Answer: False
Explanation:
From the question, we are informed that as a part of the internal control over cash receipts by mail, the mailroom sends both the customer checks and the remittance advices to the accounting department. This is not true.
It should be noted that the customer checks and the remittance advices are sent to the cashier and not the accounting department
When the operating activities section of the statement of cash flows is reported using the direct method, the FASB requires:__________.
a. The preparation of the statement of cash flows under the indirect method be completed and reported with the statement of cash flows prepared using the direct method.
b. A reconciliation of net income to net cash provided or used by operating activities.
c. Footnotes to the financial statements disclosing the difference between net income and the cash provided or used by financing activities.
d. The income statement to be prepared under the cash basis of accounting.
e. Noncash investing and financing activities be included in the statement of cash flows.
Answer:
b. A reconciliation of net income to net cash provided or used by operating activities.
Explanation:
FASB is an acronym for Financial Accounting Standards Board. The financial accounting standards board (FASB) is a private, non-profit organization saddled with the responsibility of establishing and maintaining standard financial accounting and reporting for general guidance of individuals such as investors, issuers and auditors. It was founded in 1972 but began operations fully on the 1st of July, 1973 by replacing the Accounting Principles Board (APB) and American Institute of Certified Public Accountants (AICPA).
When the operating activities section of the statement of cash flows is reported using the direct method, the FASB requires a reconciliation of net income to net cash provided or used by operating activities and it should be stated as part of the statement of cash flows or in the footnotes.
A direct method involves the use of the overall accrual-based income statement and converting them sequentially to the cash-basis.
Some examples of operating activities are cash revenue from the sales of a product, cash paid as an expense for merchandise etc.
You’ve been given a customer complaint where a vital piece of Office 365 is not working as expected. The customer explains that the issue is causing their business a great deal of stress and is currently jeopardizing a huge sale. They’re looking to get this issue resolved immediately, how would you manage this scenario? Please provide a written response as if you were emailing the customer today.
Answer:
Dear Customer,
Re: Your complaint with Ref. No. 2233546 - Dysfunctional Office 365
The above caption refers.
We empathise with you over the stress being caused by the Dysfunctional Office 365.
Please be notified that one of our IT experts will be in touch with you shortly to attempt to remotely resolve this issue. We ask that you cooperate by providing all the necessary assistance.
You may be required to provide log on details to your Office 365 Accounts as well as the nature of your IT infrastructure such as :
Make and type of your work station;type of operating system being usednature of internet connectivity and associated infrastructure etc.We are aware that the above information is private and sensitive to your organisation and have proactively taken steps to ensure that all communication, information, are transmitted over highly secure servers with very powerful encryption technologies.
We thank you for your cooperation.
Kind regards,
Moorcroft Company’s budgeted sales and direct materials purchases are as follows:
April May June
Budgeted Sales $300,000 320,000 370,000
Budgeted D.M. Purchases $45,000 54,000 60,000
Moorcroft’s sales are 40% cash and 60% credit. Credit sales are collected 30% in the month of
sale, 40% in the month following sale, and 26% in the second month following sale; 4% are
uncollectible. Moorcroft’s purchases are 50% cash and 50% on account. Purchases on
account are paid 40% in the month following the purchase and 60% in the second month
following the purchase.
Instructions
(a) Prepare a schedule of expected collections from customers for June.
Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Challenge Exercises (For Instructor Use Only)
(b) Prepare a schedule of expected payments for direct materials for June.
(c) Moorcroft’s assistant controller suggested that Moorcroft hire a part time collector to
encourage customers to pay more promptly and to reduce the amount of uncollectible
accounts. Sales are still 40% cash and 60% credit but the assistant controller predicted
that this would cause credit sales to be collected 30% in the month of the sale, 50% in
the month following sale, and 18% in the second month following sale; 2% are
uncollectible.
Prepare a schedule of expected collections from customers for June.
How did these changes impact cash collections? Would it be worth
paying the collector $1,000 per month?
(d) The assistant controller also suggested that the company switch their purchases to 40%
cash and 60% on account to help stretch out their cash payments. There is no
additional interest charge to do this and Moorcroft is still paying their bills on time. There
is no change to the company’s payment pattern.
Prepare a schedule of expected payments for direct materials for June.
How did these changes impact the cash payments for June? Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Challenge Exercises (For Instructor Use Only)
Answer:
a) Month Sales
April $300,000
May $320,000
June $370,000
Schedule of expected collections
For the month of June, 202x
Cash sales during June = $370,000 x 40% = $148,000
Collection from June's credit sales = $222,000 x 30% = $66,600
Collection from May's credit sales = $192,000 x 40% = $76,800
Collection from April's credit sales = $180,000 x 26% = $46,800
Total cash collections during June = $338,200
b) Month DM purchases
April $45,000
May $54,000
June $60,000
Schedule of expected cash payments for direct materials purchases
For the month of June, 202x
Cash purchases during June = $60,000 x 50% = $30,000
Cash payments for May's purchases = $27,000 x 40% = $10,800
Cash payments for April's purchases = $22,500 x 60% = $13,500
Total cash payments during June = $54,300
c) Month Sales
April $299,000
May $337,000
June $387,000
Schedule of expected collections
For the month of June, 202x
Cash sales during June = $370,000 x 40% = $148,000
Collection from June's credit sales = $222,000 x 30% = $66,600
Collection from May's credit sales = $192,000 x 50% = $96,000
Collection from April's credit sales = $180,000 x 18% = $32,400
Total cash collections during June = $343,000
It would be worth to pay the collector since the 2% reduction in uncollectible accounts is worth much more than the $1,000 that he/she earns.
d) Month DM purchases
April $45,000
May $54,000
June $60,000
Schedule of expected cash payments for direct materials purchases
For the month of June, 202x
Cash purchases during June = $60,000 x 40% = $24,000
Cash payments for May's purchases = $32,400 x 40% = $12,960
Cash payments for April's purchases = $27,000 x 60% = $16,200
Total cash payments during June = $53,160
Fifth National Bank just issued some new preferred stock. The issue will pay an annual dividend of $22 in perpetuity, beginning 11 years from now. If the market requires a return of 3.6 percent on this investment, how much does a share of preferred stock cost today
Answer:
$429.06
Explanation:
The computation of the cost of today preferred stock share is shown below:
But before that first determine the preferred stock value of 11 years from now which is
= Annual dividend ÷ rate of return
= $22 ÷ 0.036
= $611.11
Now the current value is
= $611.11 × Present value of discount factor at 3.6% in 10 years
= $611.11 ÷ 1.036^10
= $429.06
Kotrick Company has beginning inventory of units and expected sales of units. If the desired ending inventory is units, how many units should be produced?
Answer: $26,000
Explanation:
Ending Inventory = Beginning Inventory + Units to be produced - Sales
18,000 = 15,000 + Units to be produced - 23,000
Units to be produced = 18,000 + 23,000 - 15,000
Units to be produced = $26,000
Myers Business Systems is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given next: Possible Market Reaction Sales in Units Probabilities Low response 20 .30 Moderate response 35 .20 High response 50 .20 Very high response 90 .30
a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.)
b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer:
a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.)
Possible Market Reaction Sales Units Probability Expected sales
Low response 20 .30 6
Moderate response 35 .20 7
High response 50 .20 10
Very high response 90 .30 27
Total 50 units
b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
mean = (6 + 7 + 10 + 27) / 4 = 12.5
variance = {[0.30 x (20 - 50)²] + [0.20 x (35 - 50)²] + [0.20 x (50 - 50)²] + [0.30 x (90 - 50)²]} / 4 = (270 + 45 + 0 + 480) / 4 = 795 / 4 = 198.75
standard deviation = √198.75 = 14.10 units
If customers share a concern, complaint, or question with you in person, you should remember to use verbal, nonverbal, and listening skills in conjunction with customer service.a. Trueb. False
Answer:
True.
Explanation:
True, the given statement is true because, for any business, customers are the main person for which the company makes the product. If the customer makes some complaint that means he is not happy with the service or product of your company. However, in such a case the company may lose its customers but it is the communication that can hold the customer when he complains. When a customer makes a complaint then it is a must remember all types of skills that can satisfy the customer and it could be verbal communication, nonverbal, and listening skills.
On January 1, 1997, Brian’s stock portfolio is worth $100,000. On September 30, 1997, $5,000 is withdrawn from the portfolio, and immediately after this withdrawal the portfolio has a value of $105,000. Twelve months later, the value of the portfolio is $108,000, and Brian adds $3,000 worth of stock to his portfolio. On December 31, 1998, the portfolio is worth $100,000. What is the two-year time-weighted rate of return for Brian’s stock portfolio?
Answer:
1.93%
Explanation:
Time weighed rate can be calculated by using the formula below
TWR = [(1+HPR1)+(1+HPR2)+(1+HPR3) ...(1+HPRn)
TWR = [(1+HPR1)+(1+HPR2)+(1+HPR3) ...(1+HPRn)HPR = (End value - initial value)/end value
For HPR1:
End value = 110000
Initial value = 100000
(110000-100000)/100000
= 10000/100000
= 0.1
1 + 0.1 = 1.1
For HPR2
End value = 108000
Initial value = 105000
3000/105000
= 0.0286
1 + 0.0286
= 1.0286
For HPR3
End value = 100000
Initial value = 108000 + 3000 that was added to make it 111000
(100000-111000)/111000
= -0.0991
1-0.0991
= 0.9009
TWR = (1.1*1.0286*0.9009)-1
= 0.01933
0.0193 x 100
= 1.93%
The WRT Corporation makes collections on sales according to the following schedule: 30% in month of sale 60% in month following sale 5% in second month following sale 5% uncollectible The following sales have been budgeted: Sales April $ 158,000 May $ 128,000 June $ 141,000 Budgeted cash collections in June would be:
Answer:
Budgeted cash collections in June would be: $127,000
Explanation:
Calculation of the Budgeted Collections for June
In the Month of Sale ($ 141,000 × 30 %) = $42,300
In Month following Sale ($ 128,000 ×60%) = $76,800
In Second Month following sale ($ 158,000 × 5%) = $7,900
Total Budgeted Collections for June = $127,000
Ragas, Inc. sold goods with a selling price of $50,000 in the 2017 and estimated 5% warranty expense for the year. Customers complained of defects, and goods with a cost of $1,500 had to be replaced. Which of the following is the correct journal entry for honoring the warranties with goods?
A. Estimated Warranty Payable 1,500
Cash 1,500
B. Estimated Warranty Payable 1,500
Warranty Expense 1,500
C. Warranty Expense 1,500
Merchandise Inventory 1,500
D. Estimated Warranty Payable 1,500
Merchandise Inventory 1,500
Answer:
D. Estimated Warranty Payable 1,500
Merchandise Inventory 1,500
When the Warranty is honored, the Estimated Warranty account is debited to show the claiming of the expense.
The relevant asset account which in this case is Merchandise inventory is credited to show that it's reduction.
Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $5.3 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent these facilities from a competitor instead. If the land were sold today, the company would net $5.6 million. The company wants to build its new manufacturing plant on this land; the plant will cost $12.8 million to build, and the site requires $800,000 worth of grading before it is suitable for construction. What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?
Answer:
$18.9 million
Explanation:
The computation of the proper cash flow amount to use as the initial investment in fixed assets is shown below:
= Land + building + grading
= $5.3 million + $12.8 million + $800,000
= $18.9 million
We simply added the land, building and grading cost so that the proper cash flow i.e to be used for the initial investment could come
On January 1, 2016, Legion Company sold $200,000 of 10% ten-year bonds. Interest is payable semiannually on June 30 and December 31. The bonds were sold for $177,000, priced to yield 12%. Legion records interest at the effective rate. Legion should report bond interest expense for the six months ended June 30, 2016, in the amount of:_________.A. $8,850B. $10,000C. $10,620D. $12,000
Answer:
C. $10,620
Explanation:
January 1, 2016
Dr Cash 177,000
Dr Discount on bonds payable 23,000
Cr Bonds payable 200,000
discount amortization = ($177,000 x 6%) - $10,000 = $10,620 - $10,000 = $620
June 30, 2016, first coupon payment
Dr Interest expense 10,620
Cr Cash 10,000
Cr Discount on bonds payable 620
Broker James has had his license suspended for two years. The licenses of all the broker-associates and salespersons who work for James are
Available Options Are:
A. Revoked, subject to reinstatement after 30 days.
B. Not affected by the suspension
C. Automatically suspended
D. Placed on inactive status
Answer:
D. Placed on inactive status
Explanation:
The reason is that James was jointly responsible for the actions of his broker-associates and salesperson because they were working under his supervision and that's why now as the license of James has been suspended for 2 years, James is no more jointly accountable for the actions of his associates and salesperson. Hence the licenses of associates and salesperson will be placed on inactive status. To reactive they will have to affiliate themselves to a broker who possesses an active license.
The oversupply of hospitals and in-patient beds in the U.S. produced by the Hill-Burton legislation is the result of: A. The advent of managed care B. Change in the focus of medical education C. Technological advances D. Clinical guidelines E. A and C
Answer:
The oversupply of hospitals and in-patient beds in the U.S. produced by the Hill-Burton legislation is the result of:
E. A and C
(A. The advent of managed care and C. Technological advances).
Explanation:
Affordable Care Act produced a managed care system that aligns financial incentives to better care at lower costs. This has eliminated the need for in-patient admissions. This is because the Affordable Care Act also created Accountable Care Organizations (ACOs) which in turn are focused on boosting preventive efforts in order to attain quality goals. With preventive healthcare, there is reduced need for in-patient admissions to utilize the hospital beds.
Another factor that has reduced in-patient admissions is the prevailing technological advances, especially in the areas of telehealth and telemedicine. These have also drastically reduced the need for in-patients at hospitals, thus freeing more hospital beds as patients can now receive healthcare services from even remote locations.
Sholette Manufacturing Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs) at $10.00 per MH. During the month, the actual total variable manufacturing overhead was $66,430 and the actual level of activity for the period was 7,300 MHs. What was the variable overhead rate variance for the month
Answer:
Variable overhead rate variance is $6,570 Favorable.
Explanation:
Variable overhead rate variance = variable overhead expenditure variance + variable overhead efficiency variance.
Note : Only data for calculation of variable overhead expenditure variance is available
Variable overhead expenditure variance =Actual activity at standard rate - Actual overheads
= ( 7,300 × $10.00) - $66,430
= $6,570 Favorable
Thus,
Variable overhead rate variance is $6,570 Favorable
A grocery store manager must decide how to best present a limited supply of milk and cookies to its customers. Milk can be sold by itself for a profit of $1.50 per gallon. Cookies can likewise be sold at a profit of $2.50 per dozen. To increase appeal to customers, one gallon of milk and a dozen cookies can be packaged together and are then sold for a profit of $3.00 per bundle. The manager has 100 gallons of milk and 150 dozen cookies available each day. The manager has decided to stock at least 75 gallons of milk per day and demand for cookies is always 140 dozen per day. To maximize profits, how much of each product should the manager stock. Which of the following is the constraint that limits the amount of milk the store will use (both in bundles and sold separately) each day
Answer:
m + b ≤ 100 (100 gallons of milk available per day)
Explanation:
there are no options available, so I will prepare my own equations:
the profit function = 1.5m + 2.5c + 3b
where m = gallon of milk, c = dozen of cookies, b = bundle
we need to maximize profits, therefore the constraints will be:
m + b ≤ 100 (100 gallons of milk available per day) c + b ≤ 150 (150 dozen cookies available per day) m + b ≥ 75 (at least 75 gallons of milk are stocked per day) c + b = 140 (daily demand for dozens of cookies) m + c + b ≥ 0 (demand is positive)Report the effects for each of the following independent transactions using the financial statement effects template provided Balance Sheet Noncash Assets Earned Transaction Cash Asset + Liabilities+ Contributed Revenu Capital Capital
(a) Issue stock for $1,500 cash
(b) Purchase inventory for $750 cash
(c) Sell inventory from (b) for $3,000 on credit
(d) Record $750 for cost of inventory sold in (c)
(e) Receive $3,000 cash on receivable from (c) Totals
Answer:
since there is not enough room here, I prepared an excel spreadsheet
Explanation:
A monopolist can sell 200 units of output for $36 per unit. Alternatively, it can sell 201 units of output for $35.80 per unit. The marginal revenue of the 201st unit of output is
Answer:
There is a negative marginal revenue from the sale of 201st units of - $4.2
Explanation:
The marginal revenue is the revenue of the additional unit of output sold. Thus, the marginal revenue is the revenue earned from the 201st unit of the output sold. To calculate the marginal revenue of the 201st unit, we will calculate the total revenue for 200 units and deduct it from the total revenue for 201 units.
Total revenue - 200 Units = 200 * 36 = $7200
Total revenue - 201 Units = 201 * 35.8 = $7195.8
Marginal revenue - 201st unit = 7195.8 - 7200 = - $4.2
There is a negative marginal revenue from the sale of 201st units of - $4.2
Based upon the following data, which of the following mutually exclusive projects should you choose if your required return is 10%?
Year Investment A Investment B
0 -$150 -$150
1 80 40
2 40 50
3 40 60
4 30 55
A. Investment A with an NPV of 633%.
B. Investment B with an NPV of 6.33%.
C. Investment A with an NPV of 10.33%.
D. Investment B with an NPV of 10.33%.
E. Both projects since they have positive NPV's.
Answer:
d
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Investment A
Cash flow in year 0 = -$150
Cash flow in year 1 = $80
Cash flow in year 2 = $40
Cash flow in year 3 = $40
Cash flow in year 4 = $30
I = 10%
NPV = 6.33
Investment A
Cash flow in year 0 = -$150
Cash flow in year 1 = $40
Cash flow in year 2 = $50
Cash flow in year 3 = $60
Cash flow in year 4 = $55
I = 10%
NPV = 10.33
Project B has a higher NPV and it should be chosen
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
The payments you make on your automobile loan are given in terms of dollars. As prices rise you notice you give up fewer goods to make your payments. _____________
Answer:
Explanation:
The scenario in this question happens because the dollar amount you pay for the loan is a nominal value, meaning the face value of when it was issued and not its market value. While the number of goods you give up is a real value. In other words, the goods you give up have a real value which is adjusted for inflation and is measured based on the value of other items. Which is why you notice giving up fewer goods because they are worth more every time.
True or False: Price equals marginal cost is a sufficient condition for profit maximization.
Answer:
False
Explanation:
The profit maximizing rule is the rule in which the Marginal cost is equivalent to the Marginal revenue
i.e.
Marginal revenue = Marginal cost
MR = MC
In the case of perfect competition,
P = MC
Price = Marginal cost
For the firms that are price maker, in this the demand is downward and the marginal revenue is below to the demand curve
So
in this,
The price > MR = MC
Therefore this is not a sufficient condition
Hence, the given statement is false
Leonora Whatley is the head of the marketing research department for a cosmetics manufacturer. Whatley delegates as much authority as possible to her fourteen subordinates although she still retains ultimate responsibility. Whatley manages a _____ department.
Answer:
Decentralized
Explanation:
From the above description of Leonora Whatley, it is evident that Whatley manages a decentralized department.
Having delegated authority to her fourteen subordinates and retaining her ultimate responsibility, this means that she has decentralized the department making the department into smaller units.
Decentralization can be defined as the process by which the central activities of an organization are distributed or delegated to low-level group members or subordinates for execution. Decentralization fosters growth and development.
Suppose that Airstream and Crossroads are the sole producers of a fuel-efficent recreational vehicle. The two firms currently charge the same price for their products. If neither firm reduces the price of its fuel-efficent recreational vehicle, each firm earns $30 million in profit. If both firms reduce their prices, then each firm will earn $10 million in profit. If one firm reduces its price and the other does not, then the firm that reduces price will earn a profit of $60 million while the other firm will earn a profit of $2 million. Assuming that collusion is not a possibility, the Nash equilibrium occurs when:_________.
A. both firms will reduce their price.
B. Crossroads will reduce its price and Airstream will maintain its current price.
C. Airstream will reduce its price and Crossroads will maintain its current price
D. both firms will maintain their current price.
Answer:
A. both firms will reduce their price.
Explanation:
Airstream
not change price lower price
$30 / $60 /
not change price $30 $2
Crossroads
lower price $2 / $10 /
$60 $10
Airstream's highest payoff results from lowering its prices = $60 + $10 = $70
Crossroads highest payoff results from lowering its prices = $60 + $10 = $70
Nash equilibrium exists when both Airstream and Crossroads lower their prices.
Courier Logistics Corp. will issue $2,400,000 in 8-year bonds that pay 5% annually. The market rate for bonds of similar riskiness and maturity is 4%. How much cash will Courier Logistics Corp. receive from this bond issuance?
a. $2,529,241.
b. $2,374,124.
c. $2,561,585.
d. $2,400,000.
Answer:
Courier Logistics Corp will receive c. $2,561,585 from this bond issuance
Explanation:
Note that the Yield to Maturity is less than the Coupon Rate, therefore the bond is trading at a Premium (price will be greater than the par value)
The price of the bond, PV is calculated as follows :
PMT = $2,400,000 × 5% = $120,000
P/YR = 1
N = 8
FV = $2,400,000
YTM = 4%
PV= ?
Using a Financial Calculator, the price of the bond, PV is $2,561,585.87 or $2,561,585.
Given the following data, what is cost of goods sold as determined by the FIFO method?
Sales 280 units
Beginning inventory 250 units at $6 per unit
Purchases 128 units at $11 per unit
A. $3,080
B. $1,680
C. $2,320
D, $1,830
Answer:
The answer is D. $1,830
Explanation:
FIFO means First in First out.
It is one of the inventory methods along with LIFO(Last in First out), average weighted cost and specific identification.
FIFO literally means the inventory bought first will be the first to be sold. Leaving the last inventories bought as the ending inventory.
In this question, Cost of Sales according to FIFO is:
250 units x $6 = $1,500
30 units at $11 = $330
Total =. $1,830
Therefore, the cost of sales under this method is $1,830
Which two accounts are used to reconcile from "Cash Paid to Vendors" to Cost of Goods Sold?
Answer:
The two accounts used to reconcile from "Cash Paid to Vendors" to Cost of Goods Sold are the Cash Account and The Accounts Payable account.
Explanation:
The transaction "Cash Paid to Vendors" is credited in the Cash Account and debited to the Accounts Payable account. Based on the amount being owed at the beginning and at the end of the period, and after making adjustment for the "Cash Paid to Vendors, it becomes possible to compute the "Cost of Goods Sold," using the beginning and ending inventory balances. The cash paid to vendors reduces the amount being amount.
On January 1, 2011, Fox Corp. issued 1,000 of its 10%, $1,000 bonds for $1,040,000. These bonds were to mature on January 1, 2021, but were callable at 101 any time after December 31, 2013. Interest was payable semiannually on July 1 and January 1. On July 1, 2016, Fox called all of the bonds and retired them. Bond premium was amortized on a straight-line basis. Before income taxes, Fox's gain or loss in 2016 on this early extinguishment of debt was
Answer:
$8,000 gain
Explanation:
the carrying value of the bonds at the time of the redemption:
10 coupon payments were made, so amortization of bond premium = ($40,000 / 20) x 11 = $22,000
carrying value = $1,040,000 - $22,000 = $1,018,000
redemption price = $1,000,000 x 1.01 = $1,010,000
Fox's gain = carrying value - redemption price = $1,018,000 - $1,010,000 = $8,000
Since the carrying value was higher than the redemption value, Fox must report a gain.
Boswell Company manufactures two products, Regular and Supreme. Boswell’s overhead costs consist of machining, $5000000; and assembling, $2500000. Information on the two products is: Regular Supreme Direct labor hours 10000 15000 Machine hours 10000 30000 Number of parts 90000 160000 Overhead applied to Supreme using activity-based costing is
Answer:
$5,350,000
Explanation:
The computation of the overhead applied to supreme using activity based costing is shown below:
= Machine hours × machine hour rate + number of parts × cost per part
= 30,000 × ($5,000,000 ÷ (10,000 + 30,000)) + 160,000 × ($2,500,000 ÷ (90,000 + 160,000))
= 30,000 × $125 + 160,000 × $10
= $3,750,000 + $1,600,000
= $5,350,000
Hence, the overhead applied to supreme is $5,350,000
The next three questions refer to Jimmy Choo shoes, who sells 100,000 pairs of shoes to boutiques across the country:
The following cost information pertains to the shoes
Leather and metals: $25/pair
Shoe boxes: $1/pair
Shoemaker wages: $10/pair
Advertising & promotion: $200,000
Executive Salaries $300,000
Selling price to boutique: $100.00
a. What is the per unit gross marketing contribution?
1. 100%
2. 62%
3. 64%
4. None of the above
b. If they decided they wanted to invest in a $75,000 advertising campaign in the hopes of generating more sales, how many more pairs of shoes would they have to sell to maintain their current contribution to the organization?
1. 1,210
2. 925
3. 1,172
4. None of the above
c. By what percent does this change in sales represent?
1. 0.93%
2. 1.21%
3. 1.17%
4. None of the above
Answer:
Jimmy Choo
a. 4. None of the above
b. 3. 1,172
c. 4. None of the above
Explanation:
1) Data and Calculations:
Leather and metals: $25/pair
Shoe boxes: $1/pair
Shoemaker wages: $10/pair
Variable costs = $36/pair
Selling price to boutique: $100.00
Contribution = $64/pair
2) Fixed Costs and Profit:
Advertising & promotion: $200,000
Executive Salaries $300,000
Total fixed costs = $500,000
Net profit = $140,000
3) Per unit gross marketing contribution:
Marketing cost per unit = $2 ($200,000/100,000 units)
Gross marketing contribution = $64/$2 = 3200%
4) Increase fixed costs by $75,000 to $575,000
Sales unit to sell = Fixed costs + profit/contribution margin per unit
= $575,000 + 140,000 /$64
= 1,172
5) Change in sales:
Change = 1,172 - 1,000 = 172
Percentage change = 172/1,000 x 100 = 17.2%
Jimmy Choo is the most famous designer and famed for his handcrafted shoes.
Given data:
Leather and metals = $25/pairShoe-boxes = $1/pair Wage of shoemaker = $10/pairVariable pricing= $36/pairSelling price = $100.00Contribution = $64/paira. Option 4. None of the above
Per unit gross marketing contribution can be explained by:
Marketing cost per unit = [tex]\dfrac{\$200,000}{100,000 \text{units}} = \$ 2[/tex]Gross marketing contribution = [tex]\dfrac{\$64}{\$2} \times 100\% = 3200\%[/tex]b. Option 3. 1,172
Advertising & promotion: $200,000Executive Salaries = $300,000Total fixed costs = $500,000Net profit = $140,000Fixed cost increased by $75,000 to $575,000
[tex]\text{Sales unit to sell} & = \text{Fixed costs} +\dfrac{\text{profit}}{\text{contribution margin per unit}}[/tex]
[tex]\text{Sales unit to sell} & = \text{\$575,000} +\dfrac{\text{140,000}}{\text{\$ 64}}[/tex]
= 1,172 units
c. Option 4. None of the above
Change in sales can be estimated by:
Change = 1,172 - 1,000 = 172
[tex]\text{Percentage change} = \dfrac{172}{1,000 } \times 100 = 17.2 \; \%[/tex]
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A customer purchases $100,000 of corporate bonds at 40% in a margin account. The customer must deposit:__________
A. $2,000
B. $7,000
C. $8,000
D. $20,000