Answer:
$56,900
Explanation:
Compt. Maint. Mixing Packaging
Dept Cost 140,000 115,000
Cost allocation 32941 41177 65882
(Computer)
Cost allocation
(Maintenance) 56900 91041
Total 98077 156923
Workings.
Computer department cost allocation
Maintenance department = 4/17*140000 =32941
Mixing department = 5/17*140000 =41177
Packaging department = 8/17*140000= 65882
Maintenance department cost allocation
Total cost allocated = 147941
Mixing department = 5/13*147941 = 56900
Packaging department = 8/13*147941 =91041
The Mixing Department of the Annapolis Company will be allocated approximately $44,231 of the total Maintenance Services cost, based on the proportion of its employees to the total number of employees in the production departments.
Explanation:The Maintenance Services costs will be divided equally between the Mixing Department and the Packaging Department as those are the two production departments. Given that there are 5 employees in the Mixing Department and 8 in the Packaging Department, this constitutes a total of 13 production employees.
Each department's allocation will be based on the proportion of its employees to the total number of employees. For the Mixing Department, this is 5/13 or about 38.4615% (rounded to the nearest tenth of a percent). Therefore, the Mixing Department will be allocated about 38.4615% of the total Maintenance Services cost of $115,000.
Applying this percentage to the total cost, the allocation for the Mixing Department is approximately $44,231 (rounded to the nearest whole dollar).
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10. The Marshall Variety Store uses the lifo retail inventory method at stable prices. The following information is available as of January 2, 2021: Cost Retail Inventory, January 2, 2021 $186,000 $270,000 Purchases 560,000 700,000 Sales 760,000 Net Markups 160,000 Net Markdowns 60,000 What was the inventory value as of December 31, 2021 using the lifo-retail inventory method
Answer:
$310,000
Explanation:
Beginning inventory: $186,000 (cost); $ 270,000 (retail);
$186,000 : $270,000 cost to retail ⇒ 1.45
Purchases: $560,000 (cost); $700,000 (retail);
$560,000 : $700,000 cost to retail ⇒ 1.25
Net markups: $n/a (cost); $160,000 (retail);
Net markdowns: $ n/a (cost); $60,000 (retail);
Sales: $ n/a (cost); $760,000 (retail).
the cost of goods sold (COGS) using LIFO = ($700,000 / 1.25) + ($60 / 1.4516) = $560,000 + $41,333.33 = $601,333.33
ending inventory = [($186,000 - $41,333.33) x 1.4516] + $160,000 - $60,000 = $210,000 + $160,000 - $60,000 = $310,000
Assume you have two investment opportunities that return the following cash flows: Year 1 Year 2 Year 3 Opportunity A $50,000 $50,000 $50,000 Opportunity B $150,000 Assume the opportunity cost rate is positive and the initial cost of the two investments is the same. True or False. You will be indifferent between Opportunity A and Opportunity B because each of the investments return the same total cash flows.
Answer:
False
Explanation:
Year 1 Year 2 Year 3
Opportunity A $50,000 $50,000 $50,000
Opportunity B $150,000
The basic premise of finances is that the value of money changes over time. In other words, one dollar today is worth more than one dollar tomorrow.
Since the discount rate is positive, we can assume 1%, then the present value of the net cash flows for the two projects would be:
Opportunity A = $50,000/1.01 + $50,000/1.01² + $50,000/1.01³ = $49,505 + $49,015 + $48,530 = $147,050
Opportunity B = $150,000/1.01³ = $145,589
So the net present value (NPV) of opportunity A will be higher than the NPV of opportunity B, therefore, the investor should choose opportunity A.
One of the largest losses in history from unauthorized securities trading involved a securities trader for the French bank, Societe Generale (SCGLY). The trader was able to circumvent internal controls and create more than $7 billion in trading losses in six months. The trader apparently escaped detection by using knowledge of the bank's internal control systems learned from a previous back-office monitoring job. Much of this monitoring involved the use of software to monitor trades. In addition, traders were usually kept to tight trading limits. Apparently, these controls failed in this case. Answer the following True or False questions about Societe Generale's internal controls. These will assist you in determining the weaknesses. 1. The loss could have been avoided with a number of internal controls. 2. Required vacation time may have alerted managers to the hidden losses. 3. If traders have access to the monitoring software, then the separation of duties control is violated. 4. The trader was not under managerial oversight.
Answer: 1.true, 2.true , 3.true, 4.true
Explanation:
The Societe Generale trading losses is an eye opener that shows how poor management of the internal control can lead to huge consequences and loses.
The accumulated losses could have been avoided with proper segregation of duties in the internal controls with supervisors relating with the traders regarding their trades which would not have allowed the trader,Kerviel to manipulate the monitoring software due to his extensive knowledge from his previous job. If traders have free access to the monitoring software, then the separation of duties control is violated.
---Also, If the trader had an required vacation time, he would have been vacant in his duties and maybe enabling detection of fraud by management although we cannot conclude he had note gone for his vacation and returned before perpetuating the act
---In addition if the trader was able to fraud the company over a span of 7 months then there , then he was not under managerial oversight else he would have been caught and his acts rectified on time.
1. The loss could have been avoided with a number of internal controls.---TrUe
2.. Required vacation time may have alerted managers to the hidden losses
3. If traders have access to the monitoring software, then the separation of duties control is violated---TrUe
4. The trader was not under managerial oversight-- true
Answer:
The loss could have been avoided with a number of internal controls.
True
Required vacation time may have alerted managers to the hidden losses.
True
If traders have access to the monitoring software, then the separation of duties control is violated.
True
The trader was not under managerial oversight.
True
On January 1 Primary Manufacturing had a beginning balance in WorkminusinminusProcess Inventory of $ 80 comma 700 and a beginning balance in Finished Goods Inventory of $ 21 comma 000. During the year, Primary incurred manufacturing costs of $ 353 comma 000. In addition, the following transactions occurred during the year: Job Aminus12 was completed for a total cost of $ 125 comma 000 and was sold for $ 126 comma 000. Job Aminus13 was completed for a total cost of $ 203 comma 000 and was sold for $ 212 comma 000. Job Aminus15 was completed for a total cost $ 62 comma 000 but was not sold as of yearminusend. The Manufacturing Overhead account had an unadjusted credit balance of $ 10 comma 000, and was adjusted to zero at yearminusend. What was the final balance in the Cost of Goods Sold account?
Answer:
$318,000
Explanation:
The formula to compute the final balance in the cost of goods sold is shown below:
= Total cost of Job A -12 + Total cost of Job A -13 - unadjusted credit balance of manufacturing overhead account
= $125,000 + $203,000 - $10,000
= $318,000
The cost of goods sold refers to the direct cost that includes the direct material , direct labor cost etc
The final balance in the Cost of Goods Sold account for Primary Manufacturing for the year is $328,000, which includes the costs of Job A-12 and Job A-13 which were sold within the year.
Explanation:To calculate the final balance in the Cost of Goods Sold (COGS) account, we need to look at the cost of Job A-12 and Job A-13, both of which were completed and sold within the year. The total cost of these jobs is $125,000 (for Job A-12) plus $203,000 (for Job A-13) which comes to $328,000. This amount represents the Cost of Goods Sold (COGS) for the year as it includes the manufacturing costs of the goods that were sold. The Job A-15, which was not sold, is not included in the COGS but will be part of the ending inventory of work in process or finished goods.
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The board of directors of Weston Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15, 2007. The dividend is to be paid on August 15, 2007, to stockholders of record on July 31, 2007. The correct entry to be recorded on August 15, 2007, will include a Group of answer choices debit to Retained Earnings. credit to Retained Earnings. credit to Dividends Payable. debit to Dividends Payable.
Answer:
The correct option is debit to Dividends Payable
Explanation:
On the declaration date of dividends,the appropriate entries in the books of accounts would be to debit retained earnings since dividends are appropriated from retained earnings and a credit to dividends payable as an outstanding obligation owed to shareholders.
On payment date(August 15,2007),a debit would be passed in the dividends payable account and a credit sent to cash/bank account as an outflow of cash from the business to stockholders.
9. Problems and Applications Q9 Purchasing-power parity holds between the nations of Ectenia and Wiknam, where the only commodity is Spam. In 2015, a can of Spam cost 4 dollars in Ectenia and 24 pesos in Wiknam. The exchange rate between Ectenian dollars and Wiknamian pesos was pesos per dollar. Over the next 14 years, inflation is expected to be 5 percent per year in Ectenia and 10 percent per year in Wiknam. If this inflation comes to pass, what will happen over this period to the price of Spam and the exchange rate? Over this period, the price of Spam in Ectenia will , and the price of Spam in Wiknam will . (Hint: Recall the rule of 70 from Chapter 27.) The exchange rate between the two countries will .
Answer:
In this case, one dollar is worth three pesos.9
Explanation:
Base on the scenario been described in the question, the exchange rate between the two countries will be gotten as follows
Since the purchasing-power parity (PPP) normally holds, the exchange rate will be (2/6) = 1/3dollars/peso. That is, one peso will buy you one third of a dollar. Alternatively,we can write this as (6/2) = 3 pesos/dollar. In this case, one dollar is worth three pesos.9
According to the principle of purchasing power parity, the price of Spam will increase in both Ectenia and Wiknam due to inflation. The exchange rate is expected to shift in favor of Ectenian dollars.
Explanation:According to the principle of purchasing power parity (PPP), the price of goods should be equalized between countries. Given the inflation rates in Ectenia and Wiknam, the price of Spam in Ectenia will increase over the 14-year period. The inflation rate in Wiknam is higher, so the price of Spam in Wiknam will increase even more.
The exchange rate between the two countries will depend on the relative inflation rates. As inflation erodes the purchasing power of a currency, the exchange rate will change. In this case, the exchange rate is expected to shift in favor of Ectenian dollars as the inflation rate is lower compared to Wiknamian pesos.
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The following data relates to units shipped and total shipping expense for the Adams Company. Month Units shipped Total Shipping Expense January 3 $1,300 February 6 $1,600 March 4 $1,400 April 5 $1,500 May 7 $1,700 June 8 $1,800 July 2 $1,200 Using the high-low method, provide the following. SHOW WORK. a. Variable cost per unit b. Total fixed costs c. The cost formula for shipping expense
Answer:
Instructions are below.
Explanation:
Giving the following information:
Month - Units shipped - Total Shipping Expense
January: 3 - $1,300
February: 6 - $1,600
March: 4 - $1,400
April: 5 - $1,500
May: 7 - $1,700
June: 8 - $1,800
July: 2 - $1,200
First, we need to calculate the unitary variable cost using the following formula:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (1,800 - 1,200) / (8 - 2)
Variable cost per unit= 100
Now, we can calculate the fixed costs:
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 1,800 - (100*8)
Fixed costs= 1,000
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 1,200 - (100*2)
Fixed costs= $1,000
Finally, the total cost formula:
Total cost= 1,000 + 100X
X= units shipped
1. In the past, Christopher Morrison’s tire dealership in Cincinnati sold an average of 3,200 tires every year. In the past 2 years, 900 and 1000, respectively, were sold in fall, 1500 and 1400 in winter, 400 and 350 in spring and 400 and 450. With a major expansion planned, Christopher forecasts sales next year to increase to 4,000 tires. What will be the demand during each of the FOUR seasons of next year?
Answer:
Explanation:
Seasonality = average of a season in the past two years/average per season
Average per year = 3200 tires
Average per season = 3200/4 = 800
Sales in Fall = 900 and 1000. Average sold in fall = (900 + 1000)/2 = 950
Sales in winter = 1500 and 1400. Average sold in winter = (1500 + 1400)/2 = 1450
Sales in spring = 400 and 350. Average sold in spring = (400 + 350)/2 = 375
Sales in Summer = 400 and 450. Average sold in Summer = (400 + 450)/2 = 425
Seasonality of Fall = average sold in fall/average per season = 950/800 = 1.1875
Seasonality of winter = 1450/800 = 1.8125
Seasonality of spring = 375/800 = 0.46875
Seasonality of summer = 425/800 = 0.53125
Sales next year = 4000 tires
Average per season = 1000 tires
Seasonal forecast = average per season * seasonality
Forecast for each season:
Fall: 1000×1.1875 = 1187.5 tires
Winter: 1000×1.8125 = 1812.5
Spring: 1000×0.46875 = 468.75
Summer: 1000×0.53125 = 531.25
Rounding off the forecast to whole numbers Fall will be 1188, Winter 1813 Spring 469 and Summer 531
Pharoah Company has accumulated the following budget data for the year 2020. 1. Sales: 31,410 units, unit selling price $89. 2. Cost of one unit of finished goods: direct materials 1 pound at $5 per pound, direct labor 3 hours at $12 per hour, and manufacturing overhead $8 per direct labor hour. 3. Inventories (raw materials only): beginning, 10,240 pounds; ending, 15,220 pounds. 4. Selling and administrative expenses: $170,000; interest expense: $30,000. 5. Income taxes: 30% of income before income taxes. Prepare a schedule showing the computation of cost of goods sold for 2020. PHAROAH COMPANY Computation of Cost of Goods Sold Cost of one unit of finished goods: Direct materials $ Direct labor Manufacturing overhead Total $ Cost of Goods Sold $ Prepare a budgeted multiple-step income statement for 2020. PHAROAH COMPANY Budgeted Income Statement $ $
Answer:
Computation of cost of goods sold for 2020
Direct materials(1 pound× $5 ) $5
Direct labor(3 hours × $12) $36
manufacturing overhead ($8 × 3 hours) $24
Total unit cost $65
Budgeted multiple-step income statement for 2020
Sales ( 31,410 units × $89) 2,795,490
Less Cost of Sales (31,410 units × $65) (2,041,650)
Gross Profit 753,840
Less Operating Expenses :
Selling and administrative expenses: (170,000)
Operating Income 583,840
Less Non - Operating Expenses
Interest expense (30,000)
Income before income taxes 553,840
Income tax (553,840×30%) (166,152)
Income After income taxes 387,688
Explanation:
Cost of Sales = all manufacturing costs
Multi step - Income Statement separates income generated from Primary Activities of the Company (Operating Income) with Income generated from Secondary Activities of the Company (Non-Operating Income)
Lakeland, Inc., is a U.S.‑based MNC with a subsidiary in Mexico. Its Mexican subsidiary needs a one‑year loan of 10 million pesos for operating expenses. Since the Mexican interest rate is 40 percent, Lakeland is considering borrowing dollars, which it would convert to pesos to cover the operating expenses. By how much would the dollar have to appreciate against the peso to cause such a strategy to backfire? (The one‑year U.S. interest rate is 6%.)
Answer:
The dollar have to apprentice 32% against the peso.
Explanation:
According to the scenario, computation of the given data are as follow:-
We can calculate the Expected Future Exchange Return by using following formula:-
Expected Future Exchange Return= 1 - (1 + Mexican Interest Rate) ÷ ( 1 + US Interest Rate)
= 1 - ( 1 + 0.4) ÷ ( 1 + 0.06 )
= 1 - 1.32
= 0.32 or 32%
According to the Analysis, the dollar have to apprentice 32% against the peso for the given strategy to backfire
On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The company borrowed $1,500,000 at 8% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021: $5,000,000, 12% bonds $3,000,000, 8% long-term note Construction expenditures incurred during 2021 were as follows: January 1 $ 600,000 March 31 1,200,000 June 30 800,000 September 30 600,000 December 31 400,000 Required: Calculate the amount of interest capitalized for 2021 using the specific interest method
Answer: $177,750
Explanation:
January 1st
Construction expenditure 600,000
outstanding interest 12/12= 1
Accumulated expenditure= 600,000
x1 = $600,000
March 31
Construction expenditure = 1,200,000
outstanding interest 9/12=3/4
Accumulated expenditure= 3/4x1,200,000=$ 900.000
June 30
construction expoenditure= 800,000
outstanding interest= 6/12=1/2
Accumulated expenditure= 1/2 x 800000= $400000
September 30
construction expenditure=600,000
outstanding interest=3/12
Accumulated expenditure- 1/4 x600,000=$150,000
December 31
Construction expenditure= 400,000
outstanding interest =0/12
Accumulated expenditure=0
Total of the average accumulated expenditure =$2,050,000
Weighted average on other debts
Bonds interest of 12% for $5,000,000= $600,000
Long term note = 8% for $3,000,000 =240,000
Total = $840,000
weighted average =$840,000/(3,000,000 + 5,000,000)
= 840,000/8,000,000= 10.5%
Amount of difference =average accumulated expenditure- construction loan
=$2,050,000- $1,500,000
=$550,000
Interest on difference =10.5/100 x $550,000
=$57,750
Interest on amount on construction loan= 8/100 x $1,500,000
= $120,000
Amount of interest capitalized = interest on construction loan + interest on amount obtained from difference of accumulated expenditure and construction loan = $120,000+ $57,750 = $177,750
Final answer:
The amount of interest capitalized for the Highlands Company in 2021 using the specific interest method is $164,000, calculated based on the interest rate of the specific construction loan and the timing of construction expenditures.
Explanation:
When a company incurs costs for constructing an asset for its own use, it can capitalize interest as part of the asset's cost. For the Highlands Company, the amount of interest to be capitalized for 2021 using the specific interest method must be calculated based on the construction loan specifically taken for the asset.
Since the only loan that was taken specifically for the construction was the $1,500,000 at 8%, the interest on this loan is what should be capitalized. The interest cost for a full year on this loan would be $120,000 (which is $1,500,000 × 8%). However, because construction was ongoing throughout the year, we only capitalize interest for the actual amounts spent on construction until each date, for the duration those amounts were outstanding.
The timeline of expenditures is as follows:
January 1: $600,000 - entire yearMarch 31: $1,200,000 - 9 monthsJune 30: $800,000 - 6 monthsSeptember 30: $600,000 - 3 monthsDecember 31: $400,000 - 0 months (since the year ends on this date)To calculate the interest for each period:
$600,000 for 12 months: $600,000 × 8% = $48,000$1,200,000 for 9 months (3/4 of the year): $1,200,000 × 8% × 3/4 = $72,000$800,000 for 6 months (1/2 of the year): $800,000 × 8% × 1/2 = $32,000$600,000 for 3 months (1/4 of the year): $600,000 × 8% × 1/4 = $12,000When we add up each of these amounts, the total interest capitalized for 2021 is $164,000 ($48,000 + $72,000 + $32,000 + $12,000).
When we add up each of these amounts, the total interest capitalized for 2021 is $164,000 ($48,000 + $72,000 + $32,000 + $12,000).
The following standards have been established for a raw material used to make product O84: Standard quantity of the material per unit of output 7.7 meters Standard price of the material $ 18.50 per meter The following data pertain to a recent month's operations: Actual material purchased 4,000 meters Actual cost of material purchased $ 77,600 Actual material used in production 3,700 meters Actual output 560 units of product O84 The direct materials purchases variance is computed when the materials are purchased. Required: a. What is the materials price variance for the month
Answer:
$3,330 unfavorable
Explanation:
Material price variance is the difference between the standard price and actual price at the actual quantity. It could be due to the changes in the prices as expected.
Actual cost per unit = Total cost / Material Purchases = $77,600 / 4,000 meter =
Formula for Material price variance is
Material Price Variance = ( Standard price - Actual price ) x Actual Quantity
Material Price Variance = ( $18.5 - $19.4 ) x 3,700
Material Price Variance = --$0.9 x 3,700
Material Price Variance = --$3,330 = $3,330 unfavorable
As the actual cost is more than the estimated / budgeted cost, the higher cost incurred means higher expenditure which is unfavorable for the company.
Giada Foods reported $1,010 million in income before income taxes for 2021, its first year of operations. Tax depreciation exceeds depreciation for financial reporting purposes by $170 million. The company also had non-tax-deductible expenses of $108 million relating to permanent differences. The income tax rate for 2021 was 25%, but the enacted rate for years after 2021 is 30%. The balance in the deferred tax liability in the December 31, 2021, balance sheet is:
Answer:
$32.4 million
Explanation:
The computation of the balance in the deferred tax liability in the December 31, 2021, balance sheet is shown below:
Deferred tax liability is
= Tax depreciation exceeded depreciation for financial reporting purposes × enacted tax rate
= $108 million × 30%
= $32.4 million
Simply we multiplied the exceeded amount with the enacted rate so that the deferred tax liability could come
Suppose you examine the central bank’s balance sheet and observe that since the previous day, reserves had fallen by $100 million. In addition, on the asset side of the central bank’s balance sheet, securities had fallen by $100 million. Do you think the central bank was aiming to increase, decrease, or maintain the size of the money supply by carrying out the changes described to its balance sheet
Answer:
The Central Bank is trying to increase money supply.
Explanation:
When the Central Bank makes moves to increase reserves, it means that it is simply trying to mop up excess cash from the economy to fight inflation. Spiking inflation means that the power of a currency is gradually being eroded. The Central Bank cannot allow this to happen so it hits the "Reduce Money In Circulation" button. It does this by reviewing upwards, the money reserves which commercial banks must hold with the Central Bank.
It can also increase the rate at which it lends to the Commercial Banks and Investment houses. Commercial Banks, in turn, transfer the additional cost of borrowing to businesses who will seek loans. This slows down the rate at which money is pumped into the economy.
In the question, however, we notice that the Central Bank has enervated its reserves. This means that it is pumping more money into the economy. This economic move may have been executed to prevent the economy from slipping into a recession or simply to stimulate the economy.
In the short run, increased money supply means, businesses have more access to funds from commercial banks. More funds mean, more investment. Increased investment spending means the businesses will need to expand operations, hire more staff, and the multiplier effect goes on and on.
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Ralirali Corporation's financial statements included the following amounts for the current year: Issued new shares of preferred stock $98,000 Loaned cash to key supplier 26 comma 000 Bought new delivery truck for cash 51 comma 000 Proceeds from the sale of used production machinery 23 comma 000 Sold treasury stock 31,000 Based on this information, what is the amount of net cash provided (used) by investing activities?
Answer:
-$48,000
Explanation:
The computation of the amount of net cash provided or used by investing activities is shown below:
Cash flow from Investing Activity
Proceeds from the sale of used production machinery $29,000
Loaned cash to key supplier -$26,000
Brought new delivery truck for cash -$51,000
Net cash used by investing activities -$48,000
The negative sign represents the outflow of cash while the positive sign represents the inflow of cash
Yem expects to produce 1 comma 750 units in January and 2 comma 120 units in February. The company budgets 5 pounds per unit of direct materials at a cost of $ 45 per pound. Indirect materials are insignificant and not considered for budgeting purposes. The balance in the Raw Materials Inventory account (all direct materials) on January 1 is 5 comma 300 pounds. Yem desires the ending balance in Raw Materials Inventory to be 40% of the next month's direct materials needed for production. Desired ending balance for February is 4 comma 000 pounds. Prepare Yem's direct materials budget for January and February.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Production:
January= 1,750 units
February= 2,120 units
The company budgets 5 pounds per unit of direct materials at a cost of $ 45 per pound.
Beginning inventory= 5,300 pounds.
Desired ending inventory= 40% of the next month's direct materials needed for production.
The desired ending balance for February is 4,000 pounds.
The purchases of direct material are calculated using the following formula:
Purchases= sales + desired ending inventory - beginning inventory
January (in pounds):
Production= 1,750*5= 8,750
Desired ending inventory= (2,120*5)*0.4= 4,240
Beginning inventory= (5,300)
Total purchase= 7,690 pounds
Total cost= 7,690*45= $346,050
February (in pounds):
Production= 2,120*5= 10,600
Desired ending inventory= 4,000
Beginning inventory= (4,240)
Total purchase= 10,360 pounds
Total cost= 10,360*45= $466,200
You work for a bank as a business data analyst in the credit card risk-modeling department. Your bank recently conducted a bold experiment: over a short time interval three years ago, it quietly issued 600 credit cards to everyone who applied, regardless of their credit risk.
After three years, 150, or 25%, of card recipients defaulted – they failed to pay back at least some of the money they owed. However, the bank collected very valuable proprietary data that it can now use to optimize its future card-issuing process.
The bank initially collected six pieces of data about each person.
a. Age
b. Years at current employer
c. Years at current address
d. Income over the past year
e. Current credit card debt, and
f. Current automobile debt
Corporations with control both within and across industries are formed by a series of mergers and acquisitions across industries. These corporations are referred to as __________; they combine businesses in different commercial areas, all of which are owned by one holding company.
Answer:
conglomerate
Explanation:
In simple words, A conglomerate refers to the multi-industry corporation, which is a mixture of many enterprises operating within one organizational group in completely different sectors, which can include a holding company and several branches.
The conglomerates are always global and massive. The predominant conglomerates consolidate financial risk through investing in a variety of different industries, although other conglomerates opt to engage in a single sector, like those in mines.
A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning goods in process inventory; 110,000 units were started into production in January. There were 30,000 units that were 40% complete in the ending goods in process inventory at the end of January. What were the equivalent units of production for materials for the month of January?
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
At the beginning of the year, manufacturing overhead for the year was estimated to be $1,052,700. At the end of the year, actual direct labor-hours for the year were 36,400 hours, the actual manufacturing overhead for the year was $990,000, and manufacturing overhead for the year was overapplied by $65,600. If the predetermined overhead rate is based on direct labor-hours, then the estimated direct labor-hours at the beginning of the year used in the predetermined overhead rate must have been: (Do not round intermediate calculation.)
Answer:
36,300 hours
Explanation:
For computing the estimated direct labor hours first we need to find out the manufacturing overhead applied and predetermined overhead applied which is shown below:-
Manufacturing overhead applied = Actual Overhead + Over applied Overhead
= $990,000 + $65,600
= $1,055,600
and
Predetermined overhead rate = Manufacturing overhead applied ÷ Actual direct labor hours
= $1,055,600 ÷ 36,400 hours
= 29
So,
Estimated direct labor hours = Estimated total manufacturing Overhead ÷ Predetermined overhead rate
= $1,052,700 ÷ 29
= 36,300 hours
So, for computing the estimated direct labor hours we simply applied the above formula.
were hired as a consultant to Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of common from retained earnings is 11.25%, and the tax rate is 40%. The firm will not be issuing any new common stock. What is Quigley's WA
Answer:
8.15%
Explanation:
The computation of the WACC is shown below:
= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of preferred stock) × (cost of preferred stock) + (Weightage of common stock) × (cost of common stock)
= (0.35 × 6.50%) × ( 1 - 40%) + (0.10 × 6%) + (0.55 × 11.25%)
= 1.365% + 0.6% + 6.1875%
= 8.15%
We simply multiplied the weighted of each capital structure with its cost so that the weighted cost of capital could come
To find Quigley Company's WACC, we calculate the weighted costs of debt, preferred stock, and common equity. Considering the proportions and costs provided, Quigley's WACC is 8.15%.
To calculate Quigley Company's Weighted Average Cost of Capital (WACC), we need to weigh the cost of each component by its proportion in the target capital structure. Given the information:
Debt: 35%Preferred Stock: 10%Common Equity: 55%Interest rate on new debt: 6.50%Yield on preferred: 6.00%Cost of common equity from retained earnings: 11.25%Tax rate: 40%Steps to Calculate Quigley's WACC:
Cost of Debt after Tax:
Formula: Cost of Debt * (1 - Tax Rate)
Calculation: 6.50% * (1 - 0.40) = 3.90%
Component Costs:
Debt: 3.90%
Preferred: 6.00%
Common Equity: 11.25%
Formula: (Weight of Debt * Cost of Debt after Tax) + (Weight of Preferred * Cost of Preferred) + (Weight of Common Equity * Cost of Common Equity)
Calculation: (0.35 * 3.90%) + (0.10 * 6.00%) + (0.55 * 11.25% = 1.365% + 0.60% + 6.1875%= 8.1525%
Therefore, Quigley Company's WACC is 8.15%
Jonas is a 60% owner of Ard, an S corporation. At the beginning of the year, his stock basis is zero. Jonas's basis in a $33,200 loan made to Ard and evidenced by Ard's note has been reduced to $0 by prior losses. During the year, Jonas's net share of Ard's taxable income is $16,600. At the end of the year, Ard makes a $24,900 cash distribution to Jonas. After these transactions, what is Jonas's basis in his stock, and what is his basis in the debt? What is Jonas's recognized capital gain?
Answer:
Capital gain $24,900
Explanation:
Jonas's Stock basis $33,200
Less $8,300
Capital gain $24,900
$24,900 cash distribution - Net share of Ard's taxable income $16,600= $8,300
Therefore Jonas's recognized capital gain
of $24,900
A guitar manufacturer is considering eliminating its electric guitar division because its $76,000 expenses are higher than its $72,000 sales. The company reports the following expenses for this division. Avoidable Expenses Unavoidable Expenses Cost of goods sold$56,000 Direct expenses 9,250 $1,250 Indirect expenses 470 1,600 Service department costs 6,000 1,430 Should the division be eliminated
Answer:
The electric division should be kept
Explanation:
The computation of given question is shown below:-
Electric guitar division Kept Eliminated
Sales $72,000 $0
Expenses
Cost of goods sold $56,000 0
Direct expenses $9,250 $1,250
Indirect expenses $470 $1,600
Service department cost $6,000 $1,430
Total expenses $71,720 $4,280
Net income (loss) $280 ($4,280)
($72,000 - $71,720)
Therefore the electric division should be kept
The Lebanese steel factory “STEEL CO” was the leader in its market for many years. Today, the management noticed that sales are decreasing since the market prices are dropping down due to unbeatable offers and discounts from other companies operating in the market for more than 20 years ago.
The management decided to use “Analytical Power” (software) to analyze the market by collecting data online via Internet from many websites and saving this data on large servers. As a result, “Steel Co.” decided to change its production line to manufacture steel products only to luxurious villas and residential homes, located in high level areas of Lebanon. This strategy helped the company to sell targeted customers at higher prices making higher revenues. The new system includes a Website allowing customers to select online the designs they wish, and even to customize the products based on quality, colors, styles, etc…
Case Questions (6 points each)
1)What is the force according to Porter’s competitive forces model, faced by the company? *
Customers
Suppliers
New market entrant
Traditional competitor
2)What is the information system strategy (or strategies) used by the company to face the forces? *
Focus on market niche
Focus on market niche & Low cost leadership
Focus on market niche & Customer intimacy
Product differentiation & Customer intimacy
3)What are the main IT components mentioned in this case? *
a) Software / Telecommunications / Physical facilities
b) Hardware / Software.
C) Software / Telecommunications / Hardware
d) Telecommunications / Software
4)If the company is not sure which IS strategy to use in order to face the competitive forces, which model may best help in this case? *
Porter competitive forces
Value chain
Porter strategies
Economic impacts
5)To which type of system the “Analytical Power” software belongs? *
DSS
ESS
MIS
TPS
Answer:
1.) Traditional competitor
2.) Product differentiation & Customer intimacy
3.) C
Software / Telecommunications / Hardware
4.) Value chain
5.) ESS
Explanation:
1.) The company was aware of its competitors' marketing strategies and pricing to any changes made. Rivalry among competitors tends to be cutthroat and industry profitability low while having the potential factors.
3.) An information system is essentially made up of five components hardware, software, database, network and people. These five components integrate to perform input, process, output, feedback and control. Hardware consists of input/output device, processor, operating system and media devices.
4.) Value chain is the process or activities by which a company adds value to an article, including production, marketing, and the provision of after-sales service.
5.) An Executive Support System (ESS) is software that allows users to transform enterprise data into quickly accessible and executive-level reports, An ESS enhances decision making for executives. ESS is also known asExecutive Information System (EIS).
Answer 1):
The correct option here is D) Traditional Competitors
Explanation:
The five forces of competition when analyzed they help a business understand the factors in its external environment. It is also helpful in crafting a strong business strategy that increases the chances of the company to win over its competition in the market.
If sales were declining due to very mouth-watering offers from other companies who are over 20 years in the industry, then the force Lebanese Steel Factory has to contend with is Traditional Competitors.
Answer 2)
The correct option here is C)
Explanation:
The information system deployed by Lebanese Steel Factory helped them to identify a niche area in the market which is the ability to customize product requests. By doing this, the demonstrated a kind of empathy for what the customer wants.
Their new system allowed customers to order for steel in a way no company in the market was doing it.
Answer 3)
The correct option her is B) Hardware/Software
Explanation:
There is no mention of telecommunications which is a technology that enables one to communicate via radio frequency over a long distance.
The "Analytical Power" however is a software. Softwares require hardware (that is a computer which may or may not be remote) to run.
Answer 4)
The correct option here is C) Porters Strategies
Explanation:
There are generic strategies identified by Michael Porter that a business can adopt to beat the competition. They are:
Cost Leadership, Differentiation and Focus strategies.
Answer 5)
The correct option here is C) MIS
Explanation:
MIS stands for Management Information System.
This is often used to refer to any computerized system that enables one to acquire data, process data into usable information, store both the data and information and generate reports based on such information for use in decision making by the management.
Cheers!
Investment in depreciable equipment$560,000 Annual net cash flows $82,000 Life of the equipment 16years Salvage value$0 Discount rate 9% The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment. The payback period for the investment would be: (Round your answer to 1 decimal place.) Noreen_5e_Rechecks_2019_10_16 Multiple Choice 0.1 years 1.0 years 4.8 years 6.8 years
Answer:
The correct option is the last one,6.8 years
Explanation:
The payback period is the length of time it takes for an investor to realize the initial investment in a project,in simple terms, it is the time horizon wherein the project pays back the capital investment locked in it.
After the payback period,the project begins with return on investment phase,a phase where cash flows received are excess over and above the initial capital outlay.
Payback=initial investment/annual cash inflow
initial investment is $560,000
annual net cash flow is $82,000
payback period=$560,000/$82,000=6.8 years
The growth rate of Zerbia, a small developing country, has fallen close to zero percent in the current year. Harry Miller and Jonathan Taylor, who are columnists with a business daily, are discussing suitable fiscal measures to revive economic growth in the country. Jonathan feels that the income tax rates in Zerbia are too high. Lower income tax rates would increase consumer spending and so would promote economic growth. Harry, on the other hand, believes that an increase in government expenditure would have a substantial impact on the country's GDP. Additionally, he feels that investing in green technology would not only accelerate growth, it is also likely to be more sustainable in the long term. Which of the following can most reasonably be inferred from the information given above?
A. Private investment in green technology industries in Zerbia has been negligible.
B. Jonathan believes that the tax structure is not progressive enough.
C. Harry thinks that the value of the government purchases multiplier is high.
D. The economy of Zerbia is in a recession.
E. Increase in government investment in infrastructure is likely to result in a higher
budget deficit than the policy measure suggested by Jonathan.
Answer:
Option C
Explanation:
Clearly placed, the right response is obvious through the sentence 'Harry assumes, on the another side, that any improvement in governmental expenditures will have a huge effect on GDP.' Comparison is made with the result with utilizing the economic management instrument, that is, budget expenditures and taxation.
Thus, from the above we can conclude that the correct option is C.
Rishi, a protectionist, has seen several small businesses go bankrupt because they were unable to compete with the cheaper prices of goods provided by foreign companies. The cell-phone manufacturing industry has just started in the United Kingdom, and Rishi's company is one of the first to try its hand at cell-phone manufacturing. What argument is most likely to be used by Rishi to persuade his government to restrict the import of foreign cell phones from foreign companies?
Answer:
Key infant industries must be protected, specially those that operate with new technologies.
Explanation:
It takes time for infant industries to develop certain comparative advantages that allows them to compete against foreign firms. While they are developing their own comparative advantages, infant industries can easily go out of business due to foreign competitors that have been around for much longer.
In order to achieve competitive prices, infant industries must first achieve economies of scale. While foreign firms are already able to offer low prices because they are able to produce with lower costs.
Final answer:
Rishi would likely argue for the use of the infant industry argument as a way to temporarily protect the U.K.'s emerging cell-phone manufacturing industry, enabling it to develop the necessary qualities to compete globally.
Explanation:
Rishi, as a protectionist concerned about the survival and growth of a new domestic industry, is most likely to use the infant industry argument to persuade his government to restrict the import of foreign cell phones. This argument suggests that by temporarily blocking foreign competition, the U.K.'s nascent cell-phone manufacturing industry can have the necessary time to develop and reach a level of skill, management, technology, and economies of scale to be competitive globally. Therefore, Rishi would advocate for a policy of protectionism to serve as a short-term indirect subsidy, allowing the industry time to grow and eventually compete on equal terms without ongoing dependence on government support.
The Charade Corporation is preparing its Manufacturing Overhead budget for the fourth quarter of the year. The budgeted variable manufacturing overhead is $5 per direct labor-hour; the budgeted fixed manufacturing overhead is $90,000 per month, of which $16,500 is factory depreciation. If the budgeted direct labor time for November is 8,500 hours, then the total budgeted manufacturing overhead for November is:
Answer:
The total budgeted manufacturing overhead for November is $125,000
Explanation:
The total budgeted manufacturing overhead for November comprises of the budgeted variable manufacturing overhead of $5 per direct labor(where total labor hours are 8,500) plus the budgeted fixed manufacturing overhead of $90,000 for the month.
Budgeted variable manufacturing overhead($5*8500) $35,000
Budgeted fixed manufacturing overhead $90,000
Total budgeted manufacturing overhead for November $125,000
The overhead projected to be incurred in November is $125,000
Answer:
$132,500
Explanation:
Overhead are all the indirect expense of the business. Manufacturing overhead are all the indirect expenses which incurred for the manufacturing purpose of the product. All the variable and fixed indirect costs are included in it e.g indirect material, utilities etc.
Manufacturing Overhead
Variable manufacturing overhead ($5 x 8,500) $42,500
Fixed manufacturing overhead $90,000
Total manufacturing overhead cost $132,500
Vaughn Manufacturing has outstanding 596000 shares of $2 par common stock and 119000 shares of no-par 6% preferred stock with a stated value of $5. The preferred stock is cumulative and nonparticipating. Dividends have been paid in every year except the past two years and the current year. Assuming that $215000 will be distributed as a dividend in the current year, how much will the common stockholders receive?
Answer: $107,900
Explanation:
Cumulative Preferred Shares refer to shares that a company has to pay dividends eventually. This means that if they are unable to pay for some years, they are to accrue that payment until they are able to.
There are 119000 shares of no-par 6% preferred stock with a stated value of $5.
That means preferred shares are liable to the following amount of dividends,
= 119,000 * 5 * 6%
= $35,700
Preferred Shares have not being paid for the past 2 years and need to be paid in the current year as well. That means 3 payments,
= 35,700 * 3
= $107,100
Preferred Shares are to be paid $107,100 out of the $215,000 with the rest going to common shares.
Amount going to Common Shares is,
= 215,000 - 107,100
= $107,900
Common Stockholders are to receive $107,900
Michael's, Inc., just paid $2.20 to its shareholders as the annual dividend. Simultaneously, the company announced that future dividends will be increasing by 4.8 percent. If you require a rate of return of 9 percent, how much are you willing to pay today to purchase one share of the company's stock?
Answer:
The maximum price that should be paid for one share of the company today is $54.895
Explanation:
The price of a stock that pays a dividend that grows at a constant rate forever can be calculated using the constant growth model of Dividend discount model (DDM) approach. The DDM values a stock based on the present value of the expected future dividends. The formula for price today under this model is,
P0 = D1 / r - g
Where,
D1 is the expected dividend for the next period or D0 * (1+g)r is the required rate of returng is the growth rate in dividendsSO, the maximum that should be paid for this stock today is:
P0 = 2.2 * (1 + 0.048) / (0.09 - 0.048)
P0 = $54.895 rounded off to $54.90