Answer:
After-Tax return on Municipal Bond = 7%After-Tax Return on Corporate Bond = 6.72%Explanation:
The main advantage that Municipal Bonds usually carry with them is that they are tax-exempt. As no taxes are paid on them, there is no need to calculate an after-tax return because it is the same as a pre-tax return.
After-Tax return on Municipal Bond = 7%
The Corporate Bond is subject to tax based on the holder's tax bracket.
After-Tax Return on Corporate Bond = 8.4 % * ( 1 - 20%)
After-Tax Return on Corporate Bond = 6.72%
Considering taxes, the Municipal Bond is better.
In many larger U.S. based firms the __________ match(es) the overall strategy of the firm and reinforce(s) the culture emerging from day-to-day activities.
Answer:
Reward system
Explanation:
The reward system is the mechanism that a company uses to provide a compensation to their employees that can include salary, bonuses, equity and perks to keep them happy, maintain loyalty and increase motivation. This allows the company to have a strong team that is willing to work hard in their daily activities to achieve the company's goals.
According to this, the answer is that in many larger U.S. based firms the reward system match(es) the overall strategy of the firm and reinforce(s) the culture emerging from day-to-day activities because the reward system is established in a way in which it contributes to the appropiate implementation of the strategy to achieve the goals and it also helps strengthen the way in which people perform their activities.
The company has a bank loan and has incurred (but not recorded) interest expense of $3,500 for the year ended December 31, 2018. The company must pay the interest on January 2, 2019.
Answer:
The journal entry to record accrued interests:
December 31, 2018, accrued interests on bank loan
Dr Interest expense 3,500
Cr Interest payable 3,500
The journal entry to record the interest payment:
January 2, 2019, accrued interests paid
Dr Interest payable 3,500
Cr Cash 3,500
Saint Nick Enterprises has 17,500 shares of common stock outstanding at a price of $69 per share. The company has two bond issues outstanding. The first issue has 7 years to maturity, a par value of $1,000 per bond, and sells for 101.5 percent of par. The second issue matures in 21 years, has a par value of $2,000 per bond, and sells for 106.5 percent of par. The total face value of the first issue is $250,000, while the total face value of the second issue is $350,000. What is the capital structure weight of debt
Answer:
total weight of debt = 0.343 or 34.3%
Explanation:
stock's market value = 17,500 x $69 = $1,207,500
bond₁'s market value = $250,000 x 101.5% = $256,750
bond₂'s market value = $350,000 x 106.5% = $372,750
total market value of the firm = $1,837,000
weighted capital structure:
market value weight
stocks $1,207,500 0.657
bond₁ $256,750 0.140
bond₂ $372,750 0.203
total $1,837,000 1
total weight of debt = 0.343 or 34.3%
A proposed new project has projected sales of $95,200, costs of $48,160, and depreciation of $3,360. The tax rate is 22 percent. Calculate operating cash flow using the four different approaches. The EBIT approach
Answer:
Approach 1
“EBIT + Depreciation – Taxes” approach:
EBIT = Sales – Cost – Depreciation = $95,200 - $48,160 - $3,360 = $43,680
Tax = EBIT × Tax rate = $43,680 × 0.22 = $9,607
EBIT + Depreciation – Taxes = $43,680 + $3,360 - $9,607 = $37,433
Approach 2
Top-down approach = Sales – Cost – Tax
= $95,200 - $48,160 - $9,607
= $37,433
Approach 3
Tax-shield approach = (Sales – Cost) (1 – tax rate) + (Depreciation × tax rate)
= ($95,200 - $48,160) (1 – 0.22) + ($3,360 × 0.22)
= $36691.2 + $739.2
= $37430.4
Approach 4
Bottom-up approach = (Sales – Cost – Depreciation) (1 – tax rate) + Depreciation
= ($95,200 - $48,160 - $3,360 ) (1 – 0.22) + $3,360
= $34,070.4 + $$3,360
= $37,430.4
2. A Treasury bill with a par value of £100,000 due in two months from now is selling today for £98,039, what is the effective annual rate of interest
Answer:
Effective annual rate = 12.62%
Explanation:
The Effective annual rate of return is the equivalent rate earned where compounding is done frequently at period or interval less than a year.
The EAR can be worked out as follows
EAR = ( (1+r)^n - 1 ) × 100
r- interest rate per period
m- number of periods in a year
EAR - Effective annual rate
So we apply this model to the questions as follows:
Cash return = 100,000- 98,039 =1,961
Return over two months = cash return /price today × 100 =
= 1,961/98,039 × 100 =2.0%
Interest per 2 month = 2.0%
DATA:
r- 2%
n - number of two months in a year = 6
Effective annual rate = ((1+0.02)^6 - 1) × 100= 12.6162 %
Effective annual rate = 12.62%
ABC Gardening operates a commercial plant nursery where it propagates plants for garden centers throughout the region. ABC Gardening has $ 3.5 million in assets. Its yearly fixed costs are $ 470 comma 000, and the variable costs for the potting soil, container, label, seedling, and labor for each gallon-sized plant total $ 1.60. ABC Gardening's volume is currently 500 comma 000 units. Competitors offer the same quality plants to garden centers for $ 3.30 each. Garden centers then mark them up to sell to the public for $ 8 to $ 9, depending on the type of plant.
Requirement 1. Nature Place owners want to earn a 10% return on the company's assets. What is Nature Place's target full cost? Calculate the target full cost for Nature Place. Select the formula labels and enter the amounts. Less: Target full cost.
Requirement 2. Given Nature Place's current costs, will its owners be able to achieve their target profit? Calculate Nature Place's current total full cost.
Requirement 3. Assume that Nature Place has identified ways to cut its variable costs to $1.50 per unit. What is its new target fixed cost? Will this decrease in variable costs allow the company to achieve its target profit?
Requirement 4. Nature Place started an aggressive advertising campaign strategy to differentiate its plants from those grown by other nurseries. Nature Place doesn't expect volume to be affected, but it hopes to gain more control over pricing. If Nature Place has to spend $94,000 this year to advertise and its variable costs continue to be $1.50 per unit, what will its cost-plus price be? Do you think Nature Place will be able to sell its plants to garden centers at the cost-plus price? Why or why not? Determine its cost-plus price.
Answer:
ABC Gardening / Nature Place
1. Nature Place's target full cost, with return on assets = 10%
Sales revenue = $1,650,000 (500,000 x $3.30)
Expected Return on Asset = $350,000 ($3.5 million x 10%)
Target full cost = $1,300,000
Fixed cost = $470,000
Variable cost = $830,000 ($1.66 x 500,000)
2. Nature Place's current total full costs; will its owners achieve their target profit:
Sales revenue = $1,650,000 (500,000 x $3.30)
Current full costs:
Variable cost = $800,000 (500,000 x $1.60)
Fixed costs = $470,000
Current full costs = $1,270,000
Current profit = $380,000
Target profit = $350,000
Excess over target = $30,000
The owners will achieve target profit and make an excess of $30,000
3. With variable costs cut to $1.50 per unit, New target fixed cost. Will it achieve its target profit?
Sales revenue = $1,650,000 (500,000 x $3.30)
Variable costs = $750,000 (500,000 x $1.50)
Annual Fixed costs = $470,000
Profit = $430,000
It will exceed its target profit of $350,000 by $80,000.
4.Advertising cost of $94,000 with variable costs of $1.50 per unit, cost-plus price:
Variable costs = $750,000 (500,000 x $1.50)
Annual Fixed costs = $564,000 ($470,000 + 94,000)
Total cost = $1,314,000
Cost plus = $1,664,000 ($1,314,000 + $350,000)
Cost plus price = $3.33 ($1,664,000/500,000)
Do you think Nature Place will be able to sell its plants to garden centers at the cost-plus price?
It will not be able to sell to garden centers at the cost-plus price.
Why or why not?
The garden centers currently buy at $3.30, a little less than its cost-plus price with advertising cost of $94,000. It will be losing $15,000 if it sells its products to garden centers at their current buying price.
Explanation:
a) Data:
Assets = $3.5 million
Target profit on assets = $350,000 = ($3.5 million x 10%)
Annual Fixed costs = $470,000
Variable costs = $1.60
Volume = 500,000
Competitors price to garden centers = $3.30 each
Selling price to the public = $8 to $9
Total costs and Profit:
Sales revenue = $1,650,000 (500,000 x $3.30)
Variable costs = $800,000 (500,000 x $1.60)
Annual Fixed costs = $470,000
Profit = $380,000
b) In target profit costing, the starting point for calculating costs is the selling price and the target profit. When the profit is deducted from the selling price, a full cost per unit is determined. This determined figure will be the ceiling for costs. Any overrun negatively affects the target profit. Instead of overrunning the target cost, management must work toward a full cost that is less than the established target cost.
Consider a country that is operating under a system of flexible exchange rates. If the central bank in this country imposes an expansionary monetary policy, it would be likely to experience:_________
I. a depreciation of its currency;
II. short-term capital outflows;
III. an appreciation of its currency.
Answer:
i a depreciation of its currency;
Explanation:
A flexible exchange rate is when exchange rate is determined by the forces of demand and supply.
an expansionary monetary policy is a policy where the monetary authorities increase the money supply in the economy.
If exchange rate is flexible and an expansionary monetary policy is carried out, the supply of money would exceed its demand. as a result, the value of money would fall. this is known as depreciation
You are trying to explain to your friends the importance of using real GDP to measure economic health over time, but some of them still insist that nominal GDP is equally good. Use the data given below to show your friends the difference between real and nominal GDP.
Nominal GDP (millions of dollars)= $10,000
Price Level (GDP Deflector)= 92
Required:
What is real GDP given the nominal GDP and price level (GDP deflator)?
Answer: $10,869.57
Explanation:
The Nominal GDP is the total amount of final goods and services produced in a country within a period, usually a year. It is calculated using the current year's prices.
Real GDP adjusts the Nominal GDP for price changes by using the price level of a certain base year.
The GDP Deflator is the price level of the current year and can be useful in calculating how much the prices have risen or fallen from the prices of the base year.
The formula is;
(Nominal GDP/Real GDP)*100 = GDP Deflator
Making Real GDP the subject;
Real GDP = (Nominal GDP/GDP Deflator)*100
= (10,000/ 92) * 100
= $10,869.57
Consider a potential merger between two hypothetical beer companies. Prior to the merger, the first, Ann Hy, is worth $150 billion and the second, Czar Bosch, is worth $100 billion. If they merge, they will gain $30 billion in increased value from reduced costs and additional sales (in present discounted value). Thus the combined value of the new entity (called Ann Hy-Czar Bosch) would be $280 billion. How much more could Czar Bosch hope to get by using the theory of the pie instead of proportional division
Answer:
$3 billion more
Explanation:
Calculation of the amount that Czar Bosch could hope to get by using the theory of the pie instead of proportional division
If we are to use the theory of the pie instead of the proportional division this means that when using the proportional division, their would be likelihood that Czar Bosch would get an amount that is proportional to their market cap, 40% of the $30 billion, or $12 billion and in a situation where the they decide to split the pie this means that Czar Bosch would either get$15 billion or $3 billion more
.
Gonyo Inc., which produces and sells a single product, has provided the following contribution format income statement for December appears below:
Sales (5,000 units) $ 330,000
Variable expenses 175,000
Contribution margin 155,000
Fixed expenses 104,900
Net operating income $50,100
Required:
Redo the company's contribution format income statement assuming that the company sells 5,200 units.
Net Operating Income _______.
Answer:
Net income= 56,300
Explanation:
Giving the following information:
Fixed expenses 104,900
First, we need to determine unitary values:
Selling price= 330,000/5,000= $66
Unitary variable expenses= 175,000/5,000= $35
Now, we can redo the contribution margin income statement for 5,200 units:
Sales= 66*5,200= 343,200
Total variable cost= 35*5,200= (182,000)
Total contribution margin= 161,200
Fixed costs= (104,900)
Net income= 56,300
A contractual arrangement between a parent company and an individual or firm that allows them to operate a certain type of business under an established name and according to specific rules is called
Answer:
Franchise
Explanation:
A contractual arrangement between a parent company and an individual or firm that allows them to operate a certain type of business under an established name and according to specific rules is called franchise.
For instance, Mr Biggs could give the authority to an individual or group of people which would enable them to do the same business in another geographical location.
Hence, franchise is a license that allows individuals or group of people knowledge, processes, trademarks to provide a service.
At one point, Kodak had 90% of the film market, and 85% of the camera market in the United States. It was almost a monopoly. Ironically, this may have hurt them in the global market, i.e. outside the US. This speaks to what aspect of the diamond of national competitive advantage
Answer: Strategy and rivalry
Explanation:
Porter's Diamond Theory of National Competitive Advantage intends to explain to companies how they can gain a competitive advantage in an industry.
Under the Strategy and Rivalry section, it is shown that a company tends to benefit more when it has strong domestic competitions because it can then develop efficient strategies to help it compete in this domestic market and thus survive this competition.
These strategies learnt, can then be implemented on the global stage when the company attempts to become a multinational firm. Kodak as a virtual monopoly in the US market, did not have to worry about competition and so did not develop the strategies that would enable them compete with other companies outside the US when they tried to break into the markets of other countries.
Suppose Sally borrows $1,000 from Harry for one year and agrees to pay a nominal interest rate of 8%. When she borrows the money, both she and Harry expect an inflation rate of 6%.
1. The expected real interest rate on the loan is_______%.
2. Suppose that when Sally pays back the loan after one year, the actual inflation rate turns out to be 4%. The actual real interest rate on the loan is______%.
3A. If the inflation rate turned out to be higher than expected, then_______.
3B. But if inflation turned out to be lower than expected, then_______.
Answer:
1. 1,89%
2. 3,85%
3A. A Lower real rate will be obtained, and Harry is in worse off position
3A. A Higher real rate will be obtained, and Harry is in better off position
Explanation:
Real Interest Rate is the Nominal Return that has been adjusted with the Inflation rate.
The effect of the inflation is to reduce the value of money over time.
If Inflation rate was 6%
Real Interest Rate = ( 1 + nominal return) / (1 + Inflation rate) - 1
= ( 1 + 0.08) / ( 1 + 0.06) - 1
= 0.0189 or 1,89%
If Inflation rate was 4%
Real Interest Rate = ( 1 + nominal return) / (1 + Inflation rate) - 1
= ( 1 + 0.08) / ( 1 + 0.04) - 1
= 0.0385 or 3,85%
A bond with a coupon rate of "5.96" percent and semiannual coupon payments matures in 18 years. The YTM is 6.97 percent. What is the effective annual yield?
Available Options Are:
(A) 7.38%
(B) 5.96%
(C) 6.05%
(D) 7.09%
(E) 6.97%
Answer:
Effective Annual Yield is 7.09%
Explanation:
The Effective Annual Yield can be calculated as under:
Effective Annual Yield = (1 + YTM / n)^n - 1
Here,
YTM is 6.97%
n is 12/6 for semi annual coupon payments
By putting values, we have:
Effective Annual Yield = (1 + 6.97% / 2)^2 - 1
Effective Annual Yield = (1.03485)^2 - 1 = 0.0709145 = 7.09%
Suppose a stock has an expected return of 12% and a standard deviation of 6%. What is the likelihood that this stock returns between 12% and 18%
Answer: 34.13%.
Explanation:
Given : Expected return : [tex]\mu=12\%=0.12[/tex]
Standard deviation: [tex]\sigma=6\%=0.06[/tex]
Let x be the stock returns.
Then, the probability that stock returns between 12% and 18%:
[tex]P(0.12<x<0.18)=P(\dfrac{0.12-0.12}{0.06}<\dfrac{x-\mu}{\sigma}<\dfrac{0.18-0.12}{0.06})\\\\=P(0<Z<1)\ \ \ [\because z=\dfrac{x-\mu}{\sigma}]\\\\=P(Z<1)-P(Z<0)\\\\=0.8413-0.5\ \ \ \text{[By z-table]}\\\\=0.3413[/tex]
Hence, the likelihood that this stock returns between 12% and 18% is 34.13%.
Which of the following is the surest way to verify the reliability of information from a new or unknown source?
1. Determine how well the material fits the goals of the research
2. Decide if the author is known and published in a variety of fields
3. Look for bias in the writing
4. Corroborate the information with other sources
5. Determine the purpose of the material
Answer:
4. Corroborate the information with other sources
Explanation:
The surest way to verify the reliability of information from a new or unknown source is to corroborate the information with other sources.
This simply means that, if you got an information (data) from a new source such as newspaper, website, television, books, radio or anywhere else, you should confirm the credibility and reliability of these information by verifying from one or more sources.
Hence, if the information gotten from a new source is in tandem or accordance with what you find elsewhere, then that information is accurate, reliable and credible.
Answer:
4.
Explanation:
The best way to verify the reliability of information from an unknown source would be to Corroborate the information with other sources. To corroborate means to take an action or information to make it more certain/valid. This is done by gathering similar information from various unconnected sources that provide the same information as the original source.
All of the following are employer payroll taxes except: Multiple Choice Social Security tax equal to that withheld from employees. Medicare tax equal to that withheld from employees. State unemployment tax. Federal unemployment tax. Federal income tax equal to that withheld from employees.
Answer: Federal income tax equal to that withheld from employees.
Explanation:
Federal Income Tax equal is a withholding Tax that the employer takes from an Employee's salary and pays it directly to the Government in form of income taxes.
It will therefore count towards the Income Taxes that the person is to pay during the year.
This is an Employee Payroll Tax because it comes from the Employees's salary.
Carter's preferred stock pays a dividend of $1.00 per quarter. If the price of the stock is $45.00, what is its nominal (not effective) annual rate of return?
Answer:
8.89%
Explanation:
The answer is 8.89%
Here is how we arrived at this.
Dividend = 1$ times 4
= $4 annually
Then we calculate for the nominal rate of return.
This is equal to dividend / price.
= $4/ $45
= 0.0889
To convert this to percentage
0.089 x 100
= 8.89% is the nominal annual rate of return.
Under the constant-money-growth-rate rule, the annual money supply will be constant at the average annual growth rate of:________.
Answer:
real GDP
Explanation:
The above rule was proposed by Milton Friedman that the money supplied by the central bank be increased by constant percentage on annual basis. In other words, constant money growth rate rule suggested money supply growth rate be equal to GDP growth rate annually.
According to Friedman, monetary policy contributes to fluctuation in an economy. He suggested that the best way to stabilize a fluctuating economy is to allow the central bank increase money supply in the long run by a targeted amount annually irrespective of the situation of the economy.
b. Suppose Tom has $5 to spend on Batman and Superman comic books (nothing else matters to Tom). If Tom wants to maximize his utility, how many of each should he buy
Answer:
But 1 Batman comics book, and 2 Superman comics book
Explanation:
Remember, Tom has only $5 to spend on the two books, with the goal of deriving maximum utility. Thus, if he spends on 2 quantity of Superman comics he deeives total marginal utility of 150 (58+92). Then, he may proceed to Batman comics, which gives him a marginal utility of 40.
On June 1, 2015, the Crocus Company began construction of a new manufacturing plant. The plant was completed on October 31, 2016. Expenditures on the project were as follows ($ in millions): July 1, 2015 54 October 1, 2015 22 February 1, 2016 30 April 1, 2016 21 September 1, 2016 20 October 1, 2016 6 On July 1, 2015, Crocus obtained a $70 million construction loan with a 6% interest rate. The loan was outstanding through the end of October, 2016. The company's only other interest-bearing debt was a long-term note for $100 million with an interest rate of 8%. This note was outstanding during all of 2015 and 2016. The company's fiscal year-end is December 31.
What is the amount of interest that Crocus should capitalize in 2016, using the specific interest method (rounded to the nearest thousand dollars)?
Answer:
$7,117,000
Explanation:
There is some information missing that I looked up, hopefully the numbers are the same, but if not you can adjust them.
Weighted average expenditures:
July 1, 2015, $54 million
October 1, 2015, $22 million
February 1, 2016, $30 million
April 1, 2016, $21 million
September 1, 2016, $20 million
October 1, 2016, $6 million
we must first determine the amount of interest for 2015:
[($54 x 6/6) + ($22 x 3/6)] x 6% / 6/12 = $1.95 million
weighted average expenditures 2016:
($54 + $22 + $1.95 = $77.95) x 10/10 = $77.95$30 x 9/10 = $27$21 x 7/10 = $14.7$20 x 2/10 = $4$6 x 1/10 = $0.6total $124.25 millioninterests:
$70 x 6% x 10/12 = $3,500,000($124.25 - $70) x 8% x 10/12 = $3,617,000 (rounded to nearest thousand)Total = $7,117,00053. [LO 11.4] At the beginning of year 1, Lisa and Marie were equal shareholders in LM Corporation, an S corporation. On April 30, year 1, Lisa sold half of her interest to Shelley. On August 8, year 1, Marie sold her entire interest to George. On December 31, year 1, the corporation reported net income of $50,000. How is this income allocated to Lisa, Marie, Shelley, and George
Answer:
• Lisa $16,611
• Marie $15,070
• Shelley $8,391
• George $9,933
Explanation:
Daily allocation of $50,000 net reported net income
= $50,000/365
= $137 per day
• Income allocated to Lisa would be ;
Since Lisa and Marie are equal shareholders; meaning both would have 50% stake each in the business. Moreover, since Lisa sold half of her stake I.e 50% ÷ 2 = 25% to Shelley, her share would be;
(50% × 120 × 137) + (25% × 245 × 137) = $16,611
° Note Jan 1 to April 30 is 120 days, while the balance is 365 days - 120 days hence 245 days
• Income allocated to Marie would be;
Since Marie have 50% stake in the business and also sold her entire interest to George, her share will be;
50% × 220 × 137 = $15,070
°Note Jan 1 to August 8 is 220 days
• Income allocated to Shelley would be;
Since Shelly bought 25% out of the 50% stake that Lisa have in the business, her share will be;
25% × 245 × 137 = $8,391
°Note 245 days will be applied to Shelly's share which represent the number of days she purchased part of Lisa's interest in the business. I.e. 365 days - 120 days = 245 days
• Income allocated to George would be;
Since George purchased the whole 50% of Marie's stake in the business, his share of profit will be;
50% × 145 × 137 = $9,933
° Note 145 days will also be applied to George which represent the balance of days with which he purchased Marie's whole stake in the business. I.e 365 days - 220 days = 145 days
The owner of Kat Motel wants to develop a time standard for the task of cleaning a cat cage. In a preliminary study, she observed one of her workers perform this task six times, with the following results:Observation 1 2 3 4 5 6Time (secs) 109 117 117 128 125 129Required:What is the normal time for this task if the employee worked at a 32 percent slower pace than average and an allowance of 14 percent of job time is used?
Answer:
Standard Time = 206.6 secs
Explanation:
In order to calculate the time for this task if the employee worked at a 32 percent slower pace than average, we need to calculate the normal time first by using the following formula
Normal Time = Average element-time / performance rating
Average element time = Sum of observations / No. of observations
Average element time = 109 +117 +117 +128 +125 +129 / 6
Average element time = 725/6 = 120.83
Performance rating = 100 - 32 = 68%
Normal Time = 120.83 / 0.68 = 177.7 secs
Standard Time = Normal Time / (1-Allowance)
Standard Time = 177.7 / (1-0.14)
Standard Time = 206.6 secs
The payroll register of Patel Engineering Co. indicates $2,640 of social security withheld and $660 of Medicare tax withheld on total salaries of $44,000 for the period. Federal withholding for the period totaled $7,920. Retirement savings withheld from employee paychecks were $2700 for the period.
Provide the journal entry for the period's payroll. If an amount box does not require an entry, leave it blank.
Salaries Expense 44,000
Social Security Tax Payable 2,640
Medicare Tax Payable 660
Employees Federal Income Tax Payable
Retirement Savings Deductions Payable
Salaries Payable
Answer:
DR Salary Expense $44,000
CR Social Security Taxes Payable $2,640
CR Medicare Taxes Payable $660
CR Federal Withholding Taxes Payable $7,920
CR Retirement Contribution Payable $2,700
CR Salaries Payable $30,080
(To record Salaries expense and payables)
During March, Pendergraph Corporation incurred $65,000 of actual Manufacturing Overhead costs. During the same period, the Manufacturing Overhead applied to Work in Process was $67,000. The journal entry to record the incurrence of the actual Manufacturing Overhead costs would include a:
Answer:
debit to Manufacturing Overhead of $65,000
Explanation:
Manufacturing overhead cost are those that are shared to different processes that do not contribute directly to product being manufactured.
For example raw materials is a direct contributor to goods, while labour is a overhead cost that indirectly contributed to the good.
On the given scenario it is the actual amount incurred that will be debited to the books of the company.
So there will be a debit to Manufacturing Overhead of $65,000
debits to Work in Process—Roasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows: Work in process, August 1, 1,000 pounds, 20% completed $2,800* *Direct materials (1,000 X $2.6) $2,600 Conversion (1,000 X 20% X $1) 200 $2,800 Coffee beans added during August, 31,000 pounds 79,050 Conversion costs during August 33,748 Work in process, August 31, 1,600 pounds, 30% completed ? Goods finished during August, 30,400 pounds ? All direct materials are placed in process at the beginning of production. a. Prepare a cost of production report, presenting the following computations: Direct materials and conversion equivalent units of production for August. Direct materials and conversion costs per equivalent unit for August. Cost of goods finished during August. Cost of work in process at August 31.
Answer:
Costs per Equivalent Unit Materials 2.5515 Conversion 1.1576
Cost of goods finished during August. $ 112759.83
Work In Process Ending Costs $ 4638.05
Explanation:
The equivalent units are found by adding the percent of ending WIP to the completed units.
Equivalent Units
Particulars Units % of Completion Equivalent Units
Materials Conversion Materials Conversion
End. WIP 1600 100 30 1600 480
Completed 30400 100 100 30400 30400
Equivalent Units 32000 30880
Costs Accounted For:
Costs Materials Conversion
Beg. WIP $2600 200
Costs Added 79050 33748
Total Costs 81650 35748
Equivalent Units 32000 30880
Costs per Equivalent 81650/32000 35748/30880
Unit = 2.5515 1.1576
Cost of goods finished during August. $ 112759.83
Materials = 2.5515 * 30400= 77567.5
Conversion = 1.1576 * 30400= 35192.33
Total Costs of finished Goods = 112759.83
Work In Process Ending Costs $ 4638.05
Materials = 2.5515 * 1600= 4082.4
Conversion = 1.1576 * 480= 555.648
Total Costs :
Finished Goods + Work In Process Ending Costs = 112759.83+4638.05
= 117 397.88 ≅117398.0
Costs Accounted For
Materials Costs + Conversion Costs = (81650 +35748) 117398.0
Note: The CPR is correct when both the total costs calculated and accounted for are equal.
On September 1, the board of directors of Colorado Outfitters, Inc., declares a stock dividend on its 15,000, $6 par, common shares. The market price of the common stock is $35 on this date.
Required: 1. 2. & 3. Record the necessary journal entries assuming a small (10%) stock dividend, a large (100%) stock dividend, and a 2-for-1 stock split. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
Sept 1,
DR Stock dividends $52,500
CR Common stock $9,000
CR Additional paid in capital $43,500
Sept 1,
DR Stock dividends $90,000
CR Common stock $90,000
Sept 1,
No journal entry required.
Workings
Small Dividends
Stock dividends
= 15,000 * 10% * $35
= $52,500
Common stock
= 15,000*10%* $6
= $9,000
Additional paid in capital
= 52,500 - 9000
= $43,500
Large Dividends
Stock dividends
= 15,000 * $6
= $90,000
Common stock
= 15,000 * $6
= $90,000
No entry for stock splits.
Depletion Down Deep Mining Co. acquired mineral rights for $81,250,000. The mineral deposit is estimated at 65,000,000 tons. During the current year, 17,550,000 tons were mined and sold.
a. Determine the depletion rate. If required, round your answer to two decimal places. $ per ton
b. Determine the amount of depletion expense for the current year. $ Feedback
c. Journalize the adjusting entry on December 31 to recognize the depletion expense. Dec. 31
Depletion Expense Accumulated Depletion"
Answer and Explanation:
The computation is shown below:
a. For depletion rate
= Acquired mineral rights ÷ estimated mineral deposits
= $81,250,000 ÷ 65,000,000 tons
= $1.25
b. For the amount of depletion expense for the current year is
= Depletion rate × current year mined
= $1.25 × 17,550,000 tons
= $21,937,500
c. The journal entry is shown below:
Depletion Expense $21,937,500
To Accumulated Depletion $21,937,500
(Being the depletion expense is recorded)
For recording this we debited the depletion expense as it increased the expense and credited the accumulated depletion as it reduced the assets
You have a $4 million portfolio consisting of a $100,000 investment in each of 20 different stocks. The portfolio has a beta of 1.1. You are considering selling $100,000 worth of one stock with a beta of 0.9 and using the proceeds to purchase another stock with a beta of 1.4. What will the portfolio’s new beta be after these transactions? Show your work.
Answer:
1.1125
Explanation:
the relative weight of the stocks that you are selling is $100,000/$4,000,000 = 0.025 = 2.5% of the portfolio
this means that their effect on the portfolio's beta was 0.9 x 0.025 = 0.0225
the new stocks that you want to purchase have a beta of 1.4 and their relative effect on the portfolio's beta will be 1.4 x 0.025 = 0.035
the difference between both stocks = 0.035 - 0.0225 = 0.0125
that means that the portfolio's new beta = 1.1 + 0.0125 = 1.1125
Transactions are typically processed either [A] all together for a defined time window (e.g. end of a day or week) or [B] processed as each transaction occurs. The second method [B] is called ________ processing.
Answer: real time processing
Explanation:
Real time processing is when transactions are processed as each transaction occurs. In real time processing, the transactions are processed in a little period of time.
Good examples of real-time processing systems are traffic control systems. Real time processing is different from the batch processing which involves when transactions are processed all together for a defined time window.