Answer and Explanation:
The indications of the effect of each of following transactions are as follows
Particulars Assets Liabilities Stockholder equity
a. Borrowed
money from bank Increase Decrease No effect
b. Sold land for Cash increase No effect No effect
cash at Land decrease
a price equal
to its cost
c. Paid a liability Decrease Decrease No effect
d. Returned for credit Decrease Decrease No effect
some of the office
equipment previously
purchased on credit
but not yet paid for
e. Sold land for cash at Cash increase No effect Increase as Gain
a price in excess of cost Land decrease
f. Purchased a computer Increase Increase No effect
on credit
g. The owner invested
cash in the business Increase No effect Increase
h. Purchased office Increase in office No effect No effect
equipment for cash Decrease in cash
g. Collected an Increase in cash No effect No effect
account receivable Decrease in account
receivable
Kingbird Company is negotiating to lease a piece of equipment to MTBA, Inc. MTBA requests that the lease be for 9 years. The equipment has a useful life of 10 years. Kingbird wants a guarantee that the residual value of the equipment at the end of the lease is at least $4,000. MTBA agrees to guarantee a residual value of this amount though it expects the residual value of the equipment to be only $2,000 at the end of the lease term. If the fair value of the equipment at lease commencement is $60,000, what would be the amount of the annual rental payments Kingbird demands of MTBA, assuming each payment will be made at the beginning of each year and Kingbird wishes to earn a rate of return on the lease of 6%? (
Answer:
$ 7,994
Explanation:
Fair Value of lease 60,000
Less Present value of garanteed residual value$ 2,368
($4000*1/1.06^9)
Amount to be recovered through periodic payment $ 57,632
PVAD (9 years ,6%) 7.20979
Minimum Lease at the beginning of each year (C/D) $ 7,994
Therefore the amount of the annual rental payments Kingbird demands of MTBA, assuming each payment will be made at the beginning of each year and Kingbird wishes to earn a rate of return on the lease of 6 $7,994
Waldo consumes only apples and bananas and bananas are an inferior good for him. The price of apples increases, but there is an increase in his income that keeps him on the same indifference curve as before. (Waldo has convex preferences, and he prefers more to less of either good.)
a After the change, Waldo will buy fewer of both goods.
b After the change, Waldo will buy more of both goods.
c After the change, Waldo will buy more bananas and fewer apples.
d After the change, Waldo will buy fewer bananas and more apples.
e We would need to know his utility function to determine whether any of the above statements are true.
Answer:
The correct answer to this question is option C
Explanation:
Solution
Any difference curve will show all the combinations of goods that gives the consumer the same level of utility or same level of satisfaction.
For this, after the change Waldo will by more bananas and few apples
From the given question, The right answer here is option C
The Pritchett Corporation has two divisions--East and West. The divisions have the following revenues and expenses: East West Sales $500,000 $550,000 Variable costs 200,000 275,000 Traceable fixed costs 150,000 180,000 Allocated common corporate costs 135,000 170,000 Net operating income (loss) $ 15,000 $( 75,000) The management of Pritchett is considering the elimination of the West division. If the West division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected by this decision. Given these data, the elimination of the West division would result in an overall company net operating income (loss) of:
Answer:
($155,000)
Explanation:
The computation of the net operating income or loss by considering the elimination of the west division is shown below:
Sales $500,000
Less:
Variable Cost ($200,000)
Traceable Fixed cost ($150,000)
Common Corporate cost ($305,000) ($135,000 + $170,000)
Net Operating Loss ($155,000)
We simply deduct the all cost from the sales revenue so that the net operating loss could come
Shawl Corporation's variable overhead is applied on the basis of direct labor-hours. The standard cost card for product F02E specifies 5.5 direct labor-hours per unit of F02E. The standard variable overhead rate is $6.80 per direct labor-hour. During the most recent month, 1,560 units of product F02E were made, and 8,700 direct labor-hours were worked.
The actual variable overhead incurred was $52,635.
Required:
a. What was the variable overhead rate variance for the month?
b. What was the variable overhead efficiency variance for the month?
Answer:
(a) $6,525 (b) $816
Explanation:
Solution
Given that:
(a) The variable overhead rate variance for the month:
The variable overhead rate variance = (Actual rate - Standard rate) * Actual hours
=(($52,635/8700) -$6.80)* 8,700 hours
=($6.05-$6.80) * 8,700 hours
= $6,525 Favorable
(b) The variable overhead efficiency variance for the month:
The variable overhead efficiency variance = (Actual hours - Standard hours) * Standard rate
= (8,700 Hours -(1,560 units * 5.5 Hours/Unit)) * $ 6.80
= (8,700 Hours- 8,580 Hours) * $6.80
= $816 Which is unfavorable
he following information was taken from the 2018 financial statements of Jenny Gardner Corporation: Inventory, January 1, 2018 $ 180,000 Inventory, December 31, 2018 240,000 Accounts payable, January 1, 2018 150,000 Accounts payable, December 31, 2018 240,000 Sales revenue 1,200,000 Cost of goods sold 800,000 If the direct method is used in the 2018 statement of cash flows, what amount should Jenny Gardner report as cash payments to suppliers
Answer:
$770,000
Explanation:
Purchase = Ending inventory +Cost of goods sold- Beginning inventory Purchased
= $240,000+$800,000-$180,000= $860,000
Cash paid to suppliers = Beginning AP+ Purchased -Ending AP Cash Payments
= $150,000+$860,000-$240,000 =
$770,000
Therefore the amount that Jenny Gardner should report as cash payments to suppliers is $770,000
On January 1, 20X8, Polo Corporation acquired 75 percent of Stallion Company's voting common stock for $300,000. At the time of the combination, Stallion reported common stock outstanding of $200,000 and retained earnings of $150,000, and the fair value of the noncontrolling interest was $100,000. The book value of Stallion's net assets approximated market value except for patents that had a market value of $50,000 more than their book value. The patents had a remaining economic life of ten years at the date of the business combination. Stallion reported net income of $40,000 and paid dividends of $10,000 during 20X8.
Required:
a) Based on the preceding information, what balance will Polo report as its investment in Stallion at December 31, 20X8, assuming Polo uses the equity method in accounting for its investment?
Answer:
Polo will report $318,750 as its investment in Stallion at December 31, 20X8
Explanation:
Common stock = $300,000 acquired at 75%
Net income = $40,000
Pay dividends = $10,000
Increase in value of Patent = $50,000
Economic Life = 10
Amortization = $5,000
Therefore, the $ 5000 would be reduced from the net income.
Investments in Polo = $300,000 + [0.75 × (40000 - 10000 - 5000)]
= $300,000+ 0.75(25,000)
= $300,000+ $18,750
= $318,750
Company incurred the following costs while producing 400 units: direct materials, $ 6 per unit; direct labor, $ 27 per unit; variable manufacturing overhead, $ 19 per unit; total fixed manufacturing overhead costs, $ 4 comma 000; variable selling and administrative costs, $ 10 per unit; total fixed selling and administrative costs, $ 3 comma 200. There are no beginning inventories. What is the operating income using absorption costing if 400 units are sold for $ 180 each?
Answer:
$40,000
Explanation:
The operating income using absorption costing is find out by using the following equation
Sales revenue $72,000 (400 units × $180)
Less:
Direct material cost $2,400 (400 units × $6)
Direct labor cost $10,800 (400 units × $27)
Variable manufacturing overhead $7,600 (400 units × $19)
Fixed manufacturing overhead $4,000
Variable selling and admin cost $4,000 (400 units × $10)
Fixed selling and admin cost $3,200
Operating income using absorption costing $40,000
We simply subtract all expenses from the sales so that the operating income under absorption costing could arrive
Carbamate Manufacturing produces a pesticide chemical and uses process costing. There are three processing departmentslong dashMixing, Refining, and Packaging. On January 1, the Refining Department had 2,000 gallons of partially processed product in production. During January, 30,000 gallons were transferred in from the Mixing Department, and 29,000 gallons were completed and transferred out. At the end of the month, 3,000 gallons of partially processed product remained in the Refining Department. The weightedminusaverage method is used. See additional details below.
Refining Department, ending balance at January 31
Percent completed for materials cost: 92%
Percent completed for conversion cost: 76%
What was the total number of equivalent units of production for conversion costs for the month of January for the Refining Department?
Answer:
Equivalent unit for conversion cost= 31,280 units
Explanation:
Under the weighted average method of valuation, to account for completed units, it is assumed that the entire degree of work required is done in the period under consideration. So there is no separation of the completed units into opening inventory and fully worked.
Equivalent units are notional whole units which represent incomplete work and are used to apportion cost between work progress and completed work
Equivalent unit = Degree of completion × number of units
Equivalent unit for conversion cost
Item units Equivalent unit
transferred 29,000 100%× 29,000 = 29,000
Closing inventory 3,000 76%× 3,000 = 2280
Total equivalent unit 31,280
Equivalent unit for conversion cost= 31,280 units
Summary data for Benedict Construction Co.'s (BCC) Job 1227, which was completed in 2017, are presented below:
Bid Price: $450,000
Contract cost: 2016 -180,000
2017 -195,000
Gross Profit: 75,000
Estimated Cost to Complete:
12/31/2016 $200,000
12/31/2017 0
1. Assuming BCC uses the percentage-of-completion method of revenue recognition, the gross profit recognized in 2016 would be (rounded to the nearest thousand):
2. Assuming BCC uses the percentage-of-completion method of recognition the gross profit recognized in 2017 would be (rounded to the nearest thousand):
3. Assuming BCC used the completed contract method to recognize revenue, what would gross profit have been in 2016 and 2017 (rounded to the nearest thousand)?
2016 2017
a. $36,000 $39,000
b. $30,000 $45,000
c. $70,000 $5,000
d. $ 0 $75,000
4. Assuming BCC used the cost recovery method to recognize revenue under IFRS, what would gross profit have been in 2016 and 2017 (rounded to the nearest thousand)?
Answer:
Explanation:
Bid price - $450,000
Contract cost 2016- $ 180,000
Contract cost in 2017 - $195,000
Gross profit = $75,000
Estimated cost to complete at 2016 - $200,000
Percentage completion in 2016 - 180000/380000* 100 =47 %
Revenue recognized in 2016 - 47% * 450,000 = 211,500
Gross profit = 211,500- 180,000 = 31,500
2017
Revenue recognized - 53% = $238,500
Cost $195,000
Gross profit $43,500
3)Completed contract method -
Income are recognized when contract is completed
2016 - No revenue generated / recorded
2017
Revenue - 450,000
Cost to date - 375,000
Gross profit - 75,000
4) When using the cost recovery method under IFRS , an equal amount of income and revenue is recognized in the early life time of the project
2016
Income - 180000
Cost- 180000
Gross profit - 0
2017
Income -450000
cost 375,000
Gross profit - $75,000
Multiple Versus Single Overhead Rates, Activity Drivers Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Activity Driver Activity Capacity Setting up equipment $480,000 Number of setups 600 Ordering costs 360,000 Number of orders 18,000 Machine costs 840,000 Machine hours 42,000 Receiving 400,000 Receiving hours 10,000 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $600,000 $800,000 Direct labor $480,000 $480,000 Units completed 16,000 8,000 Direct labor hours 6,000 2,000 Number of setups 400 200 Number of orders 6,000 12,000 Machine hours 24,000 18,000 Receiving hours 3,000 7,000 The company's normal activity is 8,000 direct labor hours. Required: 1. Determine the unit cost for each model using direct labor hours to apply overhead. Unit Cost Model A $ Model B $ 2. Determine the unit cost for each model using the four activity drivers. Round your answers to nearest cent. Unit Cost Model A $ Model B $ 3. Which method produces the more accurate cost assignment?
Answer:
1. $260 ; $165 and $225
2. $132.50 and $290
3. Activity Driver Method.
Explanation:
As per the data given in the question,
1)
Overhead rate =(Direct labor + Ordering cost + Machine cost +Receiving) ÷ (Direct labor hour for A + Direct labor hour for B)
= ($480,000 + $360,000 + $840,000 +$400,000) ÷ (6,000+$2,000)
= $260
Model A cost per unit = (Direct material +Setting up)÷Units +(Direct labor hour×Overhead rate÷Units)
=($600,000+$480,000)÷$16,000 +($6,000×$260÷ $16,000)
= $165
Model B cost per unit = ($800,000+$480,000)÷$8,000 +($2,000×$260÷ $8,000)
= $225
2)
Model A cost =((Direct material + direct labor)+(direct labor×no. of setups÷number of setup)+(ordering cost×no. of orders÷machine hours)+(machine costs×no. of orders÷machine hours)+(receiving×receiving hours÷receiving hours)) ÷ Units
= (($600,000+$480,000) + ($480,000×400÷600) + ($360,000×$12,000÷$18,000) +($840,000×$18,000÷$42,000) + ($400,000×3,000÷$10,000)) ÷ $16,000
= $132.50
Model B cost = (($800,000+$480,000) + ($480,000×200÷600) + ($360,000×$12,000÷$18,000) +($840,000×$18,000÷$42,000) + ($400,000×7,000÷$10,000)) ÷ $8,000
= $290
3)
The more accurate cost assignment is produced by Activity Driver Method.
We simply applied the above formulas
You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: penguin patties, raskels, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together.
As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods.
Run-of-the-Mills provides your marketing firm with the following data: When the price of penguin patties increases by 5%, the quantity of raskels sold decreases by 4% and the quantity of kipples sold increases by 5%.
Your job is to use the cross-price elasticity between penguin patties and the other goods to determine which goods your marketing firm should advertise together.
1. Complete the first column of the following table by computing the cross-price elasticity between penguin patties and raskels, and then between penguin patties and kipples. In the second column, determine if penguin patties are a complement to or a substitute for each of the goods listed. Finally, complete the final column by indicating which good you should recommend marketing with penguin patties.
Relative to Penguin Patties
Cross-Price Elasticity of Demand Complement or Substitute Recommend Marketing with Penguin Patties (Yes or No)
Raskels
Kipples
Answer;
Raskels = 0.8 Substitute
Kipples = -1 Complement
Explanation:
Cross-price
elasticity of demand , Complement
Raskels (-4%)/(-5%) = 0.8 Substitute
Kipples (5%)/(-5%) = -1 Complement
Recommended
Raskels No
Ripples Yes
Cross price elasticity = Percentage change in quantity demanded of a good/Percentage change in price of another good.
If it is positive, then it means that the good is a substitute and should not be advertised together.
And If it is complement, then the good is a complement and should be advertised together.
You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: penguin patties, raskels, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of penguin patties decreases by 5%, the quantity of raskels sold decreases by 4% and the quantity of kipples sold increases by 6%. Your job is to use the cross-price elasticity between penguin patties and the other goods to determine which goods your marketing firm should advertise together.
Complete the first column of the following table by computing the cross-price elasticity between penguin patties and raskels, and then between penguin patties and kipples. In the second column, determine if penguin patties are a complement to or a substitute for each of the goods listed. Finally, complete the final column by indicating which good you should recommend marketing with penguin patties.
Relative to Penguin Patties
Cross-Price Elasticity of Demand Complement or Substitute Recommend Marketing with Penguin Patties (Yes or No)
Raskels
Kipples
Answer: Please refer to Explanation
Explanation:
Cross Price Elasticity of Demand measures the responsiveness of Quantity demanded of one good to the price of another good.
Remember that according to the laws of Supply and Demand when prices rise, demand drops.
When the Cross Price Elasticity is POSITIVE, it is said that the goods are SUBSTITUTES because a price increase (decrease) in one leads to more (less) of the other being demanded because they can be switched for one another like Coke and Pepsi.
When Cross Price Elasticity is NEGATIVE however then the goods are COMPLIMENTS because an increase (decrease) in the price of one good led to a reduction(increase) in demand of the other good. This proves that the goods compliment each other and so their demand moves in the same direction.
Raskals and Penguin Patties.
Cross Price ED (Raskals and Penguin Patties) = Percentage change in quantity demanded of Raskals/ Percentage change in price of Penguin Patties
Cross Price ED (Raskals and Penguin Patties) = -4%/-5%
= 0.8
This is positive so Penguin Patties and Raskels are Substitutes albeit weak ones.
Kipples and Penguin Patties.
Cross Price ED (Kipples and Penguin Patties) = Percentage change in quantity demanded of Kipples/ Percentage change in price of Penguin Patties
Cross Price ED (Kipples and Penguin Patties) = 6%/-5%
= -1.2
As it is a negative figure, Penguin Patties and Kipples are Compliments albeit weak ones as well.
Units of production data for the two departments of Continental Cable and Wire Company for November of the current fiscal year are as follows: Drawing Department Winding Department Work in process, November 1 6,000 units, 50% completed 2,200 units, 70% completed Completed and transferred to next processing department during November 82,200 units 81,400 units Work in process, November 30 4,600 units, 65% completed 3,000 units, 25% completed a. If all direct materials are placed in process at the beginning of production, determine the direct materials and conversion equivalent units of production for November for the Drawing Department. If an amount is zero, enter in "0".
Answer and Explanation:
As per the data given in the question,
Calculation for direct material and equivalent conversion is presented below:
Particulars Materials Conversion cost
Units (a) % of completion (b) Equivalent units (a ×b) % of completion (d) Equivalent units (a × d)
Beginning WIP 6,000 units 0% 0 50%
3,000 units
Completed units 76,200 units 100% 76,200 100%
76,200 units
Ending WIP 4,600 units 100% 4,600 units 65%
2,990 units
Total 86,800 units 80,800 units
82,190 units
Working notes
1. The 50% is considered as 50% is beginning work in process so the remaining would be considered
2. The 76,200 units is come from
= 82,200 units - 6,000 units
= 76,200 units
3. And at last we total beginning WIP + completed units and ending WIP
A company's planned activity level for next year is expected to be 100,000 machine hours. At this level of activity, the company budgeted the following manufacturing overhead costs:
Variable Fixed
Indirect materials $90,000 Depreciation $37,500
Indirect labor 120,000 Taxes 7,500
Factory supplies 15,000 Supervision 30,000
A flexible budget prepared at the 90,000 machine hours level of activity would show total manufacturing overhead costs of
$277,500.
$202,500.
$270,000.
$225,000.
Answer:
b
Explanation:
MJ Logistics has decided to build a new warehouse to support its supply chain activities. They have the option of building either a large warehouse or a small one. Construction costs for the large facility are $15 million versus $5 million for the small facility. The present value of the after tax profit (excluding construction costs) over the expected life of the warehouses depends on the volume of demand. In the large warehouse, if there is high demand, the company will make $35 million, and if there is low demand, the company will make $20 million. In the small warehouse, if there is high demand, the company will make $15 million, and if there is low demand, the company will make $ 9 million. The probability of high demand has been estimated to be 40% by the VP of Marketing for MJ Logistics. This estimate holds true regardless of whether a large or small warehouse is built.Construct a decision tree reflecting the components of the decision facing MJ Logistics. Be sure to clearly state the decision MJ Logistics should make as a risk-neutral company.
Answer:
13000000million dollars kiddo
Explanation:
Suppose that after hurricane​ Irene, the average income in Cape​ Charles, Virginia decreased by 2 percent. In response to this change in​ income, suppose the quantity of steak demanded in Cape Charles​ (holding the price of steak​ constant) decreased by 12 percent. What is the income elasticity of demand for steak in Cape​ Charles? The income elasticity of demand for steak in Cape Charles is _______. ​(Enter your response rounded to two decimal​ places.) In this​ instance, steak in Cape Charles is _______
Answer:The income elasticity of demand for steak in Cape Charles is ___6.0%____. In this​ instance, steak in Cape Charles is __A luxury good_____
Explanation:
The formula for calculating income elasticity is given as
Percentage Change in demand divided by the Percentage change in income
.
Income Elasticity = 12%/-2%= 6%
Luxury goods have an income elasticity of demand greater +1 what we can conclude from this is that buying streak from Cape Charles is not an essential economic activity because a fall in income resulted to a proportionate decrease in quantity demanded.
In this instance, steak in Cape Charles is a Luxury good _____
An insurance company monitors customer complaints. There are several possible problem categories including wrong bill sent, charges too high, failure to add new coverage, deletion of existing coverage and incorrect address. Determine the percentage that each problem contributes to customer complaints.
Answer:
Pareto Diagram
Explanation:
I think your question is missed of key information, allow me to add in and hope it will fit the original one.
Please have a look at the attached photo.
My answer:
The Pareto chart, named after Vilfredo Pareto, is a type of chart that consists of columns and lines in which the independent values are represented by lower-order columns and values. The cumulative sum is represented by a straight line.
The vertical vertical axis is used to measure the frequency of occurrence, but it can also be replaced to measure costs or a different unit of calculation depending on the purpose. The vertical vertical axis is used to measure the cumulative percentage of the total number of occurrences, the total cost or the sum of a unit of measurement depending on the purpose. Because values are arranged in descending order, the cumulative function will be a concave function
The purpose of the Pareto chart is to find out in a group of causes (often there are many), which are the most important causes.
So Pareto Diagram is the best determiner that each problem contributes to customer complaints.
Hope it will find you well.
The management at Dime Corporation is investigating purchasing equipment that would increase sales revenues by $527,000 per year and cash operating expenses by $339,800 per year. The equipment would cost $425,000 and have a 10 year life with no salvage value. Dime Corporation uses straight-line depreciation for all fixed assets. The simple rate of return on the investment is closest to (ignore income taxes): A. 44.05% B. 54.05% C. 27.46% D. 34.05%
Answer:
option (D) : 34.05%
Explanation:
As per the data given in the question,
Computation of Simple rate of return :
Investment = $425,000
Depreciation = (Initial cost - salvage value) ÷ useful life
= ($425,000 - 0) ÷ 10
= $42,500
Net profit = Sales revenue - cash operating expense - Depreciation
= $527,000-$339,800-$42,500
= $144,700
Simple rate of return = Net Profit ÷ Investment
= $144,700 ÷ $425,000
= 34.05%
Hence, option (D) is correct answer
Sarbanes-Oxley does not require:
A) companies and their independent accountants to report on the effectiveness of the companies' internal controls.
B) companies to turn over responsibility for establishing and maintaining internal controls for financial reporting to auditors.
C) all publicly held companies to comply with the act.
D) companies to file their internal control reports with the 10-K report with the Securities and Exchange Commission.
Answer:
B) companies to turn over responsibility for establishing and maintaining internal controls for financial reporting to auditors.
Explanation:
Sarbanes- Oxley is popularly called SOX and which is also know as the ''Public Accounting Reform and Investor Protection Act'' in the United States' Senate and ''Corporate and Auditing Accountability, Responsibility and Transparency Act'' is a USA federal law the sets out new regulations for all U.S public company boards, management and public accounting firms. Some part of the Act makes provisions that apply to privately owned companies.
The Sarbanes-Oxley is named after the bill sponsors that is Senator Sarbanes and a U.S Representative known as Micheal G. Oxley and this bill makes sure that the top management of a company must each individually determine and certify the accuracy of all financial information provided or stated. This bill was enacted in 2002 to curb a number of major corporate accounting scandals, especially those affecting big accounting firms like ; Enron, Tyco International, Adelphia, Peregrine Systems, and WorldCom that cost investors to loose a lot of money when the their shares collapsed.
As a guiding principal companies and organizations are supposed to adhere to the options mentioned above except for option B which states: companies to turn over responsibility for establishing and maintaining internal controls for financial reporting to auditors.
Rafa runs a profit maximizing firm. It turns out that for Rafa his fixed costs are $1,000 and his avoidable fixed costs are $600. In his current short run situation when he has successfully set his marginal revenue equal to his marginal cost where marginal costs are rising, he is disappointed to discover that his economics profits are negative. In fact at this production level his profits are $- 500.
Required:
1. Which one of the following statements is TRUE?
A) Rafa's accounting profits must also be negative in the short run.
B) Rafa should shut down in the short run.
C) Rafa should continue to produce at a loss in the short run.
D) If Rafa is a monopolist, he should continue to operate in the short run, otherwise he should shut down.
Answer: C) Rafa should continue to produce at a loss in the short run.
Explanation:
Rafa should continue to produce in the short run because he stands a chance of making profit in the long run. His avoidable fixed costs are $600 and his Economic profits are -$500. In the long run, all costs are variable which means that he should be able to avoid the $600 fixed costs. When he does this, he will then be making an Economic profit of $100 because the $600 in Avoidable fixed cost will be just that, avoided and when that is offset against the -$500, he will get a $100 profit.
Financial data for Safety Hire as of 30 June 2019 are:
Required:
Prepare an income statement for the month of June and a balance sheet in account format for Safety
Hire as at 30 June 2019
Answer:
Hi, the question you have given has missing data, however the following can be noted when dealing with the required.
Income statement for the month of June
The Income Statement contains Revenues and Revenue Expenditures
Step 1 ; Obtain the Sales Amounts
Step 2 : Obtain the Cost of Sales Amounts
Step 3: Obtain the Operating and Non-Operating Expenses Amounts
Step 4: In Vertical Format or T - Account Prepare and Calculate the Income or Loss
Income or Loss = Sales - Cost of Sales - Expense
Balance sheet in account format for Safety Hire as at 30 June 2019
Balance Sheet contains balances of Assets, Liabilities and Capital (Which included Income or loss calculated in Income Statement above)
The Accounting Equation must be borne in mind ; Assets = Liabilities + Capital
The Account Format Must have entries as follows :
Debit :
Enter Assets Balances
Credit:
Enter Liabilities Balances
Enter Capital Balances (Which include Income or loss calculated in Income Statement above)
Explanation:
Note key notes as explained above.
Merck & Co., Inc. is a global, research-driven pharmaceutical company that discovers, develops, manufactures, and markets a broad range of human and animal health products. The following are excerpts from the financial review section of the company’s annual report.
MERCK & CO., INC.
Financial Review Section (partial).
In the United States, the Company has been working with private and governmental employers to slow the increase of health care costs.
Outside of the United States, in difficult environments encumbered by government cost containment actions, the Company has worked with payers to help them allocate scarce resources to optimize health care outcomes, limiting potentially detrimental effects of government actions on sales growth.
Several products face expiration of product patents in the near term.
The Company, along with other pharmaceutical manufacturers, received a notice from the Federal Trade Commission (FTC) that it was conducting an investigation into pricing practices.
Required:
1. In light of the above excerpts from Merck's annual report, discuss some unique pricing issues faced by companies that operate in the pharmaceutical industry.
2. What are some reasons why the same company often sells identical drugs for dramatically different prices in different countries? How can the same drug used for both humans and animals cost significantly different prices?
3. Suppose that Merck has just developed a revolutionary new drug. Discuss the steps it would go through in setting a price. Include a discussion of the information it would need to gather, and the issues it would need to consider.
Find the given attachment
The following transactions were completed by the company.
a. The company completed consulting work for a client and immediately collected $5,500 cash earned
b. The company completed commission work for a client and sent a bill for $4,000 to be received within 30 days
c. The company paid an assistant $1,400 cash as wages for the period
d. The company collected $1,000 cash as a partial payment for the amount owed by the client in transaction b
e. The company paid $700 cash for this period's cleaning services.
Enter the impact of each transaction on individual items of the accounting equation. (Enter decreases to account balances with a minus sign.)
Find the given attachments
Rose is a human resources manager for a rapidly growing corporation. The firm recently hired 100 new workers, 10 of whom were involved in workplace accidents soon after they were hired. It was determined that alcohol usage was the cause of these accidents. Top management has asked Rose to do a better job in screening potential workers for alcohol abuse to avoid this in the future. Rose should point out that in fact the 10 percent of the recent hires with alcohol issues is actually much lower than the overall percentage of employees with alcohol issues that are involved in industrial injuries and fatalities in the U.S. True or False
Answer:
True.
(Approximately 40 percent of industrial injuries and fatalities can be linked to alcohol consumption).
Explanation:
According to research carried out, it was observed that approximately, about 40 percent of industrial injuries and fatalities can be linked to alcohol consumption.
Moreso, alcohol has historically, and continued to, hold an important role in social engagement and bonding for many. Social drinking or moderate alcohol consumption for many is pleasurable.
However, alcohol consumption especially in excess is linked to a number of negative outcomes: as a risk factor for diseases and health impacts; crime; road incidents; and for some, alcohol dependence. Globally alcohol consumption causes 2.8 million premature deaths per year.
Global, the entry patterns of alcohol consumption, patterns of drinking, beverage types, the prevalence of alcoholism; and consequences, including crime, mortality and road incidents.
On January 1, 2021, Tabitha Designs purchased a patent for $402,000 giving it exclusive rights to manufacture a new type of synthetic clothing. While the patent had a remaining legal life of 15 years at the time of purchase, Tabitha expects the useful life to be only eight more years. In addition, Tabitha purchased equipment related to production of the new clothing for $158,000. The equipment has a physical life of 10 years, but Tabitha plans to use the equipment only over the patent's service life and then sell it for an estimated $52,000. Tabitha uses straight-line for all long-term assets. The amount to expense in 2024 related to the patent and equipment should be: Multiple Choice $104,000. $98,800. $63,500. $40,050.
Answer:
$63,500
Explanation:
Patent
Amortization Charge - Patent = Cost / Useful life
= $402,000/8
= $50,250
Same amount is charged over the useful life, hence 2024 Amortization Charge - Patent will be $50,250
Equipment
Depreciation Expense = (Cost - Salvage Value) / Useful Life
= ($158,000-$52,000) / 8
= $ 13,250
Same amount is charged over the useful life, hence 2024 Depreciation Expense - Equipment will be $ 13,250
Total Expense
Amortization Charge - Patent $50,250
Depreciation Expense - Equipment $ 13,250
Total $63,500
On January 1, 20X8, Polo Corporation acquired 75 percent of Stallion Company's voting common stock for $300,000. At the time of the combination, Stallion reported common stock outstanding of $200,000 and retained earnings of $150,000, and the fair value of the noncontrolling interest was $100,000. The book value of Stallion's net assets approximated market value except for patents that had a market value of $50,000 more than their book value. The patents had a remaining economic life of ten years at the date of the business combination. Stallion reported net income of $40,000 and paid dividends of $10,000 during 20X8.
a) Provide the journal entries recorded by Polo at December 31, 20X8 on its book if it accounts for its investment in Stallion using equity method.
b) Provide all consolidation entries needed at December 31, 20X8, to prepare consolidated financial statements.
Answer:
Explanation:
Base on the question been given to us, we can solve this using equity method as seen below
Investments in Polo = 300000+0.75*(40000-10000-5000*)
300000+0.75*(25000)
300000+18750
$318,750
Increase in value of Patent $50,000
Economic Life 10
Amortization $5,000
The $ 5000 would be reduced from the net income
The before-tax income for Ivanhoe Co. for 2020 was $104,000 and $81,200 for 2021. However, the accountant noted that the following errors had been made:
1. Sales for 2020 included amounts of $39,000 which had been received in cash during 2020, but for which the related products were delivered in 2021. Title did not pass to the purchaser until 2021.
2. The inventory on December 31, 2020, was understated by $9,400.
3. The bookkeeper in recording interest expense for both 2020 and 2021 on bonds payable made the following entry on an annual basis.
Interest Expense 14,400 Cash 14,400 The bonds have a face value of $240,000 and pay a stated interest rate of 6%. They were issued at a discount of $16,000 on January 1, 2020, to yield an effective-interest rate of 7%.
4. Ordinary repairs to equipment had been erroneously charged to the Equipment account during 2020 and 20221. Repairs in the amount of $8,600 in 2021 and $9,300 in 2022 were so charged. The company applies a rate of 10% to the balance in the Equipment account at the end of the year in its determination of depreciation charges.
Prepare a schedule showing the determination of corrected income before taxes for 2020 and 2021.
Answer:
Corrected Income for 2020 is $ 86540 and for 2021 is $160,610
Explanation:
Ivanhoe Co.
Correction of Income for 2020 2021
The before-tax income $104,000 $81,200
1) Sales (39,000) 39000
2) Inventory (9,400) 9,400
3) Entry wrongly made 14,400 14,400
4) Correct Entry 15,680 15,680
5) Add Depreciation 860 930
Corrected Income $ 86540 $ 160,610
1) Sales are included when the purchaser gets the title . They are the liability of the seller so they will be deducted from 2020 sales and added to 2021.
2) Ending inventory is deducted from COGS as it is understated it will be deducted from 2020 income and added to the 2021 income when it becomes the opening inventory.
3) Interest was received not given so the it will be treated as revenue not expense and added to the income statement.
4) Actual interest received was ($ 240,000- $16,000)* 7% = $ 15680. So an entry for actual interest will be made.
5) Additional amount of depreciation was charged to 2020 and 2021 income statement which will be added back. 10 % of $ 8600= $ 860 for 2020 and 10% of $ 9,300= $ 930 for 2021
Coast-to-Coast Inc. is considering the purchase of an additional delivery vehicle for $70,000 on January 1, 20Y1. The truck is expected to have a five-year life with an expected residual value of $15,000 at the end of five years. The expected additional revenues from the added delivery capacity are anticipated to be $65,000 per year for each of the next five years. A driver will cost $40,000 in 20Y1, with an expected annual salary increase of $2,000 for each year thereafter. The annual operating costs for the truck are estimated to be $6,000 per year.
Determine the expected annual net cash flows from the delivery truck investment for 20Y1.
Answer:
First year: 19,000
Second year: 17,000
Third year: 15,000
Forth year: 13,000
Fifth year: 30,000
Explanation:
We need to subtract from the expected revenue the expected cost for Cash revenue 65,000
Driver Cost: (40,000)
Operating cost: (6,000)
Net cash flow: 19,000
This value stand for the first year
Then this will decrease by 2,000 each year as the driver wages increase over time.
Second year: 19,000 - 2,000 = 17,000
Third year: 17,000 - 2,000 = 15,000
Forth year: 15,000 - 2,000 = 13,000
In the last year we must also include the residual value of the equipment:
Fifth year: 13,000 - 2.000 + 15,000 = 30,000
Dianne Doolittle wants to download an itemized invoice for the QuickBooks Online subscriptions on her wholesale billing account for last month.
The statement can be downloaded in which 2 file formats?
Answer:. CSV and PDF
Explanation:
QuickBooks is an Accounting software that was developed to mainly help small to medium size companies maintain a proper accounting system.
The Wholesale billing option enables the owner to pay the subscription for the clients that they moved to the wholesale billing list.
When downloading an itemized invoice for this there are 2 file formats that QuickBooks permits people to use which are CSV and PDF file formats.
Given the following diagrams: Q1 = 12 bags. Q2 = 7 bags. Q3 = 19 bags. The market equilibrium price is $46 per bag. The price at point a is $70 per bag. The price at point c is $10 per bag. The price at point d is $56 per bag. The price at point e is $31 per bag. The price at point f is $67 per bag. The price at point g is $32 per bag. Apply the formula for the area of a triangle (Area = ½ × Base × Height) to answer the following questions.
What is the dollar value of the total surplus (producer surplus plus consumer surplus) when the allocatively efficient output level Q1 is being produced?
Answer:
$360
Explanation:
The computation of dollar value of the total surplus is shown below:-
Consumer surplus = 1 ÷ 2 × (Point A price - Equilibrium price) × ( Q1 output level )
= 1 ÷ 2 × ($70 - $46) × 12
= $144
Now the producer surplus is
= Producer surplus = 1 ÷ 2 × (Equilibrium price - Point c price ) × Q1 Output level
= 1 ÷ 2 × ($46 - $10) × 12
= $216
Now Total surplus when output level Q1 is being produced is
As we know that
Total surplus = Consumer surplus + Product Surplus
= $144 + $216
= $360
Answer:
$360
Explanation:
The computation of dollar value of the total surplus is shown below:-
Consumer surplus = 1 ÷ 2 × (Point A price - Equilibrium price) × ( Q1 output level )
= 1 ÷ 2 × ($70 - $46) × 12
= $144
Now the producer surplus is
= Producer surplus = 1 ÷ 2 × (Equilibrium price - Point c price ) × Q1 Output level
= 1 ÷ 2 × ($46 - $10) × 12
= $216
Now Total surplus when output level Q1 is being produced is
As we know that
Total surplus = Consumer surplus + Product Surplus
= $144 + $216
= $360
Explanation: