Answer:
$478,850
Explanation:
The computation of capitalized cost of the land is shown below:-
Capitalized cost of the land = Purchase cost + Demolition of old building + Cost of Title insurance + Attorney fees + Property taxes paid - Scrap value of the building
= $450,000 + $22,000 + $1,400 + $700 + ($8,000 - $750) - $2,500
= $450,000 + $22,000 + $1,400 + $700 + $7,250 - $2,500
= $481,350 - $2,500
= $478,850
So, for computing the capitalized cost of the land we simply applied the above formula.
May Corporation, a merchandising firm, has budgeted sales as follows for the third quarter of the year:
July $80,000
August $90,000
September $70,000
Cost of goods sold is equal to 65% of sales. The company wants to maintain a monthly ending inventory equal to 130% of the Cost of Goods Sold for the following month. The inventory on June 30 is less than this ideal since it is only $65,000. The company is now preparing a Merchandise Purchases Budget.
Required:
a. The budgeted purchases for July are ____________.
Answer:
Purchases= $63,050
Explanation:
Giving the following information:
Sales:
July $80,000
August $90,000
September $70,000
The cost of goods sold is equal to 65% of sales.
The company wants to maintain a monthly ending inventory equal to 130% of the Cost of Goods Sold for the following month.
The inventory on June 30 is less than this ideal since it is only $65,000.
To calculate the purchases for July, we need to use the following formula:
Purchases= sales + desired ending inventory - beginning inventory
Purchases= 80,000*0.65 + (90,000*0.65)*1.3 - 65,000
Purchases= $63,050
The budgeted purchases for July are $63,050.
Budgeted cost of goods sold $52,000
(65% × $80,000)
Add desired ending merchandise inventory $76,050
[(65% × $90,000)×130%]
Total needs $128,050
($52,000+$76,050)
Less beginning merchandise inventory ($65,000)
Required purchases $63,050
($128,050-$65,000)
Inconclusion the budgeted purchases for July are $63,050.
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Kristen Lu purchased a used automobile for $16,750 at the beginning of last year and incurred the following operating costs:
Depreciation ($16,750 ÷ 5 years) $3,350
Insurance $1,700
Garage rent $900
Automobile tax and license $450
Variable operating cost $0.06 per mile
The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage, the car will have zero resale value in five years, so the annual straight-line depreciation is $3,350. The car is kept in a garage for a monthly fee.
Required:
a. Kristen drove the car 16,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round your answers to 2 decimal places.)
b. Kristen is unsure about whether she should use her own car or rent a car to go on an extended cross-country trip for two weeks during spring break. What costs above are relevant in this decision?
Answer:
The average operating cost is $0.46 per mile
In deciding whether to to her use her own car or rent a car the costs are analysed below:
Variable operating cost is a relevant cost
Depreciation is not relevant as it is already cost and also it is sunk cost
insurance is not relevant as well
automobile tax and license is not relevant as it would be paid regardless of the option chosen
Explanation:
The average cost comprises of the variable operating cost per mile as well as the fixed operating cost per mile
variable operating cost per mile is $0.06
fixed cost operating cost=fixed costs/total miles driven=($3,350+$1,700+$900+$450)/16000=$6400 /16000=$0.40
average cost per mile=$0.06+$0.40=$0.46
"5. Problems and Applications Q5 You are hired as a consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost: P=MC, P>ATC Which of the following statements are true about the firm? Check all that apply. The firm can increase its profit by reducing its output. The firm is possibly maximizing profit. The firm is in long-run equilibrium."
Answer: The firm can increase its profit by reducing its output.
Explanation:
Monopolistic Competitive Firms maximise profit at the point where MR = MC. This firm is producing at MC = P. This means that should the company want to make profit, they should reduce their output. This will have the effect of increasing their price and hence marginal revenue as well as reducing marginal cost to a point where MR = MC where they will then be maximising profit.
The manufacturing overhead budget of Paparella Corporation is based on budgeted direct labor-hours. The November direct labor budget indicates that 6,000 direct labor-hours will be required in that month. The variable overhead rate is $2.00 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $79,200 per month, which includes depreciation of $21,000. All other fixed manufacturing overhead costs represent current cash flows.
Required:A. Determine the cash disbursements for manufacturing overhead for November.B. Determine the predetermined overhead rate for November.
Answer:
The answer for question A is $ 70,200
The answer for question B is $ 15.20
Explanation:
A.
Budgeted direct labor hours = 6,000 hours
Variable overhead rate = $2.00
Variable manufacturing overheads = 6000 x $2 = $ 12,000
Fixed manufacturing overhead = $ 79,200
Total Manufacturing overheads = $ 91,200
Depreciation = $ 21,000
Cash disbursement of manufacturing overhead for November = total manufacturing overheads - Depreciation
= $91,200 - $ 21,000 = $ 70,200
B.
From above, we have Total Manufacturing overheads = $ 91,200
Budgeted direct labor hours = 6,000 hours
Predetermined overhead rate for the month of November = Total Manufacturing overheads ÷ Budgeted direct labor hours
= $91,200 ÷ 6000 = $ 15.20
Suppose the government wants to reduce the total pollution emitted by three firms. Currently, each firm is creating 4 tons of pollution, for a total of 12 tons. The government is considering the following two methods to reduce total pollution to 6 tons:
1. The government sets regulation specifying that each of the three firms must cut its pollution in half.
2. The government allocates two tradable pollution permits to each of the three firms. Each permit allows the firm to emit 1 ton of pollution. Assume the negotiation and exchange of permits are costless.
The following table shows the cost each firm faces to eliminate each unit of pollution.
Cost of Eliminating: Firm X Firm Y Firm Z
First ton of pollution $950 $280 $600
Second ton of pollution $1,650 $300 $720
Third ton of pollution $2,500 $350 $880
Fourth ton of pollution $3,550 $450 $1,050
Suppose the owners of the three firms get together and agree on a trading price of $800 per permit.
Complete the following table with the action each firm will take at this permit price and the amount of pollution each firm will eliminate.
Firm Initial Pollution Permit Allocation (Tons of pollution) Action Final Amount of Pollution Eliminated (Tons of pollution)
Firm X 2
Firm Y 2
Firm Z 2
Determine the total cost of eliminating 6 tons of pollution under each method, and enter the amounts in the following table.
Method Total Cost of Eliminating 6 Tons of Pollution (Dollars)
Regulation
Tradable pollution permits
Answer:
The method cost of eliminating 6 is stated below in the explanation section while,The regulation = 4500, The tradable pollution permits = 2700
Explanation:
Solution
Now,
Every Firm will remove the pollution until the cost of eliminating is lower than the cost of permit.
Thus,
Firm A will not eliminate any pollution as cost is higher than the permit cost, he will prefer to buy 2 more permits from other Firm
Firm B will eliminate 4 tons of pollution as cost is lower for elimination therefore will not require permit and thus sell his 2 permits to firm A.
Then
Firm C will eliminate 2 tons as after that cost is higher than the permit cost.
Firm A Action : Eliminate 2 tons and purchase 2 permits, Total tons eliminated 0
Firm B Action: Eliminate 4 tons and sell 2 permits, Total tons eliminated 4
Firm C Action : Eliminate 2 tons, Total Tons eliminated 2
If the government would have regulated then each firm would have to eliminate 2 tons each hence the cost would have been = 950+1650 + 280+300+600+720=4500
While with tradable permits cost is =280+300+350+450+600+720=2700
Journalize the entries for the following transactions. Refer to the Chart of Accounts for exact wording of account titles. (Note: The company uses a clearinghouse to take care of all bank as well as non-bank credit cards used by its customers. )
A. Sold merchandise for cash, $30,500. The cost of the goods sold was $16,165.
B. Sold merchandise on account, $254,300. The cost of the merchandise sold was $134,779
C. Sold merchandise to customers who used MasterCard and VISA, $162,900. The cost of the merchandise sold was $86,337.
D. Sold merchandise to customers who used American Express, $72,000. The cost of the merchandise sold was $38,160.
E. Received and paid an invoice from National Clearing House Credit Co. for $7,010, representing a service fee paid for processing MasterCard, VISA, and American Express sales.
Answer and Explanation:
The journal entries are shown below:
A. Cash Dr $30,500
To Sales revenue $30,500
(Being the merchandise is sold for cash)
For recording this we debited the cash as it increased the assets and credited the sales revenue as it also increased the revenue
Cost of goods sold Dr $16,165
To Merchandise inventory $16,165
(being the cost of goods sold is recorded)
For recording this we debited the cost of goods sold as it increased the expenses and reduced the assets so merchandise inventory is credited
B. Account receivable Dr $254,300
To Sales revenue $254,300
(Being the merchandise sold for account)
For recording this we debited the account receivable as it increased the assets and credited the sales revenue as it also increased the revenue
Cost of goods sold Dr $134,779
To Merchandise inventory $134,779
(being the cost of goods sold is recorded)
For recording this we debited the cost of goods sold as it increased the expenses and reduced the assets so merchandise inventory is credited
C. Cash Dr $162,900
To Sales revenue $162,900
(Being the merchandise is sold for cash)
For recording this we debited the cash as it increased the assets and credited the sales revenue as it also increased the revenue
Cost of goods sold Dr $86,337
To Merchandise inventory $86,337
(being the cost of goods sold is recorded)
For recording this we debited the cost of goods sold as it increased the expenses and reduced the assets so merchandise inventory is credited
D. Cash Dr $72,000
To Sales revenue $72,000
(Being the merchandise is sold for cash)
For recording this we debited the cash as it increased the assets and credited the sales revenue as it also increased the revenue
Cost of goods sold Dr $38,160
To Merchandise inventory $38,160
(being the cost of goods sold is recorded)
For recording this we debited the cost of goods sold as it increased the expenses and reduced the assets so merchandise inventory is credited
E. Credit card expenses Dr $7,010
To Cash $7,010
(Being the cash paid is recorded)
For recording this we debited the credit card expense as it increased the expenses and reduced the assets so cash is credited
In 2009, the great recession finally took its toll on the Alamo Title company in San Antonio, Texas. The housing business was in steep decline and the size of the company was reduced to half its former size through layoffs. Alamo Title was experiencing many new and unexpected challenges to keep its doors open for business. Management was discussing what style of management would be the most effective to use now at the company and brought you in to advise them. Which management style would you recommend they use?
Answer:
Theory X management style
Explanation:
Theory X is focused on the standard laborer's suppositions. This theory of management believes the average worker has no motivation, lacks accountability and is focused to specific ambitions. Overall, managers of theory X style assume their workers are less smart, stupider, and only operate for a reliable income.
In such a management style the managers keeps strong supervision over their subordinates, therefore, it will be suitable style as the company is already in steep condition and further problems might lead to total loss.
Jaime works as a Power Plant Manager. What are some tasks that he may be involved in?
Answer:
a plant manager would be involved in a variety of tasks such as:
overseeing the plan and its daily operations that the manufacturing/production facility are in charge of
managing employees
increase production within the plant
implement and monitor safety procedures
might work on plants machinery or the planet management software
Jonathan owns a shoe factory that produces flashy shoes, but he pays his workers the bare minimum wage so that he can live large. The workers at his factory, led by Cosku, have formed a union, and are threatening to go on strike unless they receive a higher wage so that they can reasonably support their families. Five years ago, when Jonathan hired most of the workers, unemployment was very high. Now, unemployment is very low. This has changed the relative bargaining power of the employers and the employees, which Cosku and Jonathan remember from when they took ECON 104. Which statement most accurately describes how their relative power now may affect the campaign for higher wages?a) Jonathan - the factory owner - has more bargaining power than before, because he knows they will be very grateful to him for hiring them when unemployment was high. He thinks he won't have to pay workers more.b) Cosku and the workers have higher bargaining power, because they are less replaceable due to unemployment. There are very few people who Jonathan can hire to replace the workers, and if there are no workers, Jonathan cannot continue to live large. Thus, the power dynamics of the situation favor the workers winning higher wages.c) Both parties are in a better position. If Jonathan gives workers a higher wage, it will cause inflation, and then he can charge more for the flashy shoes from his factory. Workers will make more, and so will Jonathan.d) Cosku and the workers are in a worse position because they already make minimum wage. The government will see their protests and think that it's silly, because they are already paid a legal wage.
Answer:
b. Cosku and the workers have higher bargaining power, because they are less replaceable due to unemployment. There are very few people who Jonathan can hire to replace the workers, and if there are no workers, Jonathan cannot continue to live large Thus, the power dynamics of the situation favor the workers winning higher wages
Explanation:
Since in the given question it is mentioned that the employees will go on strike until they do not received higher wages so that they can support their families
And in case of low unemployment, the relative bargaining power of the employers and the employees is changed i.e high. Moreover they are very Less person through which they can hire in order to replace the workers and in the case when there is no workers so he is unable to continue its business operations due to which he cannot live large.
So to overcome this he have to agree to pay the higher wages to the employees other wise the workers could leave the organization
Answer:
b) Cosku and the workers have higher bargaining power..........dynamics of the situation favor the workers winning higher wages
Explanation:
Labour markets wages & employment are determined on the basis of :- labour demand by firms & labour supply by workers ; and relative bargaining power of buyer firms & seller workers.
Firms more bargaining power leads to reducing pressure on wage rates with more employment. Workers more bargaining power leads to increasing pressure on wage rates with less employment.
At the time of Jonathan's shoe factory inception, more unemployment meant firms had more bargaining power & hence the wages were lower. However, no hike in wages with time make workers demand higher wage with strike warning. Meanwhile, less unemployed labour supply available implies that firms have no substitute labour to hire. So, union & workers have higher bargaining power & labour irreplaceability due to less unemployment - state that Jonathan has no other alternative than to accept labour favouring notion of higher wages.
beyond lower turnover ,how else does costco benefit from treating its employees well?
Answer:
In simple words, by treating the employees well in the organisation businesses can get a lot of unexpected profits besides the lower cost due to lower employee turnover.
Employees in such organisation will always be motivated to work hard and self align their interests with objectives and goals of the organisation. Also employee satisfaction leads to lesser conflict with the workplace which further leads to more efficiency.
The following information is available for Skysong Corporation for the year ended December 31, 2022.
Beginning cash balance $35,000
Accounts payable decrease 3,200
Depreciation expense 83,000
Accounts receivable increase 9,700
Inventory increase 13,400
Net income 336,000
Cash received for sale of land at book value 35,000
Sales revenue 744,500
Cash dividends paid 10,800
Income tax payable increase 4,900
Cash used to purchase building 147,500
Cash used to purchase treasury stock 39,700
Cash received from issuing bonds 216,000
Required:
(a) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis (15,000).)
Answer and Explanation:
The preparation of the cash flow statement is presented below:
Skysong Corporation
Cash flow statement
For the year ended December 31, 2022
Cash flow from operating activities
Net operating income $336,000
Adjustment made
Add: Depreciation expenses $83,000
Less: Increase in account receivable -$9,700
Less: Increase in inventory -$13,400
Less: Decrease in account payable -$3,200
Add: Increase in income tax payable $4,900
Net cash provided by operating activities $397,600
Cash flow from investing activities
Purchase of Building -$147,500
Sale of land $35,000
Net cash used by investing activities -$112,500
Cash flow from financing activities
Purchase of treasury stock -$39,700
Issuance of the common stock $216,000
Dividend paid -$10,800
Net cash used by financing activities $165,500
Increase in cash $450,600
Add: Beginning cash balance $35,000
Ending cash balance $485,600
The items which shows in a positive sign represents the cash inflow and the items which depicts in a negative sign shows the cash outflow
The management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appear below: Sales $ 794,600 Variable expenses $ 412,900 Fixed manufacturing expenses $ 270,200 Fixed selling and administrative expenses $ 230,600 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $191,000 of the fixed manufacturing expenses and $165,500 of the fixed selling and administrative expenses are avoidable if product B90D is discontinued. Required: What would be the financial advantage (disadvantage) of dropping B90D? Should the product be dropped?
Answer:
$25,200
Net operating income would reduced by $25,200
Explanation:
As per the given question the solution of financial advantage (disadvantage) of dropping B90D is provided below:-
Net operating income of Dropping B90D = Sales - Variable Expenses - Fixed Manufacturing Expenses - Fixed Selling & Administrative expenses
= $794,600 - $412,900 - $191,000 - $165,500
= $25,200
So, we have calculated the financial advantage (disadvantage) of dropping B90D by using the above formula.
Net operating income would reduced by $25,200
• 25,000 shares of preferred stock, cumulative, 5%, $40 par was issued for $60/share. • The annual cash dividend was declared and paid to the above preferred stock. • The company purchased 12,000 shares of common stock at $68 per share to be held as Treasury stock. • Interest of $32,000 was paid to bondholders. • Bonds Payable with a par value of $400,000 were retired at $432,000. Compute the net cash flow from financing activities (parentheses indicate an outflow).
Answer:
$202,000
Explanation:
Computation of Net Cash Generated From Financing Activities
Cash generated from the preferred stock (25,000 * $60) $1500,000
Less: Preferred stock Dividend (25000 * $40 par * 5%) ($50,000)
Less: Treasury stock (12,000 shares * $68 per share) ($816,000)
Less: Interest Payments ($32,000)
Less: Bond Redemption (Interest Exclusive) ($400,000)
Net Cash Generated From Financing Activities $202,000
Sofia tells her Accountant, Luca, to prepare the financial statements of her business and then send them to Chase Manhattan Bank. She tells Luca that she wants to get a loan for her struggling business. Luca prepares the statements and emails them to the Bank. Six months later, Sofia's business files for bankruptcy. Chase files suit against Luca because he prepared the financial statements negligently. He made Sofia's business look better than it really was. If Luca was negligent in preparing the statements, under which rule or rules can he be liable to Chase for negligence
Answer:
Law of tort
Explanation:
A tort can be basically described as an act or omission, which gives rise to an injury or harm, that could results into a civil wrong that could warrant a liability.
A tort can exist in 3 forms;
1. Negligence
2. Intentional torts, and
3. Strict liability.
The scenario under study here is a clear case of negligence. Here, the bank opined that there is deliberate and deceitful representation of the financial statement. Luca, the accountant, acknowledged that he was negligent in the preparation of this financial statements. The rule that governs this borders on negligence, and thus laws of tort comes handy in addressing this.
There are different forms of negligence. Luca is said to be liable to Chase for negligence under the tort laws.
The aspect of tort law known as negligence is simply known to be the harm caused by failing to act due to carelessness due to some circumstances.A person who suffers loss due to the negligence of another person can sue for damages to compensate for their harm. it often applies to both individuals and businesses.
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Prepare the issuer's journal entry for each of the following separate transactions.
A. On March 1, Atlantic Co. issues 45,000 shares of $3 par value common stock for $305,000 cash.
B. On April 1, OP Co. issues no-par value common stock for $75,000 cash.
C. On April 6, MPG issues 2,500 shares of $25 par value common stock for $44,000 of inventory, $160,000 of machinery, and acceptance of a $94,000 note payable.
Answer:
Double entry is given in the explanation.
Explanation:
Part A. The common stock is always recorded at par which is $3 per share here and the Capital Paid In is the remainder amount which is calculated as under:
Capital Paid In = Cash Received - Common Stock
Here,
Capital Received is $305,000
Capital Stock = 45,000 shares * $3 par value = $135,000
By putting the values, we have:
Capital Paid In = $305,000 - $135,000 = $170,000
Double Entry would be:
Dr Cash $305,000
Cr Common Stock $135,000
Cr Capital Paid In $170,000
Part B. The common stock of the stocks that are issued at no par value is always recorded at money received which means there is no capital paid-in.
Double Entry would be:
Dr Cash $75,000
Cr Common Stock $75,000
Part C. The inventory received is worth $44,000 which would be debited to inventory account. In exchange of inventory $44,000 and machinery worth $160,000 (Machinery will also be debited), 2500 shares having $25 par value (common stock will be credited at par and the excess of par would be capital paid-in) and $94,000 note payables were issued (Note payable would be credited at $94,000).
Double Entry would be:
Dr Inventory $44,000
Dr Machinery $160,000
Cr Note Payable $94,000
Cr Common Stock (2000 * $25) $50,000
Cr Capital Paid In (Balancing Figure) $60,000
sment / ACCT100 Assessment 3
Superhub Ltd carries an inventory of a type of electrical device for electrician. The store uses the FIFO method and a perpetual inventory
system. Business records indicate the following transactions for the device.
July 1 (beginning): the store had 100 units of device costing $103 each
July 10: 150 devices were purchased each costing $91
July 15: 173 devices were sold
July 22: 200 devices were bought for $113 each.
July 30: 194 devices were sold
Determine the amounts of Superhub Ltd's ending inventory (at 31 July) in the month of July using the FIFO method.
st
Answer:
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Answer:
The value of closing inventory using FIFO under perpetual inventory system is $9379
Explanation:
The FIFO or first in first out method is a method of inventory valuation which basis the value of ending inventory on the assumption that the inventories that were purchased first were the ones that were sold first and the closing or ending inventory is comprised of the most recent purchases.
The perpetual method of inventory recording makes real time record and changes in the inventory level as soon as a transaction relating to inventory occurs.
The ending inventory of the business can be calculated as follows:
Transaction Purchases Sale Balance
1. Opening Inventory (100 * 103) 10300
2. July 10 purchase (150 * 91) 13650 23950
3. July 15 sale (100*103 + 73*91) 16943 7007
4. July 22 purchase (200 * 113) 22600 29607
5. July 30 sale (77*91 + 117*113) 20228 9379
Totals 36250 37171 9379
The value of closing inventory is $9379. The sale made on July 15 was made through using 100 units of opening inventory at a cost of $103 per unit and 73 units from July 10 purchases at $91 per unit.The sale made on July 30 was made through using the remaining units of July 10 purchases (150 - 73 = 77) at $91 per unit and using the units from July 22 purchase (194 - 77 = 117) at $113 per unit.The closing inventory in units is = 200 - 117 = 83The cost of closing inventory is 83 * 113 = $9379Van pays the following medical expenses this year:
a. $1500 for doctor bills for van's son who is claimed as a dependant by Van's former spouse.
b. $300 for Van's eyeglasses
c. $900 for Van's dental work
d. $3800 for Van's face lift. Van, a newscaster, is worried about the wrinkles around his eyes.
Required:
1. How much can Van include on his return as qualified medical expenses before limitation?
Answer:
The amount Van can include on his return as qualified medical expenses before limitation is $2,700
Explanation:
The amount of medical expenses that Van can include on his return as qualified medical expenses before limitation are the following:
a. $1,500 for doctor bills for van's son who is claimed as a dependant by Van's former spouse.
b. $300 for Van's eyeglasses
c. $900 for Van's dental work
Therefore, amount Van can include on his return as qualified medical expenses before limitation=$1.500+$300+$900
amount Van can include on his return as qualified medical expenses before limitation=$2,700
Carla Vista Choice sells natural supplements to customers with an unconditional sales return if they are not satisfied. The sales returns period extends 60 days. On February 10, 2021, a customer purchases $3500 of products (cost $1750). Assuming that based on prior experience, estimated returns are 20%. The journal entry to record the actual return of $200 of merchandise includes a:______
Answer:
debit to Returned Inventory for $100
Explanation:
The Journal entry is following below:
1. Sales Returns & Allowance Dr, $200
To Account Receivable $200
(Being sales return is recorded)
Here, we debited the sales return and allowances as it is return and we credited the accounts receivable as it reduces the assets.
2. Returned Inventory Dr, $100
To Cost of Goods Sold $100
(Being returned Inventory is recorded)
Here, we debited the returned inventory as it is return while we credited the cost of goods sold as the expenses is reduced.
Working note
Returned inventory = Actual return × Cost ÷ Customer purchase
= $200 × $1,750 ÷ $3,500
= $200 × 0.5
= $100
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 30,000 Rets per year. Costs associated with this level of production and sales are given:
Unit Total
Direct materials $15 $450,000
Direct labor 8 240,000
Variable manufacturing overhead 3 90,000
Fixed manufacturing overhead 9 270,000
Variable selling expense 4 120,000
Fixed selling expense 6 180,000
Total cost $45 $1,350,000
The Rets normally sell for $50 each. Fixed manufacturing overhead is constant at $270,000 per year within the range of 25,000 through 30,000 Rets per year.
Required:
Assume that due to a recession, Polaski Company expects to sell only 25,000 Rets through regular channels next year.
A large retail chain has offered to purchase 5,000 Rets if Polaski is willing to accept a 16% discount off the regular price.
There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%.
However, Polaski Company would have to purchase a special machine to engrave the retail chain's name on the 5,000 units. This machine would cost $10,000. Polaski Company has no assurance that the retail chain will purchase additional units any time in the future.
Determine the impact on profits next year if this special order is accepted.
Refer to the original data, assume again that Polaski Company expects to sell only 25,000 Rets through regular channels next year.
The U.S. Army would like to make a one-time-only purchase of 5,000 Rets.
The Army would pay a fixed fee of $1.80 per Ret, and in addition it would reimburse Polaski Company for all costs of production (variable and fixed) associated with the units.
Since the army would pick up the Rets with its own trucks, there would be no variable selling expenses of any type associated with this order.
If Polaski Company accepts the order, by how much will profits be increased or decreased for the year. Assume the same situation as that described above, except that the company expects to sell 30,000 Rets through regular channels next year. Thus, accepting the U.S. Army's order would require giving up regular sales of 5,000 Rets.
If the Army's order is accepted, by how much will profits be increased or decreased from what they would be if the 5,000 Rets were sold through regular channels?
Answer:
production level 30,000 units
production costs at that level:
direct materials $15 per unit = $450,000direct labor $8 per unit = $240,000variable manufacturing overhead $3 per unit = $90,000fixed overhead $9 per unit = $270,000variable selling expense $4 per unit = $120,000fixed selling expense $6 per unit = $180,000total costs per unit $45 = $1,350,000sales price $50 per unit, profit $5 per unit = $150,000
fixed manufacturing overhead constant between 25,000 - 30,000 units
scenario 1:
due to a recession, sales decrease to 25,000 units:
special order for 5,000 at $42 per unit
additional costs = $10,000 for special machine
without special order with special order
total units sold 25,000 30,000
total revenue $1,250,000 $1,460,000
- variable px costs -$650,000 -$780,000
- fixed ma. overhead -$270,000 -$270,000
gross profit $330,000 $410,000
- variable selling exp. -$100,000 -$115,000
- fixed selling exp. -$180,000 -$180,000
- special machine $0 -$10,000
net profit $50,000 $105,000
profits will increase by $50,000 if the special order is accepted
scenario 2:
normal sales levels 30,000 units, Army wishes to purchase 5,000 units:
special order for 5,000 at production costs + $1.80
additional costs = $10,000 for special machine
without special order with special order
total units sold 30,000 30,000
total revenue $1,500,000 $1,434,000
- variable px costs -$780,000 -$780,000
- fixed ma. overhead -$270,000 -$270,000
gross profit $450,000 $384,000
- variable selling exp. -$120,000 -$100,000
- fixed selling exp. -$180,000 -$180,000
net profit $150,000 $104,000
profits will decrease by -$46,000 if the Army's special order is accepted
Environmental recovery company RexChem Partners plans to finance a site reclamation project that will require a 4-year cleanup period. If the company borrows $4.1 million now, how much will the company have to get at the end of each quarter in order to earn 15% per year, compounded weekly on its investment?
Answer:
728,839.57883 per quarter.
Explanation:
1. Effective Annual Rate = 10%
Effective rate continuously compounded = eln(1+r) - 1
ln(1.1) = 0.09531018
Montly rate = 0.09531018/12 = 0.07942515
e0.07942515 -1 = 0.00797414
Hence, monthly continuous rate =
0.797414%
2. Effective Quarterly rate
= (1+(Rate per year/52))Number of weeks
=(1+Rate per quarter)4,
(1+(0.15/52))208=(1+r)4,
r = 16.1583394% per quarter
Now, using the PMT function in excel,
=PMT(16.1583394%,16,-4100000)
728,839.57883
per quarter
Therefore In order to earn 15% per year compounded weekly on its investment at the end of each quarter, the company will have to get $728,839.57883
3) SNG's stock is selling for $15 per share. The firm's income, assets, and stock price have been growing at an annual 15% rate and are expected to continue to grow at this rate for 3 more years. No dividends have been declared as yet, but the firm intends to declare a $2.00 dividend at the end of the last year of its supernormal growth. After that, dividends are expected to grow at the firm's normal growth rate of 6%. The firm's required rate of return is 18%. You should:
Answer:
Since the current stock's price should be $11.97, then the stock is overpriced, so you should not buy it.
Explanation:
if we use the dividend growth model to determine the intrinsic stock price:
Div₃ = $2.00
Div₄ = $2.12 (6% growth rate)
using the dividend growth model we can determine the terminal price of the stock in year 3
P₃ = $2.12 / (18% - 6%) = $17.67
terminal price in year 3 = $2 + $17.67 = $19.67
to determine the present value of the stock we must discount the future value by 18%:
present value = $19.67 / (1 + r)ⁿ = $19.67 / 1.18³ = $11.97
Since the current stock's price should be $11.97, then the stock is overpriced.
A shift in the supply curve can be caused by:
A. a change in buyers' incomes
B. a change in the price of a good
C. a change in one of the determinants of supply
D. a shift in demand.
Answer:
C. a change in one of the determinants of supply
Explanation:
Some of the factors that can cause a shift in supply includes:
Change in the price of input
Government regulations
Changes in the number of suppliers
Technological advancement
Only changes in price leads to movement along the supply curve
I hope my answer helps you
Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $73, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $90 million, a coupon rate of 6 percent, and sells for 98 percent of par. The second issue has a face value of $75 million, a coupon rate of 5 percent, and sells for 110 percent of par. The first issue matures in 22 years, the second in 7 years. Both bonds make semiannual coupon payments.Required:a. What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.)b. What are the company’s capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.)
Answer:
a. 0.7467 and 0.2534
b. 0.2504 and 0.7495
Explanation:
As per the data given in the question,
The capital structure is a combination of the both debt and equity where debt is the cheapest source while the equity is the expensive source and the risk and return is high in case of equity as compared with the debt
a)
Company's capital structure weight on the basis of Book Value Weight :
Debt = (face value of first issue + face value of second issue)÷ (face value of first issue + (face value of second issue + year × share value)
= ($90+$75) ÷ ($90+$75+7×$8)
= 0.7467
Equity = 1 - Debt
= 1 - 0.7467
= 0.2534
b)
Company's capital structure weight on the basis of Market Value Weight :
Debt = (face value of first issue × % sale +face value of second issue × sale %) ÷ (face value of first issue × % sale +face value of second issue × sale% + year × current share price)
= ($90× 98%+$75× 110%) ÷ ($90× 98%+$75× 110%+7×$73)
= 0.2504
Equity = 1 - debt
= 1 - 0.2504
= 0.7495
Aquatica makes underwater camera housings for divers. The process begins with a solid rectangular block of aluminum which is used to make a single housing. A Computer Numerically Controlled (CNC) machine drills into the block to make the metal "frame" of the housing. Each block requires 15 minutes of drilling. The frame is then chemically treated in a series of baths. There is ample capacity in the treating stage. Finally, a worker must manually attach the various buttons and components to the metal housing. This assembly takes 120 minutes per housing per worker and Aquatica has 6 workers trained to do this task. The CNC machine requires a 30 minute setup time before the production of a batch can begin.
Housing type Demand rate (housings per hour)
D7000 0.4
5DS Mark IlI 0.5
AN-5n 0.6
D300 0.7
T2i 0.8
a. If the CNC machine produces 12 housing between setups, what would be its capacity (in housings per hour)?
b. Assuming the process is supply constrained, what is the utilization (as a percentage) of the CNC machine if it operates in batches of 12 housings? (Round your answer to 2 decimal places.)
c. Assuming the process is supply-constrained and operates with batches of 12 housings, what is the average inventory of housings?
d. Aquatica actually makes 5 different housings. As already mentioned, the CNO machine must be setup whenever production switches from one housing to the other. In each case, the setup time is 32 minutes and it takes 17 minutes to drill the block for each type of housing. Demands for the housings are given in the table above. If they wish to minimize inventory while satisfying their demand, how many D7000 housings should they produce in each batch?
Answer:
(a) capacity=3.05hours
(b) utilisation percentage= 0.90 or 90%
(c) Average inventory=1.22
(d)Batch size of D700 is approximately equal to 7
Explanation:
(a)To calculate Capacity
=( Batch size) /(set up time + processing time)
= 12/ (32+17×12) = 12/236 minutes = (12/236) ×60 hours =
3.05 hours
(b)Capacity for assembly: = 113/6 = 18.8/minute = 60/18.8 = 3.19/hour as assembly takes 113 minutes per housing per worker and 6 workers are working at the moment Assembly time for batch of 12 housings = 12/3.19 hr = 3.77 hr CNC time for batch = 32+(17×12 )= 236 minutes = 3.93 hr Utilization of CNC: = (17*12)/60/3.766 = 0.902815 = 0
O.90 or 90%
(c)Average inventory = 1/2 ×batch size × (1-(capacity for assembly × 1/4))
= 1/2×12*(1-(3.186/4) = 1.22(Approximately)
(d)Total demand of all the housings = 0.4+0.5+0.6+0.7+0.8 = 3/hour
Setup time per housing = 32/60 hr = 0.53 hr
Setup time for 5 housings will be = 5×0.53 = 2.67 hr
The Processing time = 17/60 hr = 0.2833 hr
Total batch size = (2.67×3)/(1-3×0.2833) = 53.36
Batch size of D700 = 53.36*(0.4/3) = 7.11 = 7(approximately)
(a) The capacity is =3.05hours
(b) The utilization percentage is = 0.90 or 90%
(c) The Average inventory is =1.22
(d) when the Batch size of D700 is approximately equal to 7
How to Calculate Average inventory?(a) Now To calculate Capacity is:
Then =( Batch-size) /(set up time + processing time)
After that = 12/ (32+17×12) = 12/236 minutes = (12/236) ×60 hours =
3.05 hours
(b) When the Capacity for assembly is = 113/6 = 18.8/minute = then 60/18.8 is = 3.19/hour as assembly takes 113 minutes per housing per worker and also 6 workers are working at the moment.
After that Assembly time for batch of 12 housings is = 12/3.19 hr = 3.77 hr Then C-N-C time for batch is = 32+(17×12 )= 236 minutes = 3.93 hr After that Utilization of C-N-C is = (17*12)/60/3.766 = 0.902815 = 0
O.90 or 90%
(c) Then the Average inventory is = 1/2 ×batch size × (1-(capacity for assembly × 1/4))
Then = 1/2×12*(1-(3.186/4) = 1.22(Approximately)
(d) Then the Total demand of all the housings is = 0.4+0.5+0.6+0.7+0.8 = 3/hour
After that Setup time per housing is = 32/60 hr = 0.53 hr
Then Setup time for 5 housings will be = 5×0.53 = 2.67 hr
Now The Processing time is = 17/60 hr = 0.2833 hr
After that Total batch size is = (2.67×3)/(1-3×0.2833) = 53.36
Then Batch-size of D700 is = 53.36*(0.4/3) = 7.11 = 7(approximately)
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The agreement of the trial balance total is an indication that all transactions have been properly recorded in the books of accounts do you agree justify your answer
Answer: I did not agree that the agreement of trial balance is an indication that all transactions have been properly recorded in the books of account .it only means that certain types of errors have not been made.
Explanation:
Trial balance is an account prepared in order to test the arithmetical accuracy of entries in the ledger account. When a double entry principle has been observed then the total of debit entry must equal the total of credit entry in the trial balance. The balancing of the two sides of the trial balance does not mean that the account is correct. It means that certain types of errors have not been made. In the sense that there are several types of error which will not affect the balancing of trial balance such as the compensating error, error of original entry, error of omission, error of commission and so on will not affect the balancing of trial balance.
Which of the following statement regarding characteristics of high performance teams is false?
1. High-performance teams have strong core values.
2. High-performance teams turn a general sense of purpose into specific performance objectives.
3. High-performance teams have members who focus on individual effort and excellence.
4. Members of high-performance teams have the right mix of skills.
5. Members of high-performance teams feel collectively accountable.
Answer:
high-performance teams have members who focus on individual effort and excellence.
Explanation:
If team remembers focus on individual efforts and excellence ,it would lead to unnecessary competitions among team members. This can lead to conflict among members and this would be counterproductive.
I hope my answer helps you
Teal Company sells televisions at an average price of $814 and also offers to each customer a separate 3-year warranty contract for $81 that requires the company to perform periodic services and to replace defective parts. During 2017, the company sold 327 televisions and 277 warranty contracts for cash. It estimates the 3-year warranty costs as $19 for parts and $29 for labor, and accounts for warranties separately. Assume sales occurred on December 31, 2017, and straight-line recognition of warranty revenues occurs.
Account Title Debit Credit
1. Cash (Correct) $304,533 (Correct)
2. Sales Rev. (Correct) $279,585 (Correct)
3. Unearned Sales Warranty (Correct) $24948 (correct)
What liability relative to these transactions would appear on the December 31, 2017, balance sheet and how would it be classified?
Answer:
A.
Dr Cash 266,178
Cr Sales Revenue 243,741
Cr Unearned Warranty Revenue 22,437
b)Current Liabilities:Unearned Warranty Revenue 90,579
Long-term liabilities:Unearned Warranty Revenue 181,158
Explanation:
Teal Company
A.
Dr Cash (814*327) 266,178
Cr Sales Revenue 243,741
Cr Unearned Warranty Revenue (277*81) 22,437
b)Current Liabilities:Unearned Warranty Revenue 90,579
(327×277)
Long-term liabilities:Unearned Warranty Revenue 181,158
(90,579×2)
Based on your understanding of bond ratings and bond-rating criteria, which of the following statements is true? During a period of economic growth and in an optimistic environment, the yield spread between US government bonds and corporate bonds could be higher than during an economic recession and a pessimistic environment. During an economic recession and in a pessimistic environment, the yield spread between US government bonds and corporate bonds could be higher than during good economic times. In 2008, the United States began to witness one of the worst recessions since the 1930s. The collapse of the housing bubble in 2006 led to a massive decline in real estate prices, affecting consumers and institutions, especially banking and financial entities. Severe liquidity shortfalls in the United States as well as other global markets led to a serious credit crisis. During the credit crisis of 2008–2009, several banks and other businesses went through a reorganization process or were forced to liquidate. Consider the following example: In December 2008, Hawaiian Telcom took action to strengthen its balance sheet by reducing debt. Although the company continued to operate, its creditors could not collect their debts or loan payments that were due prior to the legal action that the company took. However, on November 30, 2009, the company had $75 million in cash on hand. This is an example of: Liquidation Reorganization
Answer: 1. During an economic recession and in a pessimistic environment, the yield spread between US government bonds and corporate bonds could be higher than during good economic times.
2. Reorganization
Explanation:
1. When there is a higher yield gap between the US Government bonds and Corporate bonds, this means that the Corporate bonds carry more risk. In a Pessimistic Environment, the ability of a company to pay it's Debt obligations is called into question as the economy is going through hard times and they must be as well. If this is the case which it usually is, higher risk will be attached to Corporate bonds which means that the yield spread/gap will be higher in such an environment than in an Optimistic environment.
2. Reorganization refers to the changing of the way a company is run from it's ownership to it's structure and modus operandi. It is usually done to ensure the business survives when it is going through hard times and the current status quo cannot stand. Hawaiian Telecom engaged in Reorganization by engaging in the actions described.
Eastport Inc. was organized on June 5, 2018. It was authorized to issue 380,000 shares of $11 par common stock and 25,000 shares of 5 percent cumulative class A preferred stock. The class A stock had a stated value of $25 per share.
The following stock transactions pertain to Eastport Inc.:
1. Issued 15,000 shares of common stock for $12 per share.
2. Issued 5,000 shares of the class A preferred stock for $51 per share.
3. Issued 60,000 shares of common stock for $15 per share.
Required:
a. Prepare general journal entries for these transactions.
b. Prepare the stockholders' equity section of the balance sheet immediately after these transactions.
Answer:
Dr cash $180,000
Cr common stock $165,000
Cr paid-in capital in excess of par value-common stock $15,000
Dr cash $255,000
Cr preferred stock $125,000
Cr paid-in capital in excess of par -preferred stock $130,000
Dr cash $900,000
Cr common stock $660,000
Cr paid-in capital in excess of par value-common stock $240,000
Stockholders' equity
Common stock $11 par,380,000 authorized,75,000 issued ($165,000+$660,000) $825,000
Preferred stock $25 par,25,000 authorized,5,000 issued $125,000
Total par value $950,000
paid-in capital in excess of par value-common stock
($15,000+$240,000) $255,000
paid-in capital in excess of par -preferred stock $130,000
Total stockholders' equity $ 1,210,000
Explanation:
The issue of 15,000 shares of common stock for $12 each means that cash proceeds of $180,000 (15,000*$12) which is debited to cash and common stock is credited with $165,000 (15,000*$11) while the remaining $15,000 is credited to paid-in capital in excess of par value-common stock
The issue of 5,000 shares of preferred stock for $51 each means that cash proceeds of $ 255,000 (5,000*$51) which is debited to cash and preferred stock is credited with $125,000 (5,000*$25) while the remaining $130,000 is credited to paid-in capital in excess of par value-preferred stock
The issue of 60,000 shares of common stock for $15 each means that cash proceeds of $900,000 (60,000*$15) which is debited to cash and common stock is credited with $660,000 (60,000*$11) while the remaining $ 240,000 is credited to paid-in capital in excess of par value-common stock
Innovative Consulting Co. has the following accounts in its ledger: Cash, Accounts Receivable, Supplies, Office Equipment, Accounts Payable, Common Stock, Retained Earnings, Dividends, Fees Earned, Rent Expense, Advertising Expense, Utilities Expense, Miscellaneous Expense.
Journalize the following selected transactions for October 20Y2 in a two-column journal. Journal entry explanations may be omitted.
Oct. 1 Paid rent for the month, $2,500.
4 Paid advertising expense, $600.
5 Paid cash for supplies, $1,200.
6 Purchased office equipment on account, $9,200.
12 Received cash from customers on account, $15,900.
20 Paid creditor on account, $3,410. 27 Paid cash for miscellaneous expenses, $550.
30 Paid telephone bill for the month, $400.
31 Fees earned and billed to customers for the month, $50,170.
31 Paid electricity bill for the month, $830.
31 Paid dividends, $1,850.
Answer:
Please see the Journal Entry below for Innovative Consulting Co.
Explanation:
Oct. 1
Debit: Rent Expense $2,500
Credit: Cash $2,500
Oct. 4
Debit: Advertising Expense $600
Credit: Cash $600
Oct. 5
Debit: Supplies $1,200
Credit: Cash $1,200
Oct. 6
Debit: Office Equipment $9,200
Credit: Accounts Payable $9,200
Oct. 12
Debit: Cash $15,900
Credit: Accounts Receivable $15,900
Oct. 20
Debit: Accounts Payable $3,410
Credit: Cash $3,410
Oct. 27
Debit: Miscellaneous Expense $550
Credit: Cash $550
Oct. 30
Debit: Utilities Expense $400
Credit: Cash $400
Oct. 31
Debit: Accounts Receivable $50,170
Credit: Fees Earned $50,170
Oct. 31
Debit: Utilities Expense $830
Credit: Cash $830
Oct. 31
Debit: Dividends $1,850
Credit: Cash $1,850