Answer:
January collections:
= 75% * January credit sales
= 75% * 220,000
= $165,000
February collections:
= (75% * February collections) + (25% * January collections)
= (75% * 260,000) + (25% * 220,000)
= $250,000
March collections:
= (75% of March collections) + (25% * February collections)
= (75% * 300,000) + (25% * 260,000)
= $290,000
Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company’s operations. Standard Custom Direct labor costs $60,000 $103,000 Machine hours 1,400 1,290 Setup hours 96 400 Total estimated overhead costs are $300,000. Overhead cost allocated to the machining activity cost pool is $195,000, and $105,000 is allocated to the machine setup activity cost pool.
1. Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25.)
2. Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, e.g. 12.25.)
3. Determine the difference in allocation between the two approaches. (Round answers to 0 decimal places, e.g. 1,225.)
Answer:
Saddle Inc.
1. Overhead rate using the traditional (plantwide) approach is:
= $1.84
2. The overhead rates using activity-based costing approach are:
Machining = $72.49
Machine setup = $211.69
3. The difference in allocation between the two approaches:
Differences:
ABC approach $121,808 $178,188 $299,996
Using plantwide $110,400 $189,520 $299,920
Differences $11,408 -$11,332 $76
Explanation:
a) Data and Calculations:
Total estimated overhead costs = $300,000
Machining activity = $195,000
Machine setup activity = $105,000
Standard Custom Total
Direct labor costs $60,000 $103,000 $163,000
Machine hours 1,400 1,290 2,690
Setup hours 96 400 496
Overhead rate based on direct labor costs = $1.84 ($300,000/163,000)
Overhead rates using activity-based costing approach:
Machining = $72.49 ($195,000/2,690)
Machine setup = $211.69 ($105,000/496)
Allocation of overhead costs:
Standard Custom Total
Using plantwide $110,400 $189,520 $299,920
Using ABC:
Machining $101,486 $93,512 $194,998
Machine setup 20,322 84,676 104,998
Total costs $121,808 $178,188 $299,996
Differences:
ABC approach $121,808 $178,188 $299,996
Using plantwide $110,400 $189,520 $299,920
Differences $11,408 -$11,332 $76
Calculate gross profit for the following situation: National Storage Company had sales of $1,000,000, sales discounts of $2,500, sales returns and allowances of $15,000, and a cost of goods sold of $525,000.
Answer:
$475,500
Explanation:
Sales is $1,000The discountscount is $2500
Sales return and allowances are $15,000
The cost of goods sold is $525,000
Therefore the gross profit can be calculated as follows
= 1,000,000-2,500-15,000-525,000
= 457,500
Hence the gross profit is $475,500
An educational software company wants to compare the effectiveness of teaching about supply and demand curves between computer animation presentations and textbook presentation. The company tests the economic knowledge of a number of first-year college students, then randomly divides them into two groups. One group uses the animation and the other studies the text. The company retests all the students and compares the increase in economic understanding between the two groups. Is the study described above an experiment? Why or why not?
Answer:
Yes, this is often an experiment. the corporate assigned students to either the animation or the text, instead of watching post hoc ergo propter hoc data.
Explanation:
The explanatory variables are the pre-test data and therefore the assignment to a given group. The responding variable is that the post-test data.
An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $5,150,000 and will be sold for $1,575,000 at the end of the project. If the tax rate is 22 percent, what is the aftertax salvage value of the asset
Answer:
$1,424,282.40
Explanation:
Missing word "Refer to Table 5 YEAR :20%,32%,19.2%,11.52%"
Book value as on date of sale = Cost - Accumulated Depreciation
Book value as on date of sale = $5,150,000*(1 - 0.2 - 0.32 - 0.192 - 0.1152)
Book value as on date of sale = $5,150,000*0.1728
Book value as on date of sale = $889,920
Gain on sale = $1,575,000 - $889,920
Gain on sale = $685,080
After-tax salvage value = Sale proceeds - (Gain on sale*Tax rate)
After-tax salvage value = $1,575,000 - ($685,080*22%)
After-tax salvage value = $1,575,000 - $150,717.60
After-tax salvage value = $1,424,282.40
Read the following request message, and then answer the question.
To: Customer Support
From: Helen Martin
Subject: Warranty Information for Netbook Computer
Dear Customer Service,
I need this information by noon tomorrow at the latest. My team has an important presentation to give, and my netbook crashed while we were working on the presentation. I can’t find the warranty information anywhere. So I have a few questions. Where is my warranty information? How long does it normally take to repair these machines? Do I have to mail the netbook to you, or can I bring it to your local repair shop? Will you please answer these questions in a timely manner? Thank you in advance for your help.
Regards,
Helen Martin
Revision A:
1. Where do I find my warranty information?
2. How long does the average netbook repair take?
3. Do I need to mail in my netbook for repairs or bring it to your local repair shop?
Revision B:
Where is my warranty information? How long does the average repair take? Do I have to mail in my netbook?
Revision C:
Where do I find the information?
How long does it take?
Can I take it to my local shop?
Which of the preceding revisions is the best revision for the body of this message?
A. Revision B
B. Revision C
C. Revision A
In addition to making requests, you will have to respond to requests in the business world.
Complete the following sentence with the dropdown menu.
Direct response messages might _______?
a. include long, flowery descriptions
b. use the "me" view
c. supply explanations and additional information
Answer:
?
Explanation:
A company manufactures aluminum cans for the beverage industry and prepares its financial statements in accordance with International Financial Reporting Standards (IFRS). During its latest full fiscal year, the company recorded the following:
Inventory Item Amount € (thousands)
Raw material aluminum costs 150,000
Storage of finished cans 15,000
Wasted aluminum materials from abnormal production errors during the year 500
Transportation-in costs 640
Tax-related duties 340
Administrative overhead 7,500
Trade discounts due to volume purchases throughout the year 520
The total costs included in inventory (in € thousands) for the year are closest to: ____________
Answer: 150,460 currency units
Explanation:
The costs that are included in inventory include:
Cost of raw materials Transportation in costs Tax duties Trade discountsInventory cost is:
= Cost of raw materials + Transport in costs + Tax duties - Trade discounts
= 150,000 + 640 + 340 - 520
= 150,460 currency units
Carpet Renewal dyes carpets for residential customers. The company is interested in estimating fixed and variable costs. The following data are available for the month of June when 420 carpets were dyed:
Office rent $ 1,250
Depreciation - equipment 900
Cleaning supplies 5,140
Hourly wages 11,000
Transportation (variable) 3,600
Owner’s salary 3,100
Total $24,990
Using account analysis, how much is estimated variable cost per carpet?
a. $59.50
b. $52.12
c. $47.00
d. $38.43
Answer: c. $47 per carpet
Explanation:
Total variable costs are:
= Cleaning supplies + Hourly wages + Transportation
= 5,140 + 11,000 + 3,600
= $19,740
The variable cost per carpet is:
= Total variable cost / Number of carpets dyed
= 19,740 / 420
= $47 per carpet
A property title search firm is contemplating using online software to increase the productivity of the researcher performing the search. Currently, an average of 64 minutes is needed to do a title search. The researcher cost is $1.70 per minute. Clients are charged a fee of $410. Company A’s software would reduce the average search time by 20 minutes, at a cost of $3.50 per search. Company B’s software would reduce the average search time by 21 minutes at a cost of $5.50 per search.
a. Calculate the productivity in terms of revenue per dollar of input.
b. Which option would have the highest productivity in terms of revenue per dollar of input?
a) Company A
b) Company B
c) Current
Answer:
a. Productivity in terms of revenue per dollar input:
Cost = Average time taken * Cost per minute + additional cost per search
Current cost = 64 * 1.70 = $108.80
Company A cost = (64 - 20 mins) * 1.70 + 3.50 = $78.30
Company B cost = (64 - 21) * 1.70 + 5.50 = $78.60
Productivity = Client fee / Cost
Current productivity
= 410 / 108.80
= $3.77
Company A
= 410 / 78.30
= $5.24
Company B
= 410 / 78.60
= $5.22
b. Company A is best.
chức năng cụ thể của đơn vị hành chính sự nghiệp
Answer:
Đơn vị hành chính sự nghiệp có các đặc điểm như sau: + Đơn vị hành chính sự nghiệp là đơn vị thụ hưởng nguồn kinh phí từ ngân sách Nhà nước trên cơ sở các quy định pháp luật và theo nguyên tắc không hoàn lại trực tiếp. + Đơn vị hành chính sự nghiệp sử dụng kinh phí cho các mục đích đã được hoạch định trước đó.
Explanation:
pls mark it brainliest
Miller and Sons' static budget for 10,500 units of production includes $41,000 for direct materials, $50,300 for direct labor, variable utilities of $7,600, and supervisor salaries of $14,600. A flexible budget for 12,100 units of production would show Round your final answer to the nearest dollar. Do not round interim calculations. a.the same cost structure in total b.direct materials of $47,248, direct labor of $57,965, utilities of $8,758, and supervisor salaries of $14,600 c.direct materials of $47,248, direct labor of $57,965, utilities of $8,758, and supervisor salaries of $17,520 d.total variable costs of $113,500
Answer:
b.direct materials of $47,248
Direct labor=$57,965
Variable Utilities=8,758
Supervisor salaries $14,600
Explanation:
Computation of flexible budget
FLEXIBLE BUDGET
Direct materials
$41,000/10,500*12,100
Direct materials= $47,248
Direct labor=50,300/10500*12100
Direct labor=$57,965
Variable Utilities
=7600/10500*12100
Variable Utilities=8,758
Supervisor salaries $14,600 Fixed cost
Sigma Corporation applies overhead cost to jobs on the basis of direct labor cost. Job V, which was started and completed during the current period, shows charges of $6,300 for direct materials, $8,600 for direct labor, and $5,848 for overhead on its job cost sheet. Job W, which is still in process at year-end, shows charges of $4,300 for direct materials and $5,400 for direct labor.
Required:
Calculate the overhead cost be added to Job W at year-end.
Answer:
Allocated MOH= $3,672
Explanation:
Giving the following information:
Job V:
DM= $6,300
DL= $8,600
Overhead= $5,848
Job W:
DM= $4,300
DL= $5,400
First, we need to calculate the predetermined overhead rate based on Job V:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
5,848 = Estimated manufacturing overhead rate*8,600
Estimated manufacturing overhead rate= 5,848/8,600
Estimated manufacturing overhead rate= $0.68
Now, the allocated overhead to Job W:
Allocated MOH= 0.68*5,400
Allocated MOH= $3,672
Sheridan Company purchased a delivery truck. The total cash payment was $43,718, including the following items. Negotiated purchase price $34,800 Installation of special shelving 2,880 Painting and lettering 930 Motor vehicle license 280 Two-year insurance policy 2,740 Sales tax 2,088 Total paid $43,718 Calculate the cost of the delivery truck.
Answer:
the cost of the delivery truck is $40,698
Explanation:
The computation of the cost of the delivery truck is given below:
Negotiated purchase price $34,800
Installation of special shelving $2,880
Painting and lettering $930
Sales tax $2,088
Cost of the delivery truck $40,698
Hence, the cost of the delivery truck is $40,698
The same should be considered and relevant
Beasley, Inc., reports the following amounts in its December 31, 2021, income statement. Sales revenue $ 340,000 Income tax expense $ 39,000 Interest expense 10,000 Cost of goods sold 129,000 Salaries expense 32,000 Advertising expense 24,000 Utilities expense 42,000 Prepare a multiple-step income statement.
Answer:
Beasley, Inc.
Beasley, Inc.
Income Statement
For the year ended December 31, 2021:
Sales revenue $ 340,000
Cost of goods sold 129,000
Gross profit $211,000
Operating Expenses:
Salaries expense 32,000
Advertising expense 24,000
Utilities expense 42,000
Total operating expenses $98,000
Operating income (EBIT) $113,000
Interest expense 10,000
Income before taxes $103,000
Income tax expense $ 39,000
Net income $64,000
Explanation:
a) Data and Calculations:
Beasley, Inc.
Income Statement
For the year ended December 31, 2021:
Sales revenue $ 340,000
Cost of goods sold 129,000
Salaries expense 32,000
Advertising expense 24,000
Utilities expense 42,000
Interest expense 10,000
Income tax expense $ 39,000
A parcel delivery company delivered 103,600 packages last year, when its average employment was 83 drivers. This year, the firm handled 112,160 deliveries with 93 drivers. What was the percentage change in productivity over the past years?
Answer: -3.38%
Explanation:
The percentage change in productivity over the past years will be calculated thus:
The Productivity will be the total packages handled divided by the number of drivers employed.
Last year Productivity will be:
= 103600/83
= 1248.19 packages per driver
This year Productivity will be:
= 112160/93
= 1206.02 packages per driver
Therefore, the percentage change in productivity = (This year Productivity - Last year Productivity) / (Last year Productivity) ×100
= [(1206.02-1248.19) / (1248.19)] × 100
= -42.17/1248.19 × 100
= -3.38%
Consider the market for orange juice. Suppose two events occurred last week. During the course of this past week, the price of oranges (used in the production of orange juice) decreased. At the same time, the price of coke (a substitute for orange juice) doubled. What are the likely effects of these TWO events on the equilibrium quantity Q* and price P* of orange juice
Answer:
these two events would lead to an increase in equilibrium quantity and have an indeterminate effect on equilibrium price
Explanation:
As a result of the decrease in the price of oranges which is use in the production of orange juice, there would be a rightward shift of the supply curve for orange juice. A a result, the supply of orange juice would increase and price of orange juice would fall
Substitute goods are goods that can be used in place of another good.
The doubling of the price of coke would lead to a decrease in the demand for coke and an increase in the demand for orange juice. This would shift the dead curve for orange juice to the right. As a result, both equilibrium price and quantity increases
these two events would lead to an increase in equilibrium quantity and have an indeterminate effect on equilibrium price
The most common measure of inflation is a static called the _____
1. Nominal measurement
2. Consumer price index
3. Anual rate
4. US Bureau of Labor Statistic
Explanation:
The most common measure of inflation is a statistic called the Consumer Price Index (CPI).
A steam boiler is needed as part of the design of a new plant. The boiler can be fired by natural gas, fuel oil, or coal. A cost analysis shows that natural gas would be the cheapest at $30,000; for fuel oil it would be $55,000; and for coal it would be $180,000. If natural gas is used rather than fuel oil, the annual fuel cost will decrease by $7,500. If coal is used rather than fuel oil, the annual fuel cost will be $15,000 per year less. Assuming 8% interest, a 20-year analysis period, and no salvage value, which is the most economincal installation?
Answer:
Natural gas boiler
Explanation:
Alternative Installation cost Annual savings
natural gas $30,000 $7,500
fuel oil $55,000 not given
coal $180,000 $15,000
we need to find the PV of natural gas savings = $7,500 * 9.8181 (PVIFA, 8%, 20 periods) = $73,638
the PV of coal savings = $15,000 - 9.8181 (PVIFA, 8%, 20 periods) = $147,272
NPV of natural gas boiler = $73,638 - $30,000 = $43,638
NPV of coal boiler = $147,272 - $180,000 = -$32,728
The issuance of equity for a firm with various financing alternatives signals that the firm has unfavorable prospects which it wants to share with new shareholders according to the signaling theory of capital structure.
a) true
b) false
Answer:
Option b) False
Explanation:
Capital structure
This is usually defined as a composition or the combination of debt and equity that are used to finance a firm.
Signaling theory
According to this theory, It states that actions are taken by a firm to send "signals" to shareholders. It states that firms that uses issue debt to raise funds are signaling or projecting that their future prospects are favorable.
In this theory, managers do have information about their firm's prospects than do outside investors. It is also referred to as an action taken by a firm's management that gives possible clues to investors about how management looks at the firm's capital prospects. It centers on the ability to borrow money at a reasonable cost when good investment opportunities comes their way.
a. Billed customers for fees earned, $112,700.
b. Purchased supplies on account, $4,500.
c. Received cash from customers on account, $88,220.
d. Paid creditors on account, $3,100.
e. On October 12, fees earned on account were $14,600.
Required:
Journalize this transaction.
Answer:
C.
Explanation:
Bombs Away Video Games Corporation has forecasted the following monthly sales:
January $113,000 July $58,000
February 106,000 August 58,000
March 38,000 September 68,000
April 38,000 October 98,000
May 33,000 November 118,000
June 48,000 December 136,000
Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to annual sales (in units) divided by 12. Of each month's sales, 40 percent are for cash and 60 percent are on account. All accounts receivable are collected in the month after the sale is made.
Required:
Construct a monthly production and inventory schedule in units. Beginning inventory in January is 38,000 units.
Answer:
Bombs Away Video Games Corporation
Production and Inventory Schedule
Sales Units Production units Ending Units
Beginning inventory 38,000
January 22,600 15,200 30,600
February 21,200 15,200 24,600
March 7,600 15,200 1,800
April 7,600 15,200 9,400
May 6,600 15,200 18,000
June 9,600 15,200 23,600
July 11,600 15,200 27,200
August 11,600 15,200 30,800
September 13,600 15,200 32,400
October 19,600 15,200 28,000
November 23,600 15,200 19,600
December 27,200 15,200 7,600
Explanation:
a) data and Calculations:
Sales Budget ($'000) Sales Units Production units Ending Units
Beginning inventory 38,000
January $113,000 22,600 15,200 30,600
February 106,000 21,200 15,200 24,600
March 38,000 7,600 15,200 1,800
April 38,000 7,600 15,200 9,400
May 33,000 6,600 15,200 18,000
June 48,000 9,600 15,200 23,600
July 58,000 11,600 15,200 27,200
August 58,000 11,600 15,200 30,800
September 68,000 13,600 15,200 32,400
October 98,000 19,600 15,200 28,000
November 118,000 23,600 15,200 19,600
December 136,000 27,200 15,200 7,600
Total 182,400 182,400
Accrued Product Warranty Fosters Manufacturing Co. warrants its products for one year. The estimated product warranty is 4% of sales. Assume that sales were $379,000 for January. On February 7, a customer received warranty repairs requiring $250 of parts and $105 of labor.
a. Journalize the adjusting entry required at January 31, the end of the first month of the current fiscal year, to record the accrued product warranty.
b. Journalize the entry to record the warranty work provided in February.
Answer:
a.
Date Account Title Debit Credit
Jan. 31 Product Warranty Expense $15,160
Product Warranty Payable $15,160
Working:
Product warranty expense = Amount of sales for January * Estimated product warranty
= 379,000 * 4%
= $15,160
b.
Date Account Title Debit Credit
Jan. 31 Product Warranty Payable $355
Supplies $250
Wages payable $105
The costs of the warranty will be taken from the liability account for warranties because the warranty payable account represents that the company owes warranty repairs which the customer just came to collect.
You own a portfolio that is invested 15 percent in Stock X, 35 percent in Stock Y, and 50 percent in Stock Z. The expected returns on these three stocks are 9 percent, 15 percent, and 12 percent, respectively. What is the expected return on the portfolio
Answer:
12.60%
Explanation:
The expected return on the portfolio is the sum of the weighted expected return of each stock in the portfolio
(0.15 x 9) + (0.35 x 15) + (0.5 x 12)
= 1.35 + 5.25 + 6
= 12.6%
Company XYZ is working on a marketing strategy for a new oral hygiene product and just discovered that XYZ's biggest competitor is launching a very similar product a month later. In conducting a SWOT analysis, the launch of the competitor's product represents an opportunity.
a. True
b. False
Answer:
XYZ Company
In conducting a SWOT analysis, the launch of the competitor's product represents an opportunity.
b. False
Explanation:
The launch of the competitor's product represents a threat to XYZ Company. It reduces XYZ Company's market competitiveness and profitability. XYZ Company may even be driven out of the market by the competitor, thus leading to massive loss for the company. However, threats must be overcome and turned into opportunities for future product development.
The fastener division of Southern Fasteners manufactures zippers and then sells them to customers for $8 per unit. Its variable cost is $3 per unit, and its fixed cost per unit is $1.50. Management would like the fastener division to transfer 12,000 of these zippers to another division within the company at a price of $3. The fastener division could avoid $0.20 per zipper of variable packaging costs by selling internally.
Determine the minimum transfer price:
(a) Assuming the fastener division is not operating at full capacity, and
(b) Assuming the fastener division is operating at full capacity.
Answer:
a. $2.80b. $7.80Explanation:
a. Assuming the fastener division is not operating at full capacity
When the division is not operating at full capacity, they have space to take on the production requests for other divisions and so won't incur any opportunity costs from not producing for outside customers.
Minimum transfer price = Net Variable cost
= Variable cost - cost saving if sold internally
= 3 - 0.2
= $2.80
b. Assuming the fastener division is operating at full capacity.
At full capacity the division does not have space to produce for internal divisions without incurring losses from not selling outside. The transfer price will therefore be the selling price to customers less the variable cost savings:
= Selling price - variable cost savings
= 8 - 0.2
= $7.80
acc 430 Firm B, a calendar year, cash basis taxpayer, leases lawn and garden equipment. During December, it received the following cash payments. To what extent does each payment represent current taxable income to Firm B
Answer: See explanation
Explanation:
a. Even though firm B received a cash of $522, only $22 which is the interest will be taxable as the $500 which is the principal isn't taxable.
b. Even though Firm B got $600 cash, there'll be no taxable income as the receipt brought about a liability. Hence, taxable income is 0.
c. Even though Firm B got $10000 cash, there'll be no taxable income as the receipt brought about a liability and the net worth wasn't increased. Hence, taxable income is 0.
d. The taxable income here will be $888.
You are considering buying bonds in ACBB, Inc. The bonds have a par value of $1,000 and mature in 35 years. The annual coupon rate is 20.0% and the coupon payments are annual. If you believe that the appropriate discount rate for the bonds is 17.0%, what is the value of the bonds to you
Answer:
Bond Price= $121.27
Explanation:
Giving the following information:
Face value= $1,000
Coupon= 0.2*1,000= $20
Maturity= 35 years
Discount rate= 17%
To calculate the price of the bond, we need to use the following formula:
Bond Price= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]
Bond Price= 20*{[1 - (1.17^-35)] / 0.17} + [1,000/(1.17^35)]
Bond Price= 117.16 + 4.11
Bond Price= $121.27
M. Poirot wishes to sell a bond that has a face value of $1,000. The bond bears an interest rate of 11.28% with bond interest payable semiannually. Six years ago, $979 was paid for the bond. At least a 12% return (yield) on the investment is desired. The minimum selling price must be: Enter your answer as follow: 1234.56
Answer:
M. Poirot
The minimum selling price must be:
= $2,065.09.
Explanation:
a) Data and Calculations:
Face value of bond = $1,000
Interest rate = 11.28%
Interest payment = semiannually
Price of bond six years ago = $979
Desired return (yield) rate = 12%
Minimum selling price can be determined as follows:
N (# of periods) 12
I/Y (Interest per year) 12
PV (Present Value) 979
PMT (Periodic Payment) 5.64
Results
FV = $2,065.09
Sum of all periodic payments $67.68
Total Interest $1,018.41
Bold Stapler Sales Company (BSS) began 2019 with cash of $80,000, inventory of $7,200 (400 staplers that cost $18 each), $2,000 of common stock, and $2,000 of retained earnings. The following events occurred during 2019.
1. BSS purchased additional inventory twice during 2019. The first purchase consisted of 1,600 staplers that cost $21 each, and the second consisted of 2,400 staplers that cost $25 each. The purchases were on account.
2. The company sold 4,220 staplers for cash at a selling price of $45 each.
Required: Determine the ending inventory and cost of goods sold using the three different cost flow assumptions: FIFO, LIFO, and Weighted Average.
Answer:
Bold Stapler Sales Company (BSS)
FIFO LIFO Weighted Average
Ending inventory $4,500 $3,240 $4,122
Cost of goods sold $96,300 $97,560 $96,678
Explanation:
a) Data and Calculations:
Beginning balances in 2019:
Cash $80,000
Inventory $7,200
Common stock $2,000
Retained earnings $2,000
Description Units Unit Cost Total
Beginning inventory 400 $18 $7,200
The first purchase 1,600 $21 33,600
The second purchase 2,400 $25 60,000
Goods available 4,400 $100,800
Sales of units (4,220) $45 $189,900
Ending inventory 180
FIFO:
Ending inventory = $4,500 ($25 * 180)
Cost of goods sold = $96,300 ($100,800 - $4,500)
LIFO:
Ending inventory = $3,240 ($18 * 180)
Cost of goods sold = $97,560 ($100,800 - $3,240)
Weighted Average:
Weighted average cost per unit = $22.91 ($100,800/4,400)
Ending inventory = $4,122 (22.91 * 180)
Cost of goods sold = $96,678 ($100,800 - $4,122)
You are planning to save for retirement over the next 30 years. To do this, you will invest $700 a month in a stock account and $400 a month in a bond account. The return of the stock account is expected to be 7.5 percent, and the bond account will pay 5.5 percent. When you retire, you will combine your money into an account with a 2.5 percent return. How much can you withdraw each month from your account assuming a 25-year withdrawal period?
a. 5.545.73.
b. 6,081.31.
c. 5,870.85.
d. 6.205.66
Answer:
Monthly withdraw= $5,870.6
Explanation:
Giving the following information:
Stock:
Monthly deposit= $700
Interest rate= 0.075/12= 0.00625
Number of periods= 30*12= 360
Bond:
Monthly deposit= $400
Interest rate= 0.055/12= 0.0045833
Number of periods= 30*12= 360
First, we need to calculate the value of the investment at the moment of retirement:
FV= {A*[(1+i)^n-1]}/i
A= monthly deposit
Stock:
FV= {700*[(1.00625^360) - 1]} / 0.00625
FV= $943,211.797
Bond:
FV= {400*[(1.00458^360) - 1]} / 0.00458
FV= $365,447.415
Total FV= $1,308,659.212
Now, the monthly withdrawal:
Interest rate= 0.025/12= 0.002083
Number of periods= 25*12= 300
Monthly withdraw= (FV*i) / [1 - (1+i)^(-n)]
Monthly withdraw= (1,308,659.212*0.002083) / [1 - (1.002083^-300)]
Monthly withdraw= $5,870.6
Both Sue and Joe are students. Your friend Sue has $20,000 of credit card debt (25% interest charge compounded monthly). Sue plans on paying $400 per month over the next 10 years on this credit card. Your other friend Joe has $40,000 of student loan debt (15% interest charge compounded monthly). Joe plans on paying $645.34 each month for the next 10 years.
A) Which person, Sue or Joe, do you feel will pay the most interest expense and why?
B) Which person (Joe or Sue) has the worst debt situation?
Answer:
A)
Joe will pay the most interest expense because he is paying more interest than Sue.
B)
Sue has the worst debt situation because he is paying a higher interest rate as compared to Joe.
Explanation:
A)
First Calculate the interest payment of both as follow
Interest Payment = Total Installment Payment - Debt Value
Sue
Interest Payment = ( $400 per month x 10 years x 12 months per year ) - $20,000 = $48,000 - $20,000 = $28,000
Joe
Interest Payment = ( $645.34 per month x 10 years x 12 months per year ) - $40,000 = $77,440.8 - $40,000 = $37,440.8
Joe will pay more interest expense as compared to Sue.
B)
Sue has the worst debt situation because he is paying a higher interest rate as compared to Joe.
