Answer:
FIFO Equivalent Units Materials = 15,320
FIFO Equivalent Units Conversion = 15,680
Explanation:
FIFO methods,
The equivalent units of production
Materials and conversion costs.
Particulars Units % of Completion Equivalent Units
Materials C. Costs Materials C. Cost
Beg WIP 900 60 10 540 90
Units Transferred 14500 100 100 14500 14500
WIP Ending 400 70% 70% 280 280
Total 14900 15,320 15,680
FIFO Equivalent Units Materials = 15,320
FIFO Equivalent Units Conversion = 15,680
In Fifo method the percentage of the worked units is calculated to find the equivalent units of production.
You need to accumulate $10,000. To do so, you plan to make deposits of $1,100 per year - with the first payment being made a year from today - into a bank account that pays 11.82% annual interest. Your last deposit will be less than $1,100 if less is needed to round out to $10,000. How many years will it take you to reach your $10,000 goal? Round your answer up to the nearest whole number.
Answer:
Explanation:
Using future annuity formula
Fv = Pmt ( (1+r)ⁿ -1 )/ r
[tex]\frac{FVr}{Pmt}[/tex] + 1 = (1+r)ⁿ
In ( [tex]\frac{FVr}{Pmt}[/tex] + 1) = n In ( 1+r)
n = In ( [tex]\frac{FVr}{Pmt}[/tex] + 1) / In ( 1 + r)
FV, future value = $10,000, Pmt, periodic payment per year = $1,100, r rate = 11.82% = 0.1182 and n = number of years
n = 0.7297 / 0.11172 = 6.53 years approx 7 years
the last year payment will actually be less than $1,100
A one-year call option contract on Cheesy Poofs Co. stock sells for $1,250. In one year, the stock will be worth $57 or $78 per share. The exercise price on the call option is $70. What is the current value of the stock if the risk-free rate is 2 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
Value of call option = 3.92
Explanation:
Stock price - Exercise price, 0
When share price is $57,
Payoff = Max (57 - 70, 0)
Payoff = Max (-13, 0)
Payoff = 0
When share price is $78
Payoff = Max (78 - 70, 0)
Payoff = Max (8, 0)
Payoff = 8
Value of call option = (Expected payoff * Probaliltiy) / (1 + Interest for the period)
Considering probability as 50% for each stock
Value of call option = (0 * 0.5 + 8 * 0.5) / (1 + 0.02)
Value of call option = 3.92
Presented below are two independent situations.Gambino Cosmetics acquired 10% of the 200,000 shares of common stock of Nevins Fashion at a total cost of $13 per share on March 18, 2015. On June 30, Nevins declared and paid a $60,000 dividend. On December 31, Nevins reported net income of $122,000 for the year. At December 31, the market price of Nevins Fashion was $15 per share. The stock is classified as available-for-sale.Kanza, Inc., obtained significant influence over Rogan Corporation by buying 40% of Rogan’s 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2015. On June 15, Rogan declared and paid a cash dividend of $30,000. On December 31, Rogan reported a net income of $80,000 for the year.InstructionsPrepare all the necessary journal entries for 2015 for (a) Gambino Cosmetics and (b) Kanza, Inc.
Answer:
See the explanation below
Explanation:
(a) Gambino Cosmetics
Since Gambino Cosmetics just 15% which is less than 20% of Nevins Fashion, the cost method for accounting for investments is the relevant method that is used as follows:
Stock investment = 10% * 200,000 * $13 = $260,000
Dividend income = 10% * $60,000 = $6,000
Available-for-sale (AFS) reserve = 10% * $122,000 = $12,000
Date Details Dr ($) Cr ($)
08 Mar. ‘15 Stock investments 260,000
Cash 260,000
To record investment in Nevins Fashion
30 Jun. ‘15 Cash 6,000
Dividend income 6,000
To record dividend income from investment in Nevins Fashion
31 Dec. ’15 Stock investments 12,000
AFS Reserve 12,000
To record share of income in Nevins Fashion
(b) Kanza, Inc.,
Since Kanza, Inc. acquired 40% in Rogan Corporation which is greater than 20%, the equity method for accounting for investments is the relevant method that is used as follows:
Stock investment = 40% * 30,000 * $9 = $108,000
Dividend income = 40% * $30,000 = $12,000
Investment revenue = 40% * $80,000 = $32,000
Date Details Dr ($) Cr ($)
01 Jan. ‘15 Stock investments 108,000
Cash 108,000
To record investment in Rogan Corporation
15 Jun. ‘15 Cash 12,000
Stock investment 12,000
To record dividend received from investment in Rogan Corporation
31 Dec. ’15 Stock investments 32,000
Investment revenue 32,000
To record share of income in Rogan Corporation
Journal entry is the primary record of transactions and events having monetary value in an financial year. Journal entry serves as a basis for preparation of accounts.
The entries for the given questions are provided in the attachment.
Recording of Journal Entries:Journal entries are primary records of a transaction.Accounts are prepared on the basis of entries.Entries are made for transactions that are in terms of money.There is dual effect of every transaction.Journal entry provides detail of every transaction entered into.Learn more about journal entries here:
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A jalapeno canning company is faced with a make/buy decision. Cardboard shipping cartons can be purchased for $0.60 each or made in-house. If manufactured, two machines will be required. Machine X will cost $20,000 and have a life of 6 years with a $2,000 salvage value. Machine Y will cost $11,000 and have a life of 4 years with no salvage value. The annual maintenance cost for machines X and Y are $6,000 and $5,000 per year, respectively. A total of 4 operators will be required for the two machines at a rate of $22.50 per hour per person. In a normal 8-hour day, the 4 operators and two machines can produce 1,000 cartons.
The variable cost per carton associated with the in-house option is closest to:
A. $0.0625
B. $0.10
C. $0.72
D. $0.81
E. $0.92
Answer:
Correct option is C.
$0.72
Explanation:
The following information about in-house manufacturing is given:
Wage = $22.50 per hour per person
Production = 1000
Number of workers = 4
Total number of hours = 8
Variable cost is the cost which changes with the change in level of production. For example cost of labour.
Total cost of labour = $22.50 x 4 x 8 =$720
Cost per carton is calculated as follows:
Total cost Cost per carton /Total production= $720/1000
=$0.721
Logistics Solutions provides order fulfillment services for dot merchants. The company maintains warehouses that stock items carried by its dot clients. When a client receives an order from a customer, the order is forwarded to Logistics Solutions, which pulls the item from storage, packs it, and ships it to the customer. The company uses a predetermined variable overhead rate based on direct labor-hours. In the most recent month, 120,000 items were shipped to customers using 2,300 direct labor-hours. The company incurred a total of $7,360 in variable overhead costs. According to the company's standards, 0.02 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $3.25 per direct labor-hour.What variable overhead cost should have been incurred to fill the orders for the 120,000 items? How much does this differ from the actual variable overhead cost?
The variable overhead cost that should have been incurred to fill the orders for the 120,000 items is $7,800. The actual variable overhead cost is $7,360, which is $440 less than the cost that should have been incurred.
Explanation:To calculate the variable overhead cost that should have been incurred to fill the orders for the 120,000 items, we need to multiply the standard direct labor-hours per item by the actual number of items. The standard direct labor-hours per item is given as 0.02, and the actual number of items is 120,000, so the standard direct labor-hours should be 0.02 * 120,000 = 2,400 hours.
To calculate the variable overhead cost, we multiply the standard direct labor-hours by the variable overhead rate per direct labor-hour. The variable overhead rate is given as $3.25 per direct labor-hour, so the variable overhead cost should be 2,400 * 3.25 = $7,800.
The difference between the actual variable overhead cost and the cost that should have been incurred is $7,360 - $7,800 = -$440. This means that the actual variable overhead cost is $440 less than the cost that should have been incurred.
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The variable overhead cost that should have been incurred was $7,800 based on the standard rates and quantity of items shipped. The actual variable overhead cost was $440 lower than expected.
Explanation:To calculate the variable overhead cost that should have been incurred, we need to multiply the total items times the standard rate for direct labor-hours per item, then multiply that by the variable overhead rate per direct labor-hour. That is, (Total items) x (Standard direct labor-hours per item) x (Variable overhead rate per direct labor-hour). So, 120,000 items x 0.02 direct labor-hours per item x $3.25 per direct labor-hour = $7,800.
The difference between this calculated variable cost and the actual cost incurred is found by subtracting the actual variable overhead cost incurred from the calculated cost. That is, $7,800 - $7,360 = $440. Therefore, the company’s variable overhead cost was $440 lower than it should have been according to their standard rates and quantity of items shipped.
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During March 2019, Annapolis Corporation recorded $40,600 of costs related to factory overhead. Alpha's overhead application rate is based on direct labor hours. The preset formula for overhead application estimated that $43,500 would be incurred, and 4,000 direct labor hours would be worked. During March, 6,250 hours were actually worked. Use this information to determine the amount of factory overhead that was (over) or under applied. (Round answers to the nearest whole dollar. Enter as a positive number if under applied. Enter as a negative number if over applied.)
Answer:
Overheads have been Over applied by $27,400
Explanation:
Overhead Applied = Predetermined Overhead Rate × Actual Activity
Predetermined Overhead Rate = Budgeted Overheads / Budgeted Activity
= $43,500 / 4,000 direct labor hours
= $ 10,88 per direct labor hour
Overhead Applied = $ 10,88 × 6,250 hours
= $68,000
Actual Overheads = $40,600
Actual Overheads $40,600 < Overhead Applied $68,000
Therefore Overheads have been Over applied by $27,400 that is $68,000 - $40,600
Sanchez Company's output for the current period was assigned a $419,000 standard direct labor cost. The direct labor variances included a $10,475 unfavorable direct labor rate variance and a $4,190 favorable direct labor efficiency variance. What is the actual total direct labor cost for the current period?
Answer:
the actual total direct labor cost for the current period is $425,285
Explanation:
Reconciling Standard Cost to Actual Cost
Standard Cost $419,000
Add Unfavorable direct labor rate variance $10,475
Less Favorable direct labor efficiency variance ($4,190)
Actual Cost $425,285
had $18,750 of investor-supplied operating assets (or capital), the weighted average cost of that capital (the WACC) was 9.5%, and the federal-plus-state income tax rate was 40%. What was HHH's Economic Value Added (EVA), i.e., how much value did management add to stockholders' wealth during the year
Answer:
$1,503.75
Explanation:
Sales $12,500
Operating costs $7,025
Operating income (EBIT) $5,475
WACC 9.5%
Tax rate 40%
Investor-supplied capital $18,750
EVA = EBIT(1 - T) - Investor Capital × WACC
EVA = $3,285.00 -$1,781.25
EVA = $1,503.75
Therefore the management add $1,503.75 value to stockholders' wealth during the year.
Thome and Crede, CPAs, are preparing their service revenue (sales) budget for the coming year (2017). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below. Department Quarter 1 Quarter 2 Quarter 3 Quarter 4 Auditing 2,560 1,780 2,370 2,780 Tax 3,240 2,690 2,400 2,600 Consulting 1,800 1,800 1,800 1,800 Average hourly billing rates are auditing $84, tax $93, and consulting $104. Prepare the service revenue (sales) budget for 2017 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue.
Answer:
Thome and Crede, CPAs' Service Revenue Budget for 2017 is attached.
Explanation:
The revenue for each quarter and each department is obtained by multiplying the billable hours by the billable rate.
Case A: Compute cash received for interest Case B: Compute cash paid for wages Interest revenue $ 6,600 Wages expense $ 12,200 Interest receivable, beginning of year 920 Wages payable, beginning of year 5,400 Interest receivable, end of year 2,500 Wages payable, end of year 4,200 For each separate case, compute the required cash flow information for BioClean.
Answer:
Interest received is $5.020
Wages paid is $13,400
Explanation:
The task is compute cash for interest for Case A and cash paid as wages for Case B in the year:
Computation of cash for interest:
interest revenue $6,600
opening interest receivable $920
closing interest receivable ($2,500)
Cash received $5,020
The closing balance was deducted because it a part of interest revenue for current year whose cash inflow is yet to be received and the opening interest receivable was added because the related cash would have been received during year.
Wages expense $12,200
wages payable (opening balance) $5,400
wages payable (closing balance) ($4200)
wages paid $13,400
The $5,400 was wages owed last year paid this year and the $4,200 is the wages owed this year expected to paid next year.
Suppose in 1992, the average price level in Pacifica was 100, and that in Atlantica it was also 100. In the foreign exchange market 1 Pacifica pound was exchanged for 1 Atlantica mark. In 2012, the price level in Pacifica had risen to 280 and the price level in Atlantica had risen to 360. According to the relative purchasing power parity (PPP) theory, what should the pound-mark exchange rate be in 2012? If the actual pound per mark exchange rate is 0.5 pound/mark in 2012, is the mark overvalued or undervalued relative to its PPP value?
Answer:
a. 1 Pound/1.29 or 0.78 Pound/Mark
b. Overvalued
Explanation:
a. What should the pound-mark exchange rate be in 2012?
Ratio of Pacifica pound to Atlantica mark in 2012 = 360/280 = 1.29
Or,
Ratio of Atlantica mark to Pacifica pound in 2012 = 280/360 = 0.78
Therefore, according to the relative purchasing power parity (PPP) theory, one Pacifica pound should equal to 1.29 Atlantica mark, i.e. 1 Pound/1.29 Mark.
This can also be stated differently that 1 Atlantica mark should equal to 0.78 Pacifica pound, i.e. 0.78 Pound/Mark.
b. If the actual pound per mark exchange rate is 0.5 pound/mark in 2012, is the mark overvalued or undervalued relative to its PPP value
Since the PPP pound per mark exchange rate value estimated in a above is 0.78 Pound/ Mark is higher than the actual pound per mark exchange rate of 0.5 pound/mark in 2012, mark is therefore overvalued.
Broke Benjamin Co. has a bond outstanding that makes semiannual payments with a coupon rate of 5.8 percent. The bond sells for $997.27 and matures in 16 years. The par value is $1,000. What is the YTM of the bond?
Answer:
YTM of the bond is 5.82%
Explanation:
The yield to maturity can be calculated using the rate formula in excel ,given as =rate( nper,pmt,-pv,fv)
nper is the number of times during the bond life coupon interest would be paid,which is 16 years multiplied by 2=32
pmt is the semi annual payment of the bond which is 5.8%*$1000/2=$29
pv is the current price of the bond $997.27
fv is the face value of the bond which is $1000
=rate(32,29,-997.27,1000)
rate=2.91%
that is semi-annual yield to maturity
annual yield is 2.91%*2=5.82%
The Yield to Maturity (YTM) of a bond can be calculated using the coupon rate, selling price, maturity, and par value. The YTM takes into account all coupon payments and the potential capital gain or loss upon maturity. The coupon payments for the Broke Benjamin Co. bond are $29 semiannually.
This is related to Business, specifically focusing on the realm of finance and investment. It concerns the calculation of the Yield to Maturity (YTM) for a bond. The bond in question has a semiannual payment structure with a coupon rate of 5.8 percent, a selling price of $997.27, a maturity of 16 years, and a par value of $1,000.
To calculate the YTM, one can use a financial calculator or software that can solve for the internal rate of return (IRR). The YTM is effectively the interest rate that equates the present value of all future coupon payments and the repayment of the par value at maturity with the current price of the bond.
The formula to calculate each semiannual coupon payment is: Coupon Payment = (Coupon Rate / 2) × Par Value. In this case: (0.058 / 2) × $1,000 = $29. The investor will receive $29 every six months.
The YTM is a useful measure as it considers the total return on the bond, which includes interest payments and any capital gains or losses (which would be the difference between the purchase price and the par value).
Warrick Boards calculated pension expense for its underfunded pension plan as follows:
($ in millions)
Service cost $ 354
Interest cost 215
Expected return on the plan assets ($165 actual, less $11 gain) (154 )
Amortization of prior service cost 21
Amortization of net loss 4
Pension expense $ 440
Required:
Which elements of Warrick’s balance sheet are affected by the components of pension expense? What are the specific changes in these accounts?
Answer:
(i) PBO - Projected Benefit Obligation.
(ii) Pension Liability.
(iii) OCI - Other Comprehensive Income.
(iv) Retained Earnings.
Explanation:
(i) Service Cost and Interest Cost would result in increase of Projected Benefit Obligation (PBO), So;
PBO = Service Cost + Interest Cost
PBO = $354,000,000 + $215,000,000
PBO = $569,000,000
(ii) Plan Assets are increase by Expected Return of $154,000,000, and this amount will be deducted from the PBO because this has already been included in the Balance Sheet under Assets;
Pension Liability = PBO - Plan Assets
Pension Liability = $569,000,000 - $154,000,000
Pension Liability = $415,000,000
(iii) Other Comprehensive Income - OCI is the amortization of the Prior Service Cost that will reduce the OCI account during the period of time along with the loss on OCI which will also be accounted for, as follows;
OCI = Prior Service Cost + Net Loss
OCI = $21,000,000 + $4,000,000
OCI = $25,000,000
(iv) Retained Earnings will be decreased as pension will be paid from the retained earnings account and can be calculated as follows;
Retained Earnings = - Pension Expense + Prior Service Cost + Net Gain on plan assets + Net Loss on OCI
Retained Earnings = - $440,000,000 + $21,000,000 + $11,000,000 + $4,000,000
Retained Earnings = - $404,000,000
Hence Share holders' Equity will be reduced by $404,000,000.
The components of pension expense affect the Accrued pension cost, Projected benefit obligation, Plan assets, and Accumulated other comprehensive income accounts.
Explanation:The components of pension expense affect several elements of Warrick's balance sheet. The specific changes in these accounts are as follows:
Service cost: This affects the Accrued pension cost account, which represents the portion of the pension liability that has not been funded yet. Interest cost: This affects the Projected benefit obligation account, which represents the present value of the expected pension payments. Expected return on the plan assets: This affects the Plan assets account, which represents the value of the investments held by the pension plan. Amortization of prior service cost: This affects the Accumulated other comprehensive income account, which represents the unrecognized gains and losses in the pension plan. Amortization of net loss: This also affects the Accumulated other comprehensive income account, reducing the unrecognized losses in the pension plan. Learn more about Effect of pension expense on balance sheet accounts here:https://brainly.com/question/29803406
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Suppose Intel's stock has an expected return of 20.0% and a volatility of 3.0%, while Coca-Cola's has an expected return of 7.0% and volatility of 3.0%. If these two stocks were perfectly negatively correlated (i.e., their correlation coefficient is negative −1),a. Calculate the portfolio weights that remove all risk.b. If there are no arbitrage opportunities, what is the risk-free rate of interest in this economy?
Answer:
a. The portfolio weights that remove all risk is 50% .
b. The risk-free rate of interest in this economy is 13.5%
Explanation:
The formula for standard deviation of a portfolio, of which i cannot type:
a. If we let sigma p = std. deviation of portfolio
rho 1,2 = correlation
if sigma = 0 and rho = -1, then the first equation can be re-written as :
0 = w1^2 * s1^2 + w2^2 * s2^2 + 2 * w1 * w2 * s1 * s2 * -1
0 = (w1s1 - w2s2)^2
w1s1 = w2s2
w1 * 0.03 = w2 * 0.03
w1 = w2 = 50%
Therefore, The portfolio weights that remove all risk is 50% .
b. Expected return of the portfolio = 0.5*20% + 0.5*7%
= 13.5%
This portfolio has zero risk, risk free rate = 13.5%
Therefore, The risk-free rate of interest in this economy is 13.5%
Evaluating risk and returnStock X has a 10.5% expected return, a beta coefficient of 1.0, and a 35% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 25.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%.Calculate each stock's coefficient of variation. Round your answers to two decimal places.CVx = ________CVy = ________Calculate each stock's required rate of return. Round your answers to two decimal places.rx = _____%ry = _____%Calculate the required return of a portfolio that has $9,000 invested in Stock X and $3,500 invested in Stock Y. Round your answer to two decimal places.rp = _____ %
Answer and Explanation:
The computation is shown below:
a. For coefficient of variation
CVx is
= Standard deviation ÷ expected return
= 35% ÷ 10.5%
= 3.33
CVy is
= Standard deviation ÷ expected return
= 25% ÷ 12.5%
= 2
b. For required rate of return using the Capital Asset Pricing model , the formula is shown below:
= Risk free rate of return + Beta × market risk premium
For rx, it is
= 6% + 1 × 5%
= 6% + 5%
= 11%
For ry, it is
= 6% + 1.2 × 5%
= 6% + 6%
= 12%
c. For required rate of return of a portfolio, first we have to find out the beta which is shown below
Beta = (Invested amount in Stock X ÷ Total investment amount) × (Beta of stock X) + (Invested amount in Stock Y ÷ Total investment amount) × (Beta of stock Y)
= ($9,000 ÷ $12,500) × (1) + ($3,500 ÷ $12,500) × 1.2)
= 0.72 + 0.336
= 1.056
The total investment amount is
= $9,000 + $3,500
= $12,500
Now the required rate of return of a portfolio is
= Risk free rate of return + Beta × market risk premium
= 6% + 1.056 × 5%
= 6% + 5.28%
= 11.28%
Therefore we applied the above formulas
Pottery Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 61% of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are $4 and $5, respectively. Normal production is 33,300 curtain rods per year.
A supplier offers to make a pair of finials at a price of $12.90 per unit. If Pottery Ranch accepts the supplier’s offer, all variable manufacturing costs will be eliminated, but the $49,200 of fixed manufacturing overhead currently being charged to the finials will have to be absorbed by other products.
Prepare an incremental analysis to decide if Pottery Ranch should buy the finials.
Answer:
It should keep producing their own finials
Explanation:
[tex]\left[\begin{array}{ccccc}&$Produce&$Buy&$Differential\\$Variable Cost&12.05&12.9&\\$Units&33,300&33,300&\\$Total&401,265&429,570&-28,305\\$Fixed&49,200&49,200&0\\&&&0\\$Total&450,465&478,770&-28,305\\\end{array}\right][/tex]
As the variable cost to produce are lower than the supplier offer:
4 materials + 5 labor + 61% of labor = 12.05
The company do not save any dollar in taking the offer.
Also to that cost it will be added the fixed overhead which is being allocated to finials thus, increasing further the supplier proposal.
Final answer:
An incremental analysis shows that the cost to make the finials is $12.05 per unit and the cost to buy is $12.90 per unit. Pottery Ranch Inc. should continue making the finials in-house unless it can utilize the capacity for a more profitable product.
Explanation:
To decide if Pottery Ranch should buy the finials, we will perform an incremental analysis comparing the costs of making versus buying the finials. Pottery Ranch currently makes the finials at a direct materials cost of $4 and direct labor cost of $5 per unit. The variable manufacturing overhead is 61% of the direct labor cost, which equals $3.05 ($5 imes 61%). The total cost to make one pair of finials is $12.05 ($4 + $5 + $3.05).
If they buy the finials at $12.90 per unit, they eliminate all variable costs but must still cover the $49,200 of fixed manufacturing overhead. That overhead would be allocated to other products, likely increasing their costs unless those products are also at capacity.
For an accurate incremental cost comparison:
Cost to make: $12.05 per unit.Cost to buy: $12.90 per unit.Given that the cost to make is less than the cost to buy, it would not be financially beneficial for Pottery Ranch to accept the supplier's offer unless they have an opportunity to use the freed-up capacity for a higher-margin product.
Hiro owns and operates a small business that provides economic consulting services. During the year he spends $57,000 on travel to clients and other expenses. In addition, he owns a computer that he uses for business. If he didn’t use the computer, he could sell it and earn yearly interest of $100 on the money created through this sale. Hiro’s total revenue for the year is $100,000. Instead of working as a consultant for the year, he could teach economics at a small local college and make a salary of $50,000.
Which of the following statements is true:A. If Hiro only spent $50,000 on travel services he would be indifferent between the two careers.B. The salary Hiro earns from his job teaching economics is irrelevant information when calculating his economic profit.C. Since Hiro’s revenues from his consulting job are greater than his salary from his job as an economics teacher, he should continue providing consulting services.D. Since Hiro’s economic profit is negative, he would be better off if he didn’t operate the consulting business and taught economics instead.
Answer: D. Since Hiro’s economic profit is negative, he would be better off if he didn’t operate the consulting business and taught economics instead.
Explanation:
Economic Cost is calculated by taking into account all costs, both Implicit and Explicit. Implicit Costs are also known as Opportunity costs and are referred to as the income you could be earning if you were doing the alternative.
Hiro's Economic Cost can hence be calculated by,
Economic Cost = Implicit costs + Explicit Costs
= (50,000 + 100) + 57,000
= $107,000
Subtracting that from his Revenue per year gives,
= 100,000 - 107,000
= -$7,000
Hiro is experiencing an Economic Loss by operating his business and would be better off Teaching Economics at the small local college.
The margin of safety is a measure of the distance between budgeted sales and the break-even point. It can be measured in dollars, in units or as a percentage.
These statements are true.
These statements are false.
Statement one is true and statement two is false.
Statement one is false and statement two is true.
Answer:
The correct option is these statements are true
Explanation:
Margin of safety is the measure of the reduction in sales that needs to be recorded before a company makes no profit,invariably the difference the planned sales volume and the sales volume required to break even(makes no profit no loss).
The margin of safety can be expressed in volume,say 100 units of a product,in dollar terms ,say each product sells for $100 each,the margin of safety becomes $10,000($100*100) and can also be expressed in percentage terms depending on the way management wants it stated.
Net income of Mansfield Company was $47,000. The accounting records reveal depreciation expense of $82,000 as well as increases in prepaid rent, salaries payable, and income taxes payable of $62,000, $25,000, and $22,000, respectively. Prepare the cash flows from operating activities section of Mansfield's statement of cash flows using the indirect method.
Answer:
Cash flows from operating activities
Net Income $47,000
Add: Non cash Expense Adjustments:
Depreciation $82,000
Change in Working Capital:
Prepaid rent ($62,000)
Salaries payable $25,000
Income taxes payable $22,000
Less: Net Change in WC $15,000
Net Operating Cash flow $114,000
Explanation:
Cash Flow from operating activities cash generated from to day to day activities of the business. All the cash flows needed to operate the business smoothly.
Depreciation is a non cash expense deducted in the calculation of Net income.
Increase in Liability will provide the cash and increase in assets will use the cash. So, the increase in prepaid expense is classified as increase in Assets and Increase in the Salaries payable and Taxes payable are classified as the increase in liability.
The cash flow from operating activities is calculated by adjusting the net income with non-cash expenses, and changes in Current Liabilities and Current Assets. For Mansfield Company, the cash flow from operating activities is $114,000.
Explanation:The cash flows from the operating activities section of Mansfield's statement of cash flows using the indirect method can be prepared following these steps:
Start with the Net income which is $47,000.Add back the Depreciation expense (non-cash expense) to the net income which totals to $47,000 + $82,000 = $129,000.Adjust for changes in Current Liabilities and Current Assets. Increases in prepaid rent (a Current Asset) decreases Cash Flow, so subtract $62,000 from $129,000 = $67,000. Increases in salaries payable and income taxes payable (Current Liabilities) increases Cash Flow, so add $25,000 and $22,000 respectively to get $67,000 + $25,000 + $22,000 = $114,000.So, the cash flow from operating activities is $114,000.
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During 2019, Bold Fashion, Inc., recorded credit sales of $710,000. Based on prior experience, the company estimates a 2 percent bad debt rate on credit sales. Required: Prepare journal entries for each transaction: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) a. On May 12, 2019, an account receivable of $2,600 from the prior period was determined to be uncollectible and was written off. b. Record the bad debt expense for 2019 using the Percentage of Credit Sales method.
Answer:
a. On May 12, 2019, an account receivable of $2,600 from the prior period was determined to be uncollectible and was written off.
Debit Allowance for doubtful debt $2,600
Credit Accounts receivable $2,600
Being entries to write off accounts receivable previously provided for.
If the account had not been provided for before,
Debit Bad debt expense $2,600
Credit Accounts receivable $2,600
b. Bad debt expense for 2019 using the Percentage of Credit Sales method
Debit Bad debt expense $14,200
Credit Allowance for Doubtful Debts $14,200
Being entries to record debts that may be uncollectible
Explanation:
When a company makes sales on account, debit accounts receivable and credit sales. Based on assessment, some or all of the receivables may be uncollectible.
To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i.e go bad), debit allowance for doubtful debt and credit accounts receivable.
Bad debt at 2 % of credit sales
= 2% * $710,000
= 2/100 * $710,000
= $14,200
Patent laws:
a. increase incentive to innovate by restricting entry into a market
b. give a firm the right to provide a wide variety of goods or services
c. increase incentive to innovate by giving a firm permanent and exclusive production rights
d. reduce incentive to innovate by restricting market entry
e. reduce incentive to innovate by making it difficult to use the patented innovation
Answer:
c. increase incentive to innovate by giving a firm permanent and exclusive production rights
Explanation:
Patent laws deal with new invention.
A patent is a right granted to an inventor by the government that allows the inventor to prevent others from producing, selling or using the invention for a specified period of time.
I hope my answer helps you
Brickhouse is expected to pay a dividend of $2.85 and $2.34 over the next two years, respectively. After that, the company is expected to increase its annual dividend at 3.3 percent. What is the stock price today if the required return is 10.7 percent
Answer:
The stock price is $31.14
Explanation:
The value of Brickhouse stock today is the present values of future cash flows from the stock discounted using the required rate of return of 10.7% as the discount rate as done below:
Years cash flows discount factor Present values
1 $2.85 1/(1+10.7%)^1=0.903342367 $2.57
2 $2.34 1/(1+10.7%)^2=0.816027432 $1.91
3 & beyond *$32.67 1/(1+10.7%)^2=0.816027432 $ 26.66
total present values= $31.14
* the year 3 and beyond represents the terminal value of the stock,which is computed using the formula below
=D2*(1+g)/r-g
D2 is the year dividend of $2.34
g is the dividend growth rate of 3.3%
r is the required rate of return which 10.7%
terminal value=$2.34*(1+3.3%)/(10.7%-3.3%)
=2.41722 /0.074 =$32.67
Shugart sells two products. Product A sells for $77 with variable costs of $32. Product B sells for $164 with variable costs of $52. The sales mix is 51% for products A while product B's is the remainder (or 100% less 51. What is the weighted average unit contribution margin rounding to the nearest penny? As always, do not use $ signs.
Answer: 77.83 dollars.
Explanation:
Contribution margin is known as the difference between the Selling price and variable costs.
So in the above scenario,
Product A Contribution Margin = 77 - 32
= $45
Product B Contribution Margin = 164 - 52
= $112
Now we are to calculate the Weighted Average. To do that we multiply the Contribution margins by their proportion of the sales mix and then add them up.
Product A proportion = 51%
Product B proportion = 49%
Weighted Average = 0.51(45) + 0.49(112)
= 77.83
The weighted average unit contribution margin is 77.83 dollars.
If you need any clarification do comment.
Valutech Manufacturing uses job order costing for its production of MP3 players. The cost incurred for the current year for the production of the MP3 players totaled $12,000 of materials, $6,000 of direct labor costs, and $4,000 of manufacturing overhead applied. The company ships all goods as soon as they are completed which results in no finished goods inventory on hand at the end of any year. Beginning work in process totaled $10,000, and the ending balance is $6,000. During the year the company completed production for 400 MP3 players.
Required:
1. What is the cost per unit for each MP3 player?
Answer:
$65 per unit
Explanation:
For computing the cost per unit first we have to determine the cost of goods manufactured which is shown below:
Cost of goods manufactured = Opening work in process + direct material cost + direct labor cost + manufacturing overhead cost - ending work in process
= $10,000 + $12,000 + $6,000 + $4,000 - $6,000
= $26,000
And, there is a production of 400 MP3 players
So, the cost per unit is
= $26,000 ÷ 400 MP3 players
= $65 per unit
Cost of Units Transferred Out and Ending Work in ProcessThe costs per equivalent unit of direct materials and conversion in the Filling Department of Eve Cosmetics Company are $0.25 and $2.00, respectively. The equivalent units to be assigned costs are as follows: Equivalent Units Direct MaterialsConversionInventory in process, beginning of period0 2,500 Started and completed during the period50,000 50,000 Transferred out of Filling (completed)50,000 52,500 Inventory in process, end of period3,000 1,200 Total units to be assigned costs53,000 53,700 The beginning work in process inventory had a cost of $1,530. Determine the cost of completed and transferred-out production and the ending work in process inventory. If required, round to the nearest dollar.Completed and transferred-out production$Inventory in process, ending$
Answer:
Completed and transferred-out production $ 116,500
Inventory in process, ending $3150
Explanation:
Eve Cosmetics Company
Filling Department
Costs per equivalent unit of direct materials $0.25
Costs per equivalent unit of conversion $ 2.00
Equivalent Units
Particulars Direct Materials Conversion
Inventory in process, beginning of period 0 2,500
Started and completed during the period 50,000 50,000
Transferred out of Filling (completed) 50,000 52,500
Inventory in process, end of period 3,000 1,200
Total units to be assigned costs 53,000 53,700
We multiply the cost per unit to the equivalent units of production both in the completed and ending inventory to get the total costs.
Completed and transferred-out production $ 116,500
Materials = 50,000 units * $ 0.25= $12500
Conversion = 52,000 units * $ 2.0= $104,000
Inventory in process, ending $3150
Materials = 3,000 units * $ 0.25= $ 750
Conversion = 12,00 units * $ 2.0= $2400
Your pension plan is an annuity with a guaranteed return of 4% per year (compounded quarterly). You can afford to put $1,600 per quarter into the fund, and you will work for 40 years before retiring. After you retire, you will be paid a quarterly pension based on a 25-year payout. How much will you receive each quarter? (Round your answer to the nearest cent.)
Answer:
The cash to receive each quarter is $9,935.32
Explanation:
There are two tasks here,the first is the computation of future value of the pension in 40 years' time and thereafter computing the quarterly payment for 25 years when retired.
The future value of the pension can be computed using the fv function in excel,=-fv(rate,nper,pmt,pv)
rate is the quarterly rate of interest i.e 4%/4=1%
nper is the number of times the $1,600 would invested in the fund,that is 40*4=160 times
pmt is the $1,600 inflow into the fund per quarter
pv is not known so is assumed zero
=fv(1%,160,-1600,0)
fv=$626,212.22
Second task:
amount of quarterly payment when retired is computed using pmt formula in excel:
=pmt(rate,nper,-pv,fv)
rate is 1%
nper is 25 years *2=100
pv is the pension value when retired is $626,212.22
note that this amount $626,212.22 was future value in year zero,but a present value in year 40th.
fv is zero
=pmt(1%,100,-626212.22,0)
pmt=$9,935.32
This year, Hamilton, a local manufacturer of off-shore drilling platforms, entered into a contract to construct a drilling platform that will be placed in the North Atlantic Ocean. The total contract price is $5,000,000, and Hamilton estimates the total construction cost at $3,000,000. Actual costs incurred this year are $600,000. If Hamilton uses the percentage of completion method, the gross profit for this year is:
Answer:
$400,000
Explanation:
Percentage completed:
$600,000/$3,000,000 20%
Hence:
Revenue $5,000,000 x .20 = $1,000,000
Less Costs to date (600,000)
Gross profit$ 400,000
Therefore If Hamilton uses the percentage of completion method, the gross profit for this year is: $400,000
he accounting department analyzes the variance of the weekly unit costs reported by two production departments. A sample of 16 cost reports for each of the two departments shows cost variances of 2.2 and 5.4, respectively. Is this sample sufficient to conclude that the two production departments differ in terms of unit cost variance
To conclude at a 10% significance level that the two departments differ in unit cost variance based on the given data, we need a calculated test statistic exceeding 1.746. However, due to the limited sample size (n=16), the test statistic is insufficient to draw such a conclusion.
Explanation:To determine if the observed difference in variances is statistically significant, we can perform a Levene's test. This test compares the variances of two populations based on the absolute deviations from the medians of their respective samples.
Calculate the pooled variance:
First, pool the variances: Sp = [(n1-1)*s1^2 + (n2-1)*s2^2] / (n1+n2-2)
Sp = [(16-1)*2.3^2 + (16-1)*5.4^2] / (16+16-2)
Sp ≈ 15.18
Calculate the test statistic:
L = (n1 + n2 - 2) * (Sn1^2 - Sn2^2) / Sp
L = (16 + 16 - 2) * ((2.3^2) - (5.4^2)) / 15.18
L ≈ 1.48
Compare the test statistic to the critical value:
At a 10% significance level (α = 0.10) and equal sample sizes (n1 = n2), the critical value for Levene's test is approximately 1.746.
Since the calculated test statistic (L ≈ 1.48) is lower than the critical value (1.746), we cannot statistically conclude that the two production departments differ in terms of unit cost variance at the 10% significance level.
However, it's important to note that the limited sample size (n=16) reduces the power of the test to detect potential differences. A larger sample size could potentially lead to a statistically significant result.
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Complete Question
The accounting department analyzes the variance of the weekly unit costs reported by two production departments. A sample of 16 cost reports for each of the two departments shows cost variances of 2.3 and 5.4, respectively. Is this sample sufficient to conclude that the two production departments differ in terms of unit cost variance? Use a = .10.
Calculate the value of the test statistic (to 2 decimals).
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Kegler Bowling installs automatic scorekeeping equipment with an invoice cost of $190,000. The electrical work required for the installation costs $20,000. Additional costs are $4,000 for delivery and $13,700 for sales tax. During the installation, a component of the equipment is carelessly left on a lane and hit by the automatic lane-cleaning machine. The cost of repairing the component is $1,850. What is the total recorded cost of the automatic scorekeeping equipment?
Answer:
Recorded cost = $229,550.00
Explanation:
According to International Accounting Standards (IAS) 16, property plants and equipment, the cost of an equipment includes all of the cost necessary to bring and make it ready for the intended use.
These costs include purchase cost, installation cost, delivery fees and commission associated with the purchase transaction.
Applying this principles, the recorded cost of the scorekeeping machine would be
=$190,000 + $20,000 + 4,000 + 13,700 + $1,850.
= $229,550.
How could job characteristics theory guide Andrea as she considers ways of combining areas for the staffers? Is there a way to give the new versions of their jobs a higher satisfaction potential than the pre-downsizing versions?
Answer:
Job characteristics theory could guide Andrea as she considers ways of combining areas for the staffers by developing a more challenging versatile job functions that will stimulate performance.
Explanation:
The Job Characteristics Model is a theory that is based on the idea that a task in itself is the key to the employee's motivation. In short, a boring and monotonous job is disastrous to an employee's motivation whereas a challenging, versatile job has a positive effect on motivation.
According to the tenets of job characteristics model, a more challenging and versatile job will give higher satisfaction potential than the pre-downsizing versions which could be counter productive and depressing.