounted back to present dollar value.
Please note, that it's also advisable to compare the resulting NPV with other potential investments to make an informed decision. If NPV is positive, it generally indicates that the project might add value to the firm.
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Last year Builtrite had retained earnings of $140,000. This year, Builtrite had true net profits after taxes of $65,000 which includes common stock dividends received of $10,000, and also paid a preferred dividend of $35,000. What is Builtrite’s new level of retained earnings? A) $180,000 B) $190,000 C) $200,000 D) $170,000
Answer: $160,000
Explanation: Retained earnings can be defined as the amount pf earnings left with the company after taking into consideration all tyoes of dividends and taxes.
formula :-
Retained earnings = previous retained earnings + net income - dividends to equity holders - dividends to preference holders
thus,
Retained earnings = $140,000 + $65,000 - $10,000 - $35,000
= $160,000
In 2014, GoPro spent \$27.5$27.5 million on capital expenditures, experienced an increase in net working capital (including cash) equal to \$239$239 million, and realized \$18$18 million in depreciation. What is GoPro's unlevered free cash flow for 2014? *Make sure to input all currency answers without any currency symbols or commas, and use two decimal places of precision.
In this case, the called information is not enough to calculate the unlevered free cash flow. We need both the EBIT and the taxes, which are not given in the question. We can do a simplified calculation using the available data, but it will not be the accurate Unlevered Free Cash Flow without the missing figures.
Explanation:Unlevered Free Cash Flow (UFCF) is a company's cash flow before taking interest payments into account. It is calculated by adding depreciation back to Earnings Before Interest and Taxes (EBIT), then subtracting taxes, and finally reducing the net amount by the change in net working capital and capital expenditures. In this case, the question does not provide information about GoPro's EBIT or taxes, which are necessary components in calculating UFCF. However, if we take the three provided figures, we can partially calculate a simplified UFCF using the following equation: EBIT + Depreciation - Capital Expenditures - Change in Net Working Capital. Using the provided information, we find the calculation to be: Simplified UFCF = $18 million (depreciation) - $27.5 million (capital expenditures) - $239 million (change in Net Working Capital). Unfortunately, without the EBIT and tax figures, we can't provide a complete answer.
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A company has 100 million shares outstanding trading for $8 per share. It also has $900 million in outstanding debt. If its equity cost of capital is 15%, and its debt cost of capital is 12%, and its effective corporate tax rate is 40%, what is its weighted average cost of capital? (Show workings)
Answer: :)
Explanation: :)
Why might some firms voluntarily pay workers a wage above the market equilibrium, even in the presence of surplus labor? Check all that apply.
Higher wages cause workers to shirk more of their responsibilities. Paying higher wages encourages workers to be more productive. Paying higher wages enhances workers to adopt healthier lifestyles, enhancing their productivity. Paying higher wages increases worker turnover.
Answer:
Paying higher wages encourages workers to be more productive
Paying higher wages enhances workers to adopt healthier lifestyles, enhancing their productivity.
Explanation:
Commonly the minimum salary is the average salary for an specific job, it means that if you receive a salary below the average, it is not a profitable job. at the beginning of the management theories and economic investigations, the studies said that there was not a difference between workers with minimum salaries or workers with salaries above the market.
Recently results have shown that workers with higher salaries feel motivated and reduce the worker turnover; they have a stability and they will try to keep that benefit. by the other hand, as a natural economic rule, when a person receives higher incomes they rise their live conditions improving the life style. All this situation causes the satisfaction of basic needs, as a result the people feel happier and they will increase their productivity to keep the positive situation.
In the market for pretzels, which of the following will increase demand? Choose one or more: A. If mustard is a complementary good for pretzels, the price of mustard increases. B. If income increases andpretzels are inferior goods. C. If mustard is a complementary good for pretzels, the price of mustard decreases. D. If potato chips are substitute goods for pretzels, the price of potato chips increases. E. If income increases and pretzels are normal goods.
Answer: Option(C), (D) and (E) will increase demand for pretzels.
Explanation:
(A) If mustard is a complementary good for pretzels, the price of mustard increases as a result demand for pretzel decreases. Complementary goods are the goods with negative cross price elasticity of demand. This means that as the price of one good increases as a result demand for another good decreases.
(B) If pretzels are inferior goods, as the income increases, this lowers the demand for pretzels. In inferior goods case, income and demand are inversely related with each other.
(C) If mustard is a complementary good for pretzels, the price of mustard decreases as a result demand for pretzel increases.
(D) If potato chips are substitute goods for pretzels, the price of potato chips increases as a result demand for pretzel increases. Substitute goods are the goods with positive cross price elasticity of demand. This means that as the price of one good increases as a result demand for another good increases.
(E) If pretzels are normal goods, as the income increases, this increases the demand for pretzels. In normal goods case, income and demand are directly related with each other.
In the market for pretzels, the price of complementary goods like mustard can impact demand. If the price of mustard increases or decreases, it will influence the demand for pretzels. Similarly, if pretzels are normal goods and income increases, the demand for pretzels will likely increase.
Explanation:In the market for pretzels, the price of a complementary good like mustard can affect demand. If the price of mustard increases, it would decrease the demand for pretzels because people tend to consume these two goods together. Similarly, if the price of mustard decreases, it would increase the demand for pretzels as people would be more inclined to buy both. Therefore, option A, "If mustard is a complementary good for pretzels, the price of mustard increases," and option C, "If mustard is a complementary good for pretzels, the price of mustard decreases," will both increase demand for pretzels.
Option D, "If potato chips are substitute goods for pretzels, the price of potato chips increases," is incorrect. If potato chips are a substitute for pretzels and the price of potato chips increases, it would likely lead to an increase in the demand for pretzels as people might switch from potato chips to pretzels due to the price change.
Lastly, option B, "If income increases and pretzels are inferior goods," and option E, "If income increases and pretzels are normal goods," both have the potential to increase demand. If pretzels are inferior goods, an increase in income might lead people to demand more expensive alternatives, causing a decrease in the demand for pretzels. Conversely, if pretzels are normal goods, an increase in income would likely increase the demand for pretzels as people would have more purchasing power.
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Cornerstone, Inc. has $125,000 of inventory that suffered minor smoke damage from a fire in the warehouse. The company can sell the goods "as is" for $45,000; alternatively, the goods can be cleaned and shipped to the firm's outlet center at a cost of $23,000. There the goods could be sold for $80,000. What alternative is more desirable and what is the relevant cost for that alternative?
Answer:
Alternative of cleaning and shipping is better as loss value is less.
Relevant cost of this alternative is $23,000 incurred for cleaning and shipping.
Explanation:
Evaluating both the proposals
In case the goods are sold as it is then net cost/ loss = Carrying value of inventory - Sales Revenue
= $125,000 - $45,000 = $80,000
In case the goods are cleaned and shipped then
Total cost = $125,000 + $23,000 = $148,000
Revenue = $80,000
Net loss/ cost = $148,000 - $80,000 = $68,000
Thus Since the loss value is less i alternative 2 that is of cleaning and shipping, it shall be chosen.
The relevant cost of that alternative is $23,000 incurred in cleaning and shipping.
Final answer:
For Cornerstone, Inc., cleaning and shipping the damaged goods is the more desirable alternative, as it results in a higher net revenue of $57,000 compared to selling the goods 'as is' for $45,000. The relevant cost for the more desirable alternative is $23,000.
Explanation:
To determine which alternative is more desirable for Cornerstone, Inc., we need to compare the net proceeds from each option. Selling the goods 'as is' would result in a revenue of $45,000. However, if they choose to clean and ship the goods, which costs $23,000, the goods could then be sold for $80,000. To calculate the net revenue of the second option, we subtract the cost of cleaning and shipping from the sales amount.
The calculation for selling 'as is':
Net revenue = Revenue from sale - No additional costs
Net revenue = $45,000 - $0
Net revenue = $45,000
The calculation for cleaning and shipping then selling:
Net revenue = Revenue from sale - Cost of cleaning and shipping
Net revenue = $80,000 - $23,000
Net revenue = $57,000
The second option provides a higher net revenue; therefore, it is the more desirable alternative. The relevant cost for this alternative is the cost of cleaning and shipping, which is $23,000.
Notson, Inc. produces several models of clocks. An outside supplier has offered to produce the commercial clocks for Notson for $420 each. Notson needs 1,200 clocks annually. Notson has provided the following unit costs for its commercial clocks: Direct materials $100 Direct labor 140 Variable overhead 80 Fixed overhead (40% avoidable) 150. Prepare an incremental analysis which shows the effect of the make-or-buy decision.
Answer:
The production of the clocks should be continued, as buy option will increase the cost for the company by 48,000
Explanation:
Current escenario
100 DM x 1,200 = 120,000
140 DL x 1,200 = 168,000
80 VO x 1,200 = 96,000
Fixed Cost 150 x 1,200 = 180,000
Total cost = 564,000
420 x 1,200 = 504,000
60% fixed cost unavoudable 180,00 = 108,000
Total Cost 612,000
make 564,000
buy (612,000)
total cost saving (48,000)
Final answer:
An incremental analysis to compare making clocks in-house against buying them shows the costs associated with each option, with consideration to avoidable costs. Making the clocks in-house involves direct materials, direct labor, variable overhead, and a portion of fixed overhead costs. Buying results in a flat cost per unit from the supplier.
Explanation:
The student's question involves conducting an incremental analysis to compare the cost of making clocks internally versus buying them from an external supplier. This is a common question in business courses, particularly those focused on managerial accounting and cost management. To make an informed make-or-buy decision, one must consider not only the direct costs but also the opportunity costs and potential savings on avoidable costs.
To calculate the incremental cost of making the clocks in-house, we consider the total cost for in-house production and subtract any costs that can be avoided if production is outsourced. The fixed overhead is the only avoidable cost noted, equaling 40% of $150. The remaining costs are direct materials, direct labor, variable overhead, and 60% of fixed overhead, which are inevitable. For the cost of buying clocks, we only need the quoted price from the supplier.
Here's the make-or-buy analysis:
Make:
Direct materials: $100 x 1,200 = $120,000
Direct labor: $140 x 1,200 = $168,000
Variable overhead: $80 x 1,200 = $96,000
Non-avoidable fixed overhead (60% of $150 x 1,200) = $90,000
Buy:
Cost of buying clocks: $420 x 1,200 = $504,000
By comparing these calculations, Notson, Inc. can decide whether to make or buy the commercial clocks based on cost considerations.
Suppose you have just been hired as the Chief Diversity Officer of a large company. Previous mentoring programs at this company have not been successful. After inquiring about previous efforts, you discover that most mentor pairs met just a few times, but very few lasting or meaningful mentoring relationships were created. There were also a significant number of employees that did not even attempt to seek out a mentor relationship. Which of the following may be a reason why prior mentoring programs at your company failed? Check all that apply.A) Minorities and women are much less likely to develop mentoring relationships than white malesB) Mentoring is not an effective way for organizations to develop female and minority employeesC) Due to specific laws governing appropriate workplace behavior, senior-level male executives were reluctant to cultivate mentoring relationships with female employees, fearing negative repercussionsD) Fear of creating a future competitor within the company, senior-level female executives were hesitant to mentor other female employees
Answer: options A, C and D apply to this situation.
Explanation:
A. There might be a perception with women and minorities that they could be treated inappropriately or could become a victim of harassment.
B. Mentoring is a way of motivating the employees and it works on every gender and community.
C. Senior level male managers may get false allegations of harassment from the subordinates due to various strict legislation passed. Thus, it could be a reason that male managers are reluctant for being a mentor.
D. Fear of losing superiority and power lies in all genders and communities thus it could also be reason that female managers were reluctant to be the mentor to new employees.
Prior mentoring programs likely failed due to senior male executives' apprehension about potential legal issues and senior female executives' concern about fostering competition. Therefore, options C and D are correct.
Possible reasons for failure:
Laws and fear: Senior male executives might be hesitant to mentor female employees due to potential legal issues or misunderstandings, leading to fewer mentoring relationships.Competitive concerns: Senior female executives might fear that mentoring other women could result in creating competitors within the company, thus avoiding deeper mentoring engagements.Research indicates that mentoring programs can fail due to various factors, including concerns about workplace behavior laws and competitive dynamics within an organization. In particular, gender dynamics often play a critical role. For instance, male executives may be reluctant to mentor female employees due to fears of legal repercussions. Additionally, female executives might avoid mentoring other women to prevent fostering competition. Therefore, options C and D are correct reasons why prior mentoring programs might have failed.An investment offers a total return of 18 percent over the coming year. Janice Yellen thinks the total real return on this investment will be only 14 percent. What does Janice believe the inflation rate will be over the next year?
Answer: Janice believe the inflation rate will be over 4%.
Explanation:
The expected return is 18% but Janice is thinking the return will be 14% because she is discounting the inflation which is 4%. She expects to receive 14% net rate (18%-14%= 4%).
Vaughn Manufacturing has a weighted-average unit contribution margin of $30 for its two products, Standard and Supreme. Expected sales for Vaughn are 40000 Standard and 60000 Supreme. Fixed expenses are $1950000. At the expected sales level, Vaughn’s net income will be:
Answer:
expected income 105,000
Explanation:
Our goal would be to multiply the average contribution margin of the company by the total units produced.
[tex]average \: contribution \times units\: sold = contribution \: margin\\30 \times (40,000 + 60,000) = 30\times 100,000 = 300,000[/tex]
Important: the given is the weighted average, so the units mix (40% STD 60% SUPREME) is taken into consideration already, no need to additional calculation. If we were told the Contribution Margin per type of unit we will be needing to calculate the average CM.
Now, second step will be subtract the fixed cost from the contribution to get the pretax income
[tex]Net \:Income = contribution \: margin - fixed \: cost\\300,000 - 195,000 = 105,000[/tex]
A small business owner earns $50,000 in revenue annually. The explicit annual costs equal $30,000. The owner could work for someone else and earn $25,000 annually. The owner's business profit is ________ and the economic profit is ________.
Answer:
The owner's business profit is $20,000 and the economic profit is -$5000
Explanation:
First of all the owner's business profit can also be termed as the accounting profit, which means the total amount of revenue that a firm generates after paying off the explicit cost of the business which usually includes purchase of raw material or the wages of employee.
Economic profit is almost same as owner's business profit with only difference being that in the calculation of economic profit, the total cost of production is taken, which means that both explicit and implicit cost are taken it to account. Implicit cost means the opportunity cost that a firm losses by choosing one avenue over the other.
OWNERS BUSINESS PROFIT = TOTAL REVENUE - EXPLICIT COST
= $50,000 - $30,000
= $20,000
ECONOMIC PROFIT = TOTAL REVENUE - EXPLICIT COST- IMPLICIT COST
( IMPLICIT COST = OPPORTUNITY COST)
Here the opportunity cost would be $25,000 because business owner is now working for someone else, losing the opportunity to earn more from his business.
ECONOMIC PROFIT = $50,000 - $30,000 - $25,000
= -$5000
The small business owner's business profit, which is the accounting profit, amounts to $20,000, while the economic profit, considering both explicit and implicit costs, is a loss of $5,000.
The small business owner has an accounting profit of $20,000, which is calculated by subtracting the explicit costs from the total revenues ($50,000 - $30,000). To calculate the economic profit, you must also subtract the implicit costs of the owner not working elsewhere. This includes the salary the owner could have earned, which is $25,000. So, the economic profit is the accounting profit minus the implicit costs ($20,000 - $25,000), which equals -$5,000.
Match each of the definitions that follow with the term it defines.
Engineering change order Total cost concept
Variable cost concept Normal selling price
Setup A document that initiates a product or process change
Includes manufacturing costs plus selling and administrative expenses Changing tooling when preparing for a new product
Target selling price to be achieved in the long term Variable manufacturing costs plus variable selling and administrative costs are included in cost per unit
Answer: The answers are:
1) Engieering change order is a document that initiates a product or process change.
2) Total cost concept Includes manufacturing costs plus selling and administrative expenses.
3) Variable cost concept = Variable manufacturing costs plus variable selling and administrative costs are included in cost per unit .
4) Normal selling price is Target selling price to be achieved in the long term .
5) Setup = Changing tooling when preparing for a new product.
What does a firm's supply schedule show?a. elasticity of demandb. how price changes affect demand for a particular consumerc. how price changes affect supply for a marketd. the impact of the substitute effect
Answer:
b. how price changes affect demand for a particular consumers.
Explanation:
A firm's supply schedule shows how price changes affect demand for a particular consumer.
The supply schedule of a firm shows the relationship between market prices and the quantity of goods or services that the firm is willing and able to supply. It demonstrates how price changes impact the firm's supply.
Explanation:A firm's supply schedule is an economic chart that outlines how much of a good or service a firm is willing and able to supply at various prices. It demonstrates the relationship between the product's price and the total quantity supplied by the firm.Therefore, a supply schedule essentially illustrates how price changes affect supply for a market. When prices increase, firms tend to supply more because it becomes more profitable to produce the good or service. Conversely, if prices decrease, firms may supply less as it is less profitable.
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Why don’t employers simply let people learn about their jobs as they perform them?
Answer:
Job training allows employers to hire people who are not specialists and to help make them productive sooner. With training, a person can integrate into the company faster because they do not have to discover how to do something. It is less frustrating for everyone, when there is a set of directions and expectations for the new hire.
SPINX, INC. Statement of Earnings For the Year Ended December 31, CURRENT YEAR Net sales $ 4,395,253 Costs and expenses: Cost of goods sold (2,821,455 ) Operating expenses (1,004,396 ) Interest revenue 15,797 Earnings before income tax $ 585,199 Income tax expense (204,820 ) Net earnings $ 380,379 Earnings per share $ 1.70 Comparative balance sheets report average total assets for the year of $2,575,000 and average total equity of $1,917,000 (dollar amounts in thousands, except earnings per share). a. Prepare an income statement for the year in a multiple-step format. b-1. Compute the gross profit rate. b-2. Compute the net income as a percentage of net sales. b-3. Compute the return on assets. b-4. Compute the return on equity for the year.
Answer:
a.) Income Statement for the year
Revenue
Operating Revenue Net sales $4,395,253
Less: Expenses
Cost of goods sold ($2,821,455)
Operating expenses ($1,004,396) ($3,825,851)
Earnings before Interest and Taxes $569,402
Add: Other Income Interest revenue $15,797
Earnings before Taxes $585,199
Less: Taxes ($204,820)
Net earnings $380,379
Earnings per share $1.70
Number of shares = $380,379/$1.70 = 223,752 shares
b.) 1 Gross profit rate
= gross profit/Net sales
Gross profit = Net sales - Cost of goods sold = $4,395,253 - $2,821,555 = $1,573,698
Rate = $1,573,698/ $4,395,253 = 35.8045%
b.) 2 Net income as a percentage of net sales = ($380,379/$4,395,253) X 100 = 8.654%
b.) 3 Return on assets = (Net income/Average assets) X 100 = ($380,379/$2,575,000) X 100 = 14.772%
b.) 4. Return on equity for the year = (Net income/Average equity) X 100 = ($380,379/$1,917,000) X 100 = 19.8424%
Record the following transactions of Fashion Park in a general journal. Fashion Park must charge 8 percent sales tax on all sales. DATE TRANSACTIONS 2019 April 2 Sold merchandise for cash, $2,500 plus sales tax. 3 The customer purchasing merchandise for cash on April 2 returned $250 of the merchandise; provided a cash refund to the customer. 4 Sold merchandise on credit to Jordan Clark; issued Sales Slip 908 for $1,050 plus tax, terms n/30. 6 Accepted return of damaged merchandise from Jordan Clark; issued Credit Memorandum 302 for $150 plus tax. The original sale was made on Sales Slip 908 of April 4. 30 Received payment on account from Jordan Clark in payment of her purchase of April 4, less the return on April 6.
Given :
Apr-02 :
Cash = 2700
Sales = 2500
Sales Tax Payable = 200
Apr-03 :
Sales returns and allowances = 250
Apr-04:
Accounts receivable = 1134
Apr-06:
Sales returns and allowances = 150
Final answer:
To record the transactions of Fashion Park, debit or credit the appropriate accounts according to each transaction. On April 2, debit Cash for $2,500 and Sales Tax Payable for $200. On April 3, debit Sales Returns and Allowances for $250. On April 4, debit Accounts Receivable for $1,050. On April 6, debit Sales Returns and Allowances for $150. On April 30, debit Cash for $912.
Explanation:
To record the transactions of Fashion Park in a general journal, we will follow these steps:
On April 2, we will debit Cash for $2,500 and Sales Tax Payable for $200, and credit Sales Revenue for $2,500. This records the sale of merchandise for cash.On April 3, we will debit Sales Returns and Allowances for $250, debit Cash for $250, and credit Sales Revenue for $250. This records the return of merchandise for cash.On April 4, we will debit Accounts Receivable for $1,050 and Sales Tax Payable for $84, and credit Sales Revenue for $1,050. This records the sale of merchandise on credit to Jordan Clark.On April 6, we will debit Sales Returns and Allowances for $150, debit Sales Tax Payable for $12, and credit Accounts Receivable for $150. This records the return of damaged merchandise from Jordan Clark.On April 30, we will debit Cash for $912, debit Sales Tax Payable for $72, and credit Accounts Receivable for $1,050. This records the receipt of payment on account from Jordan Clark, less the return on April 6.Abacus Company has an opportunity to invest in a depreciable asset that will yield a net cash inflow of $30,000 per year for four years. Abacus’ desired rate of return is 10%. Based on this information, what is the present value of the investment opportunity (round to the nearest whole dollar)?
Answer:
Present Value of Investment Opportunity = $95,096
Explanation:
Net cash inflow = Cash inflow - cash outflow
Given that net cash inflow = $30,000 per month for 4 years
Rate of return = 10%
Present Value = [tex]\frac{1}{(1+0.1)^{1} } X $30,000 + \frac{1}{(1+0.1)^{2} } X $30,000 + \frac{1}{(1+0.1)^{3} } X $30,000 + \frac{1}{(1+0.1)^{4} } X $30,000[/tex]
= $27,272.72 +$24,793.38 + $22,539.44 + $20,490.40
= $95,096 (rounded off to nearest dollar)
Present Value of Investment Opportunity = $95,096
Green Cleaners Inc., a U.S.-based company that specializes in environmentally-friendly cleaning supplies, has production facilities in Poland and Spain. Based on this information, Green Cleaners can be classified as what type of enterprise? Multiple Choice multinational private public semi-public local
Answer: MULTINATIONAL COMPANIES
Explanation: Companies operating their business in two or more countries other than the country in which they are incorporated are called multinational companies. In this question green cleaners is based in america but have operations in Poland and Spain also , thus, it would be a multinational enterprise.
Sheridan Company receives a $27000, 3-month, 8% promissory note from Pharoah Company in settlement of an open accounts receivable. What entry will Sheridan Company make upon receiving the note?
Answer:
Note Receivable debit 27,000
Account receivable credit 27,000
Explanation:
It will write-off the account and transfer the balance of Pharoah Company account to the notes receivable to represent the change in the conditions.
The interest will be accrued once times past. They are not relevant at the moment of recording the note in the accounting.
The interest entries will be done at end of the month, end of the accounting cycle or at the moment of honor the note.
Goshen Company's contribution format income statement for the most recent month is given below: Sales (42,000 units) $ 1,218,000 Variable expenses 852,600 Contribution margin 365,400 Fixed expenses 292,320 Net operating income $ 73,080 The industry in which Goshen Company operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of improving profits.Required:New equipment has come on the market that would allow Goshen Company to automate a portion of its operations. Variable expenses would be reduced by $8.70 per unit. However, fixed expenses would increase to a total of $657,720 each month. Prepare two contribution format income statements, one showing present operations and one showing how operations would appear if the new equipment is purchased. (Input all amounts as positive values except losses which should be indicated by minus sign.)
Answer:
Sales Revenue 1,218,000 1,218,000
Variable Cost 852,600 487,200
Contribution margin 365,400 730,800
Fixed Cost 292,320 657,720
Operating Income 73,080 73,080
Explanation:
Variable cost 852,600 / 42,000 units = 20.3 then - 8.7 for the decrease due to nex equipment = 11.6 Then 11.6 x 42,000 = 487,200
On October 1 2017 Sunland Company issued 4 10 year bonds with a face value of $6110000 at 104 Interest is paid on October 1 and April 1 with any premiums or discounts amortized on a straight line basis Bond interest expense reported on the December 31 2017 income statement of Sunland Company would be:
Answer:
The income statment will list
Interest expense 219,960Explanation:
face value 6,110,000
issued at 104
[tex]Principal \times\frac{issued\: points}{100} = cash \:proceeds\\6,110,000 \times\: \frac{104}{100} = 6,354,400[/tex]
Premium 244,400
Straight line method
[tex]\frac{Premium}{total \: payments} = amortization\: per \: payment[/tex]
It's life is 10 years. It makes 2 payment per year. Total payment 20
244,400/20 = 12,220
Cash disbursements per payment
6,110,000 x 2% = 122,200
premium amortization 12,220
Interest expense per payment 109,980
Total interest expense per year 219,960 (there are two payment per year)
Which of the following is most representative of the functional finance view of the macroeconomy? The economy is self-regulating and the best thing the government can do to enhance stability is to stay out of the way. Budgets should be balanced. Doing otherwise is morally wrong. The government should decide on tax and spending plans based on their effects on the economy. Crowding out almost completely cancels out any deficit spending, so fiscal policy is likely to be ineffective.
Answer:
The government should decide on tax and spending plans based on their effects on the economy.
Explanation:
According to the functional finance theory, the government is the authority which should finance itself to come along to meet with the explicit goals of the economy of the country. The theory has been proposed by Abba P. Lerner. Some of the goals of the economy include attainment of full employment, decreasing the rate of inflation and ensuring growth.
You are a member of the Human Resources Department of a medium-sized organization that is implementing a new inter-organizational system that will impact employees, customers, and suppliers. Your manager has requested that you work with the system development team to create a communications plan for the project. He would like to meet with you in two hours to review your thoughts on the key objectives of the communications plan. What should those objectives be?
Answer: There can be several objectives some of which are explained below :-
Explanation:
1. Sharing of information in an effective and efficient manner in both inside and outside the organisation.
2. The technology to be used should be easy to understand and user friendly so that all related parties can use it as per their requirements without any hurdle.
3. Making a team of technical professionals to ensure resolving any technical issue that could arise in future.
4. Developing strategy to train and inform all the related parties affected by the implementation of this system.
Current information for the Healey Company follows: Beginning raw materials inventory $15,200 Raw material purchases 60,000 Ending raw materials inventory 16,600 Beginning work in process inventory 22,400 Ending work in process inventory 28,000 Direct labor 42,800 Total factory overhead 30,000 All raw materials used were traceable to specific units of product. Healey Company's Cost of Goods Manufactured for the year is: $139,000. $137,000. $128,600. $131,400. $125,800.
Answer:
125,800
Explanation:
FIRST we check how many materials were used in production
beg raw + purchases = ending raw + used in production
15,200 + 60,000 = 16,600 + used in production
used in production = 58,600
SECOND the cost added during the period for the three main cost components
Raw materials 58,600
DL 42,800
MOH 30,000
cost added during the period 131,400
LASTLY the COGM
Beg WIP + cost added = ending + COGM
22,400 + 131,400 = 28,000 + COGM
COGM = 153,800 - 28,000
COGM = 125,800