Answer:
Keep price the same but provide additional services such as free delivery and financing option.
Explanation:
On a critical evaluation of the report, it is apparent that easy lifestyle furniture products come with some strength that the retailer can build on to utilize the untapped sales potential.
Adding extra features through innovation (product development) to the furniture will help in driving a sales growth considering the fact that the sales is already steady.
Providing additional services such as free delivery and financing option , at the current price rate can motivate and attract new customers.
Final answer:
To boost sales for a furniture retailer, recommend a thorough market analysis to discover new customer segments, optimize store layout and online product visibility, and analyze distribution for efficiency. Companies like IKEA demonstrate the effectiveness of employee involvement and optimized store layout.
Explanation:
Recommendations to Increase Sales for a Furniture Retailer
To increase sales for a retailer of ready-to-assemble furniture with steady sales and untapped potential, I recommend conducting a deep market analysis to identify untapped customer segments and enhance product visibility. First, conduct research to define the demographics of potential customers who may not have been reached by previous marketing efforts. Consider aspects such as age, profession, economic status, and geographic location.
Next, evaluate the store's product placement within physical locations and its online presence. Consider how to optimize the visibility and convenience for consumers, which could involve reevaluating the store layout or improving online product categorization. The success of companies like IKEA suggests that encouraging employee involvement and ownership can improve the in-store experience and customer service.
Lastly, analyze the distribution channels for the furniture. Whether it's in-store, online, or through mail, optimizing these channels can enhance customer reach and satisfaction. Additionally, measure the productivity of floor space to ensure that the most profitable products get the best positioning while minimizing costs.
A bond has a par value of $1,000, a time to maturity of 15 years, and a coupon rate of 7.90% with interest paid annually. If the current market price is $790, what will be the approximate capital gain of this bond over the next year if its yield to maturity remains unchanged? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer:
$5.97
Explanation:
In order to determine the capital gain of the bond in a year's time,it is first first of all important to calculate the yield to maturity on the bond which is arrived at by applying the rate formula in excel as follows:
=rate(nper,pmt,-pv,fv)
nper is the number of coupon interest the bond would pay over its entire life of 15 years which is 15
pmt is the annual interest,7.9%*$1000=$79
pv is the current market price of the bond which is $790
fv is the value of $1000
=rate(15,79,-790,1000)=10.79%
Afterwards,the price of the bond in one year' time can then be calculated:
=-pv(rate,nper,pmt,fv)
The variables in the formula are as above except for nper which would reduce by 1 in a year's time
=-pv(10.79%,14,79,1000)
pv=$ 795.97
Hence the capital gain=price now-price one year ago/price one year ago
price now is $795.97
price one year ago was $790
Capital gain=$795.97-$790=$5.97
Capital gain %= ($795.97-$790)/$790=0.76%
The approximate capital gain of this bond over the next year would be $290.
Explanation:The approximate capital gain of this bond over the next year can be calculated by finding the difference between the current market price and the final expected value of the bond. In this case, the current market price is $790 and the final expected value is $1,080. So, the approximate capital gain will be $1,080 - $790 = $290.
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Take It All Away has a cost of equity of 10.54 percent, a pretax cost of debt of 5.27 percent, and a tax rate of 35 percent. The company's capital structure consists of 68 percent debt on a book value basis, but debt is 28 percent of the company's value on a market value basis. What is the company's WACC?
Final answer:
The company's WACC is 7.59% based on the given information.
Explanation:
To calculate the Weighted Average Cost of Capital (WACC) for the company, we need to consider the weights of both debt and equity in the capital structure. First, we need to calculate the weights based on market value:
Debt weight = 28% (Given)Equity weight = 100% - Debt weight = 100% - 28% = 72%Next, we can calculate the cost of capital for both debt and equity:
Cost of equity = 10.54%Cost of debt = 5.27% * (1 - Tax rate) = 5.27% * (1 - 0.35) = 3.42%Finally, we can calculate the WACC using the weighted average of the cost of debt and equity:
WACC = (Equity weight * Cost of equity) + (Debt weight * Cost of debt) = (72% * 10.54%) + (28% * 3.42%) = 7.59%Amco International is a fictional importer of handcrafted leather and reptile skin handbags from India. The Indian company that sells these handbags will ship these handbags only in order sizes of 120 units. The cost of placing an order from this Indian company is US$1,440. The annual demand for these handcrafted bags is 4,000 units. Determine the holding cost per unit that Amco needs to achieve to minimize its total cost
On November 1, 2018, Nada, Inc. declared a dividend of $5.00 per share on common stock. Nada, Inc. has 20,000 shares of common stock outstanding and no preferred stock. The date of record is November 15, and the payment date is November 30, 2018. Which of the following is the journal entry needed on November 30, 2018?
A) Debit Cash Dividends $100,000, and credit Dividends Payable—Common $100,000.
B) Debit Dividends Payable—Common $100,000, and credit Cash $100,000.
C) Debit Cash $100,000, and credit Dividends Payable—Common $100,000.
D) Debit Cash Dividends $100,000, and credit Cash $100,000.
Answer:
The correct answer is Option B.
Explanation:
Dividend is simply synonymous to a profit from stockholder's investment (usually in form of shares). Dividend is usually declared when the company that the stockholder invests in is performing well.
On November 15 when the dividend declared was recorded, the following journals would have been recorded:
Debit Retained earnings ($5 x 20,000) $100,000
Credit Dividend payable $100,000
(To record declaration of dividend)
However, when it became payable on November 30, 2018, the dividend payable account has to be debited as follows:
Debit Dividend payable $100,000
Credit Cash $100,000
(To record dividend paid to stockholders)
Sam, the owner of a toy store, dies unexpectedly at the age of 56. His lifelong business associate, Paul, is appointed the administrator of the estate. Sam had a personal debt of $8,000 which he owed to Art's Appliance Store. Paul says to Art, "If there isn't enough money in the estate, I'll personally see that the bill is paid." Which of the following is correct?
a. The oral statement is enforceable because Paul is the administrator.
b. An oral statement such as this is not enforceable because it is outside the Statute of Frauds.
c. An oral statement such as this is not enforceable because it is within the Statute of Frauds.
d. The oral statement is enforceable because it is a collateral promise.
Answer:
b. An oral statement such as this is not enforceable because it is outside the Statute of Frauds.
Explanation:
The statute of frauds (SOF) is a legal concept that requires certain types of contracts to be executed in writing. Among others, these typically include those for the sale of land, of any goods over $500 in value, and contracts of a year or more in length.
The contracts that must adhere to the statutes of fraud are Collateral contracts in which a person promises to answer for the debt or duty of another, or guaranty contracts are required to be written. Prenuptial agreements and promises made in consideration of marriage must adhere to the statute of frauds.
Bed & Bath, a retailing company, has two departments—Hardware and Linens. The company’s most recent monthly contribution format income statement follows: Department Total Hardware Linens Sales $ 4,000,000 $ 3,000,000 $ 1,000,000 Variable expenses 1,300,000 900,000 400,000 Contribution margin 2,700,000 2,100,000 600,000 Fixed expenses 2,200,000 1,400,000 800,000 Net operating income (loss) $ 500,000 $ 700,000 $ (200,000 ) A study indicates that $340,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 10% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department?
Answer:
Total financial disadvantage from closing of Linens Depart. $ (350,000)
Explanation:
Computations for financial impact of discontinuing Linens Department
Positive impact of loss of discontinued Linens Department $ 200,000
Negative impact of sunk costs Linens Department $ (340,000)
Impact of 10 % reduction in sales and contribution margin of
Hardware Department ( $ 2,100,000 * 10 %) $ (210,000
Total financial disadvantage from closing of Linens Depart. $ (350,000)
The financial advantage (disadvantage) of discontinuing the Linens Department is $350,000.
Contribution margin lost if the Linens Department is dropped:
Lost from the Linens Department $600,000
Lost from the Hardware Department $210,000
(10% × $2,100,000)
Total lost contribution margin $810,000
($600,000+$210,000)
Less fixed costs that can be avoided $460,000
($800,000 – $340,000)
Decrease in profits for the company as a whole $350,000
($810,000-$460,000)
Inconclusion the financial advantage (disadvantage) of discontinuing the Linens Department is $350,000.
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Adel wrote Abdullah, "I will sell you my house and lot at 419 West Lombard Street, San Francisco, California for $950,000 payable upon
merchantable deed, deal to be completed within 60 days of the date of your acceptance." Assuming that Adel's letter contains terms which,
are deemed sufficiently certain and definite, which of the following statements is correct?
Select one:
a. Adel's letter is not an offer unless Abdullah thought Adel intended to make an offer.
b. Adel's letter is an offer if a reasonable person with full knowledge of the circumstances would be justified in thinking it was intended as an
offer.
C. Adel's letter is not an offer unless both Adel and Abdullah considered it as an offer.
d. Adel's letter is not an offer unless Adel intended it to be an offer.
Adel's letter is not an offer unless both Adel and Abdullah considered it as an offer.
Explanation:
In the context given above is an offer if the letter is accepted by both the parties as an offer. Here Adel is writing a letter where he wants to sell his house $950000 payable upon merchant deed and this deal has to be completed within 60 days the day when it was accepted. In this letter he is also mentioning that he wants to sell the house to Abdullah. Hence this letter becomes a deal when both of them accept it from their parts.
You are hired to make investment decisions for a large pension fund. You meet with representatives from the company to figure out what kind of choices to make. To get things started you try to figure out their risk preferences. You discuss the concept of risk and return with them to figure out what their level of risk aversion is.
You ask them if they would rather invest in a portfolio that offers an expected rate of return of 7% and a standard deviation of 15% or in the short term money market which offers a risk-free 2% rate of return. They say that they prefer the risky portfolio.
What is the maximum level of risk aversion for which the risky portfolio is still preferred to the risk free investment? What can you now say about the company’s employees’ risk preferences?
Answer:
The maximum level of risk aversion for which the risky portfolio is still preferred to the risk free investment is 4.4.
Explanation:
Level of utility U =E(r) - 1/2 * A * σ2
Risk free investment: U = 0.02-1/2*A*0 = 0.02
Risky portfolio: U = 0.07-1/2*A*0.15□2= 0.07-A*0.01125
The utility levels of the risk free portfolio and the risky portfolio are equal for A=4.4 making it the highest level of risk aversion.
If A is smaller or equal to 4.4, the Pension fund will prefer the risky portfolio but since A=4.4 the pension fund is indifferent. As such, it can be predicted that the level of risk aversion A of the pension fund will lie below 4.4.
On a different note, if the risk aversion A was higher than 4.4 they would prefer the risk-free investment to the risky portfolio.
A company's flexible budget for 10,000 units of production reflects sales of $200,000; variable costs of $40,000; and fixed costs of $75,000. Calculate the expected level of operating income if the company produces and sells 13,000 units. Multiple Choice $110,500. $85,000. $133,000. $100,000. $50,500.
Answer:
Expected level of operating income = $133,000
Explanation:
given data
flexible budget = 10,000 units
sales = $200,000
variable costs = $40,000
fixed costs = $75,000
solution
we get here Contribution margin for 10000 units that is express as
Contribution margin = sales - Variable cost ..............1
put here value and we get
Contribution margin = $200,000 - $40,000
Contribution margin = $160,000
and
now we get here Contribution margin expected for 13000 units that is
Contribution margin expected = $160,000 ÷ 10000 × 13000
Contribution margin expected = $208,000
so here Expected level of operating income
Expected level of operating income = Contribution Margin - Fixed costs
Expected level of operating income = $208,000 - $75,000
Expected level of operating income = $133,000
Lockeran Co. has the following projected sales, costs, net investment and free cash flows in millions. The anticipated growth rate in free cash flows after year 6 is 3% per year forever. there are 3 million shares outstanding and investors require a return of 8% on the company's stock. Using the constant growth model to find the terminal value, calculate the price of the company's stock.
Answer:
$278.75 per stock
Explanation:
FCF1 = $31.17 million
FCF2 = $35.54 million
FCF3 = $39.80 million
FCF4 = $43.78 million
FCF5 = $47.27 million
FCF6 = $50.11 million
since the FCF6 will grow at a constant 3% rate forever, then we can use the constant growth model to determine the price of the company at year 6, then we must discount it along with the rest of the cash flows:
company's value = ($50.11 x 1.03) / (8% - 3%) = $1,032.27 million
now we can discount the FCFs:
$31.17/1.08 + $35.54/1.08² + $39.80/1.08³ + $43.78/1.08⁴ + $47.27/1.08⁵ + $50.11/1.08⁶ + $1,032.27/1.08⁶ = $28.86 + $29.37 + $31.59 + $32.18 + $32.17 + $31.58 + $650.51 = $836.26 million
price per stock = $836.26 million / 3 million stocks = $278.75 per stock
One year ago you bought Superior stock for $83.00 per share. You received four quarterly dividends over the past year of $1.23 each. Now the stock is selling for $71.00 per share. What is your dollar return for the past year? _________________ What is the dividend yield? ____________________ What is the capital gains yield? _________________ What is the total yield? _____________________
Answer:
1. $ -7.08
2. 5.93%
3. -14.46%
4. -8.53%
Explanation:
The Total Dividend Received = $ 1.23 × 4 = $ 4.92
A. Dollar Return = ( Selling Price - Purchase Price ) + Dividend Received
= ( $ 71 - $ 83) + $ 4.92
= $ -7.08
My dollar return for the past year is $ -7.08
B. Dividend yield = (Annual Dividend / Purchase Price) × 100
= ($4.92/$83)×100
= 5.93%
The dividend yield is 5.93%
C. Capital Gains Yield = (( Selling Price - Purchase Price ) / Purchase Price) ×100
= (( $71 - $83) / $83)× 100
= -14.46%
The capital gains yield -14.46%
D. Total Yield =
((( Selling Price - Purchase Price ) + Dividend Received )/ Purchase Price) ×100
= ((( $71 - $83) + $ 4.92 ) / $ 83) ×100
= -8.53%
The total yield is -8.53%.
announced today that it will begin paying annual dividends next year. The first dividend will be $0.10 a share. The following dividends will be $0.15, $0.20, $0.50, and $0.60 a share annually for the following 4 years, respectively. After that, dividends are projected to increase by 5 percent per year. How much are you willing to pay to buy one share of this stock today if your desired rate of return is 9.5 percent
Answer:
The maximum that should be paid for the stock today is $9.99
Explanation:
The price of the stock today can be calculated using the dividend discount model or DDM which values a stock based on the present value of the expected future dividends of the stock. The price of the stock today is,
P0 = 0.10 / (1+0.095) + 0.15 / (1+0.095)^2 + 0.20 / (1+0.095)^3 +
0.50 / (1+0.095)^4 + 0.60 / (1+0.095)^5 + [ (0.60 * (1+0.05) / (0.095 - 0.05)) / (1+0.095)^5 ]
P0 = $9.99
Sid purchased an automobile for personal
use on January 18, 2011 for $10,000. On January 1, 2015, Sid starts a small business and
begins to use the automobile exclusively in the business. The automobile’s FMV on this
date is $6,000. MACRS depreciation deductions are based on a 5-year recovery period.
. What is the automobile’s basis for depreciation when converted to business use in 2015?
. Assuming Sid does not elect Sec. 179 expensing, what is Sid’s depreciation deduction
in 2015?
Answer:
Part A. $1200
Part B. $1200
Explanation:
Part A.
Under MACRS rules, the depreciation rate for the 5 year recovery period asset would be:
Year 1 20%
Year 2 32%
Year 3 19.2%
Year 4 11.52%
Year 5 11.52%
Year 6 5.76%
This means that the first year MACRS depreciation deduction would be 20% which is $1200 ($6000 * 20%).
Part B.
If Sid does not elect Section 179 expensing then the depreciation would be calculated using straight line basis.
The depreciation would be:
Depreciaiton Expense = $6000 / 5 Years life = $1200
The automobile's basis for depreciation when converted to business use in 2015 is $6,000, which is its fair market value at that time. Assuming Sid does not elect Sec. 179 expensing, the depreciation deduction in 2015 is $1,200, which is 20% of the basis for depreciation.
Explanation:When the automobile is converted to business use in 2015, its basis for depreciation is its fair market value (FMV) at that time, which is $6,000. This is because the basis for depreciation is the lower of the cost or FMV at the time of conversion. Since the FMV is lower than the cost, the FMV is used as the basis for depreciation.
Assuming Sid does not elect Sec. 179 expensing, the depreciation deduction in 2015 is calculated using the Modified Accelerated Cost Recovery System (MACRS). Since the recovery period for automobiles is 5 years, the depreciation deduction for 2015 is calculated as 20% of the basis for depreciation. Therefore, the depreciation deduction in 2015 is $1,200 (20% of $6,000).
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Trout Lumber Yard has a current accounts receivable balance of $527,164. Credit sales for the year just ended were $6,787,626. a. What is the receivables turnover? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the days’ sales in receivables? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. How long did it take on average for credit customers to pay off their accounts during the past year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
a. 12.88 times
b. 28.35 days
c. 28.35 days
Explanation:
a. Receivables turnover
Receivables turnover = Credit sales ÷ Receivables
= $6,787,626 ÷ $527,164
= 12.88 times
b. Days’ sales in receivables
Days' sales in receivables = 365 days ÷ Receivables turnover
= 365 ÷ 12.88
= 28.35 days
c. On average it would take 28.35 days for credit customers to pay off their balances during the last year.
Elin wants to retire in 20 years when she turns 60. Elin wants to have enough money to replace 120% of her current income less what she expects to receive from Social Security. She expects to receive $20,000 per year from Social Security in today's dollars. Elin is conservative and wants to assume a 5% annual investment rate of return and assumes that inflation will be 3% per year. Based on her family history, Elin expects that she will live to be 95 years old. If Elin currently earns $100,000 per year and expects her raises to equal the inflation rate, approximately how much does she need at retirement to fulfill her retirement goals
Answer:
She needs :$4,045,303 for her retirement
Explanation.
Total all expenses and earnings
Troy owns 600 of the 1,000 outstanding shares of Oiler Corporation. His adjusted basis in the Oiler stock at the beginning of the current year is $88,000. Oiler Corporation is organized as an S corporation (conduit) and reports the following results for the current year: Operating Income before Special Items $58,000 Charitable Contributions 8,000 Nondeductible Expenses 9,000 Cash Dividends Paid 22,000 a. What is Troy's adjusted basis in the Oiler Corporation stock at the end of the current year? b. What is the amount of Troy's gain or loss if he sells the 600 shares for $100,000 to an unrelated person at the beginning of next year?
Find the solution in the attachment
a. Troy's adjusted basis in the Oiler Corporation stock at the end of the current year is $115,000. b. If Troy sells the 600 shares for $100,000 at the beginning of next year, he will incur a loss of $15,000.
Explanation:a. To calculate Troy's adjusted basis in the Oiler Corporation stock at the end of the current year, we need to consider the different transactions. First, we deduct the cash dividends paid from the adjusted basis at the beginning of the year: $88,000 - $22,000 = $66,000. Next, we add the operating income before special items and subtract the nondeductible expenses: $66,000 + $58,000 - $9,000 = $115,000. Therefore, Troy's adjusted basis in the Oiler Corporation stock at the end of the current year is $115,000.
b. To calculate Troy's gain or loss if he sells the 600 shares for $100,000 to an unrelated person at the beginning of next year, we need to subtract the adjusted basis at the end of the current year from the selling price: $100,000 - $115,000 = ($15,000) or a loss of $15,000.
Joint ventures are often the chosen form of multinational firm alliances because they ________. Grupo de opciones de respuesta provide greater control of proprietary technology enhance the specific skills of the personnel enhance the rewards of the firm increase the level of competition between partner firms
Answer:
provide greater control of proprietary technology
Explanation:
A joint venture is a business made by two or more parties and has a shared ownership along with the risks. Companies make JV as to access new markets and particulate the emerging markets, gain scale differences in operations, share risks for major projects, to access skills and capabilities. Most of them are incorporated as the oil and gas industry. Combining temporary partnership and some examples include the Dow corning, Sony Ericsson. They can contract its own name, acquire rights as the right to buy new companies.A company issues $50,000 of 9%, 10-year bonds dated January 1, 2009, that mature on December 31, 2018, and pay interest semiannually for $2,250. On December 31, 2013, when the bond premium is $2,500, the bonds are called for $54,000. The journal entry to record this transaction would record a (Gain/Loss) ______ on Bond Retirement in the amount of ______.
The company would record a loss on bond retirement because the call price of $54,000 exceeds the book value of the bonds. The book value is the sum of the face value and the unamortized premium, which amounts to $51,125. Hence, the loss on bond retirement is $2,875.
A company issued $50,000 of 9%, 10-year bonds dated January 1, 2009, that mature on December 31, 2018, and pay interest semiannually for $2,250. On December 31, 2013, when the bond premium is $2,500, the bonds are called for $54,000. The journal entry to record this transaction would include a loss on bond retirement.
To determine the amount of the loss, we need to consider the book value of the bond on the call date and the call price. The book value includes the face value of the bonds plus any bond premium that has not been amortized. Assuming the premium is amortized evenly over the life of the bonds (on a straight-line basis), we can estimate the unamortized premium at the time of the call.
The original premium was $2,250, and since the bonds were halfway through their term (5 out of 10 years), half of the premium would have been amortized, leaving an unamortized premium of $1,125 ($2,250 / 2). The book value of the bonds on the call date is then $51,125 ($50,000 face value + $1,125 unamortized premium). The call price is $54,000, so the company would record a loss of $2,875 ($54,000 call price - $51,125 book value).
The journal entry to record the bond retirement on December 31, 2013, would be:
Debit Bonds Payable for $50,000Debit Premium on Bonds Payable for $1,125Debit Loss on Bond Retirement for $2,875Credit Cash for $54,000
The Federal National Mortgage Association (Fannie Mae) wanted to foreclose on the house and sell it to recover the balance due. Smith argued that the words "to the order of ____________" in the endorsement made the note an incomplete order instrument and that Fannie Mae could not enforce it. What is Fannie Mae's best response to this argument
Answer:
Fannie Mae would argue that "to the order of" is a complete order instrument that needs endorsement and can be enforced. "Pay to the order of" are negotiable instruments that must be paid via endorsement and delivery.
Explanation:
The Federal National Mortgage Association (Fannie Mae) wanted to foreclose on the house and sell it to recover the balance due. Smith argued that the words "to the order of " in the endorsement made the note an incomplete order instrument and that Fannie Mae could not enforce it. What is Fannie Mae's best response to this argument
Smith argued, among other things, that the indorsement on the note rendered it incomplete and "insufficient to support the use of executory process and,the words "to the order of [blank]" included in the subject indorsement made the instrument incomplete order paper, not bearer paper, and thus Fannie Mae could not properly enforce the note.However,Fannie Mae would argue that "to the order of" is a complete order instrument that needs endorsement and can be enforced. "Pay to the order of" are negotiable instruments that must be paid via endorsement and delivery.
Final answer:
Fannie Mae must assert that the note is still negotiable and enforceable despite the specific endorsement argument by Smith.
Explanation:
Fannie Mae's best response to Smith's argument that the note was an incomplete order instrument due to the endorsement 'to the order of ____________' would be to assert that the note is still negotiable. This is because the endorsement does not necessarily render the note incomplete, but rather provides direction on how to transfer it.
The Uniform Commercial Code (UCC) governs negotiable instruments like promissory notes, and according to the UCC, an endorsement 'to the order of' does not automatically make the note incomplete. The note can still be enforced by the holder.
Therefore, Fannie Mae could argue that the note remains valid and enforceable, allowing them to foreclose on the house and recover the balance due as the holder of the note.
Pharoah Co. leased equipment to Union Co. on July 1, 2021, and properly recorded the sales-type lease at $133000, the present value of the lease payments discounted at 9%. The first of eight annual lease payments of $20000 due at the beginning of each year of the lease term was received and recorded on July 3, 2021. Pharoah had purchased the equipment for $114000. What amount of interest revenue from the lease should Pharoah report in its 2021 income statement?
Answer:
$5,085
Explanation:
Assets is leased on 9% per year interest, $20,000 lease payment include the interest income and the principal payment of the leased asset. We have to calculate the interest value first and the remainder is settled for the principal value.
Total Lease Value = $133,000
Advance lease payment on July 1, 2021 = $20,000
Amount Due on December 31, 2021 = $133,000 - $20,000 = $113,000
Only 6 month are passed after asset leased, 6 month of the interest revenue will be recognized on December 2021
Interest revenue recognized = $113,000 x 9% x 6/12 = $5,085
In December 2016, Custom Mfg. established its predetermined overhead rate for jobs produced during 2017 by using the following cost predictions: overhead costs, $680,000, and direct materials costs, $400,000. At year-end 2017, the company’s records show that actual overhead costs for the year are $897,200. Actual direct material cost had been assigned to jobs as follows.
Jobs completed and sold $ 420,000 Jobs in finished goods inventory 76,000 Jobs in work in process inventory 53,000 Total actual direct materials cost $ 549,000 Determine the predetermined overhead rate for 2017.
Answer:
POAR= 170% of the direct material cost.
Explanation:
Explanation:
The predetermined overhead absorption rate (POAR: The overhead absorption is a rate which is used to charge overheads to production units. Note that this rate is computed using estimated figures
The rate is computed as follows:
Predetermined overhead absorption rate
POAR
= (Budgeted overhead for the period/Budgeted direct material cost)× 100
= $680,000/400,00 × 100
= 170% of the direct material cost.
Consider two single-malt whiskey distillers, Laphroaig and Knockando. If they advertise, they can both sell more whiskey and increase their revenue. However, the cost of advertising more than offsets the increased revenue so that each distiller ends up with a lower profit than if they do not advertise. On the other hand, if only one advertises, that distiller increases its market share and also its profit.
a. Construct a payoff matrix using the following hypothetical information: If neither distiller advertises, each earns a profit of $35 million per year. If both advertise, each earns a profit of $20 million per year. If one advertises and the other does not, the distiller who advertises earns a profit of $50 million and the distiller who does not advertise earns a profit of $9 million.
b. If Laphroaig wants to maximize profit, will it advertise? Briefly explain.
c. If Knockando wants to maximize profit, will it advertise? Briefly explain.
d. Is there a dominant strategy for each distiller? Briefly explain.
Answer:
a) Advertising Not advertising
Advertising $20 million, $20 million $50 million, $9 million
Not Advertising $9 million, $50 million $35 million, $35 million
b) If Laphroaig wants to maximize profit, it will advertise only when Knockando does not advertise.
c) If Knockando wants to maximize profit, it will advertise only when Laphroaig does not advertise.
e) No, there is no dominant strategy for each distiller.
Explanation:
a) A payoff matrix is a visual representation of all the possible strategies and all of the possible outcomes. Below is the payoff matrix for the distillers:
Advertising Not advertising
Advertising $20 million, $20 million $50 million, $9 million
Not Advertising $9 million, $50 million $35 million, $35 million
b) If Knockando does not advertise then Laphroaig gets $50 millions of profit if Laphroaig advertises. If Knockando does not advertise and Laphroaig does not advertise then Laphroaig will get only $35 million. If both do advertise, they both get $20 million. If Knockando does advertise and Laphroaig does not advertise then Laphroaig earns a profit of $9 million. If Laphroaig wants to maximize profit, it will advertise only when Knockando does not advertise.
c) Same conditions as in b) Therefore, If Knockando wants to maximize profit, it will advertise only when Laphroaig does not advertise.
d) No, there is no dominant strategy for each distiller. If the two distillers agree to coordinate their strategy means both of them can decide not to advertise to earn a profit of $35 million per year each which is better than when both advertise.
A payout matrix is a table in which one player's strategies are written in rows and the other player's strategies are listed in columns, and the cell represents payoffs to each player.
a) A payoff matrix is a visual representation of all the possible strategies and all of the possible outcomes. Below is the payoff matrix for the distillers:
Advertising Not advertising
Advertising $20 million, $20 million $50 million, $9 million
Not Advertising $9 million, $50 million $35 million, $35 million
b) If Knockando does not advertise then Laphroaig gets $50 millions of profit if Laphroaig advertises. If Knockando does not advertise and Laphroaig does not advertise then Laphroaig will get only $35 million. If both do advertise, they both get $20 million. If Knockando does advertise and Laphroaig does not advertise then Laphroaig earns a profit of $9 million. If Laphroaig wants to maximize profit, it will advertise only when Knockando does not advertise.
c) Same conditions as in b) Therefore, If Knockando wants to maximize profit, it will advertise only when Laphroaig does not advertise.
d) No, there is no dominant strategy for each distiller. If the two distillers agree to coordinate their strategy means both of them can decide not to advertise to earn a profit of $35 million per year each which is better than when both advertise.r
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Jamie Lee Jackson, age 26, is in her last semester of college and is waiting for a graduation day that is just around the corner! It is the time of year again when Jamie Lee must file her annual federal income taxes. Last year, she received an increase in salary from the bakery, which brought her gross monthly earnings to $2,550, and she also opened up an IRA, to which she contributed $300. Her savings accounts earn 2 percent interest per year, and she also received an unexpected $1,000 gift from her great aunt. Jamie was also lucky enough last year to win a raffle prize of $2,000, most of which was deposited into her regular savings account after paying off her credit card balance.
Answer:
Jamie's federal taxes are:
Gross income = $2,550 salary x 12 = $30,600
raffle prize = $2,000
earned interests = $125 + $75 = $200
IRA deductions = ($300)
student loan interests = 0
Adjusted gross income = $32,500
- standard deduction = ($12,200)
taxable income = $20,300
federal taxes = ($9,700 x 10%) + ($10,600 x 12%) = $970 + $1,272 = $2,242
social security = $20,300 x 6.2% = $1,258.60 ≈ $1,259
Medicare = $20,300 x 1.45% = $294.35 ≈ $294
Taxable Income is the amount of income which is to be taxed after the deduction made. The income generated by an individual is taxed at an standard state income tax rate. This tax is payable annually.
Computing Jamie Taxable Income :
Gross Income $30,600 [ $2,550 * 12]
Less : IRA deduction $300
Raffle Prize $2,000
Interest earned $200
Adjusted Income $32,500
Less : standard deduction $12,200
Taxable Income 20,300
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Debra King is interested in buying a five-year zero coupon bond with a face value of $1,000. She understands that the market interest rate for similar investments is 11.0 percent. Assume annual coupon payments. What is the current value of this bond? (Round answer to 2 decimal places, e.g. 15.25.)
Answer:
$593.45
Explanation:
In order to compute the current value of this bond we need to applied the present value formula which is to be shown in the attachment
Given that,
Future value = $1,000
Rate of interest = 11%
NPER = 5 years
PMT = $0
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after applying the above formula, the current value of the bond is $593.45
Two investment centers at Marshman Corporation have the following current-year income and asset data:
Investment Center A Investment Center B
Investment center income $540,000 $650,000
Investment center average invested assets $4,900,000 $3,200,000
The return on investment (ROI) for Investment Center A is:
A. 828.30%
B. 29.10%
C. 11.02%
D. 49.20
E. 24.10
Answer:
11.02%
Explanation:
ROI=Net profit on investment/total investment engaged =$540,000/$4,900,000=11.02%
As the invested assets are $4,900,000 and amount earned on such assets is $540,000, therefore we can easily worked out returned earned on investment center A.
Answer:
Option C is correct
ROI = 11.02%
Explanation:
Return on Investment is the proportion of operating assets that an investment centre earned as as net operating income.
It is calculated as follows
ROI = operating income/operating assets
ROI for Investment centre A
= (540,000/4,900,00) × 100
= 11.02%
Beridze Manufacturing expects to produce 2900 units in January and 3100 units in February. Beridze budgets $35 per unit for direct materials. The amount of indirect materials needed for production has been determined to be insignificant and will therefore not be considered in the calculation. The balance in the Raw Materials Inventory account (all direct materials) on January 1 is $37,550. Beridze desires the ending balance in Raw Materials Inventory to be 20% of the next month's direct materials needed for production. Desired ending balance for February is $50,400. What is the cost of budgeted purchases of direct materials needed for January
Answer:
The cost of budgeted purchases of direct materials needed for January is $85,650
Explanation:
Direct materials needed to produce in February = 3,100 x $35 = $108,500
Ending balance for February is $50,400
Ending Raw Materials Inventory balance for January = Beginning Raw Materials Inventory balance for February = 20% x $108,500 = $21,700
Direct materials needed to produce in January = 2,900 x $35 = $101,500
The cost of budgeted purchases of direct materials needed for January = Direct materials needed to produce in January + Ending Raw Materials Inventory balance for January - Beginning Raw Materials Inventory balance for January = $101,500 + $21,700 - $37,550 = $85,650
The human MN blood group is determined by two codominant alleles, M and N. The following data were obtained from various human populations:
Percentages*
Population
Place
MM
MN
NN
Inuit
East Greenland
83.5
15.6
0.9
Navajo Indians
New Mexico
84.5
14.4
1.1
Finns
Karajala
45.7
43.1
11.2
Russians
Moscow
39.9
44.0
16.1
Aborigines
Queensland
2.4
30.4
67.2
a. Calculate the allele frequencies in these five populations. b. Which populations appear to be in Hardy-Weinberg equilibrium? c. Which populations do you think have had significant intermixing due to migration?
Answer:
Explanation:
Note: The table containing the data is attached as a file to this solution.
Also note that the values are given in percentages in the table, the decimal equivalents of those values are used in this calculation.
a)
i) Allele Frequency in the Inuit population
M allele frequency
= 0.835+(0.156/2) = 0.913
N allele frequency
= 0.009 + (0.156/2) = 0.087
ii) Allele frequency in Navojo Indian population
M allele frequency
= 0.845+0.072 = 0.917
N allele frequency
= 0.011+0.072 = 0.083
iii) Allele frequency In Finn population
M allele frequency
= 0.457+0.2155 = 0.6725
N allele frequency
= 0.112+0.2155 = 0.3275
iv)Allele frequency In Russian population
M allele frequency
= 0.399+0.22 = 0.619
N allele frequency
= 0.161+0.22 = 0.381
v) Allele frequency In Aborigines
M allele frequency
= 0.024+0.152 = 0.176
N allele frequency
= 0.672 + 0.152 = 0.824
b)
We can observe that the sum of the frequencies of M and N alleles in each of the populations above is 1. Therefore, all the populations are in Hardy Weinberg's equilibrium.
c)
It can be again observed that the M and N allele frequencies of the Finn and the Russian population are almost the same, then it is safe to say that the Finn and Russian population have had significant intermixing due to migration.
Show that if the contribution to profit for trains is between $1.50 and $3, the current basis remains optimal. If the contribution to profit for trains is $2.50, then what would be the new optimal solution?
Answer:
210
Explanation:
Let us consider that x is the number of soldiers produced each week and y is number of trains produced each week.
Also, weekly revenues and costs can be expressed in terms of the decision variables x and y.
Then,
Hence the profit which we want to maximize is given by,
Now the constraints are given as,
Finishing Constraint:
Each week, no more than 100 hours of finishing time may be used.
Carpentry Constraint:
Each week, no more than 80 hours of carpentry time may be used.
Demand Constraint:
Because of limited demand, at most 40 soldiers should be produced each week.
Combining the sign restrictions and with the objective function and constraints,and yield the following optimization model:
Such that,
First convert the given inequalities into equalities:
From equation (1):
If x=0 in equation (1) then (0,100)
If y=0 in equation (1) then (50,0)
From equation (2):
If x=0 in equation (2) then (0,80)
If y=0 in equation (2) then (80,0)
From equation (3):
Equation (3) is the line passing through the point x=40.
Therefore, the given LPP has a feasible solution first image
The optimum solution for the given LPP is obtained as follows in the second image
The optimal solution to this problem is,
And the optimum values are .
Let c be the contribution to profit by each train. We need to find the values of c for which the current, basis remain optimal. Currently c is 2, and each iso-profit line has the form
3x + 2y = constant
y = 3x/2 +constant/ 2
And so, each iso-profit line has a slope of .
From the graph we can see that if a change in c causes the isoprofit lines to be flatter than the carpentry constraint, then the optimal solution will change from the current optimal solution to a new optimal solution, If the profit for each train is c, the slope of each isoprofit line will be.
-3/c
Because the slope of the carpentry constraint is –1, the isoprofit lines will be flatter than the carpentry constraint.
If,
-3/c<-1
c >3
and the current basis will no longer be optimal. The new optimal solution will be point A of the graph.
If the is oprofit lines are steeper than the finishing constraint, then the optimal solution will change from point B to point C. The slope of the finishing constraint is –2.
If,
-3/c < -2 or
C < 1.5
Then the current basis is no longer optimal and point C,(40,20), will be optimal. Hence when the contribution to the profit for trains is between $1.50 and $3, the current basis remains optimal.
Again, consider the contribution to the profit for trains is $2.50, then the decision variables remain the same since the contribution to the profit for trains is between $1.50 and $3. And the optimal solution is given by,
z = 3× (20) + 2.5 × (60)
= 60 + 150
= 210
If the contribution to profit for trains is between $1.50 and $3, the current basis remains optimal. If it is $2.50, a new optimal solution should be pursued.
Explanation:To show that if the contribution to profit for trains is between $1.50 and $3, the current basis remains optimal, we need to understand the concept of optimal solution and contribution to profit. In this case, an optimal solution means that the current arrangement or allocation is the most effective or efficient. The contribution to profit for trains refers to the amount of profit generated by the trains. If the contribution to profit is between $1.50 and $3, it means that the trains are generating a satisfactory level of profit, but not too high or too low. Hence, the current basis remains optimal.
However, if the contribution to profit for trains is $2.50, it suggests that the trains are generating a higher level of profit compared to the range mentioned earlier. In this case, the new optimal solution would involve optimizing the allocation of resources towards trains to maximize the profit generated at the $2.50 contribution level. This could involve increasing the number of trains, improving efficiency, or identifying additional revenue streams related to trains.
Skysong Company issued $468,000 of 10%, 20-year bonds on January 1, 2020, at 102. Interest is payable semiannually on July 1 and January 1. Skysong Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%.
Prepare the journal entries to record the following.
(a) The issuance of the bonds.
(b) The payment of interest and related amortization on July 1, 2020.
(c) The accrual of interest and the related amortization on December 31, 2020.
Answer:
a)1/1/20 Cash $477,360
Bonds payable $468,000
Premium on Bonds payable $9,360
b)7/1/20 Interest expense $23,320
Premium on Bonds payable $80
Cash $23,400
c)12/31/20 Interest expense $23,315
Premium on Bonds payable $85
Interest payable $23,400
Explanation:
In order to prepare the journal entry to record the issuance of the bonds, we first have to calculate the cash, as follows:
Cash=$468,000×1.02=$477,360
Hence, the journal entry to record the issuance of the bonds would be as follows:
1/1/20 Cash $477,360
Bonds payable $468,000
Premium on Bonds payable $9,360
In order to prepare the journal entry to record the payment of interest and related amortization on July 1, 2020, we would have to calculate the interest expense and cash as follows:
Interest expense=$477,360×9.7705%/2=$23,320
Cash=$468,000*10%/2=$23,400
7/1/20 Interest expense $23,320
Premium on Bonds payable $80
Cash $23,400
In order to prepare the journal entry to record the accrual of interest and the related amortization on December 31, 2020. , we would have to calculate the interest expense and interest payable as follows:
Interest expense=($477,360-102)×9.7705%/2 =$23,315
Interest payable=$468,000*10%/2=$23,400
12/31/20 Interest expense $23,315
Premium on Bonds payable $85
Interest payable $23,400
Which of these statements about a business plan is true?
A. Businesses do not need to document a business plan.
B. Established businesses do not create a business plan.
C. A business plan is a business’s roadmap for the future.
D. A business plan guarantees a business’s success.
Answer:
C. A business plan is a business’s roadmap for the future.
Explanation:
We are given 4 statements and we have to chose the correct statement. Let's analyze these statement one by one.
A. Businesses do not need to document a business plan.
Every business whether small or large must create a business plan. In fact, one of the most important thing for a business to be successful is its detailed business plan which must cover all the important aspects of the business e.g. pricing, revenue model, customer demographics etc. Therefore, option A is NOT a correct statement
B. Established businesses do not create a business plan.
It is equally important for an established business to have a business plan as it is for a startup. Business plan is a vision of the future. If a established business has a well defined business plan, chances of their success and chances of them achieving their goals will be significantly more. Therefore, option B is NOT a correct statement
C. A business plan is a business’s roadmap for the future.
This a true statement. Business plan is termed as a blueprint of success for the business. This means, a business plan lists all the ways, methods by which a business will sale its services/products and achieve its goals set for the future. Therefore, option C is a correct statement.
D. A business plan guarantees a business’s success.
It is true that a well formulated business plan increases chances of success, but it does not guarantee success. This is because there are many other factors for determining the success, one of which is execution of the business plan and ideas. If the business plan is not properly executed, it will be of no use. Therefore, option D is NOT a correct statement.
Answer:
C
Explanation:
A.) The first step is documenting a plan for your business when you decide to start a business.
B.) All established business started with a business plan.
C.) A business plan is literally supposed to be a road map for the future so you know what to do in the future with your business.
D.) All businesses had a business plan and some businesses fail. Nothing guarantees success except for good sales.