Answer:
Book Value = $26 million
Market value = $34.3 million
Explanation:
The computation of book value and the market value is shown below:-
For computing the book value first we need to find out the current assets
Current assets = Working capital + Current liabilities
= $5.0 million + $6.0 million
= $11.0 million
Total book value = Current assets + Fixed assets
= $11.0 million + $15 million
= $26 million
For computing the market value first we need to find out the current assets
Current assets = Cash + Current liabilities
= $7.30 million + $6.0 million
= 13.3 million
Total market value = Fixed assets + Current assets
= $21 million + 13.3 million
= $34.3 million
Valport Valve Company manufactured 7,800 units during March of a control valve used by milk processors in its Shreveport plant. Records indicated the following:
Direct labor 40,200 hr. at $14.60
Direct material purchased 30,000 lb. at $3.00
Direct material used 22,100 lb.
The control valve has the following standard prime costs.
Direct material: 3 lb. at $2.90 per lb. $ 8.70
Direct labor: 5 hr. at $15.10 per hr. 75.50
Standard prime cost per unit $ 84.20
Required:
1. Prepare a schedule of standard production costs for March, based on actual production of 7,800 units.
2. For the month of March, compute the following variances. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).)
Answer:
Instructions are below.
Explanation:
Giving the following information:
Production= 7,800 units
Direct labor 40,200 hr. at $14.60
Direct material purchased 30,000 lb. at $3.00
Direct material used 22,100 lb.
The control valve has the following standard prime costs.
Direct material: 3 lb. at $2.90 per lb. $ 8.70
Direct labor: 5 hr. at $15.10 per hr. 75.50
Standard prime cost per unit $ 84.20
1) Standard production costs:
Direct material= 8.7*7,800= 67,860
Direct labor= 75.5*7,800= 588,900
Total porduction cost= $656,760
2) We need to use the following formulas to calculate the direct material and direct labor variances:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (2.9 - 3)*30,000
Direct material price variance= $3,000 unfavorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (3*7,800 - 22,100)*15.1
Direct material quantity variance= (23,400 - 22,100)*2.9
Direct material quantity variance= $3,770 favorable
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Direct labor time (efficiency) variance= (5*7,800 - 40,200)*15.1
Direct labor time (efficiency) variance= $18,120 unfavorable
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Direct labor rate variance= (15.1 - 14.6)*40,200
Direct labor rate variance= $20,100 favorable
Jeffrey wants to get his truck custom-painted, so he is researching prices for different painting companies. He has found the following information: Assume that all four companies will take 5 hours to complete the job and will use $240 in materials. Which company will give Jeffrey the lowest price? A : Company 1 B : Company 3 C : Company 2 D : Company 4
Answer:
D : Company 4
Explanation:
Since all the painting companies require 5 hours to paint the truck, and they all will use the same amount of materials, then you have to choose the company that charges the lowest rate per hour:
Company 1 charges $57 per hour x 4 hours = $285 + $240 = $525Company 2 charges $52.50 per hour x 4 hours = $262.50 + $240 = $502.50Company 3 charges $48.95 per hour x 4 hours = $244.75 + $240 = $484.75Company 4 charges $46.20 per hour x 4 hours = $231 + $240 = $471 ⇒ lowest priceExercise 6-1 The Effect of Changes in Activity on Net Operating Income [LO6-1]Whirly Corporation’s contribution format income statement for the most recent month is shown below: Total Per UnitSales (10,000 units)$350,000 $35.00 Variable expenses 200,000 20.00 Contribution margin 150,000 $15.00 Fixed expenses 135,000 Net operating income$15,000 Required:(Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 100 units?2. What would be the revised net operating income per month if the sales volume decreases by 100 units?3. What would be the revised net operating income per month if the sales volume is 9,000 units?
Answer:
Instructions are below.
Explanation:
Giving the following information:
Sales (10,000 units)$350,000 ($35.00)
Variable expenses= 200,000 (20.00)
Contribution margin= 150,000 ($15.00)
Fixed expenses 135,000
Net operating income= $15,000
1) Sales= 10,100 units
Contribution margin= (10,100*15)= 151,500
Fixed costs= (135,000)
Net income= 16,500
2) Sales= 9,900 units
Contribution margin= (9,900*15)= 148,500
Fixed costs= (135,000)
Net income= 13,500
3) Sales= 9,000 units
Contribution margin= (9,000*15)= 135,000
Fixed costs= (135,000)
Net income= 0
The net operating income would increase to $16,500 if the sales volume increases by 100 units, decrease to $13,500 if the sales volume decreases by 100 units, and would be $0 if the sales volume is 9000 units.
The changes in net operating income with the changes in sales volume can be derived from the provided contribution format income statement.
1. If the sales volume increases by 100 units, the total sales would increase by $35.00 * 100 = $3500 and total variable expenses would increase by $20.00 * 100 = $2000. Therefore, the contribution margin would increase by $3500-$2000 = $1500, and subsequently, the net operating income would be $15,000 + $1500 = $16,500.
2. If the sales volume decreases by 100 units, the total sales would decrease by $3500, and total variable expenses would decrease by $2000. The contribution margin would decrease by $1500, resulting in the new net operating income being $15,000 - $1500 = $13,500.
3. If the sales volume is 9000 units, the total sales would be $35 * 9000 = $315,000 and total variable expenses would be $20 * 9000 = $180,000. The contribution margin would be $315,000 - $180,000 = $135,000, deducting the fixed expenses ($135,000), the new net operating income would be $0.
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The following direct materials and direct labor data pertain to the operations of Laurel Company for the month of August. Costs Actual labor rate $15 per hour Actual materials price $180 per ton Standard labor rate $14.50 per hour Standard materials price $184 per ton Quantities Actual hours incurred and used 4,000 hours Actual quantity of materials purchased and used 1,300 tons Standard hours used 4,090 hours Standard quantity of materials used 1,290 tons (a) Compute the total, price, and quantity variances for materials and labor. Total materials variance $ Materials price variance $ Materials quantity variance $ Total labor variance $ Labor price variance $ Labor quantity variance $
Answer:
Total material variance = $3,360 F
Materials price variance = $5,200 F
Material quantity variance= $1,840 U
Total labor variance = $695 U
Labor price variance = $2,000 U
Labor quantity variance = $1,305 F
Explanation:
As per the data given in the question,
Total material variance = (1300 × $180) - (1,290 × $184)
= $3,360 F
Materials price variance = 1,300($180-$184)
= $5,200 F
Material quantity variance = $184×(1,300-1,290)
= $1,840 U
Total labor variance = (4,000 hours×$15) - (4,090×$14.50)
= $695 U
Labor price variance = 4,000×($15- $14.50)
= $2,000 U
Labor quantity variance = $14.5×(4,000 - 4,090)
= $1,305 F
Becky purchases one percent of Lakeside Ventures' (LV) preferred shares of stock in a private offering. Outside of the purchase, Becky has no other connection to the company. The terms of the purchase agreement do not state any resale restrictions, and LV is not required to make any periodic filings under the Securities and Exchange Act of 1934. Less than a year later, Becky wants to sell the stock without registration. How would you advise Becky
Answer:
Advise her to register the shares before selling them.
Explanation:
The Securities and Exchange Act of 1934 was formed to govern secondary market activities relating to sale and purchase of shares. Its main aim is to improve transparency and to avoid fraud. This results in greater investor confidence.
All companies that are listed on the stock exchange must abide by the requirements of the Securities and Exchange Act of 1934.
These requirements include: registration of listed securities, disclosure, proxy solicitations, along with margin and audit requirements.
So in this scenario if Becky wants to sell her preferred shares in Lakeside Ventures, she will need to register the shares according to requirement of Securities and Exchange Act of 1934.
Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend $ 4.9 million on TV, radio, and print advertising this year for the campaign. The ads are expected to boost sales of the Mini Mochi Munch by $ 8.8 million this year and $ 6.8 million next year. In addition, the company expects that new consumers who try the Mini Mochi Munch will be more likely to try Kokomochi's other products. As a result, sales of other products are expected to rise by $ 1.7 million each year. Kokomochi's gross profit margin for the Mini Mochi Munch is 38 %, and its gross profit margin averages 23 % for all other products. The company's marginal corporate tax rate is 35 % both this year and next year. What are the incremental earnings associated with the advertising campaign?
Answer:
Check Explanation.
Explanation:
Note that the amount are in millions(dollar).
Year one: the sales of Mini Mochi Munch = $ 8.8 million = 8.8, sales of other products = $ 1.7 million. Hence, the gross profit = (8.8 × 38%) + (8.8 × 23%) = 5.368.
The selling, general and administrative expenses = 4.9 and the depreciation is zero.
Then, the EBIT = the gross profit -selling, general and administrative expenses - Depreciation.
EBIT = 5.368 - 4.9 - 0 = 0.468.
Less income tax at 38% = 0.17784.
incremental earnings= EBIT - Less income tax at 38%.
incremental earnings = 0.468 - 0.17784.
Year two: the sales of Mini Mochi Munch = $ 6.8 million = 6.8, sales of other products = $ 1.7 million. Hence, the gross profit = (6.8 × 38%) + (6.8 × 23%) = 4.148.
The selling, general and administrative expenses = 0, and the depreciation is zero(0).
Then, the EBIT = the gross profit -selling, general and administrative expenses - Depreciation.
EBIT = 4.148 - 4.9 - 0 = −0.752.
Less income tax at 38% = −0.28576.
incremental earnings= EBIT - Less income tax at 38%.
incremental earnings = −0.752 - −0.28576 = −1.03776.
Paney Company makes and sells calendars. The information on the cost per unit is as follows: Direct materials $1.50 Direct labor 1.20 Variable overhead 0.90 Variable marketing expense 0.40 The fixed marketing expense totaled $13,000, and the fixed administrative expense totaled $35,000. The price per calendar is $10. What is the break-even point in sales dollars? a.$58,330 b.$80,000 c.$120,000 d.$28,000 e.$21,670
Answer:
Break-even point (dollars)= $80,000
Explanation:
Giving the following information:
Variable costs:
Direct materials $1.50
Direct labor 1.20
Variable overhead 0.90
Variable marketing expense 0.40
Total variable costs= 4
Fixed costs:
The fixed marketing expense totaled $13,000
The fixed administrative expense totaled $35,000.
Total fixed costs= $48,000
The price per calendar is $10.
To calculate the break-even point in dollars, we need to use the following formula:
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 48,000/ [(10 - 4)/10]
Break-even point (dollars)= 48,000/0.6
Break-even point (dollars)= $80,000
The controller of Diaz Co. believes that the yearly allowance for doubtful accounts for Diaz Co. should be 2% of net credit sales. The president of Diaz Co., nervous that the stockholders might expect the company to sustain its 10% growth rate, suggests that the controller increase the allowance for doubtful accounts to 4%. The president thinks that the lower net income, which reflects a 6% growth rate, will be a more sustainable rate for Diaz Co.
Instructions
(a) Who are the stakeholders in this case?
(b) Does the president's request pose an ethical dilemma for the controller?
(c) Should the controller be concerned with Diaz Co.'s growth rate? Explain your answer.
Answer:
The answer is given below.
Explanation:
A) - In the following case, the stakeholders seem to be the chairman of that company, the Controller of that company. The Stockholders as well as all the other group that has an interest in the organization's balance sheet, including an investment manager or even a banker seeking to give cash.
B) - Yes, the appeal of the chairman raises the legal issues for such a manager. Due to confusing income reports as suggested by the chairman, the operator poses a moral issue. In the viewpoint, for safeguard the interests of big business and not to confuse customers by representing wrong net profits, the manager will be guided. Required to disclose correct net profit that, on effect, influences their rate of growth ratio. Aggregate-income growth gives a clear view of the pace where the businesses also raised their earnings. All others remaining identical, shares having stronger net profit rates of growth are much more attractive as compared to others.
C) - Yes, of course, the manager will be worried about the rate of growth of that company due to the rate of growth that should be focused upon rational as well as reliable income reports. The manager does not file income reports for the chairman's goal of meeting or retaining the defined rate of growth. The following inflation rate would be focused upon operational and financial performance, not on some distorted financial reporting.
a) In this case, the stakeholders of Diaz Co. include the stockholders (owners), the president (management), and the controller (employee).
Other stakeholders of Diaz Co. include the government, the community in which the company is situated, the public, and other interest groups.
b) The president's request does not pose an ethical dilemma for the controller. The two persons can discuss their reasons for arriving at different rates and choose an agreeable rate for the allowance for doubtful accounts. The rate for the allowance for doubtful accounts is based on experience and business expectations.
c) The controller should be concerned with Diaz Co's growth rate, which is demonstrated by the growth in the corporate's sales revenue and profitability. Without growth, a company atrophies. Growth and growth rate are required for every sustainable business entity.
Thus, the controller should be ensure that Diaz Co's achieves a growth rate compared with the industry average or similar entities within the company's environment.
Data and Calculations:
Controller's annual allowance for doubtful accounts = 2% of net credit sales
President's suggested allowance for doubtful accounts = 4% of net credit sales
Expected growth rate by stockholders = 10%
Sustainable growth rate = 6%
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The advantage of being self-employed (rather than being an employee) is: A. The overall limitation (50%) on meals does not apply. B. Job-related expenses are deductions for AGI. C. The self-employment tax is lower than the Social Security tax. D. To avoid the self-employment tax. E. All of the self-employment tax deductible for income tax purposes.
Answer:
B. Job-related expenses are deductions for AGI.
Explanation:
A person is said to be self-employed if he is working for oneself rather than for an employer as a freelancer or the owner of a business.
Adjusted gross income (AGI) refers to the measure of income calculated from your gross income. AGI is used to determine the amount of tax.
The advantage of being self-employed (rather than being an employee) is job-related expenses are deductions for AGI.
Baird Corporation began fiscal Year 2 with the following balances in its inventory accounts. Raw Materials $ 55,900 Work in Process 82,500 Finished Goods 27,300 During the accounting period, Baird purchased $238,700 of raw materials and issued $249,100 of materials to the production department. Direct labor costs for the period amounted to $322,900, and manufacturing overhead of $46,900 was applied to Work in Process Inventory. Assume that there was no over- or underapplied overhead. Goods costing $611,000 to produce were completed and transferred to Finished Goods Inventory. Goods costing $600,100 were sold for $801,900 during the period. Selling and administrative expenses amounted to $71,500. Required Determine the ending balance of each of the three inventory accounts that would appear on the year-end balance sheet. Prepare a schedule of cost of goods manufactured and sold and an income statement.
Answer:
Ending Raw Materials $ 45,500
Ending Work in Process $ 90,400
Ending Finished Goods $ 38,200
Net Profit $ 130,300
Explanation:
There are two ways to find the ending balances . One is through T accounts and the other through Cost of Goods Manufactured and Sold
Statement. In Cost of Goods Manufactured and Sold Statement we simply put the values in the correct order as given and find the required balances by the reverse operations.
Baird Corporation
Schedule of Cost of Goods Manufactured and Sold
Opening Raw Materials $ 55,900
Add Raw Materials purchased $238,700
Less Ending Raw Materials $ 45,500
Raw materials Used $249,100 (given)
(Opening Raw Materials+Raw Materials purchased)-Raw materials Used=Ending Raw Materials
Direct labor costs $322,900,
Manufacturing overhead $46,900
Total Manufacturing Costs $618,900
Total Manufacturing Costs=Raw materials Used+Direct labor costs+Manufacturing overhead
Add Opening Work in Process 82,500
Cost OF Goods Available For Manufacture $ 701,400
Cost OF Goods Available For Manufacture=Total Manufacturing Costs + Opening Work in Process
Less Ending Work in Process $ 90,400
Cost OF Goods Manufactured $611,000 (given)
Ending Work in Process=Cost OF Goods Available For Manufacture-Cost OF Goods Manufactured
Add Opening Finished Goods 27,300
Cost Of Goods Available for Sale $ 638,300
Cost Of Goods Available for Sale =Cost OF Goods Manufactured +Opening Finished Goods
Less Ending Finished Goods $ 38,200
Cost Of Goods Sold $600,100 (given)
Ending Finished Goods = Cost Of Goods Sold -Cost Of Goods Available for Sale
Baird Corporation
Schedule of Cost of Goods Manufactured and Sold
Opening Raw Materials $ 55,900
Add Raw Materials purchased $238,700
Less Ending Raw Materials $ 45,500
Raw materials issued $249,100 (given)
Direct labor costs $322,900,
Manufacturing overhead $46,900
Total Manufacturing Costs $618,900
Add Opening Work in Process 82,500
Cost OF Goods Available For Manufacture $ 701,400
Less Ending Work in Process $ 90,400
Cost OF Goods Manufactured $611,000 (given)
Add Opening Finished Goods 27,300
Cost Of Goods Available for Sale $ 638,300
Less Ending Finished Goods $ 38,200
Cost Of Goods Sold $600,100 (given)
Baird Corporation
Income Statement
Sales $801,900
Less Cost OF Goods Sold $600,100 ( calculated as above)
Gross Profit $ 201,800
Less Selling and administrative expenses $71,500
Net Profit $ 130,300
In October, Glazier Inc. reports 42,000 actual direct labor hours, and it incurs $194,000 of manufacturing overhead costs. Standard hours allowed for the work done is 40,000 hours. The flexible manufacturing overhead budget shows that budgeted costs are $3.80 variable per direct labor hour and $60,000 fixed. Compute the manufacturing overhead controllable variance. Identify whether the variance is favorable or unfavorable?
Answer:
$18,000 F
Explanation:
Actual overhead– Overhead Budgeted=
Overhead Controllable Variance
Actual overhead=$194,000
Overhead Budgeted=$212,000
$194,000–$212,000
=$18,000 F
(40,000 ×$3.80) + $60,000
=$152,000+$60,000
= $212,000
Therefore the manufacturing overhead controllable variance is $18,000 F
The traditional view of monopolistic competition holds that this type of industrial structure is inefficient because a. more advertising is needed to inform customers about product differences. b. consumers do not have enough choice among the product varieties available. c. firms do not operate at the output that minimizes average costs. d. there are too few firms to reach an efficient level of production.
Answer:
c. firms do not operate at the output that minimizes average costs.
Explanation:
Monopolistic competition is when suppliers sell products that are similar but not equal and they are not perfect substitutes. This type of market is inneficient because companies operate at a profit maximizing output that is less than the output where they have the minimum average cost. According to this, the answer is that the traditional view of monopolistic competition holds that this type of industrial structure is inefficient because firms do not operate at the output that minimizes average costs as they work with excess capacity with an output in which they can maximize their profit.
During March, the production department of a process operations system completed and transferred to finished goods 17,000 units that were in process at the beginning of March and 150,000 units that were started and completed in March. March's beginning inventory units were 100% complete with respect to materials and 59% complete with respect to conversion. At the end of March, 34,000 additional units were in process in the production department and were 100% complete with respect to materials and 24% complete with respect to conversion. Compute the number of equivalent units with respect to both materials and conversion respectively for March using the weighted-average method.
Answer:
a)201,000 units
b) 175,167 units
Explanation:
As per the data given in the question,
Details Materials Conversion
Calculation Units Calculation Units
Units completed
and transferred (150,000+17,000)×100% 167,000 (150,000+17,000)×100% 167,000
Ending WIP 34,000×100% 34,000 34,000×24% 8,160
Total units (167,000+34,000) 201000 (167,000+8,167) 175,167
The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet:
Cash 16,000
Noncash asset 434,000
Total- 450,000
Liability-150000
Abrams-80,000
Bartle- 90,000
Creighton-130,000
total- 450,000
Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $12,000.
The noncash assets were sold for $134,000. Which partner(s) would have had to contribute assets to the partnership to cover a deficit in his or her capital account, prior to considering the liquidation expenses incurred?
Answer and Explanation:
The contribution of assets to the partnership to cover a deficit is presented below:
Particulars Abram Bartle Creighton
Capital Balance $80,000 $90,000 $130,000
Less:
Allocation of non cash assets sold ($434,000 - $134,000) = $300,000 in 3 : 2 :5 ratio
-$90,000 -$60,000 -$150,000
Liquidation expense -$3,600 -$2,400 -$6,000
Liabilities ($150,000 - $16,000) = $134,000 in 3 : 2 :5 ratio
-$40,200 -.$26,800 -$67,000
Adjusted capital balance -$53,800 $800 -$93,000
So based on the above calculation the Abram and Creighton have to contribute the assets
Final answer:
Abrams and Creighton would both need to contribute assets to the partnership to cover deficits of $10,000 and $20,000 respectively in their capital accounts after the sale of noncash assets and before accounting for liquidation expenses.
Explanation:
Liquidation Deficit Calculation
Before considering liquidation expenses, we need to determine how the sale of noncash assets impacts the partners' capital accounts. The noncash assets were sold for $134,000, which is $300,000 less than the book value of $434,000. This loss needs to be allocated to the partners according to their profit and loss sharing ratio, which is 3:2:5 for Abrams, Bartle, and Creighton respectively.
The total loss is $300,000, which is shared as follows:
Abrams' share: $300,000 x 3/10 = $90,000
Bartle's share: $300,000 x 2/10 = $60,000
Creighton's share: $300,000 x 5/10 = $150,000
Adjusting their capital accounts for these losses results in:
Abrams: $80,000 - $90,000 = -$10,000 (deficit)
Bartle: $90,000 - $60,000 = $30,000
Creighton: $130,000 - $150,000 = -$20,000 (deficit)
Abrams and Creighton would both have to contribute assets to the partnership to cover their deficits in their capital accounts, prior to considering the $12,000 liquidation expenses.
On December 31, 2015, a company had assets of $36 billion and stockholders' equity of $32 billion. That same company had assets of $48 billion and stockholders' equity of $10 billion as of December 31, 2016. During 2016, the company reported total sales revenue of $29 billion and total expenses of $27 billion. What is the company's debt-to-assets ratio on December 31, 2016
Answer:
0.79 times
Explanation:
The computation of debt-to-assets ratio is shown below:-
For computing the debt-to-assets ratio first we need to find out the total debt which is given below:-
Total Debt = Assets - Stockholders' equity
= $48 billion - $10 billion
= $38 billion
Debt-to-assets ratio = Total Debt ÷ Total Assets
= $38 billion ÷ $48 billion
= 0.79 times
So, for computing the debt-to-assets ratio we simply applied the above formula.
Delhoyo Corporation, a manufacturing company, has provided data concerning its operations for September. The beginning balance in the raw materials account was $37,000 and the ending balance was $29,000. Raw materials purchases during the month totaled $57,000. The direct materials cost for September was:
Answer:
$65,000
Explanation:
Computation of the given data are as follows:
Direct material cost = Beginning balance + Purchase - Ending balance
Where, Beginning balance = $37,000
Purchase = $57,000
Ending balance = $29,000
So, by putting the value in the formula, we get
Direct material cost = $37,000 + $57,000 - $29,000
= $65,000
The direct materials cost for Delhoyo Corporation for September is calculated by adding the beginning inventory of raw materials and the purchases during the month, then subtracting the ending inventory. The total comes to $65,000.
The direct materials cost for September for the Delhoyo Corporation can be calculated using the given data. We need to consider the beginning balance of raw materials, the purchases made during the month, and the ending balance. The formula to calculate the direct materials cost is:
Direct Materials Cost = (Beginning Inventory + Purchases) - Ending Inventory.
Using the numbers provided:
Direct Materials Cost = ($37,000 + $57,000) - $29,000
Direct Materials Cost = $94,000 - $29,000
Direct Materials Cost = $65,000.
Therefore, the direct materials cost for Delhoyo Corporation for September is $65,000.
Edgar uses the cash method to report the income from his software consulting business. A large publicly held corporation has offered to invest in Edgar's business as a limited partner. Complete the statement below regarding the method of accounting for the new partnership.If the partnership's average annual gross receipts for the prior three-year period exceed $ it can use either the cash or accrual method of accounting .
Final answer:
The method of accounting for the new partnership depends on its average annual gross receipts. If the receipts exceed a certain threshold, the partnership must use the accrual method.
Explanation:
The method of accounting for the new partnership will depend on the partnership's average annual gross receipts for the prior three-year period. If the average annual gross receipts exceed a certain threshold, the partnership can use either the cash or accrual method of accounting.
For example, if the average annual gross receipts exceed $25 million, the partnership will be required to use the accrual method of accounting. However, if the average annual gross receipts do not exceed this threshold, the partnership can choose to use either the cash or accrual method.
It is important to note that the cash method is simpler and allows for greater flexibility in reporting income and expenses, while the accrual method provides a more accurate representation of the business's financial transactions.
Final answer:
The partnership Edgar is considering can use either the cash method or the accrual method of accounting if its average annual gross receipts for the past three years exceed a specific threshold. Accrual accounting records transactions when they are earned or incurred, offering a more accurate financial picture for complex organizations.
Explanation:
The requirement for a partnership's method of accounting is contingent on its annual gross receipts. If the partnership's average annual gross receipts for the prior three-year period exceed a certain threshold, which is not specified in your question, the partnership may choose to use either the cash method or the accrual method of accounting. The cash method records income and expenses when cash is actually received or paid, whereas the accrual method recognizes income and expenses when they are earned or incurred, regardless of when cash is exchanged.
Differences between the two methods can lead to variances in how transactions affect an organization's financial statements. For example, under accrual accounting, an entity would record expenses and revenues at the time they are earned or incurred, not when the cash is exchanged. This means for Edgar's business, if it makes a large purchase on credit, the transaction would be recorded when the purchase is made, not when payment is rendered.
More complex organizations often use the accrual method because it provides a more accurate representation of an entity's financial status. Transactions such as purchasing furniture on credit would be immediately reflected on the balance sheet under accrual accounting; whereas, under the cash method, this transaction would only affect the financials when the payment is made.
Large airlines might have come close to perfecting price discrimination by creating an incredibly complex pricing system designed to fill as many seats as possible. But once the Internet made it easier for flyers to compare fares, the strategy fell apart. Southwest Airlines founder Herb Kelleher said, "The high-fare, last-minute, walk-up business customer" is "gone forever." Kelleher is referring to what economists would call:
Answer:
Third degree price discrimination
Explanation:
Third degree price discrimination is when different customers are charged different price when purchasing the same product. The customers are differentiated on the basis of sex, age, location, and time of use.
In this scenario where large airlines create an incredibly complex pricing system designed to fill as many seats as possible, the last customer that comes to buy a ticket is charged at a higher price.
This exemplifies a third degree price discrimination that is based on time of use.
However the internet has made it easier to compare prices resulting in failure of this strategy.
One of the previous scenarios is an example of affirmative action, while the other is an example of diversity. Now you can compare the two scenarios in order to recognize one of the differences between affirmative action and diversity: Affirmative action is intended to_______________ , whereas diversity is intended to ________________.
Answer:
Affirmative action is intended to curb employment discrimination against a minority group, whereas diversity is intended to promote the interest of a diverse group of people within an organization.
Explanation:
Affirmative action was introduced to curb discrimination in the work force. It seeks to establish fair access to employment opportunities which will favor the marginalized minority or a particular demographic that is at a disadvantage.
Diversity is intended to promote the interest of the entire organization by repealing any policy that infringes on the rights of every citizen irrespective of race to have equal access to equal benefits.
Diversity and affirmative action deal with issues related to discrimination in different ways,
Whereas affirmative action focuses on taking positive steps to get individuals into the organization, diversity in the workplace seeks to change the organizational culture within an organizational space.
Sales total 50,000 units a year. The statues are finished either rough or polished, with an average demand of 60% rough and 40% polished. Iron ingots, the direct material, costs $5 per pound. Processing costs are $300 to convert 30 pounds into 60 statues. Rough statues are sold for $17 each, and polished statues can be sold for $19 or engraved for an additional cost of $5. Polished statues can then be sold for $23.50. How much would the profits/unit increase by if the Company should engrave the statues?
Answer:
It is more profitable to not engrave the statues.
Explanation:
Giving the following information:
Sales= 50,000 units
Polished= 40% of sales
Direct material= $5 per pound
Processing= $300 to convert 30 pounds in 60 statues
Polish= $19 per unit
Engraved= $5 per unit
New selling price= $23,5
We need to determine whether it is more convenient to sell the units engraved or not.
First, we need to calculate the unitary cost of a polished unit.
The total cost of 60 units= 5*30 + 300= $450
Unitary cost (normal)= 450/60= $7.5
Unitary cost (engraved)= 7.5+5= $12.5
Total sales= 50,000*0.4= 20,000 units
Now, we can determine the total contribution margin of both options:
Sell as-is:
Total contribution margin= 20,000*(19-7.5)= $230,000
Engrave:
Total contribtuion margin= 20,000*(23.5 - 12.5)= $220,000
It is more profitable to not engrave the statues.
Product A is normally sold for $9.60 per unit. A special price of $7.20 is offered for the export market. The variable production cost is $5.00 per unit. An additional export tariff of 15% of revenue must be paid for all export products. Assume that there is sufficient capacity for the special order. Prepare a differential analysis dated March 16 on whether to reject (Alternative 1) or accept (Alternative 2) the special order. Round your answers to two decimal places. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign
Answer:
normal price $9.60 per unit
special order price $7.20 per unit
variable production costs = $5.00 per unit
additional export tariff = $7.20 x 15% = $1.08
Differential analysis (March 16)Not sell Sell Effect on income (sell)
Revenue per unit $0.00 $7.20 $7.20
- variable prod. costs ($0.00) ($5.00) ($5.00)
- variable export tariff ($0.00) ($1.08) ($1.08)
Income per unit $0.00 $1.12 $1.12
A differential analysis only considers additional revenues or costs generated by a specific project or special order.
Union Local School District has bonds outstanding with a coupon rate of 3.4 percent paid semiannually and 19 years to maturity. The yield to maturity on these bonds is 3.6 percent and the bonds have a par value of $5,000. What is the price of the bonds? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Price $
Answer:
PV = $4,863.24
Explanation:
Computation of the given data are as follows:
Face value = $5,000
YTM = 3.6%
YTM (Semiannual) (Rate) = 3.6% ÷ 2 = 1.8%
Coupon rate = 3.4%
Coupon rate semiannual = 3.4% ÷ 2 = 1.7%
Coupon payment ( Pmt) = 1.7% × $5,000 = $85
Time period (semiannual) (Nper) = 19 × 2 = 38
By putting the value in the financial calculator, we will get the present value.
Attachment is attached below.
PV = $4,863.24
The marketing managers at Omaha Steaks used airlines' databases to mail a special offer to frequent flyers. Eight weeks after shipping the steaks to the frequent flyers who placed orders as a result of the initial offer, the company's salespeople followed up by telephoning customers to ask for new orders. This is an example of which two types of non-store retailing? a. direct mail and telemarketing b. direct selling and telemarketing c. telemarketing and online retailing d. online retailing and automatic vending
Answer:
A. Direct mail and telemarketing
Explanation:
Direct mail can be defined as a form of marketing in which the sender tends to send a direct advertisement to the recipient. It is also known as junk mail as it arrives uninvitedly, so the recipient's call it junk mail. In this form of direct marketing, the sender sends out physical promotional materials such as flyers, letters, brochures, etc through postal services.
Telemarketing, on the other hand, is another form of direct marketing in which telemarketers phone, tax, of mail their potential customers. In this form of direct marketing, telemarketers either use direct way of calling the customers or even the robocalls.
In the given case, the manager of Omaha Steaks has used direct mail and telemarketing form of non-store retailing. Direct mail is used by sending flyers to the customers and telemarketing by telephoning the customers.
So, the correct answer is option A.
Faraday Enterprises is a publicly traded company. It currently has 10 million shares trading at $12/share and $150 million in book value of equity. The firm also has book value of debt of $ 75 million and market value of debt of $ 80 million. The cost of equity for the company is 9%, the pre-tax cost of debt is 4% and the marginal tax rate is 40%. What is the cost of capital?
Answer:
6.36%
Explanation:
First we calculate the market value weights of debt and equity,
Debt to the capital ratio is calculated as,
80,000,000/(120,000,000+80,000,000) = 40%.
Therefore Equity ratio will be: (100%-40%) = 60%.
Now,
Cost of capital = (0.6*9%) + (0.4*4%)(1 - 40%) = 6.36%.
Hope this helps.
Goodluck buddy.
Answer:
6.36%
Explanation:
Weighted Average Cost of Capital (WACC) is the minimum return that is expected from a project.It shows the risk of the company
WACC = Cost of Equity + Cost of Debt
Capital Source Market Value Weight Cost Total Cost
Equity $120,000,000 60% 9% 5.40%
Debt $80,000,000 40% 2.40% 0.96%
Total $200,000,000 100% 6.36%
Cost of Debt = Market Interest rate × ( 1 - tax rate)
= 4 % × (1 - 0.40)
= 2.40%
Therefore, cost of capital is 6.36%
All of the following statements are correct EXCEPT:___________.
1. the objective of installing ABC in service firms is different than it is in a manufacturing firm
2. activity-based costing has been widely adopted in service industries
3. a larger proportion of overhead costs are company-wide costs in service industries
4. the general approach to identifying activities and activity cost pools is the same in a service company as in a manufacturing company
Answer:
the objective of installing ABC in service firms is different than it is in a manufacturing firm
Explanation:
When overhead is assigned properly in ABC, it will reduce the unit cost of the high-volume products.
The objective of installing ABC in service firms is not different from the objective of instslling it in a manufacturing company. The main objective is that inventory storage costs are lowered in just-in-time processing. ABC leads to enhanced control over the overhead costs
Final answer:
The incorrect statement is that the objective of installing ABC in service firms differs from manufacturing firms; the objective is similar - to allocate costs precisely. The correct option is 1.
Explanation:
Out of the given statements regarding activity-based costing (ABC), the incorrect statement is that the objective of installing ABC in service firms is different than it is in a manufacturing firm. The primary goal of ABC, whether in service or manufacturing industries, is to allocate costs more accurately to products, services, and customers that consume resources.
Activity-based costing has indeed been widely adopted in service industries due to their high overhead costs and the need for more precise cost allocation. Also, it is true that a larger proportion of overhead costs in service industries are company-wide costs. Lastly, the general approach to identifying activities and activity cost pools is the same in a service company as it is in a manufacturing company.
Crossroad chooses to report a financial asset at its fair value. The asset trades in two different markets; however, neither market is the principal market for the financial asset. In the first market, sales proceeds are $76, which is net of transaction costs of $6. In the second market, the sales proceeds are $80, which is net of transaction costs of $1. What amount should Crossroads report as the fair value of the asset
Answer:$81
Explanation:
The options given are:
a. $76
b. $80
c. $81
d. $82
If the principal market that is, the market that the greatest volume of activity can't be identified, then the most advantageous market would be used to determine the fair value of a financial asset.
The most advantageous market is the market that has the highest net price, after transaction cost has been considered even though the transaction costs is not included into the fair value. Therefore, the second market gives the highest net price of $80 after the consideration of the transaction costs, hence, it should be utilized for fair value purposes.
The fair value amount include the transaction costs, which give $80 + $1 = $81
The fair value amount is $81.
To which type of system the “Analytical Power” software belongs? *
DSS
ESS
MIS
TPS
Answer:
MIS
Explanation:
The Management information System (MIS) is a decision making tool that uses the computer to hardware and software to gather from various online system . Theses data are then analyzed and visualized to ease the process of decision making by the management.
One key component of the MIS is the Analytical power Software which differentiate it from other forms of information systems
Of the following, which are actions most closely associated with countercyclical monetary policy? Select the two correct answers below. Select all that apply: During an economic boom, interest rates should be kept high. When the economy slows down, the federal reserve should buy financial assets from commercial banks. During an economic boom, the supply of loanable funds should be increased. During an economic recession, the interest rate should should be increased.
Answer:
During an economic boom, interest rates should be kept high.
When the economy slows down, the federal reserve should buy financial assets from commercial banks.
Explanation:
Countercyclical monetary policy can be defined as the process of having the Fed move in the opposite direction in response to economic upswing and downturn by boosting employment and output through increased monetary supply. When countercyclical monetary policy is adopted, there are dangers of overreaction.
The actions most closely associated with countercyclical monetary policy are;
- During an economic boom, interest rates should be kept high.
- When the economy slows down, the federal reserve should buy financial assets from commercial banks.
A firm evaluates all of its projects by applying the IRR rule. Year Cash Flow 0 –$ 152,000 1 64,000 2 75,000 3 59,000 What is the project's IRR? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Internal rate of return % If the required return is 13 percent, should the firm accept the project?
The project's IRR is 18.10%, and the firm should accept the project as it is expected to generate a return higher than the cost of capital.
Explanation:The Internal Rate of Return (IRR) is a financial metric used to assess the profitability of an investment project. It is the discount rate at which the net present value (NPV) of all cash flows from the project becomes zero. To calculate the IRR, we need to evaluate the project's cash flows and find the rate that makes the NPV zero. In this case, the project's cash flows are:
To find the IRR, we can use the following formula:
NPV = 0 = -152,000 + (64,000 / (1 + IRR)^1) + (75,000 / (1 + IRR)^2) + (59,000 / (1 + IRR)^3)
Solving this equation will give us the IRR, which is 18.10% (rounded to two decimal places). So, the project's IRR is 18.10%.
To determine whether the firm should accept the project or not, we compare the IRR to the required return. In this case, the required return is 13%. Since the IRR of the project (18.10%) is higher than the required return, the firm should accept the project as it is expected to generate a return higher than the cost of capital.
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The inflation rate for a given year can be found by __________. Select the correct answer below: taking the percentage change in the Consumer Price Index (CPI) from the previous year to the given year in question calculating the absolute change in the Consumer Price Index (CPI) from the previous year to the given year in question taking the difference in the price levels as measured by the Consumer Price Index (CPI) of the two years none of the above
Answer:
none of the above
Explanation:
To calculate the inflation rate, the most commonly used formula is:
Consumer price index = ( CPI in given year / CPI in base year ) x 100
The base year being any particular year that the calculating authority selects, not necessarily the previous year.
Therefore, none of the answers in the question are correct.