Answer:
1. Compute equivalent units of production for materials and for conversion costs
Equivalent units of Materials: (Units in Beginning Work in process + Units started into production - Units in ending work in process) + Units in ending work in process
= (0 + 37,300 - 8,200) + 8,200
= 37,300
Equivalent units of conversion costs : (Units in Beginning Work in process + Units started into production - Units in ending work in process) + (Units in ending work in process * 40%)
= (0 + 37,300 - 8,200) + (8,200 * 40%)
=29,100 + 3,280
= 32,380
2. Determine the unit costs of production
Unit costs of materials = Direct materials / Equivalent units of Materials
= $78,330 / 37,300
= $2.1
Unit costs of conversion costs = (Direct labor + Overhead) / Equivalent units of conversion costs
= ($66,500 + $105,114) / 32,380
= $171,614 / 32,380
= $5.3
3. Show the assignment of costs to units transferred out and in process
Units ending work in process = Materials + Conversion costs
where, Materials = 8,200 * $2.1 = $8,202
Conversion costs = 3,281 * $5.3 = $17,389
( 8,200 * 40%)
Units ending work in process = $8,202 + $17,389
= $25,591
The value (intrinsic value) of any financial asset is: Group of answer choices the current market price present value of its future cash flows present value of all past cash flows the future value of the assets cash flows the return that you get from holding the asset
Answer:
The value (intrinsic value) of any financial asset is:
present value of its future cash flows
Explanation:
The intrinsic value is not the current market value. It is the present value of future cash flows. This means that future cash flows are discounted to their present values. This value represents the true value of the financial asset. By calculating the intrinsic value of the financial asset, the analyst takes away the noise generated by market sentiments as conveyed by current market values.
Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes):
Income Statement Balance Sheet
Sales $38,000 Assets $27,300 Debt $6,700
Costs 32,600 Equity 20,600
Net income $5,400 Total $27,300 Total $27,300
The company has predicted a sales increase of 20 percent. Assume the company pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not.
a. Prepare the pro forma statements.
b. Determine the external financing needed.
Answer and Explanation:
a. Proforma income statement
Sales $45,600
Costs $39,120
Net income $6,480
b. Proforma balance sheet
Particulars Amount Liabilities Amount
Assets $32,760 Debt $8,950
Equity $23,810
Total $32,760
External finance = Predicted debt - Beginning debt
= $7,585 - $6,700
= $885
Working note:-
For pro forma statements:
Sales = $38,000 × (1 + 0.20)
= $38,000 × 1.20
= $45,600
Costs = 32,600 × (1 + 0.20)
= $32,600 × 1.20
= $39,120
Net income = Sales - Costs
= $45,600 – 39,120
= $6,480
Assets = 27,300 × (1 + 0.20)
= 27,300 × 1.20
= $32,760
Equity = Beginning balance + Net income - Dividend
= $20,600 + $6,480 - ($6,480 × 1 ÷ 2)
= $20,600 + $6,480 - $3,240
= $23,810
Debt = Assets - Equity
= $31,760 - $23,810
= $8,950
Fuller Food Company distributes coupons which may be presented (on or before a stated expiration date) to grocers. The grocers are reimbursed when they send the coupons to Fuller. In Fuller's experience, 50% of such coupons are redeemed, and generally one month elapses between the date a grocer receives a coupon from a consumer and the date Fuller receives it. During 2012 Fuller issued two separate series of coupons as follows:
Issue On Total Value Consumer Expiration Date Amount Disbursed as of 12/31/12
1/1/12 $720,000 6/30/13 $300,000
7/1/12 500,000 12/31/12 190,000
1. The December 31, 2012 balance sheet should indicate a liability for unredeemed coupons of:
a. $730,000
b. $60,000
c. $124,000
d. $120,000
e. $365,000
2. Case Corporation issues $100,000, 10%, five-year bonds at 94. The total interest expense over the life of the bonds is:
a. $56,000
b. $44,000
c. $50,000
d. $54,000
e. $46,000
Answer:
1. c.$124,000
2. e.$46,000
Explanation:
The Fuller company has issued two bonds with separate coupons. The liability for unredeemed bond at December 31, 2012 is $124,000.
The value of bond when issued is $720,000
Value of bond at expiration date is $300,000
720,000 / 300,000 = 2.4
2.4 * 190,000 = 456,000 / 3.67 years
= $124,000
Case corporation has issued bond with value 94 issued at par with 10% coupon rate.
Using the amortization bond table we get $46,000.
$(100000 / 94 ) * 10% = 106.38 * 5 years
= 5,319.20 * 8.64 amortizing rate
= $46,000
The management team of Wickersham Brothers Inc. is preparing its annual financial statements.
The statements are complete, except for the Statement of Cash Flows.
The completed comparative Balance Sheets and Income Statements are summarized:
Balance Sheet
Assets: Current Year Prior Year
Cash $95,700 $114,900
Accounts receivable 124,000 108,500
Merchandise inventory 93,000 100,750
Property and equipment 176,000 93,000
Less: Accumulated
depreciation (50,640) (26,000)
Total assets $438,060 $391,150
Liabilities:
Accounts payable $15,500 $18,600
Salaries and Wages Payable 3,100 1,550
Notes payable, long-term 77,500 93,000
Stockholders' Equity:
Common stock 144,000 124,000
Retained earnings 197,960 154,000
Total Liabilities and
Stockholders' Equity $438,060 $391,150
Income Statement
Sales $420,000
Cost of goods sold 220,000
Depreciation expense 24,640
Other expenses 105,000
Net income $70,360
Other information from the company's records includes the following:
a. Bought equipment for cash, $83,000.
b. Paid $15,500 on long-term note payable.
c. Issued new shares of common stock for $20,000 cash.
d. Cash dividends of $26,400 were declared and paid to stockholders.
e. Accounts Payable arose from inventory purchases on credit.
f. Income tax expense ($17,590) and interest expense ($4,650) were paid in full at the end of both years and are included in Other Expenses.
Required:
Prepare the Statement of Cash Flows, using the indirect method. Include any supplemental disclosures.
(Enter any deductions and cash outflows as a negative value)
Answer:
Wickersham Brothers Inc.
Statement of Cash Flows, indirect method:
Operating Activities:
Adjustment of Net Income $70,360
Add Depreciation 24,640
Cash from operations $95,000
Working capital adjustments:
Accounts receivable -$15,500
Inventory 7,750
Accounts Payable -$3,100
Salaries & Wages Payable 1,550
Income Tax expense -$17,590
Interest expense -$4,650
Cash flow from operating activities $64,460
Financing Activities:
Long-term note payable -$15,500
Common Stock $20,000
Dividend -$26,400
Cash flow from financing activities -$21,900
Investing Activities:
Equipment -$83,000
Net Cash flows ($40,440)
Explanation:
a) Balance Sheet
Assets: Current Year Prior Year
Cash $95,700 $114,900
Accounts receivable 124,000 108,500
Merchandise inventory 93,000 100,750
Property and equipment 176,000 93,000
Less: Accumulated
depreciation (50,640) (26,000)
Total assets $438,060 $391,150
Liabilities:
Accounts payable $15,500 $18,600
Salaries & Wages Payable 3,100 1,550
Notes payable, long-term 77,500 93,000
Stockholders' Equity:
Common stock 144,000 124,000
Retained earnings 197,960 154,000
Total Liabilities and
Stockholders' Equity $438,060 $391,150
b) Income Statement
Sales $420,000
Cost of goods sold 220,000
Depreciation expense 24,640
Other expenses 105,000
Net income $70,360
c) Operating Activities:
Accounts receivable -$15,500
Inventory 7,750
Accounts Payable -$3,100
Salaries & Wages Payable 1,550
Income Tax expense -$17,590
Interest expense -$4,650
Net Income $70,360
Add Depreciation 24,640
Cash from operations $95,000
d) Financing Activities:
Long-term note payable -$15,500
Common Stock $20,000
Dividend -$26,400
e) Investing Activities:
Equipment -$83,000
f) The indirect method is one of the two methods for preparing the Statement of Cash Flows. This method takes the net income and adjusts non-cash flow expenses, like depreciation. It is prepared through a reconciliation of balances, of inflows and outflows during two periods.
Suppose you invest $ 850 in an account paying 7 % interest per year. a. What is the balance in the account after 2 years? How much of this balance corresponds to "interest on interest"? b. What is the balance in the account after 35 years? How much of this balance corresponds to "interest on interest"?
Answer and Explanation:
a. The computation of balance in the account after 2 years is shown below:-
Balance in account in 3 years = Future value = Present value (1+ interest rate)^No of years
= 850 × (1 + 7%)^2
= 973.165
Total compounded Interest = 973.165 - 850
= 123.165
Total Simple Interest = 850 × 0.07 × 2
= 119
Balance corresponds to the interest on interest = Total compounded Interest - Total simple interest
= 123.165 - 119
= 4.165
b. The computation of balance in the account after 35 years and balance corresponds to "interest on interest" is shown below:-
Future value = Present value (1+ interest rate)^No of years
= 850 × (1 + 7%)^35
= 9,075.094262
or
= 9,075.09
Total compounded Interest = 9075.09 - 850
= 8,225
Total Simple Interest = 850 × 0.07 × 35
= 2082.5
Balance corresponds to the interest on interest = Total compounded Interest - Total simple interest
= 8,225 - 2,082.5
= 6,142.5
Klumper Corporation is a diversified manufacturer of industrial goods. The company’s activity-based costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Activity Rates Supporting direct labor $ 9 per direct labor-hour Machine processing $ 3 per machine-hour Machine setups $ 40 per setup Production orders $ 170 per order Shipments $ 115 per shipment Product sustaining $ 750 per product Activity data have been supplied for the following two products: Total Expected Activity K425 M67 Number of units produced per year 200 2,000 Direct labor-hours 1,050 40 Machine-hours 2,800 30 Machine setups 17 2 Production orders 17 2 Shipments 34 2 Product sustaining 2 2 Required: How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system?
Answer:
Instructions are below.
Explanation:
Giving the following information:
K425 M67
Number of units produced per year 200 2,000
Direct labor-hours 1,050 40
Machine-hours 2,800 30
Machine setups 17 2
Production orders 17 2
Shipments 34 2
Product sustaining 2 2
To calculate the total overhead allocated to each product, we need to use the following formula:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
K425:
Supporting direct labor= 9*1,050= 9,450
Machine processing= 3*2,800= 8,400
Machine setups= 40*17= 680
Production orders= 170*17= 2,890
Shipments= 115*34= 3,910
Product sustaining= 750*2= 1,500
Total overhead= $26,830
M67:
Supporting direct labor= 9*40= 360
Machine processing= 3*30= 90
Machine setups= 40*2= 80
Production orders= 170*2= 340
Shipments= 115*2= 230
Product sustaining= 750*2= 1,500
Total overhead= $2,600
International trade promotes economic growth when it allows any two countries to grow (in their combined production) beyond (above) their pre-trade production possibilities curve (PPC).
a. True
b. False
Answer: True
Explanation:
The Production Possibilities Curve (PPC) is meant to illustrate how a country produces goods and services given the limited resources it has. The curve represents the various amounts that have to be traded off of 2 goods to produce more or less of one good.
The Curve shows that it is best that a country produces those goods that is good at producing so that it can produce more of it and then trade with the rest of the world for the goods it isn't too efficient at producing. If both countries involved in the trade are able to grow beyond (above) their pre-trade production possibilities curve then the trade would have promoted economic growth.
Suppose a society begins by producing 3 units of X and 4 units of Y and then alters production to 4 units of X and 4 units of Y. If the quantity and quality of resources and the technology being used remain unchanged, then: Group of answer choices
Answer:
This situation means that resources were not being efficiently used.
If society managed to produce 1 more unit of X with the same resources and technology, this means that some resources were idle in the past, which causes inefficiency.
This also means that the combination 3 units of X and 4 units of Y is a point inside the PPF. However, we do not know if the combination 4 units of X and 4 units of Y is a point inside the PPF, or on the PPF, because there could be some other combination that could be even more efficient (for example 5 units of both X and Y with the same resources and technology).
Thomas, the manager of an apartment complex, rented an apartment to Donna. A few weeks later, Donna complained that the hot water did not work. Thomas hired Hometown Plumbers to fix the hot water, but the job was not successful. A few days later Donna moved out since she had no hot water. She sued the landlord and Thomas for breach of contract.
Answer:
The landlord is liable but not thomas
Explanation:
Even though Thomas rented the apartment to Donna, he is just the manager and not the owner of the apartment. There is a difference between the landlord and Thomas the property manager. The landlord actually owns the apartment or the building. Thomas on the other hand, only offers a third party service because he was hired by the owner of the apartment to handle the day to day operations of taking care of the building. The Landlord is therefore liable for this breach of contract as he is known to be the apartment owner.
Answer the following questions on the basis of the three sets of data for the country of North Vaudeville: (A ) ( B ) ( C )
(A) (B) (C)
Price level Real GDP Price level Real GDP Price level Real GDP
110 240 110 290 100 215
100 240 100 265 100 240
95 240 95 240 100 265
90 240 90 215 100 290
a. Which set of data illustrates aggregate supply in the immediate short-run in North Vaudeville?
The data in : ....(A or B or C).
Which set of data illustrates aggregate supply in the short run in North Vaudeville? The data in : .... (B or C or A).
Which set of data illustrates aggregate supply in the long run in North Vaudeville? The data in : .....(A or B or C).
b. Assuming no change in hours of work, if real output per hour of work decreases by 15 percent, what will be the new levels of real GDP in the right column of B?
Instructions: Round your answers to 2 decimal places.
With a price level of 110, new output = .............
With a price level of 100, new output = ............
With a price level of 95, new output = ...............
With a price level of 90, new output = ..........
Does the new data reflect an increase in aggregate supply or does it indicate a decrease in aggregate supply? ............(Decrease or Increase).
Answer:
North Vaudeville
a. Set of data which illustrates aggregate supply
1. in the immediate short-run:
The data in: A
2. in the short run:
The data in: B
3. in the long run:
The data in: C
b. (B) New GDP Output
Price level Real GDP Price level Real GDP
110 290 110 246.50
100 265 100 225.25
95 240 95 204.00
90 215 90 182.75
Does the new data reflect an increase in aggregate supply or does it indicate a decrease in aggregate supply? ............Decrease
Explanation:
North Vaudeville
(A) (B) (C)
Price level Real GDP Price level Real GDP Price level Real GDP
110 240 110 290 100 215
100 240 100 265 100 240
95 240 95 240 100 265
90 240 90 215 100 290
b) In the short-run, aggregate supply in North Vaudeville increases as price increases, implying that the real GDP in output terms increases with price increases.
c) In the long-run, aggregate supply in North Vaudeville does not increase with price increases, but it is influenced by other factors of production, like labor, capital, and technology.
d) In the immediate short-run, aggregate supply in North Vaudeville remains constant at different price levels.
North-Va-ud-ev-ille
a. Set of data that illustrates the aggregate supply
1. in the immediate short-run:
The data in: A
2. in the short run:
The data in: B
3. in the e-long-ate run:
The data in: C
What is Aggregate supply?b. (B) New GDP Output
Price level Real GDP Price level Real GDP
110 290 110 246.50
100 265 100 225.25
95 240 95 204.00
90 215 90 182.75
Does the new data con-template an increase in aggregate supply or accomplishes it suggest a decrease in aggregate supply? Decrease
North-Va-ud-ev-ille
(A) (B) (C)
Price level Real GDP Price level Real GDP Price level Real GDP
110 240 110 290 100 215
100 240 100 265 100 240
95 240 95 240 100 265
90 240 90 215 100 290
b) In the short-run, aggregate supply in North-Va-ud-ev-ille grows as price increases, suggesting that the real GDP in output terms improves with price increases.
c) In the long-run, aggregate supply in North-Va-ud-ev-ille does not increase with price increases, but it is influenced by other characteristics of production, like struggle, prosperity, and technology.
d) In the immediate short-run, aggregate supply in North remains un-changing at different price levels.
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Holmes Company produces a product that can be either sold as is or processed further. Holmes has already spent $96,000 to produce 1,375 units that can be sold now for $89,500 to another manufacturer. Alternatively, Holmes can process the units further at an incremental cost of $290 per unit. If Holmes processes further, the units can be sold for $440 each. Should Holmes sell the product now or process it further
Answer:
Yes
Explanation:
The computation is shown below:
Particulars Sales As Is Process further Incremental Accounting
Sales $89,500 $605,000 $515,500
(1,375 units × $440)
Less:
Additional Process costs $398,750 $398,750
(1,375 units × $290)
Total $89,500 $206,250 $116,750
Based on the incremental income, Holmes should process it further.
cost $24,000 with a six-year life and no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the payback period for this machine?
Answer:
4 years
Explanation:
The computation of the payback period is shown below:
Payback period is
= Cost of a Machine ÷ Annual cash flow
where,
Cost of a machine = $24,000
And, the annual cash flow is
= Net Income + Depreciation expense
= $2,000 + $4,000
= $6,000
Now placing these values to the above formula
So, the payback period is
= $24,000 ÷ $6,000
= 4 years
Two equal-sized newspapers have an overlap circulation of 10% (10% of the subscribers subscribe to both newspapers). Advertisers are willing to pay $24 to advertise in one newspaper but only $45 to advertise in both, because they're unwilling to pay twice to reach the same subscriber. Suppose the advertisers bargain by teling each newspaper that they're going to reach agreement with the other newspaper, whereby they pay the other newspaper $21 to advertise. According to the nonstrategic view of bargaining, each newspaper would earn ____________ with the advertisers. The total gain for the two newspapers from reaching an agreement is $ of the $21 in value added by reaching an agreement _____________.
Suppose the two newspapers merge. As such, the advertisers can no longer bargain by telling each newspaper that they're going to reach agreement with the other newspaper. Thus the total gains for the two parties (the advertisers and the merged newspapers) from reaching an agreement with the advertisers are $21.
According to the nonstrategi argaining, each merged newspaper will earn ___________in an agreement with the advertisers. This gain to the merged newspaper is_____________than the total gains to the individual newspapers pre-meger.
Answer:
Each newspaper would earn $10.50 with the advertisers. The total gain for the two newspapers from reaching an agreement is $ of the $21 in value added by reaching an agreement $21
Each merged newspaper will earn $22.50 in an agreement with the advertisers.
The merged newspapes is GREATER
Explanation:
Each newspaper would earn $10.50 with the advertisers. The total gain for the two newspapers from reaching an agreement is $ of the $21 in value added by reaching an agreement $21
Each merged newspaper will earn $22.50 in an agreement with the advertisers.
The merged newspaper is GREATER
Below is the calculation:
1.$21/2=$10.50
2.$10.50+$10.50=$21
3.$45/2=$22.50
4. GREATER because $22.50 is greater than the total gains to the individual newspapers pre-meger of $21