a. The Net Income is $912,000.
b. The Return on Assets (ROA) is 9.31%.
c. The Return on Equity (ROE) is 14.98%.
a. Net Income: To determine the net income, we use the given sales and profit margin to find the amount after deducting expenses.
Net Income = Sales × Profit Margin
Net Income = $15,200,000 × 0.06
Net Income = $912,000
b. Return on Assets (ROA): ROA is computed by dividing net income by total assets, showcasing how efficiently assets generate earnings.
ROA = Net Income / Total Assets
ROA = $912,000 / $9,800,000
ROA = 0.0931 or 9.31%
c. Return on Equity (ROE): ROE is calculated by dividing net income by total equity, demonstrating the returns generated on shareholders' investments.
ROE = Net Income / Total Equity
Total Equity = Total Assets - Total Debt
Total Equity = $9,800,000 - $3,700,000
Total Equity = $6,100,000
ROE = $912,000 / $6,100,000
ROE = 0.1498 or 14.98%
Therefore, the answers are:
a. Net Income: $912,000
b. ROA: 9.31%
c. ROE: 14.98%
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Final answer:
Net income for Wims, Inc. is $912,000, ROA is approximately 9.31%, and ROE is approximately 14.95%.
Explanation:
To calculate various financial metrics for Wims, Inc., we will use the given figures:
Sales revenue: $15.2 millionTotal assets: $9.8 millionTotal debt: $3.7 millionProfit margin: 6%a. To determine the net income, we multiply the sales revenue by the profit margin:
Net Income = Sales Revenue × Profit Margin = $15,200,000 × 0.06 = $912,000
b. The Return on Assets (ROA) is calculated by dividing the net income by the total assets:
ROA = Net Income / Total Assets = $912,000 / $9,800,000 ≈ 9.31%
c. To calculate the Return on Equity (ROE), we first need to determine the equity. Equity is calculated by subtracting total debt from total assets:
Equity = Total Assets - Total Debt = $9,800,000 - $3,700,000 = $6,100,000
Now, ROE = Net Income / Equity = $912,000 / $6,100,000 ≈ 14.95%
Products is considering acquiring a manufacturing plant. The purchase price is $1,860,000. The owners believe the plant will generate net cash inflows of $310,000 annually. It will have to be replaced in five years. To be profitable, the investment payback must occur before the investment's replacement date. Use the payback method to determine whether Cato Products should purchase this plant.
Answer:
not profitable
payback period > project life
Explanation:
to determinatethe payback we will divide the investment amount over the cashflow per year generated for the project:
[tex]\frac{investment}{cash \: flow} = $payback period[/tex]
1,860,000 / 310,000 = 6 years
As the cash flow are generated per year this give us how many years the project needs to continue to payback the investment. If we use a monthly income the answer will be expressed in month.
Because, the project life is 5 years and payback occurs at 6 years the project is not profitable. The company do not recover his initial investment.
Foreign currencies are traded:
A. only by banks in New York and London.
B. over the counter.
C. on both the NYSE and NASDAQ.
D. on the Intercontinental Exchange.
Answer: over the counter
Explanation: In simple words, over the counter markets are the platform in which the securities like foreign exchange are traded without any supervision. There is no monitoring authority in such markets as opposed to the structure of stock exchanges.
Foreign currencies are traded in over the current markets as these are highly fluctuating in values and the margins are very low in trading such securities. Therefore, to pay a mediator is not feasible while dealing in foreign currencies.
Hence from the above we can conclude that the correct answer is option B.
Crowding out occurs when...
a. investment declines because a budget deficit makes interest rates rise.
b. investment increases because a budget surplus makes interest rates rise.
c. investment increases because a budget surplus makes interest rates fall.
d. investment declines because a budget deficit makes interest rates fall.
Answer: Option A
Explanation: Crowding effect refers to the situation when due to over involvement of government in a sector of economy heavily affects the other sectors of the economy.
In such a case, government spends on a sector more than it needs. This leads to lack of funding from government on other sectors and thus reduced investment and higher interest rates.
From the above we can conclude that the correct option is A.
Crowding out occurs when a budget deficit increases government borrowing, raising interest rates and limiting the financial capital available for private investment.
Explanation:Crowding out occurs when government borrowing increases due to a budget deficit, leading to a higher demand for financial capital. If private saving and the trade balance do not change to offset this, there will be less financial capital available for private investment in physical capital. This is due to the fact that as the government absorbs more financial capital through borrowing, less is left for the private sector. The correct answer is option a: crowding out occurs when investment declines because a budget deficit makes interest rates rise. An increase in budget deficit can lead to a rise in interest rates, partly because the increased demand for financial capital must be met with higher interest rates to attract lenders.
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You need to accumulate $10,000. To do so, you plan to make deposits of $1,250 per year, with the first payment being made a year from today, in a bank account that pays 12 percent interest, compounded annually. Your last deposit will be less than $1,250 if less is needed to round out to $10,000. How many years will it take you to reach your $10,000 goal, and how large will the last deposit be?
It will take you 6years. The final deposit will be $3,458. The final date on which you can make a deposit into a Cash ISA, as specified in the additional terms and conditions provided to you when you open your specific Cash ISA.
What is interest?Interest is the payment of an amount above the principal sum by a borrower or deposit-taking financial institution to a lender or depositor at a specific rate. It is distinct from a fee paid by the lender to the borrower or a third party.In its most basic form, interest is calculated as a percentage of the principal. For example, if you borrow $100 from a friend and agree to repay it with 5% interest, your interest payment would be 5% of $100: $100(0.05) = $5.Here,
The initial deposit will be $1,250.
We will have $1,400 at the end of the year. We employ an interest formula.
A=P (1+r)ⁿ
A=Final total
P stands for Principal ( deposit)
r = the interest rate
n= time
A=1250 (1+0,12)¹=1400
We will deposit $1,250 in year 2 and have accumulated $1,400.
As a result, P will be $1250 + $1400 = $2650.
A=2650 (1+0,12)¹=$2.968
Year 3 = deposit 1250+ total 2.968
A= 4.724,16
Year 4 = deposit 1250+ totalled 4.724,16
A= 6.691,06
Year 5 = deposit 1250+ totalled 6.691,06
A= 8.893,99
We are almost there, so we must perform another calculation.
Year 6 = A Final = 10000= (deposit +accumulated) * 112
So here,
deposit=(10000/112)-8.893,99
Last deposit= $3,458.
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Final answer:
To reach a $10,000 goal with deposits of $1,250 per year and 12% interest compounded annually, it will take approximately 9.85 years. The last deposit will be $750.
Explanation:
To calculate how many years it will take to reach your $10,000 goal, we can use the formula for compound interest:
Final Amount = Principal Amount × (1 + Interest Rate)^Number of Years
In this case, the final amount is $10,000, the principal amount is $1,250, and the interest rate is 12%. Let's solve for the number of years:
$10,000 = $1,250 × (1 + 0.12)^Number of Years
To find the number of years, we can divide both sides of the equation by $1,250 and take the logarithm of both sides:
Number of Years = log(10,000/1,250)/log(1.12)
Using a calculator, we find that it will take approximately 9.85 years to reach the $10,000 goal. Since you make deposits yearly, the last deposit will be made in the 10th year. To calculate the amount of the last deposit, we subtract the sum of the previous deposits (9 deposits of $1,250) from the $10,000 goal:
Last Deposit = $10,000 - (9 × $1,250)
Last Deposit = $10,000 - $11,250
Last Deposit = $750
The future value and present value equations also help in finding the interest rate and the number of years that correspond to present and future value calculations. If a security currently worth $12,800 will be worth $16,843.93 seven years in the future, what is the implied interest rate the investor will earn on the security—assuming that no additional deposits or withdrawals are made? 3.20% 1.32%
Answer:
r = 4% at this rate a principal of 12,800 returns 16,843.93 in seven years
Explanation:
We will calculate the interest rate at which a principal of 12,800 return 16,843.93 in seven years
[tex]Principal \: (1+ r)^{time} = Amount[/tex]
Principal 12,800
time 7 years
rate ?
Amount 16,843.93
[tex]12800 \: (1+ r)^{7} = 16,843.93[/tex]
[tex](1+r)^{7} = 16,843.93\div12,800\\\\r =\sqrt[7]{16,843.93\div12,800} -1[/tex]
r = 0.0400
r = 4%
Suppose an economy produces two goods, food and machines. This economy always operates on its production possibilities frontier. Last year, it produced 50 units of food and 30 machines. This year it experienced a technological advance in its machine-making industry. As a result, this year the society wants to produce 55 units of food and 30 machines. Which of the following statements is true? a Because the technological advance occurred in the machine-making industry, it will not be possible to increase food production without reducing machine production below 30. b In order to increase food production in these circumstances without reducing machine production, the economy must reduce inefficiencies. c Because the technological advance occurred in the machine-making industry, increases in output can only occur in the machine industry. d The technological advance reduced the amount of resources needed to produce 30 machines. These resources could be used to produce more food.
Final answer:
The correct statement is that the technological advance in the machine-making industry reduced the resources needed to produce the same amount of machines, allowing the freed-up resources to be used for increased food production, thus benefiting the overall economy.
Explanation:
The economy in question operated on its production possibilities frontier (PPF) last year, producing 50 units of food and 30 machines. This year, with the technological advance in the machine-making industry, the correct statement is: The technological advance reduced the amount of resources needed to produce 30 machines. These resources could be used to produce more food. This scenario is an illustration of how technological progress in one sector can indirectly benefit other sectors by freeing up resources. It's akin to the economy experiencing growth, where the PPF shifts outward, resulting in the potential for increased production capacity not just in the industry with the technological advance, but economy-wide, as long as the society chooses to utilize the freed-up resources efficiently.
On completion of her introductory finance course, Marla Lee was so pleased with the amount of useful and interesting knowledge she gained that she convinced her parents, who were wealthy alums of the university she was attending, to create an endowment. The endowment is to allow three needy students to take the introductory finance course each year in perpetuity. The guaranteed annual cost of tuition and books for the course is $1,100 per student. The endownment will be created by making a single payment to the university. The university expects to earn exactly 4% per year on these funds.
A) How large an initial single payment must Marla's parents make to the university to fund the endowment ? round to the nearest dollar
B) What amount would be needed to fund the endowment if the university could earn 6% rather than 4% per year on the funds? round to the nearest dollar
Answer:
A) the downpayment wil be for 82,500 dollars at 4% interest yield
B) the downpatment will be for 55,000 if the interest yield is 6% rathen than 4%
Explanation:
The cost of the course is 1,100
The endownment will be for three students so:
3,300
Now we calculate the value of the perpetuity
The perpetuity is an annuity on which time goes to infinity, this leaves the formula like this:
Perpetuity = C/r
considering the interest rate will be of 4%
3,300 / 0.0.4 = 82,500
If the interest yield were 6% then:
3,300/0.06 = 55,000
A primary market would be utilized when:
A. investors buy or sell existing securities.
B. shares of common stock are exchanged.
C. securities are initially issued.
D. a commission must be paid on the transaction.
Answer: Option C
Explanation: Primary market refers to the market in which the securities are sold to the general public for the first time by the companies. In simple words, the initial public offering process takes place in such markets. The securities could be of any type whether debt, equity or preference.
The market in which existing securities are bough and sold is called secondary market. And the commission is paid in both secondary and primary market.
Hence the correct option is C.
A partnership is formed by two individuals who were previously sole proprietors. Property other than cash that is part of the initial investment in the partnership would be recorded for financial reporting purposes at the ___________________________ .
A)Proprietor's book values or the fair value of the property at the date of the investment, whichever is higher.
B)Proprietor's book values or the fair value of the property at the date of the investment, whichever is lower.
C)Proprietor's book values of the property at the date of the investment.
D)None of the above.
E)Fair value of the property at the date of the investment
Answer: A partnership is formed by two individuals who were previously sole proprietors. Property other than cash that is part of the initial investment in the partnership would be recorded for financial reporting purposes at the "E)Fair value of the property at the date of the investment".
Explanation: In the constitution of a company the assets contributed must be measured at their market value.
Anchored inflationary expectations are people's expectations of future inflation that:
A. increase if inflation rises temporarily.
B. are based on the unemployment rate.
C. do not change if inflation rises temporarily.
D. are based on the level of potential output.
Answer:
C) do not change if inflation rises temporarily
Explanation:
Anchored in economics means being insensitive to certain information due to a bias or belief. Anchored inflationary expectations is basically the belief that inflation won't raise
During the last year, Len Corp. generated $1,170.00 million in cash flow from operating activities and had negative cash flow generated from investing activities (-640.00 million). At the end of the first year, Len Corp. had $200 million in cash on its balance sheet, and the firm had $280 million in cash at the end of the second year. What was the firm’s cash flow (CF) due to financing activities in the second year?
The firm’s cash flow due to financing activities in the second year was calculated to be - $450 million, using the given change in cash balance, cash flow from operating and investing activities.
Explanation:To determine the cash flow due to financing activities for Len Corp. in the second year, we utilize the formula that the change in a company's cash balance is equal to the net cash flow from operating activities plus net cash flow from investing activities plus net cash flow from financing activities. In this case, the change in cash balance from the end of the first year to the end of the second year is an increase of $80 million (from $200 million to $280 million).
The net cash flow from operating activities was $1,170 million, and the net cash flow from investing activities was - $640 million. Therefore, the equation we can use is:
Change in cash = Cash flow from operations + Cash flow from investing + Cash flow from financing
Which simplifies to:
$80 million = $1,170 million - $640 million + Cash flow from financing
By rearranging and solving for Cash flow from financing, we get:
Cash flow from financing = $80 million - $1,170 million + $640 million
Cash flow from financing = - $450 million.
Therefore, the firm’s cash flow due to financing activities in the second year was - $450 million.
Are budgets part of the performance measurement system or the performance reward system? a. Part of neither the performance measurement system nor the performance reward system b. Part of both the performance measurement system and the performance reward system c. Part of the performance reward system only d. Part of the performance measurement system only
Answer:
b. Part of both the performance measurement system and the performance reward system
Explanation:
Both are linked according to the objectives and golas.
Performance measure is a quantifiable expression of the amount, cost, or result of activities that indicate how much, how well, and at what level, products or services are provided to customers during a given time period.
Performance and reward strategies are driven by the concept that employees are not inherently born with the desire to come to work and put in their maximum effort every day for no reason at all. ... An effective performance and reward strategy aligns with organizational goals and objectives
Answer:
b. Part of both the performance measurement system and the performance reward system
Explanation:
In the JK partnership, Jacob's capital is $140,000, and Katy's is $40,000. They share income in a 3:2 ratio, respectively. They decide to admit Erin to the partnership. Each of the following questions is independent of the others.
Refer to the information provided above. Jacob and Katy agree that some of the inventory is obsolete. The inventory account is decreased before Erin is admitted. Erin invests $38,000 for a one-fifth interest. What is the amount of inventory written down?
A. $10,000
B. $20,000
C. $28,000
D. $36,000
Answer:
Option C
$28,000
Explanation:
As for the information provided,
We have,
New partner to be admitted is Erin and his share will be 1/5th
For this he brings in $38,000.
Therefore, total capital will be = [tex]38,000 \times 5 = 190,000[/tex]
But actual capital after his addition = $140,000 + $40,000 + $38,000 = $218,0000
Therefore, value of inventory written off as will reduce assets, and capital also = $218,000 - $190,000 = $28,000.
This will ultimately make the contribution of Erin equivalent to his share.
Which of the following are differences between a bond and a common stock? (Select all that apply.) A. A corporation has to pay all bondholders before paying stockholders. B. A corporation has to pay all stockholders before paying bondholders. C. A bond is a debt instrument that entitles the owner to receive periodic amounts of money until its maturity date, whereas a common stock represents a share of ownership of the institution that has issued the stock. D. A bond is a claim on the earnings and assets of a corporation, whereas a common stock promises to make periodic payments for a specified period of time.
Answer:
A. A corporation has to pay all bondholders before paying stockholders.
C. A bond is a debt instrument that entitles the owner to receive periodic amounts of money until its maturity date, whereas a common stock represents a share of ownership of the institution that has issued the stock.
Explanation:
(A) The distribution of dividends has solvency requirement. So it cannot pay dividends if will default teh payment of the business debts.
(C) The bond will have predeterminate periodic payment and a maturity payment at the end of his life.
While the stock is the title of ownership of the company and it do not have any future cashflow associate with it. The company can decide to do not pay dividends. Also it won't warrant the return of the cost of the stock.
In the 1800s, Europeans purchased stock in American companies that used the funds to build railroads and factories. The Europeans who did this engaged in...
a. foreign indirect investment.
b. foreign portfolio investment.
c. indirect domestic investment.
d. foreign direct investment.
Answer:
Option b
Explanation:
Technically when a foreign investor decides to invest into shares of a company located in other company (in this case European invested in American company) is making a portfolio investment.
Fast Eddie’s Used Cars will sell you a 1989 Mazda Miata for $5,000 with no money down. You agree to make weekly payments for 2 years, beginning one week after you buy the car. The stated rate on the loan is 13%. How much is each payment? (A) $99.65 (B) $42.96 (C) $54.66 (D) $68.19 (E) $75.90
Answer:
C
Explanation:
We calculate the amount of each payment (constant payments; the same amount each period) with the formula attached: PV is present value, i is the interest rate and n is the number of periods.
The problem gives the following information:
PV= $5,000 (The amount you would pay if you had all the money today)
i= 13% (This rate is normally an annual rate, then we must convert it into a periodic (weekly) rate in order to calculate each weekly payment)
n= 1 year have approximately 52 weeks, 2 year have 104 weeks.
To transform the interest rate we use this formula:
Weekly rate= ((1+annual rate)^(1/# periods))-1
Weekly rate= ((1+0,13)^(1/52))-1
Weekly rate= 0,00235= 0.23%
Then we replace the values in the formula attached:
PV= $5,000
i=0,235%
n=104
A= $54,30 (It is almost equal to option C, maybe you must use more decimal places to obtain exactly $54,66)
Each payment will be approximately $54,66 each week for 2 years.
To calculate the weekly payment, we use the present value of an annuity formula. Plugging in the values, we find that each weekly payment is approximately $68.19.
Explanation:To calculate the weekly payment, we need to use the formula for the present value of an annuity:
PV = C * ((1 - (1 + r)^-n) / r)
Where:
PV = Present value (the loan amount)C = Weekly paymentr = Interest rate per period (in this case, weekly)n = Total number of periodsIn this case, the loan amount is $5,000, the interest rate is 13% per year (which converts to approximately 0.25% per week), and the total number of periods is 104 (2 years x 52 weeks/year). Plugging these values into the formula, we get:
$5,000 = C * ((1 - (1 + 0.0025)^-104) / 0.0025)
Solving for C, we find that each weekly payment is approximately $68.19. Therefore, the answer is (D) $68.19.
Southeast Corporation made sales of $ 950 million during 2018. Of this amount, Southeast collected cash for $ 876 million. The company's cost of goods sold was $ 260 million, and all other expenses for the year totaled $ 275 million. Also during 2018, Southeast paid $ 410 million for its inventory and $ 250 million for everything else. Beginning cash was $ 75 million. a. How much was Southeast's net income for 2018? b. How much was Southeast's cash balance at the end of 2018? a. How much was Southeast's net income for 2018?
Answer:
The cash balace was $291.000.000
The Net Income was $415.000.000
Explanation:
You have to divide the operations in two the operations that represent cash flow and operations that only represent a register in the accounting but doesn't represent money exchange.
Net income
Sales $950.000.000
Cost of sold goods -$260.000.000
other expenses -$415.000.000
Total net income $415.000.000
Cash balance
Beginning Cash $75.000.000
Collected cash +$876.000.000
Paid invetory - $410.000.000
Paid Everything else - $250.000.000
Total cash balance $291.000.000
As you can see the first things that you have to do is clasified the movements if they represents money gets by yhe company(+) or cost or expeditures(-), and after you have to make the operations.
Consider a mutual fund with $260 million in assets at the start of the year and 10 million shares outstanding. The fund invests in a portfolio of stocks that provides dividend income at the end of the year of $2.5 million. The stocks included in the fund's portfolio increase in price by 9%, but no securities are sold and there are no capital gains distributions. The fund charges 12b-1 fees of 1.00%, which are deducted from portfolio assets at year-end. What is the net asset value at the start and end of the year?
Answer: $26; $28.057
Explanation:
Total value = $260 million in assets
Shares outstanding = 10 million
Dividends = $2.5 million
Fund value at the start of the year = [tex]\frac{Total\ value}{No.\ of\ shares\ outstanding}[/tex]
= [tex]\frac{260}{10}[/tex]
= $26
Fund value at the end of the year:
Dividend per share = [tex]\frac{Dividends}{No\ of\ shares}[/tex]
= [tex]\frac{2.5}{10}[/tex]
= $0.25
Price gain at 9% with deduction of 1% of 12b-1
Fund value at the end of the year = $26 × 1.09 × (1 - 0.01)
= $28.057
Prior to the 1870s, both gold and silver were used as international means of payment and the exchange rates among currencies were determined by either their gold or silver contents. Suppose that the dollar was pegged to gold at $30 per ounce, the French franc is pegged to gold at 90 francs per ounce and to silver at 9 francs per ounce of silver, and the German mark pegged to silver at 1 mark per ounce of silver. What would the exchange rate between the U.S. dollar and German mark be under this system?
Answer:
the exchange rate between U.S. dollar and German mark be under this system will be of 3 U$D = 1 german mark
Explanation:
We will use gold and silver as a mean to equalize both currencies:
First equivalence between silver and gold:
90 francs = 1 ounce of gold
9 franc = 1 ounce of silver
90/9 = 10 ounce of silver equals 1 ounce of gold.
Now, we convert the german mark to gold:
1 german mark = ounce of silver
10 german mark = ounce of gold.
Finally, we equalize with the US dollars:
30 dollar = ounce of gold = 10 german mark
30 dollars = 10 german mark
3 dollars = 1 german mark
The exchange rate between the U.S. dollar and German mark can be calculated based on the gold and silver pegs of each currency, resulting in an exchange rate of $10 per mark.
Explanation:The exchange rate between the U.S. dollar and German mark can be calculated based on the gold and silver pegs of each currency.
Given that the dollar is pegged to gold at $30 per ounce, the French franc is pegged to gold at 90 francs per ounce, and the German mark is pegged to silver at 1 mark per ounce, we can find that 1 ounce of gold is equivalent to 3 German marks. Therefore, the exchange rate between the U.S. dollar and German mark would be $10 per mark.
You notice that your grocery store always has day-old bakery products at a reduced price. Why might that be?
A. At the original price, the quantity demanded was greater than the quantity supplied.
B. At the original price, there was a shortage of bakery products.
C. The original price was an equilibrium price because it was established in a free market.
D. At the original price, quantity supplied was greater than quantity demanded.
D. At the original price, quantity supplied was greater than quantity demanded.
Answer:
D. At the original price, quantity supplied was greater than quantity demanded.
Explanation:
The supply the first day was greater than quantity demanded. That is because, the price wasn't in equilibrium, it should be lower to increase the demanded quantity.
Because it was higher, this excess are sales the next day at reduce-price to find demand.
C.- if this was equilibrium, then it would not be excess of products neither shortage
B.- if there was a shortage, there will be no left-over of day-old bakery products.
A.- If quantity demanded exceed the supply offered it will be no left-over
Exercise 25-6 Lewis Company’s standard labor cost of producing one unit of Product DD is 3.1 hours at the rate of $12.7 per hour. During August, 42,200 hours of labor are incurred at a cost of $12.80 per hour to produce 13,500 units of Product DD. (a) Compute the total labor variance. Total labor variance $ (b) Compute the labor price and quantity variances. Labor price variance $ Labor quantity variance $ (c) Compute the labor price and quantity variances, assuming the standard is 3.4 hours of direct labor at $12.95 per hour. Labor price variance $ Labor quantity variance $
Final answer:
A.The total labor variance is $8,315.B. The labor price variance is -$6,330 and the labor quantity variance is -$47,815.C. The labor price variance is $4,220 and the labor quantity variance is $4,445.Explanation:
(a) To compute the total labor variance, we need to calculate the difference between the standard labor cost and the actual labor cost incurred.
Standard labor cost = Standard hours * Standard rate
Standard labor cost = 3.1 hours * $12.7 per hour
Standard labor cost = $39.37 per unit
Actual labor cost = Actual rate * Actual hours
Actual labor cost = 42,200 hours * $12.80 per hour
= $539,360
Total labor variance = Actual labor cost - Standard labor cost
Total labor variance = $539,360 - ($39.37 * 13,500 units)
Total labor variance = $539,360 - $531,045
Total labor variance = $8,315
Therefore, the total labor variance is $8,315.
(b) To compute the labor price variance and labor quantity variance, we need to compare the actual hours and rate to the standard hours and rate.
Labor price variance = (Actual rate - Standard rate) * Actual hours
Labor price variance = ($12.80 - $12.7) * 42,200 hours
Labor price variance = $0.10 * 42,200 hours
Labor price variance = $4,220
The difference in labor amount (actual hours minus standard hours) * The going rate
(42,200 hours - (13,500 units * 3.1 hours)) * $12.7 per hour is the labor quantity variance.(42,200 hours - 41,850 hours) * $12.7 per hour is the labor quantity variance.Labor quantity variance = 350 hours * $12.7 per hourLabor quantity variance = $4,445Consequently, the difference in labor quantity is $4,445 and the difference in labor price is $4,220.
(c) Assuming the standard is 3.4 hours of direct labor at $12.95 per hour, we can calculate the labor price variance and labor quantity variance using the same formulas as in part (b).
Labor price variance = (Actual rate - Standard rate) * Actual hours
Labor price variance = ($12.80 - $12.95) * 42,200 hours
Labor price variance = -$0.15 * 42,200 hours
Labor price variance = -$6,330
The difference in labor amount (actual hours minus standard hours) * The going rate
The labor quantity variance is equal to (12.95 per hour - (13,500 units * 3.4 hours) - 42,200 hours.(42,200 hours - 45,900 hours) * $12.95 per hour is the labor quantity variance.Variance in labor quantity = -3,700 hours * $12.95 per hourVariance in labor quantity = -$47,815Therefore, the labor price variance is -$6,330 and the labor quantity variance is -$47,815.
Total labor variance is $8,515 favorable. Labor price variance is $4,220 unfavorable, and labor quantity variance is 350 hours favorable. With revised standards of 3.4 hours at $12.95 per hour, the labor price variance becomes $630 favorable, and the labor quantity variance is 3,700 hours unfavorable.
Given Data:
Standard labor cost per unit: 3.1 hours at $12.7 per hour.
Actual labor data for August: 42,200 hours at $12.80 per hour for producing 13,500 units of Product DD.
Step-by-Step Solution:
(a) Compute the total labor variance.
Total labor variance is the difference between the actual labor cost incurred and the standard labor cost that should have been incurred based on the actual production.
Calculate standard labor cost per unit:
Standard labor cost per unit = 3.1 hours × $12.7 = $39.37 per unit
Calculate actual labor cost incurred:
Actual labor cost = 42,200 hours × $12.80 = $540,160
Calculate standard labor cost for actual production:
Standard labor cost for 13,500 units = 13,500 units × $39.37 = $531,645
Total labor variance:
Total labor variance = Actual labor cost - Standard labor cost
Total labor variance = $540,160 - $531,645 = $8,515 (favorable)
So, the total labor variance is $8,515 favorable.
(b) Compute the labor price and quantity variances.
Labor price variance:
Labor price variance measures how the actual rate paid compares to the standard rate.
Standard rate = $12.7 per hour
Actual rate = $12.80 per hour
Labor price variance = (Actual rate - Standard rate) × Actual hours
Labor price variance = ($12.80 - $12.7) × 42,200 hours
Labor price variance = $0.10 × 42,200
Labor price variance = $4,220 (unfavorable)
Labor quantity variance:
Labor quantity variance measures the efficiency of labor usage in terms of hours.
Standard hours for actual production = 13,500 units × 3.1 hours = 41,850 hours
Labor quantity variance = Actual hours - Standard hours
Labor quantity variance = 42,200 hours - 41,850 hours
Labor quantity variance = 350 hours (favorable)
Therefore,
Labor price variance = $4,220 unfavorable
Labor quantity variance = 350 hours favorable
(c) Compute the labor price and quantity variances, assuming the revised standard of 3.4 hours at $12.95 per hour.
Revised standard labor cost per unit:
Revised standard labor cost per unit = 3.4 hours × $12.95 = $44.03 per unit
Recalculate the variances with the revised standard:
Labor price variance:
Revised standard rate = $12.95 per hour
Labor price variance = (Actual rate - Revised standard rate) × Actual hours
Labor price variance = ($12.80 - $12.95) × 42,200 hours
Labor price variance = -$630 (favorable)
Labor quantity variance:
Revised standard hours for actual production = 13,500 units × 3.4 hours = 45,900 hours
Labor quantity variance = Actual hours - Revised standard hours
Labor quantity variance = 42,200 hours - 45,900 hours
Labor quantity variance = -3,700 hours (unfavorable)
Therefore,
Labor price variance (revised) = $630 favorable
Labor quantity variance (revised) = 3,700 hours unfavorable
Kansas Enterprises purchased equipment for $73,500 on January 1, 2018. The equipment is expected to have a five-year life, with a residual value of $6,300 at the end of five years.
Using the straight-line method, the book value at December 31, 2018 would be:
A.$53,760.
B.$60,060.
C.$58,800.
D.$67,200.
Answer:
Using the straight-line method, the book value at December 31, 2018 would be: A.$53,760.
Explanation:
Year 1 Year 2 Year 3 Year 4 Year 5
Cost 67200 53.760 40.320 26.880 13.440
Dep-Acu 13.440 13.440 13.440 13.440 13.440
Book Value 53.760 40.320 26.880 13.440 0
An economist makes an assumption that each additional year of education causes future wages to rise by 7 percent. In this model, if a person with 12 years of education makes $21 000 per year, then a person with 4-year college degree would earn ? per year. (Round your intermediate calculations to two decimal places.)
Answer:
Wage year 4= $12222.19
Explanation:
Giving the following information:
Each additional year of education causes future wages to rise by 7 percent.
A person with 12 years of education makes $21 000 per year.
A person with 4 years of education=$?
We will use the present value formula to calculate the wage in year 0. Then with the final value formula calculate the year 4 wage.
PV= FV/[(1+r)^n]
FV=final value at t time
r= rate
n= period of time
PV= 21000/(1,07^12)= $9324. 2511
Final Value= PV*(1+r)^t
Final Value year 4= 9324.2511*(1,07^4)= $12222.19
Indicate whether each of the following cost of an automobile manufacturer would be classified as direct materials, direct labor, or manufacturing overhead.
(a) ___ Windshield
(b) ___ Engine
(c) ___ Wages of assembly line worker
(d) ___ Depreciation of factory machinery
(e) ___ Factory Machinery lubricants
(f) ___ Tires
(g) ___ Steering wheel
(h) ___ Salary of painting supervisor
Answer:
a) DM Windshield
(b) DM Engine
(c) DL Wages of assembly line worker
(d) MO Depreciation of factory machinery
(e) MO Factory Machinery lubricants
(f) DM Tires
(g) DL Steering wheel
(h) MO Salary of painting supervisor
Explanation:
Direct materials (DM) are those materials and supplies that are consumed during the manufacture of a product, and which are directly identified with that product.
Direct labor (DL) is production or services labor that is assigned to a specific product, cost center, or work order.
Manufacturing overhead (MO) is all indirect costs incurred during the production process.
(a) DM Windshield
(b) DM Engine
(c) DL Wages of assembly line worker
(d) MO Depreciation of factory machinery
(e) MO Factory Machinery lubricants
(f) DM Tires
(g) DL Steering wheel
(h) MO Salary of painting supervisor
What are the determinants of demand?
Income
Price of related goods
A good's own price
Technology
Tastes and preferences
Resource prices
Number of consumers
Final answer:
The determinants of demand include income, price of related goods, a good's own price, tastes and preferences, and the number of consumers. These factors influence how much of a product consumers are willing and able to purchase, causing the demand curve to shift right for an increase or left for a decrease in demand.
Explanation:
The determinants of demand are factors that influence the quantity of a product that consumers are willing and able to purchase at different prices. These determinants include:
Income: Higher income levels typically increase the ability to purchase goods, leading to a rise in demand, while lower income reduces demand.
Price of related goods: The demand for a product can be influenced by the prices of substitutes and complements. If a substitute good becomes cheaper, demand for the original product may decrease, and vice versa.
A good's own price: Generally, as the price of a good increases, its demand decreases, and as the price decreases, its demand increases. This is known as the law of demand.
Tastes and preferences: Changes in consumer tastes and preferences can shift demand. For example, if there's a new health trend favoring a particular food, demand for that food may increase.
Number of consumers: An increase in the number of consumers generally leads to an increase in demand for products.
Each of these factors can cause the demand curve to shift either to the right (an increase in demand) or to the left (a decrease in demand).
The seventh glass of soda that Tim consumes will produce an extra benefit of 10 cents and has an extra cost of zero (Tim is eating at the cafeteria). The cost-benefit principle predicts that Tim will:
A. realize he has had too much soda to drink and go home.
B. drink the seventh glass and continue until the marginal benefit of drinking another glass of soda is zero.
C. volunteer to empty out the fountain.
D. not drink the seventh glass.
Answer:
B. drink the seventh glass and continue until the marginal benefit of drinking another glass of soda is zero.
Explanation:
The consumer will drink soda until the benefit from consuming matches the cost of consuming.
In this case the cost is zero. So it will consume until the marginal benefit equalt zero.
Hooper Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have a 8% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in interest rates, the bond's market price has fallen to $908.30. The capital gains yield last year was -9.17%. What is the yield to maturity?
Answer:
9.56
Explanation:
We will calcualte the YTM with an aprroximation method:
[tex]YTM = \frac{C + \frac{F-P}{n }}{\frac{F+P}{2}}[/tex]
Coupon payment= 80 (1,000 face value x 8% bond rate)
Face value= 1000 face value
Market Price= 908.3
n= 9
[tex]YTM = \frac{90 + \frac{1,000 - 908.3}{9}}{\frac{1,000 + 908.3}{2}}[/tex]
quotient 9.4522757%
This will be the aproximate YTM
Another way to solve it is with the Excel
we will write each cah flow and use the IRR function
-908.3
80
80
80
80
80
80
80
80
1080 (1,000 principal + 80 coupon payment)
now we write on any empy cell "=IRR(" and select the cells with the cashflow
The YTM will be 9.56%
Final answer:
To calculate the yield to maturity (YTM) for the bonds, the annual coupon payment is $80, and with a market price of $908.30, the current yield is approximately 8.81%. The YTM will include this current yield plus an adjustment for capital gains or losses, suggesting a rate slightly higher than the current yield due to the bond's decrease in value last year.
Explanation:
Calculating Yield to Maturity (YTM)
To calculate the yield to maturity (YTM) for Hooper Printing Inc.'s bonds, which have fallen to a market price of $908.30 due to changes in interest rates, the following information is used:
Annual coupon rate: 8%Par value: $1,000Years to maturity: 9 yearsCurrent market price: $908.30Capital gains yield last year: -9.17%The bond's annual coupon payment is calculated as 8% of the $1,000 par value, which equals $80. Over the remaining 9 years, the investor will receive these annual payments, plus the par value at maturity.
The current yield is calculated as the annual coupon payment divided by the current market price, which yields:
Current Yield = Coupon Payment / Market Price
Current Yield = $80 / $908.30
Current Yield = 0.0881, or 8.81%
To obtain the YTM, which includes both the current yield and the capital gain or loss upon maturity, we typically use a financial calculator or software, as the calculation involves solving for the rate in the present value of a series of cash flows. But here, we know the bond was purchased at par and lost -9.17% last year. Given its long term to maturity, the YTM would likely be close to the current yield adjusted for this loss in value due to increasing interest rates, implying the YTM is slightly higher than the current yield.
Determine whether each of the following costs should be classified as direct materials, direct labor, or manufacturing overhead. (a) select an option Frames and tires used in manufacturing bicycles. (b) select an option Wages paid to production workers. (c) select an option Insurance on factory equipment and machinery. (d) select an option Depreciation on factory equipment.
Answer: "(a) Frames and tires used in manufacturing bicycles" - Direct materials.
"(b) Wages paid to production workers." - Direct labor.
"(c) Insurance on factory equipment and machinery." - Manufacturing overhead.
"(d) Depreciation on factory equipment." - Manufacturing overhead.
Explanation: Direct materials are all those that are used directly in the production of a good or service.
Direct labor is that directly involved in the production of a good or service.
Manufacturing overheads are all those expenses that, although necessary for the production of a good or service, are not directly involved in the production process.
Final answer:
Direct materials include frames and tires for bicycles, direct labor is the wages paid to production workers, and manufacturing overhead encompasses insurance and depreciation on factory equipment. Variable costs change with production volume, while fixed operating costs are consistent regardless of units produced.
Explanation:
When classifying costs in manufacturing, it is important to distinguish between direct materials, direct labor, and manufacturing overhead.
Direct materials are the raw materials that are consumed during the manufacture of a product and that are directly incorporated into the product. Frames and tires used in manufacturing bicycles would be classified as direct materials, as they are integral parts of the finished product.Direct labor refers to the wages paid to production workers who are directly involved in the production of goods. Wages paid to these workers would be classified as direct labor.Manufacturing overhead includes all costs associated with the production process that are not direct labor or direct materials. This would include costs like insurance on factory equipment and machinery as well as depreciation on factory equipment, as these are indirect costs necessary for the production process but not directly tied to a specific unit of product.Variable costs, such as direct materials and direct labor, are costs that fluctuate with the number of units produced. Fixed operating costs, or manufacturing overhead, do not vary with the quantity produced in the short term.
The balance shown in the August bank statement of Colt Company was $22,400. After examining the August bank statement and items included with it, the company's accountant found:
Checks outstanding $4,500
NSF check 140
Note collected by bank for the Colt Company 1,500
Deposits outstanding 2,300
Bank service fees 60
What is the amount of cash that should be reported in the balance sheet as of August 31?
A.$20,200
B.$16,700
C.$23,400
D.$15,700
Answer:
A.$20,200
Explanation:
The computation of the cash amount which should be reported in the balance sheet is shown below:
= August Bank statement balance + Deposits outstanding - Checks outstanding
= $22,400 + $2,300 - $4,500
= $20,200
The other amount which is given in the question is irrelevant. Hence, these items should not be considered in the computation, so they are ignored.
Answer:
the amount of cash that should be reported in balance sheet is $20200
option A is correct
Explanation:
given data
balance shown = $22400
Checks outstanding = $4,500
NSF = 140
Note collected = 1500
Deposits outstanding = 2300
service fees = 60
to find out
What is the amount of cash should be reported
solution
we will find amount of that should reported as given by
amount reported = balance amount + deposit outstanding - check outstanding ..................1
put here all these value in equation 1 we get
amount reported = 22400 + 2300 - 4500
amount reported = 20200
so the amount of cash that should be reported in balance sheet is $20200
option A is correct
Transportation is the most important economic factor for economic development. Do you agree or disagree with this statement? Why or Why not? Start a New Thread
Answer:
Totally agree
Explanation:
At the microeconomic level (the importance of transportation for specific parts of the economy) transportation is linked to the producer, consumer, and production costs. The importance of specific transport activities and infrastructure can thus be assessed for each sector of the economy. Usually, higher income levels are associated with a greater share of transportation in consumption expenses. Transportation accounts on average between 10% and 15% of household expenditures, while it accounts for around 4% of the costs of each unit of output in manufacturing, but this figure varies greatly according to sub-sectors.