Answer:
the present value of this growing perpetuity is $83,692.31
Explanation:
The computation of the present value of this growing perpetuity is shown below:
present value of this growing perpetuity is
= Payment at end of this year ÷ (Discount rate - Growth rate)
= $2,176 ÷ (0.09-0.034)
= $83,692.31
Hence, the present value of this growing perpetuity is $83,692.31
Presented here are selected transactions for the Cullumber Company during April. Cullumber uses the perpetual inventory system. April 1 Sold merchandise to Mann Company for $4,200, terms 2/10, n/30. The merchandise sold had a cost of $3,000. 2 Purchased merchandise from Wild Corporation for $8,500, terms 1/10, n/30. 4 Purchased merchandise from Ryan Company for $1,100, n/30. 10 Received payment from Mann Company for purchase of April 1 less appropriate discount. 11 Paid Wild Corporation for April 2 purchase. Journalize the April transactions for Cullumber Company
Answer:
Cullumber Company
Journal Entries:
April 1 Debit Accounts receivable (Mann Company) $4,200
Credit Sales revenue $4,200
To record the sale of goods on credit terms, 2/10, n/30.
Debit Cost of goods sold $3,000
Credit Inventory $3,000
To record the cost of goods sold.
April 2 Debit Inventory $8,500
Credit Accounts payable (Wild Corporation) $8,500
To record the purchase of goods on credit terms, 1/10, n/30.
April 4 Debit Inventory $1,100
Credit Accounts payable (Ryan Company) $1,100
To record the purchase of goods on credit terms, n/30.
April 10 Debit Cash $4,116
Debit Cash Discounts $84
Credit Accounts receivable (Mann Company) $4,200
To record the receipt of cash on account, including discounts.
April 11 Debit Accounts payable (Wild Corporation) $8,500
Credit Cash $8,415
Credit Cash Discounts $85
To record the payment on account, including discounts.
Explanation:
a) Data and Analysis:
April 1 Accounts receivable (Mann Company) $4,200 Sales revenue $4,200 terms 2/10, n/30.
Cost of goods sold $3,000 Inventory $3,000
April 2 Inventory $8,500 Accounts payable (Wild Corporation) $8,500 terms 1/10, n/30.
April 4 Inventory $1,100 Accounts payable (Ryan Company) $1,100 n/30.
April 10 Cash $4,116 Cash Discounts $84 Accounts receivable (Mann Company) $4,200
April 11 Accounts payable (Wild Corporation) $8,500 Cash $8,415 Cash Discounts $85
The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $39 per unit. Variable costs for the casing are $12 per unit and fixed cost is $6 per unit. Cotwold executives would like for the Molding Division to transfer 22,000 units to the Assembly Division at a price of $33 per unit. Assume that the Molding Division has excess capacity, but the Assembly Division requires the casing to be made from a specific blend of plastics. This would raise the variable cost per unit to $37.
Answer:
1. No, the Molding Division accept the $33 transfer price proposed by management.
2. The minimum transfer price that the Molding Division will accept is $37.
3. Mutually beneficial transfer price = $38.00
Explanation:
Note: This question is not complete as the requirements are missing. The requirements are therefore provided to complete the question before answering it as follows:
Required:
1. Should the Molding Division accept the $33 transfer price proposed by management?
2. Determine the minimum transfer price that it will accept.
3. Determine the mutually beneficial transfer price so that the two divisions equally split the profits from the transfer. (Round your answer to 2 decimal places.)
The explanation of the answers is now provided as follows:
Note: Since it is assumed that the Molding Division has excess capacity, the relevant cost to consider whether or not to accept is the variable cost per unit. The fixed cost per unit is not relevant as it will be incurred whether or not the transfer is accepted.
We can now proceed as follows:
1. Should the Molding Division accept the $33 transfer price proposed by management?
No, the Molding Division accept the $33 transfer price proposed by management. This is because it is lower than the variable cost per unit of $37 for casing from a specific blend of plastics required by the Assembly Division.
2. Determine the minimum transfer price that it will accept.
The minimum transfer price that the Molding Division will accept is $37. This is equal to the variable cost per unit of $37 for casing from a specific blend of plastics required by the Assembly Division.
3. Determine the mutually beneficial transfer price so that the two divisions equally split the profits from the transfer. (Round your answer to 2 decimal places.)
This can be determined as follows:
Profit per unit from selling to external customers = Selling price per unit to external customers - Variable cost per unit for casing from a specific blend of plastics required by the Assembly Division = $39 - $37 = $2.00
Mutually beneficial transfer price = Variable cost per unit for casing from a specific blend of plastics required by the Assembly Division + (Profit per unit from selling to external customers / 2) = $37 + ($2 / 2) = $38.00
The privately-owned school system in Smalltown has a virtually unlimited capacity. It accepts all applicants and operates on both tuition and private donations. Although every resident places value on having an educated community, the school's revenues have suffered lately due to a large decline in private donations from the elderly population. Since the benefit that each citizen receives from having an educated community is a public good, which of the following would not be correct?
a. The free-rider problem causes the private market to undersupply education to the community
b. The govemment can potentially help the market reach a socially optimal level of education.
c. A tax increase to pay for education could potentially make the community better off.
d. The private market is the best way to supply education.
Answer:
A
Explanation:
The privately-owned school system in Smalltown generates positive externality to members of SmalltownA good has positive externality if the benefits to third parties not involved in production is greater than the cost. an example of an activity that generates positive externality is research and development. Due to the high cost of R & D, they are usually under-produced. Government can encourage the production of activities that generate positive externality by granting subsidies.
The free rider problem is a form of market failure. It occurs when people benefit from a good or service of communal nature and do not pay to enjoy these services.
The free rider has caused a decline in revenues and did not cause the private market to undersupply education to the community
Which of the following is not a characteristic of a general partnership?
a) the partnership is created by a contract
b) mutual agency
c) partners share equally in net income or net losses unless an agreement states differently
d) dissolution occurs only when all partners agree
Among the following, dissolution occurs only when all partners agree is not a characteristic of a general partnership. Thus the correct option is D.
What is a partnership?When two or more two people come up with the objective to manage the operation of a business by making an alliance by sharing capital for investment and profit or loss of the organization. the collaboration is said to be a partnership.
Dissolution is the termination of a general partnership, whether by mutual consent or by the provisions of law. It is a provision of the partnership agreement that must be developed and accepted by the partners at the very beginning of the partnership.
In a general partnership, each partner is equally responsible for the debts and liabilities of the company, which can have major consequences for finances if the partnership is dissolved quickly and without thorough planning or thought.
Therefore, option D is appropriate.
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Mohave Corp. makes several varieties of beach umbrellas and accessories. It has been approached by a company called Lost Mine Industries about producing a special order for a custom umbrella called the Ultimate Shade (US). The special-order umbrellas with the Lost Mine Company logo would be distributed to participants at an upcoming convention sponsored by Lost Mine.
Lost Mine has offered to buy 1,500 of the US umbrellas at a price of $11 each. Mohave currently has the excess capacity necessary to accept the offer. The following information is related to the production of the US umbrella:
Direct materials $5.00
Direct labor 2.00
Variable manufacturing overhead 3.50
Fixed manufacturing overhead 2.50
Total cost $13.00
Regular sales price $19.00
Required:
1. Compute the incremental profit (or loss) from accepting the special order.
2. Should Mohave accept the special order?
3. Suppose that the special order had been to purchase 2,000 umbrellas for $9.00 each. Recompute the incremental profit (or loss) from accepting the special order under this scenario.
4. Assume that Mohave is operating at full capacity. Calculate the special-order price per unit at which Mohave would be indifferent between accepting or rejecting the special order.
Answer:
Mohave Corp.
1. The incremental profit from accepting the special order is:
= $750.
2. Mohave should accept the special order.
Explanation:
a) Data and Calculations:
Special order quantity = 1,500
Special order price = $11 per unit
Direct materials $5.00
Direct labor 2.00
Variable manufacturing overhead 3.50 $10.50
Fixed manufacturing overhead 2.50
Total cost $13.00
Regular sales price $19.00
Relevant costs:
Direct materials $5.00
Direct labor 2.00
Variable manufacturing overhead 3.50 $10.50
Incremental Analysis:
Special order price = $11.00
Variable cost per unit = $10.50
Incremental profit per unit $0.50
Total incremental profit = $750 ( $0.50 * 1,500)
Sidewinder, Inc., has sales of $714,000, costs of $348,000, depreciation expense of $93,000, interest expense of $58,000, and a tax rate of 25 percent. The firm paid out $88,000 in cash dividends. What is the addition to retained earnings? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)Duela Dent is single and had $180,800 in taxable income. Use the rates from Table 2.3. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)Calculate her income taxes.Prepare a balance sheet for Alaskan Peach Corp. as of December 31, 2019, based on the following information: cash = $203,000; patents and copyrights = $857,000; accounts payable = $286,000; accounts receivable = $263,000; tangible net fixed assets = $5,200,000; inventory = $548,000; notes payable = $179,000; accumulated retained earnings = $4,686,000; long-term debt = $1,150,000. (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)
Answer:
Sidewinder, Inc.
The addition to retained earnings is:
= $73,250
Duela Dent:
Income taxes = $45,200.
Alaskan Peach Corp.:
Balance Sheet as of December 31, 2019
Assets
Current assets:
Cash $203,000
Accounts receivable 263,000
Inventory 548,000 $1,014,000
Long-term assets:
Tangible net fixed assets 5,200,000
Patents and copyrights 857,000 $6,057,000
Total assets $7,071,000
Liabilities and Equity:
Current liabilities:
Accounts payable $286,000
Notes payable 179,000 $465,000
Long-term liabilities:
Long-term debt $1,150,000
Total liabilities $1,615,000
Accumulated retained earnings 4,686,000
Common stock (missing figure) 770,000
Total liabilities and equity $7,071,000
Explanation:
a) Data and Calculations:
Sidewinder, Inc.:
Sales revenue $714,000
Cost of goods sold $348,000
Depreciation expense $93,000
Interest expense $58,000
Tax rate = 25%
Cash dividends paid = $88,000
Income Statement
Sales revenue $714,000
Cost of goods sold 348,000
Gross profit $366,000
Depreciation expense 93,000
EBIT $273,000
Interest expense (58,000)
Income before tax $215,000
Tax rate (25%) 53,750
Net income $161,250
Cash dividends paid 88,000
Addition to Retained
Earnings $73,250
Duela Dent (single):
Taxable income = $180,800
Income tax (25%) 45,200
Alaskan Peach Corp.:
Account Titles Debit Credit
Cash $203,000
Accounts receivable 263,000
Inventory 548,000
Patents and copyrights 857,000
Tangible net fixed assets 5,200,000
Accounts payable $286,000
Notes payable 179,000
Long-term debt 1,150,000
Accumulated retained earnings 4,686,000
Common stock (missing figure) 770,000
Totals $7,071,000 $7,071,000
A real estate attorney employed by a large national clothing store evaluates sites across the United States, searching for ideal locations for new stores. Which type of property is the attorney surveying?
Answer: Commercial
Explanation:
Commercial property refers to the real estate which is used for business activities. It simply refers to the buildings that are used for business purposes, as well as land that are utilized for the generation of profit.
Since the real estate attorney employed by a large national clothing store evaluates sites across the United States, searching for ideal locations for new stores, the attorney is looking for a commercial property.
One year ago, you purchased $6,000 worth of a mutual fund at an offering price of $38.10 a share. Today, the fund distributed $0.20 in short-term gains and $1.04 in long-term gains. The current offering price is $41.80. The fund has a front-end load of 5 percent and total annual operating expenses of 1.25 percent. What is your rate of return on this investment?
a. 7.48 percent
b. 9.91 percent
c. 2.87 percent
d. 3.54 percent
e. 6.06 percent
Answer:
a. 7.48%
Explanation:
Number of shares = $ 6,000 / $ 38.10
Number of shares = 157.48
Rate of return = [Number of shares * (Short term gans + Long term gains + ((1 - Front end load) * (Current offering price)) - Purchase price] / Purchase price
Rate of return = [157.48 * ($0.20 + $1.04 + ((1 - 0.05 ) * $41.80)) - $6,000] / $6,000
Rate of return = [157.48 * ($0.20 + $1.04 + (0.95 * $41.80)) - $6,000] / $6,000
Rate of return = [157.48 * ($1.24 + $39.71) - $6,000] / $6,000
Rate of return = $448.806 / $6,000
Rate of return = 0.074801
Rate of return = 7.48%
Year 1 Year 2 EBITDA $7,650 $9,150 Total value of equity $76,500 $82,500 Total firm value $99,450 $132,000 What is value of the entity multiple of Company X in Year 1?
Answer:
$5.59
Explanation:
Calculation to determine the value of the entity multiple of Company X in Year 1
Using this formula
Entity multiple=Market value / EBITDA
Let plug in the formula
Entity multiple=$99,450/$17800
Entity multiple=$5.59
Therefore the value of the entity multiple of Company X in Year 1 will be $5.59
In the month of March, Wildhorse Salon services 620 clients at an average price of $130. During the month, fixed costs were $16,380 and variable costs were 70% of sales
(a) Determine the total contribution margin in dollars, the per unit contribution margin, and the contribution margin ratio Contribution margin in dollars 5 Contribution margin per unit $ Contribution margin ratio %
Answer:
a) We have:
Total contribution margin in dollars = $24,180
Per unit contribution margin = $39
Contribution margin ratio = 30%
b) We have:
Break-even point in dollars = $54,600
Break-even point in in units = 420 units
Explanation:
Note: This question is not complete as its part b is missing. The part b of the question is therefore provided to complete it before answering it as follows:
b) Using the contribution margin technique, compute the break-even point in dollars and in units.
The explanation of the answer is now provided as follows:
a) Determine the total contribution margin in dollars, the per unit contribution margin, and the contribution margin ratio
Average price = $130
Variable costs = Average price * 70% = $130 * 70% = $91
Total sales = Number of clients * Average price = 620 * $130 = $80,600
Total variable cost = Total sales * 70% = $80,600 * 70% = $56,420
Therefore, we have:
Total contribution margin in dollars = Total sales - Total variable cost = $80,600 - $56,420 = $24,180
Per unit contribution margin = Average price - Variable costs = $130 - $91 = $39
Contribution margin ratio = (Total contribution margin in dollars / Total sales) * 100 = ($24,180 / $80,600) * 100 = 30%
b) Using the contribution margin technique, compute the break-even point in dollars and in units.
Break-even point in dollars = Fixed cost / Contribution margin ratio = $16,380 / 30% = $54,600
Break-even point in in units = Fixed cost / Per unit contribution margin = $16,380 / $39 = 420 units
We learned about Cost-Volume-Profit analysis. Review a few of the break even examples in the chapter.
1. If only the selling price per unit of a product increases (variable cost per unit and total fixed costs do not change), does the breakeven point increase or decrease?
2. Using Break Even Analysis, provide a unique mathematical example to support you answer. (Calculate the breakeven point for a base example, then increase the selling price and re-calculate your breakeven point.) Label all numbers in your examples."
Answer:
decrease
1. fixed cost is 100
variable cost is 10
price = 20
100 / ( 20 - 10) = 10
2. fixed cost is 100
variable cost is 10
price = 30
100 / (30 - 10) = 5
Explanation:
consumers who had used a gasoline company's proprietary credit card...is the court of appeals likely to accept the interlocutory appeal
Answer:
No appeal can not be made.
Explanation:
Interlocutory appeal is the one in which a court will issue order while the case is still pending. Any appeal is not accepted on these orders. Appeal can only be made when the court issues final judgement after a trial.
Suppose that you can sell as much of a product (in integer units) as you like at $68 per unit. Your marginal cost (MC) for producing the qth unit is given by: MC = 9q. This means that each unit costs more to produce than the previous one (e.g., the first unit costs 9*1, the second unit (by itself) costs 9*2, etc.). If fixed costs are $60, what is the optimal output level?
Answer:
8 units
Explanation:
P = $68 per unit
MC = 9q
Fixed cost = $60
It is noted that seller can sell as much as a product at $68 per unit. This means that the firm is price taken, hence, it is case of perfect competition.
For a perfectly competitive firm, the optimal output is at: P = MC
i.e. 68 = 9q
=> q = 68/9
=> q = 7.556
> q = 8
So, the optimal output level is 8 units.
Baskin's pretax accounting income in Year 2 is $100,000. Baskin received cash rental payments in advance for $20,000 in Year 1 and $30,000 in Year 2, which are taxed in the year of receipt. It is expected the rent will be recognized for financial reporting purposes as $25,000 in Year 3 and $25,000 in Year 4. The income tax rate is 40%. What is Baskin's tax basis for rental revenues in Year 2
Answer:
the baskin tax basis for rental revenue is $10,000
Explanation:
The computation of the baskin tax basis for rental revenue is given below:
= Year 4 rent recognized × income tax rate
= $25,000 × 40%
= $10,000
Hence, the baskin tax basis for rental revenue is $10,000
The same should be considered and relevant
When a parent owns less than 100% of a subsidiary, the noncontrolling interest shareholders are allocated their ownership percentage of income or net assets in all of the following eliminating entries except for: Group of answer choices The basic investment account elimination entry The excess value (differential) entry The optional accumulated depreciation elimination entry The amortized excess value reclassification entry
Answer: The optional accumulated depreciation elimination entry
Explanation:
A non-controlling interest, is also refered to as a minority interest, and this occurs when a has below 50% of the outstanding shares and in such case doesn't have a control over decisions as well.
It should be noted that when a parent owns less than 100% of a subsidiary, the noncontrolling interest shareholders are allocated their ownership percentage of income or net assets in all of the following eliminating entries except for the optional accumulated depreciation elimination entry.
If the price of a good increases, _____________. The demand curve _________________ . If the number of buyers in the market increases, ________________. The demand curve ____________.
Answer:
1. Quantity demanded decreases
2. Shift to the left
3. Quantity demanded increases
4. Shift to the right
Explanation:
If the price of a good increases, QUANTITY DEMANDED DECREASES, The demand curve SHIFT TO THE LEFT.
If the number of buyers in the market increases, QUANTITY DEMANDED INCREASES. The demand curve SHIFT TO THE RIGHT.
This is based on the law of demand which states under normal circumstances, the lower the price, the higher the quantity demanded, and the higher the price, the lower the quantity demanded.
A demand curve moves to the right when there is an increase in quantity demanded, while the demand curve also moves to the left when there is a decrease in quantity demanded.
FAB Corporation will need 200,000 Canadian dollars (C$) in 90 days to cover a payable position. Currently, a 90-day call option with an exercise price of $.75 and a premium of $.01 is available. Also, a 90-day put option with an exercise price of $.73 and a premium of $.01 is available. FAB plans to purchase options to hedge its payable position. Assuming that the spot rate in 90 days is $.71, what is the net amount paid, assuming FAB wishes to minimize its cost
Answer:
$144,000
Explanation:
Calculation to determine net amount paid, assuming FAB wishes to minimize its cost
Net amount: ($.71 + $.01) x 200,000
Net amount = $144,000.
Therefore net amount paid, assuming FAB wishes to minimize its cost is $144000
Gilberto manages a grocery store in a country experiencing a high rate of inflation. To keep up with inflation, he spends a lot of time every day updating the prices, printing new price tags, and sending out newspaper inserts advertising the new prices. His employees regularly deal with customer annoyance over the frequent price changes. This is an example of the of inflation.
Answer:
Menu Costs
Explanation:
From the question we are informed about Gilberto who manages a grocery store in a country experiencing a high rate of inflation. To keep up with inflation, he spends a lot of time every day updating the prices, printing new price tags, and sending out newspaper inserts advertising the new prices. His employees regularly deal with customer annoyance over the frequent price changes. This case is an example of the of Menu Costs inflation.
In domain of economics, menu cost can be regarded as the cost to a firm that results due to changing its prices. When there is high inflation, firms needs to often make a change to their prices ,so they can keep up with economy-wide changes. The name arised out of the cost of a printing new menus of a restaurants , but it is used by economists when they are generally referring to the costs of changing nominal prices
.
Which of the following is part of the generally accepted account of the 1822 conspiracy led by Denmark Vesey?A. His lieutenant was named Cinque. B. Vesey and his followers killed or maimed 37 whites. C. Vesey studied the Magna Carta and quoted the Farmer's Almanac.D. Vesey had purchased his freedom after winning the lottery.
Answer: D. Vesey had purchased his freedom after winning the lottery.
Explanation:
Denmark Vasey was a African American leader in the early 19th century who was born into slavery but was able to buy his freedom when he won a lottery.
In 1822, he was accused of a conspiracy to organize a slavery revolt that would have seen thousands of African Americans killing slave owners in South Carolina and then sailing to Haiti. They had him executed at the age of 55 for this alleged crime.
A stock just paid an annual dividend of $1.10. The dividend is expected to increase by 10 percent per year for the next two years and then increase by 2 percent per year thereafter. The discount rate is 14 percent. What correctly computes the current stock price?
Answer: $10.79
Explanation:
This requires the use of the Dividend Discount Model.
The price of the stock is the present value of the dividends for the two years and then the Terminal value.
Terminal value = Third year dividend / (Required return - Growth rate)
= (1.10 * 1.10² * 1.02) / (14% - 2%)
= 1.35762 / 12%
= $11.31
Price of stock is:
= Present value of first year dividend + Present value of second year dividend + Present value of Terminal value
= ((1.10 * 1.1) / 1.14) + (( 1.10 * 1.1²) / 1.14²) + (11.31 / 1.14²)
= $10.79
Frederic Taylor applied the scientific method to management . In many cases,this meant measuring a process to determine it optimal possible output .Discuss a time you have seen measurements used to manage a process
Answer:
fg sheriff f hiding fh gay
Which of the following relationships is NOT valid? A. When marginal cost is above average variable cost, AVC is rising. B. Rising marginal cost implies that average total cost is also rising. C. When marginal cost is below average total cost, the latter is falling. D. None of the above
Answer:
b
Explanation:
Suppose Cold Goose Metal Works Inc. is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of $3,000,000. The project is expected to generate the following net cash flows:
Year Cash Flow
Year 1 $350,000
Year 2 $450,000
Year 3 $450,000
Year 4 $450,000
Cold Goose Metal Works Inc.'s weighted average cost of capital is 8%, and project Beta has the same risk as the firm's average project. Based on the cash flows, what is project Beta's NPV?
Answer:
Cold Goose Metal Works Inc.
Based on the cash flows, project Beta's NPV is negative:
= ($1,602,200).
Explanation:
a) Data and Calculations:
Initial investment in project Beta = $3,000,000
Weighted average cost of capital = 8%
Net cash flows:
Year Cash Flow Discount Factor Present Value
Year 1 $350,000 0.926 $324,100
Year 2 $450,000 0.857 385,650
Year 3 $450,000 0.794 357,300
Year 4 $450,000 0.735 330,750
Total cash inflows = $1,397,800
Investment cost = $3,000,000
NPV = -$1,602,200
b) Cold Goose should not pursue the investment. The cash outflows outweigh the cash inflows by more than 50%. The net present value of the project is negative.
suppose the transfers of pillars to the lantern would reduce sales to outside customers by 15000. whats the lowest transfer price that would
Answer:
$1.20
Explanation:
Variable cost per pillar is $0.80, there is demand of pillar for 15000 by an outside customer. The selling cost is around $0.40. The total variable cost is $1.20, this is minimum transfer price that can be set by the supplier.
A marketing team at a carwash company was brainstorming better methods to identify what influenced their customers. The team discussed the social and personal factors of various customers and their decisions. What additional factors should the team discuss?
a. situational factors
b. psychological factors
c. personal factors
A spurious regression refers to a situation where:____.
a. the direction of the relationship between the dependent variable and the explanatory variables is uncertain.
b. even though two variables are independent, the OLS regression of one variable on the other indicates a relationship between them.
c. a few important and necessary explanatory variables are left out of a regression equation, thus leading to inefficient and inconsistent forecasts.
d. at least one of the variables used in a regression equation does not have a unit root and the error terms are heteroskedastic.
Answer:
b. even though two variables are independent, the OLS regression of one variable on the other indicates a relationship between them.
Explanation:
An experiment can be defined as an investigation which typically involves the process of manipulating an independent variable (the cause) in order to be able to determine or measure the dependent variable (the effect).
This ultimately implies that, an experiment can be used by scientists to show or demonstrate how a condition causes or gives rise to another i.e cause and effect, influence, behavior, etc in a sample.
In an experiment , the variable being manipulated by an experimenter is known as an independent variable while the dependent variable is the event expected to change when the independent variable is manipulated
A spurious regression refers to a situation where even though two (2) variables are independent, the ordinary least squares (OLS) regression of one independent variable on the other variable indicates a relationship between them.
An ordinary least squares (OLS) regression is typically designed to be used in estimating unknown variables or parameters in a linear regression model.
Using the high-low method and the Millco data above, what is the approximate fixed cost component of the monthly maintenance costs? Group of answer choices
Millco Inc. manufactures electronic parts They are analyzing their monthly maintenance costs to determine the best way to budget these costs in the future. They have collected the following data for the last six months:
Months Machine Hours Maintenance Costs
January 30,000 $67,500
February 40,000 74,500
March 37,500 65,900
April 39,000 68,750
May 42,300 74,000
June 35,000 64,500
Answer:
Millco Inc.
The approximate fixed cost component of the monthly maintenance costs is:
$51,600.
Explanation:
a) Data and Calculations:
Months Machine Hours Maintenance Costs
January 30,000 $67,500
February 40,000 74,500
March 37,500 65,900
April 39,000 68,750
May 42,300 74,000
June 35,000 64,500
High-low:
May 42,300 $74,000 for highest
January 30,000 67,500 for lowest
Difference 12,300 $6,500
Variable costs = $0.53 ($6,500/12,300)
Using May, the total variable cost = 42,300 * $0.53 = $22,419
Fixed cost = $51,581 ($74,000 - $22,419)
or approximately $51,600
The three categories of manufacturing costs comprising the cost of work in process are direct labor, direct materials, and: __________
a) direct expenses
b) indirect expenses
c) factory overhead
d) sales salaries expense
Answer:
C)) factory overhead
Explanation:
Manufacturing cost can be regarded as the sum of all the costs resources that is been consumed during the process of making a product. manufacturing cost can be classified as;
✓direct materials cost
✓ manufacturing overhead.
✓direct labor cost
It can be regarded as factor in total delivery cost. Direct Material Cost can be regarded as total cost that is incurred in purchasing of raw material and cost of other components such as packaging, as well as freight and storage costs by the company
It should be noted that The three categories of manufacturing costs comprising the cost of work in process are direct labor, direct materials, and factory overhead.
If the government intervenes and corrects the externality in the situation described, we would expect Group of answer choices the demand for the output from the hydroelectric power plants to decrease. the demand for the output from the hydroelectric power plants to increase the supply of the output from the hydroelectric power plants to decrease the supply of the output from the hydroelectric power plants to increase.
Answer: the supply of the output from the hydroelectric power plants to increase.
Explanation:
The hydroelectric power operators are incurring the cost of cleaning the river before they can use it. This cost is money that they could be investing in the business in order to produce more power.
If the government corrects the externality and limits the amount of waste being thrown into the river, the hydroelectric company would be able to invest the expenses it was incurring in clean up into generating more power which would lead to a higher supply of output from the power station.
Life, Inc. experienced the following events in Year 1, its first year of operation: Performed counseling services for $22,000 cash. On February 1, Year 1, paid $15,000 cash to rent office space for the coming year. Adjusted the accounts to reflect the amount of rent used during the year.
Required
Based on this information alone:
a. Record the events under an accounting equation.
TABLE PROVIDED BELOW
a.
Life, Inc.
Effect of Events on the Accounting Equation
Assets = Stockholders’ Equity
Event
Cash
Prepaid Rent
=
Retained Earnings
1. Performed Services 36,000 36,000
2. Prepaid Rent (18,000) 18,000 NA
3. Used Rent (18,000) (18,000)
Totals 18,000 0 = 18,000
b. Prepare an income statement, balance sheet, and statement of cash flows for the 2016 accounting period.
Life, Inc.
Income Statement
For the Year Ended December 31, 2016
Revenue 36,000
Expense 18,000
Net Income 18,000
Answer:
a. Assets = Liabilities + Stockholders' Equity = $8,250
b. We have:
Net income = $8,250
Assets = Liabilities + Stockholders' Equity = $8,250
Ending cash balance = $7,000
Explanation:
Note: The data in this question are merged together and the question also contains some errors in terms of irrelevant data and date/year inconsistency. These errors are therefore fixed by picking the actual question with the sorted data before answering the question as follows:
Life, Inc. experienced the following events in Year 1, its first year of operation:
1. Performed counseling services for $22,000 cash.
2. On February 1, Year 1, paid $15,000 cash to rent office space for the coming year.
3. Adjusted the accounts to reflect the amount of rent used during the year.
Required
Based on this information alone:
a. Record the events under an accounting equation.
b. Prepare an income statement, balance sheet, and statement of cash flows for the Year 1 accounting period.
The explanation of the answer is now presented as follows:
a. Record the events under an accounting equation.
Note: See Part a of the attached excel file for the record of the events under an accounting equation.
From Part of the attached excel file, we have:
Use rent = Rent paid = (Number of months used in Year 1 / Number of months in a year) = $15,000 * (11 / 12) = $13,750
Assets = Cash + Prepaid rent = $7,000 + $1,250 = $8,250
Liabilities = $0
Stockholders' Equity = $8,250
Therefore, we have:
Assets = Liabilities + Stockholders' Equity = $8,250
b. Prepare an income statement, balance sheet, and statement of cash flows for the Year 1 accounting period.
Note: See Part b of the attached excel file for the income statement, balance sheet, and statement of cash flows for the Year 1 accounting.
From Part of the attached excel file, we have:
Net income = $8,250
Assets = Liabilities + Stockholders' Equity = $8,250
Ending cash balance = $7,000
Note:
Increase in prepaid rent = Rent expense to be recognized in Year 2 = Rent paid - Rent used = $15,500 - $13,750 = $1,250