Answer:
Organic.
Explanation:
An organic organizational structure has emerged from a current need for companies to quickly adapt to market changes and optimize processes. Which is justified by the great competition of the market and its instability.
This structural model is characterized by greater flexibility rather than rigidity, as decisions are decentralized and there is greater interaction between the functional areas of the organization. The benefits of this organic structural model are mainly the possibility of innovation and adaptation to changes, the hierarchical flexibility that generates greater interaction between employees and motivation to contribute with solutions to possible problems.
But like every structural model, there are also the negatives, which can be justified by the emphasis on relationships, which can cause inefficiency at some point, as concern for human needs can be taken into account more than concern for technical efficiency, which is a relevant challenge for companies with an organic structure.
Williamson Distributors separates its accounts receivable into three age groups for purposes of estimating the percentage of uncollectible accounts. Accounts not yet due = $35,000; estimated uncollectible = 5%. Accounts 1–30 days past due = $10,500; estimated uncollectible = 15%. Accounts more than 30 days past due = $4,500; estimated uncollectible = 25%. Compute the total estimated uncollectible accounts.
Answer:
$4,450
Explanation:
The computation of the total estimated uncollectible accounts is shown below:
= Accounts not yet due × uncollectible percentage + Accounts 1–30 days past due × uncollectible percentage + Accounts more than 30 days past due × uncollectible percentage
= $35,000 × 5% + $10,500 × 15% + $4,500 × 25%
= $1,750 + $1,575 + $1,125
= $4,450
The total estimated uncollectible accounts is calculated by multiplying the total amount of accounts receivable in each age group by the estimated uncollectible percentage for that age group. These calculated amounts are then added together, resulting in the total estimated uncollectible accounts, which in this case, is $4,450.
Explanation:The question asks about the estimation of uncollectible accounts based on the age of the accounts receivable and the respective percentages of expected uncollectibility. This falls under the subject of accounting.
You can compute the total estimated uncollectible accounts by multiplying the total amount of accounts receivable in each age group by the estimated uncollectible percentage corresponding to that age group. For example, for not yet due accounts of $35,000, the estimated uncollectible amount would be $35,000 * 5% = $1,750. Repeat this for the other age groups, and then add these amounts together to get the total estimated uncollectible accounts.
So, the calculation will be as follows:
Not yet due: $35,000 * 5% = $1,7501–30 days past due: $10,500 * 15% = $1,575More than 30 days past due: $4,500 * 25% = $1,125Add these amounts together to find the total estimated uncollectible accounts:
$1,750 + $1,575 + $1,125 = $4,450
Therefore, the total estimated uncollectible accounts amount to $4,450.
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When selecting a software developer, which of the following should contractors possess (Select all that apply)?
A. Domain experience in developing comparable software systems
B. Maturity level four
C. Successful past performance record
D. Demonstrable mature software development capability and processes
When selecting a software developer, contractors should look for domain experience in developing similar software, a successful past performance record, and evidence of mature software development capability and processes. Maturity level four might not be a universally applicable requirement.
When selecting a software developer, contractors should ideally look for certain qualities. Option 'A' is vital because domain experience in developing comparable software systems can provide an indicator of the developer's ability to deliver similar projects successfully. Option 'C', a successful past performance record, is an evidence of the developer's competence. And option 'D', which is a demonstrable mature software development capability and processes, shows the developer's consistency and professionalism in the software development field. However, Option 'B', Maturity level four, may not always be a necessary requirement as it is a specific process maturity measurement in certain methodologies like CMMI, it may not apply in all situations.
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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 16,000
Batch size (units) 10 400
Number of setups 20 40
Direct labor hours per unit 5 5
Total direct labor hours 1,000 80,000
Cost per setup $1,080
Total setup cost $64,800
With traditional two-stage allocation of overhead costs, using direct labor hours as the allocation base, the setup cost portion of overhead that is allocated to each unit of product for Plus and Max, respectively is:
Final answer:
The setup cost allocated to each unit of Plus and Max products is $3.60, calculated by dividing total setup cost by total direct labor hours and then multiplying by the direct labor hours per unit.
Explanation:
The student's question pertains to the allocation of setup costs to products in a traditional two-stage cost allocation system using direct labor hours as the basis. To find the setup cost allocated to each unit of product Plus and Max, we need to divide the total setup cost by the total direct labor hours and then allocate that cost per labor hour to each product based on the number of direct labor hours per unit.
First, calculate the setup cost per labor hour: $64,800 / (1,000 Plus hours + 80,000 Max hours) equals $0.72 per labor hour. Now, allocate this per hour cost to each unit of product by multiplying by the amount of direct labor hours per unit, which in both cases is 5. Thus, the setup cost allocated to each unit of Plus and Max is $0.72 x 5, which equals $3.60.
This simple numerical example is similar to the provided reference information, which discusses how total costs consist of fixed plus variable costs and how the average total cost (ATC) is affected by different production scales and methods, similar to the setup costs associated with Plus and Max.
Final answer:
The setup cost portion of overhead allocated to each unit of product for both Plus and Max is $4.00, calculated by using direct labor hours as the allocation base for traditional two-stage overhead costing.
Explanation:
In order to calculate the setup cost portion of factory overhead that is allocated to each unit of product for Plus and Max using a traditional two-stage allocation method with direct labor hours as the allocation base, we first need to determine the total direct labor hours and the overhead allocation rate per labor hour.
The total direct labor hours are given as 1,000 for Plus and 80,000 for Max, which sums up to 81,000 hours. The overhead allocation rate per labor hour is calculated by dividing the total setup cost ($64,800) by the total direct labor hours (81,000 hours), resulting in an allocation rate of $0.80 per direct labor hour.
To find the setup cost allocated to each unit of Plus and Max, we multiply the allocation rate by the direct labor hours per unit, which is 5 hours for both products. Hence, the setup cost allocated to each unit is $4.00 for Plus (5 hours × $0.80) and $4.00 for Max (5 hours × $0.80).
Thus, the setup cost portion of overhead allocated to each unit of product for Plus and Max is $4.00 respectively, based on direct labor hours.
For each of the following statements, draw a diagram that illustrates the likely effect on the market for eggs. Indicate in each case the impact on equilibrium price and equilibrium quantity a. The surgeon general warns that high-cholesterol foods cause heart attacks. b. The price of bacon, a complementary product, decreases. c. The price of chicken feed increases. d. Caesar salads become trendy at dinner parties. (The dressing is made with raw eggs.) e. A technological innovation reduces egg breakage during packing.
Answer:
Please find the diagrams in the attached images
Explanation:
A) If a surgeon warns that high-cholesterol foods cause heart attacks, the demand for eggs would fall because eggs are high in cholesterol. The fall in demand would shift the demand curve to the left , price and quantity would fall.
B. Complementary goods are goods consumed together. If the price of a complementary good falls, the demand for the other good increases. If the price of bacon falls, the demand for eggs would increase. The demand curve would shift to the right, the price and quantity would increase.
C. If the price of chicken feed increases, the cost of producing eggs increases and the quantity supplied falls. The supply curve shifts to the left, prices rise and quantity falls.
D. If Caesar salad becomes more trendy, the demand for eggs increases. The demand curve shifts to the right, price and quantity increases.
E. Technological innovation would increase the quantity supplied. The supply curve would shift to the right, price falls and quantity increases.
I hope my answer helps you
1. High-cholesterol food has an adverse effect on health, such that it can lead to attacks and stroke. The surgeon warns that food with high cholesterol leads to heart attack, then the demands for eggs will be reduced. The equilibrium curve will be shifted towards the left due to less demand and a decrease in the price.
2. The fall in the complementary goods decreases, then the demand for other goods increases. The bacon, here is a complementary good. The demand for bacon if falls, the price of eggs will be increased. The demand curve will shift towards the right due to an increase in the price.
3. The demand and supply are dependent on each other, such that if the rate of chicken feed increases, then the supply of produced eggs decreases. The demand curve will be tilted towards the left as the price increase and supply decreases.
4. The ceaser salad includes eggs. If the ceaser trend is popular in people then the demand for eggs will be increased. The demand curve will be shifted to the right.
5. The innovation in technology will lead to an increase in the supply. The supply curve will shift to the right due to a decrease in the price and an increase in quantity.
Find the graphs in the attachment below.
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Which statement most accurately describes the FDIC's auditor independence requirements? a.FDIC independence requirements incorporate requirements for attorneys and actuaries.b.FDIC independence requirements mirror the AICPA and DOL independence rules.c. Certain FDIC policy statements address auditor independence.d.The FDIC has not adopted regulations that incorporate SEC independence rules.
Answer:
c. Certain FDIC policy statements address auditor independence.
Explanation:
Options A and B are wrong because option A suggests that the requirements are for attorneys and actuaries, while option B tells the FDIC rules are copying from AICPA and DOL independence rules. In both cases, it contradicts from FDIC's auditor independence. Option "D" is wrong because FDIC has originally adopted regulations that incorporate SEC rules.
Since all the options are wrong, the option "C" is correct because some of the FDIC policies are addressing the auditors' independence.
The statement that most accurately describes the FDIC's auditor independence requirements is that the certain FDIC policy statements address auditor independence.
What makes an audits effective?In order for an audits to be effective, the external auditors appointed must be independent in both fact and appearance.
The external auditors must perform all necessary procedures to comply with auditing and attestation standards.
Therefore, the Option C is correct.
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The systems view is important to managers because it a. underscores the importance of the organization's environment. b. allows them to eliminate the interaction among various elements of the organization. c. gives them a set procedure for making decisions. d. reduces their risk of human error. e. shifts the focus from outside the company to inside the company.
Answer: a.
Explanation: systems view of an organization refers to the parts of the organization interacts with the organization as an entity. System theory tries to prove the importance of an organized environment.
System view of an organization is developed on the knowledge that everything is interconnected. System view tends to see an organization as a United entity where similar approach is used in carrying out activities within the organization.
Bam's product manager continues to perform well in the market. However, a competing product is coming on strong and is looking to take over as the market share leader in the segment. Without sacrificing contribution margin, what can the Bam product manager do in order to improve upon the buying criteria, and thus potentially increase demand? Select: 1 Increase MTBF by 2000 Increase the promotion budget to gain greater awareness Lower the selling price since it is the second most important buying criteria Reposition Bam to make it even smaller and higher performing
Selling price cannot be lowered as contribution margin cannot be sacrificed.
Explanation:
Sales prices can not be reduced because there can not be lost investment margins.
Promotions may not strengthen the criteria for purchases. Criteria for the purchase are usually related to brand performance and reliability.
Re-positioning it in order to make it smaller and better. MTBF is already a reliability factor and a purchasing criterion.
Therefore 1 and 4 solutions are likely to be true.
But let us take the 4th option, which is important to increase market share. It also speaks about re-positioning.
In a responsibility accounting system:
Select one:
a. Managers are responsible for their departments' controllable costs.
b. Each accounting report contains all items allocated to a responsibility center.
c. Organized and clear lines of authority and responsibility are only incidental.
d. All managers at a given level have equal authority and responsibility.
e. Outputs of the departments are not part of the evaluation process.
Answer:
Option A
Explanation:
A responsibility model in accounting refers to the program that collects and offers administrators details to assess the performance of department heads. In other expressions, this is a framework used to assess how good departments handle expenditures and handles costs.
The responsibility accountability mechanism is built on the notion that agencies should be properly managed as accurately as possible. The director and upper-level managers should not be responsible for the specific divisions daily activities.
In simple words, The accountability mechanism allows supervisors to manage and assign related costs depending on what they're doing at the moment.
In a responsibility accounting system, managers are held accountable for their departments' controllable costs and outcomes. Reports in such a system only include items that are allocated to a specific responsibility center. Clear lines of authority are essential in this system and evaluation includes the outputs of the departments.
Explanation:In a responsibility accounting system, managers are indeed responsible for their departments' controllable costs, which is option (a). The idea behind this system is to hold managers accountable for specific activities and have them completely own the costs and outcomes. Notably, in this framework, the accounting reports would only include the items that are allocated to a specific responsibility center (option b).
This system of accounting heavily depends on clear lines of authority and responsibility (contrary to option c). However, it could be argued that not all managers at a given level have equal authority and responsibility (contrary to option d), as different departments may have differing degrees of controllable costs. Finally, the outputs (results) of the departments are certainly part of the evaluation process (contrary to option e).
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In recent years, the Federal government’s top three uses of funds were approximately _____ % for income security and pensions, ______ % for health, and _____ % for national defense.
Answer:
The correct numbers for the blank spaces are: 23; 21,7; 18,8.
Explanation:
According to the Congressional Budget Office, in 2009 the United States Government destined 18,8% of the national budget to national defense, 23% for social security (retirement benefits), 21,7% in health care (Medicaid and Medicare), 5,3% in Interest of Federal Debt, and 33,8% in other spending such as education, public transportation, and housing.
Which of the following is not part of the materials activity in the flow of manufacturing activities?
a. Beginning raw materials
b. Beginning work in process
c. Raw materials purchases
d. Raw materials available for use
e. Ending raw materials
Final answer:
In the context of manufacturing activities, 'Beginning work in process' is not part of the materials activity because it refers to materials already being converted into finished goods, which is distinct from initial materials handling and procurement.
Explanation:
The flow of manufacturing activities encompasses several stages which are involved in the handling of raw materials and their transformation into finished products. The stages typically include the procurement of beginning raw materials, purchase of additional raw materials, raw materials available for use, and the computation or valuation of ending raw materials. The option that does not fit into this category of materials activity, and thereby, is not part of the flow of manufacturing activities is b. Beginning work in process. This is because 'work in process' refers to materials that have already been partially converted into finished goods and so they are a different stage of the manufacturing process, beyond the initial handling and procurement of raw materials.
Lusk Company produces and sells 16,100 units of Product A each month. The selling price of Product A is $31 per unit, and variable expenses are $25 per unit. A study has been made concerning whether Product A should be discontinued. The study shows that $71,000 of the $111,000 in fixed expenses charged to Product A would continue even if the product was discontinued. These data indicate that if Product A is discontinued, the company's overall net operating income would:
decrease by $54,400 per month
increase by $14,400 per month
decrease by $56,600 per month
increase by $54,400 per month
Answer:
decrease by $56,600 per month
Explanation:
The impact on the net operating income would be shown below:
In the first case,
Sales ( $31 × 16,100 units) = $499,100
Variable expenses ($25 × 16,100 units) = - $402,500
Fixed expenses = - $111,000
Net loss = - $14,400
And, the fixed cost not avoidable cost is $71,000
So, the net income decreased by
= $71,000 - $14,400
= $56,600
if the product A is discontinued
Sales revenue $900,000 Cost of goods sold 625,000 Sales discounts 30,000 Sales returns and allowances 15,000 Operating expenses 99,000 Interest revenue 6,500 What is the gross profit?
A. $130,000
B. $120,000
C. $230,000
D. $300,000
Answer:
Correct answer is C, $230,000
Explanation:
Gross profit is the amount we derived after we deduct cost of goods sold to the net sales revenue.
First, we must compute the Net sales revenue.
Sales Revenue $900,000
Less:
Sales discounts $30,000
Sales returns and allowances $15,000
Net Sales $855,000
Next, We deduct cost of goods sold to net sales revenue in order for us to arrive the gross profit of the period.
Net sales $855,000
Less
Cost of goods sold $625,000
GROSS PROFIT MARGIN $230,000
Answer:
The gross profit is: C.$230,000.
Explanation:
The gross profit is determined by deducting Cost of good sold from Net sales.
Net Sales is net amount of sales in the period, that is, after taken away Sales Discounts, Sales returns and allowances from Gross Sales. So, we have Net Sales calculated as $900,000 - $30,000 - $15,000 = $855,000.
As a result, Gross profit = Net Sales - Cost of good sold = $855,000 - $625,000 = $230,000.
Operating expenses and Interest revenue is irrelevant in Gross profit determination. These expense item and income item will be taken into account when calculating Net Profit.
Thus, the answer is C.$230,000.
Beasley Industries' sales are expected to increase from $4 million in 2019 to $5 million in 2020, or by 25%. Its assets totaled $2 million at the end of 2019. Beasley is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2019, current liabilities are $760,000, consisting of $120,000 of accounts payable, $400,000 of notes payable, and $240,000 of accrued liabilities. Its profit margin is forecasted to be 4%, and its dividend payout ratio is 70%. Using the AFN equation, forecast the additional funds Beasley will need for the coming year. Do not round intermediate calculations. Round your answer to the nearest dollar.
Final answer:
Using the AFN equation, Beasley Industries will need additional funds totaling $350,000 for the coming year to support the projected increase in sales.
Explanation:
To forecast the additional funds needed (AFN) for Beasley Industries, we can use the AFN equation which is:
AFN = (A*/S0)ΔS - (L*/S0)ΔS - M(S1)(1 - dividend payout ratio), where:
A* = Assets tied directly to sales and required to support operations
S0 = Sales in the base year
ΔS = Change in sales
L* = Spontaneous liabilities (accounts payable, accrued liabilities) that will increase with sales
M = Profit margin
S1 = Sales in the year for which we are forecasting
In the given case, A* = $2 million.
S0 = $4 million in 2019 and S1 = $5 million in 2020, thus ΔS = $1 million.
L* = $120,000 (accounts payable) + $240,000 (accrued liabilities) = $360,000.
Profit margin M = 4% and the dividend payout ratio is 70%.
Now we calculate:
Asset increase needed to support new sales: (A*/S0)ΔS = ($2 million / $4 million) * $1 million = $0.5 million
Spontaneous liabilities increase with new sales: (L*/S0)ΔS = ($360,000 / $4 million) * $1 million = $90,000
Retained earnings available to fund new sales: M(S1)(1 - dividend payout ratio) = 4% * $5 million * (1 - 0.70) = $0.06 million
Subtracting the increase in spontaneous liabilities and the retained earnings from the asset increase required, we get the final AFN:
AFN = $0.5 million - $90,000 - $0.06 million = $0.5 million - $0.09 million - $0.06 million
AFN = $0.35 million, or $350,000.
Therefore, Beasley Industries will need an additional $350,000 for the coming year.
The amount you pay for gasoline for your car is an example of a(n):public-good cost.internal cost.external cost.social cost.third-party cost.
Answer:
Internal cost.
Explanation:
The gasoline that a person used for his car is an example of an internal cost.
Internal costs are considered as a private costs which were incurred by the firms for the production of goods. It includes labor, depreciation, rents and inputs. These are the costs which is directly borne by a firm or an individual.
It is the direct cost associated with the firms for the production of goods and services.
Assume a factory that currently employs 25 workers is considering adding another 5 workers to its payroll. Economists would classify this as:A) a long run decisionB) a short run decisionC) neither a short run or long run decisionD) both a short run and long run decision
D: It is both a short run and long run decision.
Explanation:
Whether its a short run or long run decision, it is determined by when the benefit will accrue to the entity.
Thus employing 5 more workers in the short run is going to help the entity whiles in the long run also they are going to be a developed staff which will benefit the entity in the long run.
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The yield to maturity on a coupon bond is _____.(A) always greater than the coupon rate.(B) the rate an investor earns if she holds the bond to the maturity date, assuming she can reinvest all coupons at the current yield.(C) the rate an investor earns if she holds the bond to the maturity date, assuming she can reinvest all coupons at the yield to maturity.(D) only equal to the internal rate of return of a bond when the bond is priced at par.(E) greater than both the current yield and coupon rate when the bond is priced at a premium to par.
The yield to maturity on a coupon bond is the rate an investor earns if she holds the bond to the maturity date, assuming she can reinvest all coupons at the yield to maturity. This takes into account both interest payments and any capital gain or loss.
Explanation:The yield to maturity on a coupon bond is (C) the rate an investor earns if she holds the bond to the maturity date, assuming she can reinvest all coupons at the yield to maturity. The yield to maturity (YTM) is the total return anticipated on a bond if it is held until its maturity date. It is comparable to the internal rate of return of a bond.
YTM takes into account both the interest payments received periodically, which can be assumed to be reinvested at the same rate, and any capital gain or loss. For example, if a bond with a face value of $1000 is purchased at a discount for $900 and gives a coupon payment of $100 yearly before maturing in 3 years, the YTM will factor in both the yearly coupon payments and the $100 gain upon maturity.
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The yield to maturity on a coupon bond is the C. rate an investor earns if they hold the bond to the maturity date and reinvest all coupons at the yield to maturity.
Explanation:The yield to maturity on a coupon bond is the rate an investor earns if they hold the bond to the maturity date and reinvest all coupons at the yield to maturity. This is option (C) from the given choices. The yield to maturity takes into account the bond's current price, coupon rate, and time to maturity, and reflects the total return an investor can expect to receive.
YTM considers interest payments received periodically, which can be assumed to be reinvested at the same rate, and any capital gain or loss. For example, if a bond with a face value of $1000 is purchased at a discount for $900 and gives a coupon payment of $100 yearly before maturing in 3 years, the YTM will factor in both the yearly coupon payments and the $100 gain upon maturity.
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Which of the following fringe benefits are nontaxable fringe benefits for the recipient?aEmployer-paid health insurancebEmployer-paid premiums on a $25,000 group-term life insurance policycA below-market loan provided to an employee who needed an advance on his paydSeason tickets for the local NFL teameThe cost of meals and lodging that is for the convenience of the employer
Answer:
(a) Employer-paid health insurance
Explanation:
Employer paid health insurance premiums are non taxable. According to standard practices, health insurance are not taxed.
Material participation standards for shareholders of Subchapter S corporations, who are individuals, include those who during the tax year __________. (A) participated in the activity for more than 80 hours during the tax year.(B) constituted at least one half of all the participation in the activity of all individuals ( including non-owners).(C) participated in all significant participation activities including activities outside the corporation for more than 200 hours).(D) participated in business activities for more than 100 hours during the tax year and the participation was not less than the activity of any other individual`s during the tax year.
Answer:
The correct answer is letter "D": participated in business activities for more than 100 hours during the tax year and the participation was not less than the activity of any other individual's during the tax year.
Explanation:
Material Participation Tests are principles the Internal Revenue Service (IRS) considers at the moment of qualifying an individual as being part of an income-producing activity. There are seven (7) tests taken into consideration by the IRS but only one requirement is necessary for qualification. Among them, test three (3) states that an individual qualifies if that person was involved for more than 100 hours and not less than any other individual in the firm.
Finishing Touches has two classes of stock authorized: 9%, $10 par preferred, and $1 par value common. The following transactions affect stockholders' equity during 2021, its first year of operations: January 2 Issues 100,000 shares of common stock for $29 per share. February 6 Issues 2,400 shares of 9% preferred stock for $11 per share. September 10 Purchases 11,000 shares of its own common stock for $34 per share. December 15 Resells 5,500 shares of treasury stock at $39 per share. In its first year of operations, Finishing Touches has net income of $154,000 and pays dividends at the end of the year of $94,500 ($1 per share) on all common shares outstanding and $2,160 on all preferred shares outstanding.
Required:
Prepare the stockholders' equity section of the balance sheet for Finishing Touches as of December 31, 2021.
The stockholders' equity section of the balance sheet for Finishing Touches as of December 31, 2021 includes common stock, preferred stock, treasury stock, and retained earnings.
Explanation:The stockholders' equity section of the balance sheet for Finishing Touches as of December 31, 2021 would be presented as follows:
Common Stock
100,000 shares issued at $29 per share = $2,900,000
Preferred Stock
2,400 shares issued at $11 per share = $26,400
Treasury Stock
11,000 shares purchased at $34 per share = ($374,000) 5,500 shares resold at $39 per share = $214,500
Retained Earnings
Net income of $154,000 Dividends paid of $94,500
Total Stockholders' Equity = $2,970,400
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On December 31, Sulfur Corporation has the following data available: Net Income $ 140 comma 000 Market price of one share of common stock $ 6 Preferred dividends 40 comma 000 Weightedminusaverage number of shares of common stock outstanding 20 comma 000 shares Total common stockholders' equity at the beginning of the year 370 comma 000 Total common stockholders' equity at the end of the year 300 comma 000 What is the priceminusearnings ratio?
Answer:
Earnings per share
= Net income - Preferred dividend
No of common stocks outstanding
= $140,000 - $40,000
300,000 shares
= $0.33 per share
Price-earnings ratio
= Market price per share
Earnings per share
= $6.00
$0.33
= 18
Explanation:
There is need to calculate earnings per share, which is net income minus preferred dividend divided by number of common stocks outstanding at the end of the year. Finally, we will calculate price-earnings ratio, which is the ratio of market price per share to earnings per share.
Which statements are true regarding the sate administrators authoity to estabish recordkeeping rules for broker-dealers?
Answer:
The correct answer is letter "A": The Administrator can only establish recordkeeping rules that are the same as those set by the SEC.
Explanation:
The Securities and Exchange Commission or SEC is an independent agency of the United States government. The mission of the SEC is to enforce securities laws passed by Congress. These laws aim to promote fair, orderly and efficient securities markets, protect investors from abuses, and help maintain a well-functioning economy. In the case States' administrators want to establish recordkeeping rules for broker-dealers in their region, they must follow those already set by the SEC.
BSU Inc. wants to purchase a new machine for $35,500, excluding $1,400 of installation costs. The old machine was bought five years ago and had an expected economic life of 10 years without salvage value. This old machine now has a book value of $2,200, and BSU Inc. expects to sell it for that amount. The new machine would decrease operating costs by $7,500 each year of its economic life. The straight-line depreciation method would be used for the new machine, for a six-year period with no salvage value.
(a) Determine the cash payback period. (Round cash payback period to 1 decimal place, e.g. 10.5.)
(b) Determine the approximate internal rate of return. (Round answer to 0 decimal places, e.g. 10. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
(c) Assuming the company has a required rate of return of 6%, determine whether the new machine should be purchased.
The cash payback period for the new machine is 4.6 years. The exact internal rate of return (IRR) may require additional data to calculate. However, the new machine should be purchased if the IRR exceeds the firm's required rate of return of 6%.
Explanation:The subject of this question is related to the basic principles of financial management, specifically concepts of capital budgeting. Let's address each question individually:
a. The cash payback period refers to the time it takes for a company to recover its initial investment. In this case, the cash outflow is the cost of the new machine plus installation costs minus the resale value of the old machine, which amounts to $35,500 + $1,400 - $2,200 = $34,700. We decrease the operating costs by $7,500 each year. Thus the cash payback period is $34,700 / $7,500 = 4.6 years.
b. Internal Rate of Return, or IRR, refers to the discount rate at which the net present value of the cash flows equals zero. It is often computed iteratively or using computer algorithms. Without a factor table or other direct means of calculating, accurate determination might not be feasible without additional data. However, note that the IRR is generally used to compare returns with other investment alternatives on a per year basis.
c. The company will purchase the new machine if the IRR exceeds the required rate of return (6%) because it shows that the machine is expected to generate a return greater than the minimum required return by the firm. As long as the IRR is higher than 6%, purchasing the machine is financially justifiable.
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Consider a project with free cash flows in one year of $90,000 in a weak economy or $117,000 in a strong economy, with each outcome being equally likely. The initial investment required for the project is $80,000, and the project's cost of capital is 15%. The risk-free interest rate is 5%.Suppose that you borrow $60,000 in financing the project. According to MM proposition II, the firm's equity cost of capital will be closest to:A) 45%B) 30%C) 25%D) 35%
Answer:
Option (D) is correct.
Explanation:
Expected cash flow in year 1 : C1 = (0.5 × 90,000) + (0.5 × 117,000)
= 103,500
Discount rate, r = Project's WACC = 15%
Hence, Value of the project today = Vp = C1 ÷ (1 + r)
= 103,500 ÷ (1 + 15%)
= $90,000
Value of equity today : Ve0 = Vp - Debt
= 90,000 - 60,000
= 30,000
Value of equity in year 1 = Project cash flows - Debt × (1 + interest rate)
Weak economy = 90,000 - 60,000 × (1 + 5%)
= 27,000
Strong economy = 117,000 - 60,000 × (1 + 5%)
= 54,000
Expected value of equity in year 1 : Ve1 = (0.5 × 27,000) + (0.5 × 54,000)
= 40,500
Hence, Levered cost of equity, Ke = (Ve1 ÷ Ve0) - 1
= (40,500 ÷ 30,000 ) - 1
= 35%
Final answer:
According to MM proposition II, the firm's equity cost of capital is calculated using the initial investment, the amount of debt financing, the project's cost of capital, and the risk-free rate. In this case, the correct equity cost of capital is closest to 45%.
Explanation:
To determine the firm's equity cost of capital according to Modigliani and Miller's proposition II, with corporate taxes ignored, we utilize the formula: equity cost of capital = risk-free rate + (project cost of capital - risk-free rate) * (total value / equity value).
In this scenario, the initial investment is $80,000, of which $60,000 is financed with debt. Therefore, the equity value is $80,000 - $60,000 = $20,000. Given the project's cost of capital is 15% and the risk-free rate is 5%, we can calculate the equity cost of capital as follows:
Equity cost of capital = 5% + (15% - 5%) * ($80,000 / $20,000) = 5% + 10% * 4 = 5% + 40% = 45%
Therefore, the equity cost of capital is closest to 45%, making answer choice A correct.
A property is sold for $150,000 with the buyer agrees to assume an existing loan of $98,000 and executing a second note and deed of trust to the seller for $30,000. The purchase contract states that the unpaid balance of any existing loan is approximate and at closing any differences shall be reflected in cash. If the buyers closing costs are $2,500 and the remaining balance of the first loan is $89,800, what is the total cash due from the buyer at closing?
Final answer:
To calculate the total cash due from the buyer at closing, subtract the existing loan amount and second note and deed of trust from the purchase price, subtract the remaining balance of the first loan, and add the buyer's closing costs.
Explanation:
To calculate the total cash due from the buyer at closing, we need to consider the purchase price, the existing loan amount, the second note and deed of trust, and the buyer's closing costs. First, we subtract the existing loan amount of $98,000 and the second note and deed of trust of $30,000 from the purchase price of $150,000. This leaves us with $22,000. Then, we subtract the remaining balance of the first loan, which is $89,800. Finally, we add the buyer's closing costs of $2,500 to get the total cash due from the buyer at closing, which is $35,500.
Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the company’s products, a football helmet for the North American market, requires a special plastic. During the quarter ending June 30, the company manufactured 3,800 helmets, using 2,774 kilograms of plastic. The plastic cost the company $18,308. According to the standard cost card, each helmet should require 0.67 kilograms of plastic, at a cost of $7.00 per kilogram. Required: 1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,800 helmets? 2. What is the standard materials cost allowed (SQ × SP) to make 3,800 helmets? 3. What is the materials spending variance? 4. What is the materials price variance and the materials quantity variance?
Answer:
1. Standard quantity of kilograms
= 0.67 kg x 3,800
= 2,546 kg
2. Standard material cost allowed to make 3,800 helmets
= 0.67 x $7 x 3,800
= $17,822
3. Material spending variance $
Standard material cost 17,822
Less: Actual material cost 18,308
486(U)
4. Material price variance
= (Standard price - Actual price) x Actual quantity purchased
= ($7 - $6.599855804) x 2774 kg
= $1,110(F)
Actual price
= Actual material cost
Actual quantity purchased
= $18,308
2,774 kg
= $6.599855804
Material usage variance
= (Standard quantity - Actual quantity used) x Standard price
= (2,546 - 2,774) x $7
= $1,596(U)
Explanation:
Material spending variance is the difference between standard material cost and actual material cost. Material price variance is the difference between standard price and actual price multiplied by actual quantity purchased. Material usage variance is the difference between standard quantity and actual quantity used multiplied by standard price. Actual price is actual material cost divided by actual quantity purchased. Standard quantity is calculated as standard quantity per unit multiplied by actual output.
Manufacturing is considering three capital investment proposals. At this time, Britton only has funds available to pursue one of the three investments. LOADING...(Click the icon to review the proposals.) Which investment should Britton pursue at this time? Why?
Answer:
The right project will be sorted by the use of the Profitability Index.
Explanation:
Since all three capital investment proposals have a positive Net Present Value, we have to use profitability index to ascertain which project is most profitable by following the steps below.
1. Divide the N.P.V of each project by the initial investment of the project
2. Rank the answer from the highest ratio to the least.
3. The project with the highest Profitability Index is to be selected for the investment.
An owner withdrawal of $20,000 would_______.
A. decrease owner’s equity and increase assets by $20,000
B. increase owner’s equity and decrease liabilities by $20,000
C .increase liabilities and assets by $20,000
D. decrease assets and owner's equity by $20,000
An owner who withdraws an amount of $20000 would lead to decrease in the assets and the owner's equity by $20000.
Answer: Option D.
Explanation:
Assets are the things which are owned by the owner of the organisation and provide economic benefits. Liabilities are things which are the obligation on the owner of the company that he has to pay off. Equity is the share of the share holder of the company.
If an owner with draws or takes out money from the business for the personal use, it would lead to the decrease in the amount of the assets of the owner. It would also lead to the decrease in the amount of equity of the owner because he has taken out his share from the business for his personal use and not for the business.
SIROM Scientific Solutions has $12 million of outstanding equity and $4 million of bank debt. The bank debt costs 4% per year. The estimated equity beta is 1. If the market risk premium is 8% and the risk-free rate is 4%, compute the weighted average cost of capital if the firm's tax rate is 30%.
A) 9.70 %
B) 8.73 %
C) 10.67%
D) 9.22%
Answer:
WACC = 9.7%
Explanation:
First lets calculate CAPM to identify the return on equity.
CAPM = Risk free rate + Beta(Market Premium)
CAPM = 4 + 1(8) = 12%
WACC
= weight of equity * return on equity + weight of debt * return on debt * (1 - tax)
This gives,
=(12/12+4) * 0.12 + [(4/12+4) * 0.04 * (1 - 0.30)]
WACC = 0.09 + 0.007 = 9.7%
Hope that helps.
Answer: A) 9.7%
Explanation:
Bank debt cost= bank rate debt
Cost equity = free risk rate + equity beta × market risk premium.
Weight in equity = outstanding equity / (outstanding equity + debt)
Weight in debt = 1 - weight in equity.
WACC = weight in equity × cost of equity + weight in debt × cost of debt × (1 - tax rate)
Cost of equity = 0.04 + 1 × 0.08= 0.12
weight in equity= 12 / (4 + 12) = 0.75 weight in debt = 1 - 0.75 = 0.25
WACC= 0.75 × 0.12 + 0.25 × 0.04 × (1 - 0.30) = 0.097 * 100 = 9.7%
Exchange rates Personal Finance Problem Fred Nappa is planning to take a wine-tasting tour through Italy this summer. The tour will cost 2,750 euros () and includes transportation, hotels, and a guide. Fred estimates that round-trip airfare from his home in North Carolina to Rome, Italy, will be $1,459, he also will incur another $290 in incidental travel expenses. Fred estimates the cost of meals in Italy to be about 519, and he will take an additional $1,090 to cover miscellaneous expenditures. Currently the exchange rate is $1.3423/1.00 (or 0.74499/$1.00). a. Determine the total dollar cost of the trip to Italy b. Deternine the amount of euros () Fred will need to cover meals and miscellaneous expendtures a. The total cost of the trip in dollars is s(Round to the nearest dollar) b. The amount of euros for meals and miscellaneous expenditures is (Round to the nearest euro)
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.
Vietnam and Ecuador both produce shrimp and wheat. Vietnam can produce 80 thousand pounds of shrimp or 40 thousand bushels of wheat in a year. Ecuador can produce 60 thousand pounds of shrimp or 20 thousand bushels of wheat in a year. Ecuador’s opportunity cost of producing one bushel of wheat is equal to pounds of shrimp. Vietnam’s opportunity cost of producing one bushel of wheat is equal to pounds of shrimp. The two countries decide to specialize and trade with each other. The country that produces wheat will sell one bushel of wheat for no less than pounds of shrimp. The other country will pay no more than pounds of shrimp for the one bushel of wheat. Enter whole numbers.
Final answer:
The opportunity cost of producing one bushel of wheat for Vietnam is 2 pounds of shrimp, and for Ecuador, it is 3 pounds of shrimp. Vietnam should specialize in wheat and Ecuador in shrimp based on comparative advantage. The trade exchange rate should be between 2 and 3 pounds of shrimp per bushel of wheat.
Explanation:
The concept being discussed is related to opportunity cost and comparative advantage in the realm of international trade. Opportunity cost is defined as the cost of not producing the next best alternative. For example, when Vietnam produces 40 thousand bushels of wheat, it foregoes the production of 80 thousand pounds of shrimp; therefore, the opportunity cost of producing one bushel of wheat in Vietnam is 2 pounds of shrimp. Similarly, for Ecuador, the opportunity to produce 20 thousand bushels of wheat instead of 60 thousand pounds of shrimp suggests their opportunity cost of producing one bushel of wheat is 3 pounds of shrimp.
When it comes to specialization, a country should specialize in the production of goods for which it has a lower opportunity cost. In the given context, Vietnam has a lower opportunity cost in producing wheat (2 pounds of shrimp) compared to Ecuador (3 pounds of shrimp). On the basis of comparative advantage, Vietnam should specialize in producing wheat and Ecuador should specialize in producing shrimp. The exchange rate for trade between the two countries should be set such that it is between their respective opportunity costs, i.e., between 2 and 3 pounds of shrimp per bushel of wheat.
In scenarios like that of the US and Brazil, with Brazil having a lower opportunity cost in producing sugar cane and the US in wheat, each country would benefit by specializing and trading based on their respective comparative advantages.