Answer:
110,000 units
Explanation:
Given that
Started units in inventory = 110,000 units
Ending inventory units = 30,000 units
Completion percentage = 40%
Based on the above information, the equivalent units of production for the material is equal to the started units in inventory i.e 110,000 units as it already includes the ending inventory plus the given percentage is also considered for the same
"Hubbard Industries is an all-equity firm whose shares have an expected return of 9.1%. Hubbard does a leveraged recapitalization, issuing debt and repurchasing stock, until its debt-equity ratio is 0.45. Due to the increased risk, shareholders now expect a return of 12.5%. Assuming there are no taxes and Hubbard's debt is risk-free, what is the interest rate on the debt?"
Answer: 1.54 %
Explanation:
Assuming no risk, the interest rate on the debt can be calculated using the Cost of Equity of levered Capital formula which is,
Cost of Equity of Levered Capital = Un levered cost of capital + Debt / equity * (rate of return - rate of debt)
All the variables are present except the rate of debt.
Plugging them in is,
0.125 = 0.091 + 0.45 ( 0.091 - rD)
0.125 = 0.091 + 0.04095 - 0.45(rD)
0.125 = 0.13195 - 0.45rD
0.45rD= 0.13195 - 0.125
0.45rD = 0.00695
rD = 0.00695/0.45
rD = 0.01544444444
rD = 1.54%
1.54% is the interest rate on the debt.
The question asks for the determination of the interest rate on Hubbard Industries' debt after a leveraged recapitalization. The interest rate can be calculated using a rearranged Modigliani-Miller proposition formula for levered cost of equity. Given all equity return and post-recapitalization equity return, along with the debt-equity ratio, one can compute the cost of debt.
Explanation:The question involves determining the interest rate on the debt after Hubbard Industries performs a leveraged recapitalization. Initially, the firm was all-equity with an expected return of 9.1%. Post recapitalization, we are given that the new expected equity return is 12.5% and the debt-equity ratio is 0.45. To calculate the interest rate on Hubbard's debt, we must use the Modigliani-Miller proposition without taxes which implies that the firm's value (and cost of capital) does not change due to the capital structure decisions. The formula for the levered cost of equity is:
Re = Ru + (Ru - Rd) * (D/E)
Where Re is the cost of equity after leverage, Ru is the cost of equity (or assets) without leverage, Rd is the cost of debt, and (D/E) is the debt-to-equity ratio. Here, Re is 12.5%, Ru is 9.1%, and D/E is 0.45.
Rearranging the formula to solve for Rd gives us:
Rd = Ru - (Re - Ru) / (D/E)
Substituting the given values:
Rd = 9.1% - (12.5% - 9.1%) / 0.45
Rd represents the interest rate on the company's debt. After calculation, we can determine the interest rate which Hubbard's shareholders will face post recapitalization.
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On January 22, Zentric Corporation issued for cash 76,000 shares of no-par common stock at $15. On February 14, Zentric issued at par value 8,000 shares of preferred 6% stock, $50 par for cash. On August 30, Zentric issued for cash 12,000 shares of preferred 6% stock, $50 par at $65. Journalize the entries to record the January 22, February 14, and August 30 transactions. Refer to the Chart of Accounts for exact wording of account titles.
Answer:
Zentric Corporation
Journal Entries:
January 22:
Debit Cash with $1,140,000
Credit Common Stock with $1,140,000
To record issue of 76,000 shares of no-par value common stock at $15 each.
February 14:
Debit Cash Account with $400,000
Credit Preferred 6% Stock with $400,000
To record the issue of 8,000 shares at $50 par.
August 30:
Debit Cash Account with $780,000
Credit Preferred 6% Stock with $600,000
Credit APIC - Preferred with $180,000
To record issue of 12,000 shares, $50 par at $65.
No Chart of Accounts was provided for exact wording of account titles.
Explanation:
1. No-par common stock: When shares are issued at no-par, it means that there is no set par value. Par value is the nominal value of a share. Issuing at no-par implies that the amount realized from the sale would be credited to the Common Stock without any to the Additional Paid-in Capital (APIC).
2. Issue of preferred 6% stock at par value: This means that the stock was issued without additional paid-in capital. The stock was issued at the nominal value without premium.
3. Issue of preferred 6% stock, $50 par at $65: This stock was issued at a premium. More was charged above the par value. There is additional paid-in capital of $15 per share. This additional is credited to Additional Paid-in Capital - Preferred.
Conley Company has fixed costs of $17,802,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company’s two products follow: Product Model Selling Price Variable Cost per Unit Contribution Margin per Unit Yankee $180 $99 $81 Zoro 225 135 90
The sales mix for products Model 94 and Model 81 is 75% and 25%, respectively. Determine the break-even point in units of Model 94 and Model 81. If required, round your answers to the nearest whole number.
a. Product Model 94 units
b. Product Model 81 units
Answer:
Break-even point:
a. Product Model 94 units = 160,378.38 units
b. Product Model 81 units= 53,459.46 units
Explanation:
The break even point in units is the minimum units of each of the two products that Conley Company should sell in order for it to make no profit or loss.
At this units of sales, the sales revenue would produce a total contribution exactly equal to the fixed cost of $17,802,000.
The beak-even point (total units) = Total fixed cost / average contribution per unitAverage average contribution per unit = ( 81× 75%) + (90× 25%) = $83.25
Break-even point = $17,802,000/83.25 = 213,837.84 units
Product Model unit = 75%× 213,837.84 units
= 160,378.38 units
Product Model 81 units = 25% × 213,837.84
= 53,459.46 units
The break-even points are 160,411 units for Yankee and 53,471 units for Zoro.
The unit selling price, variable cost per unit, and contribution margin per unit for the company’s two products follow:
Product Yankee: Selling Price $180, Variable Cost $99, Contribution Margin $81Product Zoro: Selling Price $225, Variable Cost $135, Contribution Margin $90The sales mix for products Yankee and Zoro is 75% and 25%, respectively. To determine the break-even point in units for each model, we need to use the weighted average contribution margin (WACM).
Step 1: Calculate the WACM
WACM = (75% × $81) + (25% × $90) = $60.75 + $22.50 = $83.25Step 2: Calculate the total break-even point in units
Total Break-even Point (units) = Total Fixed Costs / WACM Total Break-even Point = $17,802,000 / $83.25 = 213,882 units (rounded to nearest whole number)Step 3: Determine the break-even point in units for each product
Yankee: 75% of 213,882 units = 160,411 unitsZoro: 25% of 213,882 units = 53,471 unitsTherefore, the break-even points for Conley Company in units are 160,411 units for Model Yankee and 53,471 units for Model Zoro.
Waupaca Company establishes a $400 petty cash fund on September 9. On September 30, the fund shows $122 in cash along with receipts for the following expenditures: transportation costs of merchandise purchased, $51; postage expenses, $73; and miscellaneous expenses, $141. The petty cashier could not account for a $13 shortage in the fund. The company uses the perpetual system in accounting for merchandise inventory. Prepare (1) the September 9 entry to establish the fund, (2) the September 30 entry to reimburse the fund, and (3) an October 1 entry to increase the fund to $460.
Answer and Explanation:
The Journal entry is shown below:-
September 9
Petty cash fund Dr, $400
To Cash $400
(Being establishment of petty cash fund is recorded)
Here we debited the petty cash fund as assets is increasing while we credited the cash is decreasing.
September 30
Merchandise Inventory Dr, $51
Postage expense Dr, $73
Cash Short and over Dr, $13
Miscellaneous Dr, $141
To Petty Cash $278
(Being reimburse of petty cash find is recorded)
Here we debited the merchandise Inventory, postage expense, cash short and over and miscellaneous as it is expenses while we credited the petty cash as is reimbursed.
October 1
Petty cash fund Dr, $60
($460 - $400)
To Cash $60
(Being increase in petty cash fund is recorded)
Here we debited the petty cash fund as assets is increasing while we credited the cash is decreasing.
Final answer:
The student needs three journal entries to manage the petty cash transactions: establishing the fund, reimbursing it, and increasing its total. These transactions involve various accounts such as Petty Cash, Cash, and specific expense accounts.
Explanation:
To assist the student with their accounting question regarding petty cash transactions, here are the journal entries needed:
Establishing the Petty Cash Fund on September 9:The receipts and cash shortfall are used to determine how much to reimburse the petty cash to bring it back up to the established amount of $400 on September 30. Then, the fund's size is increased from $400 to $460 on October 1 with additional cash.
Rexford Corporation produces three products, with costs and selling prices as follows: Product A Product B Product C Machine hours per unit 3 1 2
Maximum demand 500 units
Selling price per unit $30 $20 $15
Variable costs per unit $18 $15 $ 6
Contribution Margin per unit $12 $ 5 $ 9
Machining is the bottleneck. The total machine time available is 2,100 hours. What is the maximum contribution margin that Rexford can earn by optimal use of the constrained resource?
Answer:
$9,400
Explanation:
For computing the maximum contribution margin we need to do following calculations
Contribution Margin
Product A = ($12 ÷3) = 4
Product B = ($5 ÷ 1) = 5
Product C = ($9 ÷ 2) = 4.50
So, the ranking order would be product B > product C > product A
Now
Total machine hours available = 2,100 hours
And,
Time for making 500 units of B
= 500 × 1
= 500 hours
For making 500 units of C, the time taken is
= 500 × 2
= 1000 hours
So the remaining hours left is
= 2,100 hours - 1,000 hours - 500 hours
= 600 hours
So, for A the manufactured is
= 600 ÷ 3
= 200
And, finally the Maximum contribution margin is
= (200 × $12) + (500 × 5) + (500 × 9)
= $2,400 + $2,500 + $4,500
= $9,400
Liang Company began operations in Year 1. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows.
Year 1 Sold $1,345,434 of merchandise (that had cost $975,000) on credit, terms n/30.
Wrote off $18,300 of uncollectible accounts receivable.
Received $669,200 cash in payment of accounts receivable.
In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable would be ______.
The estimated bad debt at the end of Year 1 for the Liang Company is calculated as 1.5% of the remaining accounts receivable ($657,934), which results in $9,869.01.
Explanation:The Liang Company ended its first year with some transactions that involved credit sales, account receivable payments, and bad debts. The company sold $1,345,434 of merchandise from which $18,300 was written off as bad debts and $669,200 was received in cash. To calculate the potential bad debts at the end of the year, we apply the bad debt estimation rate, which is 1.5%. This rate is applied to the total amount of accounts receivable left (which is the initial credit sales minus the cash received and the bad debts).
Here is the step-by-step process:
Calculate the total receivables at the end of the year: $1,345,434 (credit sales) - $18,300 (write offs) - $669,200 (cash received) = $657,934. Apply the estimated bad debt rate on the remaining receivable amount: 1.5% of $657,934 = $9,869.01. This value represents the estimated bad debts. Learn more about Bad Debts Estimation here:
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Final answer:
Liang Company will calculate the estimated bad debts at 1.5% of the adjusted total accounts receivable, which must be derived from the credit sales minus collections and write-offs.
Explanation:
The student's question is about how to account for the estimation of bad debts at the end of the fiscal year. Liang Company estimated that 1.5% of accounts receivable would be uncollectible. To calculate this, Liang Company needs to determine the total accounts receivable at the end of the year, which includes sales on credit, minus any collections and write-offs. If they have not provided the year-end total accounts receivable, the company would take the credit sales made during the year and adjust it for any cash received and any write-offs. The estimation of bad debts would then be 1.5% of the adjusted accounts receivable total.
Poseidon Co. holds 70% of the common stock of Saturn Co. In the current year, Poseidon report sales of $2,400,000 and cost of goods sold of $1,800,000. For this same period, Saturn has sales of $900,000 and cost of goods sold of $540,000. During the current year, Saturn sold merchandise to Poseidon for $300,000. Poseidon still possesses 40% of this inventory at the end of the current year. Saturn had established the transfer price based on its normal markup. What are consolidated sales and cost goods sold
Final answer:
Consolidated sales are $3,300,000 and consolidated cost of goods sold are $2,340,000.
Explanation:
Consolidated sales and cost of goods sold are calculated when a parent company owns a significant percentage of the common stock of another company. In this scenario, Poseidon Co. holds 70% of the common stock of Saturn Co. To calculate consolidated sales, we need to add the sales of both companies. In this case, Poseidon reported sales of $2,400,000 and Saturn reported sales of $900,000. Therefore, consolidated sales would be $2,400,000 + $900,000 = $3,300,000.
To calculate consolidated cost of goods sold, we need to add the cost of goods sold of both companies. Poseidon reported a cost of goods sold of $1,800,000 and Saturn reported a cost of goods sold of $540,000. Therefore, consolidated cost of goods sold would be $1,800,000 + $540,000 = $2,340,000.
HyperNet Systems is a start-up company that makes connectors for high-speed Internet connections. The company has budgeted variable costs of $ 125 for each connector and fixed costs of $ 9 comma 500 per month. HyperNet's static budget predicted production and sales of 100 connectors in August, but the company actually produced and sold only 77 connectors at a total cost of $ 20 comma 000. HyperNet's total flexible budget cost for 77 connectors per month is
Answer:
$ 2,875 U
Explanation:
HyperNet Systems
Standard cost = (77 * 125 ) + 9,500
9,625+9,500
$ 19,125
Variance =actual -standard
22,000 - 19,125
$ 2,875 U
Martha receives $200 on the first of each month. Stewart receives $200 on the last day of each month. Both Martha and Stewart will receive payments for 30 years. The discount rate is 9 percent, compounded monthly. What is the difference in the present value of these two sets of payments?
Answer:
Instructions are below.
Explanation:
Giving the following information:
Martha receives $200 on the first of each month. Stewart receives $200 on the last day of each month. Both Martha and Stewart will receive payments for 30 years. The discount rate is 9 percent, compounded monthly.
To calculate the present value, first, we need to determine the final value.
i= 0.09/12= 0.0075
n= 30*12= 360
Martha:
FV= {A*[(1+i)^n-1]}/i + {[A*(1+i)^n]-A}
A= montlhy payment
FV= {200*[(1.0075^360)-1]}/0.0075 + {[200*(1.0075^360)]-200}
FV= 366,148.70 + 2,746.12
FV= 368,894.82
Now, the present value:
PV= FV/ (1+i)^n
PV= 368,894.82/ 1.0075^360
PV= $25,042.80
Stewart:
FV= {A*[(1+i)^n-1]}/i
A= monthly payment
FV= {200*[(1.0075^360)-1]}/0.0075
FV= 366,148.70
PV= 366,148.70/1.0075^360
PV= $24,856.37
Martha has a higher present value because the interest gest compounded for one more time.
Final answer:
The difference in present value for Martha and Stewart's payments stems from receiving payments at the beginning versus the end of the month, with Martha's payments having a slightly higher present value due to earlier investment potential.
Explanation:
The question relates to the calculation of present value of annuity payments, received at different times, under a certain discount rate. Martha receives her payments at the beginning of the month, and Stewart receives his at the end of the month, both over a 30-year period with a 9 percent discount rate, compounded monthly. The present value difference between their payments arises because of the time value of money; Money received earlier is worth more because it can be invested to earn interest.
To calculate the present value of the payments for both Martha and Stewart, we would use the present value of an annuity formula considering the timing of their payments. As Martha receives her payments at the beginning of the month, her valuation would be slightly higher than Stewart's, who receives payments at the end of the month, due to Martha being able to invest each payment a month earlier over the 30-year period.
fitness center is planning to invest in specialized exercise equipment. This equipment is highly effective, but the club members could be injured if the equipment is used incorrectly. The fitness center sends its exercise instructors to a certified training program to learn how to use these machines correctly. This is best classified as ____________________________. a. career training b. job and technical training c. problem-solving training d. developmental training
Answer:
b. job and technical training
Explanation:
The job and the technical training is the training which is to be provided by the company or the centers to the workers or the people who want to trained in a particular service or specialized in a service in order to get a better and satisfying job through which they can build their career in a better way
In the given situation, the fitness center send the instructors to the certified training program to learn how to use these machines correctly that reflects the job and technical training
Jallouk Corporation has two different bonds currently outstanding. Bond M has a face value of $30,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $1,900 every six months over the subsequent eight years, and finally pays $2,200 every six months over the last six years. Bond N also has a face value of $30,000 and a maturity of 20 years; it makes no coupon payments over the life of the bond. The required return on both these bonds is 12 percent compounded semiannually.
Sarah, Sue, and AS Inc. formed a partnership on May 1, 20X9, called SSAS, LP. Now that the partnership is formed, they must determine its appropriate year-end. Sarah has a 30 percent profits and capital interest while Sue has a 35 percent profits and capital interest. Both Sarah and Sue have calendar year-ends. AS Inc. holds the remaining profits and capital interest in the LP, and it has a September 30 year-end. What tax year-end must SSAS, LP, use for 20X9, and which test or rule requires this year-end
Answer:
The correct answer to the following question will be "12/31, majority interest taxable year".
Explanation:
Throughout the incident in question, all parties mostly in calendar year carry upwards of fifty percent and the result is 12/31, most interest taxing year.When all the participants in the calendar year have a mutual value of more than 50 percent so the same will be selected.They will vote for the 12/31 fiscal year minimum interest. And the solution to the above seems to be the right one.
On September 1, 2021, Daylight Donuts signed a $170,000, 9%, six-month note payable with the amount borrowed plus accrued interest due six months later on March 1, 2022. Daylight Donuts records the appropriate adjusting entry for the note on December 31, 2021. In recording the payment of the note plus accrued interest at maturity on March 1, 2022, Daylight Donuts would: (Do not round your intermediate calculations.) Multiple Choice Debit Interest Expense, $7,650. Debit Interest Expense, $5,100. Debit Interest Expense, $2,550.
Answer:
The correct answer is Debit Interest Expense, $5,100.
Explanation:
Note is a promissory note with a written promise made by the borrower to the lender (payee) to pay a certain, definite sum at a specified date.
Interest expense on the notes is calculated as: Principal x Interest Rate x Time
In this case, the total interest expense is $170,000 x 9%/12 x 6 months = $7,650.
Interest expense as at December 31, 2021 is therefore $7,650 / 6 x 4 = $5,100.
A company purchased 500 units for $ 30 each on January 31. It purchased 600 units for $ 36 each on February 28. It sold a total of 650 units for $ 40 each from March 1 through December 31. What is the cost of ending inventory on December 31 if the company uses the firstminusin, firstminusout (FIFO) inventory costing method? (Assume that the company uses a perpetual inventory system.)
Answer:
The answer is $16,200
Explanation:
First-in, first-out (FIFO) inventory costing method refers to one in which the most recently stocked goods are sold last. To calculate this, let us first lay out the relevant information:
January 31 purchase = 500 units at $30 each
February 28 purchase = 600 units at $36 each
sales = 650 units at $40 each.
required = cost of ending inventory
According to FIFO method, all the goods bought in January, will be sold first before the goods bought in February, hence out of the 650 units sold:
500 units are from January inventory and the remaining 150 units are from February inventory.
Therefore to calculate the cost of ending inventory, which is units of goods remaining from February purchases:
Total initial units in February = 600 units
Units sold from February purchases = 150 units
∴ Units remaining from February purchases = 600 - 150 = 450
remember that for unit cost of goods for February = $36 per unit
∴ Cost of ending inventory = units of ending inventory × unit cost of ending inventory
= 450 × 40 = $16,200
Final answer:
The cost of ending inventory on December 31 using FIFO is $16,200, calculated by considering that 450 units remaining from the February purchase at $36 each are left after sales.
Explanation:
Given the purchases and sales data, here's how you would calculate the ending inventory:
Initial purchase of 500 units at $30 each on January 31.Subsequent purchase of 600 units at $36 each on February 28.Total sales of 650 units throughout the year.According to FIFO, the oldest inventory is sold first. To calculate the ending inventory, subtract the 650 units sold from the total units purchased (500 + 600 = 1100 units). As 500 of the oldest units were sold first, only 150 out of the 650 sold units would come from the batch purchased in February. This leaves us with 450 units from the February purchase remaining in the ending inventory. Therefore:
450 units x $36 each = $16,200 ending inventory on December 31.
The accounting records of Baddour Company provided the data below. Net loss $ 4,625 Depreciation expense 6,125 Increase in salaries payable 495 Decrease in accounts receivable 2,175 Increase in inventory 2,320 Amortization of patent 490 Reduction in discount on bonds 390 Prepare a reconciliation of net income to net cash flows from operating activities.
Answer:
Net cash flows from operating activities $2,730
Explanation:
Cash flows from operating activities:
Net loss($4,625)
Adjustments for non cash effects:
Depreciation expense $6,125
Amortization of patent $490
Changes in operating assets and liabilities:
Increase in salaries payable $495
Decrease in accounts receivable $2,175
Increase in inventory($2,320)
Decrease in discount on bonds $390
Net cash flows from operating activities $2,730
Baxter International Inc. can obtain funds for future investments through retained earnings, new issues of common stock, and issuance of debt. Baxter's stock currently sells for $18 per share, paid a dividend of $1.20 last year(D0=$1.20), has a growth rate of 6% that is expected to continue, and new issues carry flotation costs of7%. Baxter's bonds sell for $945, pays a 7% annual coupon, matures in 30 years, and new issues carry3% flotation costs. Baxter's tax rate is 30%.9.What is Baxter's after-tax cost of debt
Answer:
The multiple choices are:
a. 7.72%
b. 5.40%
c. 5.22%
d. 7.46%
e. 4.90%
Option B is the correct answer,5.40%
Explanation:
In order to determine the after tax cost of Baxter's debt,we need to first of all calculate the pretax cost of debt which is by applying the rate formula in excel.
=rate(nper,pmt,-pv,fv)
nper is the number of coupon payments the bond would make which is 30
pmt is the annual coupon interest on the bond=7%*$1000=$70
pv is the current price of the bond minus the flotation cost=$945*(1-3%)=$916.65
The fv is the face value of $1000 per bond
=rate(30,70,-916.65,1000)
pretax cost of debt=rate=7.72%
After tax cost of debt=pretax cost of debt*(1-t)
t is th tax rate of 30% 0or 0.30
after tax cost of debt=7.72%*(1-.3)=5.40%
. Tiger Mfg. owns a manufacturing facility that is currently sitting idle. The facility is located on a piece of land that originally cost $159,000. The facility itself cost $1,390,000 to build. As of now, the book value of the land and the facility are $159,000 and $1,258,000, respectively. The firm owes no debt on either the land or the facility at the present time. The firm received a bid of $1,200,000 for the land and facility last week. The firm's management rejected this bid even though they were told that it is a reasonable offer in today's market. If the firm was to consider using this land and facility in a new project, what cost, if any, should it include in the project analysis?
Answer: $1,200,000
Explanation:
The firm should include $1,200,000 as the cost of the Manufacturing facility for a new project in it's analysis.
This is because $1,200,000 is the opportunity cost of not selling the facility. The old costs that were incurred for the land and the facility are to be considered sunk costs as they have already been incurred and the only relevant cost now is what the market will pay for the facility which is $1,200,000.
Final answer:
In the project analysis for Tiger Mfg.'s potential use of an idle manufacturing facility and land, only the opportunity cost, which is the forgone sale price of $1,200,000, should be included.
Explanation:
The question revolves around determining the relevant costs that Tiger Mfg. should include in the project analysis for utilizing an idle manufacturing facility and land, which have book values of $1,258,000 and $159,000 respectively, and for which they recently rejected a $1,200,000 offer. In project analysis, the focus should be on incremental cash flows or costs and benefits that would change as a result of undertaking the project. In this case, the original cost and the book value of the land and facility are sunk costs and should not be considered in the project analysis. However, if the project precludes the sale of the land and facility, the potential sale price (opportunity cost) of $1,200,000 represents the economic cost that should be factored into the project analysis.
Duluth Ranch, Inc. purchased a machine on January 1, 2018. The cost of the machine was $21,500. Its estimated residual value was $6,500 at the end of an estimated 5-year life. The company expects to produce a total of 10,000 units. The company produced 850 units in 2018 and 1,300 units in 2019. Required: Calculate depreciation expense for 2018 and 2019 using the straight-line method. Calculate the depreciation expense for 2018 and 2019 using the units-of-production method. Calculate depreciation expense for 2018 through 2022 using the double-declining balance method.
Answer:
Explanation:
Cost of acquisition - $21,500
Residual value - $6,500
Depreciable amount - 21500-6500 =15,000
Useful life = 5 years
Total units produced = 10000
Depreciation rate = 1/5*100 = 20%
Double depreciation raate = 40%
Depreciation 2018 2019
Straight line 20%*15000 3000 3000
Units of production
850/10000*15000 1275
1300/10000*15000 1950
Double declining balance method
2018 = 40%*21500 = 8600
2019 =(21500-8600) *40%= 5160
2020 (12900 -5160)*40% = 3096
2021 (7740-3096) *40% =1858
2022 (4644-1858)*40% = 1114
A bank has book value of $5 million in liquid assets and $95 million in nonliquid assets. Large depositors unexpectedly withdraw $9.5 million in deposits. To cover the withdrawals the bank sells all of its liquid assets at book value. To raise the additional funds needed the bank sells the necessary amount of nonliquid assets at 80 cents per dollar of book value. As a result, the bank's equity will _____________.
Answer:
The equity will reduce by $1,125,000 or 1.125 M
Explanation:
Liquid assets needed to mange the withdraw = Withdrawal amount - Existing Liquid asset
Liquid assets needed to mange the withdraw = $9,500,000 - $5,000,000
Liquid assets needed to mange the withdraw = $4,500,000
Required Sale of Non-liquid assets = Liquid assets needed to mange the withdraw / Ratio of sale to book value
Required Sale of Non-liquid assets = $4,500,000 / 80%
Required Sale of Non-liquid assets = $5,625,000
Change in Bank Equity = Required Sale of Non-liquid assets - Liquid assets needed to mange the withdraw
Change in Bank Equity = $5,625,000 - $4,500,000
Change in Bank Equity = $1,125,000
The equity will reduce by $1,125,000 or 1.125 M
In a company's standard costing system, direct labor-hours are used as the base for applying variable manufacturing overhead costs. The standard direct labor rate is twice the variable overhead rate. Last period the labor efficiency (quantity) variance was unfavorable. From this information one can conclude that last period the variable overhead efficiency (quantity) variance was:
Answer:
From this information one can conclude that last period the variable overhead efficiency (quantity) variance was unfavorable.
Explanation:
The variable overhead efficiency variance measures the difference between the actual and budgeted hours worked with respect to standard variable overhead rate per hour.
Variable overhead efficiency variance can be calculated thus:
Actual labor hours less budgeted labor hours x Hourly rate for standard variable overhead
If the time it takes to manufacture a product and the time budgeted for it matches or performs well, the labor efficiency is favorable.
Variable overhead efficiency variance is deemed unfavorable when it takes the company more time than budgeted to produce. This also shows labor efficiency variance was unfavorable.
Sandy's Sauces, which produces stir-fry sauces, is developing direct material standards. Each bottle of sauce requires 0.70 kilograms of base. The allowance for waste is 0.05 kilograms per bottle, while the allowance for rejects is 0.09 kilograms per bottle. What is the standard quantity of base per bottle? Group of answer choices
A. 0.75 kilograms
B. 0.70 kilograms
C. 0.84 kilograms
D. 0.79 kilograms
Answer:
C) 0.84 kilograms
Explanation:
The standard material quantity = kilograms per bottle + allowance for waste + allowance for rejects = 0.70 kg + 0.05 kg + 0.09 kg = 0.84 kg
The standard material quantity is the budgeted (estimated) amount of direct materials needed to produce one unit of output. The total standard quantity = standard material quantity times total units produced.
New Age Computers manufactures and sells pagers and radio paging systems which include a 180 day warranty on product defects. It also sells an extended warranty which provides an additional two years of protection. On May 10, it sold a paging system for $4,500 and an extended warranty for another $1,400. The journal entry to record this transaction would include
a. a credit to Service Revenue of $5,050.
b. a credit to Service Revenue of $1,200.
c. a credit to Sales of $3,850 and a credit to Service Revenue of $1,200
d. a credit to Unearned Service Revenue of $1,200
Answer:
D. credit to Unearned Warranty Revenue of $1,400
Explanation:
Unearned extended warranty revenue can be defined as the way in unearned revenues is reflected in accrued liabilities in the balance sheets which in turn lead to the revenue from separately priced as well as self-insured service contracts to be deferred at the point of sale.
Therefore the journal entry to record this transaction would include:
credit to Unearned Warranty Revenue of $1,400
Symon's Suppers Co. has announced that it will pay a dividend of $4.25 per share one year from today. Additionally, the company expects to increase its dividend by 4.5 percent annually. The required return on the company's stock is 10.7 percent. What is the current share price
Answer:
$68.55
Explanation:
The computation of the current share price is shown below:
Current price = Today dividend price per share ÷ (Required rate of return-Growth rate)
= $4.25 ÷ (0.107-0.045)
=$68.55
We simply applied the above formula after considering all the three items given in the question so that the correct value could come
Suppose that a telecommunications company controls a large share of the national market. The government believes that the economies of scale in this industry are not significant, and, therefore, multiple smaller firms would be able to provide lower prices. Which of the following policy options might most effectively enable the government to achieve its objectives in this situation?Do nothing at all.Regulate the firm's pricing behavior.Use antitrust laws to increase competition.Turn the company into a public enterprise.
Answer: Use antitrust laws to increase competition.
Explanation:
If the aim of the Government really is to.improve competition then they should use Anti-trust laws to increase competition.
This question is rooted in the concept of Capitalism and focuses on its good side which is that competition is good.
With such a law coming into effect, the large market share of the big company can be redistributed to the smaller firms which would enable competition amongst them and the large company as well. Competition at base level is good for the Economy for two main reasons;
1. It will make companies more efficient as they strive to better than each other. They'll produce better products and be more cost effective.
2. The citizens and consumers gain better service at cheaper costs because again, the companies would be competing amongst themselves and introducing newer and better ways to capture market share.
Answer:
Turn the company into a public enterprise.
Explanation:
Base on the scenario been described in the question, the policy options might most effectively enable the government to achieve its objectives in this situation is turn the company into a public enterprise.
If the government belief that the economies of scale in this industry are not significant, and therefore, multiple smaller firms would be able to provide lower prices is true, it would be profitable for the market, When a natural monopoly, such as an electric utility, is forced to sell itself to a public institution, the private monopoly will become a public enterprise. Such a policy option, which might be chosen by a government that views electricity as a public good, is generally the European approach to providing utilities. A potential drawback of this approach is that government managers may have little incentive to keep costs down
The following data is available for three different alternatives. Assume an interest rate of 9% per year, compounded annually.
Alternative A Alternative B Alternative C
Initial Cost 7,000 8,600 14,000
Annual Benefit 1,375 793 6,007
Useful Life (yrs) infinite 18 9
Alternatives B and C are replaced at the end of their useful lives with identical replacements. Using present worth analysis, find the best alternative.
To determine the best option using present worth analysis at a 9% interest rate, calculate the present value of the benefits for each alternative. Use the perpetuity formula for Alternative A and equivalent annual benefits for Alternatives B and C considering their respective lifespans and replacement costs. The alternative with the highest present worth is the best option.
Explanation:To find the best alternative using present worth analysis, we need to calculate the present value (PV) of each alternative at the 9% per year interest rate over the given lifespan of the alternatives. Since Alternative A has an infinite lifespan, its annual benefit of $1,375 will be perpetually received, which means we can use the perpetuity formula to calculate its present worth. The formula for perpetuity is PV = (Annual Benefit / Interest Rate).
For Alternative A:
Present Worth (PW) = $1,375 / 0.09 = $15,277.78Alternatives B and C are finite and will be replaced with identical replacements at the end of their useful lives, thus we can consider them as perpetuities as well, but we need to calculate the equivalent annual benefit that takes the replacement cost into account.
For Alternative B (18-year lifespan):
Capital Recovery Factor (CRF) = (Interest Rate * (1 + Interest Rate)^n) / ((1 + Interest Rate)^n - 1)Equivalent Annual Benefit (EAB) = (Annual Benefit - (Initial Cost * CRF))Present Worth (PW) = EAB / Interest RateFor Alternative C (9-year lifespan):
Repeat the same CRF and EAB calculation with 9 yearsCalculate the PW using the obtained EABOnce the PW for B and C are calculated, compare the PW of all three alternatives. The alternative with the highest present worth is considered the best financial option.
Suppose that real GDP is currently $13.22 trillion and potential real GDP is $14.0 trillion, or a gap of $800800 billion. The government purchases multiplier LOADING... is 10.010.0, and the tax multiplier is 9.09.0. Holding other factors constant, by how much will government purchases need to be increased to bring the economy to equilibrium at potential GDP
Answer:
Change in government purchase needed = $40
Explanation:
Multiplier denotes the extent to which, change in an autonomous variable leads to multiple change in economy income.
Multiplier 'k' = Change in Income 'ΔY' / Change in autonomous variable 'ΔG', as autonomous variable = government purchase here.
ΔY needed = 200 billion , k = 5 , ΔG = ?
k = ΔY / ΔG
5 = 200 / ΔG
ΔG = 200 / 5
ΔG = 40
Change in government purchase needed = $40
Fulfillment Fulfillment costs represent those costs incurred in operating and staffing our fulfillment and customer service centers, including costs attributable to receiving, inspecting, and warehousing inventories; picking, packaging, and preparing customer orders for shipment; credit card fees and bad debts costs, including costs associated with our guarantee for certain third-party transactions; and responding to inquiries from customers. Fulfillment costs also include amounts paid to third parties that assist us in fulfillment and customer service operations. Certain of our fulfillment-related costs that are incurred on behalf of other business, such as Toysrus, Inc. and Target Corporation, are classified as cost of sales rather than fulfillment. (a) What type of cost is Amazon’s cost of sales, a product or a period cost?
Answer:
Cost of sales is a product cost since it is directly associated to the production of services by Amazon.
Explanation:
Another term for cost of sales is cost of goods sold. Even though Amazon provides services, it doesn't manufacture any goods, its cost of sales (or COGS) is directly related to the providing of the sales service.
Period costs are not directly associated to the production of goods or services, instead they are incurred as time passes, e.g. rent or interests.
Amazon's cost of sales is considered a product cost. It forms a crucial part of their business model, which combines economies of scale and technology to maintain low fulfillment costs.
Explanation:Amazon's cost of sales is generally categorized as a varietal product cost. Product costs are directly linked to the manufacturing or purchasing of the goods that a company sells, which does represent a significant portion of Amazon's business model. In contrast, period costs are not directly tied to the production process and typically include expenses like administrative and selling costs.
Amazon has been able to succeed largely due to its effective use of economies of scale, keeping its fulfillment costs low by storing inventories in vast, technologically advanced warehouses in areas with lower rent. This approach, in addition to their online business model, enables Amazon to reduce the average cost per sale and maintain competitive pricing.
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Novak provides environmentally friendly lawn services for homeowners. Its operating costs are as follows. Depreciation $2,400 per month Advertising $400 per month Insurance $2,400 per month Weed and feed materials $15 per lawn Direct labor $31 per lawn Fuel $2 per lawn Novak charges $100 per treatment for the average single-family lawn. Determine the company’s break-even point in number of lawns serviced per month. Break-even point enter the company’s break-even point in number of lawns lawns
Answer: 100 lawns
Explanation:
The Break-Even Point is the point where expenses/costs equal revenue.
First calculate the costs starting with the fixed costs which are Depreciation, advertising and insurance
= 2,400 + 400 + 2,400
= $5,200
Then the Variable costs per units which are, Weed and feed materials, Direct labor and Fuel.
= 15 + 31 + 2
= $48
Now calculate the Contribution Margin ratio which is,
= (Sales - Variable Cost ) / Sales
= (100 - 48) / 100
= 52%
With Contribution Margin, Break-Even sales can be calculated as,
Breakeven sales = fixed costs / contribution margin ratio
Breakeven sales = 5,200/52%
Breakeven sales in cash = $10,000
Breakeven sales in lawns = breakeven sales / sales per unit
Breakeven sales in lawns = 10,000/100
Breakeven sales in lawns = 100 lawns
Novak breaks even at servicing 100 lawns.
n the long run a company that produces and sells popcorn incurs total costs of $1,150 when output is 60 canisters and $1,100 when output is 90 canisters. The popcorn company exhibits a. diseconomies of scale because total cost is rising as output rises. b. economies of scale because total cost is rising as output rises. c. economies of scale because average total cost is falling as output rises. d. diseconomies of scale because average total cost is rising as output rises.
Answer:
Option (c)
Explanation:
As per the data given in the question,
A company exhibits economy when average total cost falls as output rises and company exhibits dis economy of scale when total cost rises as output rises.
In case of 60 canisters,
Average total cost = Total cost ÷ output
=$1,150÷60
=$19.17
In case of 90 canisters,
Average total cost = Total cost ÷ output
=$1,100 ÷ 90
=$12.22
Which indicates Economies of scale since total average cost decreasing as output increases.
The popcorn company exhibits economies of scale because average total cost is falling as output rises.
Given that,
When output is 60 canister, total cost is $1,150.When output is 90 canister, total cost is $1,100.We need to find the economies of scale.According to the scenario, computation of the given data are as follows,
Output = 60 canister
Total cost average = Total cost [tex]\div[/tex] output
= $1,150 [tex]\div[/tex] 60 = $19.17
When, Output = 90 canisters
Total cost average = Total cost [tex]\div[/tex] output
= $1,100 [tex]\div[/tex] 90
= $12.22
This shows, average total cost is falling as output rises.
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Classify each transaction as either an operating activity, an investing activity, a financing activity, or a noncash investing and financing activity. 1. Common stock is sold for cash above par value. Select an option 2. Bonds payable are issued for cash at a discount. Select an option 3. Interest on a short-term note receivable is collected. Select an option 4. Merchandise is sold to customers for cash.
Answer:
1. Common stock is sold for cash above par value. Financing activity
2. Bonds payable are issued for cash at a discount. Financing activity
3. Interest on a short-term note receivable is collected. Operating activity
4. Merchandise is sold to customers for cash. Operating activity
Explanation:
Operating activity
Cash Flow from operating activities cash generated from to day to day activities of the business. All the cash flows needed to operate the business smoothly.
Interest on Account receivables and Sale of Merchandise are operating activities.
Investing activity
All the cash flows related to the fixed asset is called cash flows from the investing activities. Cash inflows from the sale fixed asset and cash outflows from the purchase of fixed assets are included in it.
There is no Investing activities in this question
Financing activity
Cash flow from financing activities is the cash inflows and outflows related to the Financing of the business. It includes the cash flows related to Financing from common stock, preferred stock, Debt etc.
Proceeds from issuance of common stock and bond is classified as cash flow from Financing activities.
Answer:
he/she is right
Explanation:
i got the same answer