Answer:
Days in Receivables:
Year 2:
= Average Receivables/Sales x 365 days
= $11,000/$82,500 x 365 days
= 48.67
= 49 days
Year 1:
= Average Receivables/Sales x 365 days
= $10,000/$78,000 x 365 days
= 46.79
= 47 days
Explanation:
a) Data:
Sales & Receivables
Year 2: Sales are $82,500; average accounts receivable is $11,000.
Year 1: Sales are $78,000; average accounts receivable is $10,000
b) he days' sales in receivables for company A measures the efficiency of credit collection by showing the number of days it takes company A to receive cash from its credit customers. It is an efficiency ratio that measures management's ability to manage credit policies.
Consider the following information for Maynor Company, which uses a periodic inventory system:
Transaction Units Unit Cost Total Cost
January1 Beginning Inventory 34 $84 $2,856
March 28 Purchase 44 90 3,960
August 22 Purchase 68 94 6,392
October 14 Purchase 73 100 7,300
Goods Available for Sale 219 $20,508
The company sold 73 units on May 1 and 68 units on October 28.
Required:
Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods.
A. FIFO
B. LIFO
C. Weighted Average.
Answer:
A. FIFO - 78 units and $7,770 and Cost of Goods Sold $12,738
B. LIFO - Inventory Valuation $7,312 and Cost of Goods Sold $13,196
C. Weighted Average - inventory Valuation $7,304 and Cost of Goods Sold $13,204
Explanation:
Detailed calculation as under:
A. FIFO
First 73 Units are sold from the inventory on May 1. Therefore, we first take the beginning inventory units and then we take the next in line purchases made during the period. In this case the first 34 units are completely taken and then out of the 44 units only 39 units are taken.
Next 68 units are sold from the inventory on October 28. Now we will take the remainder 5 units bought on March 28 (which are not yet sold). Then we take 63 units out of the 68 units purchased on August 22.
The company's ending inventory on FIFO Basis is remaining 5 units bought on 22 August and 73 units bought on 14 October. There total value is (5 x 94) + (73 x 100) = $7,770
Cost of Goods Sold = Total Goods Cost available for sale - Inventory ending valuation
$12,738 = $20,508 - $7,770
B. LIFO
First 73 Units are sold from the inventory on May 1. Therefore, we first take the units purchased on 28 March and then we take the beginning inventory. In this case the first 44 units are completely taken and then out of the 34 units only 29 units are taken.
Next 68 units are sold from the inventory on October 28. Now we will take the units bought on 14 October i.e. 68 units out of the 73 units bought.
The company's ending inventory on LIFO Basis is remaining 5 units in the beginning inventory, remaining 5 units bought on 14 October and 68 units bought on 22 August. There total value is (5 x 84) + (5 x 100) + (68 x 94) = &7,312
Cost of Goods Sold = Total Goods Cost available for sale - Inventory ending valuation
$13,196 = $20,508 - $7,312
C. Weighted Average
In order to calculate Weighted average cost method we divide the total cost of inventory (Beginning and Purchased) with the total units, this yields average cost per unit. Then we multiple the average cost per unit with the units remaining after sales. As shown below:
$20,508 / 219 = $93.64 per unit
$93.64 x 78 units = $7,304
1. A small-scale businessman deposits money at the beginning of each year into his savings account, depending on the level of the business’ returns. He deposits $1000 in the first year, $3000 in the second year, $5000 in the third and $7000 in the fourth year and annual interest rate of 7%. What is the value of the investment at the time of his first deposit?
Answer:
The value of the investment at the time of his first deposit is $13,855.
Explanation:
The Value of the Investment at the time of his first deposit is its Net Present Value.
Calculation of the Net Present Value of this Investment is as follows ;
Hint : Find the Present Value of individual deposits and sum them up
PV = FV / (1 + r) ^n
Year 0 = $1000 / (1.07)^0
= $1,000
Year 1 = $3000 / (1.07)^1
= $2,804
Year 2 = $5000 / (1.07)^2
= $4,367
Year 2 = $7000 / (1.07)^3
= $5,714
Net Present Value = $1,000 + $2,804 + $4,367 + $5,714
= $13,855
The U.S. Congress passed a stimulus bill in February 2009 to help remove the economy from a recessionary gap. This is an example of the use of
Answer: expansionary fiscal policy
Explanation:
Expansionary fiscal policy is used to
boost the aggregate demand, and this will lead to increase in output and also employment.
Expansionary fiscal policy methods include, transfer payments, reduction in taxes, rebates, increase in government spending.
The U.S. Congress passed a stimulus bill in February 2009 to help remove the economy from a recessionary gap. This is an example of the use of expansionary fiscal policy.
At the beginning of year 1, Looby Corp. purchases equipment for $100,000. The equipment has a residual value of $20,000 and an expected useful life of 10 years. What is accumulated depreciation at the end of year 2 using straight-line depreciation
Answer:
Accumulated Depreciation at the end of year = $16,000
Explanation:
Under the straight line method of depreciation, the cost of an asset less the salvage value is spread equally over the expected useful life.
An equal amount is charged as annual depreciation over the life of the asset. The annual depreciation is calculated as follows:
Annual depreciation:
= (cost of assets - salvage value)/ Estimated useful life
Cost - 100,000
Residual value = 20,000
Estimated useful life = 10 years
Annual depreciation = (100,000- 20,000)/10 =8,000
Annual depreciation = 8,000
Accumulated Depreciation for 2 years = Annual depreciation× number of years
= 8,000× 2 = 16,000
Accumulated Depreciation for 2 years = $16,000
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
Labor related $ 6.00 per direct labor-hour
Machine related $ 4.00 per machine-hour
Machine setups $ 50.00 per setup
Production orders $ 90.00 per order
Shipments $ 14.00 per shipment
General factory $ 9.00 per direct labor-hour
Cost and activity data have been supplied for the following products:
K425 M67
Direct materials cost per unit $ 13.00 $ 56.00
Direct labor cost per unit $ 5.60 $ 3.50
Number of units produced per year 200 2,000
Total Expected Activity
K425 M67
Direct labor-hours 80 500
Machine-hours 100 1,500
Machine setups 1 4
Production orders 1 4
Shipments 1 10
Required:
Compute the unit product cost of each product listed above. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)
K425 M67
Unit product cost $ $
Answer:
Instructions are below.
Explanation:
We were provided with the activity rates. To calculate the total cost, first, we need to allocate overhead to both product lines:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Product K425:
Allocated MOH= (6*80) + (4*100) + (50*1) + (90*1) + (14*1) + (9*80)
Allocated MOH= $1,754
Product M67:
Allocated MOH= (6*500) + (4*1,500) + (50*4) + (90*4) + (14*10) + (9*500)
Allocated MOH= $14,200
Now, we can calculate the unitary cost:
Product K425:
Unitary cost= 13 + 5.6 + (1,754/200)
Unitary cost= $27.37
Product M67:
Unitary cost= 56 + 3.5 + (14,200/2,000)
Unitary cost= $66.6
In #31, Kathryn and Jose decide to try mediation instead of arbitration. They can select one of the following, which are the typical types of mediation (select one):
Answer: e. two of the above.
Explanation:
The typical types of mediation in the options include both Facilitative and Evaluative;
Facilitative mediating is the most common and basic of mediation techniques. It involves the use of mediators who create an environment for negotiations. In other words they facilitate negotiations amongst the parties in conflict in the hopes that both parties can come to an agreement that favors the both of them and results in lasting peace. Evaluative Mediating on the other hand emulates Settlement conferences which is like a pre-trial where a Judge attempts to get both parties to settle a case before they go to court. Evaluative mediating therefore involves the use of a mediator who will act like a judge and show the parties where they are both falling short and then attempt to settle the issue they way they think a Judge would.A monopolist has four distinct groups of customers. Group A has an elasticity of demand of 0.2, B has an elasticity of demand of 0.8, C has an elasticity of demand of 1.0, and D has an elasticity of demand of 2.0. The group paying the highest price for the product will be
Answer: Group A
Explanation:
Price Elasticity of demand refers to the sensitivity of quantity demanded given a change in price. In other words, how much will quantity demanded change if price changes. Higher elastcities mean that when prices change, their quantity demanded changes more. For instance, an elasticity of demand of 2 means that when prices rise by 2%, demand will decrease by 4%.
The group that will be paying the most therefore will have to be the group that is least sensitive to paying that high price. That would be Group A. As they are not very sensitive to price changes with an elasticity of 0.2, the Monopoly can increase their price to a higher point than others knowing that they won't demand less goods.
You have just turned 40 years old and are trying to decide who much money to put into your retirement plan. The plan works as follows: Every dollar in the plan earns 7% per year. You cannot make withdrawals until you retire on your sixty-fifth birthday. After that point, you can make withdrawals as you see fit. You decide that you will plan to live to 95 and work until your turn 65. You estimate that to live comfortably in retirement, you will need $250,000 per year starting at the end of the first year of retirement and ending on your 95th birthday. You already have $200,000 in the retirement plan. You will contribute the same amount to the plan at the end of every year that you work, starting next year. How much do you need to contribute each year to fund your retirement
Answer:
$31,886.09
Explanation:
years until retirement = 65 - 40 = 25 years
interest earned 7%
retirement age 65
expected life span after retiring = 95 - 65 = 30 years
financial needs during retirement $250,000 per year
current account balance $200,000
we must first determine how much money you will need when you are 65:
present value = $250,000 x 12.409 (PV annuity, 30 years, 7%) = $3,102,250
your $200,000 will be worth $200,000 x (1 + 7%)²⁵ = $1,085,486.53 in 25 years
so you need $3,102,250 - $1,085,486.53 = $2,016,763.47 extra
using the FV formula for an annuity:
$2,016,763.47 = payment x 63.249 (FV annuity, 25 years, 7%)
payment = $2,016,763.47 / 63.249 = $31,886.09
You can ready yourself for an interview by:
a. Conducting a practice interview
b. Preparing answers to typical questions
c. Researching the company
d. All of the above
Please select the best answer from the choices provided
о А
o B
Mark this and return
Save and Exit
Nex
Submit
The correct answer is D. All of the above
Explanation:
Preparing for an interview implies as a candidate for a job knowing beforehand how to answer and behave during the interview. One of the best ways to achieve this is to prepare answers to typical questions because, in this way, your answers will be coherent, complete and you will show confidence when answering.
Besides this, you can conduct a practice interview or recreate the interview; this will help you to practice how to talk, introduce yourself, or behave during the interview.
Moreover, to be ready for the interview you should be well informed about the company because it is common some interview questions are related to the company goals or expectations of an employee, and in this way, you can answer appropriately and show your interest in working in the company.
How could managers use increased worker flexibility and diligence to increase the competitiveness of their manufacturing sites
Explanation:
In order to increase the flexibility and diligence of workers in order to increase the competitiveness of their manufacturing sites, it is ideal for management to offer working conditions that allow employees greater benefits, such as greater mobility, with a layout that includes the correct flow between people, products and materials.
It is also ideal to implement technologies that reduce the bureaucracy both at work and facilitate communication and carrying out tasks.
Mobility also includes remote work using technology.
These are strategies that help to make work more flexible and, consequently, increase innovation in work and worker motivation.
The correct way in which the flexibility of the workers in an organization can be increased is by adapting to suitable principles of business management as per the size and scale of the business.
This will also help the manager to increase the competitiveness in the market and also beat the need for optimum level of production in the organization.
Principles of Business Management. The principles of business management as given by economist Henry Fayol are a great source for how the business can be run efficiently and effectively using the resources available.There can be chain level management that can be followed to achieve specialization of work and bring in additional capital or workforce to divide the work uniformly. Manufacturing can also be increased by doing departmentalization in management to save up costs and achieve optimum utilization of resources.Hence, a manager may adapt to different principles of management to increase competitiveness and effectiveness in the level of manufacturing.
Learn more about Principles of Management here :
https://brainly.com/question/14493167
On June 10, 20X8, Playoff Corporation acquired 100 percent of Series Company's common stock. Summarized balance sheet data for the two companies immediately after the stock acquisition are as follows:
Playoff Corp. Series Company
Item Book Value Fair Value
Cash $ 15,000 $ 5,000 $ 5,000
Accounts Receivable 30,000 10,000 10,000
Inventory 80,000 20,000 25,000
Buildings & Equipment (net) 120,000 50,000 70,000
Investment in Series Stock 100,000
Total $ 345,000 $ 85,000 $ 110,000
Accounts Payable $ 25,000 $ 3,000 $ 3,000
Bonds Payable 150,000 25,000 25,000
Common Stock 55,000 20,000
Retained Earnings 115,000 37,000
Total $ 345,000 $ 85,000 $ 28,000
Required:
a. Prepare the consolidating entries required to prepare a consolidated balance sheet immediately after the acquisition of Series Company shares. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
b. Record the excess value (differential) reclassification entry.
Answer:
a. Consolidating Journal Entries:
Description Debit Credit
June 10, 20X8:
Cash $5,000
Accounts receivable 10,000
Inventory 25,000
Building & Equipment 70,000
Unrealized Gain on fair value $25,000
Accounts payable 3,000
Bonds payable 25,000
Investment in Series Stock 100,000
Excess Value (differential) 43,000
To record consolidating entries in the consolidated parent.
Goodwill 43,000
Excess Value (differential) 43,000
To record the reclassification of the excess value as Goodwill on acquisition.
Explanation:
a) Summarized balance sheet data
Playoff Corporation Series Company
Item Book Value Fair Value
Cash $ 15,000 $ 5,000 $ 5,000
Accounts Receivable 30,000 10,000 10,000
Inventory 80,000 20,000 25,000
Buildings & Equipment (net) 120,000 50,000 70,000
Investment in Series Stock 100,000
Total $ 345,000 $ 85,000 $ 110,000
Accounts Payable $ 25,000 $ 3,000 $ 3,000
Bonds Payable 150,000 25,000 25,000
Common Stock 55,000 20,000
Retained Earnings 115,000 37,000
Total $ 345,000 $ 85,000 $ 28,000
b) Consolidated entries are made for assets and liabilities acquired of the subsidiary using fair values. An unrealized gain on fair value account is created to account for the differences in fair values. Any excess or differential after consolidation and above the fair values is regarded as Goodwill arising from the acquisition.
Suppose a ten firm industry has total sales of $35 million per year. The largest firm have sales of $10 million, the third largest firm has sales of $4 million, and the fourth largest firm has sales of $2 million. If fifth through tenth largest firms combined have annual sales of $12 million, the fourfirm concentration ratio for this industry is
Answer:
0.66
Explanation:
the fourfirm concentration ratio is the sum of the concentration ratio of the four largest firms in the industry.
The sales of the second largest firm = $35 million - ( $10 million + $4 million+ $2 million + $12 million ) = $7 million
concentration ratio of firm 1 = $10 million / $35 million = 0.29
concentration ratio of firm 2 = $7 million / $35 million = 0.2
concentration ratio of firm 3 = $4 million / $35 million = 0.11
concentration ratio of firm 4 = $2 million / $35 million = 0.06
Adding the ratios together = 0.66
Calculate the forecasted cost at completion if the total budgeted cost is $15,000, the cumulative actual cost is $10,000, and the cumulative earned value is $12,000.
Answer:
$13,000
Explanation:
The total budgeted cost is $15,000
The cumulative actual cost is $10,000
The cumulative earned value is $12,000
Therefore, the forecasted cost at completion can be calculated as follows
= Cumulative actual cost + ( Budgeted cost-Cumulative earned value)
= $10,000 + ($15,000-$12,000)
= $10,000 + $3,000
= $13,000
Hence the forecasted cost at completion is $13,000
On January 1, you sold short one round lot (that is, 100 shares) of Four Sisters stock at $21 per share. On March 1, a dividend of $2 per share was paid. On April 1, you covered the short sale by buying the stock at a price of $15 per share. You paid 50 cents per share in commissions for each transaction. What is the value of your account on April 1?
Answer:
The value of your account on April 1 is $300
Explanation:
Proceed from short sales
Sales proceed = $2,100 ($21 * 100 shares)
Less Commission= $50 ($0.50 * 100 shares)
Proceeds = $2,050
Dividend payment
= 100 shares * $2
=$200
Total Cost of buy back
Buy back= $1,500 ($15 * 100 shares)
Add commission= $50 ($0.50 * 100 shares)
Total cost = $1,550
Value of Account on April 1
Proceed = $2,050
Less Dividend payment = $200
Less Total cost of buy back= $1,550
Value of Account = $300
Therefore, the value of your account on April 1 is $300
Bonita Company purchases $54,800 of raw materials on account, and it incurs $61,600 of the factory labor costs. Supporting records show that (a) the Assembly Department used $30,000 of raw materials and $43,000 of the factory labor, and (b) the Finishing Department used the remainder.
Required:
Journalize the assignment of the costs to the processing departments on March 31.
Answer:
We will journalize the assignment of cost as follows
Explanation:
Raw materials = $54,800
Assembly department used = $30,000 of raw material
Finishing department used = $24,800 (remainder)
NOTE: As mentioned above-finishing department use remainder
Entry DEBIT CREDIT
Work in process- Assembly department $30,000
Work in process- Finishing department $24,800
Raw material $54800
Factory labor costs = $61,600
Assembly department used = $43,000 of labor cost
Finishing department used = $18,600 (remainder)
NOTE: As mentioned above-finishing department use remainder
Entry DEBIT CREDIT
Work in process- Assembly department $43,000
Work in process- Finishing department $18,600
Factory labor cost $61,600
Make a list of at least three items that are important to double check before submitting a loan application to underwriting. List at least two things you would be sure to tell a borrower in preparation for closing. List at least three calculations that are typically used during the course of a mortgage loan transaction.
Answer:
Please see answers below.
Explanation:
A. Three important Items to double check before submitting a loan application to underwriting.
• Completeness of data : One has to be sure that all important details are captured hence none is left out. It means that there are no missing information on the application.
• Calculations performed accurately: This means that calculations such as borrower's income, qualifying ratios are calculated accurately and also double checked for the purpose of the loan underwriting.
• Documentations required by the loan programme. All Documentations required by the loan programme must be double checked before submitting a loan application to underwriting.
B. List at least two things you would be sure to tell a borrower in preparation for closing
• I will seek clarity in terms of the money borrower would be bringing to the closing table.
• The date,time,venue of closing are essential for the closing hence will be communicated to the borrower. Also, there are no right or wrong answers that may be asked or given by the borrower during the closing.
C. List at least three calculations that are typically used during the course of mortgage loan transaction.
• Income calculation
• Front end and back end ratio (DTI ratio)
• Monthly payment.
You purchased a bond 69 days ago for $891.26. You received an interest payment of $24.00 56 days ago. Today the bond’s price is $884.89. What is the holding period return (HPR) on the bond as of today?
Answer:
1.97%
Explanation:
The formula to calculate the holding period return is:
HPR=(Income generated+(ending value-initial value)/Initial value)*100
Income generated= $24
Ending value= $884.89
Initial value= $891.26
HPR=(24+(884.89-891.26)/891.26)*100
HPR=(24+(-6.37)/891.26)*100
HPR=(17.63/891.26)*100
HPR=0.0197*100
HPR= 1.97%
According to this, the holding period return (HPR) on the bond as of today is 1.97%.
If Highway 55 Studios can reduce fixed expenses by , by how much can variable expenses per unit increase and still allow the company to maintain the original break even sales in units
Answer:
$2.25
Explanation:
Please check the attached image for the full question used in answering this question
Breakeven sales is the quantity sold at which net income is equal to zero.
Breakeven sales = fixed cost / (price per unit - variable cost per unit )
$1,215,000 / ($80 - $35) = 27,000
If Highway 55 Studios can reduce fixed expenses by $60,750, variable cost =
27,000 = ($1,215,000 - $60,750) / ($80 - V)
27,000 = 1,154,250 / ($80 - V)
V = $37.25
Variable cost would increase by : $37.25 - $35 = 2.25
On January 1, 20X6, Pumpkin Corporation acquired 70 percent of Spice Company's common stock for $210,000 cash. The fair value of the noncontrolling interest at that date was determined to be $90,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:______.
Pumpkin Spice Cash 50,000 15,000 Accounts Receivable 70,000 25,000 Inventory 30,000 20,000 Land 150,000 80,000 Buildings and Equipment 250,000 200,000 Less: Accumulated Depreciation -70,000 -20,000 Investment in Spice Co. 210,000 Total Assets 690,000 320,000 Accounts Payable 40,000 10,000 Bonds Payable 150,000 40,000 Common Stock 300,000 90,000 Retained Earnings 200,000 180,000 Total Liabilities and Equity 690,000 320,000 At the date of the business combination, the book values of Spice's assets and liabilities approximated fair value except for inventory, which had a fair value of $30,000, and land, which had a fair value of $95,000. 1. what amount of total inventory will be reported in the consolidated balance sheet prepared immediately after the business combination?
Answer:
Total inventory in consolidated balance = $60,000
Explanation:
In the consolidated balance sheet, we record the sum of both parent and subsidiary assets. Here pumpkin and spice both have an inventory of $30,000.
Total inventory in consolidated balance = Pimpkin's Inventory + fair value of Spice's inventory
Total inventory in consolidated balance = $30,000 + $30,000
Total inventory in consolidated balance = $60,000
A budget based on several different levels of activity, often including both a best-case and worst-case scenario, is called a:
Answer:
Flexible budget.
Explanation:
direct materials $34, direct labor $27, variable manufacturing overhead $15, fixed manufacturing overhead $43, variable selling and administrative expenses $20, and fixed selling and administrative expenses $28. Its desired ROI per unit is $31. Compute the markup percentage using absorption-cost pricing.
Answer:
Mark- up = 26.05%
Explanation:
Absorption costing is method of costing where overheads are charged to units produced using volume-based bases. e.g machine hours, labour hours e.t.c. Units are valued using full cost per unit
Full cost per unit= Direct material cost + direct labor cost + variable manufacturing overhead + fixed manufacturing overhead
Note that the selling and administrative expenses are period cost which are not to be considered as production cost, hence they are excluded.
Full cost per unit= 34 + 27 +15 +43 = 119
ROI per unit/profit per unit = 31
Mark- up under absorption costing is profit expressed as a percentage of of the full cost.
Mark- up = 31/119 × 100 = 26.05%
Mark- up = 26.05%
Bentley estimates manufacturing overhead of $3,251,600 for 2013 and will apply overhead to units produced based on 739,000 machine hours. During 2013, Bentley used $1,640,000 of raw materials, paid $5,335,800 of direct labor, generated 734,000 machine hours, and produced 2,190,000 units. Required: Calculate Bentley’s predetermined overhead rate for 2013. (Round your answer to 2 decimal places.) Calculate Bentley’s cost per unit of production for 2013. (Round your answer to 2 decimal places.)
Answer:
Instructions are below.
Explanation:
Giving the following information:
Estimated overhead= $3,251,600
Estimated machine-hours= 739,000
During 2013, Bentley used $1,640,000 of raw materials, paid $5,335,800 of direct labor, generated 734,000 machine hours, and produced 2,190,000 units.
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 3,251,600/739,000
Predetermined manufacturing overhead rate= $4.4 per machine hour
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 4.4*734,000= $3,229,600
Finally, we can determine the total cost and unitary cost:
Total cost= 1,640,000 + 5,335,800 + 3,229,600= $10,205,400
Unitary cost= 10,205,400/2,190,000= $4.66 per unit
kerch co. had beginning net fixed assets of $216,566, ending net fixed assets of $211,729, and deperciation of $40,477. During the year, the company sold fixed assets with a book value of $8,014. How much did the company purchase in new fixed assets?
a) $32,224
b) $43,639
c) $41,476
d) $35,625
e) $34,293
Answer:
The closest option is B,$43,639
Explanation:
The formula for ending net fixed assets can be used to determine the value of new purchase as shown below:
ending net fixed assets= beginning net fixed assets-depreciation-cost of asset sold+new purchase
$211,729=$216,566-$40,477-$8,014+x
$211,729=$168075 +x
x=$211,729-$168075
x=$43654
The closest option is B
Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $17 million, and production and sales will require an initial $3 million investment in net operating working capital. The company's tax rate is 35%. What is the initial investment outlay? Write out your answer completely. For example, 2 million should be entered as 2,000,000. $ The company spent and expensed $150,000 on research related to the new project last year. Would this change your answer? -Select- Rather than build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for $1.5 million after taxes and real estate commissions. How would this affect your answer? The project's cost will -Select- .
Answer:
What is the initial investment outlay?
initial investment = $17 million (manufacturing equipment) + $3 (increase in net working capital) = $20,000,000The company spent and expensed $150,000 on research related to the new project last year. Would this change your answer?
No, this will not change the answer because that was a sunk cost that doesn't affect the project's initial outlay.Rather than build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for $1.5 million after taxes and real estate commissions. How would this affect your answer?
If the company decides to do this, it will increase the project's initial outlay by $1,500,000 which is the opportunity cost of selling the building.Consider Figure 9.2 on page 205 of our textbook. Suppose P0 is $10 and P1 is $11. Suppose a new firm with the same LRAC curve as the incumbent tries to break into the market by selling 4,000 units of output. Estimate from the graph what the new firm's average cost of producing output would be. If the incumbent continues to produce 6,000 units, how much output would be supplied to the market by the two firms? Estimate what would happen to the market price as a result of the supply of both the incumbent firm and the new entrant. Approximately how much profit would each firm earn ?
Answer:
The 10,000 units of output that will be supplied by the two firms to the market.
Profit that each firm would earn will be higher than previous.
Explanation:
The firm selling 4,000 units at the price of $10 per unit. If the output is increased to 6,000 units the price will increase to $11 per unit. If the new 6,000 units are produced along with the previous 4,000 units then the total output supplied by the two firms will be 10,000 units (6,000 + 4,000). The supply of goods in the market will increase so price will fall and the revenue for the firms will decline but they can benefit with sales volume and their profit can increase.
The 10,000 units of output will be supplied by the two firms to the market.
The profit that each firm would earn will be higher than the previous.
Calculation of the number of units and profits:Here the firm sells 4,000 units at the price of $10 per unit. And, in the case when the output is increased to 6,000 units the price will increase to $11 per unit.
And, In the case when the new 6,000 units are produced along with the previous 4,000 units so the total output supplied by the two firms will be 10,000 units.
The supply of goods in the market should increase due to which the price will fall and the revenue for the firms will decline however they can benefit with sales volume and their profit can increase.
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Bonds payable—record issuance and discount amortization Coley Co. issued 515 million face amount of 9%, 10-year bonds on June 1, 2013. The bonds pay interest on an annual basis on May 31 each year.
Required:
a. Assume that the market interest rates were slightly higher than 9% when the bonds were sold. Would the proceeds from the bond issue have been more than, less than, or equal to the face amount? Explain.
b. Independent of your answer to part a, assume that the proceeds were 514,820,000. Use the horizontal model (or write the journal entry) to show the effect of issuing the bonds.
c. Calculate the interest expense that Coley Co. will show with respect to these bonds in its income statement for the fiscal year ended September 30, 2013, assuming that the discount of 5180,000 is amortized on a straight-line basis.
Answer:
a. Assume that the market interest rates were slightly higher than 9% when the bonds were sold. Would the proceeds from the bond issue have been more than, less than, or equal to the face amount? Explain.
If the market interest is higher than the coupon interest, then the bonds will sell at a discount. This means that the amount of cash received will be less than the $515 million face valueb. Independent of your answer to part a, assume that the proceeds were 514,820,000. Use the horizontal model (or write the journal entry) to show the effect of issuing the bonds.
Dr Cash 514,820,000Dr Discount on bonds payable 180,000 Cr Bonds payable 515,000,000c. Calculate the interest expense that Coley Co. will show with respect to these bonds in its income statement for the fiscal year ended September 30, 2013, assuming that the discount of 5180,000 is amortized on a straight-line basis.
amortization of bond discount = $180,000 / 10 = $18,000 per annual coupon payment
4 months from June 1 to September 30, so discount amortization = $18,000 x 4/12 = $6,000
the journal entry to adjust accrued interest expense:
September 30, 2013, accrued interest expense:
Dr Interest expense 15,456,000
Cr Interest payable 15,450,000
Cr Discount on bonds payable 6,000
Flexible Budget for Selling and Administrative Expenses for a Service Company Digital Solutions Inc. uses flexible budgets that are based on the following data:
Sales commissions 14% of sales
Advertising expense 20% of sales
Miscellaneous administrative expense $6,000 per month plus 12% of sales
Office salaries expense $29,000 per month
Customer support expenses $14,000 per month plus 20% of sales
Research and development expense $32,000 per month
Required:
Prepare a flexible selling and administrative expenses budget for October for sales volumes of $400,000, $500,000, and $600,000. (Use Exhibit 5 as a model.)
Answer:
Flexible selling and administrative expenses budget for October for sales volumes of $400,000, $500,000, and $600,000
$400,000, $500,000, $600,000
Sales commissions $56,000 $70,000 $84,000
Advertising expense $80,000 $100,000 $120,000
Miscellaneous administrative expense $54,000 $66,000 $78,000
Office salaries expense $29,000 $29,000 $29,000
Customer support expenses $94,000 $114,000 $134,000
Research and development expense $32,000 $32,000 $32,000
Total Expense $345,000 $411,000 $477,000
Explanation:
A Flexible Budget is a Master Budget that has been adjusted to the Actual level of Activity instead of estimated level of Activity.
Tamarisk Corporation issued 115,000 shares of $18 par value, cumulative, 8% preferred stock on January 1, 2018, for $2,530,000. In December 2020, Tamarisk declared its first dividend of $730,000. Prepare Tamarisk’s journal entry to record the issuance of the preferred stock. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Answer:
Dr Cash $2,530,000
Cr Preferred stock $2,070,000
Cr Additional Paid-in-Capital (Preferred Stock) $460,000
(To record issuance of Preferred Stock)
Explanation:
Preferred Stock
= 115,000 shares * $18 par value
= $2,070,000
Additional Paid-in-Capital (Preferred Stock)
= 2,530,000 - 2,070,000
= $460,000
"If bookstore ABC Books determines it is going to sell books at its profit-maximizing price of $16 in a market facing monopolistic competition, calculate total profit for the store. ABC Books Revenue and Cost Quantity Price Total Revenue Marginal Revenue Total Cost Marginal Cost 0 $26 $0 - $300 - 10 $23 $230 $23 $340 $4 20 $20 $400 $17 $400 $6 30 $18 $540 $14 $480 $8 40 $16 $640 $10 $580 $10 50 $14 $700 $6 $700 $12 60 $12 $720 $2 $840 $14"
Answer:
40 books revenue is maximized
Explanation:
Profit is maximized where Marginal cost equals Marginal Revenue. The revenue is maximized where 40 books are sold for the price of $16. The marginal revenue at this point equals the marginal cost. Profit will be maximized for the ABC Books if it sells 40 books at the price of $16 per book. Here Marginal cost is $10 and marginal revenue is also $10. This is profit maximizing point.
Ariel T. Corporation reported the following data for the month of February:
Inventories: Beginning Ending
Raw materials (Direct and Indirect) $40000 $24000
Work in process $23000 $17000
Finished goods $50000 $72000
Additional information:
Raw materials purchases $63000
Direct labor cost $73700
Manufacturing overhead cost actually incurred: $55000
Raw materials included in manufacturing overhead costs incurred as indirect materials $5000. Manufacturing overhead cost applied to Work in Process $48000.
Required:
The adjusted cost of goods sold that appears on the income statement for February is:________
Answer:
Cost of goods sold = $191,700
Explanation:
a) Cost of production:
Beginning Inventory: Raw Materials $40,000
Purchase of Raw materials $63,000
Ending inventory: Raw materials ($24,000)
Cost of raw materials used $79,000
Beginning Work in process $23,000
Cost of raw materials used $79,000
Direct labor cost $73,700
Manufacturing overhead $55,000
less Ending Work in process ($17,000)
Cost of production $213,700
Beginning Finished goods $50,000
Cost of production $213,700
Ending Finished goods ($72,000)
Cost of goods sold $191,700
b) The adjusted cost of goods sold takes into consideration the cost of raw materials used, the direct labor costs, and the manufacturing overhead, before adjusting for the beginning inventory and ending inventory.