Answer:
C) 9.00; 8.92
Explanation:
The arithmetic rate of return is given by:
[tex]R_{A} = \frac{11+3+8+14}{4} \\R_{A} = 9.00[/tex]
The geometric rate of return is given by:
[tex]R_{G} = (\sqrt[4]{(1.11*1.03*1.08*1.14)} -1) *100 \%\\R_{G} = (1.0892-1) *100 \%\\R_{G} = 8.92[/tex]
Therefore, the arithmetic rate of return is 9.00 percent and the geometric rate of return is 8.92 percent
The answer is C) 9.00; 8.92.
Harrison Forklift's pension expense includes a service cost of $17 million. Harrison began the year with a pension liability of $42 million (underfunded pension plan). 1. Interest cost, $13; expected return on assets, $11; amortization of net loss, $3. 2. Interest cost, $13; expected return on assets, $10; amortization of net gain, $3. 3. Interest cost, $13; expected return on assets, $10; amortization of net loss, $3; amortization of prior service cost, $4 million. Required: Prepare the appropriate general journal entries to record Harrison’s pension expense in each of the following independent situations regarding the other components of pension expense ($ in millions): (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
Answer:
Journal Entries:
Explanation:
Event 1 Pension expense A/C Dr. $22
Plan assets A/C Dr. $11
To PBO A/C $30
To Amortization of net loss-OCI A/C $3
Event 2 Pension expense A/C Dr.$17
Plan assets A/C Dr. $ 10
Amortization of net gain- OCI A/C Dr. $3
To PBO A/C $30
Event 3 Pension expense A/C Dr.$27
Plan assets A/C Dr. $10
To PBO A/C $30
To Amortization of net loss-OCI A/C $3
To Amortization of prior service cost-OCI A/C $4
1. PBO ($17 service cost + $13 interest cost) = 30
2. PBO ($17 service cost + $13 interest cost) = 30
3. PBO ($17 service cost + $13 interest cost) = 30
The amortization amounts are reported as other comprehensive income in the statement of comprehensive income.
Final answer:
The question involves creating journal entries to record pension expenses for Harrison Forklift under different conditions involving service cost, interest cost, expected return on assets, and amortizations. Each scenario is addressed with a corresponding journal entry that reflects the specific components of the pension expense for that situation.
Explanation:
The student's question relates to the recording of pension expenses for Harrison Forklift in various scenarios. Each scenario involves varying amounts of interest cost, expected return on assets, amortization of net loss or gain, and possibly amortization of prior service cost. The pension expense is calculated by combining the service cost with these other components, and the appropriate general journal entries will reflect these calculations.
Scenario 1:
Service Cost: $17M
Interest Cost: $13M
Expected Return on Assets: $11M
Amortization of Net Loss: $3M
Total Pension Expense: $22M ($17M + $13M - $11M + $3M)
Journal Entry: Pension Expense $22M; Pension Liability $22M
Scenario 2:
Service Cost: $17M
Interest Cost: $13M
Expected Return on Assets: $10M
Amortization of Net Gain: $3M
Total Pension Expense: $20M ($17M + $13M - $10M - $3M)
Journal Entry: Pension Expense $20M; Pension Liability $20M
Scenario 3:
Service Cost: $17M
Interest Cost: $13M
Expected Return on Assets: $10M
Amortization of Net Loss: $3M
Amortization of Prior Service Cost: $4M
Total Pension Expense: $27M ($17M + $13M - $10M + $3M + $4M)
Journal Entry: Pension Expense $27M; Pension Liability $27M
Walthaus Corporation's standard cost sheet is as follows Direct material Direct labor Variable overhead Fixed overhead 4 feet at $5.00 per foot 3 hours at $10.00 per hour 3 hours at $2.00 per hour 3 hours at $1.00 per hour Additional information Actual results: purchased 30,000 lbs of material at $5.25 per lb. (there were no beginning or ending material inventories); direct labor cost incurred was 26,000 hours at $9.75 per hour; actual variable overhead incurred, $50,000; and actual fixed overhead incurred $43,000. Overhead is applied to work-in-process on the basis of direct labor hours. The company produced 8,000 units of product during the period. The number of estimated hours for computing the fixed overhead application rate totaled 45,000 hours. What are the fixed overhead price and production volume variances? O $2.000 F; $23,000 U $2,000 U; $23,000 F. $4,000 F: $25,000 F. $4,000 F: $25,000 U. None of these.
Answer:
1. U. None of these
2. Variable overhead price variance = $2,000 F
Variable overhead efficiency variance = $4,000 U
Explanation:
Please see attachment.
Debt Management Ratios You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $30 million in assets with $29 million in debt and $1 million in equity. LotsofEquity, Inc. finances its $30 million in assets with $1 million in debt and $29 million in equity. Calculate the debt ratio and equity multiplier for the two firms.
The debt ratio and equity multiplier for LotsofDebt, Inc. are 96.67% and 30, respectively, indicating high leverage. For LotsofEquity, Inc., these ratios are 3.33% and approximately 1.03, suggesting a conservative financial structure with low leverage.
Explanation:Debt Management Ratios Calculation
To calculate the debt ratio and the equity multiplier for both LotsofDebt, Inc. and LotsofEquity, Inc., we can use the following formulas:
Debt Ratio = Total Debt / Total AssetsEquity Multiplier = Total Assets / Total EquityFor LotsofDebt, Inc.:
Debt Ratio = $29 million / $30 million = 0.9667 or 96.67%Equity Multiplier = $30 million / $1 million = 30For LotsofEquity, Inc.:
Debt Ratio = $1 million / $30 million = 0.0333 or 3.33%Equity Multiplier = $30 million / $29 million = 1.0345 or approximately 1.03These ratios indicate that LotsofDebt, Inc. is highly leveraged with a much higher proportion of debt financing, whereas LotsofEquity, Inc. uses primarily equity to finance its assets.
Drogo, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 12 years to maturity that is quoted at 110 percent of face value. The issue makes semiannual payments and has an embedded cost of 6 percent annually.
a. What is the company’s pretax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Pretax cost of debt %.
b. If the tax rate is 35 percent, what is the aftertax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Aftertax cost of debt %.
Answer:
1. 4.89%
2. 3.18%
Explanation:
In this question, we use the Rate formula which is shown in the spreadsheet.
The NPER represents the time period.
Given that,
Present value = $1,000 × 110% = $1,100
Assuming figure - Future value or Face value = $1,000
PMT = 1,000 × 6% ÷ 2 = $30
NPER = 12 years × 2 = 24 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this,
1. The pretax cost of debt is 4.89%
2. And, the after tax cost of debt would be
= Pretax cost of debt × ( 1 - tax rate)
= 4.89% × ( 1 - 0.35)
= 3.18%
Edwards Enterprises follows a moderate current asset investment policy, but it is now considering a change, perhaps to a restricted or maybe to a relaxed policy. The firm's annual sales are $400,000; its fixed assets are $100,000; its target capital structure calls for 50% debt and 50% equity; its EBIT is $39,000; the interest rate on its debt is 10%; and its tax rate is 40%. With a restricted policy, current assets will be 15% of sales, while under a relaxed policy they will be 25% of sales. What is the difference in the projected ROEs between the restricted and relaxed policies?
Answer:
Please see attachment
Explanation:
Please see attachment
For a variety of reasons, a bank sometimes will hold more reserves than is legally required. These reserves are known as excess reserves. How does holding excess reserves affect the money supply? Choose one:
(A) The money supply will increase as banks loan out more money.
(B) The money supply will increase as banks hold more vault cash.
(C) The money supply will increase as a bank’s vault cash falls.
(D) The money supply will decrease as banks loan out less money.
(E) There is no impact. The level of deposits and loans will be unaffected.
Option D , The money supply will decrease as banks loan out less money.
Explanation:
Banks are lending their deposits and increasing the economic supply of money. Nevertheless, if the bank holds more money and invests less then the supply of money into the economy rises.
Conversely, the ratio increased, boosted, lowered the cash multiplier, and decreased the supply of money. Expansionary fiscal policy is the decrease in the necessary reserve ratio; contraction monetary policy is the rise in the reserve ratio.
When attempting to control the monetary supply, the Fed has two challenges. Firstly, the Federal does not regulate the amount of cash families want to keep in their accounts as deposits. The second problem seems to be that the banks ' capital is not verified by the Fed. If the banks opt for more excess reserves and deposits, the sum of money will be lower.
Excess reserves held by a bank decrease the money supply because this money is not being loaned out to stimulate economic activity. Therefore, the money supply will decrease as banks loan out less money.
Explanation:When a bank holds excess reserves, it means it is retaining more money than it is legally obligated to. This action directly impacts the money supply in the economy. The correct answer is (D) The money supply will decrease as banks loan out less money.
Here's why: Banks loan out their reserves to borrowers, and these loans enter the economy as new money, which increases the money supply. When banks hold back some of their reserves, they reduce the amount of loans they can make, which in effect decreases the potential money supply. Instead of being used for loans that could stimulate economic activity, these funds are being held back, thus effectively reducing the total money supply.
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Assume an economy begins with zero inflation, a 25 percent income tax rate, and a real interest rate of 4 percent. If inflation rises to 4 percent, the nominal interest rate becomes ________ percent and the after-tax real interest becomes ________ percent.
Answer:
8%
2%
Explanation:
Real interest rate is interest rate that has been adjusted for inflation . It is calculated as nominal interest rate - inflation rate.
Nominal interest rate is interest rate that has not been adjusted for inflation. It is calculated as real interest rate + inflation rate. The nominal interest rate is the more commonly quoted interest rate.
Nominal interest rate = 4%+4%=8%
After tax real interest rate = [nominal interest rate × ( 1 - tax rate )] - inflation rate
0.08 × (0.75) = 0.06 = 6%
6% - 4% = 2%
Which of the following statements is CORRECT?
Dividends paid reduce the net income that is reported on a company's income statement.
If a company uses some of its bank deposits to buy short-term, highly liquid marketable securities, this will cause a decline in its current assets as shown on the balance sheet.
If a company issues new long-term bonds to purchase fixed assets during the current year, this will increase both its reported current assets and current liabilities at the end of the year.
Accounts receivable are reported as a current liability on the balance sheet.
If a company pays more in dividends than it generates in net income, its retained earnings as reported on the balance sheet will decline from the previous year's balance.
Answer:
If a company pays more in dividends than it generates in net income, its retained earnings as reported on the balance sheet will decline from the previous year's balance.
Explanation:
The dividend is shown while preparing the retained earning statement. So, it does not affect the net income.
The highly liquid marketable securities does not show a decline in the current assets
If the long term bonds are issued to purchase fixed assets it would show under the long term liabilities and the long term assets rather than the current assets and the current liabilities
Account receivable are reported in the current assets rather than the current liabilities
We know that
The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid
If the dividend amount is more than the net income so the ending balance of retained earning will decline than its beginning year balance.
Answer:
E
Explanation:
If a company pays more divided than net income, its retained will reduce more than reported in the previous balance sheet. This is beacue dividends are paid out of retained earnings; therefore where the dividend payment is higher than the net income.
Indicate whether each of the following is an example of an automatic stabilizer or discretionary fiscal policy. The government increases the top income tax bracket to 35%. The tax rate paid by an individual falls from 20% to 15% when his pay is reduced during a recession. A person qualifies for unemployment compensation when she loses her job during a recession.
Answer:1.. Discretionary fiscal policy.
2. Automatic stabilizer
3. Automatic stabilizer
Explanation:
An automatic stabilizer are in built economy policy that are already in existence to tackle economy issues as it relates to recession and expansion in the economy.
An increase in tax rate is a new directive taken to curtailed expansionary drive in the economy after his occurence.
A fall in tax rate from 20 to 15 during recession is the already existing progressive tax rate that takes more tax during expansion and less during recession.
The unemployment compensation is also an inbuilt policy to tackle a recession issue.
Mount Nittany Medical Center has an X-ray machine that cost $84,300. Shipping and site preparation costs $1,200 and installation costs $400 At the end of the 3rd year of service, the X-ray machine was traded in for a different X-ray machine with a purchase price of $89,999, shipping and site preparation costs $1,600 and installation costs $400. The trade-in allowance was $27,000 for purchasing the new machine. This equipment is a 5- year MACRS class. What is the cost basis of the new X-ray machine for computing the amount of depreciation for income tax purposes?
Answer:
Please see attachment
Explanation:
Please see attachment
Scenario: You are 30 years old and single. You have a moderate risk investment philosophy. You are interested in long-term investing, but you do not have sufficient funds to buy a variety of investments to be fully diversified and you do not feel you have the expertise to make good choices. Among the features that facilitate making investments in a mutual fund are: Check all that apply O Any interest, dividends, and capital gains can be automatically reinvested O As your objectives change, you can easily swap shares for another mutual fund within a mutual fund family ? A mutual fund investment can be inherited by a designated beneficiary without the need to go through probate O A check-writing feature The best mutual funds in which to invest are usually O no-load funds O front-load funds O back-end load funds A $2,000 investment in a mutual fund with a 8% front-end load will allow you to make a net investment of $2,160 $1,840 $1,680 You should review and rebalance your mutual fund investment never; the fund is rebalanced for you monthly annually quarterly A fund named "Fidelity Freedom Fund 2030 is a target-date fund designed O to automatically shift assets from moderate to aggressive as retirement age approaches O for someone retiring in 20 to 30 years. O to provide a no-hassle, set-it-and-forget-it approach to investing for retirement. O for someone between the ages of 20 and 30
Answer:
Check the following explanation
Explanation:
Features that facilitiate making investment in mutual funds are as follows:
Any interest, dividends and capital gains can be automatically reinvested.
As your objective change, you can easily swap shares of another mutual funds withing a mutual fund family.
A mutual fund can be inherited by a designated beneficiary without the need to be checked.
Answer - the best mutual funds to invest are usually
No load funds.
In no load funds the investor need not pay any amount in the form of commission or other charges while purchasing or selling the investments.
Answer- If we invest $2000 in a front end load with 8% interest rate then we will earn $1840 as $160( $2000 x 8%) will get deducted from the purchase amount and eventually reducing the investment size.
Answer- we should review and rebalance your mutual funds annually as if we do it too frequently it kight involve some costs and thus would turn out to be less profitable.
Answer- It shifts assets from moderate to more risky as the retirement age approaches because it will help in increasing the income of the investor when he retires as at retirement he or she might start withdrawing his or her money.
Scientific management forms of work organization are being replaced with flatter, team-oriented work structures that serve ____________________ and employee involvement rather than mass manufacturing.A. union demandsB. increased productivityC. flexible specializationD. extrinsic motivators
Answer: flexible specialization
Explanation: In simple words, flexible specialization refers to an organisation which is expertise in its field of business regrading manufacturing or after sales service ans still can change their level and method of business within a short notice as per the situation.
Only team oriented work structures can implement that as in such as structure all the employees suggestions are taken into consideration which brings harmony and trust. On the other hand, scientific management involves planning by the top managers and execution by the lower level.
A portfolio has three stocks 300 shares of Yahoo (YHOO), 300Shares of General Motors (GM),
and 80 shares of Standard and Poorʹs Index Fund (SPY). If the price of YHOO is $20, the price of
GM is $30, and the price of SPY is $150, calculate the portfolio weight of YHOO and GM.
A) 11.1%, 20.0%
B) 16.7%, 28.3%
C) 22.2%, 33.3%
D) 22.2%, 43.3%
Answer:
c. 22.2%, 33.3%
Explanation:
Portfolio weight of each investment equals division of total value of each investment to total value of portfolio.
Portfolio weight of YHOO = (300×$20)/(300*$20 +300× $30 + 80×150)= 0.222= 22%Portfolio weight of GM = (300×$30)/(300*$20 +300× $30 + 80×150)= 0.333= 33%Jeff is approached by a salesperson. The salesperson fails to make a first impression and Jeff decides in the early minutes of the sales presentation itself that he will not buy anything from the salesperson.
Which of the following phenomena is observed here?
a. Central traits principle
b. Incremental effect
c. Primacy effect
d. Covariation principle
Answer:
Letter c is correct. Primacy effect.
Explanation:
The primacy effect is a phenomenon that describes about the preference that humans have over a first choice, that is, individuals generally have a preference for the first data they receive about something, than the next data. This effect is compared to the first impression, which is the initial perceptions we get from meeting someone that are difficult to change even over time.
A good strategy for salespeople is to bring their highest performing product on the first visit, to have a positive effect on customer expectations and encourage sales.
Hardware Suppliers reports net income of $157,000. Included in net income is a gain on the sale of land of $16,000. A comparison of this year’s and last year’s balance sheets reveals an increase in accounts receivable of $27,000, an increase in inventory of $16,000, and a decrease in accounts payable of $47,000.Required: Prepare the operating activities section of the statement of cash flows using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)
Final answer:
The operating activities section of the statement of cash flows using the indirect method begins with the net income of $157,000, deducts the non-cash gain on the sale of land of $16,000, and adjusts for increases in accounts receivable and inventory, and a decrease in accounts payable. The final total cash provided by operating activities is $51,000.
Explanation:
To prepare the operating activities section of the statement of cash flows using the indirect method, we start with the net income and adjust for non-cash items and changes in working capital.
Net income: $157,000
Adjustments for non-cash items:
- Gain on the sale of land: (-$16,000)
Adjustments for changes in working capital:
- Increase in accounts receivable: (-$27,000)
- Increase in inventory: (-$16,000)
- Decrease in accounts payable: (-$47,000)
When we adjust the net income, we remove the gain on the sale of land because it's a non-operating item. We also consider the changes in working capital. Increases in current assets and decreases in current liabilities are uses of cash, so they are subtracted from the net income.
Adjusted net income for operating activities is calculated as follows:
Start with net income: $157,000Subtract gain on the sale of land: $157,000 - $16,000 = $141,000Subtract increase in accounts receivable: $141,000 - $27,000 = $114,000Subtract increase in inventory: $114,000 - $16,000 = $98,000Subtract decrease in accounts payable: $98,000 - $47,000 = $51,000The total cash provided by operating activities is $51,000.
Decision Point: Pricing Your Writing Desk Fir-Niche's new product development team is developing an ornate writing desk. Before the prototype is produced, you have been asked to engage in target costing to recommend the target cost of materials per unit. This is part of an effort to make the writing desk of the best quality materials that the target market will be willing to pay, while still allowing Fir-Niche to make a profit. Conner emails you a report that contains the following information to help you make your decision
Fixed costs - 250 000$
Projected units sold in one year - 1000
Average price target market will pay - 550$
What cost of material per unit (variable cost) do you recommend for the ornate writing desk?
1. 100$/per unit
2. 200$/per unit
3. 300$/per unit
200$/unit cost of material per unit (variable cost) is recommended for the ornate writing desk.
How to calculate which cost of material per unit (variable cost) is recommended for the ornate writing desk?Given:
Fixed Cost = $25000
Units sold in 1 year = 1000
Average Price = $550
Total Revenue (TR) = Price x Quantity
$550 x 1000 = 550,000
Total Cost (TC) = Fixed Cost + Per unit Variable Cost (VC) x Quantity
= $250,000 + 1000 x VC
Profit = TR - TC
= 550,000 - (250,000 + 1000VC)
= 300,000 - 1000VC
Now,
When VC = $200Profit = 300,000 - 1000*(200) = 300,000 - 200,000 = 100,000When VC = $100profit = 300,000 - 1000*(100)= 300,000 - 100,000 = 200,000When VC = $300Profit = 300,000 - 1000*(300) = 300,000 - 300,000 = 0Now, $300 can not be the variable cost as it causes profit to be break-even leading to no profit or loss.
Therefore, 200$/unit (option 2) cost of material per unit (variable cost) is recommended for the ornate writing desk as at this choice there are more profits without compromising on the quality.
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Faulk Industries (FI) produces low cost digital cameras that sell for $175. FI requires a 25% return on sales. Currently feasible costs are $9,944,000 and a cost reduction of $100,250 is required to meet their target. FI assumes they will sell ____cameras. A. 70,313 B. 56,823 C. 75,000 D. 85,000
Answer:
option (C) 75,000
Explanation:
Data provided in the question:
Selling cost of digital cameras = $175
Required return on sales = 25%
feasible costs = $9,944,000
cost reduction = $100,250
Now,
cost of camera = $175 × (1 - Desired profit )
or
cost of camera = $175 × (1 - 0.25)
or
cost of camera = $131.25
Now,
Net cost of cameras sold = cost of camera × Number of cameras FI sell
$9,944,000 - $100,250 = $131.25 × Number of cameras FI sell
or
$9,843,750 = $131.25 × Number of cameras FI sell
or
Number of cameras FI sell = 75,000
Hence,
the answer is option (C) 75,000
Project Marvel is a five-year project. The project has a total cash inflow of $350,000. The present value of such inflows is $275,000. The project requires an initial investment of $200,000 and additional working capital of $25,000. What is the net present value of the project? a. $0 b. $50,000 c. ($50,000) d. ($250,000)
Answer:
The correct answer is B.
Explanation:
Giving the following information:
Project Marvel is a five-year project. The project has a total cash inflow of $350,000. The present value of such inflows is $275,000. The project requires an initial investment of $200,000 and an additional working capital of $25,000.
NPV= -Io + ∑[Cf/(1+i)^n]
Cf= cash flow
NPV= -225,000 + 275,000= 50,000
Answer:
The answer is: B
Explanation:
Capital budgeting is a process of evaluating investment projects to be undertaken by a company. Net Present Value (NPV) computation is one of the techniques used in this evaluation. This computation entails discounting cash flows, using an appropriate discount rate, which emerge as a result of undertaking the project or investment at the initial period prior to the commencement of a project or investment.
The computation of the net present value of future cash inflows of Project Marvel has already been done and the value is given as: $275, 000. The cash outflows which would occur are given as an initial investment of $200,000 and additional working capital of $25, 000. Total cash outflows which would occur in the current period thus amount to $225, 000. The net cash inflow from Project Marvel is $50, 000 ($275,000 - $225,000)
In October, Glazier Inc. reports 42,000 actual direct labor hours, and it incurs $194,000 of manufacturing overhead costs. Standard hours allowed for the work done is 40,000 hours. Glazier’s predetermined overhead rate is $5.00 per direct labor hour.
Compute the total manufacturing overhead variance. Identify whether the variance is favorable or unfavorable? Total manufacturing overhead variance $
Final answer:
The total manufacturing overhead variance is $-16,000, which is unfavorable.
Explanation:
To compute the total manufacturing overhead variance, we need to calculate the difference between the actual manufacturing overhead costs and the standard manufacturing overhead costs allowed. The actual manufacturing overhead costs are given as $194,000, while the standard manufacturing overhead costs allowed is $5.00 per direct labor hour multiplied by 42,000 actual direct labor hours, which equals $210,000. The total manufacturing overhead variance is the difference between these two amounts:
Total manufacturing overhead variance = Actual manufacturing overhead costs - Standard manufacturing overhead costs allowed = $194,000 - $210,000 = -$16,000
The total manufacturing overhead variance is unfavorable because the actual manufacturing overhead costs are lower than the standard manufacturing overhead costs allowed.
The total manufacturing overhead variance is $6,000, and it is favorable.
Explanation and Calculation
To compute the total manufacturing overhead variance, we need to compare the actual manufacturing overhead costs incurred with the applied manufacturing overhead costs based on the standard hours allowed for the work done.
Given Data:
- Actual direct labor hours: 42,000 hours
- Actual manufacturing overhead costs: $194,000
- Standard hours allowed for the work done: 40,000 hours
- Predetermined overhead rate: $5.00 per direct labor hour
Step-by-Step Calculation:
1. Calculate the Applied Overhead:
The applied overhead is based on the standard hours allowed for the actual work done.
[tex]\[ \text{Applied Overhead} = \text{Standard Hours} \times \text{Predetermined Overhead Rate} \][/tex]
[tex]\[ \text{Applied Overhead} = 40,000 \, \text{hours} \times \$5.00 \, \text{per hour} = \$200,000 \][/tex]
2. Calculate the Total Overhead Variance:
The total overhead variance is the difference between the actual overhead costs incurred and the applied overhead.
[tex]\[ \text{Total Overhead Variance} = \text{Actual Overhead} - \text{Applied Overhead} \][/tex]
[tex]\[ \text{Total Overhead Variance} = \$194,000 - \$200,000 = -\$6,000 \][/tex]
Since the variance is negative, it indicates that the actual overhead costs were less than the applied overhead costs, meaning the variance is favorable.
Consider an economy with two types of firms, S and I. S firms always move together, but I firms
move independently of each other. For both types of firms there is a 20% probability that they
will have a 20% return and a 80% probability that they will have a -30% return.
What is the expected return for an individual firm?
A) -12%
B) -20%
C) 10%
D) 20%
Answer:
option (B) -20%
Explanation:
Data provided in the question:
Return Probability
20% 20%
-30% 80%
Now,
Expected return for an individual firm = ∑ (Return × Probability)
or
Expected return for an individual firm = ( 0.20 × 0.20 ) + ( -0.30 × 0.80 )
or
Expected return for an individual firm = 0.04 + ( - 0.24)
or
Expected return for an individual firm = - 0.2
or
Expected return for an individual firm = -20%
Hence,
The correct answer is option (B) -20%
Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November.Sales (5,700 units) $ 319,200Variable expenses 188,100Contribution margin 131,100Fixed expenses 106,500Net operating income $ 24,600If the company sells 5,300 units, its net operating income should be closest to:Multiple Choice$24,600$2,200$22,874$15,400
Answer:
$15,400
Explanation:
Please see attachment
Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one cup of tea, one biscuit, and one magazine. In year one, the basket costs $10.00.1. In year two, the price of the same basket is $9.00. Is this called inflation or deflation? What is the annual rate of it?2. How many baskets can $80.00 buy in year one? How many in year two?3. What happens to the value of money if the price level falls?
Answer:
1. Deflation
-10%
2. In year 1 - 8 baskets
In year 2 - 8.9 baskets
3. The value of money increases
Explanation:
Deflation is a fall in general price levels. The price fell from $10 to $9. It indicates deflation has occured.
Inflation is a rise in price level.
Annual rate = (current year price - previous year price ) / previous year price
(9 - 10) / 10 = -0.1 = -10%
The annual change is negative because price level fell.
$80 would buy $80/$10 = 8 baskets of goods in year 1
$80 Will buy $80/$9 = 8.9 baskets of goods in year 2.
A fall in price levels increases the value of money because less money can buy the same basket of goods. Therefore, the purchasing power of money increases.
The price level is decreasing, which is called deflation. The annual rate of deflation is 10%. $80.00 can buy approximately 8 baskets of goods in year one and 8.89 baskets of goods in year two. The value of money increases when the price level falls.
Explanation:In this scenario, the price level is decreasing from year one to year two, which is called deflation. The annual rate of deflation can be calculated by finding the percentage change in the price level. In this case, the percentage change is 10%.
In year one, $80.00 can buy 8 baskets of goods. In year two, $80.00 can buy approximately 8.89 baskets of goods. When the price level falls, the value of money increases. This means that each unit of currency can purchase more goods and services.
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Division A of Huskie, Inc. has operating data as follows: Capacity 20,000 units Selling price $80 per unit Variable costs $40 per unit Fixed costs $20 per unit Division B wants to purchase units from Division A. If Division A agrees to sell units to Division B, A's variable costs will be $5 less per unit. If Division A has capacity available to meet B's requirements, what is the minimum price it should charge? A. $30 B. $35 C. $40 D. $60
Answer:
B. $35
Explanation:
While making these kind of decisions relevant cost is to be considered.
Since there is an idle capacity lying to meet the demand of Division B, the fixed cost shall be avoided while making this decision.
Thus, concerned cost is variable cost. Since the company is supplying in its own company to other division there might be some avoidable cost in the nature of variable, as for example: transportation, selling and marketing.
Here it is $5
Thus, relevant variable cost = $40 - $5 = $35
This represents the correct option.
Penn Company has a division that manufactures a component that sells for $ 50 and has variable costs of $ 25 and fixed costs of $ 10$ Another division wants to purchase the component. What is the minimum transfer price if the division is operating at capacity?
A $10
B. $25
C. $35
D. $50
Answer:
C. $35
Explanation:
Given;
Selling price of the manufactured component = $ 50
Variable costs of production = $ 25
Fixed costs of Production = $ 10
If the component is to be sold to another division, the minimum sales price is equivalent to the total production cost of the transferring division
= $ 25 + $ 10
= $ 35
The minimum transfer price if the division is operating at capacity is $35.
Misty McDougall is the manager of the Zachary Bagel Shop. The corporate office had budgeted her store to sell 2,900 ham sandwiches during the week beginning July 17. Each sandwich was expected to contain 7 ounces of ham. During the week of July 17, the store actually sold 3,400 sandwiches and used 24,400 ounces of ham. The standard cost of ham is $0.20 per ounce. The variance report from company headquarters showed an unfavorable materials usage variance of $820. Ms. McDougall thought the variance was too high, but she had no accounting background and did not know how to register a proper objection.
Answer:
The report is incorrect the direct materials quantity variance should be unvaforable for 120 dolllars not 820.
Explanation:
We are going to verify the materials quantity variance:
[tex](standard\:quantity-actual\:quantity) \times standard \: cost = DM \: quantity \: variance[/tex]
std quantity 23,800.00 (3,400 sandwiches x 7 ounces each)
actual quantity 24,400.00
std cost $0.20
[tex](23,800 - 24,400) \times 0.20 = DM \: quantity \: variance[/tex]
difference -600.00
We use 600 extra ounces thus, the variance will be negative
We multiply by each ounce standard cost to obtain the quantity variance:
quantity variance $(120.00)
The manager is concerned about the high materials usage variance in the bagel shop.
Explanation:The subject of this question is Business and the grade level is College.
The manager of the Zachary Bagel Shop is concerned about the unfavorable materials usage variance. In this case, the variance refers to the difference between the standard usage (based on the budget) and the actual usage of ham during the week. The $820 unfavorable variance indicates that more ham was used than budgeted.
To address the high variance, the manager can investigate the reasons for the increase in ham usage. It could be due to factors such as incorrect portion sizes, wastage, or theft. By identifying the source of the variance, the manager can take corrective actions to minimize future variances and align with the budgeted costs.
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Product B has revenue of $39,500, variable cost of goods sold of $25,500, variable selling expenses of $16,500, and fixed costs of $15,000, creating a loss from operations of $17,500.
Required:
1. Prepare a differential analysis as of May 9 to determine if Product B should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.
2.
Determine if Product B should be continued (Alternative 1) or discontinued (Alternative 2).
Amount DescriptionsFixed
Income (loss)
Revenue
Total costs
Variable cost of goods sold
Variable selling and administrative expenses
1. Prepare a differential analysis as of May 9 to determine if Product B should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.
Differential Analysis
Continue Product B (Alternative 1) or Discontinue Product B (Alternative 2)
May 9, 2016
1
Continue Product B
Discontinue Product B
Differential Effect on Income
2
(Alternative 1)
(Alternative 2)
(Alternative 2)
3
4
Costs:
5
6
7
8
9
2. Determine if Product B should be continued (Alternative 1) or discontinued (Alternative 2).
The company is indifferent since the result is the same regardless of which alternative is chosen.
Discontinued
Continued
Answer:
We should discontinue Product B
Explanation:
We should check if Product B generates a contribution or not:
We subtract from the sales revenues the variable cost:
revenue 39,500
variable cost of goods sold (25,500)
variable selling expenses (16,500)
Contribution (2,500)
As the contribution is negative, we should discontinue Product B as is less expensevely to stop production than continue.
In 2019, Alliant Corporation acquired Centerpoint Inc. for $548 million, of which $98 million was allocated to goodwill. At the end of 2021, management has provided the following information for a required goodwill impairment test: Fair value of Centerpoint Inc. $ 402 million Book value of Centerpoint’s net assets (excluding goodwill) 352 million Book value of Centerpoint’s net assets (including goodwill) 450 million Required: 1. Determine the amount of the impairment loss. (Negative amount should be indicated by a minus sign. Enter your answer in millions (i.e., 10,000,000 should be entered as 10)).
Answer:
$48 million
Explanation:
In this scenario, we compare the values between book value including goodwill and the fair value of machinery, the difference would be the loss on impairment of the asset
In mathematically,
= Book value including goodwill - fair value
= $450 million - $402 million
= $48 million
All other information which is given is not relevant. Hence, ignored it
The amount of the impairment loss is $48 million.
Explanation:In order to determine the amount of the impairment loss, we need to compare the fair value of Centerpoint Inc. with its book value. The fair value of Centerpoint Inc. is $402 million, while its book value (including goodwill) is $450 million. The difference between the fair value and the book value is $48 million. However, since the fair value is lower than the book value, an impairment loss needs to be recognized.
To calculate the impairment loss, we subtract the fair value of Centerpoint Inc. from its book value (including goodwill). Therefore, the amount of the impairment loss is $450 million - $402 million = $48 million.
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Consider an economy with two types of firms, S and I. S firms always move together, but I firms
move independently of each other. For both types of firms there is a 40% probability that the
firm will have a 20% return and a 60% probability that the firm will have a -30% return.
The standard deviation for the return on an individual firm is closest to ________.
A) 24.49%
B) -10.00%
C) 12.25%
D) 9.80%
Answer:
option (A) 24.49%
Explanation:
Data provided in the question:
Return : 20% -30%
Probability : 40% 60%
Now,
Expected return = ∑ (Return × Probability)
= ( 0.20 × 0.40 ) + (-0.30 × 0.60)
= 0.08 - 0.18
= - 0.10 or - 10%
Thus,
Variance = ∑ [ Probability × (Return - Expected return)² ]
= 0.40 × ( 0.20 - ( -0.10))² + 0.60 × ( -0.30 - ( -0.10))²
= ( 0.40 × 0.09 ) + ( 0.60 × 0.04 )
= 0.036 + 0.024
= 0.06
Also,
Standard deviation = √variance
thus,
Standard deviation = √0.06
or
Standard deviation = 0.2449 or 24.49%
Hence,
the correct answer is option (A) 24.49%
The following information pertains to Travis Concrete: Sales revenue $ 1,500,000 Gross margin 600,000 Income 90,000 Invested capital 450,000 The company's imputed interest rate is 8%. The capital turnover is:
Answer:
The capital turnover is: 3.33
Explanation:
The capital turnover ratio is also referred to annual sales of a business to the total amount of its stockholders' equity. It indicates a company's effectiveness in using its capital to generate revenue.
The capital turnover ratio is calculated by the following formula:
The capital turnover = Net Annual Sales /Average amount of working capital
In where:
Average amount of working capital = Current assets - Current abilities
In Travis Concrete:
The capital turnover = Sales revenue/Invested capital = $1,500,000/$450,000 = 3.33
The capital turnover for Travis Concrete is 3.33, calculated by dividing the sales revenue by the invested capital.
Capital Turnover is calculated by dividing the sales revenue by the invested capital. In this case, it would be $1,500,000 / $450,000, resulting in a capital turnover of 3.33.
What is the best indicator that a training and development program was worth the investment?
a. long-term behavioral change
b. effective recruiting and onboarding
c. attentive participants
d. perfect test scores
e. strong negative reactions and resistance when training starts
Answer: It is answer B.
Explanation:
I done this in class and my teacher check it