Answer:
$369,720
Explanation:
The computation of the amount record the new equipment for financial accounting purpose is shown below:
Book value of new equipment = book value of old equipment + cash given
where,
Book value of old equipment is $83,720
And, the cash paid for new equipment is $286,000
SO, the book value of new equipment is
= $83,720 + $286,000
= $369,720
Which scenario describes a job seeker using an online resource for a job search?
Answer:
A job seeker using an online resources for job search shows how
technology and the internet in particular has helped to simplify our everyday life. The use of online resources shows how much the internet has helped to reshape and revolutionize so many sectors of the society. This use of online resources in job search provides a much faster way of reaching and covering a wide range of available jobs within and far beyond your immediate geographical range. Before the internet, job searches were typically done manually, and the process consumed a lot of time and resources and was mostly limited a certain geographical range. Nowadays, someone in the US can easily apply for a job post on the internet all the way in Germany.
Answer:
these are the questions, how do you forget to put the questions??
Explanation:
A.
Tabitha visits a career expo that many architectural firms are attending.
B.
Samuel speaks to a former coworker to ask about job openings at his company.
C.
Pauline checks job listings on the career page of a company’s website.
D.
Jay registers with an employment agency to help him find jobs in engineering.
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
Under its executive stock option plan, W Corporation granted options on January 1, 2021, that permit executives to purchase 28 million of the company's $1 par common shares within the next eight years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $19 per share. The fair value of the options, estimated by an appropriate option pricing model, is $5 per option. No forfeitures are anticipated. The options are exercised on April 2, 2024, when the market price is $22 per share. By what amount will W's shareholders equity be increased when the options are exercised
Answer:
$532 million
Explanation:
Number of common stock executives are permitted to purchase = 28 million
Exercise price = Market price of the shares on the date of grant = $19 per share
Amount of increase in W's shareholders equity = 28 million * $19 = $532 million
Therefore, W's shareholders equity will increase by $532 million when the options are exercised.
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
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
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
In doing aggregate planning for a firm producing paint, the aggregate planners would most likely deal with: a. Gallons, quarts, pints, and all the different sizes to be produced b. Gallons of paint, but be concerned with the different colors to be produced c. All of the different colors targeted for different markets d. Just gallons of paint, without concern for the different colors and sizes e. All the different sizes and all the different colors by size
Answer:
D. Just gallons of paint, without concern for the different colors and sizes
Explanation:
Aggregate planning is explained to be an operational activity critical to the organization as it looks to balance long-term strategic planning with short term production success.
Thus annual and quarterly plans are broken down into labor, raw material, working capital, etc. requirements over a medium-range period (6 months to 18 months). This process of working out production requirements for a medium range is called aggregate planning.
Also it is noted that a complete information is required about available production facility and raw materials.
A solid demand forecast covering the medium-range period.
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
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
The 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.
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
Linda and Richard are married and file a joint return for 2019. During the year, Linda, who works as an accountant for a national airline, used $2,100 worth of free passes for travel on the airline; Richard used the same amount. Linda and Richard also used $850 worth of employee discount coupons for hotel rooms at the hotel chain that is also owned by the airline. Richard is employed at State University as an accounting clerk. Under a tuition reduction plan, Richard saved $4,000 in tuition fees during 2019. He is studying for a master's degree in business at night while still working full-time. Richard also had $30 worth of personal typing done by his administrative assistant at the University.
What is the amount of fringe benefits that should be included in Linda and Richard's gross income on their 2019 tax return?
Answer:
$4,850
Explanation:
the amount of fringe benefits that should be included in Linda and Richard's gross income on their 2019 tax return is $4,850
This was gotten by adding $850 worth of employee discount coupons for hotel rooms and $4,000 in tuition fees during 2019
$4,000 + $850
= $4,850
Parks Corporation is considering an investment proposal in which a working capital investment of $10,000 would be required. The investment would provide cash inflows of $2,000 per year for six years. The working capital would be released for use elsewhere when the project is completed.
If the company's discount rate is 10%, the investment's net present value is closest to (Ignore income taxes):
a) $1,290 b) $(1,290) c) $2,000 d) $4,350
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! :)
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
The form below shows the amounts that appear in the Earnings to Date column of the employees' earnings records for 10 full- and part-time workers in Unger Company. These amounts represent the cumulative earnings for each worker as of October 4, the company's last payday. The form also gives the gross amount of earnings to be paid each worker on the next payday, October 11.
In the state where Unger Company is located, the tax rates and bases are as follows: Tax on Employees: FICA—OASDI 6.2% on first $128,400 FICA—HI 1.45% on total earnings SUTA 0.5% on first $8,000 Tax on Employer: FICA—OASDI 6.2% on first $128,400 FICA—HI 1.45% on total earnings FUTA 0.6% on first $7,000 SUTA 1.8% on first $8,000 In the appropriate columns of the form shown below, do the following:
1. Compute the amount to be withheld from each employee's earnings on October 11 for (a) FICA—OASDI, (b) FICA—HI, and (c) SUTA, and determine the total employee taxes.
2. Record the portion of each employee's earnings that is taxable under FICA, FUTA, and SUTA, and calculate the total employer's payroll taxes on the October 11 payroll. If an amount box does not require an entry, leave it blank. If required, round your answers to the nearest cent. Enter the tax rates as decimals, carried out to four decimal places when required.
UNGER COMPANY Gross Taxes to Be Withheld from Employees' Earnings Under Employer Taxes: Portion of Employees' Earnings Taxable Under Earnings to Earnings FICA FICA Employee Date Oct. 11 OASDI HI SUTA OASDI HI FUTA SUTA
1. Weiser, Robert A. $126,815 $1,900 $ $ $ $ $ $ $
2. Stankard, Laurie C. 15,090 270
3. Grow, Joan L. 4,020 220
4. Rowe, Paul C. 8,175 300
5. McNamara, Joyce M. 7,470 170
6. O'Connor, Roger T. 124,740 1,780
7. Carson, Ronald B. 8,925 265
8. Kenny, Ginni C. 4,280 180
9. Devery, Virginia S. 57,035 565
10. Wilson, Joe W. 3,580 250
Total employee taxes $ $ $
Total taxable earnings $ $ $ $
Applicable tax rate (enter as decimals, not percentages)
Totals $ $ $ $
Total payroll taxes $
Answer:
I prepared and attached an excel spreadsheet because there is not enough room here. I rounded all numbers to the nearest dollar.
Explanation:
Employers are generally allowed to deduct reasonable compensation paid to employees, but the level of deductible compensation is limited to a maximum of $ ________ for the CEO, CFO, and the next three highest paid officers of publicly traded corporations unless certain exceptions are met.
Answer:
1 million.
Explanation:
Employers are generally allowed to deduct reasonable compensation paid to employees, but the level of deductible compensation is limited to a maximum of $ 1,000,000 for the CEO, CFO, and the next three highest paid officers of publicly traded corporations unless certain exceptions are met.
Allowance for Doubtful Accounts has a debit balance of $600 at the end of the year (before adjustment), and an analysis of accounts in the customer ledger indicates uncollectible receivables of $13,000.
1. Which of the following entries records the proper adjusting entry for bad debt expense?a. debit Bad Debt Expense, $12,400; credit Allowance for Doubtful Accounts, $12,400b. debit Bad Debt Expense, $13,600; credit Allowance for Doubtful Accounts, $13,600c. debit Allowance for Doubtful Accounts, $600; credit Bad Debt Expense, $600d. debit Bad Debt Expense, $600; credit Allowance for Doubtful Accounts, $600
Answer:
b. debit Bad Debt Expense, $13,600; credit Allowance for Doubtful Accounts, $13,600
Explanation:
Allowance for Doubtful Accounts is a contra asset account, It normally has credit balance but an adjustment may also make it's balance debit.
The uncollectible receivables of $13,000 means the there should be a credit balance in Allowance for Doubtful Accounts at the end of the period. This account already has debit balance of $600 which is also needs to be adjusted.
Total adjustment = $13,000 + $600 = $13,600
A gourmet coffee shop in downtown San Francisco is open 200 days a year and sells an average of 75 pounds of Kona coffee beans a day. (Demand can be assumed to be distributed normally, with a standard deviation of 15 pounds per day.) After ordering (fixed cost 5 $16 per order), beans are always shipped from Hawaii within exactly 4 days. Per-pound annual holding costs for the beans are $3.
a) What is the economic order quantity (EOQ) for Kona coffee beans?
b) What are the total annual holding costs of stock for Kona coffee beans?
c) What are the total annual ordering costs for Kona coffee beans?
d) Assume that management has specified that no more than a 1% risk during stockout is acceptable. What should the reorder point (ROP) be?
e) What is the safety stock needed to attain a 1% risk of stockout during lead time?
f) What is the annual holding cost of maintaining the level of safety stock needed to support a 1% risk?
g) If management specified that a 2% risk of stockout during lead time would be acceptable, would the safety stock holding costs decrease or increase?
Answer and Explanation:
Gourmet coffee shop
(a) d= 75 lbs/day 200 days per year
D= 15,000 lb/year
H= $3/lb/year
S= $16/order
EOQ= √(2*15,000*16)/3
=400 lb of beans
(b)Total annual holding cost =
Q/2 * H
= 400/2 * 3
= $600
(c)Total annual order cost
= D/Q * S
= 15,000/400 * 16
= $600
(d) LT= 4 days with σ = 15
Stockout risk = 1%
Z= 2.33
ROP = Lead time demand + SS, where SS= (Z)(σd*LT) and lead time demand = (d)(LT)
σd*LT= (√LT) * 15 = √4 * 15 = 30
ROP = 369.99
where ROP = (d)(LT) + SS
(e) SS= 69.99 from part (d)
(f) Annual safety stock holding cost = $209.97
(g)2% stockout level →Z= 2.054 SS= (Z) * (σdLT)
= 61.61
A- The Economic Order Quantity for Kona coffee beans is 400 pounds.
B- Total annual holding costs of stock for Kona coffee beans $600.
C- Total ordering cost for the Kona coffee beans is also $600.
D- Reorder point at 1% risk will be 369.9
E- This can be achieved with (D) as 70.
F- The safety stock's annual holding cost at 1% risk $209.97
G- The safety stock holding costs will increase if the risk of stock out is 2%.
The above calculations can be achieved with the form of calculations as shown below. For A[tex]\rm Economic\ Order\ Quantity= \sqrt \dfrac {2\ x\ \$15000\ x\ 16} {3} }\\\\\\\\\rm Economic\ Order\ Quantity=400\ pounds[/tex]For B [tex]\rm Total\ annual\ holding\ cost= \dfrac{400}{2}\ x\ 3 \\\\\\\rm Total\ annual\ holding\ cost= \$ 600[/tex]For C [tex]\rm Total\ annual\ ordering\ cost= \dfrac{15000}{400}\ x\ 16\\\\\\\\\rm Total\ annual\ ordering\ cost= \$ 600[/tex]For D [tex]\rm Reorder\ point\ = \sqrt{4\ x\ 15}\\\\\\\rm Reorder\ point\ = \$400- \$30\\\\\\\rm Reorder\ point\ = \$369.99[/tex]For F[tex]\rm Annual\ Safety\ Stock\ Holding\ Cost = \$209.97[/tex]For G [tex]\rm Safety\ Level = \$61.11[/tex]Hence, the solutions for all the queries have been given above by the use of calculations by applying the given values to the formulae.
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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
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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.
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.
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 following information relates to a product produced by Faulkland Company:
Direct materials $ 9
Direct labor 6
Variable overhead 5
Fixed overhead 7
Unit cost $ 27
Fixed selling costs are $1,170,000 per year. Variable selling costs of $3 per unit sold are added to cover the transportation cost. Although production capacity is 670,000 units per year, Faulkland expects to produce only 570,000 units next year. The product normally sells for $35 each. A customer has offered to buy 77,000 units for $26 each. The customer will pay the transportation charge on the units purchased. If Faulkland accepts the special order, the effect on income would be a:___________
A. $231,000 increase.
B. $462,000 increase.
C. $77,000 increase.
D. $693,000 decrease.
Answer:
A. $231,000 increase.
The following data pertains to Xena Corp.: Xena Corp. Total Assets $23,610 Interest-Bearing Debt (market value) $11,070 Average borrowing rate for debt 10.2% Common Equity: Book Value $ 6,150 Market Value $25,830 Marginal Income Tax Rate 37% Market Beta 1.73 Assuming that the risk-free rate is 4.5% and the market risk premium is 6.2%, calculate Xena's cost of equity capital using the capital asset pricing model. Select one: A. 15.2% B. 10.4% C. 13.4% D. 8.9%
Answer:
Option (A).
Explanation:
According to the scenario, computation of the given data are as follow:-
We can calculate the cost of equity capital by using following formula:-
Market Beta = 1.73
Risk free rate = 4.50% = 0.045
Market risk premium = 6.20% = 0.062
Cost of Equity Capital = (Market Risk Premium × Market Beta ) + Risk Free Rate
= (0.062 × 1.73) + 0.045
= 0.1073 + 0.045
= 0.1523 or 15.23%
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.
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.
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.
The Blue Company is the primary taxi company in the city of Maintown. It uses gasoline at the rate of 106,800 gallons per year. Because this is such a major cost, the company has made a special arrangement with the Amicable Petroleum Company to purchase a huge quantity of gasoline at a reduced price of $2.00 per gallon. The cost of arranging for each order, including placing the gasoline into storage, is $2,000. The cost of holding the gasoline in storage is estimated to be $0.24 per gallon per year.
Required:
a. Using MS Excel Solver, determine the optimal order quantity.
Answer:
462.169 gallons
Explanation:
Given that:
the annual demand of gasoline = 106800 gallons per year
Price = $2.00 per gallon
Order cost = $2,000
Holding cost = $0.24 per gallon per year
The objective here is to use Ms Excel solver to determine the optimal order quantity.
We will be attaching four diagrams showing the step-wise process for the determination of the optimal order quantity.
Firstly; we create a model for the given data
Then we ; use the excel formula which the description are shown in the second diagram attached
Finally;we use the solver parameter to obtain the optimal order quantity.
The optimal order quantity = 462.169 gallons
See the attachment below for better understanding.
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.