Answer:
$5,208
Explanation:
First we need to calculate the growth rate using following formula
Growth Rate = (Final Value - Initial Value) / Initial Value
Placing Values in the formula = ($9,000 - $7,500) / $7,500 = $1,500 / $7,500 = 0.2 = 20%
As the cash flow in growing on constant rate of 20%. We need to calculate the prior years cash flow using following formula.
Cash Flow after growth = Current Cash flow ( 1 + growth rate)
Year 3 cash flow
$7,500 = Cash Flow of Year 3 ( 1 + 20% )
Cash Flow of Year 3 = $7,500 / 120%
Cash Flow of Year 3 = $6,250
Year 2 cash flow
$6,250 = Cash Flow of Year 2 ( 1 + 20% )
Cash Flow of Year 3 = $6,250 / 120%
Cash Flow of Year 3 = $5,208
Four highly similar and competitive income-producing properties located in close proximity to the subject property have sold this month. All four offer essentially the same amenities and services as the subject property. The sale prices and estimated first-year NOI for each of the comparable properties are as follows: Comparable Sale Price NOI1 A $1,450,000 $155,000 B $1,100,000 $135,400 C $1,250,000 $143,400 D $1,500,000 $169,000 Using the information provided, calculate the overall capitalization rate by direct market extraction assuming each property is equally comparable to the subject.
Answer: 11.43%
Explanation:
Capitalization rate is a real estate valuation measure that is used to compare and contrast different real estate investments.
The capitalization rate is calculated as shown below:
Capitalization rate of comparable A:
= Net operating income (NOI) / Sales price
= $ 155,000 / $ 1,450,000
= 0.1069
Capitalization rate of comparable B:
= Net operating income (NOI) / Sales price
= $ 135,400 / $ 1,100,000
= 0.1231
Capitalization rate of comparable C:
= Net operating income (NOI) / Sales price
= $ 143,400 / $ 1,250,000
= 0.1147
Capitalization rate of comparable D:
= Net operating income (NOI) / Sales price
= $ 169,000 / $ 1,500,000
= 0.1127
The overall capitalization rate will the be the average of all the 4 rates that we have calculated. This will be:
= (0.1069 + 0.1231 + 0.1147 + 0.1127) / 4
= 0.4574/4
= 0.1143 or 11.43%
Indigo Devices Corp. has 25,000 units in process on September 1 that are 70% complete. In September, the company completed and transferred out 60,000 units. The company has 12,000 units in process on September 30 that are 40% complete. Calculate the equivalent units of Indigo Devices for September assuming the company uses the FIFO method of costing.
Answer:
Equivalent unit = 47,300 units
Explanation:
The FIFO separates the completed units into opening inventory and fully worked
Fully work represent units started and completed in the same period. They exclude the opening inventory.
Fully worked = 60,000- 25,000 =175,000.
Item units Equivalent units
Opening inventory 25,,000 25,000× 30%= 7,500
Fully worked 35,000 35,000× 100% 35,000
Closing inventory 12000 12,000 × 40% = 4,800
Total equivalent unit 47,300
Equivalent unit = 47,300 units
Note also at that the degree of completion for opening inventory is the simply the balance of work remaining to be done.
For example, for materials, 70%% of work has been done on the opening inventory in the last period, hence the balance of 30% would be done this period
A firm is running 12 different ad campaigns in Brazil with a total budget of BRL 40 million (exchange rate: BRL 2.2517 per USD), but the campaigns do not appear to be effective. What would you recommend
Answer:
BRL 40 million is $90.068 million in America.
For 12 different ads, that is an average of about $7.5 million per ad.
My recommendations will be to check the effectiveness of the marketing strategy and the general approach towards the ad campaigns. It might be necessary for the company to narrow down on the number of campaigns or increase the funding available for the ad campaign. Also, the effectiveness of the methods of ad campaign can be compared to that of similar firms that has been successful with their ad campaigns, and necessary can then be made.
Fit-for-Life Foods reports the following income statement accounts for the year ended December 31.
Gain on sale of equipment $ 6,250 Depreciation expensesOffice copier $ 500
Office supplies expense 700 Sales discounts 16,000
Insurance expense 1,300 Sales returns and allowances 4,000
Sales 220,000 TV advertising expense 2,000
Office salaries expense 32,500 Interest revenue 750
Rent expenses Selling space 10,000 Cost of goods sold 90,000
Sales staff wages 23,000 Sales commission expense 13,000
Prepare a multiple-step income statement.
Answer:
Fit-for-Life Foods
Multi Step Income Statement for the year ended 31 Dec
$ $
Sales $220,000
Sales Discounts $16,000
Sales returns & Allowances $4,000 $20,000
Net Sales $200,000
Cost of Goods Sold $90,000
Gross Profits $110,000
Expenses
Selling Expenses:
Rent Expenses Selling Space $10,000
Sales Staff Wages $23,000
TV Advertising Expense $2,000
Sales Commission Expense $13,000
Total Selling expenses $48,000 ($48,000)
General & Administrative expenses:
Office Supplies expense $700
Insurance expense $1,300
Office Salaries Expenses $32,500
Depreciation expense $500
Office Copier
Total general and administrative $35,000 ($35,000)
expenses
Operating Income $27,000
Other Revenues, gains expense and losses:
Gain on Sale of Equipment $6,250
Interest Revenue $750
Total other revenues gains $7,000 ($7,000)
expenses and losses
Net Income $20,000
Orwell building supplies' last dividend was $1.75. Its dividend growth rate is expected to be constant at 19.00% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%. What is the best estimate of the current stock price
Answer:
$38.74
Explanation:
Div₀ = $1.75
Div₁ = $2.0825
Div₂ = $2.4782
Div₃ = $2.6269 and grow at a 6% constant rate forever
required rate of return = 12%
using growing perpetuity formula to determine the terminal value of the stock in year 2 = $2.6269 / (12% - 6%) = $43.78
the stock's current price = $2.0825/1.12 + $2.4782/1.12² + $43.78/1.12² = $1.86 + $1.98 + $34.90 = $38.74
An employee receives an hourly rate of $15, with time and a half for all hours worked in excess of 40 during the week. Payroll data for the first week of the calendar year are as follows: hours worked, 46; federal income tax withheld, $110; Social security tax rate, 6%; and Medicare tax rate, 1.5%; state unemployment tax, 5.4% on the first $7,000; federal unemployment tax, 0.8% on the first $7,000. What is the net amount to be paid to the employee? If required, round your answers to the nearest cent.
Answer:
Net pay $569.88
Explanation:
Let the gross earnings be:
$15 * 40 = $600
$15 * 1.5 * 6 = $135
$600+$135
=$735
Withheld Federal income tax = $110
Social security tax rate =0.06* $735
= $44.10
Medicare tax rate = 0.015* $735
= $11.02
Net pay $569.88
($735 - $110 - $44.10 - $11.02)
Amount to be paid to the each employee will be $569.88
Winners and losers from tariff reductions Suppose that Canada imports pearl necklaces from India. The free market price is $80.00 per necklace. If the tariff on imports in Canada is initially 8%, Canadians pay $________ per necklace. One of the accomplishments of the Uruguay Round that took place between 1986 and 1993 was significant across-the-board tariff cuts for industrial countries, as well as many developing countries. Suppose that as a result of the Uruguay Round, Canada reduces its import tariffs to 4%. Assuming the price of pearl necklaces is still $______ per necklace, consumers now pay the price of per necklace. in Canada_______ and Based on the calculations and the scenarios presented, the Uruguay Round most likely in India
Answer:
a. $86.40 per necklace
b. $86.40 per necklace
c. $83.20 per necklace
Explanation:
free market price pf necklace is $80.00
Initial tariff on import = 8%
8% of $80.000 = 0.08 x $80.00 = $6.40
Canadians will therefore pay $80.00 + $6.40 = $86.40 per necklace
If tariff is reduced to 4%,
4% of $80.00 = 0.04 x $80.00 = $3.20
new price per necklace = $80.00 + $3.20 = $83.20 per necklace
Proposals L and K each cost $600,000, have 6-year lives, and have expected total cash inflows of $720,000. Proposal L is expected to provide equal annual net cash flows of $170,000, while the net cash flows for Proposal K are as follows:
Year 1 $250,000
Year 2 200,000
Year 3 100,000
Year 4 50,000
Year 5 100,000
Year 6 20,000
Total $720,000
Determine the cash payback period for each proposal. Round your answers to two decimal places, if necessary.
Answer:
Year 4 50,000
Explanation:
ou currently own 10 percent of the 3.0 million outstanding shares of Webster Mills. The company has just announced a rights offering with a subscription price of $40. One right will be issued for each share of outstanding stock. This offering will provide $12 million of new financing for the firm, ignoring all issue costs. Assume that all rights are exercised. What will be your new ownership position if you opted to sell your rights rather than exercise them personally
Answer: 9.09% ownership
Explanation:
Your current ownership of the shares in Webster Mills is 10% of 3 million.
That means that you own,
= 10% * 3 million
= 300,000 shares.
The new offering that the company is doing equates one right to each share of existing stock and is expected to raise $12 million in new financing at a cost of $40. The goal is to find out how many new shares this will add.
= 12,000,000/40
= 300,000 shares
This means that 300,000 new shares will be added.
There are already 3,000,000 shares outstanding and now there are 300,00 extra which would bring the total to,
= 3,000,000 + 300,000
= 3,300,000 outstanding shares.
Since you sold your rights then you still have shares but now your percentage of ownership will change because of the increase in outstanding shares.
Your ownership percentage is now,
= 300,000 shares (that you own) / 3,300,000 (new outstanding balance)
= 0.0909
= 9.09%
Your new ownership position is that you own 9.09% of Webster Mills.
The new ownership position if you opted to sell your rights rather than exercise them personally is 9.09% of 3.3 Million shares.
The calculation is as follows:New shares Issued is
= Proceeds ÷ Subscription price
= $12 M ÷ $40
= 300,000
Now
New Composition = No. of shares held ÷ Total shares after issuance
= 300,000 ÷ 3,300,000
= 0.0909
= 9.09%
Therefore we can conclude that The new ownership position if you opted to sell your rights rather than exercise them personally is 9.09% of 3.3 Million shares.
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On September 12, Vander Company sold merchandise in the amount of $4,600 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $3,175. Vander uses the periodic inventory system and the gross method of accounting for sales. On September 14, Jepson returns some of the merchandise. The selling price of the merchandise is $400 and the cost of the merchandise returned is $280. Jepson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Vander makes on September 18 is:
Answer:
Dr Cash 4,116
Dr Sales discounts 84
Cr Accounts receivable 4,200
Explanation:
Vander Company Journal entry
Dr Cash 4,116
(4,200-82)
Dr Sales discounts 84
Cr Accounts receivable 4,200
Calculation of Sales discounts
4,200*2%
=84
Merchandise
(4,600-400)
=4,200
Select the sentence where the idea is clearer.
A. We have every desire for and hope of a substantial salary increase.
B. We have every desire and hope of a substantial salary increase.
Answer:
B. We have every desire and hope of a substantial salary increase.
Explanation:
Prepositions are used along with a noun or a pronoun to indicate a relationship with another word or element in the clause. It makes an idea clearer.
Examples of prepositions are at, for, if, on, in, over, and under.
These are used to describe location time or place. However we should avoid unnecessary use of prepositions.
In this instance the use of for in the following sentence is unnecessary, as 'every desire' is adequate : 'We have every desire for and hope of a substantial salary increase. '
We have every desire and hope of a substantial salary increase. Is a more concise and better option
Percival Hygiene has $10 million invested in long-term corporate bonds. This bond portfolio's expected annual rate of return is 9%, and the annual standard deviation is 10%. Amanda Reckonwith, Percival's financial adviser, recommends that Percival consider investing in an index fund that closely tracks the Standard & Poor's 500 Index. The index has an expected return of 14%, and its standard deviation is 16%. The Treasury bill yield is 6%. A. Suppose Percival puts all his money in a combination of the index fund and Treasury bills. Can he thereby improve his expected rate of return without changing the risk of his portfolio measured as the standard deviation?B. Could Percival do even better by investing equal amounts in the corporate bond portfolio and the index fund? The correlation between the bond portfolio and the index fund is _.1.
Answer:
Explanation:
a)We find the portfolio weights first. For a two security portfolio
[tex]sP^2 = x_1^2s_1^2 + 2x_1x_2s_1s_2r_1_2 + x_2^2s_2^2[/tex]
[tex](0.10)^2 = 0 + 0 + x_2^2(0.16)^2[/tex]
x2 = 0.625 and x1 = 0.375
Then
rp = x1r1 + x2r2
rp = (0.375 ´ 0.06) + (0.625 ´ 0.14)
= 0.11
= 11.0%
Hence, he can improve the expected rate of return without any change in the risk of the portfolio.
b)
The expected return is:
rp = x1r1 + x2r2
rp = (0.5 *´ 0.09) + (0.5 ´* 0.14)
= 0.115 = 11.5%
[tex]sP^2 = x_1^2s_1^2 + 2x_1x_2s_1s_2r_1_2 + x_2^2s_2^2[/tex]
sP2 = (0.5)^2(0.10)^2 + 2*(0.5)(0.5)(0.10)(0.16)(0.10) + (0.5)^2(0.16)^2
sP2 = 0.0097
sP = 0.985 = 9.85%
Hence, he can never perform better by investing equal amount in bond portfolio and index fund. The expected return increases to 11.5% and standard deviation decreases to 9.85%.
The dean of a highly reputed business school has decided to pursue a coveted accreditation for the college. To get the faculty's buy-in and support, she created a faculty-driven process whereby members of the faculty participate and carry out the accreditation process under her guidance. This approach has increased the commitment of the faculty, who now have a stake in seeing the process succeed and the goal of accreditation accomplished. What influence tactic did the dean use?
Answer:
Consultation.
Explanation:
In the scenario observed in the question, it can be seen that the dean used the consultation tactic.
This tactic can be defined as the influencing leader seeking support from others to influence a group. This is an effective approach to increase group satisfaction due to the value of democratic decision-making.
The benefits of this technique are described in the question, such as the increased commitment of the faculty, who are now interested in seeing the process succeed and the objective of accreditation fulfilled.
A cash register tape shows cash sales of $3,000 and sales taxes of $200. The journal entry to record this information is:_________
A) Cash 3, 200 Sales Revenue 3, 200
B) Cash 3, 200 Sales Tax Payable 200 Sales Revenue 3,000
C) Cash 3,000 Sales Tax Expense 200 Sales Revenue 3, 200
D) Cash 3, 200 Sales Revenue 3000 Sales Taxes
Answer:
B) Cash 3, 200 Sales Tax Payable 200 Sales Revenue 3,000
Explanation:
The journal entry is shown below:
Cash $3,200
To Sales tax payable $200
To Sales revenue $3,000
(Being the sales and sales tax is recorded)
For recording this we debited the cash as it increased the assets and credited the sales tax payable and sales revenue as it also increased the liabilities and revenue
Therefore, option B is correct
Mayall Corporation is developing standards for its products. Each unit of output of the product requires 0.92 kilogram of a particular input. The allowance for waste and spoilage is 0.02 kilogram of this input for each unit of output. The allowance for rejects is 0.11 kilogram of this input for each unit of output. The standard quantity in kilograms of this input per unit of output should be: Select one: a. 0.90 b. 0.92 c. 0.79 d. 1.05
Answer:
d. 1.05 kilograms
Explanation:
Since we are looking for the standard quatity in kilograms of input per unit of out put we are going to sum up all the input for each unit of output in order to arrived at the standard quantity in kilograms.
Output unit required 0.92 kg
Add: waste and spoilage allowance 0.02 kg
Allowance rejected 0.11 kg
Standard quantity in kilograms 1.05 kg
Jimmy Company uses the weighted-average method in its process costing system. The ending work in process inventory consists of 9,000 units. The ending work in process inventory is 100% complete with respect to materials and 70% complete with respect to labor and overhead. If the cost per equivalent unit for the period is $3.75 for material and $1.25 for labor and overhead, what is the balance of the ending work in process inventory account? Select one: a. $41,625 b. $33,750 c. $45,000 d. $31,500
Answer:
The correct answer is A.
Explanation:
Giving the following information:
The ending work in process inventory consists of 9,000 units.
The ending work in process inventory is 100% complete for materials and 70% complete for labor and overhead.
The cost per equivalent unit for the period is $3.75 for material and $1.25.
First, we need to calculate the ending inventory in units for equivalent units:
Direct material= 9,000*1= 9,000 units
Conversion costs= 9,000*0.7= 6,300
Now, the cost of ending inventory:
Direct material= 9,000*3.75= 33,750
Conversion costs= 6,300*1.25= 7,875
Total cost= $41,625
Inventory, often known as stock, refers to the items and materials that a company keeps on hand with the intention of reselling, producing, or using them. Inventory management is largely concerned with defining the shape and location of stocked products.
The correct answer is A. $41,625
The ending work in process inventory consists of 9,000 units.
The ending work in process inventory is 100% complete for materials and 70% complete for labor and overhead.
The cost per equivalent unit for the period is $3.75 for material and $1.25.
Calculation of the ending inventory:
Direct material= [tex]9,000\times1[/tex]= 9,000 units
Conversion costs=[tex]9,000\times0.7[/tex]= 6,300
Now, the cost of ending inventory:
Direct material= [tex]9,000\times3.75[/tex]= 33,750
Conversion costs= [tex]6,300\times1.25[/tex]= 7,875
Total cost= $41,625
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At points on the short run aggregate supply curve (SAS) to the left of the long run aggregate supply curve (LAS), resources are most likely:________.a. overutilized, making it more likely that the short run aggregate supply curve (SAS) will shift up.b. underutilized, making it more likely that the short run aggregate supply curve (SAS) will shift down.c. overutilized, making it more likely that the short run aggregate supply curve (SAS) will shift down.d. underutilized, making it more likely that the short run aggregate supply curve (SAS) will shift up.
Answer:.b----underutilized, making it more likely that the short run aggregate supply curve (SAS) will shift down.
Explanation: At points on the short run aggregate supply curve shifting to the left of the long run aggregate supply curve means that the economy is at the stage where output in the short run will not exceed output on the long run therefore resources will be underutilized resulting to lower prices and therefore causing a a downward shift on the short run aggregate supply curve.
Answer:
d. underutilized, making it more likely that the short run aggregate supply curve (SAS) will shift up.
Explanation:
Aggregate supply is a sum of all goods and services that is supplied to a consumer. In the short run aggregate supply is affected by factors such as price level, government policy.
When the prices of inputs increases it results in a reduction in amount aggregate supplied (shift to the left and upward as illustrated in the diagram).
This implies that resources are not used maximally to produce output, but production is limited by the higher cost of inputs.
In the attached diagram aggregate supply shifts upward and to the left from AS1 to AS2
Springer Company had three intangible assets at the end of 2014 (end of the accounting year): a. A copyright purchased on January 1, 2014, for a cash cost of $14,500. The copyright is expected to have a 10-year useful life to Springer. b. Goodwill of $65,000 from the purchase of the Hartford Company on July 1, 2013. c. A patent purchased on January 1, 2013, for $48,000. The inventor had registered the patent with the U.S. Patent Office on January 1, 2009.
Answer:
1.$120,050
2.Copyright $1,450
Patent $3,000
3.Copyright $13,050
Goodwill $65,000
Patent $42,000
Explanation:
1.Computation of the acquisition cost of each intangible asset
SPRINGER COMPANY Income Statement for 2014(partial)
Operating expenses:
Amortization expense $4,450
SPRINGER COMPANY Balance SheetDecember 31, 2014 (partial)
Intangibles:
Copyright $13,050
Goodwill$65,000
Patent$42,000
Total $120,050
2. Computation of amortization expense of each intangible for the year ended December 31, 2014
Amortization on December 31, 2014 using thr straight-line method excluding residual value:
Amortization expense
Calculation for Copyright:
$14,500 × 1/10 = $1,450
We wont calculate for Goodwill because goodwill is not amortized because of its indefinite life.
Calculation for Patent:
$48,000 × 1/16 =$3,000
1/16 is what was remaining at time of the purchase
[Amortization expense =20 year legal life – the years used which is 4 years = 16 years remaining]
3. Calculation of how the assets and any related expenses should be reported on the balance sheet and income statement for 2014.
Income statement for 2014:
Calculation for Amortization expense: ($1,450 + $3,000) = $4,450
Springer Company Balance sheet at December 31, 2014:
Calculation for Copyright ($14,500 − $1,450) = $13,050
Goodwill $65,000
Calculation for Patent ($48,000 − $6,000) = $42,000
($3,000 amortization expense × 2 years =$6,000)
During 2009, Accent Toys Plc., which began business in October of that year, purchased 15,000 units of a toy at cost of $10 per unit in October. The toy sold well in October. In anticipation of heavy December sales, Accept purchased 7,000 additional units in November at a cost of $11 per unit. During 2009, Accent sold 18,000 units at a price of $15 per unit. Under the first in, first out (FIFO) method, what is Accent's cost of goods sold for 2009?
Answer:
$183,000
Explanation:
The computation of the cost of goods sold using the FIFO method is shown below:
= Number of units purchased × per unit + additional units purchased × per unit
= 15,000 units × $10 + 3,000 units × $11
= $150,000 + $33,000
= $183,000
Since there are 18,000 units are sold
out of which 15,000 are at $10 and the remaining 3,000 units are at $11 and the same is to be considered
Accounts Receivable Turnover and Days' Sales in Receivables American Eagle Outfitters, Inc. sells clothing, accessories, and personal care products for men and women through its retail stores. American Eagle reported the following data (in millions) for two recent years: Year 2 Year 1 Sales 3522 3283Accounts receivable 81 68Assume that accounts receivable (in millions) were $74 million at the beginning of Year 1 a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to two decimal places. Year 2: Year 1: b. Compute the day's sales in receivables for Year 2 and Year 1. Round interim calculations and final answers to one decimal place. Use 365 days per year in your $3,283 68 calculations. Year 2: Year 1: c. The change in accounts receivable turnover from year 1 to year 2 indicates a(n) a(n) days days in the efficiency of collecting accounts receivable and is___________ change. The change in the days' sales in receivables indicates a _________ change
Answer and Explanation:
The computation is shown below:
a. Account receivable turnover ratio is
= Net credit sales ÷ Average accounts receivable
where,
the Average accounts receivable would be
= (Accounts receivable, beginning of year + Accounts receivable, end of year) ÷ 2
For year 2
= ($3,522) ÷ ($81 + $68) ÷ 2
= 47.3 times
For year 1
= ($3,283) ÷ ($68 + $74) ÷ 2
= 46.2 times
b. The days sales in receivables is
= 365 days ÷ account receivable turnover ratio
For year 2
= 365 days ÷ 47.3 times
= 7.7 days
For year 1
= 365 days ÷ 46.2 times
= 7.9 days
c. As we can see that the change in accounts receivable turnover from year 1 to year 2 i.e from 46.2 times to 47.3 times is favorable change and it is increasing and the change in days sales in receivables from year 1 to year 2 i.e from 7.9 days to 7.7 days indicates a favorable change
Emerald Statuary manufactures bust statues of famous historical figures. All statues are the same size. Each unit requires the same amount of resources. The following information is from the static budget for 2017: Expected production and sales $7,000 unitsExpected selling price per unit 680Total fixed costs $1,400,000 Standard quantities, standard prices, and standard unit costs follow for direct materials and direct manu- facturing labor: Standard Quantity Standard Price Standard Unit CostDirect materials 10 pounds $ 8 per pound $ 80Direct manufacturing labor 3.7 hours $ 50 per hour $ 185 During 2017, actual number of units produced and sold was 4,800, at an average selling price of $720. Ac- tual cost of direct materials used was $392,700, based on 66,000 pounds purchased at $5.95 per pound. Direct manufacturing labor-hours actually used were 18,300, at the rate of $48 per hour. As a result, actual direct manufacturing labor costs were $878,400. Actual fixed costs were $1,170,000. There were no beginning or ending inventories.Required: 1. Calculate the sales-volume variance and flexible-budget variance for operating income. 2. Compute price and efficiency variances for direct materials and direct manufacturing labor.
Answer:
a) Sales volume variance = $1496000 unfavorable
flexible-budget variance = $192000 favorable
b) For direct materials
Price variance = `$135000 unfavorable
efficiency variances = $527920 favorable
For direct manufacturing labor
Price variance = `$36600 unfavorable
efficiency variances = $914815 favorable
Explanation:
a) Sales volume variance = (Actual units sold - Budgeted units sold) x Budgeted price per unit = (4800 - 7000) × $680 = $1496000 unfavorable
flexible-budget variance = (Actual price - Budgeted price) x Actual units sold= ($720 - $680) × 4800 = $192000 favorable
b) For direct materials
Price variance = (Actual cost - standard cost) x Actual quantity of units purchased = ($5.95/ pound - $8/pound) × 66000 pound= `$135000 unfavorable
efficiency variances = (Actual unit - Standard unit) x Standard cost per unit = (66000 pound - 10 pound) × $8 per pound= $527920 favorable
For direct manufacturing labor
Price variance = (Actual cost - standard cost) x Actual hours = ($48/hour - $50/hour) × 18300 hours = `$36600 unfavorable
efficiency variances = (Actual hours - Standard hours) x Standard cost per hour= (18300 hour - 3.7 hour) × $50/hour = $914815 favorable
In this exercise we have to use business knowledge to calculate the variance of each of the items requested in the given text, in this way we find that:
1) Sales volume variance, we can say that is unfavorable amd flexible-budget variance we can say that is favorable.
2) Price variance we can say that is unfavorable and efficiency variances is favorable. For direct manufacturing labor we can say that price variance is unfavorable and efficiency variances is favorable.
So calculating the variance for the items, we find that:
1)To calculate the variance in sales volume we will use the formula:
[tex](Actual \ units \ sold - Budgeted \ units \ sold) * (Budgeted \ price \ per\ unit )[/tex]
Replacing the values informed in the text, we find that:
[tex]= (4800 - 7000) * (680) = \$1.496.000[/tex]
So the variance in sales volume is equal to [tex]\$1.496.000[/tex] and we can also say that it is unfavorable.
To calculate the variance in flexible-budget we will use the formula:
[tex](Actual \ price - Budgeted \ price) * (Actual \ units \ sold)[/tex]
Replacing the values informed in the text, we find that:
[tex]= ($720 - $680) * 4800 = \$192000[/tex]
So the variance in flexible-budget is equal to [tex]\$192.000[/tex] and we can also say that it is favorable.
b) To calculate the variance in price variance we will use the formula:
[tex](Actual\ cost - standard\ cost) * (Actual\ quantity\ of\ units\ purchased)[/tex]
Replacing the values informed in the text, we find that:
[tex]= ($5.95 - $8) * (66000)= \$135.000[/tex]
So the variance in price variance is equal to [tex]\$135.000[/tex] and we can also say that it is unfavorable.
To calculate the variance in efficiency variances we will use the formula:
[tex](Actual \ unit - Standard \ unit) * Standard \ cost\ per\ unit[/tex]
Replacing the values informed in the text, we find that:
[tex](66000 - 10 ) * $8 = \$527.920[/tex]
So the variance in efficiency variances is equal to [tex]\$527.000[/tex] and we can also say that it is favorable.
To calculate the variance in price variance we will use the formula:
[tex](Actual \ cost - standard \ cost) * Actual\ hours[/tex]
Replacing the values informed in the text, we find that:
[tex]($48 - $50) * 18300 = \$36.600[/tex]
So the variance in price variance is equal to [tex]\$36.600[/tex] and we can also say that it is unfavorable.
To calculate the variance in efficiency variances we will use the formula:
[tex](Actual \ hours - Standard \hours) * Standard \ cost \ per \ hour[/tex]
Replacing the values informed in the text, we find that:
[tex](18300 - 3.7 ) * $50 = $914.815[/tex]
So the variance in efficiency variances is equal to [tex]\$914.815[/tex] and we can also say that it is favorable.
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Gomez runs a small pottery firm. He hires one helper at $10,500 per year, pays annual rent of $4,500 for his shop, and spends $19,000 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him $5,000 per year if alternatively invested. He has been offered $21,000 per year to work as a potter for a competitor. He estimates he could use his talents to earn an additional $3,000 per year in consulting fees if he were working full time as a potter. Total annual revenue from pottery sales is $71,000.Calculate the accounting profit and the economic profit for Gomez’s pottery firm.1. Accounting Profit = $______2. Economic Profit = $______
Answer:
Economic profit= $8,000
Accounting profit= $37,000
Explanation:
Giving the following information:
Costs:
Helper= $10,500 per year
Rent= $4,500
Materials= $19,000
Total= 34,000
Pottery Revenue= $71,000
Alternative= 5,000 + 21,000 + 3,000= $29,000
The difference between the economic profit and accounting profit is that the first one includes the opportunity cost of an alternative income.
Economic profit= 71,000 - 34,000 - 29,000= $8,000
Accounting profit= 71,000 - 34,000= $37,000
Cathy, the manager of Cathy’s Catering, Inc., uses activity-based costing to compute the costs of her catered parties. Each party is limited to 20 guests and requires 5 people to serve and clean up. Cathy offers two types of parties, an afternoon picnic and an evening formal dinner. The breakdown of the costs follows: Activities (and cost drivers) Afternoon Picnic Formal Dinner Advertising (parties) $ 89 per party $ 89 per party Planning (parties) $ 90 per party $ 134 per party Renting equipment $ 51 per party plus $ 77 per party plus (parties, guests) $ 10 per guest $ 20 per guest Obtaining insurance (parties) $ 155 per party $ 430 per party Serving (parties, servers) $ 58 per server per party $ 79 per server per party Preparing food (guests) $ 19 per guest $ 27 per guest Per party costs do not vary with the number of guests.
Required:
(a) Compute the cost of a 20-guest afternoon picnic.
(b) Compute the cost of a 20-guest evening formal dinner.
Answer:
a. $1,042
b. $1,864
Explanation:
a. The computation of cost of a 20-guest afternoon picnic is shown below:-
Particulars Amount
Advertising $89 ($89 × 1 per party)
Add: Renting equipment $251 ($51 × 1 per party) + ($10 × 20 guests)
Add: Planning $90 ($90 × 1 per party)
Add: Obtaining insurance $155 ($155 × 1 per party)
Add: Preparing foods $320 ($19 × 20 per party)
Add: Serving $140 ($58 × 5 servers)
Total cost of afternoon picnic $1,042
b. The computation of cost of a 20-guest afternoon picnic is shown below:-
Particulars Amount
Advertising $89 ($89 × 1 per party)
Add: Planning $134 ($134 × 1 per party)
Add: Renting equipment $277 ($77 × 1 per party) + ($10 × 20 guests)
Add: Obtaining insurance $430 ($430 × 1 per party)
Add: Serving $395 ($79 × 5 servers)
Add: Preparing foods $540 ($27 × 20 guests)
Total cost of evening formal dinner $1,864
Flare Co. manufactures textiles. Among Flare's 2016 manufacturing costs were the following salaries and wages: Loom operators $ 129,000 Factory foremen 54,000 Machine mechanics 39,000 What was the amount of Flare's 2016 indirect labor
Answer: $93,000
Explanation:
Flare Co. manufactures textiles. As such the direct labour should be those directly involved in the Manufacturing of these textiles and all others will be considered Indirect Labour.
Looming refers to the weaving of fabric meaning therefore that it is directly related to the Manufacturing of textiles.
Factory Foremen only supervise the activities of the factory and so are not directly involved and Machine Mechanics ensure that machines are running smoothly and so are not directly involved either.
Indirect labor for 2016 is therefore,
= Factory Foremen + Machine Mechanics
= 54,000+ 39,000
= $93,000
The finance department is prone to unethical practices?
Explanation:
the unethical practices in accounting are more in proprietary, partnership and Private Limited companies. it is is at lower level in in public limited companies and MNCs.
The statement is correct that "The finance department is prone to unethical practices in private sector as compared to the public sector".
What is finance department?A finance department is the business unit in charge of receiving and managing funds on behalf of the organization. The department manages revenue and expenses while also ensuring that the firm runs smoothly and efficiently.
Money laundering, investment fraud, toxic loans, and violations of banking rules are only a few of the unethical actions performed by commercial banks.
Accounting unethical practices are more prevalent in proprietary, partnership, and Private Limited enterprises. It is lower in public limited firms and multinational corporations. Therefore, it can be concluded that The finance department is prone to unscrupulous behavior".
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When investors follow a "herd instinct," they:________A. invest in something as a group, making it appear more valuable than it is.B. make decisions as a group, inflating the prices of goods somewhat arbitrarily.C. invest in something simply because everyone else is doing it.D. None of these statements is true.
Answer:
The option is C is correct
Explanation:
Herd instinct refers to an inclination in people to think or reason like the majority.
When investors follow a herd instinct it simply mean that they invest in something simply because everyone is doing it. this is to say that an investor or investors is ready to take certain risk in any business that is seen as profitable on the long run or time period.
If the business is profitable and is seen as a good investment, in which everyone or investors are actively participating on it. other investors will key into the idea.
Cavy Company accumulated 560 hours of direct labor on Job 567 and 820 hours on Job 888. The direct labor was incurred at a rate of $15 per direct labor hour for Job 567 and $25 per direct labor for Job 888. Journalize the entry to record the flow of labor costs into production. If an amount box does not require an entry, leave it blank. Work in Process
Answer:
Dr work-in-process $ 28,900.00
Cr wages payable $ 28,900.00
Explanation:
The total amount of labor costs incurred on both jobs would be debited to work in process account , while the credit entry would be posted to the wages payable account.
Total labor cost incurred=(560*$15)+(820*$25)=$28,900.00
The amount is debited to work in process so as to add up to other direct costs of production while entry into wages payable indicates that employees are being owed.
Mike worked for Frank's Pizza as a driver and was an agent. His duties consisted of making deliveries along a designated route. One day Mike decided to see his girlfriend, Jackie, who lived 50 miles off his pizza route. While driving to his girlfriend's, Mike injured a pedestrian, Chuck. The accident was caused by Mike's negligent driving. Chuck is now suing both Mike and Frank's for personal injuries. Under the circumstances
A. Frank's is never liable for the negligent torts of its agents.B. Frank's is not liable because Mike was on a frolic of his own.C. Chuck can recover damages from both Frank's and Mike.D. Frank's is liable under the doctrine of respondeat superior.
Answer:
B. is not liable because Mike was on a frolic of his own.
Explanation:
Mike who is a dispatch rider, decided to see his girlfriend, Jackie, who lived 50 miles off his pizza route. He had an accident while driving to his girlfriend's, and injured a pedestrian, Chuck due to his negligent driving.
Under the circumstances, Frank's Pizza isn't liable because Mike was on a frolic of his own. Mike embarking on a 50 mile drive to see his girlfriend is frolicsome and outside the scope of his employment as a delivery agent.
Hence, this will absolve his employer from any liability as he wasn't working on the designated route at the time.
A stockbroker predicts whether a stock will go up or down by tossing a coin and so has a 50% chance of making a correct prediction. Another broker, who is skilled, has a 60% chance of making a correct prediction. You don’t know which broker is which, so you watch their predictions for three days. Each broker gets all three predictions correct. What are the relevant probabilities? How do you decide who is the skilled broker? Search entries or author
Answer:
A skilled broker will be right at 60% of time compared to 50%
Explanation:
Solution
Given that:
Now,
Let X be represented as = number of correct predictions/outcomes
X foll binomial distribution with n = 3 and p = 0.5 for broker who use a toss coin
Thus,
P(X = 3) = p^3 = 0.5^3 which gives us = 0.125
So,
For a skilled broker, Y goes with the binomial distribution with n = 3 and p is = 0.6
Then,
P(Y = 3) = 0.6^3 = 0.216
We can therefore conclude who is skilled broker by making large number of observations
Hence, we say that a skilled broker will be correct 60% of time compared to 50% .
ctual and budgeted fixed overhead $1,092,000 Standard variable overhead rate $27.00 per standard labor hour Actual variable overhead costs $137,144 Overhead is applied on standard labor hours. (Round interim calculations to the nearest cent.) The direct labor rate variance is
Answer:
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Explanation:
Giving the following information:
Actual and budgeted fixed overhead $1,092,000
Standard variable overhead rate $27.00 per standard labor hour
Actual variable overhead costs $137,144
We weren't provided with enough information to calculate the direct labor rate variance. But I will provide the formula.
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Actual rate= actual direct labor costs/total actual hours worked
