Answer:
NPV is $771,739
Explanation:
As we know that:
Net Present Value = Present Value of Cash inflow (STEP 1) - Present Value of Cash outflow
STEP 1. Present Value of Cash Inflow
Here
Present Value of Cash Inflow = Annuity of Annual Cash flow - PV of Scrap Value
Annual Cash flow is $346,000 ($230,000 + ($786,000 - $90,000)/6)
So
Annuity of annual cash inflow = $346,000 * Annuity Factor
Here
Annuity Factor for 6 years is 4.3553
Now this means that:
Annuity of annual cash Inflow = $346,000 * 4.3553 = $1,506,934
Present Value of Residual Value ($90,000 * 0.5645) = $50,805
Present Value of cash inflows $1,557,739
Now putting values in the above equation, we have:
Net Present Value = $1,557,739 - $786,000
Net Present Value = $771,739
Joe Dumars Company has outstanding 40,000 shares of $5 par common stock which had been issued at $30 per share. Joe Dumars then entered into the following transactions.
1. Purchased 5,000 treasury shares at $45 per share.
2. Resold 2,000 of the treasury shares at $49 per share.
3. Resold 500 of the treasury shares at $40 per share.
Indicate the effect each of the three transactions has on the financial statement categories listed in the table below, assuming Joe Dumars Company uses the cost method.
Answer:
Transaction 1
Assets - Decrease by $225,000
Cash expended to acquire shares = 5,000 * 45 = $225,000
Liabilities - No effect
Stockholders' equity - Decrease by $225,000
Increase in Treasury shares leads to decrease in the amount stockholders hold.
Paid In Capital - No effect
Retained Earnings - No Effect
Net Income - No Effect
Transaction 2
Assets - Increase by $98,000
Cash increased because of sale of stock = 2,000 * 49 = $98,000
Liabilities - No effect
Stockholders' equity - Increase by $90,000
= 2,000 * 45 = $90,000
Cost method means that when debiting from Treasury account, use original cost.
Paid In Capital - Increase by $8,000
If stock is sold for amount different from what it was bought, it goes into this account. If it is larger than it was bought for then this account increases and vice versa.
Retained Earnings - No Effect
Net Income - No Effect
Transaction 3
Assets - Increase by $20,000
Cash from sale of stock = 500 * 40 = $20,000
Liabilities - No effect
Stockholders' equity - Increase by $22,500
= 500 * 45 = $22,500
Paid In Capital - Decrease by $2,500
If stock is sold for amount different from what it was bought, it goes into this account. If it is smaller than it was bought for then this account decreases and vice versa.
Retained Earnings - No Effect
Net Income - No Effect
On April 1, 9,000 shares of $7 par common stock were issued at $26, and on April 7, 5,000 shares of $70 par preferred stock were issued at $108. Required: Journalize the entries for April 1 and 7. Refer to the Chart of Accounts for exact wording of account titles.
Answer:
Apr 1
DR Cash $234,000
CR Common stock $63,000
CR Paid in capital in excess of par - Common Stock $171,000
(To record issuance of common stock)
Apr 7
DR Cash $540,000
CR Preferred stock $350,000
CR Paid in capital in excess of par - Preferred Stock $190,000
(To record issuance of preferred stock)
Explanation:
April 1
Cash
9,000 * 26 = $234,000
Common stock
9,000*7 = $63,000
April 7
Cash
5,000*108 = $540,000
Preferred stock
5,000*70 = $350,000
Skills of CIOs needed to improve IT-business alignment and governance include all of the following except ________. Select one: a. Negotiating SaaS or other cloud service contracts b. Having political savvy c. Inspiring a shared vision and influencing subordinates and superiors d. Thinking strategically and making good decisions under pressure
Answer: Negotiating SaaS or other cloud service contracts.
Explanation:
The skills of CIOs that are needed to improve IT-business alignment and governance are having political savvy, inspiring a shared vision and influencing subordinates and superiors and also thinking strategically and making good decisions under pressure.
Therefore, negotiating SaaS or other cloud service contracts is not a skill of CIOs needed to improve governance and IT business alignment.
Xinghong company is considering replacing one pf its manufacturing machines. The machine has a book value of $44000 and a remaining useful life of five years, at which time its salvage value will be zero. It has a curretn market value of 54000 variable manufacturing costs are $33600 per year for this machine. Inforamation on two alternative replacement machines follows.
Alternative A Alternative B
Cost $117,000 $118,000
Variable manufacturing costs per year 22,700 10,700
1. Calculate the total change in net income if Alternative A is adopted.
Alternative A: Increase or (Decrease) in Net Income
Cost to buy new machine
Cash received to trade in old machine
Reduction in variable manufacturing costs
Total change in net income
2. Calculate the total change in net income if Alternative B is adopted.
Alternative B: Increase or (Decrease) in Net Income
Cost to buy new machine
Cash received to trade in old machine
Reduction in variable manufacturing costs
Total change in net income
3. Should Xu keep or replace its manufacturing machine? If the machine should be replaced, which alternative new machine should Xu purchase?
A. Alternative B
B. Alternative A
C. Keep the manufacturing machine
Answer:
1. Decrease in Net Income of -$8,500
2. Increase in Net Income of $50,500
3. Replace the old machine with Alternative B
Explanation:
1.
Alternative A
Cost to Buy New Machine -$117,000
Cash received to trade in old machine $54,000
Reduction in Variable Manufacturing Costs (($33,600*5 years ) - (22,700*5 years )) $54,500
Total change in Net Income -$8,500
2.
Alternative B
Cost to Buy New Machine -$118,000
Cash received to trade in old machine $54,000
Reduction in Variable Manufacturing Costs (($33,600*5years ) - (10,700*5 years )) $114,500
Total change in Net Income $50,500
3. Replacing the old machine with alternative B will result in an increased income of $50,500 so it is a good option.
Sue is considering purchasing a new vacuum cleaner. Which of the following sets is she using when she is ready to make the final decision? Group of answer choices Total set Choice set Awareness set Consideration set
Answer:
choices Total.
Explanation:
By being ready to make the final purchase decision, Sua is using the choices total to make its decision.
The purchase decision process arises due to a need, from the emergence of that need the consumer will seek solutions to solve his problem, which means evaluating the alternatives related to the product or service he wants to buy, such as value, benefits, brand , quality, design, etc., so when all these requirements are satisfied, the consumer actually makes the purchase and satisfies his needs.
Consider the production department of a manufacturer of laptop computers. Classify the cost of the factory maintenance manager's salary.
a. variable.
b. direct.
c. period.
d. fixed.
Answer:
d. fixed.
Explanation:
The Maintenance Managers`s work can not be directly traced during the production process and this does not meet the definition of a direct cost.
However the Maintainace Managers`s work is key in every production thus, it is an indirect manufacturing cost that in most cases is fixed.
Fixed in the sense that the salary (cost) does not vary with the level of production.
Today, a firm has a stock price of $14.26 and an EPS of $1.15. Its close competitor has an EPS of $0.48. What would be the expected price of the competitor's stock if estimated using the method of comparables
Answer:
$5.952
Explanation:
For the computation of expected price of the competitor's stock first we need to find out the P/E ratio of a firm which is shown below:-
P/E ratio of a firm = Stock price ÷ Earning per share
= $14.26 ÷ $1.15
= $12.4
Price of competitor's stock = P/E ratio of a firm × Earning per share
= $12.4 × $0.48
= $5.952
Therefore for computing the expected price of the competitor's stock we simply applied the above formula.
Harmony Company sells handminusknit scarves. Each scarf sells for $ 45. The company pays $ 70 to rent vending space for one day. The variable costs are $ 12 per scarf. How many scarves should the company sell each day in order to break even? (Round your answer up to the nearest whole scarf.)
Answer:
2.12, rounded up to 3
Explanation:
To solve the equation, we first need to set up an equation.
Let x represent the number of scarves. We want one side of the equation to be the amount earned and the other to be the cost
45x is how much they earn since each scarf is $45
70+12x is how much they cost for rent and production
45x=70+12x
Subtract 12x from both sides
33x=70
Divide both sides by 33
x=2.12
It says we should round up so 3 scarves to break even
A bond has a standard deviation of 10.7 percent and an average rate of return of 6.4 percent. What is the coefficient of variation (CoV)
Answer:
CoV = 1.671875 rounded off to 1.67
Explanation:
The coefficient of variation (CoV) is a measure of volatility of an investment. It tells the volatility in comparison with the expected return from the investment. We can say that the CoV tells us the risk per unit of return as CoV is calculated by dividing standard deviation, which is a measure of risk, by the expected return of the investment.
CoV = SD / r
Where,
SD is the standard deviationr is the expected returnCoV = 0.107 / 0.064
CoV = 1.671875 rounded off to 1.67
Regina recently landed her dream job at a local clothes outlet. Within a few weeks of working in her new employment, however, Regina began to engage in fraud. Regina committed the fraud by doing the following:
When people returned merchandise, Regina would ring up an amount that was greater than the value of the item that was being returned. Regina would then pocket the extra cash and give the customer the amount due. Regina found this method of fraud very effective because people were, in reality, returning something and inventory and register totals wouldn't be out of balance at the end of the day.
Required:
1. What type of fraud is Regina committing?
2. How could her employer detect this kind of fraud?
Answer:
Fraudulent disbursements,
card statement review
Explanation:
Fraudulent disbursements are very common and occur when an employee misappropriates company funds by making inappropriate payments, fraudulent. They are also called on-book frauds and can only be traced by putting systems that keep these practices in check. The most likely way to have caught the employee in the above case was to review the card statement and review purchases made and to what amount the refund from the company's card was made
Listed below are certain costs (or discounts) incurred in the purchase or construction of new plant assets. Indicate whether the costs should be expensed or capitalized (included in the cost of the plant assets on the balance sheet.) For costs that should be included in plant assets. Indicate in which category of plant assets (Equipment. Building. or Land) the related costs should be recorded on the balance Sheet.
a. Invoice cost to purchase Equipment
b. Sales tax on new equipment purchased
c. Cost to lay foundation for a new building
d. Repair costs to fix new equipment damaged by the crew that unpacked it
e. Charges incurred to train employees to use new equipment
f. Construction costs for a new building to be used in operations
g. Attorney fees incurred to complete the purchase documents for a new plant warehouse
h. Freight costs to ship the equipment From the manufacturer to the warehouse
Answer:
a. Capitalized : Equipment
b. Expensed
c. Capitalized : Building
d. Expensed
e. Capitalized : Equipment
f. Capitalized : Building
g. Capitalized : Building
h. Capitalized : Equipment
Explanation:
The Cost of Property, Plant and Equipment item according to IAS 16 includes, the Purchase Cost and any cost directly incurred in putting the assets in location and condition intended for use by management.
The costs exclude amounts collected in tax on behalf of third parties
Also not Capital expenditures increase the earning ability of the asset whilst revenue expenditure is the maintenance of such asset.
Laurasia has identified the following goods as its market basket. Here are the prices of those goods over three years.
Compute the cost of that market basket in all three years.
Answer:
2015 = $942016 = $128.502017 = $115Explanation:
A Market Basket is used to calculate inflation overtime by tracking the change in prices of a specific and permanent number of goods and services.
The formula for calculating the market basket is;
Cost of Market Basket[tex]_{year}[/tex] = ∑(Price of good * Basket Quantity of good)
2015
Cost of Market Basket = (25 * 0.4) + (2 * 18) + ( 4 * 12)
Cost of Market Basket = 10 + 36 + 48
Cost of Market Basket = $94
2016
Cost of Market Basket = (25 * 0.5) + (2 * 22) + ( 4 * 18)
Cost of Market Basket = 12.5 + 44 + 72
Cost of Market Basket = $128.50
2017
Cost of Market Basket = (25 * 0.6) + (2 * 20) + ( 4 * 15)
Cost of Market Basket = 15 + 40 + 60
Cost of Market Basket = $115
The cost of that market basket in all three years. is :
In 2015 = $94 In 2016 = $128.50 In 2017 = $115"Market Basket"A selected gather of buyer merchandise and administrations whose costs are followed for calculating a customer cost file and measuring the taken a toll of living.
2015
Cost of Market Basket = ∑(Price of good * Basket Quantity of good)
Oranges Baseball caps Wrenches
Cost of Market Basket = (25 * 0.4) + (2 * 18) + ( 4 * 12)
Cost of Market Basket = 10 + 36 + 48
Cost of Market Basket = $94
2016
Cost of Market Basket =∑(Price of good * Basket Quantity of good)
Oranges Baseball caps Wrenches
Cost of Market Basket = (25 * 0.5) + (2 * 22) + ( 4 * 18)
Cost of Market Basket = 12.5 + 44 + 72
Cost of Market Basket = $128.50
2017
Cost of Market Basket = ∑(Price of good * Basket Quantity of good)
Oranges Baseball caps Wrenches
Cost of Market Basket = (25 * 0.6) + (2 * 20) + ( 4 * 15)
Cost of Market Basket = 15 + 40 + 60
Cost of Market Basket = $115
Learn more about "Market Basket" :
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A company has among its long-term debt, a bond due in 2015 that carries a face interest rate of 4.65 percent and pays interest annually. Recently this bond sold on the New York Bond Exchange at 103.39. Assume that the company uses the effective interest method to amortize its bonds. Answer the following true/false questions and then select the appropriate multiple choice response. _____ The current market rate of interest on this bond is less than 4.65 percent. _____ The current market rate of the bond affects the amount that the company pays in annual interest. _____ The current market rate of interest affects the amount of interest expense for the current year.
Answer:
A company with long-term debt
A. True/false questions:
1. __TRUE___ The current market rate of interest on this bond is less than 4.65 percent. __FALSE___ The current market rate of the bond affects the amount that the company pays in annual interest. _FALSE____ The current market rate of interest affects the amount of interest expense for the current year.
B. The appropriate multiple choice response:
2. The current market rate of interest on this bond is less than 4.65 percent.
Explanation:
Since the bond is being sold on the New York Bond Exchange at 103.39, it implies that it is selling at a premium. Therefore, the effective interest rate will be less than the face interest rate of 4.65%. This is the reason for the bond to be selling at a premium. That is, it is selling above the face value of 100 per bond. Conversely, when a bond sells at a discount, say 98 per bond, the effective interest rate will be higher than the face interest rate. The face interest rate is the stated interest rate while the effective interest rate is the market rate.
The ___________ organization becomes a central hub surrounded by networks of outside suppliers and specialists, and parts can be added or taken.
Answer: modular
Explanation:
A modular organizational structure is a form of business which can be separated and then recombined so as to bring about efficiency at the workplace.
In modular structure, the business is grouped into small, strategic business units that focuses on a particular element of the process in the organization. It leads to flexibility and efficiency.
On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: For all journal entries, if an amount box does not require an entry, leave it blank. 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 20Y1 July 1 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31 b. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y2 June 30 3. Determine the total interest expense for 20Y1. $ 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest
Answer and Explanation:
1 . The journal entries are shown below;
Cash Dr $42,309,236
Discount on bond payable $3,690,764
To Bond payable $46,000,000
(Being the issuance of the bond is recorded)
2. a.
Interest expense Dr $2,392,269
To Discount on bond payable ($3,690,764 ÷ 20 years × 2) $92,269.10
To Cash $23,000,000 ($46,000,000 ÷ 2 years)
(Being the interest expense is recorded)
b.
Interest expense Dr $2,392,269
To Discount on bond payable ($3,690,764 ÷ 20 years × 2) $92,269.10
To Cash $23,000,000 ($46,000,000 ÷ 2 years)
(Being the interest expense is recorded)
3. Total interest expense is $2,392,269
4. Yes, bond payments will always be lower than the face value of bonds, if the contract rate is lower than the interest rate on the market.
XYZ Corporation’s bonds have 14 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of $950. What is their yield to maturity? Show your work.
Answer:
The answer is 10.71%
Explanation:
N(Number of periods) = 14 years
I/Y(Yield to maturity) = ?
PV(present value or market price) = $950
PMT( coupon payment) = $100 ( 10 percent x $1,000)
FV( Future value or par value) = $1,000.
We are using a Financial calculator for this.
N= 14; PV= -950 ; PMT = 100; FV= $1,000; CPT I/Y= 10.71
Therefore, the yield to maturity of the bond is 10.71%
Which of the following is an advantage of a partnership?
A.ease of starting and ending the business
B. Shared management and pooled skills
C. Unlimited liability
D. Little time commitment
Answer:
B
Explanation:
as if u share a business then the time and management is also shared
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Childress Company produces three products, K1, S5, and G9. Each product uses the same type of direct material. K1 uses 3.7 pounds of the material, S5 uses 3.4 pounds of the material, and G9 uses 6.1 pounds of the material. Demand for all products is strong, but only 44,500 pounds of material are available. Information about the selling price per unit and variable cost per unit of each product follows.
K1 S5 G9
Selling price $155.8 $108.92 $205.55
Variable costs 91.00 90.00 136.00
Required:
Calculate the contribution margin per pound for each of the three products.
Answer:
K1 S5 G9
$ $ $
Contribution per pound 17.51 5.11 17.99
Explanation:
Contribution is he excess of selling price over variable cost. The following relationships would help in solving the question:
The contribution per Selling price - variable cost
The contribution per pound of a material = Contribution per unit/ Material per unit
K1 S5 G9
$ $ $
Selling price 155.8 108.92 202.55
Variable cost (91.00) ( 90.00) (136.00)
Contribution per unit 64.8 18.92 66.55
Material per unit 3.7 3.4 6.1
Contribution per pound 17.51 5.11 17.99
you are going to deposit $19000 today. You will earn an annual rateof 3.3 percent for 11 years, and then earn an annual rate of 2.7 percent for 14 years. how much will you have in your account in 25 years?
Answer:
After 25 years you will have in your account $42,782.05.
Explanation:
First find the Future value of $19000 invested today at the end of 11 years.
PV = - $19,000
Pmt = $0
P/yr = 1
r = 3.30%
n = 11
FV = ?
Using a Financial calculator, the Future Value (FV) after 11 years will be $27,155.46.
Use the $27,155.46 to find future value at the end of the next 14 years at the rate of 2.70%
PV = - $27,155.46
Pmt = $0
P/yr = 1
r = 3.30%
n = 14
FV = ?
Using a Financial calculator, the Future Value (FV) after 14 years will be $42,782.05.
Thus, after 25 years you will have in your account $42,782.05.
Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2003, an auction house sold a sculpture at auction for a price of $10,371,500. Unfortunately for the previous owner, he had purchased it in 1999 at a price of $12,497,500.
What was his annual rate of return on this sculpture? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Annual rate of return %
Answer:
-4.25%
Explanation:
purchase price in 1999 = $12,497,500
purchase price in 2003 = $10,371,500
annual rate of return = {[($10,371,500 - $12,497,500) / $12,497,500] / (2003 - 1999)} x 100 = (-0.170114 / 4) x 100 = -4.25%
the annual rate of return refers to how much money you win or loss with an investment during a year. In this case, the investor lost $2,126,000 in 4 years, which resulted in a total loss of 17.01% for the whole period.
The Box Manufacturing Division of the Allied Paper Company reported the following results from the past year. Shareholders require a return of 9%. Management calculated a weightedminusaverage cost of capital (WACC) of 7%. Allied's corporate tax rate is 30.
Sales $700,000
Operating income $175,000
Total Assets $1,500000
Current liabilities $600,000
What is the division's Return on Investment (ROI)?
A) 25.00%.
B) 11.67%.
C) 40.00%.
D) 46.67%.
Answer:
Return n investment = 11.67%
Explanation:
Return on Investment is the proportion investment that is earned as operating income.
For the division, the return on investment would be the proportion of te investment in assets that is earned as net income.
This would be determined as follows;
Return n investment = (Net income÷ Operating assets) × 100
Return n investment = (175,000 ÷ 1,500,000) × 100= 11.67%
Return n investment = 11.67%
Sales revenue $350,000 Accounts receivable $280,000 Ending inventory $230,000 Cost of goods sold $180,000 Sales returns $50,000 Sales discount $20,000 What is the gross profit?
Answer:
$100,000
Explanation:
The computation of gross profit is shown below:-
Gross profit = (Sales revenue - Sales return - Sales discount) - Cost of goods sold
= ($350,000 - $50,000 - $20,000) - $180,000
= $280,000 - $180,000
= $100,000
Therefore we simply applied the above formula for determining the gross profit
Due to a recession in the United States and abroad, ski resorts have suffered from a lack of guests during the peak season. These ski resorts have felt a direct impact from ____ force.
A) competitive
B) technological
C) sociocultural
D) economic
E) legal and regulatory
Answer:
D) economic.
Explanation:
These are seen to be factors which play vital roles in bringing/affects the competitiveness of the environment of operation of a said firm.
These forces in a business are said to primarily affect the distribution of production activities across the globe and also within a smaller region. These effects of economic forces are easily been felt by the mass/population around the region where these forces are present and also where these enterprises are been sited/located.
Factors ranging from interest rate, employment, inflation rate, government fiscal and monetary policy are generally known to make up these factors been talked about.
Kim's brokerage company offers dual agency. Tom and Don are two of her licensed agents. Tom ha been appointed to represent the seller, and Don has been appointed to represent the buyer in an in-house transaction. In this situation, who is a dual agent ? A. Kim only B. Kim, Tom, and Don only C. all licensed agents Kim's broker age D. no one.
Answer:
A. IS THE ANSWER
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You consider buying a share of stock at a price of $25. The stock is expected to pay a dividend of $1 next year, and your advisory service tells you that you can expect to sell the stock in 1 year for $30. The stock's beta is 1.3, rf is 6%, and market risk premium is 10%. What is the stock's alpha?
Answer:
5%
Explanation:
stock's Alpha = R - Rf - beta (Rm - Rf)
R represents the stock's return = $6/$25 = 24%Rf = 6%Beta = 1.3Rm = 16%Alpha = 0.24 - 0.06 - 1.3 (0.1) = 0.24 - 0.06 - 0.13 = 0.24 - 0.19 = 0.05 = 5%
A stock's Alpha is basically the excess return that the stock yields compared to an specific benchmark, e.g. S&P 500, Dow Jones.
The following costs result from the production and sale of 1,000 drum sets manufactured by Tight Drums Company for the year ended December 31, 2015. The drum sets sell for $500 each. The company has a 25% income tax rate.
Variable production costs
Plastic for casing $17,000
Wages of assembly workers 82,000
Drum stands 26,000
Variable selling costs
Sales commissions 15,000
Fixed manufacturing costs
Taxes on factory 5,000
Factory maintenance 10,000
Factory machinery depreciation 40,000
Fixed selling and administrative costs
Lease of equipment for sales staff 10,000
Accounting staff salaries 35,000
Administrative management salaries125,000
Compute its contribution margin per unit and its contribution margin ratio. Prepare a contribution margin income statement. Interpret the contribution margin and contrubition margin ratio.
Answer and Explanation:
The computation of contribution margin per unit and its contribution margin ratio and the Preparation of contribution margin income statement is shown below:-
Particulars Amount
Sales Revenue $500,000
(1,000 × 500)
Variable Costs
Plastic for casing $17,000
Wages of assembly workers $82,000
Drum stands $26,000
Sales commission $15,000
Total Variable costs $140,000
Contribution $360,000
($500,000 - $140,000)
Fixed Costs
Taxes on factory $5,000
Factory maintenance $10,000
Factory machinery depreciation $40,000
Lease of equipment for
sales staff $10,000
Accounting staff salaries $35,000
Administrative management
salaries $125,000
Total fixed Cost $225,000
Income $135,000
($360,000 - $225,000)
Taxes at 25% $33,750
Net Income $101,250
Contribution Margin per unit $360
($360,000 ÷ 1,000)
CM Ratio 0.72
(360,000 ÷ 500,00)
Answer and Explanation:
The computation of contribution margin per unit and its contribution margin ratio and the Preparation of contribution margin income statement is shown below:-
Particulars Amount
Sales Revenue $500,000
(1,000 × 500)
Variable Costs
Plastic for casing $17,000
Wages of assembly workers $82,000
Drum stands $26,000
Sales commission $15,000
Total Variable costs $140,000
Contribution $360,000
($500,000 - $140,000)
Fixed Costs
Taxes on factory $5,000
Factory maintenance $10,000
Factory machinery depreciation $40,000
Lease of equipment for
sales staff $10,000
Accounting staff salaries $35,000
Administrative management
salaries $125,000
Total fixed Cost $225,000
Income $135,000
($360,000 - $225,000)
Taxes at 25% $33,750
Net Income $101,250
Contribution Margin per unit $360
($360,000 ÷ 1,000)
CM Ratio 0.72
(360,000 ÷ 500,00)
We simply applied the above format
If the economy booms, RTF, Inc., stock is expected to return 13 percent. If the economy goes into a recessionary period, then RTF is expected to only return 5 percent. The probability of a boom is 83 percent while the probability of a recession is 17 percent. What is the variance of the returns on RTF, Inc., stock
Answer: 0.000903
Explanation:
Expected return is the sum of the probability that the other returns will happen.
= (13% * 83%) + (5% * 17%)
= 10.79 % + 0.85%
= 11.64%
Variance = ((Return during boom - Expected return)²*probability of boom) + ((Return during recession - Expected Return)²*probability of recession)
Variance = ((13% -11.64%)² * 83%) + (5% - 11.64%)² * 17%)
= 0.0001535168 + 0.0007495232
= 0.000903
Betty Harrington owns a floor covering firm. Her market research is telling her that she is taking business away from the large home improvement stores in her trade area. One thing that Betty is worried about is that the large stores might fight back by lowering their prices, which hurts everyone except the consumer. The day-to-day challenge of firm growth that this example is referring to is:
Answer:
price stability
Explanation:
In this scenario, the day-to-day challenge of firm growth that this example is referring to is price stability. Since the prices of the competing store are being changed (on purpose) Betty Harrington's firm will have a hard time adjusting in order to continue competing with the larger competing store, especially if the larger store lowers the price too much that Betty's store cannot actually lower theirs to that price. Thus ultimately forcing her out of the market.
Rodriguez Company pays $385,000 for real estate plus $20,405 in closing costs. The real estate consists of land appraised at $193,500; land improvements appraised at $86,000; and a building appraised at $150,500.
Allocate the total cost among the three purchased assets and prepare the journal entry to record the purchase.
Answer: Please see answer in the explanation column
Explanation:
a) Allocate the total cost among the three purchased assets
Total Appraised value of the three assets = Land(193,5000 )+land improvement(86,000) + building (150,500) =$430,000
Total amount of acquisition of assets =Purchase price of assets + closing costs = $385,000 + 20,405= $405,405
1)Asset --Land
Appraised value= $193,500
percentage of appraised value = appraised value of asset / total appraised value of the three assets x 100%= 193,500/430,000 x 100= 45%
Apportioned amount = 45% x $405405 = $182,432.25
2)Asset --Land improvements
Appraised value= $86,000
percentage of appraised value = appraised value of asset / total appraised value of the three assets x 100%= 86,000/430,000 x 100= 20%
Apportioned amount = 20% x $405405 = $81,081
3) Asset --Building
Appraised value= $150,500
percentage of appraised value = appraised value of asset / total appraised value of the three assets x 100%= 150,500/430,000 x 100= 35%
Apportioned amount = 35% x $405405 = $141,891.75
Total cost = Apportioned amount of ( Land + Land improvements +Building ) =
$182,432.25 + $81,081+ $141,891.75= $405,405
b)Journal entry to record purchase of the three assets
Account Debit Credit
Land $182,432.25
Land improvements $81,081
Building $141,891.75
Cash $405,405
In case of resale of goods arising out of a breach of contract, if the seller sets aside goods intended for the contract or completes the manufacture of such goods, he is:
Answer:
not obligated to resell the goods to other buyers
Explanation:
In the course of selling goods, a breach of contract could arise either on the part of the seller or buyer. When this occurs, there are options that the two parties could consider. For a seller who suffers a breach of contract after the completion of the manufacture of goods, he has several actions which he could take. One of them is the resale of these goods to another buyer and sue the buyer for losses that were incurred during the manufacturing process.
However, it is not compulsory that he resells the goods to other buyers. He could also decide to retain the goods until the goods are paid for by the buyer. Another option is to stop the goods if they are already in transit.