Answer:
1. Calculate the equivalent units for the Forming Department for the month of August.
direct materials 60,000 unitsconversion 70,000 units2. Find the cost per equivalent of input resource.
direct materials per unit $2.33conversion cost per unit $3.61Explanation:
beginning WIP 20,000 units:
direct materials 100% = 20,000 equivalent units $80,000
conversion 20% = 4,000 equivalent units $24,000
total $104,000
Units completed and transferred 60,000
Ending WIP = 20,000:
direct materials 100%
conversion costs 70% = 14,000 equivalent units
costs charged:
Direct materials $140,000
Direct labor $105,000
Overhead applied 148,000
equivalent units:
direct materials 60,000 since all materials are added at the beginning
conversion = units started + ending WIP - beginning WIP = 60,000 + 14,000 - 4,000 = 70,000 units
direct materials per unit = total direct materials / equivalent units = $140,000 / 60,000 = $2.33
conversion costs per unit = total conversion costs / equivalent units = $253,000 / 70,000 = $3.61
On December 31, 2020, Berclair Inc. had 460 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2021, Berclair purchased 24 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2021. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2021, was $700 million. The income tax rate is 25%.
Also outstanding at December 31 were incentive stock options granted to key executives on September 13, 2016. The options are exercisable as of September 13, 2020, for 30 million common shares at an exercise price of $56 per share. During 2021, the market price of the common shares averaged $70 per share.
In 2017, $50.0 million of 8% bonds, convertible into 6 million common shares, were issued at face value.
Required:
Compute Berciair's basic and diluted earnings per share for the year ended December 31, 2021.
Answer:
Basic earnings per share = $1.46
Diluted earnings per share = $1.40
Explanation:
Basic earnings per share = Earnings Attributable to Holders of Common Stock / Weighted Average Number of Common Stockholders
Earnings Attributable to Holders of Common Stock Calculation :
Net income for the year ended December 31 $700,000,000
Less Preference dividend ( 3,000,000 × 9%×$100×5%) ($1,350,000)
Earnings Attributable to Holders of Common Stock $698,650,000
Weighted Average Number of Common Stockholders Calculation :
Common Shares 1 January 2021 460 million
Purchased On March 1, 2021, (10/12×24,000,000) 20 million
Weighted Average Number of Common Stockholders 480 million
Basic earnings per share = $698,650,000/ 480,000,000
= $1.46
Diluted earnings per share = Adjusted Earnings Attributable to Holders of Common Stock /Adjusted Weighted Average Number of Common Stockholders
Adjusted Earnings Attributable to Holders of Common Stock Calculation :
Net income for the year ended December 31 $700,000,000
Less Preference dividend ( 3,000,000 × 9%×$100×5%) ($1,350,000)
Earnings Attributable to Holders of Common Stock $698,650,000
Adjusted Weighted Average Number of Common Stockholders Calculation
Common Shares 1 January 2021 460 million
Purchased On March 1, 2021, (10/12×24,000,000) 20 million
Weighted Average Number of Common Stockholders 480 million
Diluted earnings per share = $698,650,000/ 500,000,000
= $1.40
A fast internationalization strategy for better generation has some associated risks. What are these risks?
Answer: Political risks eg High taxes
Economic risks eg fluctuation of exchange in currency.
Please see below for further explanation.
Explanation:
Internationalization strategy is the plan by an organization to expand beyond the domestic market to become globally visible in another country or countries market.
The risks associated Associated when a company, better generation tries to expand globally include
1.)Political risks:Political risk occurs when target countries policies change or fluctuates in such a way to negatively affect a business.
Some of the political risks include
---Instability in foreign country's governments due to corruption
---Government regulations eg High taxation, High tariff quotas
-----Trade barriers etc.
2.Economic Risks here refers to the conditions in the foreign nation's economy that affect a company's financial gains.
Some of the Economic risk include
-fluctuations in the value of currencies exchange.
-Inflation
-Quality of basic infrastructure in terms of electricity, transportation, accessible to water etc as the case may be.
--Labor and differences in wages.
Journalize the following transactions in the accounts of Zippy Interiors Company, a restaurant supply company that uses the allowance method of accounting for uncollectible receivables: May 24 Sold merchandise on account to Old Town Cafe $18,450. The cost of goods sold was $11,000. Sept. 30 Received $6,000 from Old Town Cafe and wrote off the remainder owed on the sale of May 24 as uncollectible. Dec. 7 Reinstated the account of Old Town Cafe that had been written off on September 30 and received $12,450 cash in full payment. For a compound transaction, if an amount box does not require an entry, leave it blank.
Answer:
Explanation:
Prepare the journal entry to record the sale of merchandise on account, and the cost of goods sold.
Date Particulars Debit Credit
May 24 Accounts receivable – O T Cafe $18,450
Sales $18,450
(To record sale of merchandise on account)
May 24 Cost of merchandise sold $11,000
Merchandise inventory $11,000
(To record the cost of goods sold)
Table (1)
Sale on account increases accounts receivable and sales revenue account. Hence, an increase in accounts receivable (asset account) is debited with $18,450 and an increase in sales revenue (stockholders’ equity account) is credited with $18,450.
Cost of goods sold is $11,000. Thus the expense incurred must be recognized by increasing cost of goods sold account and the merchandise inventory which is sold out should be decreased to record the inventory which is sold out. Hence, an increase in Cost of goods sold (expense account) is debited with $11,000 and a decrease in Merchandise inventory (asset account) is credited with $11,000.
2.
Prepare the journal entry to record the collection of cash and write-off of uncollectible accounts, under direct write-off method.
Date Particulars Debit Credit
September 30 Cash $6,000
Allowance for doubtful accounts $12,450
Account receivable – O T Cafe $18,450
(To record cash collection and write-off of uncollectible account receivable )
Table (2)
To record the collection of cash on account, cash account must be increased and accounts receivable must be decreased by $6,000.
To record this write-off of uncollectible receivables of $12,450 ($18,450−$6,000)($18,450−$6,000) under allowance method, both allowance for doubtful accounts and accounts receivable must be decreased by $12,450
Jasmin purchased 100 shares of Pinkstey Corporation (publicly traded company) on January 1 of year 1 for $5,000. The FMV of the shares at the end of year 1 was $6,000. On January 1 year 4, Pinkstey Corporation declared a 2-for-1 stock split when the fair market value of the stock was $65 per share. On January 1 of year 5, Jasmin sold all of her Pinkstey Corporation stock when the fair market value was $40 per share. Which of the folowing statements is true? a. Jasmin reports $6,500 in gross income for the 2-for-1 stock split in year 4 b. Jasmin's basis in the Pinkstey Corporation stock at the end of year 4 is $65/ share. c. Jasmin has no taxable income for the Pinkstey Corporation stock in year 4 d. Jasmin owns 100 shares in Pinkstey Corporation stock at the end of year 4
Answer:
Option C=> Jasmin has no taxable income for the Pinkstey Corporation stock in year 4.
Explanation:
So, here are the main information given in the question above that is going help us on solving the question and they are;
(1)."Jasmin purchased 100 shares of Pinkstey Corporation (publicly traded company) on January 1 of year 1 for $5,000."
(2). ''The FMV of the shares at the end of year 1 was $6,000.''
(3). "On January 1 year 4, Pinkstey Corporation declared a 2-for-1 stock split when the fair market value of the stock was $65 per share."
(4)." On January 1 of year 5, Jasmin sold all of her Pinkstey Corporation stock when the fair market value was $40 per share."
So, in the statement (3) above where Pinkstey Corporation declared a 2-for-1 stock split, Jasmine will no longer receive income for a period of the 4th year.
Also, Jasmine now have 200 shares instead of the 100 shares originally purchased in statement (1) above in Pinkstey Corporation.
Answer:
Option C=> Jasmin has no taxable income for the Pinkstey Corporation stock in year 4.
Explanation:
Hope this helps!
Have a great day! :)
Pete is a woodworker and charges $125 an hour for his time manufacturing custom-made wood products. For his wife's birthday, he designs and creates an intricate maple jewelry box that takes him 20 hours to complete. By how much and in what direction does GDP change as a result of his efforts? Group of answer choices GDP rises by $1,875. GDP falls by $1,875. GDP is not affected by Pete's production of the jewelry box. GDP rises by $125.
Answer:
GDP is not affected by Pete's production of the jewelry box.
Explanation:
Pete is a woodworker and works 20 hours to prepare a jewelry box to gift his wife. If Pete prepares this jewelry box to sell and earn revenue, this will be considered in GDP but in this case Pete prepares a jewelry box to give his wife as his wife's birthday gift.
All types of gifts received or given in kind are not included in Gross Domestic Production.
New World Deli exchanged land for a more suitable parcel of land to be used for a new restaurant. New World Deli reported the old land at its original cost of $85,000. According to an independent appraisal, the old land currently is worth $110,000. New World Deli paid $15,000 in cash to complete the transaction. Required:Record the exchange.
Answer: Please refer to Explanation
Explanation:
New World Dell exchanged old land for new land.
In the exchange, the old land was considered to be worth $110,000 according to an independent appraisal and yet New World Dell still had to pay an additional $15,000 to get it. This means that the new land is valued at,
= 110,000 + 15,000
= $125,000
The old land was however recorded at cost for New Dell so the properly recording would be,
DR Land, New $125,000
CR Land, Old $85,000
CR Cash $15,000
CR Gain on Exchange $25,000
(To record Exchange of land)
There is a gain because the old land was valued at $25,000 more than New World Dell had valued it for themselves.
Complete the following statements using either "debit" or "credit":
a. The cash account is increased with a _______ .
b. The owner's capital account is increased with a _________ .
c. The delivery equipment account is increased with a _________ .
d. The cash account is decreased with a _________ .
e. The liability account Accounts Payable is increased with a ___________ .
f. The revenue account Delivery Fees is increased with a __________ .
g. The asset account Accounts Receivable is increased with a _________ .
h. The rent expense account is increased with a ___________ .
i. The owner's drawing account is increased with a ___________ .
Answer:
a Debit
b Credit
c Debit
d Credit
e Credit
f Credit
g Debit
h Debit
i Debit
Explanation:
The rules are that increase in assets such as cash account ,delivery equipment,accounts receivable are debited while the reverse is done for reduction in assets.
The increase in liability accounts and revenue such as accounts payable and revenue account delivery fees are normally credited while the reverse applies to decrease in liabilities.
The increase in expense is normally debited while the reduction in expense is a credit.
The increase in capital account is a credit
Sunland Corporation produces outdoor portable fireplace units. The following per unit cost information is available: direct materials $18, direct labor $22, variable manufacturing overhead $13, fixed manufacturing overhead $27, variable selling and administrative expenses $7, and fixed selling and administrative expenses $17. The company's ROI per unit is $16. Compute Sunland Corporation’s markup percentage using absorption-cost pricing. Absorption-cost pricing markup percentage % Compute Sunland Corporation’s markup percentage using variable-cost pricing. (Round answer to 2 decimal places, e.g. 10.50%.) Variable-cost pricing markup percentage %
Answer:
Mark-up;
Absorption costing=20%
Variable costing pricing = 26.7%
Explanation:
Absorption costing values production units using full cost per unit.
Full cost per unit= Direct material cost + Direct Labour cost + Variable production overhead+ Fixed production overhead
Absorption costing =18 + 22+ 27+13= 80
Mark-up = ROi/cost per unit× 100
= 16/80 ×100= 20%
Variable costing pricing
Here products are valued using the variable cost of production.
18 + 22+ 13+ 7= 60
Mark-up = 16/60× 100= 27%
Mark-up;
Absorption costing= 20%
Variable costing pricing =26.7%
Coronado Family Instruments makes cellos. During the past year, the company made 6,370 cellos even though the budget planned for only 5,500. The company paid its workers an average of $15 per hour, which was $1 higher than the standard labor rate. The production manager budgets four direct labor hours per cello. During the year, a total of 25,000 direct labor hours were worked.
Calculate the direct labor rate and efficiency variances. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.)
Answer:
Instructions are below.
Explanation:
Giving the following information:
Production= 6,370 cellos
The Budget production= 5,500.
The company paid its workers an average of $15 per hour, which was $1 higher than the standard labor rate.
The production manager budgets four direct labor hours per cello. During the year, a total of 25,000 direct labor hours were worked.
To calculate the direct labor rate and efficiency variance, we need to use the following formulas:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Direct labor time (efficiency) variance= (4*6,370 - 25,000)*14
Direct labor time (efficiency) variance= $6,720 favorable
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Direct labor rate variance= (14 - 15)*25,000
Direct labor rate variance= $25,000 unfavorable
Match the items below by entering the appropriate code letter in the space provided.A twelve month accounting periodExpenses paid before they are incurredCost less accumulated depreciationDivides the economic life of a business into artificial time periodsA contra asset accountRecognition of revenue when the performance obligation is satisfiedRevenues recognized but not yet receivedExpenses incurred but not yet paidA cost allocation processAn optional tool which facilitates the preparation of financial statements.A temporary account used in the closing process.Balance sheet accounts whose balances are carried forward to the next period.Entries at the end of an accounting period to transfer the balances of temporary accounts to a permanent stockholders’ equity account.Entries to correct errors made in recording transactions.The exact opposite of an adjusting entry made in a previous period.A. Fiscal yearB. Income SummaryC. Revenue recognition principleD. Closing entriesE. Accrued expensesF. Accumulated depreciationG. Book valueH. Prepaid expensesI. WorksheetJ. Accrued revenuesK. Reversing entryL. DepreciationM. Time period assumptionN. Correcting entriesO. Permanent accounts
Answer:
A. Fiscal year: A twelve month accounting period.
H. Prepaid expenses: Expenses paid before they are incurred.
G. Book value: Cost less accumulated depreciation.
M. Time period assumption: Divides the economic life of a business into artificial time periods.
F. Accumulated depreciation: A contra asset account
C. Revenue recognition principle: Recognition of revenue when the performance obligation is satisfied.
J. Accrued revenues: Revenues recognized but not yet received.
E. Accrued expenses: Expenses incurred but not yet paid.
L. Depreciation: A cost allocation process.
I. Worksheet: An optional tool which facilitates the preparation of financial statements.
B. Income Summary: A temporary account used in the closing process.
O. Permanent accounts: Balance sheet accounts whose balances are carried forward to the next period.
D. Closing entries: Entries at the end of an accounting period to transfer the balances of temporary accounts to a permanent stockholders' equity account.
N. Correcting entries: Entries to correct errors made in recording transactions.
L. Reversing entry: The exact opposite of an adjusting entry made in a previous period.
In July, one of the processing departments at Junkin Corporation had beginning work in process inventory of $29,000 and ending work in process inventory of $31,000. During the month, $205,000 of costs were added to production and the cost of units transferred out from the department was $203,000. Required: Construct a cost reconciliation report for the department for the month of July.
Answer and Explanation:
The construction of the cost reconciliation report for the department for the month of July is shown below:
Cost to be Accounted For :
Beginning Work in process inventory $29,000
Add: Cost added to production $205,000
Total Cost to Be accounted For $ 234,000
Cost Accounted for as Follows
Cost of Ending Work in process inventory $31,000
Add: Cost of units Transferred Out $203,000
Total Cost Accounted For $234,000
The total cost accounted for could be computed by two methods
1. Adding the cost added to the beginning work in process inventory
2. Adding the cost of units transferred out to the ending work in process inventory
Gelb Company currently manufactures 43,000 units per year of a key component for its manufacturing process. Variable costs are $2.95 per unit, fixed costs related to making this component are $73,000 per year, and allocated fixed costs are $77,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.70 per unit. Calculate the total incremental cost of making 43,000 units and buying 43,000 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier
Answer:
It is cheaper to buy the component. At this level of production by $40,750.
Explanation:
Giving the following information:
Production= 43,000 units
Variable costs are $2.95 per unit
Avoidable Fixed costs= $73,000 per year
Unavoidable fixed costs= $77,500 per year.
The company is considering buying this component from a supplier for $3.70 per unit.
We need to calculate the cost of producing and buying and choose the best option.
Production:
Total cost= 43,000*2.95 + 73,000= $199,850
Buy:
Total cost= 43,000*3.7= $159,100
It is cheaper to buy the component. At this level of production by $40,750.
Suppose that, in a competitive market without government regulations, the equilibrium price of milk is $2.50 per gallon. Complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it is binding or nonbinding.
Statement Price Control Binding or Not
The government has instituted a legal elector
minimum price of $2.30 per gallon for more
than $2.50 per gallon. Price ceiling Binding
Price floor Non-binding
The government has instituted a legal minimum
price of $3.40 per gallon for gasoline. Price ceiling Binding
Price floor Non-binding
There are many teenagers who would like to
work at gas stations, but they are not hired due
to minimum-wage laws. Price ceiling Binding
Price floor Non-binding
Answer and Explanation:
According to the scenario, computation of the given data are as follow:-
Price ceiling:-This is show the limit of the price on maximizing value of the product which is decided by government and his imposed group for customer.
Binding:-The binding price ceiling is below the equilibrium price.
Unbinding:-The unbinding price ceiling is above equilibrium price.
Price floor:-This is show the limit of the price on lower value of the product which is decided by government and his imposed group for customer. A price floor must be higher than the price equilibrium price in order to be effective.
Binding:-The binding price floor is above the equilibrium price.
Unbinding:-The unbinding price floor is below the equilibrium price.
It is given that the equilibrium price of milk is $2.50 per gallon.
Statement 1:-This is the example of price floor and binding because minimum price of $2.30 per gallon is decided.
Statement 2:-This is the example of price floor and binding because minimum price of $3.40 per gallon is decided for gasoline.
Statement 3:-This is the example of price floor and binding because teenagers are not hired due to minimum-wage laws.
150-seat restaurant $8,000,000 is needed to construct the restaurant; no additional investment is needed in working capital.
The owners have 6,000,000 in cash and borrow the rest from the bank at 5%.
The projected average seat turnover is 2 (use 320 days open in a year).
The stockholders require a 15% return on their investment annually.
The restaurant pays income taxes at the rate of 25%.
The restaurant’s estimated undistributed expenses, not including income taxes, total $2,000,000.
The forecasted cost of food sold and variable labor is 50 percent of sales.
What is the projected annual total number of covers?
Answer:
The answer is $7400000
Explanation:
Solution
Recall that:
There is no information is given about per unit cost or sales price hence, a reverse calculation is to be made to find out the projected total revenue.
Now,
The reverse calculation to find sales is computed as follows:
Begin from the expected profit + Tax expenses + Interest Expenses + undistributed expenses + variable cost
Thus,
From the calculation of each term is as stated below:
1. The profit expected = 15% return on their investment. it is to be after tax return, total investment = $8000000,
So,
The Profit expected = $8000000 *15% = $1200000.
2. The tax xxpenses = 25% that is, it should be 25% on taxable profit which is decreased from it and then net profit after tax is available,
Thus,
we have net profit after tax we can compute the taxable profit as = $1200000 / 75% = $1600000. for example, tax amount on taxable profit = $160000 * 25% = $400000.
3. The Interest Expenses = 5% of borrowed fund from bank,
Now,
The borrowed fund from bank = $2000000 (8000000-6000000)
The expenses interest = $ 100000 ($2000000*5%)
4. Undistributed Expenses is stated as follows:
The Undistributed expenses are given in the question = $2000000.
5. Variable cost that is the labor cost and cost of food :
From the question it is given that it is 50% of the sales, which means the remaining 50% is the contribution.
Now
The contribution on reverse calculation is computed as:
Profit +taxes + Interest + fixed expenses
Contribution = 1200000 + 400000 + 100000 + 2000000 = $ 3700000,
Thus,
We say,let the sales be 10 , then variable cost be 50 and contribution is 50, that means variable cost = contribution in this case.
so, in proportional calculation , the variable cost = $3700000 .
Thus
The projected sales = expected profit + Tax expenses + Interest Expenses + undistributed expenses + variable cost
The total revenue projected =$1200000+ $ 400000 + $100000 + $ 2000000 +$ 3700000
Therefore, the total revenue projected = $ 7400000
At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $95 million attributable to a temporary book-tax difference of $380 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $288 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2021 is $684 million and the tax rate is 25%. Required: 1. Prepare the journal entry(s) to record Payne’s income taxes for 2021, assuming it is more likely than not that the deferred tax asset will be realized in full. 2. Prepare the journal entry(s) to record Payne’s income taxes for 2021, assuming it is more likely than not that only one-fourth of the deferred tax asset ultimately will be realized.
Answer:
See the explanation below.
Explanation:
1. Prepare the journal entry(s) to record Payne’s income taxes for 2021, assuming it is more likely than not that the deferred tax asset will be realized in full.
Details Dr ($'Million) Cr ($'Million)
Income tax expenses 194
Deferred Tax Assets 23
Income Tax Payable 171
To record income tax expense for 2021 and deferred tax assets reversed for temporary differences reversal
Note the calculations:
Amount credited to Deferred Tax Assets = ($380 - $288) * 25% = $23 million
Amount credited to Income Tax Payable = $684 * 25% = $171 million
2. Prepare the journal entry(s) to record Payne’s income taxes for 2021, assuming it is more likely than not that only one-fourth of the deferred tax asset ultimately will be realized.
Details Dr ($'Million) Cr ($'Million)
Income tax expenses 194
Deferred Tax Assets 23
Income Tax Payable 171
To record income tax expense for 2021 and deferred tax assets reversed for temporary differences reversal.
Income tax expenses 54
Valuation Allowance - Deferred Tax Assets 54
To record valuation allowance for deferred tax assets. .
Note the calculations:
Amount credited to Valuation Allowance - Deferred Tax Assets = ($288 * (3/4)) * 25% = $54 miillion.
The following table contains statements that provide some analysis of policies that address globalization. Categorize each of these statements as either positive or normative.
1. Statement Positive Normative In the past decade, U.S. companies have outsourced millions of jobs overseas.
2. Companies that outsource jobs are acting immorally.
3. If the U.S. government were to institute higher tariffs on imports, companies would stop outsourcing jobs.
4. The U.S. government should institute higher tariffs on imports.
Answer:
In the past decade, U.S. companies have outsourced millions of jobs overseas - Positive
Companies that outsource jobs are acting immorally - Normative
If the U.S. government were to institute higher tariffs on imports, companies would stop outsourcing jobs - Positive
The U.S. government should institute higher tariffs on imports - Normative
Explanation:
Normative statements are statements made out of value judgements. Normative statements are opinions.
Positive statements are statements made based on facts. They are objective statements that can be tested, accepted or rejected using evidence.
I hope my answer helps you
A normative statements refers to the statements made out of value judgement. Hence, these statement are opinions.
A positive statements refers to the are statements made based on facts. Hence, a positive statements are objective statements that can be tested, accepted or rejected using evidence.
In the past decade, U.S. companies have outsourced millions of jobs overseas is an example of Positive statement.Companies that outsource jobs are acting immorally is an example of Normative statement.If the U.S. government were to institute higher tariffs on imports, companies would stop outsourcing jobs is an example of Positive statement.The U.S. government should institute higher tariffs on imports is an example of Normative statement.Read more about normative statement
brainly.com/question/5709401
Mr. Rational has $27 that he plans to spend purchasing 5 units of good X (priced at $3 per unit) and 6 units of good Y (priced at $2 per unit). The marginal utility of the fifth unit of X is 30, and the marginal utility of the sixth unit of Y is 18. If Mr. Rational is a utility maximizer, he should: a. buy less of X and more of Y. b. buy more of X and less of Y. c. buy X and Y in the quantities indicated. d. buy less of X and even lesser than that of Y. e. not buy anything.
Answer:
Option A, buy less of X and more of Y is correct.
Explanation:
The amount that Mr. Rational is going to spend = $27
Quantity of good X = 5 units
Price of good X (Px) = $3 per unit
Marginal utility of 5th unit of X (MUx) = 30
Quantity of good Y = 6 units
Price of good Y (Py) = $2 per unit
Marginal utility of 6th unit of Y (MUy) = 18
[tex]Now \ find \ \frac{MUx}{Px} = \frac{30}{3} = 10 \\[/tex]
[tex]Now \ \frac{MUy}{Py} = \frac{18}{2} = 9[/tex]
[tex]Since \ the \ \frac{MUx}{Px} is \ greater \ than \ \frac{MUy}{Py}.[/tex]
So good x will be substituted for y in order to reach the consumer equilibrium.
[tex]\frac{MUx}{Px} = \frac{MUy}{Py}[/tex]
Thus, Option a. buy less of X and more of Y is correct.
Following is information on two alternative investments being considered by Jolee Company. The company requires an 8% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
Project A Project B
Initial investment $ (179,325 ) $ (152,960 )
Expected net cash flows in year:
1 41,000 33,000
2 41,000 43,000
3 86,295 54,000
4 81,400 77,000
5 54,000 36,000
For each alternative project compute the net present value.
Answer:
$349,182.47 and $257,636.71
Explanation:
The computation of net present value for each project is shown below:
For project A
($) ($)
Year Cash flows Discount factor at 8% Present value (A)
0 -179325 1.0000 -179325.00
1 41000 0.9259 37962.96
2 41000 0.8573 35150.89
3 86295 0.7938 68503.75
4 81400 0.7350 141617.61
5 54000 0.6806 245272.25
Sum of present value 528507.47 (B)
Net present value 349182.47 (A - B)
For project B
($) ($)
Year Cash flows Discount factor at 8% Present value
0 -152960 1.0000 -152960.00 (A)
1 33000 0.9259 30555.56
2 43000 0.8573 36865.57
3 54000 0.7938 42866.94
4 77000 0.7350 110288.07
5 36000 0.6806 190020.58
Sum of present value 410596.71 (B)
Net present value 257636.71 (A - B)
Refer to the discount factor table
Based on this the project A should be accepted as it generates high net present value
Omicron Technologies has $50 million in excess cash and no debt. The firm expects to generate additional free cash flows of $40 million per year in subsequent years and will pay out these future free cash flows as regular dividends. Omicron’s unlevered cost of capital is 10% and there are 10 million shares outstanding. Omicron’s board is meeting to decide whether to pay out its $50 million in excess cash as a special dividend or to use it to repurchase shares of the firm’s stock. Assume that Omicron uses the entire $50 million in excess cash to pay a special dividend. Assume that you own 2,500 shares of Omicron stock. Suppose you are unhappy with Omicron’s decision and would prefer that Omicron used the excess cash to repurchase shares. The number of shares that you would have to buy in order to undo the special cash dividend that Omicron paid is closest to:
Answer:
278 Shares
Explanation:
According to the scenario, computation of the given data are as follow:-
We can calculate the no. of shares to be bought by using following formula:-
Unlevered cost of capital = 10% = 0.10
Value of Enterprise = Additional Free Cash Flow ÷ Unlevered Cost of Capital
= $40 million ÷ 0.10 = $4 million
Market Value of Shares = Value of Enterprise + Excess Cash
= $400 million + $50 million = $450 million
Per Share Market Value = Market Value of Shares ÷ Share Outstanding
= $450 million ÷ $10 million shares = $45 per share
Per Share Special Dividend = Excess Cash ÷ Share Outstanding
= $50 million ÷ $10 million shares = $5 per share
Dividend Per Share = Own Shares × Per Share Special Dividend
= 2500 shares × $5 per share = $12,500
No. of Shares to Be Bought = Dividend Per Share ÷ Per Share Market Value
= $12,500 ÷ $45 per share
= 277.78 or 278
Pharoah Construction enters into a contract with a customer to build a warehouse for $870000 on March 30, 2021 with a performance bonus of $50000 if the building is completed by July 31, 2021. The bonus is reduced by $10000 each week that completion is delayed. Pharoah commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by Probability July 31, 2021 65% August 7, 2021 25% August 14, 2021 5% August 21, 2021 5% The transaction price for this transaction is
Answer:
$915,000
Explanation:
The computation of the transaction price based on the expected value approach is presented below:
The formula is
= (Building cost of warehouse + bonus) × probability percentage
Date Calculation Amount
July 31, 2021 ($870,000+$50,000) × 0.65 $598,000
August 7, 2021 ($870,000+$40,000) × 0.25 $227,500
August 14, 2021 ($870,000+$30,000) × 0.05 $45,000
August 21, 2021 ($870,000+$20,000) × 0.05 $44,500
Total $915,000
Since the bonus is reduced $10,000 each week so $10,000 is subtracted for every delayed week
The Merchant Company issued 10-year bonds on January 1. The 15% bonds have a face value of $100,000 and pay interest every January 1 and July 1. The bonds were sold for $117,205 based on the market interest rate of 12%. Merchant uses the effective interest method to amortize bond discounts and premiums. On July 1 of the first year, Merchant should record interest expense (round to the nearest dollar) of:__________.
a) $7,032
b) $8,790
c) $14,065
d) $7,500
Answer:
c) $14,065
Explanation:
Because I said so
What’s the disadvantage of the stock repurchases relative to the dividend payments? Stock repurchase can help avoiding setting a high dividend level that cannot be maintained. Firms may have to bid up stock price to complete repurchase, thus paying too much for its own stock. Stockholders may take stock repurchase as a positive signal – management thinks stock is undervaluated. Investors can receive income from lower-taxed capital gains rather than the higher-taxed dividends
Answer:
Firms may have to bid up stock price to complete repurchase, thus paying too much for its own stock.
Explanation:
Generally, the price of stocks are not fixed, so it might take a long time for a stock repurchase or buyback to be completed. Investors like buybacks since they tend to increase the price of stocks, but it makes them more expensive for the corporation to repurchase them.
Buybacks are seen positive by investors because they will eventually increase the earnings per share (by decreasing the number of shares outstanding) and they are also taxed in a lower rate than normal income. Management will tend to start buybacks when they believe the stock price is undervalued and they have excess cash. This way they will achieve achieve two objectives with one action:
lower equity costsincrease stock priceThe management of Shatner Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from an outside supplier. The part, called CISCO, is a component of the company’s finished product. The following information was collected from the accounting records and production data for the year ending December 31, 2020.
1. 7,900 units of CISCO were produced in the Machining Department.
2. Variable manufacturing costs applicable to the production of each CISCO unit were: direct materials $4.58, direct labor $4.51, indirect labor $0.45, utilities $0.41.
3. Fixed manufacturing costs applicable to the production of CISCO were:
Cost Item Direct Allocated
Depreciation $1,900 $860
Property taxes 530 320
Insurance 870 610 $3,
300 $1,790
All variable manufacturing and direct fixed costs will be eliminated if CISCO is purchased. Allocated costs will have to be absorbed by other production departments.4. The lowest quotation for 7,900 CISCO units from a supplier is $63,200.5. If CISCO units are purchased, freight and inspection costs would be $0.60 per unit, and receiving costs totaling $1,270 per year would be incurred by the Machining Department.Required:a) Prepare an incremental analysis for CISCO.
Answer:
Financial advantage of purchasing Cisco from outside vendor = $9,440
Explanation:
7,900 units produced
variable costs allocated to Cisco units (avoidable):
direct materials $4.58 per unitdirect labor $4.51 per unitindirect labor $0.45 per unitutilities $0.41 per unittotal $9.95 x 7,900 units = $78,650fixed manufacturing costs allocated to Cisco:
depreciation $860property taxes $320Insurance $610total $1,790an outside supplier can provide Cisco for $63,200 plus:
freight and inspection costs $0.60 per unit x $7,900 = $4,740total receiving costs $1,270total $6,010Incremental Analysis
Produce Purchase Difference
Cisco Cisco amount
Variable production $78,650 $78,650
costs
Purchase price $63,200 ($63,200)
Additional expenses $6,010 ($6,010)
Financial advantage of purchasing Cisco $9,440
Allocated fixed costs are not included in this analysis since they cannot be avoided by either action, producing or purchasing.
Nick’s Novelties, Inc., is considering the purchase of new electronic games to place in its amusement houses. The games would cost a total of $300,000, have an eight-year useful life, and have a total salvage value of $20,000. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues $ 200,000 Less operating expenses: Commissions to amusement houses $ 100,000 Insurance 7,000 Depreciation 35,000 Maintenance 18,000 160,000 Net operating income $ 40,000 Garrison 16e Rechecks 2017-05-22 Exercise 12-8 Part 2 2a. Compute the simple rate of return promised by the games. 2b. If the company requires a simple rate of return of at least 12%, will the games be purchased?
Answer:
13.33%
Yes , the recent games should be purchased.
Explanation:
Relevant data provided to figure out the simply rate of return is here below:-
Net income = $40,000
Initial investment = $300,000
As per the given question the solution of simple rate of return is provided below:-
Simple rate of return = Net income ÷ Initial investment × 100
= $40,000 ÷ $300,000 × 100
= 0.13333 × 100
= 13.33%
The recent games should be purchased for the reason that simple rate of return exceed least rate of return = Simple rate of return - Least simple rate of return
= 13.33% - 12%
= 1.33%
The bookkeeper at Jefferson Company has not reconciled the bank statement with the Cash account, saying, "I don’t have time." You have been asked to prepare a reconciliation and review the procedures with the bookkeeper. The April 30, Current Year, bank statement and the April ledger account for cash showed the following (summarized):
Bank Statement
Checks Deposits Balance
Balance, April 1, 2014 $37400 32,700
Deposits during Apri 1,340 70,100
Interest collected 71,440
Checks cleared during April $45,600 25,840
NSF check-A. B. Wright 270 25,570
Bank service charges 230 25,340
Balance, April 30, 2014 25,340
Cash (A)
Apr. 1 Balance 24,700
Apr Deposits 43,500
Apr. Checks written 42,100
A comparison of checks written before and during April with the checks cleared through the bank showed outstanding checks at the end of April of $4,500. No deposits in transit were carried over from March, but a deposit was in transit at the end of April.
Answer:
Bank balance April 30 $25,340
+ deposits in transit $6,100
- outstanding checks $4,500
Adjusted total $26,940
Account balance April 30 $26,100
+ interests $1,340
- NSF check $270
- bank service fees $230
Adjusted total $26,940
In order to verify that we have reconciled our bank statement correctly, we must compare it to the reconciliation of the cash account. If both balances are the same (in this case $26,940), then we did the reconciliation correctly.
Required journal entries:
to record NSF check
Dr Accounts receivable 270
Cr Cash 270
to record earned interests
Dr Cash 1,340
Cr Interest revenue 1,340
to record bank fees
Dr Bank service fees 230
Cr Cash 230
Suppose the following items were taken from the December 31, 2017, assets section of the Boeing Company balance sheet. (All dollars are in millions.)
Inventory $16,933
Patents $12,528
Notes receivable—due after December 31, 2018 5,466
Buildings 21,579 Notes receivable—due before December 31, 2018 368
Cash 9,215
Accumulated depreciation—buildings 12,795
Accounts receivable 5,785
Debt investments (short term) 2,008
Required:
1. Prepare the assets section of a classified balance sheet, listing the current assets in order of their liquidity.
Answer:
Inventory $16,933
Notes receivable—due before December 31, 2018 368
Debt investments (short term) 2,008
Accounts receivable 5,785
Cash 9,215
Explanation:
Current Assets Section consists of Asset items that can be converted into cash within the period of 12 months.
Conversion happens in order of liquidity. Which means how much cash can be realized from conversion of a non-monetary asset in short term.
The order is given as below:
Inventory $16,933
Notes receivable—due before December 31, 2018 368
Debt investments (short term) 2,008
Accounts receivable 5,785
Cash 9,215
Static and Flexible Budgets Graham Corporation used the following data to evaluate its current operating system. The company sells items for $10 each and used a budgeted selling price of $10 per unit.
Actual Budgeted
Units sold 991,000 1,000,000
Variable costs 1,280,000 1,500,000
Fixed costs 955,000 905,000
Prepare the actual income statement, flexible budget, and static budget.
Answer:
Actual Budgeted
Units sold 991,000 1,000,000
Variable costs 1,280,000 1,500,000
Fixed costs 955,000 905,000
Actual Results Flexible Budget Static Budget
Units sold 991,000 991,000 1,000,000
Revenues $9,910,000 $9,910,000 $10,000,000
Variable costs -$1,280,000 -$1,486,500 -$1,500,000
Contr. margin $8,630,000 $8,423,500 $8,500,000
Fixed costs -$955,000 -$905,000 -$905,000
Operating income $7,675,000 $7,518,500 $7,595,000
The static budget only considers standard revenue (units sold and price) and costs (both variable and fixed). While a flexible budget will be calculated using standard costs but with actual units sold and produced. Both static and flexible budgets use the same fixed costs, only variable costs and revenues differ.
Departmental overhead rates LO P2 Textra Plastics produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for this year follow. (Round "OH rate and cost per unit" answers to 2 decimal places.) Direct Labor hours Machine hours Overhead costs Molding Trimming 52,000 DLH 48,000 DLH 30.500 MH3 , 600 MH 6752,000 $612,000 Data for two special-order parts to be manufactured by the company in this year follow: N Part 270 9.300 units Part XB2B 54,500 units ot units Machine Tours Maldin Terming Direct labor hours Molding Trening 5,100 MH 2.600 MIL 1.020 MH 650 MH 5,500 DL 700D 2,150 DLH , 500D
Required:
1. Compute a departmental overhead rate for the molding department based on machine hours and a department overhead rate for the trimming department based on direct labor hours. Molding 01 Trimming
2. Determine the total overhead cost assigned to each product line using the departmental overhead rates from requirement 1,
3. Determine the overhead cost per unit.
Answer:
Explanation:
Textra Plastics
All Amounts in $
1. Departmental Overhead Rate
Modelling Department
Overhead Costs 730000
Machine Hours worked 30500 MH
Overhead Rate/Machine Hour 23.93 per machine hour
Trimming Department
Overhead Costs 590000
Direct Labor Hours 48000 DLH
Overhead Rate/Machine Hour 12.29 per direct labor hour
2. Total Overhead Cost assigned to each product line
Part A27C Activity Departmental For Total Overhead
Driver OH Rate each Cost
Molding Machine Hours 23.93 Machine Hour 122065.57 = 5,100 MH X 23.93
Trimming Direct Labor Hours 12.29 Direct Labor Hour 8604.17 = 700 DLH X 12.29
Total Overheads 130669.74 For 9,800 units
Overhead per unit 13.33
Part X82B Activity Departmental For Total Overhead
Driver OH Rate each Cost
Molding Machine Hours 23.93 Machine Hour 24413.11 = 1,020 MH X 23.93
Trimming Direct Labor Hours 12.29 Direct Labor Hour 43020.83 = 3,500 DLH X 12.29
Total Overheads 67433.95 For 54,500 units
Overhead per unit
Answer:
1-Departmental Overhead Rate Molding $ 221.38 per machine hour
Trimming Department $ 12.75 per DLH
2- Total overhead cost $140 8395.6
3- Overhead cost per unit.
$ 112.36 per unit of N Part 270
$ 4.96 per unit of Part XB2B
Explanation:
Direct Labor hours Machine hours Overhead costs
Molding 52,000 DLH 30,500 MH 6752,000
Trimming 48,000 DLH 3 , 600 MH $612,000
Total 100,000 DLH 34,100 MH $7364,000
N Part 270 Part XB2B
Units 9,300 54,500
Machine Hours
Molding 5,100 1.020
Trimming 2,600 650
Direct Labor Hours
Molding 5,500 2150
Trimming 700 3,500
We divide the Costs with the cost drivers to get the rates.
1-Departmental Overhead Rate
1) Molding Department = Overhead Costs/ Machine Hours
= 6752,000/ 30,500= $ 221.377= $ 221.38 per machine hour
2) Trimming Department= Overhead Costs/ Direct Labor Hours
=$612,000 /48,000 DLH = $ 12.75 per DLH
Now we multiply the cost drivers with the rates to get the overheads costs.
2- Total overhead cost= $ 1137963 + $ 270432.6= $140 8395.6
N Part 270 =$ 1129038 + $ 8925= $ 1137963
Molding = $ 221.38 *5,100 = $ 1129038
Trimming= $ 12.75 *700= $ 8925
Part XB2B= $ 225807.6 + $ 44625= $ 270432.6
Molding= $ 221.38 *1020 = $ 225807.6
Trimming= $ 12.75 *3500= $ 44625
We divide the overhead cost for each product with the number of units to get the unit costs.
3- Total Overhead Rate N Part 270 = Total Overhead Cost/ Units Produced
=$ 1137963 / 9300 = $ 112.36 per unit of N Part 270
Total Overhead Rate Part XB2B = Total Overhead Cost/ Units Produced
=$ 270432.6/54,500= $ 4.96 per unit of Part XB2B
In response to rapidly rising property taxes, California voters approved a statewide ballot initiative, Proposition 13, which froze property taxes regardless of the appraised value of the property. The state was to reassess the value of the property and could increase taxes only when the ownership of property was transferred. The property was exempt from this reassessment if the exchange of ownership was made between persons over the age of fifty-five or between parents and children. Over time, this system created dramatic differences in the taxes paid by people owning similar property. Long-term owners paid lower taxes; new owners paid higher taxes. Stephanie Nordlinger bought a house in Los Angeles County. Nordlinger then sued the county, claiming that the tax system was unconstitutional under the equal protection clause because it allowed the government to treat similarly situated individuals differently. In finding that the law did not violate the equal protection clause, the court most likely applied which of the following standards?
a. Strict scrutiny
b. The rational bass test
c. intermediate scrutiny
d. A due process test
Answer: b. The Rational Basis test
Explanation:
The Rational Basis test allows for a court of law to scrutinize a Government law or regulation to determine if it violates the principles of the Equal Protection clause which holds that people in a jurisdiction are entitled to equal protection under the laws of the jurisdiction.
The Rational Basis clause is usually applied to economic and business laws Instituted by a government and for this reason and the previously mentioned must be the standard that the court applied in finding out if Nordlinger was in the right.
Edgerron Company is able to produce two products, G and B, with the same machine in its factory. The following information is available.
Product G Product B
Selling price per unit $150 $180
Variable costs per unit 60 108
Contribution margin per unit $90 $72
Machine hours to produce 1 unit 0.4 hours 1.0 hours
Maximum unit sales per month 550 units 200 units
The company presently operates the machine for a single eight-hour shift for 22 working days each month. Management is thinking about operating the machine for two shifts, which will increase its productivity by another eight hours per day for 22 days per month. This change would require $9,000 additional fixed costs per month. (Round hours per unit answers to 1 decimal place. Enter operating losses, if any, as negative values.)
Required:
1. Determine the contribution margin per machine hour that each product generates.
2. How many units of product G and product B should the company produce if it continues to operate with only one shift? How much total contribution margin does this mix produce each month?
Answer:
Product G Product B
Selling price per unit $150 $180
Variable costs per unit $60 $108
Contribution margin per unit $90 $72
Machine hours to produce 1 unit 0.4 hours 1.0 hours
Maximum unit sales per month 550 units 200 units
1)
Contribution margin per = $90 / 0.4 = $72 / 1
machine hour = $225 = $72
2)
total operating hours per 176 hours
month
units produced 440 units 0 units
contribution margin $39,600 $0
Since Product G generates a much higher contribution margin per machine hour, all the available machine hours (176) should be used to produce it. That would result in 440 units produced and $39,600 generated as contribution margin.