Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Final answer:
A pro forma income statement and two flexible budgets were prepared for Glacier Computer Services based on different service rates and expected service hours. The highest net income is achieved at a rate of $64 per hour with 25,000 service hours. Lowering the rate to $56 per hour for 38,000 service hours results in a lower net income.
Explanation:
Howard Cooper, president of Glacier Computer Services, wishes to understand how fluctuations in the service rate might affect the company’s net income. We need to prepare pro forma and flexible budgets based on differing service rates and projected service hours. To begin, we will create a master budget's pro forma income statement for the initial expectation of 30,000 service hours at a $60.00 rate per hour.
Master Budget (Initial):
Revenue: $60.00/hour × 30,000 hours = $1,800,000
Variable Costs (Labor + Overhead + SG&A): ($32.00 + $5.76 + $3.44)/hour × 30,000 hours = $1,236,000
Fixed Costs (Facility + SG&A): $320,000 + $120,000 = $440,000
Net Income: Revenue – Variable Costs – Fixed Costs = $1,800,000 – $1,236,000 – $440,000 = $124,000
Next, we'll prepare flexible budgets considering the consultant’s suggestions:
Flexible Budget (Service Rate $56/hour, 38,000 hours):
Revenue: $56.00 × 38,000 = $2,128,000
Variable Costs: ($32.00 + $5.76 + $3.44) × 38,000 = $1,578,880
Net Income: $2,128,000 – $1,578,880 – $440,000 = $109,120
Flexible Budget (Service Rate $64/hour, 25,000 hours):
Revenue: $64.00 × 25,000 = $1,600,000
Variable Costs: ($32.00 + $5.76 + $3.44) × 25,000 = $1,030,000
Net Income: $1,600,000 – $1,030,000 – $440,000 = $130,000
Comparing the net incomes of all budgets, raising the price to $64/hour for fewer hours results in a higher net income compared to the original master budget, while reducing the price to $56/hour leads to a decrease in net income despite more service hours.
Your company operates a fleet of light trucks that are used to provide contract delivery services. As the engineering and technical manager, you are analyzing the purchase of 55 new trucks as an addition to the fleet. These trucks would be used for a new contract the sales staff is trying to obtain. If purchased, the trucks would cost $21,200 each; estimated use is 20,000 miles per year per truck; estimated operation and maintenance and other related expenses (year-zero dollars) are $0.45 per mile, which is forecasted to increase at the rate of 5% per year; and the trucks are MACRS (GDS) three-year property class assets. The analysis period is four years; t= 25%; MARR = 15% per year (after taxes; includes an inflation component); and the estimated MV at the end of four years (in year-zero dollars) is 35% of the purchase price of the vehicles. This estimate is expected to increase at the rate of 2% per year. Based on an after-tax analysis, what is the uniform annual revenue required by your company from the contract to justify these expenditures before any profit is considered? This calculated amount for annual revenue is the breakeven point between purchasing the trucks and which other alternative?
Answer:
Revenues in the order of 18.170,66 dollars per truck per year will break even financially the investment with a yield of 15%
for the 55 truck $999.386,66 per year
Explanation:
F0 cash disbursement 21,200
MACRS dep dep tax shield (depreciation x tax rate)
7,065.96 1,766.49
9,423.40 2,355.85
3,139.72 784.93
1,570.92 392.73
annual cost of the truck:
20,000 x 0.45 x 5% increase per year
maintenance
first year 9000
second year: 9450
third year: 9922.5
fourth year: 10418.625
net (maintenance cost less tax shield):
net
7233.51
7094.15
9137.57
10025.895
Then, we bring this to present considering the discount rate:
[tex]\frac{cash \: flow}{(1 + rate)^{time} } = PV[/tex]
time: 1 7,233.51 6,290.01
time: 2 7,094.15 7,094.15
time: 3 9,137.57 9,137.57
time: 4 10,025.90 10,025.90
Total PV 32,547.63
We know the salvage value in todays dollar is 35% of the purchase price:
21,200 x 35% = 7,420
(the inflation is already considered in the MARR)
We knwo calculate the present worth:
-21,200 - 32,547.63 + 7,420 = -38.907,63
Know we solve for an annuity of four year to ge t the equivalent annual cost:
[tex]PV \div \frac{1-(1+r)^{-time} }{rate} = C\\[/tex]
PV 38,908
time 4
rate 0.15
[tex]38907.63 \div \frac{1-(1+0.15)^{-4} }{0.15} = C\\[/tex]
C $ 13,627.995
We have to consider taxes so:
13,628 / 0.75 = 18.170,66
Answer:
Explanation:
Your company operates a fleet of flight trucks that are used to provide contract delivery services. As the engineering and technical manager, you are analyzing the purchase of 55 new trucks as an addition to the fleet.These trucks would be used for a new contract the sales staff is trying to obtain. If purchased, the trucks would cost $21,200 each; estimated use is 20,000 miles per year per truck; estimated annual operation and maintenance and other related expenses (year-zero dollars) are $0.45per mile which is forecasted to increase at a rate of 5% per year; and estimated annual revenue (in actual $) are $20,000 per year per truck required .
The trucks are MACRS-GDS three-year property class assets.The analysis period is four years; t=38%; after-tax MARR=15% per year (after-tax; includes an inflation component) ; and the estimated MV at the end of four years (in year-zero dollars) is 35% of the purchase price of the vehicles.This estimate is expected to increase at the rate of 2% per year.
Part A: Create a spreadsheet to determine whether your company should buy the new trucks. Develop the spreadsheet for each truck (per truck).
Part B: Based on an after-tax, actual-dollar analysis, what is the annual revenue required by your company from the contract to justify these expenditures before any profit is considered?
Which OAuth URL parameter can be used to retain the originally requested page so that a user can be redirected correctly after OAuth authorization?
A. Universal Containers (UC) built integration for their employees to post, view, and vote for ideas in Salesforce from an internal Company portal.
B. When ideas are posted in Salesforce, links to the ideas are created in the company portal pages as part of the integration process.
C. The Company portal connects to Salesforce using OAuth.
D. Everything is working fine, except when users click on links to existing ideas, they are always taken to the Ideas home page rather than the specific idea, after authorization.
All options are correct.
Redirect_uri OAuth URL parameter can be used to retain the originally requested page so that a user can be redirected correctly after OAuth authorisation.
Explanation:
The open standard for token-based authentication on the Internet is OAuth (Open Authorization). OAuth, which is known as ' oh-auth, ' allows third-Party sites like Twitter to use account information on end users, without the user's password being revealed.
The redirect uri is an url used among OAuth services as a place to transmit the admin rights token by means of the redirect web browser.
Once the user authorises an application successfully, the approval manager must return the user to the client either with an authentication code or with an URL access token.
A stock price is currently $100. Over each of the next two six-month periods it is expected to go up by 10% or down by 10%. The risk-free interest rate is 8% per annum with continuous compounding. What is the value of a one-year European call option with a strike price of $100?
Calculate the price of a three-month European put option on a non-dividend-paying stock with a strike price of $50 when the current stock price is $50, the risk-free interest rate is 10% per annum, and the volatility is 30% per annum.
Answer:
Please see attachment
Explanation:
Please see attachment
The cost of European call and put options can be calculated using financial mathematical models such as the Black-Scholes Model and IV tree. The risk-free rate, time to maturity, volatility, current and strike prices are factored in these calculations.
Explanation:The subject matter of your question pertains to the calculation of the price of European call and put options, which falls under the field of Financial Mathematics in Business Studies. The major concepts needed to solve this include the understanding of options, the Black-Scholes Model, IV trees, and continuously compounded interest.
For the first part, a one-year European call option would use an IV tree model. Two options exist for the stock price after six months: $110 (up-state) or $90 (down-state).
After another six months, the up-state can go to $121 or $99, while the down-state can turn to $99 or $81. Using the risk-neutral probabilities and the risk-free rate, you can discount these future payoffs back to the present, hence calculating the option price.
The second part involves the use of the Black-Scholes Model to value a three-month European put option.
Here, the assumptions include the stock price, the strike price, the risk-free interest rate, the volatility, and the time to maturity, which are all given in the question. Plugging these into the Black-Scholes formula will generate the price of the put option.
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Advance, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 16 years to maturity that is quoted at 105 percent of face value. The issue makes semiannual payments and has a coupon rate of 10 percent annually. Required: (a) What is Advance's pretax cost of debt? (Do not include the percent sign Round your answer to 2 decimal places. (e.g., 32.16) Pretax cost of debt (b) If the tax rate is 35 percent, what is the aftertax cost of debt? (Do not include the percent sign Round your answer to 2 decimal places. (e.g., 32.16) Aftertax cost of debt
Answer:
a. 9.39%
b. 6.10%
Explanation:
The NPER shows the time period or number of years
Provided that,
Present value = $1,000 × 105% = $1,050
Assuming figure - Future value or Face value = $1,000
PMT = 1,000 × 10% ÷ 2 = $50
NPER = 16 years × 2 = 32 years
The formula is presented below:
= Rate(NPER;PMT;-PV;FV;type)
The present value always comes in negative amount while applying the rate formula
So, after calculations, the rate would be equal to
a. The pretax cost of debt is 9.39%
b. And, the after tax cost of debt would be
= Pretax cost of debt × ( 1 - tax rate)
= 9.39% × ( 1 - 0.35)
= 6.10%
Nouveaux Co. was incorporated at the beginning of this calendar year. Its articles of incorporation authorize 500,000 shares of common stock, of which 100,000 were issued immediately. On June 30, Nouveaux repurchased 10,000 shares to be held as treasury stock. On September 30, it effected a 3-for-1 stock split. Consequently, the number of shares outstanding at year end was
A) 1,500,000
B) 330,000
C) 300,000
D) 270,000
Answer:
D) 270,000
Explanation:
The computation of the outstanding number of shares is shown below:
= (Issued shares - treasury shares) × stock split ratio
= (100,000 shares - 10,000 shares) × 3
= 90,000 shares × 3
= 270,000 shares
Simply we deduct the treasury stock from the issued shares and then multiply it by the stock split ratio so that the correct amount of outstanding shares can come
A firm produces and sells two products, Plus and Max. The following information is available relating to setup costs (a part of factory overhead): Plus Max Units produced 200 16,000Batch size (units) 10 400Number of setups 20 40Direct labor hours per unit 5 5Total direct labor hours 1,000 80,000Cost per setup $1,080 Total setup cost $64,800 Using number of setups as the activity base, the amount of setup cost allocated to each unit of product for Plus and Max, respectively is:______-
Answer:
Setup cost per unit of PLUS= $108
Setup cost per unit of MAX= $2.7
Explanation:
Number of setups is used as the activity base for the allocation of setup cost. First of all, we need to calculate setup cost per setup and then multiply cost per setup to the number of setups required by each product to get the setup cost for each unit of product PLUS and MAX, see as follows:
Setup cost per setup = $64800÷ (20+40)
Setup cost per setup = $1080 per setup
Each batch of 10 unit of product PLUS requires 20 setups to complete so the allocated setup cost to each unit of product PLUS would be as follows;
Setup cost of batch of 10 units of product PLUS = $1080× 20
Setup cost of batch of 10 units of product PLUS = $21600
Setup cost per unit of PLUS= $21600÷ 200
Setup cost per unit of PLUS= $108
Similarly,
Each batch of 400 unit of product MAX requires 40 setups to complete so the setup cost of batch of 400 units of product MAX would be as follows;
Setup cost of batch of 400 units of product MAX = $1080× 40
Setup cost of batch of 400 units of product MAX = $43200
Setup cost per unit of MAX= $43200÷ 16000
Setup cost per unit of MAX= $2.7
Answer:
Setup cost per unit of product: Plus-$108, Max-$2.7
Explanation:
This question falls under the activity-based costing method.
Traditional absorption costing uses volume-related bases to charge overheads to cost units. It assumes that resources used during production of products are consumed in proportion to the amount of direct labour hours, machine hours used. This is a major problem in a modern manufacturing setting where non-production activities account for a large amount of the production costs. Examples of such activities include setting up of machines, production scheduling, procurement of material e.t.c
To ensure that the overheads of these activities are accurately charged to the products, it is important that products which benefit more from a particular activity should end up with higher cost. This is what activity-based costing(ABC) seeks to achieve.
Activity based costing allocates overheads to cost units using cost drivers. Overheads are first collected together, this is called a cost pool and then charged to the cost units using a cost driver rate. The steps below should be adopted when dealing with activity-based costing:
Step 1: identify the activities e.g procurement, setup, delivery
The activity is setup in this question
Step 2: Ascertain the cost pool. Collect and separate all the costs related to each activity
The cost pool is $64,800
Step 3: Identify the appropriate cost driver suitable for each activity. For example, number of set ups is a suitable cost driver for setup activity cost.
cost driver: 20 +40 = 60
Step 4: calculate the cost per driver. Divide the activity overhead by the number of cost drivers
given as $1080
Step 5: charge overhead to product. This is done by multiplying the cost driver rate by the amount of cost driver consumed .
Plus; (1080*20)/200= 108
Max: (1080*40)/16000=2.7
We divided by 200 and 16000 for Plus and Max respectively to determine cost per unit
Third State Bank wants to add a new branch office. It has determined that the cost of construction of the new facility will be $1.5 million with another $500,000 in organizational costs. The bank has estimated that it will generate $319,522 per year in net revenues for 20 years. If Third State requires a 17% return on its money, what is this project's net present value?
Answer:
$298,206
Explanation:
The computation of the Net present value is shown below
= Present value of all yearly cash inflows after applying discount factor + salvage value - initial investment
where,
The Initial investment is $1,500,000
All yearly cash flows would be
= Annual net operating cash inflows × PVIFA for 20 years at 17%
= $319,522 × 5.6278
= $1,798,206
Refer to the PVIFA table
Now put these values to the above formula
So, the value would equal to
= $1,798,206 - $1,500,000
= $298,206
Say that the original supply curve for avocados is the curve labeled S and the demand curve for avocados is the curve labeled D. If the supply curve moved from S to S1 and the demand curve did not move, at the new equilibrium we would conclude that
A. supply decreased and quantity demanded decreased.
B. supply increased and quantity demanded decreased.
C. price decreased and quantity demanded did not change.
D. supply increased and quantity demanded increased.
E. demand increased and quantity supplied increased.
Answer:
D. supply increased and quantity demanded increased.
Explanation:
When supply curve moved from s to s1 , supply increased . demand curve did not move . Then the new equilibrium will shift towards the lower price with demand also showing increasing trend to balance supply but at lower price.
The compensation committee is a _____.
(A) subgroup of the shareholders that is composed of investors who are currently the officers of the firm
(B) subgroup of the union that is composed of employees who are not officers of the firm
(C) subgroup of the management that is composed of managers who are currently the officers of the firm
(D) subgroup of the board of directors that is composed of directors who are not officers of the firm
Answer:
The correct answer is
(D) subgroup of the board of directors that is composed of directors who are not officers of the firm
good luck ❤
A company manufactured 1,000 units of product during the year and sold 800 units. Costs incurred during the current year are as follows:
Direct materials and direct labor $7,000
Indirect materials and indirect labor 2,000
Insurance on manufacturing equipment 3,000
Advertising 1,000
1. What amount should be reported as inventory in the company’s year-end balance sheet?
Answer:
$2,400
Explanation:
Total production Cost:
= Direct materials and direct labor + Indirect materials and indirect labor + Insurance on manufacturing equipment
= $7,000 + $2,000 + $3000
= $12,000
Amount should be reported as inventory in the company’s year-end balance sheet:
= (Total production Cost ÷ Units manufactured) × (Units manufactured - Units sold)
= ($12,000 ÷ 1,000) × (1,000 - 800)
= $12 × 200
= $2,400
Interview Notes Olivia is single, 66 years old, and not blind. She paid all the cost of keeping up her home. She earned $55,000 in wages for 2019. Olivia provided all the support for her two grandchildren who lived with her all year. Cora is 11 years old and Jack is 15 years old. She does not have enough deductions to itemize. Olivia, Cora, and Jack are all U.S. citizens with valid Social Security numbers. 2. The maximum amount of child tax credit that Olivia is able to claim per qualifying child for 2019 is:
Answer:
$2000.
Explanation:
Please see attachment
Which of the following would you expect to decrease the demand for tennis racquets?
A. A decrease in the price of tennis balls which are complements in consumption of tennis
B. An increase in the supply of tennis racquets
C. An increase in the price of tennis racquets
D. None of the above would decrease the demand for tennis racquets
Answer:
C) An increase in the price of tennis racquets
Explanation:
If tennis racquets become more expensive, the demand for them will decline, and people will try to supply this need with substitutes, for example, lacrosse raquets. The reason for this is that the classical supply and demand model tells us that demand and price are inversely correlated: if the price goes up, demand goes down, and viceversa.
An increase in the price of tennis racquets (Option C) is the factor that would be expected to decrease the demand for tennis racquets.
To answer the student's question regarding what would cause a decrease in the demand for tennis racquets, we must understand the factors that affect demand. Option C, 'an increase in the price of tennis racquets,' would indeed decrease demand according to the law of demand, which states that, ceteris paribus, when the price of a product rises, the quantity demanded of the product will fall.
This is because as the price goes up, the product becomes less affordable to consumers, so they will buy less of it. None of the other options provided (decrease in the price of tennis balls, increase in the supply of tennis racquets, or none of the above) are likely to decrease demand for tennis racquets. In fact, a decrease in the price of tennis balls might actually increase the demand for tennis racquets since they are complementary goods.
Assembly department of Zahra Technologies had 200 units as work in process at the beginning of the month. These units were 45% complete. It has 300 units which are 25% complete at the end of the month. During the month, it completed and transferred 600 units. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Zahra uses weighted-average process-costing method. What is the number of equivalent units of work done during the month with regards to direct materials?
Answer:
700 units of work done.
Explanation:
Since all the direct materials are added at the beginning, we assume that the 200 beginning inventory was completed 100% in regards to direct materials and as such 600 - 200 = 400 units transferred were completed in respect to direct materials and 300 units in work in progress are also completed as 100% of direct materials.
So total equivalent units in respect to direct materials are 400 + 300 = 700 units of work done.
Hope that helps.
Final answer:
The number of equivalent units of work done for direct materials in the Assembly department of Zahra Technologies is 875 units for the month, calculated by adding the units completed, the beginning inventory units (since materials are added at the start), and the portion of the ending inventory that has been processed for direct materials.
Explanation:
The question seeks to determine the number of equivalent units of work done with regards to direct materials in the Assembly department of Zahra Technologies for the month, using the weighted-average process-costing method.
Since direct materials are added at the beginning of production, the equivalent units for materials will be the total number of units transferred out plus the units still in process at the end of the month. Thus, the calculation for equivalent units of direct materials is:
600 units transferred out are 100% complete with respect to direct materials.
200 units at the beginning were 100% complete since materials are added at the beginning.
For the 300 units at the end of the month, since they are 25% complete, only 300 units x 25% = 75 equivalent units of direct materials are needed for these.
Total equivalent units for direct materials would be 600 + 200 + 75 = 875 units.
a company issues a 10000 8 percent 10 year bond on jan 1 year 1 for 10420. Interest is paid annually on jan 1. If the company uses the straight line method of amortization of bond discounts and premiums, the amount of bond interest expense to be recognized in year 1 would be
Answer:
The interest expense to be recognize in years 1 amounts to be 792 dollars.
Explanation:
As per matching principle the interest expense to be recognized in income statement is calulated using effective rate of return. The effective rate is calculated using IRR method
For IRR purpose the cashflow will be taken as given below
Time (year) Cashflow
0 10,420
1-9 800
10 10,800
By hit and trail method IRR= 7.6 %
So interest expense to be recognized = 7.6% *10,420 = 792 dollars
(Standard applied IFRS 9)
Lancelot Manufacturing is a small textile manufacturer using machineminushours as the single indirectminuscost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Case High School band jacket job. Company Case High School Job Direct materials $ 47 comma 000 $ 2 comma 200 Direct labor $ 25 comma 000 $ 500 Manufacturing overhead costs $ 36 comma 000 Machineminushours 90 comma 000 mh 900 mh What amount of manufacturing overhead costs will be allocated to this job? A. $ 360 B. $ 1 comma 080 C. $ 220 D. $ 610
Answer:
Overhead absorption rate = Budgeted overhead
Budgeted machine hours
= $36,000/90,000 hrs
= $0.4 per machine hour
The amount of manufacturing overhead to be allocated to the job
= $0.4 x 900 machine hours
= $360
Explanation:
There is need to calculate the overhead absorption rate which is budgeted manufacturing overhead divided by budgeted activity level.
Then, we will multiply the overhead absorption rate by the actual machine hours of 900 hours.
Snyder Computer Chips Inc. is experiencing a period of rapid growth. Earnings and dividends are expected to grow at a rate of 15% during the next two years, at 13% in the third year, and at a constant rate of 6% thereafter. Snyder's last dividend was $1.15, and the required rate of return on the stock is 12%.a. Calculate the value of the stock today.b. Calculate P1 and P2.c. Calculate the dividend yield and the expected capital gains yield for year 1.
Answer
Consider the following calculation
Explanation
D1 = 1.15*(1+0.15) = 1.3225
D2 = 1.3225*(1+0.15) = 1.52
D3 = 1.52*(1+0.13) = 1.719
D4 = 1.719*(1+0.06) = 1.82
According to dividend discount model,
P0 = D1/(R-G)
D1 - Dividend at t =1
R - Required rate
G - Growth rate
P3 = D4/(R-g) = 1.821/(0.12-0.06) = 30.36
Find P0 by discounting the future dividends and P3
P0 = 1.3225/(1+0.12) + 1.52/(1+0.12)^2 + 1.718/(1+0.12)^3 + 30.36/(1+0.12)^3 = $25.23
Current value of stock = $25.23
b. P1 = 1.52/(1+0.12)^1 + 1.718/(1+0.12)^2 + 30.36/(1+0.12)^2 = $26.93
P2 = 1.718/(1+0.12)^1 + 30.36/(1+0.12)^1 = $28.64
c. Dividend yield = Dividend/Price
For year 1, Dividend yield = 1.3225/25.23 = 0.0524 = 5.24%
Capital gains yield = (P1-P0)/P0 = (26.93-25.23)/25.23 = 0.0674 = 6.74%
The value of Snyder Computer Chips Inc.'s stock can be calculated by computing the present value of dividends and the present value of sale price. The prices P1 and P2 correspond to the price of the stock in year 1 and 2, and can be computed using the dividend discount model. The dividend yield and expected capital gains yield vary based on the stock's current price and expected future prices.
Explanation:To calculate the value of the Snyder Computer Chips Inc. stock, we need to compute the present value of dividends and the present value of sale price at the end of year 3. We use the formula for present value which factors in the dividend growth and the required rate of return.
a. D1 = $1.15*1.15 = $1.3225 is the expected dividend in year 1, D2 = $1.3225*1.15 = $1.52088 is the expected dividend for year 2, and D3 = $1.52088*1.13 = $1.7185924 is the expected dividend for year 3. We then compute the present value of these dividends. After that, we calculate the price of the stock in year 3 using the constant growth model P3 = D3*(1+g) / (required rate of return - g).
b. P1 = D2 / (required rate of return - growth rate) and P2 = D3 / (required rate of return - growth rate).
c. The dividend yield for any year is the expected dividend divided by the current price of the stock. The expected capital gains yield would be the expected price of the stock in the following year minus current price divided by the current price.
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Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of $2,000. The division sales for the year were $1,040,000, and the variable costs were $850,000. The fixed costs of the division were $183,000. If the mountain bike division is dropped, 30% of the fixed costs allocated to that division could be eliminated. The impact on operating income for eliminating this business segment would be:
A. $54,900 decrease
B. $135,100 decrease
C. $52,900 decrease
D. $190,000 increase
E. $190,000 decrease
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
please help me with this problem
Answer:
$25.73
Explanation:
Apples $4.25
Oranges $5.00
Cheese $4.50
Flowers $9.99
Total Purchase Before Tax $23.74
Sales Tax @8% $1.99
Total Cost $25.73
Where Sales Tax is calculated as;
$23.74 x 0.08 = $1.99
Financial swap markets have emerged in recent years because of the following reasons:_______a. Exchange rates fluctuate widely b. Interest rates fluctuate widely c. Forward markets may not function properly d. Currency futures are available only for selected currencies e. All of the above
Answer:
E. All of the above
Explanation:
Financial swap is a treaty between the two parties, sometimes called the counterparties, to exchange the prospective cash flow between themselves.
Financial swap emerges due to the fluctuation of the exchange rate and interest rates because the exchange rate and interest rates change from time to time which might create a problem for either the buyer or the seller. The forward market does not work correctly, and some currencies are not accessible in the foreign exchange. Therefore, all the answers are valid for the emergence of a financial swap.
Financial swap markets emerged due to fluctuating exchange rates, interest rates, limitations in forward markets, and limited currency futures availability. Correct option is e. All of the above
Financial swap markets have emerged in recent years due to a combination of factors, including:
a. Exchange rates fluctuate widely:
- Fluctuating exchange rates can expose businesses to significant risks when dealing with international transactions. Financial swaps, such as currency swaps, allow companies to hedge against these fluctuations by exchanging one currency for another at a predetermined rate, reducing exchange rate risk.
b. Interest rates fluctuate widely:
- Interest rate swaps are a common type of financial swap that helps businesses manage interest rate risk. As interest rates fluctuate, companies can enter into these swaps to exchange variable-rate interest payments for fixed-rate payments or vice versa, depending on their risk preferences.
c. Forward markets may not function properly:
- Sometimes, forward markets may not provide the desired financial instruments or flexibility. Financial swaps offer customized solutions that may not be available through standardized forward contracts.
d. Currency futures are available only for selected currencies:
- Currency futures markets primarily cover major currencies, leaving smaller or less commonly traded currencies with limited hedging options. Financial swaps allow businesses to hedge exposure to a broader range of currencies.
e. All of the above:
- Financial swap markets have gained prominence because they address the combined challenges of exchange rate volatility, interest rate fluctuations, the limitations of forward markets, and the availability of currency futures. The flexibility and customization offered by swaps make them a versatile tool for managing various financial risks.
In summary, the emergence of financial swap markets can be attributed to the multifaceted challenges that businesses face in the global financial landscape, making swaps a valuable risk management tool for a wide range of financial uncertainties.
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when an agent changes employement from one broker-dearl erot another, the agents registration must be transfered _____
Answer: Immediately
Explanation: An Agent is a legally appointed third-party to act in the place of a person or organizations.
Whenever an agent changes employment from one dealer broker to another he has to immediately transfer his registration number, the registration number of an agent is very important as it is one of the main requirements for Government regulation of an agent.
The registration number of an agent gives the agent some level of credibility and ensures that the agent has gone through the legal and valid requirement for practice.
Hexene, Inc. produces a specialized machine part used in forklifts. For last year's operations, the following data were gathered: Units produced 40,000 Direct labor 32,000 hours @ $10.00 Actual variable overhead $140,000 Hexene employs a standard costing system. During the year, a variable overhead rate of $6.00 was used. The labor standard requires 0.75 hours per unit produced. The variable overhead spending and efficiency variances are____________.
a.$45,000 U and $6,500 U.
b.$52,000 F and $12,000 U.
c.$9,600 U and $45,000 F.
d.$16,000 F and $8,400 F.
e.None of these choices are correct.
Answer:
b.$52,000 F and $12,000 U.
Explanation:
The computation is shown below:
Variable overhead spending variance
= (Standard variable overhead Rate × Actual Hour) - (Actual Rate × Actual Hour)
= ($6 × 32,000 hours) - ($140,000)
= $192,000 - $140,000
= $52,000 favorable
The (Actual Rate × Actual Hour) is also known as Actual variable overhead
Variable overhead efficiency variance
= (Standard Rate × Standard Hour) - (Standard Rate × Actual Hour)
= ($6 × 0.75 × 40,000 hours) - ($6 × 32,000 hours)
= $180,000 - $192,000
= $12,000 unfavorable
Which of the following might explain the evidence of an endowment effect in behavioral economics?A) Government regulation B) Knowledge and experience C) The federal tax code D) Class envy
Answer:
The correct answer is letter "D": Class envy.
Explanation:
In behavioral economics, the endowment effect explains why an individual could give a higher value to an object that posses than giving a low value when the individual does not have it. The approach implies the object has symbolic importance for the individual while having it.
A good example of the endowment effect refers to a teacher that gives one of his classes' students mugs as gifts. The value of the students who received mugs was higher than the value of those who did not get one.
The endowment effect in behavioral economics is best explained by knowledge and experience, which affect how individuals value their possessions. Barriers to entry can be government-enforced or not and influence market dynamics.
The endowment effect in behavioral economics might be explained by B) Knowledge and experience. This effect, as described by David Hume and acknowledged by behavioral scientists, refers to the tendency for individuals to value an item more once it becomes part of their personal endowment. This is likely because knowledge and experience with a product increase its subjective value, which is consistent with behavioral economics' recognition that human behavior often deviates from the rational decision-making models of traditional economics. Concepts such as mental accounting and nudges further illustrate that individuals value their possessions not solely based on their market value but also due to various psychological attachments and barriers.
Understanding barriers to entry in a market can be classified as follows: a) a city limiting taxicab licenses represents a government-enforced barrier to entry; b) requiring drivers to pass safety tests and have insurance is also a government-enforced barrier; C) having a well-known trademark is a non-government-enforced barrier; d) owning a unique spring is another non-government-enforced barrier; and e) large economies of scale present a non-government-enforced barrier attributable to market conditions rather than regulatory intervention.
Finally, government intervention in the economy can affect the endowment effect through various means such as taxation, provision of merit goods, and legislation that nudges consumer behavior. Additionally, economic policies can influence levels of employment, output, and price levels, suggesting a complex interaction between government actions and the endowment effect.
Johnson Corporation unadjusted trial balance at year-end include the following accounts. Compute the uncollectible account expense, and make the appropriate journal entry for the current year assuming the uncollectible account expense is determined as follows:
Sales(75% represent credit sales) credit 1,152,000, accounts receivable debit 288,000, allowance for doubtful accounts credit 2,184.
A. Income statement approach 1% of total sales.
B. Income statement approach 1.5% of credit sales.
C. Balance sheet approach and the allowance for doubtful accounts should be $12,000.
Answer:
Explanation:
The journal entries are shown below:
A. Uncollectible Expense A/c Dr $11,520
To Allowance for doubtful accounts A/c $11,520
(Being the uncollectible expense is recorded)
The computation is shown below:
= $1,152,000 × 1%
= $11,520
B. Uncollectible Expense A/c Dr $12,960
To Allowance for doubtful accounts A/c $12,960
(Being the uncollectible expense is recorded)
The computation is shown below:
= $1,152,000 × 1.5% × 75%
= $12,960
C. Uncollectible Expense A/c Dr $9,816
To Allowance for doubtful accounts A/c $9,816
(Being the uncollectible expense is recorded)
The computation is shown below:
= $12,000 - $2,184
= $9,816
in regard to an operating budget identifiable costs may generally include _________.
Answer:
Explanation:
Identifiable costs by definition are expenses that can be identified directly with a specific facility, activity or function. Operating budgets deal with short term expenses and expenses to be incurred in the next one year. Therefore, in regard to operating budget, identifiable costs may generally include cost of inventory, cost of fixed assets like land and equipment, supporting group and the direct care group wages.
Final answer:
Identifiable costs in an operating budget generally consist of both fixed and variable costs. Fixed costs are initial, unchanging expenses for essential equipment, while variable costs fluctuate based on organizational activities such as personnel expenses and supplies.
Explanation:
In regard to an operating budget, identifiable costs may generally include fixed costs and variable costs. Fixed costs, such as purchases of essential equipment like vehicles and capture or recording equipment, are expenses that do not change with the level of activity within the organization and are typically incurred during the first year. These costs are important to factor into the budget for long-term planning and replacement scheduling. Variable costs, on the other hand, include items that fluctuate with the organization's activities, such as cumulative personnel expenses (salaries, benefits, and indirect costs), and expendable items like supplies that must be renewed regularly.
Budget planning and management require an understanding of both fixed and variable costs to ensure that they accurately reflect the organization's expenditure needs. It's also crucial for public managers to be aware of how cost structures and behaviors change in different performance scenarios, which aids in effective budgeting and management at the program level.
Adjusting Entries for Interest The following note transactions occurred during the year for Towne Company: Nov. 25 Towne issued a 90-day, nine percent note payable for $8,000 to Hyatt Company for merchandise. Dec. 7 Towne signed a 120-day, $30,000 note at the bank at ten percent. Dec . 22 Towne gave Barr, Inc., a $12,000, four percent, 60-day note in payment of account. Prepare the general journal entries necessary to adjust the interest accounts at December 31. Use 360 days for calculations and round to the nearest dollar.
Answer:
31st December
Dr Interest expenses 72
Cr Interest Payable 72
(to record interest expenses payable as at 31st December for note owed to Hyatt)
Dr Interest expenses 200
Cr Interest Payable 200
(to record interest expenses payable as at 31st December for note owed to the Bank)
Dr Interest expenses 12
Cr Interest Payable 12
(to record interest expenses payable as at 31st December for note owed to Towne)
Explanation:
The total interest expenses payable as at 31st December is calculated for each creditors as below:
- 36 days Interest expenses owed to Hyatt: 36/360 * 9% * 8,000 = $72.
- 24 days Interest expenses owed to the Bank: 24/360 x 10% x 30,000 = $200.
- 9 days Interest expenses owed to Towne: 9/360 x 4% x 12,000 = $12.
The question involves adjusting entries for interest on the loans issued by Towne Company. The calculations are based on simple interest, with each entry reflecting an interest expense and an interest payable.
Explanation:This question involves calculating
simple interest
on loans due after the closing of the calendar year. For the $8000 note payable to Hyatt for example, the calculation would be as follows: $8000 * 0.09 * (36 / 360) = $72. The general journal entry would be:
Interest Expense
72,
Interest Payable
72. Similar entries would be made for the $30,000 bank note and the $12,000 Barr note, adjusting for the varying interest rates. We adjust the interest because the loans extend into the next year past the close of this year.
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Sales $484,000 Operating Income ? Total Assets ? Sales Margin (ROS) 10% Capital Turnover ? Return on Investment (ROI) 22% Target Rate of Return (Cost of Capital) ? Residual Income 4,400 Match the unknowns to the correct answer. Correct! Operating Income Correct! Total Assets Correct! Capital Turnover You Answered Target Rate of Return Correct Answer20.0% Other Incorrect Match Options: 100,000
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Each of the events listed will shift either Aggregate Demand or Short-Run Aggregate Supply. Match each event with its result.
Question
1.The government raises taxes and cuts its own spending in order to reduce its budget deficit
2.Planned Investment rises.
3.Commodity prices fall
4.Labor productivity falls while nominal wages stay the same
5.Exports rise while imports stay constant.
6.Nominal wages rise while productivity stays the same.
All Answer Choices
A. Aggregate Demand shifts to the left.
B. Aggregate Demand shifts to the right.
C. Short Run Aggregate Supply shifts down and to the right.
D. Short Run Aggregate Supply shifts up and to the left.
Answer:
See below.
Explanation:
For question 1, the aggregate demand shifts to the left as raising taxes and cutting government expenditure is a contracting fiscal policy. Raised taxes will leave people with less disposable income to spend and lees government demand will also result in reduced aggregate demand thus shifting AD curve to the left . Matched with A.
For question 2, with rise in planned investment, the aggregate demand shifts to the right. As more firms demand for capital goods the aggregate demand curve shifts to the right. In the long run the aggregate supply curve will also shift to the right due to increased production capacity. Matched with B.
For question 3, commodity prices are directly linked with aggregate demand. A fall in prices increases the quantity demanded and thus shifts the AD curve to the right. Matched with B.
For question 4, SAS curve shifts up and to the left. Since the cost of labor has stayed the same and productivity has fallen, per product manufactured is now more expensive and the aggregate supply is less due to fallen productivity. Matched with D.
For question 5, an increase in exports would mean more employment as more of the production is needed to to be sent out to foreign countries. More employment means people have more money to spend and as such they demand more goods and services thus pushing the aggregate demand curve to the right. Matched with B.
For question 6, an increase in nominal wage rate will shift the aggregate supply curve to the left as in the short run this has increased the cost of production. As such less of the goods will be supplied and at a higher price reflecting a change in costs for the producers. Matched with D.
Brooke owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home where she meets with clients, prepares bills, and performs other work-related tasks. The home office is 300 square feet and the entire house is 4,500 square feet. Brooke incurred the following home-related expenses during the year. Unless indicated otherwise, assume Brooke uses the actual expense method to compute home office expenses.
Real property taxes $ 3,600
Interest on home mortgage 14,000
Operating expenses of home 5,000
Depreciation 12,000
Repairs to home theater room 1,000
Assume Brook's consulting business generated $50,000 in gross income for the current year.
a. What is the Brooke's home office deduction for the current year?
b. What is Brooke's AGI for the year?
Brooke's home office deduction is $2,307.82, which represents 6.67% of her total home-related expenses, excluding repairs that don't affect the office space. After deducting this amount from her gross income of $50,000, her adjusted gross income (AGI) would be $47,692.18 for the year.
Explanation:To calculate Brooke's home office deduction, we need to determine the portion of her home expenses that can be attributed to her home office. The percentage of the home used for the office is calculated by dividing the square footage of the office (300 square feet) by the total square footage of the home (4,500 square feet), which gives us 6.67% (300/4500).
The deductible home office expenses are a portion of the total home expenses that relate to the business use of the home. Calculating these expenses:
Real property taxes: $3,600 * 6.67% = $240.12Interest on home mortgage: $14,000 * 6.67% = $933.80Operating expenses of home: $5,000 * 6.67% = $333.50Depreciation: $12,000 * 6.67% = $800.40Repairs to home theater room are not deductible as they do not affect the office area.Total home office deduction:
$240.12 (taxes) + $933.80 (interest) + $333.50 (operating expenses) + $800.40 (depreciation) = $2,307.82
To calculate Brooke's Adjusted Gross Income (AGI), you subtract the home office deduction from the gross income:
Gross Income: $50,000
Home Office Deduction: -$2,307.82
Adjusted Gross Income: $47,692.18
a. Brooke's home office deduction for the current year is approximately $2,309.22.
b. Brooke's AGI for the year is approximately $47,690.78.
a. To calculate Brooke's home office deduction, we first need to determine the percentage of her home used for business. The home office represents 300/4,500 = 1/15 or 6.67% of the total square footage. Therefore, Brooke can deduct 6.67% of her home-related expenses attributable to the home office.
Home office deduction = Total home-related expenses × Percentage of home used for business
= ($3,600 + $14,000 + $5,000 + $12,000) × 6.67%
= $34,600 × 6.67%
≈ $2,309.22
Brooke's home office deduction for the current year is approximately $2,309.22.
b. To calculate Brooke's AGI, we subtract her business expenses (including the home office deduction) from her gross income.
AGI = Gross income - Business expenses
= $50,000 - $2,309.22
≈ $47,690.78
Therefore, Brooke's AGI for the year is approximately $47,690.78.
Gonzalez Company has been in business several years. At the end of the current year, the ledger shows the following: Accounts Receivable $ 318,600 Dr. Sales Revenue 2,301,300 Cr. Allowance for Doubtful Accounts 6,600 Cr. Bad debts are estimated to be 5% of accounts receivables. Prepare the entry to adjust Allowance for Doubtful Accounts.
Answer:
Allowance for Doubtful Accounts is $9330
Explanation:
given data
Accounts Receivable = $318,600 Dr.
Sales Revenue = 2,301,300 Cr.
Allowance for Doubtful Accounts = 6,600 Cr.
Bad debts estimated = 5% of accounts receivables
to find out
Prepare entry Allowance for Doubtful Accounts
solution
we get here required allowance that is
required allowance = $318,600 × 5%
required allowance = $15930
so bad debt expense that is = required allowance - Allowance for Doubtful Accounts ................1
so bad debt expense that is $15930 - $6,600
bad debt expense = $9330
so
particular debt credit
bad debt expense $9330
Allowance for Doubtful Accounts $9330
The risk that actual returns will not match or exceed expected returns is called:________a. investment risk. b. asset class risk. c. market risk. d. default risk. e. opportunity cost.
Answer:
a. investment risk
Explanation:
Risk is the potential of an action or activity (including the option not to move) to cause an undesired loss or event. The idea implies that a choice affects the outcome. The same potential losses can be called "risk".
Investment risk: We can define it as the inappropriateness between the actual and expected returns. Because on this type of risk, there may be occurrence of any losses with some probability or likelihood which will be relative the expected return.
Asset class is about the grouping process of investments which have some mutual or similar characteristics. The risk on this case is something has relative elasticity compared to another investment in the market. Usually, there is 3 groups of asset classes: equities, bonds and money market instruments.
The market risk which is called sometimes as systematic risk. This risk consider the entire market and has effects on this scale. The investor who undertook this risk will see that the factors which affect the overall performance of the whole marketplace.
Opportunity cost is the cost when you have purchased, chose or bought the product compared to another product. However, you will notice that if you buy another one you will get more value or consumer surplus but you have just bought and you missed chance. This is the opportunity cost