Answer:
Instructions are below.
Explanation:
Giving the following information:
Number of Gallons Produced 80,000
Number of Gallons Sold 70,000
Sales Price $3.00/gallon
Unit Product Cost (variable costing) $1.45/gallon
Contribution Margin $84,000
Total Fixed Manufacturing Overhead $?
Total Fixed Selling & Administrative $25,000
Variable Selling & Administrative $?Total Fixed Selling & Administrative $25,000
Variable Selling & Administrative $?
Inventory value under absorption costing $29,500
The difference between the absorption and variable costing method is that the first one includes the fixed manufacturing overhead in the product cost.
Absorption= direct material + direct labor + total unitary overhead
Variable= direct material + direct labor + unitary variable overhead
First, we will calculate all the missing information:
Sales= 3*70,000= 210,000
Total variable cost= 210,000 - 84,000= 126,000
Unitary varaible cost= 126,000/70,000= $1.8 per unit
Unitary variable selling and administrative= 1.8 - 1.45= 0.35
Unitary inventory production cost (absorption)= 29,500/10,000= $2.95
Unitary fixed manufacturing cost= 2.95 - 1.45= 1.5
Now, we can determine the income statement under absorption and variable costing method:
Absorption costing:
Sales= 210,000
COGS= 70,000*2.95= (206,500)
Gross profit= 3,500
Total Fixed Selling & Administrative= (25,000)
Variable Selling & Administrative= (0.35*70,000)=
Net operating income= (46,000)
Variable costing method:
Sales= 210,000
Total variable cost= (126,000)
Contribution margin= 84,000
Total Fixed Selling & Administrative= (25,000)
Total fixed manufacturing overhead= (80,000*1.5)= (120,000)
Net operating income= (61,000)
A construction company is bidding on a project comprising five high-rise buildings to be erected one after the other. The company considers the purchase of a set of advanced, hydraulically operated tunnel forming systems for $20/sf. The forms are to be used 200 times for the forming of 1,000 sf of walls and 1,000 sf of slabs per use on a series of residential buildings over a period of 4 yr, and then they will be sold. Salvage value is expected to be 10% of original purchase price. No maintenance costs are expected. Labor productivity is estimated at 0.025 labor hr/sf. Hourly wages are $22. Consider 5% annual interest rate. What is the average formwork cost (material
Answer:
Explanation:
The two attached pictures explains the problem and is so explanatory.
Consider the following premerger information about Firm X and Firm Y: Firm X Firm Y Total earnings $ 86,000 $ 17,500 Shares outstanding 43,000 18,000 Per-share values: Market $ 58 $ 14 Book $ 18 $ 9 Assume that Firm X acquires Firm Y by issuing long-term debt for all the shares outstanding at a merger premium of $7 per share, and that neither firm has any debt before the merger. List the assets of the combined firm assuming the purchase accounting method is used.
Answer:
Total assets X Y 1,152,000
Explanation:
Since both the firms do not have any liability -Book value of equity = Carrying value of assets
Goodwill = Net consideration - Market Value of Assets of Y
Assets from X 18 x 43000 774000
Assets From y 14 x 18000 252000
Goodwill (18000 x (14+7)) - 252000 = 126000
Total assets X Y 1152000
Owen wants to contribute cash or capital gain property or stock to a charitable organization this year. Assume his adjusted gross income for the year will be $150,000 and that he only plans to make one of the following donations.
If he contributes $100,000 cash to a public charity, he can deduct $ __________ this year.
If he contributes property that is worth $80,000 to a public charity, he can deduct $ ___________ .
Or, if he contributes publicly traded stock with a FMV of $60,000 and a basis of $40,000 to a private non-operating foundation, he can deduct $ __________ this year.
Answer:
$90,000; $45,000; $30,000.
Explanation:
In the United States of America, tax payers get reduction in the amount of taxes that they pay when taxpayers donate money to charity. The deductions in tax depends on the charity organization the tax payer is donating to and the kind of property the tax payer is donating.
Below is how it is been deducted;
(1). As regards to public charity, only 60% can be deducted from the adjusted gross income.
(2).As regards to Capital gain property contribution to public charity, only 30% can be deducted from the adjusted gross income.
(3). As regards to Capital gain property contribution to private non operating foundation, only 20% can be
In the question above, the adjusted gross income for the year will be = $150,000 deducted from the adjusted gross income.
Therefore, for (1). 60/100 × $150,000 = $90,000.
(2). 30/100 × 150,000 = $45,000.
(3). 20/100 × 150,000 = $ 30,000.
Dawson Toys, Ltd., produces a toy called the Maze. The company has recently established a standard cost system to help control costs and has established the following standards for the Maze toy:
Direct materials: 6 microns per toy at $0.34 per micron
Direct labor: 1.2 hours per toy at $6.90 per hour
During July, the company produced 5,100 Maze toys. The toy's production data for the month are as follows:
Direct materials: 76,000 microns were purchased at a cost of $0.33 per micron. 37,750 of these microns were still in inventory at the end of the month.
Direct labor: 6,620 direct labor-hours were worked at a cost of $48,326.
Required:
1. Compute the following variances for July:a. Direct materials price and quantity variances.b. Direct labor rate and efficiency variances.2. Prepare a brief explanation of the possible causes of each variance.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Direct materials: 6 microns per toy at $0.34 per micron
Direct labor: 1.2 hours per toy at $6.90 per hour
During July, the company produced 5,100 Maze toys.
Direct materials: 76,000 microns were purchased at a cost of $0.33 per micron. 37,750 of these microns were still in inventory at the end of the month.
Direct labor: 6,620 direct labor-hours were worked at a cost of $48,326.
1) To calculate the direct material price and quantity variance, we need to use the following formula:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (0.34 - 0.33)*76,000
Direct material price variance= $760 favorable
This variance can be explained by negotiation with the supplier, finding a new supplier, or a market decrease in the price of the part.
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (5,100*6 - 38,250)*0.34
Direct material quantity variance= $2,601 unfavorable
This variance can be explained by a decrease in the quality of the part, mishandlings, and breakage of parts, or an inexperienced worker.
2) To calculate the direct labor efficiency and rate variance, we need to use the following formulas:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Direct labor time (efficiency) variance= (5,100*1.2 - 6,620)*6.9
Direct labor time (efficiency) variance= $3,450 unfavorable
This variance can be explained by an inexperienced worker or a trainee, a break down of a machine, a new part, etcetera.
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Actual rate= 48,326/6,620= $7.3
Direct labor rate variance= (6.9 - 7.3)*6,620
Direct labor rate variance= $2,648 unfavorable
Testbank Multiple Choice Question 86 Bonita Industries is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $6300000 on March 1, $5260000 on June 1, and $8450000 on December 31. Bonita Industries borrowed $3180000 on January 1 on a 5-year, 10% note to help finance construction of the building. In addition, the company had outstanding all year a 8%, 3-year, $6410000 note payable and an 9%, 4-year, $12150000 note payable. What are the weighted-average accumulated expenditures? $8318333 $9720000 $20010000 $11560000
Answer:
$8,318,333
Explanation:
The computation of the weighted average accumulated expenditure is shown below:
Date Amount Capitalization period Weighted Average Accumulated Expenditures
Mar 1 $6,300,000 10 months $5,250,000 ($6,300,000 × 10 months ÷ 12 months)
Jun 1 $5,260,000 7 months $3,068,333.33 ($5,260,000 × 7 months ÷ 12 months)
Dec 31 $8,450,000 0 months $0
Total $8,318,333
We simply multiplied the amount with the capitalization period so that the weighted average accumulated expenditure could come
On January 1, Jackson, Inc.'s WorkminusinminusProcess Inventory account showed a balance of $ 66 comma 000. During the year, materials requisitioned for use in production amounted to $ 71 comma 700, of which $ 66 comma 000 represented direct materials. Factory wages for the period were $ 208 comma 000 of which $ 187 comma 000 were for direct labor. Manufacturing overhead is allocated on the basis of 60% of direct labor cost. Actual overhead was $ 116 comma 110. Jobs costing $ 353 comma 110 were completed during the year. The December 31 balance in WorkminusinminusProcess Inventory is
Answer:
$78,090
Explanation:
The solution of ending balance is provided below:-
Ending balance = Beginning balance + Direct material + Direct labor + Manufacturing overhead - Transfer to finished goods inventory
= $66,000 + $66,000 + $187,000 + ($187,000 × 60%) - $353,110
= $66,000 + $66,000 + $187,000 + $112,200 - $353,110
= $431,200 - $353,110
= $78,090
Therefore, we have calculated ending balance by using the above formula.
VUESTIUNI
occurs when information is shared with some stockholders of the company and not with all of them.
a. Price per share
b. Underwriting
C. Capital gains
d. Insider corruption
e. Insider trading
Answer:
e. Insider trading.
Explanation:
Insider trading occurs when information is shared with some stockholders of the company and not with all of them.
According to the United States of America, Securities and Exchange Commission (SEC); Illegal Insider trading involves the "buying or selling of a security, in breach of a fiduciary duty or other relationship of trust and confidence, on the basis of material, non-public information about the security."
In the stock exchange market, any information that possibly could impact an investor's decision substantially to buy or sell the security is known as material information while informations that is not legally available to the public is non-public information.
A potential investor who has access to insider information would definitely have an advantage or unfair edge over other investors, who obviously don't have same privileges, and could potentially make unfair-large profits.
U.S SEC is very much concerned with maintaining a fair marketplace, thus requiring that all transactions be timely submitted electronically.
Your team consists of 12 members, each in different locations, who are collaborating on a detailed committee report. Your team is in the final phase of the writing process and is making final edits to the report. Because you are each responsible for different aspects of the finalization process, the entire team needs to track changes so that the edits are visible before they are finalized.
Which collaboration tools would be best for this situation? Check all that apply.A. Google DocsB. WikiC. E-mail
Answer: A. Google Docs
Explanation:
Google Docs will be the best solution in this case because it is a cloud computing tool that enables people to work on a document simultaneously across the world. As others are working on the documents, the saves that they make are instantly saved on the document and reflected across all users who have access to the document at the time.
On June 1, 2018, Perfect Performance Cell Phones sold $ 17,000 of merchandise to Ashton Trucking Company on account. Ashton fell on hard times and on July 15 paid only $ 6,000 of the account receivable. After repeated attempts to collect, Perfect Performance finally wrote off its accounts receivable from Ashton on September 5. Six months later, March 5, 2019, Perfect Performance received Ashton's check for $ 11,000 with a note apologizing for the late payment.
Requirements:
1. Journalize the transactions for High Performance Cell Phones using the direct write-off method. Ignore Cost of Goods Sold.
2. What are some limitations that High Performance will encounter when using the direct write-off method?
Answer:
See answers and explanation below.
Explanation:
1. Journalize the transactions for High Performance Cell Phones using the direct write-off method. Ignore Cost of Goods Sold.
Date Details Dr ($) Cr ($)
1 Jun. 18 Account receivable 17,000
Sales revenue 17,000
To record sales to Ashton Trucking Company on account.
15 Jul. 18 Cash 6,000
Account receivable 6,000
To record cash received from Ashton Trucking Company.
5 Sep. 18 Bad debt 11,000
Account receivable 11,000
To record accounts receivable from Ashton written off.
5 Mar. 19 Account receivable 11,000
Bad debt 11,000
To record transfer of bad bad back toaccounts receivable.
5 Mar. 19 Cash 11,000
Account receivable 11,000
To record cash received from Ashton Trucking Company.
2. What are some limitations that High Performance will encounter when using the direct write-off method?
a. It is not in line with the matching principle. This is because bad debt expenses will not be reported in the same period they are incurred and might not be realized as bad expenses until the following period.
b. It can cause inaccurate balance sheet as it does give the actual amount of accounts receivable of a company.
c. It method of recording violates GAAP and financial statements does to present the actual financial performance of the business.
d. It overstates accounts receivable as the full amount of amount owed to the company from credit sales will be reported as accounts receivable.
Below is the income statement for Sun Devil Company for the year ending December 31, 20x2: Sales (net) $500,000 Cost of Goods Sold: Beginning Inventory $ 50,000 Purchases 300,000 Goods Available for Sale 350,000 Ending Inventory 40.000 Cost of Goods Sold 310,000 Gross Profit $190.000 Operating Expenses: Wages $35,000 Depreciation 30,000 Advertising 15,000Administrative 5.000 $85,000$105,000 Income from Operations Gain on Sale of Equipment 50.000 Net Income $155 000 The following balances were derived from the balance sheet: December 31 20x2 20x1 Accounts Receivable $100,000 $ 90,000Accounts Payable 30.000 50.000 Prepaid Advertising Expense 5,000 3,000Wages Payable 5,000 4,000 Determine Cash Flows from Operating Activities: a. $164,000 b. $104,000 c. $114,000 d. $94,000
Answer:
The Cash Flows from Operating Activities is $104,000. The right answer is b.
Explanation:
According to the given data, the cash flows from operating activities would be the following:
Sun Devil Company
Statement of cash flow(Partial)
For the year ended December 31,20x2
Operating Activities:
Net income $155,000
Adjust to reconcile net income to
Net cash provided (used)by operating Activities:
Depreciation Expense $30,000
Gain on sale of Equipment -$50000
Account Receivable Increase -$10000
Prepaid Expense Increase -$2000
Wages Payable Increase $1000
Account Payable Decrease -$20000
Total Adjust to reconcile net income to
Net cash provided (used)by operating Activities= -$51000
Therefore, Net cash provided by operating Activities $104,000
Tamar Co. manufactures a single product in one department. All direct materials are added at the beginning of the manufacturing process. Conversion costs are added evenly throughout the process. During May, the company completed and transferred 22,200 units of product to finished goods inventory. Its 3,000 units of beginning work in process consisted of $19,800 of direct materials and $221,940 of conversion costs. It has 2,400 units (100% complete with respect to direct materials and 80% complete with respect to conversion) in process at month-end. During the month, $496,800 of direct material costs and $2,165,940 of conversion costs were charged to production.
Prepare the company's process cost summary for May using the weighted-average method.
Answer:
Valuation of output
$
Completed units = 2,544,000.
Closing WIP = 240,480
Explanation:
Equivalent unit for conversion cost
Item units equivalent unit
Completed 22,200 100%× 22,200 22,200
Closing WIP 2,2400 80%× 2,400 1,920
Total equivalent unit 24,120
Cost per equivalent unit for conversion cost =
(221,940 + 2,165,940)/=24,120= $99
Equivalent unit for material cost
Equivalent unit for Material = 22,200 + 2,400 =24,600
Cost per equivalent unit for material cost
= 19800+496800/24,600= $21
Valuation of output $
Completed units = (21+99)× 21,200 = 2,544,000.
Closing WIP = 99× 1920 + (21 × 2,400) = 240,480
Neosho Corporation's Gauge Division manufactures and sells product no. 24, which is used in refrigeration systems. Per-unit variable manufacturing and selling costs amount to $23 and $7, respectively. The Division can sell this item to external domestic customers for $40 or, alternatively, transfer the product to the company's Refrigeration Division. Refrigeration is currently purchasing a similar unit from Taiwan for $36. Assume use of the general transfer-pricing rule. Required: A. What is the most that the Refrigeration Division would be willing to pay the Gauge Division for unit? B. If Gauge had excess capacity, what transfer price would the Division's management set? C. If Gauge had no cxecss capacity, what transfer price would the Division's management sct? D. Repeat part "C," assuming that Gauge was able to reduce the variable cost of internal transfers b $5 per unit
Answer:
(a) Refrigeration would be willing to pay a maximum of Rate 36 to gauge division for unit. because its outside purchase price. (b) $30 (c) $40 (d) $35
Explanation:
Solution
Given that:
(A) The Refrigeration would be willing to pay a maximum of Rate 36 to gauge division for unit. because its outside purchase price.
(B) If Gauge had excess capacity, The Division's Management set the transfer price would be $30. this is because transfer price be set as sum of Total Outlay cost and Opportunity Cost. So, ($23 + $7) + $0 = $30
(C) iF Gauge had no excess capacity, the transfer price would be $40.
The Calculation of Transfer price is as follows:
($23 + $7) = $30
Add :- ($40 - $23 -$7) = $10
Hence, the transfer Price = $40
(D) If Gauge was able to reduce the variable cost of internal transfers b $5 per unit then Transfer Price Would be $35.
Thus,
The calculation of transfer price is as follows:-
($23 + $7 - $5) = $25
Add :- ($40 - $23 -$7) = $10
The transfer Price = $35
MA-4 (Static) Recording a Bond Investment Held as Trading Securities LO A-1
On January 1, 2018, Brian Company purchased at par $800,000, 6 percent bonds issued by Laura Company to be actively traded. At December 31, 2018, the bonds had a fair value of $775,000. The bond investment was sold on July 1, 2019, for $802,000. Brian Company’s fiscal year ends on December 31.
Record (1) the adjustment of the bond investment on December 31, 2018, and (2) the sale of the bonds on July 1, 2019. Ignore interest. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
1. Recognize the fair value of investments $775,000 on December 31, 2018.
2. Recognize the fair value of investments on July 01, 2019.
3. Recognize the cash received from sale of investments on July 01, 2019.
Date/General Journal/Debit/Credit/
Answer:
MA-4 Bond Investment Held as Trading Securities
1) Journal Entries:
December 31, 2018:
Debit Loss on Bond Investment $25,000
Credit Bond Investment (Held as Trading Securities) $25,000
To recognize the fair value of bonds.
July 1, 2019:
Debit Bond Investment (Held as Trading Securities) $27,000
Credit Gain on Bond Investment 27,000
To recognize the fair value of investments.
July 1, 2019:
Debit Cash Account $802,000
Credit Bond Investment 802,000
To recognize the cash from sale of investments.
Explanation:
a) Investments in Debt Securities, e.g. Bonds are classified into i) For Trading, ii) Available for Sale, and iii) Held to Maturity. They have different account treatments.
b) Debt Securities for Trading are held for short-term profits in the price movements of the investment. They are accounted for using the Fair Value method. With this method, the fair value of the investment is recognized and the Gains and Losses at each accounting period are taken to operating income.
The appropriate journal entries to record the adjustment of the bond investment on December 31, 2018, and the sale of the bonds on July 1, 2019 are:
1. December 31, 2018
Debit Unrealized holding loss $25,000
Credit Fair value adjustment- Trading Securities $25,000
($800,000-$775,000)
(To record unrealized loss on trading investment)
2. July 1, 2019
Debit Fair value adjustment-Trading Securities $27,000
Credit Unrealized holding gain $27,000
($802,000-$775,000)
(To record unrealized gain on trading investment)
July 1, 2019
Debit Cash $802,000
Credit Fair value adjustment-Trading Securities $802,000
(To record sale of trading securities)
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At the beginning of the year, Custom Mfg. established its predetermined overhead rate by using the following cost predictions: overhead costs, $840,000, and direct materials costs, $400,000. At year-end, the company’s records show that actual overhead costs for the year are $1,151,500. Actual direct materials cost had been assigned to jobs as follows.
Jobs completed and sold $390,000
Jobs in finished goods inventory 83,000
Jobs in work in process inventory 55,000
Total actual direct materials cost $528,000
Required:
a. Determine the predetermined overhead rate.
b. Enter the overhead costs incurred and the amounts applied to jobs during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied.
c. Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold.
Answer:
a) Predetermined overhead rate is 210%
b. Overhead is under-applied by $42,700
c. Particulars Debit credit
cost of goods sold $42,700 $42,700
factory overhead
Explanation:
Beginning of the year
Overhead costs = $840,000
Direct materials costs = $400,000
End of the year actual overhead cost = $1,151,500
Jobs completed and sold = $390,000
Jobs in finished goods inventory = $83,000
Jobs in work in process inventory = $55,000
Total actual direct materials cost = $528,000
a. Calculating the predetermined overhead rate= (Overhead ÷direct labor) × 100
Predetermined overhead rate= ($840,000 ÷ $400,000) × 100
= 210%
b. Factory overhead
Actual overhead = $1,151,500
Applied overhead = $528000 × 210% = $1,108,800
Difference = actual overhead- applied overhead
= $1,151,500 - $1,108,800
= $42,700 Under-applied overhead
c. Adjusting entry to allocate the above under-applied overhead cost of goods sold
Particulars Debit credit
cost of goods sold $42,700 $42,700
factory overhead
What is a challenge to reporting to more than one manager in a matrix organization? What might be a benefit?What is a challenge to reporting to more than one manager in a matrix organization? What might be a benefit?
Answer:
Matrixed organisations can be more efficient than conventional hierarchical organisations in maximising resource use and delivering job development at a faster rate. They could also be slightly frustrating, noisy and more effective if performed incorrectly.
Potential drawbacks in answering to several executives:
Specific Management goals
Diverse modes of service
Varying political strategies
Related Space Access
Specific timescales of their intentions
Potential benefits of answering to several executives:
Connection to a broader network
Chances to switch to other areas of the company improved
Project development opportunities to develop organisational skills
Expanded capabilities for the company to see the larger picture
the production manager for the coory soft drink company is considering the production of 2 kinds of soft drinks: regular (R) and diet(D). two of the limited resources are production time 480 minutes per day and sytrum limited to 675 gallons per day. to produce a regular case requires 2 minutes and 5 gallons of syrup, while a diet case needs 4 minutes and 3 gallons of syrup, products for regular soft drink are $3.00 per case and profits for diet soft drink are $2.00 per case. What is the time constraint
Answer:
The time constraint is that you have only 480 minutes available per day to produce either type of soda.
In this case, if you are going to base your production schedule on your time constraint, then you should produce only regular sodas (240 cases). Each case of regular sodas generates $1.50 per minute of machine hour used. While a case of diet soda generates only $0.50 per minute of machine hour. Total revenue generated from he production of regular soda would be $720. If you would produce diet soda, total revenue would be $240.
The problem you face is the materials constraint (syrup), which will allow you to produce only 135 cases of regular soda and 0 cases of diet soda. Total revenue = $405, which is still higher than the revenue generated from diet soda ($240).
Explanation:
2 kinds of soft drinks:
regular (R) diet(D)production time 480 minutes per day
syrup limited to 675 gallons per day
regular case requires 2 minutes and 5 gallons of syrup, while a diet case needs 4 minutes and 3 gallons of syrup
price:
regular $3diet $2regular diet
sales price $3 $2
syrup gallons required 5 3
revenue per syrup gallon $0.60 $0.67
production time required 2 4
revenue per px time $1.50 $0.50
Given the following information for Watson Power Co., find the WACC. Assume the companyâs tax rate is 21 percent.
Debt: 15,000 bonds with a 5.8 percent coupon outstanding, $1,000 par value, 25 years to maturity, selling for 108 percent of par; the bonds make semiannual payments.
Common stock: 575,000 shares outstanding, selling for $64 per share; the beta is 1.09.
Preferred stock: 35,000 shares of 2.8 percent preferred stock outstanding, currently selling for $65 per share.
Market: 7 percent market risk premium and 3.2 percent risk-free rate.
Required:
What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16)
Answer:
8.60%
Explanation:
For computing the WACC first we need to find the following items
Debt:
Value of Debt is
= Number of bonds × Par value × Given percentage
= 15,000 × $1,000 × 108%
= $16,200,000
Now
Par Value = $1,000
So,
Current Price is
= 108% × $1,000
= $1,080
Given that
Annual Coupon Rate = 5.8%
So, Semiannual Coupon Rate = 2.90%
Now its Semiannual Coupon amount is = 2.90% × $1,000 = $29
Time period = 25 years
Semiannual time period = 50 years
Let we assume the semiannual yield to maturity be x%
Current Price = Coupon amount × PVIFA (x%, time period) + Par value × PVIF(x%, time period)
$1,080 = $29 * PVIFA(x%, 50) + $1,000 × PVIF(x%, 50)
Using financial calculator:
N = 50
PV = -$1,080
PMT = 29
FV = $1,000
We got the X i.e interest rate is 2.612%
Semiannual YTM = 2.612%
Annual YTM = 2 × 2.612% = 5.224%
Now this is a before tax cost of debt
So, after cost of debts is
= Before tax cost of debt × (1 - tax rate)
= 5.224% × (1 - 0.21)
= 4.127%
For Common Stock:
As we know that
Expected Rate of Return = Risk Free Rate + Beta × Market Risk Premium
= 0.032 + 1.09 × 0.07
= 0.032 + 0.0763
= 0.1083 or 10.83%
Now
Value of Equity is
= Number of outstanding shares × selling price per share
= 575,000 × $64
= $36,800,000
For Preferred Stock:
Cost of Preferred Stock = Expected Dividend ÷ Current Price
where,
Expected Dividend = $100 × 2.8% = $2.80
So,
Cost of Preferred Stock = 2.80 ÷ $65
= 4.308%
Now
Value of Preferred Stock = 35,000 × $65
= $2,275,000
So,
Value of Firm = Debt value + Common Stock value + Preferred Stock value
= $16,200,000 + $36,800,000 + $2,275,000
= $55,275,000
Weight of Debt is
= Debt value ÷ Total value of firm
= $16,200,000 ÷ $55,275,000
= 0.2930
Weight of Common Stock
= Common stock value ÷ Total firms value
= $36,800,000 ÷ $55,275,000
= 0.6658
Weight of Preferred Stock
= Preferred stock value ÷ Total firms value
= $2,275,000 ÷ $55,275,000
= 0.0412
Now
WACC = (Weight of Debt × After-tax Cost of Debt) + (Weight of Common Stock × Cost of Common Stock)+ (Weight of Preferred Stock × Cost of Preferred Stock )
= (0.2930 × 0.04127) + (0.6658 × 0.1083) + (0.0412 × 0.04308)
= 1.209211 + 7.210614 + 0.17749
= 8.60%
Box Elder Power Company expects to operate at 85% of productive capacity during May. The total manufacturing costs for May for the production of 40,000 batteries are budgeted as follows:
Direct materials $240,000
Direct labor 100,000
Variable factory overhead 32,000
Fixed factory overhead 150,000
Total manufacturing costs $522,000
The company has an opportunity to submit a bid for 5,000 batteries to be delivered by May 31 to a government agency. If the contract is obtained, it is anticipated that the additional activity will not interfere with normal operation during May or increase the selling or administrative expenses.
Required:
1. What is the unit cost below which Box Elder Power Company should not go in bidding on the government contract?
Answer:
The company should not go below $9.30 in bidding on the government contract.
Explanation:
Given:
Direct materials = $240,000
Direct labor = 100,000
Variable factory overhead = 32,000
Fixed factory overhead = 150,000
Total manufacturing costs = $522,000
Direct Material p.u = $240,000 ÷ 40,000 = $6
Direct Labor p.u = $100,000 ÷ 40,000 = $2.5
Variable Factory overhead p.u = $32,000 ÷ 40,000 = $0.8
Total overhead = Direct Material p.u + Direct Labor p.u + Variable Factory overhead p.u
= $6 + $2.5 + $0.8
Thus total overhead = $9.3
Enviro Company issues 8%, 10-year bonds with a par value of $230,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 1/2. The straight-line method is used to allocate interest expense.1. Using the implied selling price of 87 ½, what are the issuer's cash proceeds from issuance of these bonds?2. What total amount of bond interest expense will be recognized over the life of these bonds?3. What is the amount of bond interest expense recorded on the first interest payment date?
Answer:
Cash proceeds is $201,250.00
Explanation:
The cash proceeds derived from issuing the bonds can be computed as follows:
cash proceeds=87.5%*$230,000=$201,250.00
Total interest expense on the bond is $212,519 as contained in the attached bond amortization schedule
The first payment=$201,250*10%*6/12=$10,063 as it also found in the attached
Western, Inc. is a technology consulting firm focused on Web site development and integration of Internet business applications. The president of the company expects to incur $ 640,000 of indirect costs this year, and she expects her firm to work 4,000 direct labor hours. Western's systems consultants provide direct labor at a rate of $ 280 per hour. Clients are billed at 160% of direct labor cost. Last month, Western's consultants spent 170 hours on Halbert's engagement.
Compute Western's predetermined overhead allocation rate per direct labor hour.
Answer:
Estimated manufacturing overhead rate= $160 per direct labor hour
Explanation:
Giving the following information:
Estimated overhead= $640,000
Estimated direct labor hours= 4,000
To calculate the estimated manufacturing overhead rate we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 640,000/4,000
Estimated manufacturing overhead rate= $160 per direct labor hour
what is socail engineering?
Answer:
Social engineering, in the context of information security, is the psychological manipulation of people into performing actions or divulging confidential information. This differs from social engineering within the social sciences, which does not concern the divulging of confidential information.
Explanation:
Answer:
Explanation:
1. the use of centralized planning in an attempt to manage social change and regulate the future development and behavior of a society.
2.
(in the context of information security) the use of deception to manipulate individuals into divulging confidential or personal information that may be used for fraudulent purposes.
"people with an online account should watch for phishing attacks and other forms of social engineering"
On April 1, 2021, Shoemaker Corporation realizes that one of its main suppliers is having difficulty meeting delivery schedules, which is hurting Shoemaker's business. The supplier explains that it has a temporary lack of funds that is slowing its production cycle. Shoemaker agrees to lend $490,000 to its supplier using a 12-month, 10% note.
Required:
The loan of $490,000 and acceptance of the note receivable on April 1, 2021.
The adjustment for accrued interest on December 31, 2021.
Cash collection of the note and interest on April 1, 2022.
Record the above transactions for Shoemaker Corporation. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
Record the loan of $490,000 and acceptance of the note receivable on April 1, 2021.
Note: Enter debits before credits.
Date General Journal Debit Credit
April 01, 2021
Record the adjusting entry for accrued interest.
Note: Enter debits before credits.
Date General Journal Debit Credit
December 31, 2021
Record the cash collection.
Note: Enter debits before credits.
Date General Journal Debit Credit
April 01, 2022
Answer:
Shoemarket Corporation
Journal Entries:
April 1, 2021:
Debit Notes Receivable $490,000
Credit Cash Account $490,000
To record the issue of notes.
December 31, 2021:
Debit Interest on Notes Receivable $36,750
Credit Interest on Notes $36,750
To accrue interest on notes for the year.
April 1, 2022:
Debit Cash Account $539,000
Credit Notes Receivable $490,000
Credit Interest on Notes Receivable $36,750
Credit Interest on Notes $12,250
To record cash collection of the note and interest.
Explanation:
a) The acceptance of notes receivable increases the Notes Receivable account and reduces the Cash Account by $490,000.
b) Due to the accrual concept and the matching principle, on December 31, 2021, interest on notes receivable will be accrued. This is calculated as follows:
Interest for 9 months = $490,000 x 10% x 9/12 = $36,750.
c) On April 1, 2022, when the cash collection of the note and interest is made, the Cash received will total $539,000 ($490,000 + 10% Interest for a year). This is worked as $490,000 x 10% = $49,000. But, already interest for 2021 had been accrued. The difference is now accrued in 2022.
d) The entries required are a debit to the Cash Account $539,000, a credit to Interest on Notes Receivable $36,750, to Interest on Notes $12,250, and Notes Receivable Accounts $490,000 respectively.
Answer:
Explanation:
Journal entry is a record of transactions in respective accounts using the debit and entry system. Debit entry represents an inflow and credit entry represents an outflow.
Date General journal Debit Credit
April 2021 Note receivable 490,000
Credit Cash 490,000
Dec. 31 Interest Receivable 36750
(Year end)
Interest revenue 36,750
Cash Collection
April 1 ,2022 Cash 539,000
Note receivable 490,000
( Principal )
Interest receivable (2021) 36750
Interest revenue (2022) 12,250
Workings.
Loan note rate = 10%
Issue date = April 1, 2012
( months to the year end )
Interest receivable = 490,000*10%*9/12 = 36,750
January 1, 2022 - March 31 , 2022 (maturity ) =3 months
Interest revenue = 490000*10%*3/12 = 12,250
Motivational theory applications argue for recognizing individual differences. They also suggest paying attention to members of diverse groups. Is this a contradiction? Why or why not? Compare and contrast two motivational theories (one content and one process theory) regarding how they can support diversity within teams.
Explanation:
It is not a contradiction to say that motivational theory advocates the recognition of individual differences and at the same time also suggests paying attention to members of different groups.
This is due to the fact that people have distinct personality, values and skills, which in an organizational environment must be properly recognized and developed so that it can be integrated into a group and contribute to the different characteristics that integrated will assist the organization in reaching its goals. goals and objectives. It is important that the organization observes the strengths of each employee and seeks strategies to develop them to improve individual and collective work and productivity.
The theory of content in motivation is relevant in this context, as it is a theory that focuses on what motivates the human being and enables the process by which organizations are able to analyze and understand what are the main motivational sources of their employees in the company, which adds the benefits of working in a process of continuous improvement that involves satisfaction, motivation, innovation and maintenance of staff.
The Finishing Department had 5,200 incomplete units in its beginning Work-in-Process Inventory which were 100% complete as to materials and 30% complete as to conversion costs. 15,400 units were received from the previous department. The ending Work-in-Process Inventory consisted of 2,200 units which were 50% complete as to materials and 30% complete as to conversion costs. The Finishing Department uses first-in, first-out (FIFO) process costing.
Required:
A) How many units were transferred-out during the period?
Answer:
The total amount of units were transferred-out during the period iv 18,400 units
Explanation:
Beginning Work-in-Process = 5,200 incomplete units
Units received from previous department = 15,400 units
Ending Work-in-Process = 2,200 units
Units were transferred-out during the period = beginning Work-in-Process Inventory + units were received - ending Work-in-Process Inventory
Units were transferred-out during the period = 5,200 + 15,400 - 2,200
= 18,400 units
The reported net incomes for the first 2 years of Sarasota Products, Inc., were as follows: 2020, $155,500; 2021, $188,100. Early in 2022, the following errors were discovered.
1. Depreciation of equipment for 2020 was overstated $15,900.
2. Depreciation of equipment for 2021 was understated $37,500.
3. December 31, 2020, inventory was understated $48,400.
4. December 31, 2021, inventory was overstated $15,800.
Prepare the correcting entry necessary when these errors are discovered. Assume that the books are closed.
Answer:
Dr retained earnings($21,600+$15,800) $37,400.00
Cr accumulated depreciation $21,600
Cr inventory $15,800
Explanation:
The errors that require adjustment are the overstatement and understatement of depreciation expense as well as the December 2021 overstatement of inventory.
The understatement of inventory in 2020 would have self-corrected itself in 2021 since closing inventory in 2020 deducted from costs of goods available for sale would be introduced as opening inventory in 2021.
net effect of depreciation=understatement -overstatement=$37,500-$15,900=$21,600.00
hence retained earnings would reduce by $21,600.00
for the overstatement of inventory,retained earnings would reduce by $15,800
Schmidt Electronics offered an incentive stock plan to its employees. On January 1, Year 1, 90 comma 000 options were granted for 90 comma 000 $1 par common shares. The exercise price equals the $6 market price of the common stock on the grant date. The vesting period is 3 years. The options cannot be exercised before January 1, Year 4, and expire on December 31, Year 5. Each option has a value of $ 6 based upon an option pricing model. At the end of the first year, it is expected that 100% of employees will exercise the options. By the end of Year 2, it is expected that only 80% of the options will be exercised. Schmidt chooses to adjust the fair value of the options for the estimated forfeitures. What is the journal entry to record compensation expense for year 2? (Do not round intermediate calculations. Only round your final answer to the nearest dollar.)
Answer:
China
Explanation:
China
An external competitor to Construction (from another island) is offering to build the new homes for $1300 each. Here are facts about the each of the projects (incline, bridge, campground, new home) Construction is considering:
Revenue Variable Cost Incline $1,400 $600
Bridge $1,500 $950
Campground $2,700 $1,200
New Home ? $700
Island Evaluations only wants to hire one company to build all five homes. In other words, either Construction (internal) will build all five, or the competitor (from another island) will build all five new homes. Island Evaluations plans on selling the homes to new tenants for $2,500 each.
a) What is the minimum transfer price (per home) that Construction would be willing to accept?
b) What is the maximum transfer price (per home) Island Evaluations would be willing to accept?
Answer:
a. The minimum transfer price (per home) that Construction would be willing to accept would be $1,270
b. The maximum transfer price (per home) Island Evaluations would be willing to accept would be $1,300
Explanation:
a. According to the given data If Construction accepts the proposal of Island Evaluations, then it has to foregone the profits which could have been earned if Construction accepted the proposal of local villagers to build an incline, a bridge and a campground.
Hence, minimum transfer price (per home) for Construction should be such that it covers the profit foregone as given above:
Now, profit foregone is calculated as per the table below:
Figures in $
Particulars Revenue Cost Profit
Incline 1400 600 800
Bridge 1500 950 550
Campground 2700 1200 1500
Total 5600 2750 2850
Therefore, the transfer price should be such which can generate a profit of $2,850 for Construction.
Therefore, total revenue which should be generated = Cost of building five new homes + Profit foregone
= 700*5 + 2850 = $6,350
Hence, minimum transfer price (per home) should be = 6350/5 = $1,270
b. The maximum transfer price (per home) that Island Evaluations will be willing to accept is $1,300 per home as quoted by the external competitor from another island.
A gourmet coffee shop in downtown San Francisco is open 200 days a year and sells an average of 76 pounds of Kona coffee beans a day. (Demand can be assumed to be distributed normally with a standard deviation of 13 pounds per day). After ordering (fixed cost = $19 per order), beans are always delivered from Hawaii in exactly 4 days. Per-pound annual holding costs for the beans are $2. Refer to the standard normal tableLOADING... for z-values.
Answer:
Explanation:
Base on the scenario been described in the question, we use the following method to solve the question
d = 75 lbs/day 200 days per year
D= 15,000 lb/year H= $3/lb/year S= $16/order
RATIO CALCULATIONS Assume the following relationships for the Caulder Corp.: Sales/Total assets 1.4x Return on assets (ROA) 6% Return on equity (ROE) 9% Calculate Caulder's profit margin assuming the firm uses only debt and common equity, so total assets equal total invested capital. Round your answer to two decimal places. 4.29 % Calculate Caulder's debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Round your answer to two decimal places. %
Answer:
33.33%
Explanation:
The solution of debt-to-capital ratio is provided below:-
Here, to find out the debt to capital ratio we need to follow some steps which is following below:-
Step 1
Return on equity = Return on assets × (Assets ÷ Equity)
9% = 6% × (Assets ÷ Equity)
(Assets ÷ Equity) = 9% ÷ 6%
= 1.5%
Step 2
Debt ÷ Equity = (Assets ÷ Equity) - 1
= 1.5% - 1
= 0.5%
and finally
Debt-to-capital = 0.5% ÷ (1 + (Debt ÷ Equity)
= 0.5% ÷ (1 + 0.5%)
= 0.5% ÷ 1.5%
= 33.33%
So, we have calculated the debt to capital by using the above formula.
Toan Inc. uses a job-order costing system in which any underapplied or overapplied overhead is closed to cost of goods sold at the end of the month. In September the company completed job S80M that consisted of 23,000 units of one of the company's standard products. No other jobs were in process during the month. The job cost sheet for job S80M shows the following costs:
Beginning balance $ 66,700
Direct materials $494,500
Direct labor cost $158,700
Manufacturing overhead cost applied $269,100
During the month, the actual manufacturing overhead cost incurred was $270,020 and 3,000 completed units from job S80M were sold. No other products were sold during the month.
The unadjusted cost of goods sold (in other words, the cost of goods sold BEFORE adjustment for any underapplied or overapplied overhead) for September is closest to:
Answer:
$129,000
Explanation:
The computation of the unadjsuted cost of goods sold is shown below:
Before that we need to compute the total cost and cost per unit which are as follows
Total cost
= Beginning balance + Direct materials + Direct labor + Manufacturing overhead cost applied
= $66,700 + $494,500 + $158,700 + $269,100
= $989,000
And, Units completed is 23,000 units
So, the cost per unit is
= Total cost ÷ Number of units completed
= $989,000 ÷ 23,000 units
= $43
And, the number of units sold is 3,000 units
So, the cost of good sold unadjusted is
= Number of units sold × cost per unit
= 3,000 units × $43
= $129,000