Answer:
D
Explanation:
7) Suppose AVC = $113 when the firm produces 515 units of output. Then the firm's fixed cost amounts to a) $5,500, and its profit amounts to $20,375. b) $5,980, and its profit amounts to $25,750. c) $5,750, and its profit amounts to $20,375 d) $6,180, and its profit amounts to $25,750.
Answer:
d) $6,180, and its profit amounts to $25,750.
Explanation:
At output 515, average variable cost is $113
VC = AVC * Q
= $113 x 515
= $58,195
TC = ATC * Q
= $125 x 515
= $64,375
Now calculate for Fixed Cost
Total Cost (TC) = VARIABLE COST (VC) + FIXED COST (FC)
FC = TC - VC
= $64,375 - $58,195
= $6,180
Calculate for profit
Profit = TR - TC
= $90,125 - $64,375
= $25,750
Briefly explain what the term "balance of trade" refers to from a macroeconomic perspective and include a brief description of how exports and imports influence the balance of trade.
Answer:
In a macroeconomic perspective, the balance of trade (BOT) simply refers to the difference between the value of the imports and exports of a country. In measuring the relative strength of a country's economy, economists make use of the balance of trade. Also, in considering the balance of payments, the balance of trade is the largest component considered.
In balance of trade, TRADE DEFICIT and TRADE SURPLUS are usually considered in relation to their import and export activities
The Trade Deficit results when a country imports more good and services than it exports. While the Trade Surplus results when a country exports more goods and services than it imports.
Since 1976, the United States had a trade deficit. This was as a result of their dependency on oil imports and consumer products. While since 1995, China which produces and exports many of the world's consumable goods has recorded a trade surplus.
When trade deficit occurs, countries affected borrow money to pay for their goods and services but when trade surplus occurs in a country, such country lends money to deficit countries.
Formula for BOT = Total Value Of Imports minus (➖) Total value of exports.
Answer: balance of trade is used to show the major difference between a country import and export over a specified period of time.
Explanation: Balance of trade is used to show the major difference between a country import and export over a specified period of time. Macroeconomics is the study of the whole factors that affect a countries economy.
When exports is greater than import, this leads to what is called unbalanced or unfavorable balance trade ( trade surplus) same applies when import exceeds export. The balance of trade is a part of a large economic unit this is where it relates to macroeconomics.
Walter Utilities is a dividend-paying company and is expected to pay an annual dividend of $0.65 at the end of the year. Its dividend is expected to grow at a constant rate of 9.50% per year. If Walter’s stock currently trades for $12.00 per share, what is the expected rate of return?
Answer:
14.90%
Explanation:
We know,
Current stock price, [tex]P_{0}[/tex] = [tex]\frac{D_{1}}{r_{s} - g}[/tex]
Given,
Current stock price, [tex]P_{0}[/tex] = $12.00
growth rate, g = 9.50% = 0.095
Expected annual dividend, [tex]D_{1}[/tex] = $0.65
We have to determine the expected rate of return ([tex]r_{s}[/tex]).
Putting the values into the above formula, we can get,
Current stock price, [tex]P_{0}[/tex] = [tex]\frac{D_{1}}{r_{s} - g}[/tex]
or, $12.00 = $0.65 ÷ ([tex]r_{s}[/tex] - 0.095)
or, $12.00 × ([tex]r_{s}[/tex] - 0.095) = $0.65
or, [tex]r_{s}[/tex] - 0.095 = $0.65 ÷ $12.00
or, [tex]r_{s}[/tex] - 0.095 = 0.0542
or, [tex]r_{s}[/tex] = 0.054 + 0.095
Therefore, [tex]r_{s}[/tex] = 0.149
The expected rate of return = 0.149 or 14.90%
Tom is the quality control manager for the company XYZ. XYZ recently received some complaints about its product A's quality and the general manager Steve requested Tom to investigate it. To gain a better understanding of the production process, Tom decided to use p-chart to monitor and identify the assignable cause variations. For the next 8 working days, Tom collected 8 samples (each of the size 100 units) and found the following number of defects, 4, 6, 0, 1, 3, 5, 8, 3.
a. What is the defect rate for sample 2? Ignore the percentage sign, and round your answer to the nearest integer. For example, if your answer is 12.34%, input 12.
Your answer is .
b. What is p-bar? Ignore the percentage sign, and round your answer to two decimals. For example, if your answer is 12.34%, input 12.34. (Note that this is different from question a.)
Your answer is .
c. What is sigma? Ignore the percentage sign, and round your answer to two decimals. For example, if your answer is 12.34%, input 12.34.
Your answer is .
d. What is upper control limit UCL for this p-chart? Ignore the percentage sign, and round your answer to two decimals. For example, if your answer is 12.34%, input 12.34.
Your answer is .
e. What is lower control limit LCL? (If LCL is negative, input 0) Ignore the percentage sign, and round your answer to two decimals. For example, if your answer is 12.34%, input 12.34. If your answer is -1.234%, input 0.
Your answer is .
f. How many outlier(s) is(are) identified? Round your answer to the nearest whole number. For example, if the answer is 3.12, input 3.
Your answer is
Answer:
Answer a= Defect rate of sample 2= 6/100 =6
Answer b=
Data % defect % defect
4 4/800 0.005
6 6/800 0.0075
0 0/800 0
1 1/800 0.00125
3 3/800 0.00375
5 5/800 0.00625
8 8/800 0.01
3 3/800 0.00375
Sum 0.0375
p bar =0.0375
Answer c= sigma = [p bar(1-p bar) / sample size]]0.5
Sigma = (0.0375*(1-0.0375)/100)^0.5 =0.019
Answer d= UCL=p bar + 3*(Estimated standard deviation) = 0.0375+3*0.019 =0.0945
Answer e= LCL=p bar - 3*(Estimated standard deviation) =0.0375-3*0.019 =-0.0195=0
Kelli Blakely is a portfolio manager for the Miranda Fund, a core large-cap equity fund. The market proxy and benchmark for performance measurement purposes is the S&P 500. Although the Miranda portfolio generally mirrors the asset class and sector weightings of the S&P, Blakely is allowed a significant amount of leeway in managing the fund. However, her portfolio holds only stocks found in the S&P 500 and cash.
The question discusses mutual funds and investment strategies related to the S&P 500 benchmark. Portfolio managers like Kelli Blakely must weigh the decision to use actively managed or index funds, taking into account factors like historical performance and fees. The Principles of Diversification and Portfolio Theory also play roles in how investors should approach asset allocation to balance risk and return.
Explanation:The student's inquiry pertains to the realm of investing, specifically portfolio management within the scope of mutual funds, the use of benchmarks like the S&P 500 for performance measurement, and the choice between actively managed funds and index funds. Kelli Blakely, as a portfolio manager for the Miranda Fund, must navigate these principles while adhering to the fund's strategy, which aligns closely with the asset class and sector weightings of the S&P 500 but allows for some manager discretion. Choosing between an actively managed fund and an index fund like the S&P 500 requires a consideration of factors such as historical returns, associated fees, and the theory of diversification. Warren Buffet, among others, advocates for a diversified investment approach, often recommending low-cost index funds for the majority of investors due to the challenges that active management faces in consistently outperforming market benchmarks.
Portfolio Theory suggests that asset allocation is key to managing risk and return, with diversification as a central tenet. Investors must balance the potential higher returns of riskier assets like stocks with the stability provided by fixed-income investments like bonds. Furthermore, mutual funds and indices such as the Dow Jones Industrial Average (DJIA) and the Standard and Poor 500 Index (S&P 500) serve as important benchmarks for assessing fund performance, and various companies offer mutual funds designed to mimic these benchmarks, such as the BlackRock ESG Aware Moderate Allocation Index, which invests in a mix of equity and fixed income iShares ESG ETFs.
Rockville Enterprises manufactures woodworking equipment and is incorporated and based in Evansville, Indiana. All of itsreal property is in Indiana. Rockville employs a large sales force that travels throughout the U.S. Determine whether each of the following is a protected activity in nondomiciliary states under Public Law 86-272: a)Rockville advertises in Wisconsin using television, radio and newspapers.b) Rockville’s employees in Illinois check the credit of a potential customer.c) Rockville maintains a booth at an industry tradeshow in Arizona for 10 days.d)Sales representatives check the inventory of a Tennessee customer to make sure it has enough in stock and that the stock is properly displayed.e) Rockville holds a management seminar executive retreat for corporate executives over four days in Florida.
Answer:
In the modern situation of Rockville Enterprises, it is producing wood functioning tools and situated in Evansville, following are the description whether Rockville Enterprise is a defensive commotion in non-ordinary conditions or not.
A) - Yes. All form of marketing is deliberated as secure action. As these marketing is revealed in all country.
B) - No. Inspection credit value of consumers is not secure action underneath the public regulation 86-272
C) - Yes. Sustaining a stand at a business exhibition in Arizona for 14 days is measured as secure action under the public regulation 86-272
D) - Yes. Inspection record is secure action underneath the public regulation 86-272
E) - No. Organizing administration meeting is not a secure action. Conversely. Organizing individual meeting is measured as secure action.
Final answer:
Under Public Law 86-272, Rockville Enterprises' activities such as advertising in Wisconsin are protected in nondomiciliary states, while activities like credit checking in Illinois and inventory checks in Tennessee are not protected due to exceeding mere solicitation. Management seminars in Florida also do not fall under protected activities.
Explanation:
The question involves understanding Public Law 86-272 and its implications for Rockville Enterprises, a company that manufactures woodworking equipment and operates nationwide from its base in Indiana. Here we analyze which activities are protected under this law in nondomiciliary states, where Rockville does not have a physical presence.
Advertising in Wisconsin through television, radio, and newspapers is protected under Public Law 86-272, as this constitutes solicitation of sales and does not establish a physical presence.
Credit checking in Illinois by employees is not protected, as this goes beyond mere solicitation and could be construed as conducting business locally.
Maintaining a booth at a tradeshow in Arizona for 10 days is generally considered a protected activity under Public Law 86-272, provided the activity is focused on solicitation of orders for sales.
Sales representatives checking inventory in Tennessee is not protected, as it involves more than solicitation and enters the realm of providing customer service or support post-sale.
Holding a management seminar in Florida is also not protected, as this activity does not directly relate to the solicitation of sales and represents a more substantial business operation in the state.
Madeline Rollins is trying to decide whether she can afford a loan she needs in order to go to chiropractic school. Right now, Madeline is living at home and works in a shoe store, earning a gross income of $1,260 per month. Her employer deducts a total of $320 for taxes from her monthly pay. Madeline also pays $190 on several credit card debts each month. The loan she needs for chiropractic school will cost an additional $290 per month. Calculate her debt payments-to-income ratio with and without the college loan
Answer:
Without loan:
Debt = Credit card debts = 190
Without loan:
Debt = Loan payments+credit card debt =190+290 = 480
Explanation:
Gross Income = $1260
Income after tax = 1260-290 = 970
1st case(without loan)
Debt = Credit card debts = 190
Debt/income = 190/970 =0.1958 = 19.58%
2nd case (with loan)
Debt = Loan payments+credit card debt =190+290 = 480
An ever-present facet of all exchanges between buyers and sellers, the value inculcated with marketing utility that emphasizes the connectivity between the tangibility and intangibility in the flows of marketing offerings is:a. The marketing conceptb. Service utilityc. Marketing myopia
Answer:
Option B is correct one.
Service utility
Explanation:
These are the ramifications of the job of service utility. Different ramifications are - it suits all inclusive associated and innovation empowered worth conveyance point of view, it's a cost concentrated piece of distributive procedure, and it's hard to evaluate, on account of fluctuating client desires for service delivery.
When estimating wage equations we expect that young, inexperienced workers will have relatively low wages and that with additional experience their wages will rise, but then begin to decline after middle age, as the worker nears retirement. This life-cycle pattern of wages can be captured by introducing experience and experience squared to explain the level of wages. If we also include years of education and a dummy variable for the sex (0 if male, 1 if female) we have the following equation:
W AGE = β1 + β2 EDUC + β3 EXPER + β4 EXPER^2 + β5 SEX + e
a. What is the marginal effect of experience on wages?
b. What signs do you expect for each of the coefficients β2, β3, β4 and β5 Why?
c. After how many years of experience do wages start to decline (Since you are not provided with OLS estimates of the regression coefficients, cast your answer in terms of the theoretical coefficients β).
The marginal effect of experience on wages can be calculated mathematically, coefficient signs show the expected impact of each variable on wages, and the point when wages start to decline can be determined from the wage equation.
Explanation:The marginal effect of experience on wages can be calculated by taking the derivative of the wage equation with respect to experience. This would be the sum of the coefficients β3 and 2 times the coefficient β4 multiplied by the level of experience.
The signs expected for the coefficients β2, β3, β4, and β5 would be positive for β2 (education increases wages), positive for β3 (experience typically increases wages), negative for β4 (experience squared captures the decline in wages after a certain point), and the sign for β5 would depend on whether being female positively or negatively impacts wages in the specific context of the data.
Wages start to decline after the number of years of experience indicated by the point where the marginal effect of experience on wages changes from positive to negative, which occurs at -β3 / (2*β4) in the wage equation.
owns a Dell laptop computer. She uses the computer in class and her classmates can see the Dell logo when she uses her laptop. One of her classmates is looking to purchase a new laptop and asks Felicity her opinion of Dell computers. Felicity informs her classmate that she is satisfied with her laptop and recommends that her classmate purchases one, too. For Dell, Felicity is exhibiting some of the benefits of _____.
Complete question:
Trudy owns a Dell laptop computer. She uses the computer in class and her classmates can see the Dell logo when she uses her laptop. One of her classmates is looking to purchase a new laptop and asks Trudy her opinion of Dell computers. Trudy informs her classmate that she is satisfied with her laptop and recommends that her classmate purchases one, too. For Dell, Trudy is exhibiting some of the benefits of _____.
a. brand recognition
b. brand equity
c. brand insistence
d. brand loyalty
e. brand mark
Answer:
For Dell, Trudy is exhibiting some of the benefits of brand loyalty .
Explanation:
Brand loyalty is described as favorable emotions towards the company and willingness to buy the same product or service consistently from the same company now and in the future, irrespective of the behavior of the rival or adjustments in the world.
Corporations spend large sums of money in customer support and promotions in order to create and retain brand awareness with the existing commodity.
Coca-Cola Corporation is an example of an established company that has culminated in consumers showing brand loyalty in light of Pepsi's beverages and advertisement campaigns over the years.
M. Cotteleer Electronics supplies microcomputer circuitry to a company that incorporates microprocessors into refrigerators and other home appliances. One of the components has an annual demand of 250 units, and this is constant throughout the year. Carrying cost is estimated to be $1 per unit per year, and the ordering (setup) cost is $20 per order.
To minimize cost, how many units should be ordered each time an order is placed?
Answer:
Order size per time = 100 units
Explanation:
To minimize cost, M Cotteleer Electronics Supplies should adopt the EOQ.
The Economic Order Quantity (EOQ) is the order size that minimizes the balance of ordering cost and holding cost. At the EOQ, the carrying cost is equal to the holding cost.
It is computed using he formula below
EOQ = √ (2× Co× D)/Ch
C0- ordering cost per order- 20, Ch-carrying cost per per unit per annum- $1, D- annual demand 250 units
EOQ= √ (2× 20× 250)/1
=100 units
To minimise cost, the M Cotteleer Electronics Supplies should order 100 units per time
The Molson Company had budgeted production for the year as follows: Quarter 1 2 3 4 Production in units 10,000 12,000 16,000 14,000 Four pounds of raw materials are required for each unit produced. Raw materials on hand at the start of the year total 4,000 lbs. The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs in materials. Budgeted purchases of raw materials in the second quarter would be:
Answer:
49,600 pounds
Explanation:
Prepare a Production Budget as Follows :
Q1 Q2 Q3 Q4
Budgeted Production 10,000 12,000 16,000 14,000
Budgeted Materials 40,000 48,000 64,000 56,000
Add Budgeted c/stock 4,800 6,400 5,600
Total Materials 44,800 54,400 69,600
Less Budgeted o/stock (4,000) (4,800) (6,400)
Budgeted Material Purch 40,800 49,600 63,200
Therefore Budgeted purchases of raw materials in the second quarter would be 49,600 pounds.
Bonita Industries produces 5000 units of part A12E. The following costs were incurred for that level of production: Direct materials $ 60000 Direct labor 165000 Variable overhead 80000 Fixed overhead 175000 If Bonita buys the part from an outside supplier, $45000 of the fixed overhead is avoidable. If the outside supplier offers a unit price of $73, net income will increase (decrease) by $145000. $(60000).$85000. $(15000).
Bonita Industries will save $80000 and therefore increase their net income by the same amount if they buy part A12E from the outside supplier instead of producing it in-house.
Explanation:In determining whether Bonita Industries should produce part A12E in-house or buy from an outside supplier, we first need to calculate the total cost of producing the part in-house. The total cost of producing 5000 units of part A12E in-house is $60000 (direct materials) + $165000 (direct labor) + $80000 (variable overhead) + $175000 (fixed overhead) = $490000. Since $45000 of the fixed overhead is avoidable if the part is bought from an outside supplier, the true cost of producing the part in-house is $490000 - $45000 = $445000.
The cost of buying the part from an outside supplier is $73 * 5000 units = $365000. Comparing this with the in-house production cost, Bonita Industries will save $445000 - $365000 = $80000 if they buy from the outside supplier. Therefore, the net income will increase by $80000 if Bonita buys part A12E from the outside supplier.
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19. Which of the following statements is FALSE? A) Leverage can reduce the degree of managerial entrenchment because managers are more likely to be fired when a firm faces financial distress. B) When a firm is highly levered, creditors themselves will closely monitor the actions of managers, providing an additional layer of management oversight. C) According to the empire building hypothesis, leverage increases firm value because it commits the firm to making future interest payments, thereby reducing excess cash flows and wasteful investment by managers. D) Managers of large firms tend to earn higher salaries, and they may also have more prestige and garner greater publicity than managers of small firms. As a result, managers may expand (or fail to shut down) unprofitable divisions, pay too much for acquisitions, make unnecessary capital expenditures, or hire unnecessary employees.
Answer: C) According to the empire building hypothesis, leverage increases firm value because it commits the firm to making future interest payments, thereby reducing excess cash flows and wasteful investment by managers.
Explanation:
This statement is false because it is not the definition of the Empire Building Hypothesis.
It is rather, the definition of the Free Cash Flow Hypothesis which essentially believes that a company that is making a lot of free cashflow is not as disciplined in handling money as a company that has debt obligations. It claims that when a company has a lot of free cash flow it tends to invest in bad projects.
The FREE CASH FLOW HYPOTHESIS not the Empire Building Hypothesis therefore believes that leverage increases firm value because it commits the firm to making future interest payments, thereby reducing excess cash flows and wasteful investment by managers.
The payback method is often more useful than the net present value method for evaluating systems projects because the effective lives of information system tend to be short and shorter payback projects are often desirable.
True/False
Answer:
True
Explanation:
Payback method considers the time that a project takes to payback the capital invested in it from its net cash flows.
Projects that have a short payback period are preferred by investors because the capital invested takes a shorter time to be repaid. That is shorter risk period.
Net present value is a consideration of the expected future cash flows in a project. It is the difference between the net present value of an asset and the present value of cash flows over a certain period. It's calculation is based on a lot of assumptions so it is probe to error.
Payback method is preferred because the effective lives of information system tend to be short and shorter payback projects are often desirable.
Answer:
True
Explanation:
The payback method of evaluating capital expenditure projects is very popular because it's easy to calculate and understand. It has severe limitations, however, and ignores many important factors that should be considered when evaluating the economic feasibility of projects.
In finance, the net present value or net present worth applies to a series of cash flows occurring at different times. The present value of a cash flow depends on the interval of time between now and the cash flow. It also depends on the discount rate. NPV accounts for the time value of money.
Payback method considers the time that a project takes to payback the capital invested in it from its net cash flows.
The payback method is often more useful than the net present value method for evaluating systems projects because the effective lives of information system tend to be short and shorter payback projects are often desirable.
Labor costs represent a large percentage of total costs for many firms. According to data from the Bureau of Labor Statistics, U.S. labor costs were up 2.0% in 2015, compared to 2014.
a. When labor costs increase, what happens to average total cost and marginal cost? Consider a case in which labor costs are only variable costs and a case in which they are both variable and fixed costs. An increase in labor productivity means each worker can produce more output. Recent data on productivity show that labor productivity in the U.S. nonfarm business sector grew by 1.7% between 1970 and 1999, by 2.6% between 2000 and 2009, and by 1.1% between 2010 and 2015.
b. When productivity growth is positive, what happens to the total product curve and the marginal product of labor curve? Illustrate your answer with a diagram.
c. When productivity growth is positive, what happens to the marginal cost curve and the average total cost curve? llustrate your answer with a diagram.
d. If labor costs are rising over time on average, why would a company want to adopt equipment and methods that increase labor productivity?
Answer: Labor cost is a representative of greater percentage of total cost for many firms. From the data of Bureau of Labor statistics, the U.S labour cost up to 2% in 2015 in comparison to 2014.
Explanation:
A. As labor increases, average total cost and marginal cost increases as well due to the fact that labor is part of total cost of production. If labor cost represents only variable cost when firms shut down, labor cost will be save but if it represents but variable and fixed cost, labor cost can't be avoided.
B. A positive productivity growth lead to a total product curve and marginal labor curve shift upward because total output and marginal product of labor curve increases.
C. A positive productivity curve will result in an downward shift of marginal cost curve and average total cost curve because average total cost and marginal cost decreases per output.
D. If labor cost are rising overtime on average. equipments, technologies and methods that increases labor productivity will be adopted in order for total output and marginal product of labour to increase.
On January 2, 2020, Grouper Company sells production equipment to Fargo Inc. for $54,000. Grouper includes a 2-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on January 2, 2020. During 2020, Grouper incurs costs related to warranties of $860. At December 31, 2020, Grouper estimates that $650 of warranty costs will be incurred in the second year of the warranty.
Required:
a. Prepare the journal entry to record this transaction on January 2, 2020, and on December 31, 2020 (assuming financial statements are prepared on December 31, 2017).b. Repeat the requirements for (a), assuming that in addition to the assurance warranty, Grando sold an extended warranty (service-type warranty) for an additional 2 years (2022â2023) for $800.
Answer:
Part a
January 2, 2020
Cash $54,000 (debit)
Revenue $54,000 (credit)
Warranty Provision $860 (debit)
Cash $860 (credit)
December 31, 2020
Warranty $650
Warranty Provision $650
Part b
January 2, 2020
Cash $54,000 (debit)
Revenue $54,000 (credit)
Cash $800 (debit)
Deferred Warranty Service $800 (credit)
December 31, 2020
No Entry
Explanation:
Part a
Recognise Revenue and Warranty Provision in terms of IAS 37 - Provisions. An assurance warranty is not a separate performance obligation hence accounted for in terms of IAS 37 - Provisions.
Part b
Recognise Revenue and Deferred Warranty Service in terms of IFRS 15 - Revenue from Contracts with Customer. A Service type Warranty is distinct and therefore is a separate performance obligation hence accounted for in terms of IFRS 15.
On June 1, 2017, Windsor, Inc. was started with an initial investment in the company of $22,420 cash. Here are the assets, liabilities, and common stock of the company at June 30, 2017, and the revenues and expenses for the month of June, its first month of operations:Cash$ 4,830 Notes payable$12,460Accounts receivable4,470 Accounts payable970Service revenue7,730 Supplies expense1,100Supplies2,300 Maintenance and repairs expense700Advertising expense400 Utilities expense200Equipment26,230 Salaries and wages expense1,630Common stock22,420 In June, the company issued no additional stock but paid dividends of $1,720.Prepare an income statement for the month of June.
Answer:
The answer is attached
Explanation:
Suzanne, an HR specialist, is assessing training and development needs at
her firm by reviewing job descriptions. Which type of analysis is Suzanne
most likely conducting?
I In your business, assets, and liabilities have historically varied with sales. Assets are usually 82 percent of sales, and liabilities are usually 54 percent of sales. Your sales next year will be $208,000 which represents an increase of $40,000. Your profit margin is 11.99 percent. You anticipate that you will have an 42 owner payout of net profit. Using the percentage of sales method, determine the amount of additional financing or surplus for your business next year. (answer to two decimal places, negative numbers start with -)
Answer and Explanation:
Computation table for Surplus amount:
Particular Current year Future year
Sales $168,000 $208,000
Less: Net Profit 11.99% of sales $20,143.8 $24,932.2
Cost (sales - 11.99%) $147,856.8 $183,060.8
Owner's payout 42% of cost $62,099.856 $76,885.536
Surplus (Cost - Owner payout) $85,756.944 $106,175.264
Computation table for additional financing fund:
Particular Current year Future year
Assets 82% of sales $137,760 $170,560
Less: Liabilities 54% of sales $90,720 $112,320
Additional Funding $47,040 $58,240
Define how managerial accounting differs from financial accounting. Be sure to address the diverse users of managerial and of financial accounting and provide examples of how at least five users would utilize accounting information. Cost can be classified in 5 categories-behavior, traceability, controllability, relevance and function. Briefly explain each category. (Watch Accounting 2 - ACCT 122 - Program #223 - Managerial Accounting Concepts and Accounting 2 - ACCT 122 - Program #224 - Managerial Accounting Concepts - Continued Illustrate how managerial accounting information assists managers in performing the roles of planning, directing, and controlling by providing an example of each.
ANSWER:
Managerial accounting is the use of accounting information, to determine the best decision to take, inorder to better the organization, and bring in more profit.
While.
Financial accounting is reporting all financial transaction, by preparing a financial statement, which details out the inflow and outflow of money in the organization.
HOW TO USE ACCOUNTING INFORMATION:
1) Accounting Information are used by managerial accountants to determine the best business to invest more money into.
2) Accounting Information are used by financial accountant to report the profit or loss in the business of the company.
3) Accounting information are used by managerial accountant to decide which investment that should be added or removed from the portfolio, so that much profit will be achieved.
4) Accounting Information are used by financial accountant to calculate and tabulate it financial statement. Using statistical methods and accounting formulas.
5) Accounting Information are used by managerial accountant, to manage the returns in investment, and decide which investment, that will have the highest budget.
Traceability of cost means that all cost should be able to show what lead to it, why the cost is necessary, and the effect of the cost to the business.
Behavior of cost shows the way cost will change whenever they is a change in activities t looko lead to costing. A decrease in spending, will decrease the cost.
Controllability of Cost defines cost to be subject to the decision of how the business will be achieved. This shows that cost can be altered at anytime, to suit the need of the business.
Relevance of Cost defines cost to be used to show how relevant or irrelevant a cost can be to the business, which helps a manger to consider only the relevant cost in the business first.
Function of cost shows the amount invested in relation to the amount produced. It is represented in a cost curve, and is used to optimize the business of the organization.
SAP Inc. received a $1 million grant under its Small Business Innovation program. SAP invested the grant money and developed a system to remove metal contaminants from storm water in shipyards. The firm estimates that each shipyard spends $500,000 a year on storm water clean-up efforts. If SAP is able to sign up and retain four shipyards from the first year onwards, what is the present value (PV) of the project (net of investment) if the cost of capital for SAP is 20% per year
Answer:
$4,000,000
Explanation:
The computation of the present value of the project is shown below:
Since it is given that for four shipyards and it is signed
Therefore,
Total revenue = $500,000 × 4 = $2,000,000
And we assume
Cost of operations and other costs is
= 50% of revenue
= $1,000,000
Now
Net revenue is
= $2,000,000 - $1,000,000
= $1,000,000
So, the present value of the project is
= Present Value of net revenues - Initial cost
= ($1,000,000 ÷ 0.20) - $1,000,000
= $4,000,000
Labor Variances Verde Company produces wheels for bicycles. During the year, 660,000 wheels were produced. The actual labor used was 360,000 hours at $9.50 per hour. Verde has the following labor standards: 1) $10.00 per hour; 2) 0.5 hour per wheel.
Answer and Explanation:
Given:
Actual output = 660,000
Actual labor hours = 360,000 at $9.50 per hour
Standard labor rate = $10 per hour
Standard output hour = 0.5 hour per wheel
Computation:
Labor Variances includes:
1. Labor Cost Variance
2. Labor Rate Variance
3. Labor Efficiency Variance
1. Labor Cost Variance = (SR×SH) - (AR×AH)
Labor Cost Variance = [$10(Actual output×Standard output hour)] - [$9.5×360000]
Labor Cost Variance = [$10×330,000] - $3,420,000
Labor Cost Variance = $120,000 (Adverse)
2. Labor Rate Variance = (SR-AR)AH
Labor Rate Variance = ($10-$9.5)×360,000
Labor Rate Variance = $180,000 (Favorable)
3. Labor Efficiency Variance = (SH- AH)×SR
Labor Efficiency Variance = [(Actual output×Standard output hour)-360,000]×10
Labor Efficiency Variance = (330,000 - 360,000) ×10
Labor Efficiency Variance = $300,000 (Adverse)
The labor rate variance and labor efficiency variance for Verde Company are calculated based on standard and actual labor hours and costs. The labor rate variance is $180,000 Unfavorable, while the labor efficiency variance is $300,000 Unfavorable.
Explanation:We need to calculate the labor variances for Verde Company. To do that, first, we need to calculate the standard hours for the actual production, which is 660,000 wheels * 0.5 hour/wheel, yielding 330,000 standard hours. The standard labor cost for this is simply the standard hours * standard rate per hour, resulting in $3,300,000.
The actual cost of labor is the actual hours of work * actual rate per hour, giving us $3,420,000. Hence, the Labor rate variance is actual hours *(standard rate - actual rate), which is 360,000 * ($10.00-$9.50), resulting in $180,000 Unfavorable. The Labor efficiency variance is standard rate * (standard hours - actual hours), yielding $10.00 * (330,000 - 360,000), or $300,000 Unfavorable.
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Rick agreed to buy two campers from McMahon and made a deposit of $1,000 as partial payment. Rick then wired McMahon not to ship the campers and explained his reasons for delaying shipment. Later, Rick decided not to buy the campers and demanded a return of his $1,000. Was Rick's instruction not to ship an anticipatory repudiation that will justify McMahon's retention of the $1,000? Explain.
Answer:
Rick instruction not to ship is an anticipatory repudiation and it justifies McMahon's retention of the $1000
Explanation:
Rick instruction not to ship is an anticipatory repudiation and it justifies McMahon's retention of the $1000
when a contract is entered by two parties and one party provides a clear inability/unwillingness to keep to the original terms of the contract the party is said to have committed an anticipatory repudiation and the decision to accept or reject such inability lies with the second party because the second party may have to lose something due to the inability of the first party keeping to the contract hence McMahon's retention of the initial deposit of $1000 is within his rights
An employee earned $42,700 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $128,400 maximum per year and the rate for FICA Medicare 1.45%. The employer's total FICA payroll tax for this employee is:
Answer: $3,266.55
Explanation: The employee's salary scale falls between $1 and $128,400 so the FICA tax rate for social security of 6.2% and Medicare of 1.45% applies to him.
Social security tax payable
$42,700 x 6.2% / 100 = $2,647.4
Medicare tax payable
$42,700 x 1.45% / 100 = $619.15
Total tax payable by the employee
$2647.4 + $619.15 = $3,266.55
Both Bond Bill and Bond Ted have 11.2 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 4 years to maturity, whereas Bond Ted has 21 years to maturity. Both bonds have a par value of 1,000. If interest rates suddenly rise by 3 percent, what is the percentage change in the price of these bonds
Answer:
3.33% increase in the price of bond.
Explanation:
Price of the bond is the present value of all cash flows of the bond. These cash flows include the coupon payment and the maturity payment of the bond. Price of the bond is calculated by following formula:
According to given data
Price at par means the the bond have face equal to par which is $1,000 and the yield to maturity is also equals to the the coupon rate.
Coupon payment = C = $1,000 x 11.2 = $112 annually = $56 semiannually
Number of periods = n = 2 x 4 years = 8 periods
As the interest rate rises by 3%
Revised discount rate = r = 11.2% + 3% = 14.2 annually = 7.1% semiannually
Price of the Bond = $56 x [ ( 1 - ( 1 + 7.1% )^-8 ) / 7.1% ] + [ $1,000 / ( 1 + 7.1% )^8 ]
Price of the Bond = 455.63 + $577.68 = 1,033.31
Change in price = $1,033.31 - $1,000 = $33.31
Percentage change = $33.31 / $1,000 = 0.03331 = 3.33%
Answer:
Bond Bill = (value of bond - par value) / par value
= ( 910.78 - 1000) / 1000 = -0.0892 = -8.92%
Bond Ted = ( $800 - $1000 ) / $1000 = -0.1994 = -19.94%
Explanation:
The value of coupon rate for both bonds = 11.2 %
when there is an increase of 3% coupon rate = 14.2%
percentage change in the value of the bonds =
( value of bond - par value) / par value
value of bond = present value of coupon + present value of face value
the semiannual coupon payments = (1000 * 11.20) / 2 = $56
semi-annual coupon rate when increased = 14.20% / 2 = 7.10%
number of payments for Bond bill = 4 years * 2 = 8
number of payments for Bond Ted = 21 years * 2 = 42
value of Bond Bill = $56 * ( PVIFA*7,10% *8 ) + $1000 * (PVIFA*7.10%*8 )
= $910.78
Value of Bond Ted = $56 * (PVIFA*7.10%*42 ) + $1000 * ( PVIFA * 7.10%*42)
= $800.58
calculate the individual percentage change in value of each bonds
Bond Bill = (value of bond - par value) / par value
= ( 910.78 - 1000) / 1000 = -0.0892 = -8.92%
Bond Ted = ( $800 - $1000 ) / $1000 = -0.1994 = -19.94%
Elias is a risk-averse investor. David is a less risk-averse investor than Elias. Therefore, Group of answer choices for the same risk, Elias requires a lower rate of return than David. Cannot be determined. for the same risk, David requires a higher rate of return than Elias. for the same return, Elias tolerates higher risk than David. for the same return, David tolerates higher risk than Elias.
For the same level of risk, David requires a lower rate of return than Elias because David is less risk-averse. For the same return, David would tolerate a higher level of risk than Elias.
Explanation:The scenario provided involves a comparison between two investors based on their risk tolerance. Elias is described as being risk-averse, while David is less risk-averse than Elias. A risk-averse investor requires a higher rate of return to be compensated for the additional risk they are taking on. Therefore, for the same level of risk, David, being less risk-averse, would require a lower rate of return than Elias, since David is willing to accept more risk for the same potential return.
However, if we're looking at the tolerance for risk for the same return, then David, being less risk-averse, would tolerate a higher level of risk compared to Elias. This is because less risk-averse investors are generally willing to take on more risk in the pursuit of potentially higher returns. The tradeoff between return and risk is a foundational concept in investment strategies and reflects personal preferences, which must also consider different time frames for investment.
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George Corporation had the following transactions occur in the current year: 1. Cash sale of merchandise inventory. 2. Sale of delivery truck at book value. 3. Sale of George Corporation common stock for cash. 4. Issuance of a note payable to a bank for cash. 5. Sale of a debt security held as an available-for-sale investment. 6. Collection of loan receivable. How many of the above items will appear as a cash inflow from investing activities on a statement of cash flows for the current year? Two items Three Items Four Items Five or more items
Answer: Three items will appear being;
2. Sale of delivery truck at book value
5. Sale of a debt security held as an available-for-sale investment
6. Collection of loan receivable.
Explanation:
The Investment Section of the Cash Flow Statement contains activities related to investment such as the buying or selling of fixed assets and the buying or selling of other company stocks or bonds.
Out of the above therefore, there are 3 activities that would fall under this section of the Cash Flow Statement.
They are;
2. Sale of delivery truck at book value.
- This refers to the sale of a Fixed asset and as such it goes to the investment section.
5. Sale of a debt security held as an available-for-sale investment.
- As a debt security of another firm that was considered available for sale, this goes to the Investment Section as well.
6. Collection of loan receivable.
- Finally, collection of loan receivable means that the company loaned money to another company making it an investment related cash inflow as it is a long term Investment income source.
The Retained earnings account has a credit balance of $23,800 before closing entries are made. Of total revenues for the period are $75,200, total expenses are $55,000, and dividends are $12,600, what is the ending balance in the Retained earnings account after all closing entries are made
Answer:
The ending balance in the retained earnings account is $31400.
Explanation:
The ending balance in the retained earnings accounts is equal to the opening balance of the retained earnings account plus the addition to the retained earnings for the year.
The addition to retained earnings will be the Net income less dividends.
The net income for the year was = 75200 - 55000 = $20200
Addition to Retained earnings = 20200 - 12600 = $7600
Closing balance of retained earnings = 23800 + 7600 = $31400
Suppose your firm just issued a 20-year, $1000 par value bond with semiannual coupons. The coupon interest rate is 9%. The bonds sold for par value, but flotation costs amounted to 5% of the price. You have a 21% corporate tax rate. What is your firm’s after-tax cost of debt? Group of answer choices
Answer:
4.78%
Explanation:
From the question given, we solve the issue
the calculation of he bond price is:
Price of bond = per value * (1- flotation cost)
$1000 * (1- 0.05)
= $950
For the calculation of semi-annual coupon payments,
Semi -annual coupon payment = Par value * Interest/2
$1000 * 0.09/2 = $45
Calculation of semi- annual yield to maturity
Let recall the following
YTM = yield to maturity
C = The semi-annual coupon payment
FV= Face value or par value
PV= Price of a bond
n = Maturity years of the bond
Therefore,
YTM= C + FV - PV/n/ FV + PV/2
which is
$45 + $1000 - $950/40/$1000 + $950 / 2 = 4.78%
The firm’s after-tax cost of debt is $45 + $1000 - $950/40/$1000 + $950 / 2 is semi- annual yield to maturity is = 4.78%
What is the Tax cost?
From the question given, we solve the issue
Then the calculation of the bond price is:
Price of bond is = per value * (1- flotation cost)
$1000 * (1- 0.05)
Therefore, = $950
For the calculation of semi-annual coupon payments,
Then Semi -annual coupon payment is = Par value * Interest/2
$1000 * 0.09/2 = $45
Computation of semi- annual yield to maturity
Let recall the following are:
Then YTM is = yield to maturity
After that C is = The semi-annual coupon payment
Then FV is = Face value or par value
Now, PV is = Price of a bond
n is = Maturity years of the bond
Thus,
YTM is = C + FV - PV/n/ FV + PV/2
which is $45 + $1000 - $950/40/$1000 + $950 / 2 is = 4.78%
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