Answer:
FV = 2,621,048.23
Explanation:
we will calcualte the future value of an annuity with an geometric progression:
[tex]\frac{(1+r)^{n} -(1+q)^{n}}{r - q} = FV[/tex]
g 0.03
r 0.092
C 5,356 ( we will save next year (52,000 x 1.03) the 10% )
n 39 (we start saving next year)
[tex]\frac{(1+0.092)^{39} -(1+0.03)^{39}}{0.092 - 0.03} = FV[/tex]
FV = 2,400,227.319
As we deposit at the first day of the year this will be an annuity-due so we will multiply by (1 +r)
FV = 2,621,048.23
Answer:
the answer is $2 830 830. 09
Explanation:
The first thing to calculate is the growth of salary o fwhich it grows by 3%
$52000*1.03=53560
The for the first year of saving we calculate the portion to be saved
53560*0.1= 5356
in order to find the future value of savings we will use the pv of perpetuity to find the value of the deposit today
PV = C{(1/(r-g)) - (1/(r-g)*(1+g)/(1+r)^t}
=5356*{(1/0.092-0.03) - (1/(0.092-0.03)*(1.03)/(1.092)^40}
=83754.52289
Then from the PV we can calculate the future value as
FV = 83754.52289 *(1.092)^40
=2 830 830 .09
Matilda just graduated from college. In order to devote all her efforts to college, she didn't hold a job. She is going to tour around the country on her motorcycle for a month before she starts looking for work. Other things the same, the unemployment rate...
a. increases, and the labor-force participation rate is unaffected.
b. and the labor-force participation rate both increase.
c. and the labor-force participation rate are both unaffected.
d. increases, and the labor-force participation rate decreases.
Answer:
d) increases, and the labor -force participation rate decreases
Luther Inc., has 3,000 shares of 6%, $50 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2013, and December 31, 2012. The board of directors declared and paid a $7,500 dividend in 2012. In 2013, $36,000 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2013?
a. $25,500
b. $18,000
c. $ 10,500
d. $ 9,000
Answer:
c. $ 10,500
Explanation:
3,000 shares at $50 yields 6% cumulative = dividends per year
3,000 x 50 x 0.06 = $9,000 dividends per year
dividends for 2012:
7,500 - 9,000 preferred dividends = -1,500
The preferred stock accumulated 1,500 dividend to recieve in future periods
dividends for 2013:
36,000 - 9,000 preferred for 2013 - 1,500 accumulate = 25,500 available for common stock
The preferred stock reviee 9,000 + 1,500 = 10,500 for 2013
You plan to purchase an $110,000 house using a 15-year mortgage obtained from your local bank. The mortgage rate offered to you is 5.5 percent. You will make a down payment of 10 percent of the purchase price. a. Calculate your monthly payments on this mortgage. b. Calculate the amount of interest and, separately, principal paid in the 100th payment. c. Calculate the amount of interest and, separately, principal paid in the 130th payment. d. Calculate the amount of interest paid over the life of this mortgage.
Answer:
Cuota: 808.91
100th cuota:
Amortization 561.07
Interest 247.84
130th cuota:
Amortization 561.07
Interest 247.84
Total Inerest:
$ 46,603.80
Explanation:
We will first calculate the mortgage payment. which is the PTM of the present value of an ordinary annuity
[tex]PV \div \frac{1-(1+r)^{-time} }{rate} = C\\[/tex]
PV $99,000.00 (110,000 - 10% down payment)
time 180 (15 years x 12 month per year)
rate 0.004583333 (0.055 divided by 12 month per year
[tex]99,000 \times \frac{1-(1+0.0045833)^{-180} }{0.0045833} = C\\[/tex]
C $ 808.91
Now we will calculate "t" which is the amortization ofthe first period:
Cuota - Interest = t
interest: 99,000 x 0.00548333 = 453.75
808.91 - 453.75 = 355.16
Now will calculatize this by 100 period
and by 130 period to get the amortization in each k period.
[tex]t\: (1+ r)^{k} = Amortization_k[/tex]
t = 355.16
k = 100
rate 0.00458
[tex]355.16 \: (1+ 0.0045833)^{100} = Amortization_{100}[/tex]
Amortization 561.07
For interest we subtract from the cuota:
808.91 - 561.07 = 247.84
We repeat for the 130th payment:
[tex]355.16 \: (1+ 0.00458333333333333)^{130} = Amortization_{130}[/tex]
Amortization 643.58
808.91 - 561.07 = 247.84 interest
Total Interest:
Cuota x total payment - principal
808.91 x 180 - 99,000 = $ 46,603.80
You have a biased coin that lands heads 10% of the time. You win $1000 every time the coin lands head and lose 50 every time the coin lands tails. You start with $0 it is possible to have ne ative balance 1 you throw the coin 100 times, what is: The maximum balance you could finish with? 2. The minimum balance you could finish with? 3. Your expected end balance? 100,000
Answer:
1. Maximum balance = $100,000
2. Minimum balance = $(-5,000)
3. Expected balance = $55
Explanation:
Data:
PW = Probability Win = 10% = 0.10
PL = Probability Lose = 100% - 10% = 90% = 0.90
WA = Winning Amount = $1,000
LA = Losing Amount = ($50)
L = Launchs = 100
Calculations:
1. Maximum balance = L x WA = 100 x $1,000 = $100,000
2. Minimum balance = L x LA = 100 x $(-50) = $(-5,000)
3. Expected balance = (PW x WA) + (PLxLA) = (0.10 x $1,000) + (0.90 x $(-50)) = $100 - $45 = $55
Hope this helps!
Cheryl Alder operates her own catering service. Summary financial data for March are presented in the following equation form. Each line, designated by a number, indicates the effect of a transaction on the balance sheet. Each increase and decrease in retained earnings, except transaction (4), affects net income. Cash + Land = Liabilities + Common Stock + Retained EarningsBal. 40,000 100,000 16,000 24,000 100,000 (1) 28,000 28,000 (2) (20,000) 20,000(3) (18,000) (18,000)(4) (1,000) (1,000)Bal. 29,000 120,000 16,000 24,000 109,000(a) Enter the amount for each transaction described below.(1) Provided catering services for cash $ _____(2) Purchase of land for cash $____(3) Payment of expenses $ ____(4) Payment of cash dividends $ ____
Answer:
1. $28,000
2. $20,000
3. $18,000
4. $1,000
Explanation:
(1) Provided catering services for cash $28,000
It affects the cash balance negatively while affecting the retained earning balance positively.
(2) Purchase of land for cash $20,000
It affects the cash balance negatively while affecting the land balance positively.
(3) Payment of expenses $18,000
It affects the cash balance negatively while affecting the retained earning balance positively.
(4) Payment of cash dividends $1,000
It affects the cash balance negatively while affecting the retained earning balance positively.
Final answer:
The financial transactions are identified through changes in the balance sheet, resulting in $28,000 for catering services provided, $20,000 for purchase of land, $18,000 for payment of expenses, and $1,000 for cash dividends paid.
Explanation:
The student's question is asking for the amounts for each financial transaction which affected Cheryl Alder's catering service balance sheet for March. To analyze these transactions, we begin with the original balance of assets, liabilities, and equity and apply each transaction to derive the new balance.
Provided catering services for cash: This amount is equal to the increase in cash due to services provided. Since cash increased by $28,000 and there are no other effects on liabilities or stock, the full amount of $28,000 was for catering services.
Purchase of land for cash: This is seen as a decrease in cash and an increase in land by the same amount, thus the purchase of land for cash is $20,000.
Payment of expenses: The payment of expenses reduced cash by $18,000. This transaction reflects an expense that reduces retained earnings, thereby affecting net income which is seen in the balance of retained earnings.
Payment of cash dividends: Cash dividends resulted in a reduction of cash and retained earnings by $1,000, indicating that the cash dividend paid was $1,000.
Suppose that the total expenditures for a typical household in 2000 equaled $5,500 per month, while the cost of purchasing exactly the same items in 2005 was $6,875. If 2000 is the base year, the CPI for the year 2005 equals:
A. 0.80
B. 1.00
C. 1.20
D. 1.25
Answer:
d. 1.25
Explanation:
The consumer price index is a ratio that expresses the increase or decrease of the price of a good or service. Is obtained by the division of the most recent year. between the base year.
Household 2000 --> 5.500
Household 2005 ---> 6.875
CPI = 6875/5500 = 1.25
Final answer:
The CPI for the year 2005, using 2000 as the base year, is calculated as 125, reflecting a 25% increase in price levels over this time period.
Explanation:
The question concerns the calculation of the Consumer Price Index (CPI) for the year 2005 using 2000 as the base year. The formula to find the CPI in a given year is the current cost of the basket of goods and services divided by the base-period cost of that same basket. In this case, the base-period (year 2000) cost is $5,500 and the year 2005 cost is $6,875. Applying this to the formula gives us:
CPI for 2005 = ($6,875 / $5,500) × 100 = 1.25 × 100 = 125.
Therefore, the CPI for the year 2005 is 125 when using 2000 as the base year, which indicates a 25% increase in the price level since the base year. The correct answer is option D: 1.25.
Hittle Company is considering two mutually exclusive projects X and Y. The cost of capital for each project is 10%. The projects’ expected net cash flows are as follows: Year Project X Project Y 0 -$10,000 -$10,000 1 4,500 3,500 2 3,000 3,500 3 3,000 3500 4 3000 3500 5 3600 3500 What are the correct NPVs of projects X and Y, respectively?
Answer:
Project X:
NPV= $3108,55
Project Y
NPV= $3267,75
Explanation:
Giving the following information, we need to find the net present values of both projects:
Project X:
i=0,10
Cash flow=
0= -$10,000
1= 4,500
2= 3,000
3= 3,000
4= 3000
5= 3600
Project Y:
i= 0,10
Cash flow=
0 = -$10,000
1=3,500
2=3,500
3=3500
4=3500
5=3500
The NPV is the difference between the present value of cash inflows and the present value of cash outflows over a period of time.
The formula is:
n
NPV= ∑ [Rt/(1+i)^t]t-1
where:
R t =Net cash inflow-outflows during a single period t
i=Discount rate of return that could be earned in alternative investments
t=Number of timer periods
In this exercise:
Project X:
NPV= -10000 + (4500/1,10^1) + (3000/1,10^2) + (3000/1,10^3) + (3000/1,10^4) + (3600/1,10^5)= $3108,55
Project Y
NPV= $3267,75
Income Statement. A firm’s income statement included the following data. The firm’s average tax rate was 20%. (LO3-1) Cost of goods sold $8,000 Income taxes paid $2,000 Administrative expenses $3,000 Interest expense $1,000 Depreciation $1,000 What was the firm’s net income? What must have been the firm’s revenues? What was EBIT?
Answer:
Revenues: $23.000
Net Income : $8.000
EBIT: $11.000
Please see details below:
Explanation:
Income Statement 2017
Revenues $23.000
Cost of goods sold -$8.000
Depreciation -$1.000
Gross Profit $14.000
Administrative Expenses -$3.000
Net Income Before Taxes and Int $11.000
Interest Expenses -$1.000
Net Income Before Taxes $10.000
Tax RATE 20% -$2.000
Net Income after Taxes $8.000
Gasoline prices typically rise during the summer, a time of heavy tourist traffic. A "street talk" feature on a radio station sought tourist reaction to higher gasoline prices. Here was one response: "I don’t like ‘em [the higher prices] much. I think the gas companies just use any excuse to jack up prices, and they’re doing it again now." How does this tourist’s perspective differ from that of economists who use the model of demand and supply?
The tourist views higher gasoline prices as unfair manipulation by gas companies. However, economists see it as a natural outcome of increased demand during the tourist season based on the principle of supply and demand.
Explanation:The tourist's perspective is more intuitive and emotional, based on their personal experience and judgement. They believe that gas companies are taking advantage of a situation to increase prices unfairly. However, economists using the model of supply and demand would look at this situation differently. They would argue that during the summer, the demand for gasoline increases due to increased travel. As demand increases and supply remains somewhat steady, prices naturally rise to balance the two. This reflects the basic principle of supply and demand, and is not inherently about companies intentionally raising prices.
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Reactive Power Generation has the following capital structure. Its corporate tax rate is 40%. Security Market Value Required Rate of Return Debt $ 30 million 4 % Preferred stock 30 million 6 Common stock 40 million 10 What is its WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Answer:
The WACC is 6.52%
Explanation:
The formula to compute WACC is shown below:
= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of preferred stock) × (cost of preferred stock) + (Weightage of common stock) × (cost of common stock)
where,
Weighted of debt = Debt ÷ total firm
The total firm includes debt, preferred stock, and the equity which equals to
= $30 million + $30 million + $40 million
= $100 million
So, Weighted of debt = ($30 million ÷ $100 million) =0.3
So, the weight of preferred stock = (Preferred stock ÷ total firm)
= $30 million ÷ $100 million
= 0.3
And, the weighted of common stock = (Common stock ÷ total firm)
= $40 million ÷ $100 million
= 0.4
Now put these values to the above formula
So, the value would equal to
= (0.3 × 4%) × ( 1 - 40%) + (0.3 × 6%) + (0.4 × 10%)
= 0.72% + 1.8% + 4%
= 6.52%
A grocery store manager must decide whether to buy four rug cleaners to rent to customers. The manager estimates that the first would yield $200 a year, the second $150, the third $75, and the fourth $20. If the interest rate is 12 percent and each rug cleaner costs $500, how many should the manager buy?
Answer:
It will purchase three.
Explanation:
the return will be:
income / investment
1ST rug cleaners: 200/500 = 40% return
2 rug cleaners: 150/500 = 30% return
3 rug cleaners: 75/500 = 15% return
4 rug cleaners: 20/500 = 4% return
As the current market rate is 12% if the forth rug cleaner is pruchased it will not turn out profitable.
. Based on the following data, Accounts payable…………………………………………………..... $62,000 Accounts receivable…………………………………………………. 100,000 Cash………………………………………………………………....... 30,000 Inventory………………………………………………………………. 138,000 Land………………………………………………………………….… 160,000 Common Stock ………………………………………………………. 200,000 Revenue………………………………………………………………. 80,000 Dividends……………………………………………………………… 56,000 Expenses……………………………………………………………… 40,000 what is the amount of total assets?
Answer: $428,000
Explanation:
Given that,
Accounts payable = $62,000
Accounts receivable = 100,000
Cash = 30,000
Inventory = 138,000
Land = 160,000
Common Stock = 200,000
Revenue = 80,000
Dividends = 56,000
Expenses = 40,000
Total assets = Accounts receivable + Cash + Inventory + Land
= 100,000 + 30,000 + 138,000 + 160,000
= $428,000
Kline Construction is an all-equity firm that has projected perpetual EBIT of $376,000. The current cost of equity is 13.7 percent and the tax rate is 40 percent. The company is in the process of issuing $992,000 worth of perpetual bonds with an annual coupon rate of 5.5 percent at par. What is the value of the levered firm?
Answer:
$2,043,515.33
Explanation:
EBIT = $376,000
Current cost of equity = 13.7%
Tax rate = 40%
Worth of stocks issued = $992,000
Coupon rate = 5.5%
Thus,
Amount of tax = 0.40 × EBIT
or
The amount of tax = $150,400
Therefore,
EAT = EBIT - tax
or
EAT = $376,000 - $150,400
or
EAT = $225,600
Now,
Value of unlevered firm = [tex]\frac{\textup{EAT}}{\textup{Current cost of equity}}[/tex]
or
Value of unlevered firm = [tex]\frac{\textup{225600}}{\textup{0.137}}[/tex]
or
Value of unlevered firm = $1,646,715.33
Therefore, the value of levered firm = $1,646,715 + ( $992,000 × 40% )
or
The value of levered firm = $1,646,715.33 + ( $992,000 × 40% )
or
The value of levered firm = $2,043,515.33
Suppose that Italy and Germany both produce beer and cheese. Italy's opportunity cost of producing a pound of cheese is 5 barrels of beer while Germany's opportunity cost of producing a pound of cheese is 10 barrels of beer. By comparing the opportunity cost of producing cheese in the two countries, you can tell that has a comparative advantage in the production of cheese and has a comparative advantage in the production of beer. Suppose that Italy and Germany consider trading cheese and beer with each other. Italy can gain from specialization and trade as long as it receives more than of beer for each pound of cheese it exports to Germany. Similarly, Germany can gain from trade as long as it receives more than of cheese for each barrel of beer it exports to Italy. Based on your answer to the last question, which of the following prices of trade (that is, price of cheese in terms of beer) would allow both Germany and Italy to gain from trade? Check all that apply. 8 barrels of beer per pound of cheese 3 barrels of beer per pound of cheese 9 barrels of beer per pound of cheese 1 barrel of beer per pound of cheese
Explanation:
Italy's opportunity cost of producing a pound of cheese is
= 5 barrels of beer
Germany's opportunity cost of producing a pound of cheese is
= 10 barrels of beer
Italy's opportunity cost of producing a barrel of beer is
= [tex]\frac{1}{5}[/tex]
= 0.2
Germany's opportunity cost of producing a barrel of beer is
= [tex]\frac{1}{10}[/tex]
= 0.1
A country is said to be having a comparative advantage in producing a good if it can produce it at a lower opportunity cost.
Here, Italy has a lower opportunity cost of producing cheese. So we can say that it has a comparative advantage in making cheese.
Germany has a lower opportunity cost in producing beer so it has a comparative advantage in making beer.
Italy gains from trade as long as it earns more than 5 barrels of beer for each pound of cheese, which is its opportunity cost, from trade.
Germany gains from trade as long as it gains more than 0.1 pounds of cheese for each barrel of beer.
Trade prices will be 8 barrels of beer per pound of cheese and 9 barrels of beer per pound of cheese. Since Italy will want more than 5 barrels of beer, the other two options will not be accepted.
Fullerton Waste Management purchased land and a warehouse for $610,000. In addition to the purchase price, Fullerton made the following expenditures related to the acquisition: broker’s commission, $31,000; title insurance, $3,500; miscellaneous closing costs, $6,500. An independent appraisal estimates the fair values of the land and warehouse at $497,000 and $213,000, respectively.
Determine the amounts Fullerton should capitalize as the cost of the land and the building.
Capitalized cost of land = $
Capitalized cost of building = $
Answer:
Capitalized cost of land = $455,700
Capitalized cost of building = $ 195,300
Explanation:
All the costs of purchasing the land and warehouse should be capitalized so we first have to sum all the costs
Cost of land and warehouse $610,000
+
Brokers comission $31,000
+
title insurance $3,500
+
miscellaneous closing costs $6,500
------------------
Total cost to be capitalized $651,000
Then you must devide into cost of land and cost of building
For this we will use the independent appraisal estimates
Land $497,000/($497,000+$213,000)=0,7
Building $213,00/($497,000+$213,000)=0,3
Then Capitalized cost of land would be $651,000*0,7=$455,700
Capitalized cost of building would be $651,000*0,3=$195,300
The capitalized cost for Fullerton Waste Management's land acquisition is $459,138 and for the building is $191,862, calculated based on their respective fair values and the total acquisition cost.
Explanation:The capitalized costs for the land and building can be calculated by allocating the total acquisition costs based on the proportionate fair values of both the land and the building. In this case, Fullerton Waste Management has a total acquisition cost of $651,000 ($610,000 purchase price + $31,000 broker's commission + $3,500 title insurance + $6,500 closing costs). The fair value of the land is $497,000 and the total fair value of both is $710,000 ($497,000 + $213,000). Therefore, the capitalized cost for the land will be $459,138 [($497,000/$710,000)*$651,000] and for the building, it will be $191,862 [($213,000/$710,000)*$651,000].
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Tamarisk, Inc. has the following inventory data:
Nov. 1 Inventory 31 units @ $6.20 each
8 Purchase 125 units @ $6.70 each
17 Purchase 62 units @ $6.55 each
25 Purchase 94 units @ $6.90 each
A physical count of merchandise inventory on November 30 reveals that there are 104 units on hand. Cost of goods sold (rounded) under LIFO is
Answer:
Cost of goods sold (rounded) under LIFO is $1.403
Explanation:
Date Q Cost U.Cost Sold Inventory Cost
nov-01 31 192,2 6,2 0 31 0
nov-08 125 837,5 6,7 52 73 348
nov-17 62 406,1 6,55 62 0 406
nov-25 94 648,6 6,9 94 0 649
312 208 104 1403
Using the LIFO method, which considers the most recent purchases first, the cost of goods sold by Tamarisk, Inc. in November amounts to $1,403.10.
Explanation:The LIFO (Last In, First Out) method assumes that the most recently purchased inventory items are sold first. Since we are asked to find out the cost of goods sold (COGS), and there were 104 units left over at the end of November, it means that Tamarisk, Inc. must have sold the rest.
Initially, Tamarisk Inc. had 31 units, and then added 125 units, 62 units, and 94 units to its inventory. Hence, total units bought = 31 + 125 + 62 + 94 = 312 units. Since there are 104 units left, the company sold 312 - 104 = 208 units in November.
To calculate COGS using the LIFO method, we begin by taking the last purchase first (94 units at $6.90 each = $648.6). But, we have 208 - 94 = 114 units left to account for, so we move to the second last purchase (62 units at $6.55 each = $406.1). We still need to account for 114 - 62 = 52 units, so we pull these from the second purchase (52 units at $6.70 each = $348.4). Therefore, the total COGS under LIFO is $648.6 + $406.1 + $348.4 = $1,403.10.
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The trial balance for Windsor, Inc. appears as follows:
Windsor, Inc.
Trial Balance
December 31, 2017
Cash $230
Accounts Receivable 407
Prepaid Insurance 64
Supplies 140
Equipment 3120
Accumulated Depreciation, Equipment $470
Accounts Payable 300
Common Stock 940
Retained Earnings 1090
Service Revenue 2331
Salaries and Wages Expense 780
Rent Expense 390 0
$5131 $5131
If service for $137 had been performed but not billed, the adjusting entry to record this would include a:
Answer:
Explanation:
The adjusting entry is shown below:
Accounts receivable A/c Dr $137
To Service revenue $137
(Being service is performed)
When service is performed but not billed yet, we debit the accounts receivable account and credit the service revenue account as the amount is not yet received from the client so we do not debit the service revenue account.
Final answer:
The adjusting entry for services performed but not billed would include a debit to Accounts Receivable for $137 and a credit to Service Revenue for $137, which reflects earned revenue that is yet to be paid.
Explanation:
The student's question pertains to how to record an adjusting entry in Windsor, Inc.'s accounting records for services that have been performed but not yet billed by the end of the accounting period. An adjusting entry is made to ensure that the revenues and expenses are recognized in the period in which they are incurred, following the accrual basis of accounting. Since the service was performed but not billed, we need to recognize this revenue.
To record this adjusting entry, we would debit (increase) Accounts Receivable and credit (increase) Service Revenue. This reflects that the company has earned revenue but has not yet received the payment, thus increasing the amount owed by customers. The adjusting entry would be:
Debit Accounts Receivable: $137
Credit Service Revenue: $137
Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that was popular in the 1930s. The retro-look cycle would be sold for $15,000 and at that price, Thad estimates 300 units would be sold each year. The variable cost to produce and sell the cycles would be $11,250 per unit. The annual fixed
cost would be $1,012,500.
What is the break-even in unit sales?
What is the margin of safety in dollars (Omit the "$" sign in your response.)
Answer:
Instructions are listed below
Explanation:
Giving the following information:
Price= $15000
Q=300
The variable cost to produce and sell the cycles would be $11,250 per unit.
The annual fixed cost would be $1,012,500.
A)break-even point in units=fixed costs/contribution margin= 1012500/(15000-11250)= 270 units
B) margin of safety= budgeted sales - break-even sales
Margin of safety= 4500000-4050000= $450000
Thad Morgan's break-even point in unit sales for Western Hombre brand of cycle is 270 units. The margin of safety in dollars is $450,000.
Explanation:First, let's determine the break-even point in unit sales. The break-even point is reached when total cost equals total revenue. To calculate the break-even point, we need to divide the fixed costs by the contribution margin per unit. The contribution margin per unit is calculated as the selling price per unit minus the variable cost per unit. In this case, the selling price per unit is $15,000 and the variable cost per unit is $11,250. Thus, the contribution margin per unit is $15,000 - $11,250 = $3,750. The fixed costs are $1,012,500. So, the break-even point in unit sales is $1,012,500 / $3,750 = 270 units.
Second, let's calculate the margin of safety in dollars. The margin of safety measures the difference between the actual or projected sales and the sales at the break-even point. In this case, Thad estimates 300 units would be sold each year. Therefore, the projected sales in dollars are 300 units * $15,000/unit = $4,500,000. The sales at the break-even point would be 270 units * $15,000/unit = $4,050,000. Thus, the margin of safety in dollars is $4,500,000 - $4,050,000 = $450,000.
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Skysong, Inc. just began business and made the following four inventory purchases in June:
June 1 123 units $850
June 10 164 units 1280
June 15 164 units 1380
June 28 123 units 1080
$4590
A physical count of merchandise inventory (rounded to whole dollar) on June 30 reveals that there are 170 units on hand. The inventory method which results in the highest gross profit for June is
Answer:
The inventory method which results in the highest gross profit for June is FIFO
Explanation:
Month Units Cost U/cost LIFO E.INVEN. I.COST
jun-01 123 850 7 123 861 0
jun-10 164 1280 8 47 376 936
jun-15 164 1380 8 0 0 1312
jun-28 123 1080 9 0 0 1107
4590 170 1237 3355
FIFO E.INVEN. I.COST
7 0 0 861
8 0 0 1312
8 47 376 936
9 123 1107 0
170 1483 3109
Home Realty, Incorporated, has been operating for three years and is owned by three investors. J. Doe owns 60 percent of the total outstanding stock of 9,000 shares and is the managing executive in charge. On December 31, the following financial items for the entire year were determined: sales revenue, $236,000; salaries and wages expense, $111,000; interest expense, $7,700; advertising expenses, $9,725; and income tax expense, $19,900. Also during the year, the company declared and paid the owners dividends amounting to $17,000. Prepare the company’s income statement.
Answer:
Net profit= $87675
Explanation:
An income statement is one of the three important financial statements used for reporting a company's financial performance over a specific accounting period. The income statement focuses on the four key items - revenue, expenses, gains, and losses. It does not cover receipts (money received by the business) or the cash payments/disbursements (money paid by the business).
It follows the general structures:
Revenues (+)
Operating Revenue
Non-Operating Revenue
Total
Expenses (-)
Primary Activity Expenses
Secondary Activity Expenses
Total
Gains (+)
Losses (-)
Net income/loss
In this exercise:
Total revenues=$236000
Expenses:
salaries=$111000
Advertising=$9725
Interest=7700
Total Expenses=$128425
Taxes= $19900
Net profit= $87675
Note: dividends shouldn't be included in the Income Statement
The income statement for Home Realty, Incorporated shows a net income of $88,675, calculated by subtracting the sum of salaries, interest, advertising expenses, and income tax from the total sales revenue of $236,000.
Explanation:The student is required to prepare an income statement for Home Realty, Incorporated, based on the financial items provided. An income statement summarizes the revenues, expenses, and profits over a specific period. The following information helps create the income statement:
Sales Revenue: $236,000Salaries and Wages Expense: $111,000Interest Expense: $7,700Advertising Expenses: $9,725Income Tax Expense: $19,900The net income is calculated as:
Total Revenues - Total Expenses = Net Income
Sales Revenue: $236,000
- Salaries and Wages: $111,000
- Interest Expense: $7,700
- Advertising Expenses: $9,725
- Income Tax Expense: $19,900
Net Income: $236,000 - ($111,000 + $7,700 + $9,725 + $19,900) = $88,675
Dividends paid to the owners are not included in the income statement since they are distributions of profit, not business expenses.
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At the beginning of the year, Smith, INc., budgeted the following: Units: 10,000 Sales: $100,000 Total variable expenses: $ 60,000 Total fixed expenses: $ 20,000 Variable factory overhead $ 30,000 Fixed factory overhead: $ 10,000 There were no beginning inventories. At the end of the year, no work was in process, total factory overhead incurred was $39,500, and underapplied factory overhead was $1,500. Factory overhead was applied on the basis of budgeted unit production. How many units were produced this year?
To determine the number of units produced by Smith, Inc., it was calculated that the total applied factory overhead was $38,000, by subtracting the underapplied overhead from the total overhead incurred. By dividing this amount by the standard overhead rate of $4 per unit based on the budgeted production, it was found that 9,500 units were produced.
Explanation:To calculate how many units were produced this year by Smith, Inc., we need to consider the total factory overhead applied and the underapplied factory overhead. The total factory overhead applied is based on the budgeted unit production, which consists of both variable and fixed components.
According to the information provided, variable factory overhead was budgeted at $30,000 and fixed factory overhead was budgeted at $10,000, totaling $40,000 for the factory overhead based on the budgeted production of 10,000 units. This gives us a standard overhead rate of $4 per unit (i.e., $40,000 ÷ 10,000 units).
At the end of the year, the actual total factory overhead incurred was $39,500. Additionally, there was an underapplied factory overhead of $1,500, indicating that the overhead costs applied to the products were less than the actual overhead incurred. Therefore, the total applied factory overhead can be calculated by subtracting the underapplied overhead from the total overhead incurred, which equals $38,000 ($39,500 - $1,500).
To find the number of units produced, we divide this total applied overhead by the standard overhead rate of $4 per unit. This gives us 9,500 units produced (i.e., $38,000 ÷ $4 per unit).
Jenna decides to see a movie that costs $7 for the ticket and has an opportunity cost of $20. After the movie, she says to one of her friends that the movie was not worth it. Apparently:
A. Jenna failed to apply the cost-benefit model to her decision.
B. Jenna was not rational.
C. Jenna overestimated the benefits of the movie.
D. Jenna underestimated the benefits of the movie.
Answer:
The correct answer is option C.
Explanation:
The cost of the movie ticket is $7.
The opportunity cost involved is $20.
The total cost of the movie will thus be $27.
Jenna would have thought that the benefit of watching the movie would be worth $27 at least.
But later she said that the movie was not worth it. This means that the cost incurred was higher than the benefits earned.
This implies that Jenna overestimated the benefits of watching the movie.
If Dominion Bank also pays 3.25% annual interest, compounded daily. If you had the following deposits and withdrawals, calculate the amount of interst you would have earned at Dominoin bank during the month of March. (March has 31 days)DATE ACCOUNT ACTIVITY BALANCEMarch 1 beginning balance $6,500March 16 withdraw $1,500 ????March 28 deposit $700 ????
Answer:
It would have earned 15.91 dollars of interest
Explanation:
We will calcualte for compounding at each moment:
First, we will calculate for $6,500 for March 1st to March 15th:
Then, from March 16th to march 27th we calculate for $5,000 + accrued interest of the peri
and from March 28th to 31th we calcualte $5,700 + accrued interest
[tex]Principal (1 + \frac{r}{m} )^{n \times m} = Amount[/tex]
n = 15/365 days
m = 365
r = 0.0325
[tex]6,500 (1 + \frac{0.0325}{365} )^{15/365 \times 365} = Amount[/tex]
6508.69
Then we withdraw 1,500
And we calcualte for hte period marchth to March 27th for the currnet value: 5,008.69
[tex]5,008.69 (1 + \frac{0.0325}{365} )^{11/365 \times 365} = Amount[/tex]
Amount: 5,013.60
Then we deposit 700 and calcualte the rest of the month:
[tex]5,713.60 (1 + \frac{0.0325}{365} )^{11/365 \times 365} = Amount[/tex]
Amount: 5,715.64
We can now calcualtethe interest earned:
6,508.96 - 6,500 = 8.96
5,013.60 - 5,008.69 = 4.91
5,715.64 - 5,713.60 = 2.04
total interest = 15.91
Final answer:
To calculate the interest earned at Dominion Bank with a 3.25% annual interest compounded daily for various account balances in March, use the formula for daily compounding interest separately for each period: initial 15 days, following 12 days after a withdrawal, and final 3 days after a deposit.
Explanation:
The question asks to calculate the interest earned in the month of March at Dominion Bank, which pays 3.25% annual interest compounded daily, with several account activities involved. The balance changes due to withdrawals and deposits within the month, making it a situation where daily compounding interest needs to be calculated for different balance amounts over varying periods within a single month.
Calculating daily compounded interest, the formula to use is P(t) = P(0) * (1 + r/365)365t, where P(t) is the future balance, P(0) is the initial balance, r is the annual interest rate, and t is the time in years. For parts of a year, t is a fraction.
For March 1-15, the balance is $6,500 for 15 days.
After the withdrawal on March 16, the new balance is $5,000 ($6,500 - $1,500), held for 12 days until the deposit on March 28.
The final balance, after the deposit on March 28, is $5,700 ($5,000 + $700) for the remaining 3 days of March.
The following data apply to the provision of psychological testing services: Sales price per unit (1 unit = 1 test plus feedback to client) $ 320 Fixed costs (per month): Selling and administration 22,000 Production overhead (e.g., rent of testing facilities) 15,000 Variable costs (per test): Labor for oversight and feedback 160 Outsourced test analysis 21 Materials used in testing 6 Production overhead 8 Selling and administration (e.g., scheduling and billing) 10 Number of tests per month 2,000 tests Required: Calculate the amount for each of the following (one unit = one test) if the number of tests is 2,000 per month. Also calculate if the number of tests decreases to 1,250 per month. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.)
Answer:
2,000 test
Revenues 2,000*$320=$640,000
Variable costs 2000*$205 ($160+$21+$6+$8+$10)=$410,000
Fixed costs=$37,000 ($22,000+$15,000)
Income =$193,000
1,250 test
Revenues 1,250*$320=$400,000
Variable costs 1,250*$205 ($160+$21+$6+$8+$10)=$256,250
Fixed costs=$37,000 ($22,000+$15,000)
Income =$106,750
Explanation:
These calculations provide the financial performance of the psychological testing services for both 2,000 and 1,250 tests per month.
When the number of tests is 2,000 per month, the following amounts are calculated:
1. Total revenue: $640,000
2. Total variable costs: $406,000
3. Contribution margin: $234,000
4. Total costs: $376,000
5. Operating income: $264,000
When the number of tests decreases to 1,250 per month, the following amounts are calculated:
1. Total revenue: $400,000
2. Total variable costs: $253,750
3. Contribution margin: $146,250
4. Total costs: $351,250
5. Operating income: $48,750
First, we calculate the amounts for 2,000 tests per month:
1. Total revenue is calculated by multiplying the sales price per unit by the number of units sold:
Total revenue = $320 [tex]\times[/tex] 2,000 = $640,000
2. Total variable costs are calculated by summing the variable costs per test and then multiplying by the number of units sold:
Total variable costs = ($160 + $21 + $6 + $8 + $10) [tex]\times[/tex] 2,000 = $205 [tex]\times[/tex] 2,000 = $406,000
3. Contribution margin is the difference between total revenue and total variable costs:
Contribution margin = Total revenue - Total variable costs = $640,000 - $406,000 = $234,000
4. Total costs are the sum of fixed costs and total variable costs:
Total costs = Fixed costs (selling and administration + production overhead) + Total variable costs
Total costs = $22,000 + $15,000 + $406,000 = $376,000
5. Operating income is the difference between contribution margin and fixed costs:
Operating income = Contribution margin - Fixed costs = $234,000 - ($22,000 + $15,000) = $264,000
Next, we calculate the amounts for 1,250 tests per month,
1. Total revenue is calculated by multiplying the sales price per unit by the new number of units sold:
Total revenue = $320 [tex]\times[/tex] 1,250 = $400,000
2. Total variable costs are calculated by summing the variable costs per test and then multiplying by the new number of units sold:
Total variable costs = ($160 + $21 + $6 + $8 + $10) [tex]\times[/tex] 1,250 = $205 [tex]\times[/tex] 1,250 = $253,750
3. Contribution margin is the difference between total revenue and total variable costs:
Contribution margin = Total revenue - Total variable costs = $400,000 - $253,750 = $146,250
4. Total costs are the sum of fixed costs and total variable costs:
Total costs = Fixed costs (selling and administration + production overhead) + Total variable costs
Total costs = $22,000 + $15,000 + $253,750 = $351,250
5. Operating income is the difference between contribution margin and fixed costs:
Operating income = Contribution margin - Fixed costs = $146,250 - ($22,000 + $15,000) = $48,750
All-Star Automotive Company experienced the following accounting events during 2018: Performed services for $25,000 cash. Purchased land for $6,000 cash. Hired an accountant to keep the books. Received $50,000 cash from the issue of common stock. Borrowed $5,000 cash from State Bank. Paid $14,000 cash for salary expense. Sold land for $9,000 cash. Paid $10,000 cash on the loan from State Bank. Paid $2,800 cash for utilities expense. Paid a cash dividend of $5,000 to the stockholders. Required Indicate how each of the events would be classified on the statement of cash flows as operating activities (OA), investing activities (IA), financing activities (FA), or not applicable (NA). Prepare a statement of cash flows for 2018. Assume All-Star Automotive Company had a beginning cash balance of $9,000 on January 1, 2018.
Answer & Explanation:
Operating Activities
services collected 25,000
salaries paid (14,000)
utilities paid (2,800)
cash generated from operating activities 8,200
Investing activities
proceeds from land 9,000
purchase of land (6,000)
cash generated from investing activities 3,000
Financing Activities
issuance of stocks 50,000
bank loan 5,000
payment on loan (10,000)
dividends paid (5,000)
cash generated from financing activities 40,000
Total cash generated for the year ended December 31th, 2018 51,200
beginning balance 9,200
ending balance 60,400
Notes: Activities related to the daily operation wil lbe operating activities.
The transaction involving long-term assets will be investing activities
The stocks, dividends and loan, loan payment are financing activities for the company.
The mentioned accounting events are classified under either Operating Activities, Investing Activities, or Financing Activities in the statement of cash flows. Non-cash events such as hiring an accountant are not included. To prepare the statement of cash flows, begin by determining the net amount provided by or used in each category and adjust the beginning cash balance accordingly.
Explanation:The accounting events would be classified as follows in the statement of cash flows:
Performed services for $25,000 cash - Operating Activities (OA).Purchased land for $6,000 cash - Investing Activities (IA).Hired an accountant to keep the books - Not Applicable (NA).Received $50,000 cash from the issue of common stock - Financing Activities (FA).Borrowed $5,000 cash from State Bank - Financing Activities (FA).Paid $14,000 cash for salary expense - Operating Activities (OA).Sold land for $9,000 cash - Investing Activities (IA).Paid $10,000 cash on the loan from State Bank - Financing Activities (FA).Paid $2,800 cash for utilities expense - Operating Activities (OA).Paid a cash dividend of $5,000 to the stockholders - Financing Activities (FA).To prepare the statement of cash flows for 2018, you will need to calculate the net cash provided by or used in each of the categories (Operating, Investing, and Financing) and then ensure that the ending cash balance equals the beginning cash balance plus or minus these net amounts.
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Kaplan Manufacturing Corporation purchased 2,500 shares of its own previously issued $10 par common stock for $57,500. As a result of this event,a. Kaplan's Common Stock account decreased $25,000.b. Kaplan's total stockholders' equity decreased $57,500.c. Kaplan's Paid-in Capital in Excess of Par Value account decreased $32,500.d. All of these answer choices are correct.
Answer:
b. Kaplan's total stockholders' equity decreased $57,500
Explanation:
The purchase of treasury stock is as follows:
Treasury Stock debit 57,500 (-Equity)
cash credit 57,500 (-Assets)
The company's equity decreased as well as the Assets.
The common stock and paid-in Capital in Excess of Par Value will not be modified.
This account will be decreased if the stocks are retired not at purchase
Regarding the direct and indirect methods of preparing the statement of cash flows, which of the following statements is true? A. The indirect method and the direct method will produce a different amount of net cash provided by investing activities. B. The indirect method starts with net income and adjusts it to net cash provided by (used for) operating activities. C. The direct and indirect methods include different types of cash flows in the investing activities section. D. The indirect method includes all non-cash activities, whereas the direct method includes only the cash activities
Answer:
B. The indirect method starts with net income and adjusts it to net cash provided by (used for) operating activities.
Explanation:
The cash flow statement shows the entire cash flow for the period in consideration, generally a financial year.
This statement is divided in three parts: Operating, Investing and Financing.
There are two methods to prepare the cash flow statement: Direct Method and Indirect Method.
There is no difference in reporting investing and financing activity, whereas the operating activities are reported in different manners.
Under indirect method, the net income is adjusted to calculate the operating cash flow, all the transactions which are non cash or do not relate to operating activities.
Thus, statement B is correct.
Leisure Industries manufactures custom-designed playground equipment for schools and city parks. Leisure expected to incur $ 627 comma 000 of manufacturing overhead cost, 41 comma 800 of direct labor hours, and $ 919 comma 600 of direct labor cost during the year (the cost of direct labor is $22 per hour). The company allocates manufacturing overhead on the basis of direct labor hours. During September, Leisure completed Job 309. The job used 160 direct labor hours and required $ 13 comma 000 of direct materials. The City of Hamptonville has contracted to purchase the playground equipment at a price of 23 % over manufacturing cost. . Calculate the manufacturing cost of Job 309. 2. How much will the City of Hamptonville pay for this playground equipment?
Answer:
Price= $85263,6
Explanation:
We need to calculate the price paid by the City of Hamptonville for playground equipment.
We know the following information:
Direct material= $13000
Direct labor= 160hours*$22hour= $3520
Manufacturing overhead: it is assigned on labor hours.
We need to calculate the value of manufacturing overhead.
Labor hours presupuested= $41800/$22hour= 1900hours
$/hour of manufacturing overhead= $627000/1900hours= $330
Manufacturing overhead Job 309= 330*160hours= $52800
Manufacturing cost Job 309= direct material + direct labor + Manufacturing overhead= 13000 + 3520 + 52800= $69320
Price=69320*1.23= $85263,6
Final answer:
The manufacturing cost for Job 309 is $18,920. The City of Hamptonville will pay $23,271.60 for the playground equipment, which is 23% over the manufacturing cost.
Explanation:
To calculate the manufacturing cost of Job 309 for Leisure Industries, we need to determine the overhead allocation rate, which is calculated by dividing the expected manufacturing overhead cost by the number of direct labor hours. Here, we have $627,000 of expected manufacturing overhead and 41,800 direct labor hours, giving us an overhead allocation rate of $15 per direct labor hour ($627,000 \/ 41,800).
For Job 309, the total direct labor cost can be calculated by multiplying the number of direct labor hours used by the cost per hour, which is 160 hours \\times $22/hour = $3,520. To this, we add the overhead cost, which is 160 hours \\times $15/hour = $2,400. We also know the direct materials cost for this job is $13,000. Adding all these costs gets us the total manufacturing cost for Job 309: $3,520 (labor) + $2,400 (overhead) + $13,000 (materials) = $18,920.
The City of Hamptonville will pay 23% over the manufacturing cost for the playground equipment. Hence, the selling price will be $18,920 \\times 1.23 = $23,271.60.
Budgeted Sales for January: 8,000 Units Budgeted Sales for February: 10,000 Units Budgeted Sales for March: 12,000 Units Beginning Finished Goods for January: 3,000 Units Pevensie Inc. plans to have ending finished goods inventory of 20% of next month's projected sales. What are the budgeted total required production units for February?
Answer:
Production= 10400 units
Explanation:
Giving the following information:
Budgeted Sales for January: 8,000 Units
Budgeted Sales for February: 10,000 Units
Budgeted Sales for March: 12,000 Units
Beginning Finished Goods for January: 3,000
Units Pevensie Inc. plans to have an ending finished goods inventory of 20% of next month's projected sales.
We will assume that the ending finished goods of January reaches 20% required for February.
February:
(+)Budgeted Sales for February= 10,000 Units
(+)Ending finished goods= 12000*0,20= 2400 units
(-)Beginning finished goods inventory= 2000 units
Production= 10000+2400-2000= 10400 units
In the markets for factors of production, ____
(A) the government provides firms with inputs for the production process.
(B) households provide firms with labor, land, and capital.
(C) firms provide households with goods and services.
(D) households provide firms with savings for investment.
Answer: In the markets for factors of production, "(B) households provide firms with labor, land, and capital.".
Explanation: Companies and households interact between 2 markets.
The market of goods and services: is one in which companies sell products and services to homes.
The market of productive factors: it is one in which households sell productive factors to companies so that they can produce goods and services.
Answer:
"(B) households provide firms with labor, land, and capital.".
Explanation: