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.
beyond lower turnover ,how else does costco benefit from treating its employees well?
Answer:
In simple words, by treating the employees well in the organisation businesses can get a lot of unexpected profits besides the lower cost due to lower employee turnover.
Employees in such organisation will always be motivated to work hard and self align their interests with objectives and goals of the organisation. Also employee satisfaction leads to lesser conflict with the workplace which further leads to more efficiency.
sment / ACCT100 Assessment 3
Superhub Ltd carries an inventory of a type of electrical device for electrician. The store uses the FIFO method and a perpetual inventory
system. Business records indicate the following transactions for the device.
July 1 (beginning): the store had 100 units of device costing $103 each
July 10: 150 devices were purchased each costing $91
July 15: 173 devices were sold
July 22: 200 devices were bought for $113 each.
July 30: 194 devices were sold
Determine the amounts of Superhub Ltd's ending inventory (at 31 July) in the month of July using the FIFO method.
st
Answer:
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Answer:
The value of closing inventory using FIFO under perpetual inventory system is $9379
Explanation:
The FIFO or first in first out method is a method of inventory valuation which basis the value of ending inventory on the assumption that the inventories that were purchased first were the ones that were sold first and the closing or ending inventory is comprised of the most recent purchases.
The perpetual method of inventory recording makes real time record and changes in the inventory level as soon as a transaction relating to inventory occurs.
The ending inventory of the business can be calculated as follows:
Transaction Purchases Sale Balance
1. Opening Inventory (100 * 103) 10300
2. July 10 purchase (150 * 91) 13650 23950
3. July 15 sale (100*103 + 73*91) 16943 7007
4. July 22 purchase (200 * 113) 22600 29607
5. July 30 sale (77*91 + 117*113) 20228 9379
Totals 36250 37171 9379
The value of closing inventory is $9379. The sale made on July 15 was made through using 100 units of opening inventory at a cost of $103 per unit and 73 units from July 10 purchases at $91 per unit.The sale made on July 30 was made through using the remaining units of July 10 purchases (150 - 73 = 77) at $91 per unit and using the units from July 22 purchase (194 - 77 = 117) at $113 per unit.The closing inventory in units is = 200 - 117 = 83The cost of closing inventory is 83 * 113 = $9379Resources fall broadly into two categories: tangible and intangible. Tangible resources have physical attributes and are visible. Intangible resources have no physical attributes and thus are invisible. Examples of intangible resources are a firm's culture, its knowledge, brand equity, and reputation.
1. Which of the following is an example of an intangible resource?Multiple Choice:A) equipmentB) copyrightC) cashD) landE) inventory
Answer:
copyright.
Explanation:
Intangible resource do not have any physical attributes and therefore are invisible, can not be seen but can only be felt. Accordingly, from the choices provided, equipment, cash, land and inventory are all physical resources and hence are called tangible resources. Only copyright fall under intangible resource. Hence the correct answer is copyright.
Answer:
B) copyright
Explanation:
Intangible Resource is the intangible assets which we can’t touch this resource and can’t see or intangible in nature. Intangible resource does not have in physical form. We can only feel that. Intangible Resource is necessary for any business.
So according to the analysis, option (B) is the correct example of intangible resources.
We can’t see copyright we just feel it. Copyright also don’t have a physical attribute but the other options have i.e current assets, fixed assets
Eastport Inc. was organized on June 5, 2018. It was authorized to issue 380,000 shares of $11 par common stock and 25,000 shares of 5 percent cumulative class A preferred stock. The class A stock had a stated value of $25 per share.
The following stock transactions pertain to Eastport Inc.:
1. Issued 15,000 shares of common stock for $12 per share.
2. Issued 5,000 shares of the class A preferred stock for $51 per share.
3. Issued 60,000 shares of common stock for $15 per share.
Required:
a. Prepare general journal entries for these transactions.
b. Prepare the stockholders' equity section of the balance sheet immediately after these transactions.
Answer:
Dr cash $180,000
Cr common stock $165,000
Cr paid-in capital in excess of par value-common stock $15,000
Dr cash $255,000
Cr preferred stock $125,000
Cr paid-in capital in excess of par -preferred stock $130,000
Dr cash $900,000
Cr common stock $660,000
Cr paid-in capital in excess of par value-common stock $240,000
Stockholders' equity
Common stock $11 par,380,000 authorized,75,000 issued ($165,000+$660,000) $825,000
Preferred stock $25 par,25,000 authorized,5,000 issued $125,000
Total par value $950,000
paid-in capital in excess of par value-common stock
($15,000+$240,000) $255,000
paid-in capital in excess of par -preferred stock $130,000
Total stockholders' equity $ 1,210,000
Explanation:
The issue of 15,000 shares of common stock for $12 each means that cash proceeds of $180,000 (15,000*$12) which is debited to cash and common stock is credited with $165,000 (15,000*$11) while the remaining $15,000 is credited to paid-in capital in excess of par value-common stock
The issue of 5,000 shares of preferred stock for $51 each means that cash proceeds of $ 255,000 (5,000*$51) which is debited to cash and preferred stock is credited with $125,000 (5,000*$25) while the remaining $130,000 is credited to paid-in capital in excess of par value-preferred stock
The issue of 60,000 shares of common stock for $15 each means that cash proceeds of $900,000 (60,000*$15) which is debited to cash and common stock is credited with $660,000 (60,000*$11) while the remaining $ 240,000 is credited to paid-in capital in excess of par value-common stock
Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $73, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $90 million, a coupon rate of 6 percent, and sells for 98 percent of par. The second issue has a face value of $75 million, a coupon rate of 5 percent, and sells for 110 percent of par. The first issue matures in 22 years, the second in 7 years. Both bonds make semiannual coupon payments.Required:a. What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.)b. What are the company’s capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.)
Answer:
a. 0.7467 and 0.2534
b. 0.2504 and 0.7495
Explanation:
As per the data given in the question,
The capital structure is a combination of the both debt and equity where debt is the cheapest source while the equity is the expensive source and the risk and return is high in case of equity as compared with the debt
a)
Company's capital structure weight on the basis of Book Value Weight :
Debt = (face value of first issue + face value of second issue)÷ (face value of first issue + (face value of second issue + year × share value)
= ($90+$75) ÷ ($90+$75+7×$8)
= 0.7467
Equity = 1 - Debt
= 1 - 0.7467
= 0.2534
b)
Company's capital structure weight on the basis of Market Value Weight :
Debt = (face value of first issue × % sale +face value of second issue × sale %) ÷ (face value of first issue × % sale +face value of second issue × sale% + year × current share price)
= ($90× 98%+$75× 110%) ÷ ($90× 98%+$75× 110%+7×$73)
= 0.2504
Equity = 1 - debt
= 1 - 0.2504
= 0.7495
Innovative Consulting Co. has the following accounts in its ledger: Cash, Accounts Receivable, Supplies, Office Equipment, Accounts Payable, Common Stock, Retained Earnings, Dividends, Fees Earned, Rent Expense, Advertising Expense, Utilities Expense, Miscellaneous Expense.
Journalize the following selected transactions for October 20Y2 in a two-column journal. Journal entry explanations may be omitted.
Oct. 1 Paid rent for the month, $2,500.
4 Paid advertising expense, $600.
5 Paid cash for supplies, $1,200.
6 Purchased office equipment on account, $9,200.
12 Received cash from customers on account, $15,900.
20 Paid creditor on account, $3,410. 27 Paid cash for miscellaneous expenses, $550.
30 Paid telephone bill for the month, $400.
31 Fees earned and billed to customers for the month, $50,170.
31 Paid electricity bill for the month, $830.
31 Paid dividends, $1,850.
Answer:
Please see the Journal Entry below for Innovative Consulting Co.
Explanation:
Oct. 1
Debit: Rent Expense $2,500
Credit: Cash $2,500
Oct. 4
Debit: Advertising Expense $600
Credit: Cash $600
Oct. 5
Debit: Supplies $1,200
Credit: Cash $1,200
Oct. 6
Debit: Office Equipment $9,200
Credit: Accounts Payable $9,200
Oct. 12
Debit: Cash $15,900
Credit: Accounts Receivable $15,900
Oct. 20
Debit: Accounts Payable $3,410
Credit: Cash $3,410
Oct. 27
Debit: Miscellaneous Expense $550
Credit: Cash $550
Oct. 30
Debit: Utilities Expense $400
Credit: Cash $400
Oct. 31
Debit: Accounts Receivable $50,170
Credit: Fees Earned $50,170
Oct. 31
Debit: Utilities Expense $830
Credit: Cash $830
Oct. 31
Debit: Dividends $1,850
Credit: Cash $1,850
Teal Company sells televisions at an average price of $814 and also offers to each customer a separate 3-year warranty contract for $81 that requires the company to perform periodic services and to replace defective parts. During 2017, the company sold 327 televisions and 277 warranty contracts for cash. It estimates the 3-year warranty costs as $19 for parts and $29 for labor, and accounts for warranties separately. Assume sales occurred on December 31, 2017, and straight-line recognition of warranty revenues occurs.
Account Title Debit Credit
1. Cash (Correct) $304,533 (Correct)
2. Sales Rev. (Correct) $279,585 (Correct)
3. Unearned Sales Warranty (Correct) $24948 (correct)
What liability relative to these transactions would appear on the December 31, 2017, balance sheet and how would it be classified?
Answer:
A.
Dr Cash 266,178
Cr Sales Revenue 243,741
Cr Unearned Warranty Revenue 22,437
b)Current Liabilities:Unearned Warranty Revenue 90,579
Long-term liabilities:Unearned Warranty Revenue 181,158
Explanation:
Teal Company
A.
Dr Cash (814*327) 266,178
Cr Sales Revenue 243,741
Cr Unearned Warranty Revenue (277*81) 22,437
b)Current Liabilities:Unearned Warranty Revenue 90,579
(327×277)
Long-term liabilities:Unearned Warranty Revenue 181,158
(90,579×2)
A firm must choose from six capital budgeting proposals outlined below. The firm is subject to capital rationing and has a capital budget of $1,000,000; the firm's cost of capital is 15 percent. Please show the work.
Project Initial Investment IRR NPV
1 $200,000 19% $100,000
2 400,000 17 20,000
3 250,000 16 60,000
4 200,000 12 -5,000
5 150,000 20 50,000
6 400,000 15 150,000
Using the internal rate of return approach to ranking projects, which projects should the firm accept?
Using the net present value approach to ranking projects, which projects should the firm accept?
Answer:
On IRR basis projects 1, 2, 3, and 5 will be selected.
On NPV basis projects 1, 3, 5, and 6 will be selected.
Explanation:
The firm will accept or choose all the project that has a higher or equal internal rate of interest than cost of capital. However, in the given case project 4 has a lower internal rate of interest (12 percent) than the cost of capital. Thus, projects 1, 2, 3, and 5 will be chosen by the firm. While the firm has budget constraints so it will have no money for projects 4 and 6.
The firm will select all the projects with positive NPV when there is no budget constraint. But in case of budget constraint, the firm will select the project that has high NPV. Thus, Project 1, 6, 3, and 5 will be selected and there will be no money left for projects 2 and 4.
Sofia tells her Accountant, Luca, to prepare the financial statements of her business and then send them to Chase Manhattan Bank. She tells Luca that she wants to get a loan for her struggling business. Luca prepares the statements and emails them to the Bank. Six months later, Sofia's business files for bankruptcy. Chase files suit against Luca because he prepared the financial statements negligently. He made Sofia's business look better than it really was. If Luca was negligent in preparing the statements, under which rule or rules can he be liable to Chase for negligence
Answer:
Law of tort
Explanation:
A tort can be basically described as an act or omission, which gives rise to an injury or harm, that could results into a civil wrong that could warrant a liability.
A tort can exist in 3 forms;
1. Negligence
2. Intentional torts, and
3. Strict liability.
The scenario under study here is a clear case of negligence. Here, the bank opined that there is deliberate and deceitful representation of the financial statement. Luca, the accountant, acknowledged that he was negligent in the preparation of this financial statements. The rule that governs this borders on negligence, and thus laws of tort comes handy in addressing this.
There are different forms of negligence. Luca is said to be liable to Chase for negligence under the tort laws.
The aspect of tort law known as negligence is simply known to be the harm caused by failing to act due to carelessness due to some circumstances.A person who suffers loss due to the negligence of another person can sue for damages to compensate for their harm. it often applies to both individuals and businesses.
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Which of the following statement regarding characteristics of high performance teams is false?
1. High-performance teams have strong core values.
2. High-performance teams turn a general sense of purpose into specific performance objectives.
3. High-performance teams have members who focus on individual effort and excellence.
4. Members of high-performance teams have the right mix of skills.
5. Members of high-performance teams feel collectively accountable.
Answer:
high-performance teams have members who focus on individual effort and excellence.
Explanation:
If team remembers focus on individual efforts and excellence ,it would lead to unnecessary competitions among team members. This can lead to conflict among members and this would be counterproductive.
I hope my answer helps you
• 25,000 shares of preferred stock, cumulative, 5%, $40 par was issued for $60/share. • The annual cash dividend was declared and paid to the above preferred stock. • The company purchased 12,000 shares of common stock at $68 per share to be held as Treasury stock. • Interest of $32,000 was paid to bondholders. • Bonds Payable with a par value of $400,000 were retired at $432,000. Compute the net cash flow from financing activities (parentheses indicate an outflow).
Answer:
$202,000
Explanation:
Computation of Net Cash Generated From Financing Activities
Cash generated from the preferred stock (25,000 * $60) $1500,000
Less: Preferred stock Dividend (25000 * $40 par * 5%) ($50,000)
Less: Treasury stock (12,000 shares * $68 per share) ($816,000)
Less: Interest Payments ($32,000)
Less: Bond Redemption (Interest Exclusive) ($400,000)
Net Cash Generated From Financing Activities $202,000
Read the case study, Business Model and Competitive Strategy of IKEA in India, from the Deresky textbook Part 3 Comprehensive Cases. Analyze the content and prepare a paper addressing the following prompts. Analyze the reasons for IKEA’s delayed entry into the Indian market. Discuss the market entry strategy of IKEA for the Indian market. Identify the advantages and disadvantages of adopting the wholly-owned subsidiary route in entering the market. Be specific with your responses and validate with research.
Answer:
Explanation:
1.Analyze the reasons for IKEA’s delayed entry into the Indian market.The deferral of IKEA section into the Indian market was as needs be of India's controls on Foreign Direct Investment that bound the association to develop its stores in the country. Despite India revealing a coupleof enhancements to the FDI rules, the firm expected to sit tight for one year to get the Indian government support to set up its stores in the country. Fundamentally, the affiliation expected to ensure that its store show fit the Indian customer slants, sourcing outlines and FDI rules.
2.Discuss the market entry strategy of IKEA for the Indian market. What are the advantages and disadvantages of adopting the wholly-owned subsidiary route in entering the market?
In 2009, the great recession finally took its toll on the Alamo Title company in San Antonio, Texas. The housing business was in steep decline and the size of the company was reduced to half its former size through layoffs. Alamo Title was experiencing many new and unexpected challenges to keep its doors open for business. Management was discussing what style of management would be the most effective to use now at the company and brought you in to advise them. Which management style would you recommend they use?
Answer:
Theory X management style
Explanation:
Theory X is focused on the standard laborer's suppositions. This theory of management believes the average worker has no motivation, lacks accountability and is focused to specific ambitions. Overall, managers of theory X style assume their workers are less smart, stupider, and only operate for a reliable income.
In such a management style the managers keeps strong supervision over their subordinates, therefore, it will be suitable style as the company is already in steep condition and further problems might lead to total loss.
The management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appear below: Sales $ 794,600 Variable expenses $ 412,900 Fixed manufacturing expenses $ 270,200 Fixed selling and administrative expenses $ 230,600 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $191,000 of the fixed manufacturing expenses and $165,500 of the fixed selling and administrative expenses are avoidable if product B90D is discontinued. Required: What would be the financial advantage (disadvantage) of dropping B90D? Should the product be dropped?
Answer:
$25,200
Net operating income would reduced by $25,200
Explanation:
As per the given question the solution of financial advantage (disadvantage) of dropping B90D is provided below:-
Net operating income of Dropping B90D = Sales - Variable Expenses - Fixed Manufacturing Expenses - Fixed Selling & Administrative expenses
= $794,600 - $412,900 - $191,000 - $165,500
= $25,200
So, we have calculated the financial advantage (disadvantage) of dropping B90D by using the above formula.
Net operating income would reduced by $25,200
The manufacturing overhead budget of Paparella Corporation is based on budgeted direct labor-hours. The November direct labor budget indicates that 6,000 direct labor-hours will be required in that month. The variable overhead rate is $2.00 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $79,200 per month, which includes depreciation of $21,000. All other fixed manufacturing overhead costs represent current cash flows.
Required:A. Determine the cash disbursements for manufacturing overhead for November.B. Determine the predetermined overhead rate for November.
Answer:
The answer for question A is $ 70,200
The answer for question B is $ 15.20
Explanation:
A.
Budgeted direct labor hours = 6,000 hours
Variable overhead rate = $2.00
Variable manufacturing overheads = 6000 x $2 = $ 12,000
Fixed manufacturing overhead = $ 79,200
Total Manufacturing overheads = $ 91,200
Depreciation = $ 21,000
Cash disbursement of manufacturing overhead for November = total manufacturing overheads - Depreciation
= $91,200 - $ 21,000 = $ 70,200
B.
From above, we have Total Manufacturing overheads = $ 91,200
Budgeted direct labor hours = 6,000 hours
Predetermined overhead rate for the month of November = Total Manufacturing overheads ÷ Budgeted direct labor hours
= $91,200 ÷ 6000 = $ 15.20
A shift in the supply curve can be caused by:
A. a change in buyers' incomes
B. a change in the price of a good
C. a change in one of the determinants of supply
D. a shift in demand.
Answer:
C. a change in one of the determinants of supply
Explanation:
Some of the factors that can cause a shift in supply includes:
Change in the price of input
Government regulations
Changes in the number of suppliers
Technological advancement
Only changes in price leads to movement along the supply curve
I hope my answer helps you
Suppose the government wants to reduce the total pollution emitted by three firms. Currently, each firm is creating 4 tons of pollution, for a total of 12 tons. The government is considering the following two methods to reduce total pollution to 6 tons:
1. The government sets regulation specifying that each of the three firms must cut its pollution in half.
2. The government allocates two tradable pollution permits to each of the three firms. Each permit allows the firm to emit 1 ton of pollution. Assume the negotiation and exchange of permits are costless.
The following table shows the cost each firm faces to eliminate each unit of pollution.
Cost of Eliminating: Firm X Firm Y Firm Z
First ton of pollution $950 $280 $600
Second ton of pollution $1,650 $300 $720
Third ton of pollution $2,500 $350 $880
Fourth ton of pollution $3,550 $450 $1,050
Suppose the owners of the three firms get together and agree on a trading price of $800 per permit.
Complete the following table with the action each firm will take at this permit price and the amount of pollution each firm will eliminate.
Firm Initial Pollution Permit Allocation (Tons of pollution) Action Final Amount of Pollution Eliminated (Tons of pollution)
Firm X 2
Firm Y 2
Firm Z 2
Determine the total cost of eliminating 6 tons of pollution under each method, and enter the amounts in the following table.
Method Total Cost of Eliminating 6 Tons of Pollution (Dollars)
Regulation
Tradable pollution permits
Answer:
The method cost of eliminating 6 is stated below in the explanation section while,The regulation = 4500, The tradable pollution permits = 2700
Explanation:
Solution
Now,
Every Firm will remove the pollution until the cost of eliminating is lower than the cost of permit.
Thus,
Firm A will not eliminate any pollution as cost is higher than the permit cost, he will prefer to buy 2 more permits from other Firm
Firm B will eliminate 4 tons of pollution as cost is lower for elimination therefore will not require permit and thus sell his 2 permits to firm A.
Then
Firm C will eliminate 2 tons as after that cost is higher than the permit cost.
Firm A Action : Eliminate 2 tons and purchase 2 permits, Total tons eliminated 0
Firm B Action: Eliminate 4 tons and sell 2 permits, Total tons eliminated 4
Firm C Action : Eliminate 2 tons, Total Tons eliminated 2
If the government would have regulated then each firm would have to eliminate 2 tons each hence the cost would have been = 950+1650 + 280+300+600+720=4500
While with tradable permits cost is =280+300+350+450+600+720=2700
The agreement of the trial balance total is an indication that all transactions have been properly recorded in the books of accounts do you agree justify your answer
Answer: I did not agree that the agreement of trial balance is an indication that all transactions have been properly recorded in the books of account .it only means that certain types of errors have not been made.
Explanation:
Trial balance is an account prepared in order to test the arithmetical accuracy of entries in the ledger account. When a double entry principle has been observed then the total of debit entry must equal the total of credit entry in the trial balance. The balancing of the two sides of the trial balance does not mean that the account is correct. It means that certain types of errors have not been made. In the sense that there are several types of error which will not affect the balancing of trial balance such as the compensating error, error of original entry, error of omission, error of commission and so on will not affect the balancing of trial balance.
Thunder Bolt Inc., is a manufacturer of the very popular G36 motorcycles. The management at Thunder Bolt has recently adopted absorption costing and is debating which denominator-level concept to use. The G36 motorcycles sell for an average price of $8,200. Budgeted fixed manufacturing overhead costs for 2012 are estimated at $6,480,000. Thunder Bolt Inc., uses subassembly operators that provide component parts. The following are the denominator-level options that management has been considering:a. Theoretical capacity--based on three shifts, completion of five motorcycles per shift, and a 360-day year--3 x 5 x 360 = 5,400.b. Practical capacity--theoretical capacity adjusted for unavoidable interruptions, breakdowns, and so forth--3 x 4 x 320 = 3,840.c. Normal capacity utilization--estimated at 3,240 units.d. Master-budget capacity utilization--the strengthening stock market and the growing popularity of motorcycles have prompted the marketing department to issue an estimate for 2012 of 3,600 units.Required:1. Calculate the budgeted fixed manufacturing overhead cost rates under the four denominator-level concepts.2. What are the benefits to Thunder Bolt, Inc., of using either theoretical capacity or practical capacity?3. Under a cost-based pricing system, what are the negative aspects of a master-budget denominator level? What are the positive aspects?
Answer:
Explanation:
Ans1. budgeted fixed manufacturing overhead costs rates:
denominator, level capacity concept budgeted fixed manufacturing overhaed per period budgeted capacity level budgeted fixed manufacturig overhead cost rate ;
theoritical= $6,480,000 5,400$1,200.00
practical 6,48,000 3,840 1,687.50
normal 6,480,000 3240 2,000.00
master - budget 6,480,000 3,600 1,800
The rates are different because of varying denominator- level concepts. theoriitical and practical capacity levels are driven by supply-side concepts,i.e," how much can I produce?" Normal and master budgete capacity levels are driven by demand- side concepts, i.e ," how much can I sell"/
Ans 2 :- The variance that arise from use of the theoritical or practical levels concepts will signal that there is a divergence between for capacity. this is useful input to managers. As a general rule, however , it is important not to place undue reliance on the production volume variance as a measure of the economic costs of unused capacity.
Ans 3:- Under a cost - based pricing system, the choice of a master - budget level deniminator will lead to high prices when demand is low (more fixed costs allocated to the individual product level), further eroding demand ; conversely ,it will lead to low prices when demand ; conversely , it will lead to low prices when demand is high, forgoig profits. This has been refered to as the downward demand spiral- the continuing reduction in demand that occurs when the prices of the competitors are not met and demand drops , resulting in even higher unit costs and even more reluctance to meet the prices of competitors. The positive aspects of the master - budget denominator level are that it is based on demand for the product and indicates the price at which all costs per unit would be recovered to enable teh company to make a profit.Master budget denominator level is also a good bench mark against which to evaluate performance.
Aquatica makes underwater camera housings for divers. The process begins with a solid rectangular block of aluminum which is used to make a single housing. A Computer Numerically Controlled (CNC) machine drills into the block to make the metal "frame" of the housing. Each block requires 15 minutes of drilling. The frame is then chemically treated in a series of baths. There is ample capacity in the treating stage. Finally, a worker must manually attach the various buttons and components to the metal housing. This assembly takes 120 minutes per housing per worker and Aquatica has 6 workers trained to do this task. The CNC machine requires a 30 minute setup time before the production of a batch can begin.
Housing type Demand rate (housings per hour)
D7000 0.4
5DS Mark IlI 0.5
AN-5n 0.6
D300 0.7
T2i 0.8
a. If the CNC machine produces 12 housing between setups, what would be its capacity (in housings per hour)?
b. Assuming the process is supply constrained, what is the utilization (as a percentage) of the CNC machine if it operates in batches of 12 housings? (Round your answer to 2 decimal places.)
c. Assuming the process is supply-constrained and operates with batches of 12 housings, what is the average inventory of housings?
d. Aquatica actually makes 5 different housings. As already mentioned, the CNO machine must be setup whenever production switches from one housing to the other. In each case, the setup time is 32 minutes and it takes 17 minutes to drill the block for each type of housing. Demands for the housings are given in the table above. If they wish to minimize inventory while satisfying their demand, how many D7000 housings should they produce in each batch?
Answer:
(a) capacity=3.05hours
(b) utilisation percentage= 0.90 or 90%
(c) Average inventory=1.22
(d)Batch size of D700 is approximately equal to 7
Explanation:
(a)To calculate Capacity
=( Batch size) /(set up time + processing time)
= 12/ (32+17×12) = 12/236 minutes = (12/236) ×60 hours =
3.05 hours
(b)Capacity for assembly: = 113/6 = 18.8/minute = 60/18.8 = 3.19/hour as assembly takes 113 minutes per housing per worker and 6 workers are working at the moment Assembly time for batch of 12 housings = 12/3.19 hr = 3.77 hr CNC time for batch = 32+(17×12 )= 236 minutes = 3.93 hr Utilization of CNC: = (17*12)/60/3.766 = 0.902815 = 0
O.90 or 90%
(c)Average inventory = 1/2 ×batch size × (1-(capacity for assembly × 1/4))
= 1/2×12*(1-(3.186/4) = 1.22(Approximately)
(d)Total demand of all the housings = 0.4+0.5+0.6+0.7+0.8 = 3/hour
Setup time per housing = 32/60 hr = 0.53 hr
Setup time for 5 housings will be = 5×0.53 = 2.67 hr
The Processing time = 17/60 hr = 0.2833 hr
Total batch size = (2.67×3)/(1-3×0.2833) = 53.36
Batch size of D700 = 53.36*(0.4/3) = 7.11 = 7(approximately)
(a) The capacity is =3.05hours
(b) The utilization percentage is = 0.90 or 90%
(c) The Average inventory is =1.22
(d) when the Batch size of D700 is approximately equal to 7
How to Calculate Average inventory?(a) Now To calculate Capacity is:
Then =( Batch-size) /(set up time + processing time)
After that = 12/ (32+17×12) = 12/236 minutes = (12/236) ×60 hours =
3.05 hours
(b) When the Capacity for assembly is = 113/6 = 18.8/minute = then 60/18.8 is = 3.19/hour as assembly takes 113 minutes per housing per worker and also 6 workers are working at the moment.
After that Assembly time for batch of 12 housings is = 12/3.19 hr = 3.77 hr Then C-N-C time for batch is = 32+(17×12 )= 236 minutes = 3.93 hr After that Utilization of C-N-C is = (17*12)/60/3.766 = 0.902815 = 0
O.90 or 90%
(c) Then the Average inventory is = 1/2 ×batch size × (1-(capacity for assembly × 1/4))
Then = 1/2×12*(1-(3.186/4) = 1.22(Approximately)
(d) Then the Total demand of all the housings is = 0.4+0.5+0.6+0.7+0.8 = 3/hour
After that Setup time per housing is = 32/60 hr = 0.53 hr
Then Setup time for 5 housings will be = 5×0.53 = 2.67 hr
Now The Processing time is = 17/60 hr = 0.2833 hr
After that Total batch size is = (2.67×3)/(1-3×0.2833) = 53.36
Then Batch-size of D700 is = 53.36*(0.4/3) = 7.11 = 7(approximately)
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Riley Company promises to pay Janet Anderson or her estate $150,000 per year for the next 10 years, even if she leaves the company or passes away to try to induce her to stay with the company. Riley Company wants to properly record this transaction as deferred compensation, but is unsure how to record the cost. In addition, Riley Company purchased a whole life insurance policy for Janet, naming the company as the beneficiary. Riley Company wants to determine if it can offset the cash surrender value of the life insurance policy against the deferred compensation liability.
Answer:
The Answer is explanatory so it is given as under:
Explanation:
Part 1. At the start of the year:
The part of the salary includes $150,000 per year for the next 10 years and this must be recorded as an deferred compensation liability. All we have to do is to calculate the present value of the annual salary payments.
Present Value = Annual Payment * Annuity factor
And for Annuity factor we will use 5% rate of interest.
So
Annuity Factor = (1 - (1-r)^n) / r
Here
r = 5%
n = 10 years
Which means
Annuity Factor = (1 - (1 + 5%)^10) / 5% = 7.722
Hence
Present value = $150,000 * 7.722 = $1,158,260
So the journal entry would be as under:
Dr Deferred Compensation expense $1,158,260
Cr Deferred Compensation Liability $1,158,260
Part 2. At the end of the Year 1:
At the first year end, the annual payment of $1,158,260 will be discounted back by using the following formula:
Discounted Back Amount = Annual Amount * (1- (1+r)^n)
Remember for the first year n is 10, for second n is 9 and so on.
Discounted Back Amount = 150,000 x (1 - 0.614) = $57,913
Dr Deferred Compensation Expense $57,913
Cr Deferred Compensation Liability $57,913
Part 3. And when the first payment of the salary is made, the journal entry would be:
Dr Deferred compensation Liability $ 150,000
Cr Cash Account $150,000
Likewise we will till the year 10 and will record the part 2 and part 3 until at the end of the year 10, the whole of the deferred tax liability is reduced to zero.
The life insurance policy payments can not be offset against the deferred compensation liability because it will be accounted for as a different transaction and hence must not be treated as Riley desires.
So the Cash surrender value will be treated as an asset and annual increase in this asset would be treated as an income.
"5. Problems and Applications Q5 You are hired as a consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost: P=MC, P>ATC Which of the following statements are true about the firm? Check all that apply. The firm can increase its profit by reducing its output. The firm is possibly maximizing profit. The firm is in long-run equilibrium."
Answer: The firm can increase its profit by reducing its output.
Explanation:
Monopolistic Competitive Firms maximise profit at the point where MR = MC. This firm is producing at MC = P. This means that should the company want to make profit, they should reduce their output. This will have the effect of increasing their price and hence marginal revenue as well as reducing marginal cost to a point where MR = MC where they will then be maximising profit.
May Corporation, a merchandising firm, has budgeted sales as follows for the third quarter of the year:
July $80,000
August $90,000
September $70,000
Cost of goods sold is equal to 65% of sales. The company wants to maintain a monthly ending inventory equal to 130% of the Cost of Goods Sold for the following month. The inventory on June 30 is less than this ideal since it is only $65,000. The company is now preparing a Merchandise Purchases Budget.
Required:
a. The budgeted purchases for July are ____________.
Answer:
Purchases= $63,050
Explanation:
Giving the following information:
Sales:
July $80,000
August $90,000
September $70,000
The cost of goods sold is equal to 65% of sales.
The company wants to maintain a monthly ending inventory equal to 130% of the Cost of Goods Sold for the following month.
The inventory on June 30 is less than this ideal since it is only $65,000.
To calculate the purchases for July, we need to use the following formula:
Purchases= sales + desired ending inventory - beginning inventory
Purchases= 80,000*0.65 + (90,000*0.65)*1.3 - 65,000
Purchases= $63,050
The budgeted purchases for July are $63,050.
Budgeted cost of goods sold $52,000
(65% × $80,000)
Add desired ending merchandise inventory $76,050
[(65% × $90,000)×130%]
Total needs $128,050
($52,000+$76,050)
Less beginning merchandise inventory ($65,000)
Required purchases $63,050
($128,050-$65,000)
Inconclusion the budgeted purchases for July are $63,050.
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Van pays the following medical expenses this year:
a. $1500 for doctor bills for van's son who is claimed as a dependant by Van's former spouse.
b. $300 for Van's eyeglasses
c. $900 for Van's dental work
d. $3800 for Van's face lift. Van, a newscaster, is worried about the wrinkles around his eyes.
Required:
1. How much can Van include on his return as qualified medical expenses before limitation?
Answer:
The amount Van can include on his return as qualified medical expenses before limitation is $2,700
Explanation:
The amount of medical expenses that Van can include on his return as qualified medical expenses before limitation are the following:
a. $1,500 for doctor bills for van's son who is claimed as a dependant by Van's former spouse.
b. $300 for Van's eyeglasses
c. $900 for Van's dental work
Therefore, amount Van can include on his return as qualified medical expenses before limitation=$1.500+$300+$900
amount Van can include on his return as qualified medical expenses before limitation=$2,700
Kristen Lu purchased a used automobile for $16,750 at the beginning of last year and incurred the following operating costs:
Depreciation ($16,750 ÷ 5 years) $3,350
Insurance $1,700
Garage rent $900
Automobile tax and license $450
Variable operating cost $0.06 per mile
The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage, the car will have zero resale value in five years, so the annual straight-line depreciation is $3,350. The car is kept in a garage for a monthly fee.
Required:
a. Kristen drove the car 16,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round your answers to 2 decimal places.)
b. Kristen is unsure about whether she should use her own car or rent a car to go on an extended cross-country trip for two weeks during spring break. What costs above are relevant in this decision?
Answer:
The average operating cost is $0.46 per mile
In deciding whether to to her use her own car or rent a car the costs are analysed below:
Variable operating cost is a relevant cost
Depreciation is not relevant as it is already cost and also it is sunk cost
insurance is not relevant as well
automobile tax and license is not relevant as it would be paid regardless of the option chosen
Explanation:
The average cost comprises of the variable operating cost per mile as well as the fixed operating cost per mile
variable operating cost per mile is $0.06
fixed cost operating cost=fixed costs/total miles driven=($3,350+$1,700+$900+$450)/16000=$6400 /16000=$0.40
average cost per mile=$0.06+$0.40=$0.46
In its 2015 fiscal year annual report, Texas Roadhouse reports net operating income after tax (NOPAT) of $102,495 thousand. As of the beginning of fiscal year 2015 it reports net operating assets of $596,104 thousand.
a. Did Texas Roadhouse earn positive residual operating income (ROPI) in 2015 if its weighted average cost of capital (WACC) is 7%. Explain
1. TXRH earned a negative ROPI because the realized NOPAT exceeds the expected NOPAT.
2. TXRH earned a positive ROPI because the realized NOPAT was less than the expected NOPAT.
3. TXRH earned a positive ROPI because the realized NOPAT exceeds the expected NOPAT.V
4. TXRH earned a negative ROPI because the realized NOPAT was less than the expected NOPAT.
b. At what level of WACC would Texas Roadhouse not report positive residual operating income for 2015?
Answer:
a. 3. TXRH earned a positive ROPI because the realized NOPAT exceeds the expected NOPAT.
b. ROPI which is 17.9% will be in negative
Explanation:
a. The explanation of positive residual operating income is here below:-
Expected net operating income after tax = Operating asset × Weighted average cost of capital
= $596,104 × 7%
= $41,727.28
Therefore the actual net operating income after tax is higher than Expected net operating income after tax.
TXRH earned a positive ROPI because realized net operating income after tax is higher than Expected net operating income after tax
b. For ROPI to be 0, Weighted average cost of capital
Realised net operating income after tax = Operating asset × weighted average cost of capital
= $102,495 = $596,104 × weighted average cost of capital
weighted average cost of capital = 17.19%
So, The ROPI which is 17.9% will be in negative
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 30,000 Rets per year. Costs associated with this level of production and sales are given:
Unit Total
Direct materials $15 $450,000
Direct labor 8 240,000
Variable manufacturing overhead 3 90,000
Fixed manufacturing overhead 9 270,000
Variable selling expense 4 120,000
Fixed selling expense 6 180,000
Total cost $45 $1,350,000
The Rets normally sell for $50 each. Fixed manufacturing overhead is constant at $270,000 per year within the range of 25,000 through 30,000 Rets per year.
Required:
Assume that due to a recession, Polaski Company expects to sell only 25,000 Rets through regular channels next year.
A large retail chain has offered to purchase 5,000 Rets if Polaski is willing to accept a 16% discount off the regular price.
There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%.
However, Polaski Company would have to purchase a special machine to engrave the retail chain's name on the 5,000 units. This machine would cost $10,000. Polaski Company has no assurance that the retail chain will purchase additional units any time in the future.
Determine the impact on profits next year if this special order is accepted.
Refer to the original data, assume again that Polaski Company expects to sell only 25,000 Rets through regular channels next year.
The U.S. Army would like to make a one-time-only purchase of 5,000 Rets.
The Army would pay a fixed fee of $1.80 per Ret, and in addition it would reimburse Polaski Company for all costs of production (variable and fixed) associated with the units.
Since the army would pick up the Rets with its own trucks, there would be no variable selling expenses of any type associated with this order.
If Polaski Company accepts the order, by how much will profits be increased or decreased for the year. Assume the same situation as that described above, except that the company expects to sell 30,000 Rets through regular channels next year. Thus, accepting the U.S. Army's order would require giving up regular sales of 5,000 Rets.
If the Army's order is accepted, by how much will profits be increased or decreased from what they would be if the 5,000 Rets were sold through regular channels?
Answer:
production level 30,000 units
production costs at that level:
direct materials $15 per unit = $450,000direct labor $8 per unit = $240,000variable manufacturing overhead $3 per unit = $90,000fixed overhead $9 per unit = $270,000variable selling expense $4 per unit = $120,000fixed selling expense $6 per unit = $180,000total costs per unit $45 = $1,350,000sales price $50 per unit, profit $5 per unit = $150,000
fixed manufacturing overhead constant between 25,000 - 30,000 units
scenario 1:
due to a recession, sales decrease to 25,000 units:
special order for 5,000 at $42 per unit
additional costs = $10,000 for special machine
without special order with special order
total units sold 25,000 30,000
total revenue $1,250,000 $1,460,000
- variable px costs -$650,000 -$780,000
- fixed ma. overhead -$270,000 -$270,000
gross profit $330,000 $410,000
- variable selling exp. -$100,000 -$115,000
- fixed selling exp. -$180,000 -$180,000
- special machine $0 -$10,000
net profit $50,000 $105,000
profits will increase by $50,000 if the special order is accepted
scenario 2:
normal sales levels 30,000 units, Army wishes to purchase 5,000 units:
special order for 5,000 at production costs + $1.80
additional costs = $10,000 for special machine
without special order with special order
total units sold 30,000 30,000
total revenue $1,500,000 $1,434,000
- variable px costs -$780,000 -$780,000
- fixed ma. overhead -$270,000 -$270,000
gross profit $450,000 $384,000
- variable selling exp. -$120,000 -$100,000
- fixed selling exp. -$180,000 -$180,000
net profit $150,000 $104,000
profits will decrease by -$46,000 if the Army's special order is accepted
Based on your understanding of bond ratings and bond-rating criteria, which of the following statements is true? During a period of economic growth and in an optimistic environment, the yield spread between US government bonds and corporate bonds could be higher than during an economic recession and a pessimistic environment. During an economic recession and in a pessimistic environment, the yield spread between US government bonds and corporate bonds could be higher than during good economic times. In 2008, the United States began to witness one of the worst recessions since the 1930s. The collapse of the housing bubble in 2006 led to a massive decline in real estate prices, affecting consumers and institutions, especially banking and financial entities. Severe liquidity shortfalls in the United States as well as other global markets led to a serious credit crisis. During the credit crisis of 2008–2009, several banks and other businesses went through a reorganization process or were forced to liquidate. Consider the following example: In December 2008, Hawaiian Telcom took action to strengthen its balance sheet by reducing debt. Although the company continued to operate, its creditors could not collect their debts or loan payments that were due prior to the legal action that the company took. However, on November 30, 2009, the company had $75 million in cash on hand. This is an example of: Liquidation Reorganization
Answer: 1. During an economic recession and in a pessimistic environment, the yield spread between US government bonds and corporate bonds could be higher than during good economic times.
2. Reorganization
Explanation:
1. When there is a higher yield gap between the US Government bonds and Corporate bonds, this means that the Corporate bonds carry more risk. In a Pessimistic Environment, the ability of a company to pay it's Debt obligations is called into question as the economy is going through hard times and they must be as well. If this is the case which it usually is, higher risk will be attached to Corporate bonds which means that the yield spread/gap will be higher in such an environment than in an Optimistic environment.
2. Reorganization refers to the changing of the way a company is run from it's ownership to it's structure and modus operandi. It is usually done to ensure the business survives when it is going through hard times and the current status quo cannot stand. Hawaiian Telecom engaged in Reorganization by engaging in the actions described.
Sharon is a skilled toy maker who is able to produce both trucks and puzzles. She has 8 hours a day to produce toys. The following table shows the daily output resulting from various possible combinations of her time.
Choice Hours Producing Produced
(Trucks) (Puzzles) (Trucks) (Puzzles)
A 8 0 4 0
B 6 2 3 11
C 4 4 2 16
D 2 6 1 19
E 0 8 0 20
Required:
1. Suppose Sharon is currently using combination D, producing one truck per day. Her opportunity cost of producing a second truck per day is _________ per day.2. Now, suppose Sharon is currently using combination C, producing two trucks per day. Her opportunity cost of producing a third truck per day is_________ per day.
Answer:
1. Opportunity Cost of 2nd truck from 1st Truck = 1T : 3P
2. Opportunity Cost of 3rd truck from 2nd truck = 1T : 5P
Explanation:
Choice Hours Producing Produced
(Trucks) (Puzzles) (Trucks) (Puzzles)
A 8 0 4 0
B 6 2 3 11
C 4 4 2 16
D 2 6 1 19
E 0 8 0 20
Opportunity Cost is the cost of a good sacrifised to achieve additional unit of other good.
From point D ( 1 truck) to point C ( 2nd truck ), opportunity cost in terms of puzzles sacrifised is 19 - 16 = 3. So, opportunity cost is 1T : 3P From point C ( 2 trucks ) to point D (3rd truck ), opportunity cost in terms of puzzles sacrifised is 16 - 11 = 5. So, opportunity cost is 1T : 5PSharon's opportunity cost of producing a second truck per day is 3 puzzles, and that of producing a third truck per day is 5 puzzles.
1) Since Sharon is currently using combination D, producing one truck per day. Her opportunity cost of producing a second truck per day is 3 puzzles per day.
This is so because by producing 2 trucks, she has the capacity to produce 16 puzzles, while by producing just 1 truck, she can produce 19 puzzles (19-16 = 3).
2) Given that Sharon is currently using C, producing two trucks per day. Her opportunity cost of producing a third truck per day is 5 puzzles per day.
This is so because by producing 3 trucks, she has the capacity to produce 11 puzzles, while by producing 2 trucks, she can produce 16 puzzles (16-11 = 5).
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Jaime works as a Power Plant Manager. What are some tasks that he may be involved in?
Answer:
a plant manager would be involved in a variety of tasks such as:
overseeing the plan and its daily operations that the manufacturing/production facility are in charge of
managing employees
increase production within the plant
implement and monitor safety procedures
might work on plants machinery or the planet management software