Answer:
You should purchase standard doors because the present value of that purchase is -$25,600, while the NPV of purchasing aluminum doors is -$30,195.56.
Explanation:
we have to compare the present value of both alternatives:
alternative 1: purchase aluminum deluxe doors:
cash flow year 1 = (16 x -$2,200) = -$35,200
cash flow year 1 - 5 = $1,000
cash flow year 6 = $1,000 + (16 x $150) = $3,400
NPV = -$35,200 + $1,000/1.12 + $1,000/1.12² + $1,000/1.12³ + $1,000/1.12⁴ + $1,000/1.12⁵ + $3,400/1.12⁶ = -$35,200 + $892.86 + $797.19 + $711.78 + $635.52 + $497.18 + $1,469.91 = -$30,195.56
alternative 2: purchase standard doors
NPV = 16 x -$1,600 = -$25,600
Beloit Co. is a manufacturer of mini-doughnut machine makers. Early in 2015 a customer asked Beloit to quote a price for a custom-designed doughnut machine to be delivered by the end of 2015. Once purchased, the customer intends to place the machine in service in January 2016 and will use it for four years. The expected annual operating net cash flow is estimated to be $120,000. The expected salvage value of the equipment at the end of four years is about 10% of the initial purchase price. To expect a 15% required rate of return on investment, what would be the maximum amount that should be spent on purchasing the doughnut machine
Answer:
$363,375.20
Explanation:
initial outlay = X
useful life = 4 years
salvage value = 0.1X
NCF years 1 - 4 = $120,000
discount rate = 15%
NPV = 0
X = $120,000/1.15 + $120,000/1.15² + $120,000/1.15³ + ($120,000 + 0.1X)/1.15⁴ =
X = $104,347.83 + $90,737.24 + $78,901.95 + $68,610.39 + 0.05718X
X = $342,597.41 + 0.05718X
0.94282X = $342,597.41
X = $342,597.41 / 0.94282 = $363,375.20
#2 - You are organizing an exploratory meeting with engineering representatives from a dozen manufacturers from around the world to discuss updates to a technical standard that all the companies' products must adhere to. The representatives have a wide range of firmly held opinions on the subject because the changes could help some companies and hurt others. They can't even agree on what should be addressed in the first meeting, so you need to develop a minimum level of consensus on what should be on the agenda. Which combination of media and channels would you use to move the conversation forward and finalize the agenda? Each company has one representative, and any discussions need to be kept confidential. PreviousNext
Answer:
Written media and digital channel
Explanation:
In the stated problem been faced by the organizing committee or the convener of the meeting, the best combination of media and channel would be the use of written media and Digital channel.
This combination is the best because in the use of written media the ideas about the updates to a technical standards would be better represented and the advantages and disadvantages can also be highlighted clearly for the various representative to study and come to a consensus as well.
The digital channel is the best channel because it provides more security to data and easy access as well.
note : every confidential document must as well be written and stored using a digital channel hence the above choice.
Determine whether each of the following transactions contributes to the calculation of GDP as total spending, then, identify the relevant component of GDP (C, I, G, or NX). Michelin sells tires to Nissan to install on their 2019 Sentras that are produced and sold in the United States. American consumers import $3.5 billion of woven apparel from Bangladesh. The U.S. government spent $523.1 billion on national defense. Entrepreneur and Shark Tank investor Barbara Corcoran purchases 15% of Cousins Maine Lobster food truck company for $55,000.
Answer:
Michelin sells tires to Nissan to install on their 2019 Sentras that are produced and sold in the United States.
Not included in the GDP since tires are a component of new cars, they are not a final product.American consumers import $3.5 billion of woven apparel from Bangladesh.
Included in the GDP as imports, which reduce total net exports (NX).The U.S. government spent $523.1 billion on national defense.
Included in the GDP as government spending (G).Entrepreneur and Shark Tank investor Barbara Corcoran purchases 15% of Cousins Maine Lobster food truck company for $55,000.
Not included int he GDP since sale of stocks or ownership stakes at businesses are not considered final goods or services.Channing Corporation makes two products (A1 and B2) that require direct materials, direct labor, and overhead. The following data refer to operations expected for next month.
A1 B2 Total
Revenue $100,000 $ 300,000 $400,000
Direct material 30,000 60,000 90,000
Direct labor 40,000 95,000 135,000
Overhead:
Direct-material related 13,500
Direct-labor related 40,500
Required:
Channing uses a two-stage cost allocation system, It uses direct-material costs to allocate direct-materials related overhead and direct-labor costs to allocate direct-labor related overhead costs.
a. Compute the direct-material related overhead rate for next month.
b. Compute the direct-labor related overhead rate for next month.
c. What is the total overhead allocated to product A1 next month?
d. What is the total overhead allocated to product B2 next month?
a. predetermined rate ?? % of direct materials costs
b. predetermined rate ?? % of direct-labor cost
c. Total Overhead (A1) ??
d. Total Overhead (B2) ??
Answer:
a. 15% of direct material cost
b. 30% of direct labor cost
c. $16,500
d. $37,500
Explanation:
The computation is shown below:-
a. Predetermine overhead rate = Direct-material related ÷ Total of direct labor
= 13,500 ÷ 90,000
= 15% of direct material cost
b. Predetermine overhead rate = Direct-labor related ÷ Total of direct labor
= 40,500 ÷ 135,000
= 30% of direct labor cost
c. Total overhead (A1) = Direct material × Predetermine overhead rate of direct material + Direct labor × Predetermine overhead rate of direct labor
= 30,000 × 15% + 40,000 × 30%
= $16,500
d. Total overhead (B2) = Direct material × Predetermine overhead rate of direct material + Direct labor × Predetermine overhead rate of direct labor
= 60,000 × 15% + 95,000 × 30%
= $37,500
Required information [The following information applies to the questions displayed below.] During April, the first production department of a process manufacturing system completed its work on 310,000 units of a product and transferred them to the next department. Of these transferred units, 62,000 were in process in the production department at the beginning of April and 248,000 were started and completed in April. April's beginning inventory units were 70% complete with respect to materials and 30% complete with respect to conversion. At the end of April, 84,000 additional units were in process in the production department and were 90% complete with respect to materials and 40% complete with respect to conversion. Compute the number of equivalent units with respect to both materials used and conversion used in the first production department for April using the weighted-average method.
Answer:
Computation of Equivalent units
units Materials Conversion
Started & completed 248,000 248,000 248,000
Ending inventory 84,000 75,600 33,600
Equivalent units 323,600 281,600
Explanation:
a) Data and Calculations:
Units transferred out = 310,000
Beginning inventory = 62,000 (70% materials and 30% conversion)
Started and completed = 248,000
Ending inventory = 84,000 (90% materials and 40% conversion)
b) Equivalent units are physical units expressed as finished units by multiplying the physical units with the degree of completion in terms of materials and conversion (labor and overheads).
Newton Company currently produces and sells 5,000 units of a product that has a contribution margin of $6 per unit. The company sells the product for a sales price of $20 per unit. Fixed costs are $40,000. The company is considering investing in new technology that would decrease the variable cost per unit to $9 per unit and double total fixed costs. The company expects the new technology to increase production and sales to 10,000 units of product. What sales price would have to be charged to earn a $90,000 target profit assuming the investment in technology is made
Answer:
26
Explanation:
The computation of sales price is shown below:-
Particulars Amount
New Fixed Costs $80,000
($40,000 × 2)
Variable Cost per unit $9
Total variable cost on 10,000 Units $90,000
(10,000 × $9)
Total cost $170,000
Profit desired $90,000
Sales $260,000
Number of units 10,000
sales price per unit $26
For computing the sales price per unit we simply divide the number of units by sales price per unit.
Does Diamond’s recording of the August 2010 ‘‘continuity’’ payments and August/September 2011 ‘‘momentum’’ payments as the purchases of fiscal 2010 and fiscal 2011, respectively, comply with the U.S. GAAP (Generally Accepted Accounting Principles)? Why or why not? Provide support from the accounting literature, including the FASB Concept Statements, in support of your argument
Answer:
The correct response is "No".
Explanation:
The August year 2010 "continuity" transactions reported by Diamonds as well as the August/September year 2011 "momentum" transactions or transfers do not cooperate within U.S. GAAP. Diamond said that because it was truly compensating for products they had indeed purchased, the fees are there for potential products to be obtained.Depreciation Expense on the Heating and Air Conditioning Equipment for the factory of $50,000 is allocated to five departments. The cost-allocation base for this expense is the number of cubic feet, which equals 100,000 cubic feet. Information for five departments is below: Department Square Feet Cubic Feet Department A 15,000 15,000 Department B 5,000 5,000 Department C 30,000 20,000 Department D 20,000 35,000 Department E 10,000 25,000 How much Depreciation Expense is allocated to Department A
Answer: $7,500
Explanation:
Cost allocation base is Cubic feet which is 100,000 ft³.
Department A has 15,000 ft³ of the 100,000 ft³.
Depreciation is $50,000
Depreciation for Department A is therefore;
= (15,000/100,000) * 50,000
= $7,500
Assume that you inherited some money. A friend of yours is working as an unpaid intern at a local brokerage firm, and her boss is selling securities that call for 4 payments of $80 (1 payment at the end of each of the next 4 years) plus an extra payment of $1,000 at the end of Year 4. Your friend says she can get you some of these securities at a cost of $900 each. Your money is now invested in a bank that pays a 10% nominal (quoted) interest rate but with quarterly compounding. You regard the securities as being just as safe, and as liquid, as your bank deposit, so your required effective annual rate of return on the securities is the same as that on your bank deposit. You must calculate the value of the securities to decide whether they are a good investment. What is their present value to you?
Answer: The securities are a good investment as their Present Value of $925.17 is greater than their cost of $900.
Explanation:
First calculate the Effective annual rate of return;
= (( 1 + r/n)^n) - 1
= ((1 + 10%/4 ) ^ 4 ) - 1
= 10.38%
The present value of the security is;
= (80 / 1.1038 ) + (80 / 1.1038 ^ 2) + (80 / 1.1038 ^ 3) + (80 / 1.1038 ^ 4 ) + (1000 / 1.1038 ^ 4 )
= $925.17
Serge stayed at a bed and breakfast in a mountain town. The bed and breakfast provides food and a comfortable
room for Serge each night after he skis and hikes in the mountains. What term best describes the role of the bed
and breakfast
hospitality
tourism
O sightseeing
recreation
Answer:
C
Explanation:
The term best describes the role of the bed and breakfast is hospitality. Thus the correct option is A.
What is a Context clue?Any kind of hint or idea reflects from the statements which helps the reader to understand the clear context in which the word is used refers to a context clue. This clue helps the reader to determine the appropriate meaning.
The relationship between a host and a guest is known as hospitality, and it involves the host's goodwill expressions for the guest as well as providing them with better amenities to enhance their stay.
In the given case, Serge receives a bed and breakfast in a mountain town which provides him comfort and describes the elements of hospitality as a nice gesture from the host to the guest.
Therefore, option A is appropriate.
Learn more about context clues, here:
https://brainly.com/question/20263792
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The following is a portion of the current assets section of the balance sheets of Avanti's, Inc., at December 31, 2020 and 2019: 12/31/20 12/31/19 Accounts receivable, less allowance for bad debts of $9,887 and $17,439, respectively $173,948 $239,842
Required:
a. If $11,722 of accounts receivable were written off during 2020, what was the amount of bad debts expense recognized for the year? (Hint Use a T-account model of the Allowance account, plug in the three amounts that you know, and solve for the unknown) Bad debt xpemse
b. The December 31, 2020, Allowance account balance includes $3,094 for a past due account that is not likely to be collected. This account has not been written off (1) If it had been written off, will there be any effect of the write-off on the working capital at December 31, 2020?
Answer:
Avanti's, Inc.
Bad Debts Expense = $4,170
Explanation:
a) Data:
Current assets section of the balance sheets of
Avanti's, Inc.,
at December 31, 2020 and 2019: 12/31/20 12/31/19
Accounts receivable, $183,835 $257,281
less allowance for bad debts of $9,887 $17,439
Balance of Accounts receivable $173,948 $239,842
Allowance for bad debts account
Account Details Debit Credit
Balance, 12/31/19 $17,439
Accounts receivable $11,722
Balance, 12/31/20 9,887
Bad debt expense 4,170
Journal Entries:
Debit Bad Debts Expense $4,170
Credit Allowance for Bad Debts $4,170
To record bad debts expense for the period.
Jamie's Motor Home Sales currently sells 1,100 Class A motor homes, 2,200 Class C motor homes, and 2,800 pop-up trailers each year. Jamie is considering adding a mid-range camper and expects that if she does so she can sell 1,500 of them. However, if the new camper is added, Jamie expects that her Class A sales will decline to 850 units while the Class C camper sales decline to 2,000. The sales of pop-ups will not be affected. Class A motor homes sell for an average of $140,000 each. Class C homes are priced at $59,500 and the pop-ups sell for $5,000 each. The new mid-range camper will sell for $42,900. What is the erosion cost of adding the mid-range camper
Answer:
$46,900,000
Explanation:
Calculation for the erosion cost of adding the mid-range camper
Erosion cost = [(1,100 - 850) × $140,000] + [(2,200 -2,000) × $59,500]
Erosion cost =(250×$140,000)+(200×$59,500)
Erosion cost =$35,000,000+$11,900,000
Erosion cost = $46,900,000
Therefore the erosion cost of adding the mid-range camper will be $46,900,000
On January 1, 2016, Gless Textiles issued $24 million of 9%, 10-year convertible bonds at 101. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of Gless’s no par common stock. Bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 99 (that is, 99% of face amount). Century Services purchased 15% of the issue as an investment.3. On July 1, 2021, when Gless’s common stock had a market price of $33 per share, Century converted the bonds it held. Prepare the journal entries by both Gless and Century for the conversion of the bonds (book value method). (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)1. Record the entry for Gless regarding the conversion of the bonds.2. Record the entry for Century regarding the conversion of the bonds.
Answer and Explanation:
The Journal entries are shown below:-
1. Convertible bonds payable Dr, $3,600,000
Premium bonds payable Dr, $16,200
To common stock $3,616,700
(Being conversion of the bonds is recorded)
Working note:
Issue price of the convertible bonds $3,636,000
($24,000,000 × 15% × 101%)
Less: Par value of the bonds $3,600,000
($24,000,000 × 15% × 100%)
Premium on bonds payable $36,000
less: Premium on bonds payable
amortized $19,800
($26,000 × 11 ÷ 20)
Available Balance $16,200
2. Investment in common stock Dr, $3,616,200
To Investment in convertible bonds $3,616,200
To Premium on bond investment $16,200
(Being conversion of the bonds is recorded)
You are planning to save for retirement over the next 25 years. To do this, you will invest $730 per month in a stock account and $330 per month in a bond account. The return of the stock account is expected to be 9.3 percent, and the bond account will pay 5.3 percent. When you retire, you will combine your money into an account with a return of 6.3 percent. How much can you withdraw each month from your account assuming a 20-year withdrawal period? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
The monthly withdrawal will be of $ 7.823,24
Explanation:
We solve for the future value of each investment:
stock account:
[tex]C \times \frac{(1+r)^{time} - 1}{rate} = FV\\[/tex]
C 730
time 300 (25 years x 12 month per year)
rate 0,00775 (9.3% among 12 months)
[tex]730 \times \frac{(1+0,00775)^{300} -1}{0,00775} = FV\\[/tex]
FV $860.498,28
bond account:
[tex]C \times \frac{(1+r)^{time} -1}{rate} = FV\\[/tex]
C 330
time 300
rate (5.3% annual among 12 months) 0,004416667
[tex]330 \times \frac{(1+0,00441667)^{300} -1}{0,00441667} = FV\\[/tex]
FV $205.563,2522
now, we add them:
860498.28 + 205.563,25 = $1.066.061,53
And last, solve for the monthly withdrawal of this sum:
[tex]PV \div \frac{1-(1+r)^{-time} }{rate} = C\\[/tex]
PV $1.066.061,53
time 240 (20 years x 12 months)
rate 0,00525 (6.3% among 12 months)
[tex]1066061,53 \div \frac{1-(1+0,00525)^{-240} }{0,00525} = C\\[/tex]
C $ 7.823,244
True or false is public disclosure laws are laws that require companies to provide full information about their products
Answer:
True
Explanation:
Public disclosure entails making information or data easily accessible and available to all interested parties. Public disclosure may be in the form of statements released to the general public through media, publication in an official bulletin, website, or special report document.
Public disclosure laws are regulations requiring businesses to provide full information about their products. The information provided includes ingredients or components of a product and any hazards that may arise from its usage. Public disclosure laws exist to protect consumers.
1. You will receive a Financial Aid Award Letter... *
Before you have completed the FAFSA
After you have completed the FAFSA and applied to colleges
After you have completed the FAFSA and have been accepted to colleges
O After you have started your first semester of classes
Holly Renfro contributed a patent, accounts receivable, and $20,000 cash to a partnership. The patent had a book value of $8,000. However, the technology covered by the patent appeared to have significant market potential. Thus, the patent was appraised at $92,000. The accounts receivable control account was $45,000, with an allowance for doubtful accounts of $3,000. The partnership also assumed a $14,000 account payable owed to a Renfro supplier.Provide the journal entry for Renfro’s contribution to the partnership.
Answer: Please see explanation column for answers
Explanation:
Journal entry to record Renfro's contribution to partnership.
Account Titles and Explanation Debit Credit
Cash $ 20,000
Patent $92,000
Accounts receivables $45,000
Accounts payable $ 14,000
Allowance for doubtful accounts $ 3,000
Holly Renfro, capital $ 140,000
[20,000 + 92,000 + 45,000 - 14000 - 3,000} = $140,000
Andreas Broszio (Geneva). Andreas Broszio just started as an analyst for Credit Suisse in Geneva, Switzerland. He receives the following quotes for Swiss francs against the dollar for spot, 1 month forward, 3 months forward, and 6 months forward. Spot exchange rate: Bid rate SF1.2573/$ Ask rate SF1.2599/$ 1-month forward 10 to 15 3-months forward 14 to 22 6-months forward 20 to 30 The current one-year U.S. T-Bill rate is 4.1%. a. Calculate outright quotes for bid and ask and the number of points spread between each. b. What do you notice about the spread as quotes evolve from spot toward 6 months?
Answer:
The answer is below
Explanation:
a) The spread is the difference between the ask and bid price, it is given by:
Spread = ask - bid
The outright quotes are given as:
1 - month forward:
Bid = 1.2573 + 0.0010 = 1.2583
Ask = 1.2599 + 0.0015 = 1.2614
3 - month forward:
Bid = 1.2573 + 0.0014 = 1.2587
Ask = 1.2599 + 0.0015 = 1.2621
1 - month forward:
Bid = 1.2573 + 0.0020 = 1.2593
Ask = 1.2599 + 0.0030 = 1.2629
Bid Ask Spread
1 - month forward: 1.2583 1.2614 0.0031
3 - month forward: 1.2587 1.2621 0.0034
6 - month forward: 1.2593 1.2629 0.0036
b) The spread widen as it spot moves to 6 - month, this can lead to a thinner trading volume.
Acceptance. Amy Kemper was seriously injured when her motorcycle was struck by a vehicle driven by Christopher Brown. Kemper’s attorney wrote to Statewide Claims Services, the administrator for Brown’s insurer, asking for "all the insurance money that Mr. Brown had under his insurance policy." In exchange, the letter indicated that Kemper would sign a "limited release" on Brown’s liability, provided that it did not include any language requiring her to reimburse Brown or his insurance company for any of their incurred costs. Statewide then sent a check and release form to Kemper, but the release demanded that Kemper "place money in an escrow account in regards to any and all liens pending." Kemper refused the demand, claiming that Statewide’s response was a counteroffer rather than an unequivocal acceptance of the settlement offer. Did Statewide and Kemper have an enforceable agreement? Discuss.
Answer:
In the clarification section down, the definition including its concern is mentioned.
Explanation:
In terms of strategy, two important components necessarily entail an "Agreement."
Offer AcceptanceStep 1: Approval + Bid = Agreement
Step 2: Agreement + Enforceability = Contract.
Throughout water to establish a legal Arrangement or Contract, those would be the two underlying equations to be met. Going to come to something like the case's reality, The counsel for Kemper addressed to Statewide Claims Management, Brown's insurance company agent, calling for "all the premium money something which Mr. Brown seems to be under his insurance contract." Statewide decided to send the document and perhaps freedom of the individual to Kemper throughout reaction to the aforementioned request, however, they pointed to Kemper's current requirement that she should put money during an emergency fund concerning anything and everything outstanding liens.Kemper disagreed with all of the above assumptions as well as denied the proposal, arguing that perhaps the response from Nationwide was a counteroffer. If we correctly examine the aforementioned situation, without even any discussion, we will realize that it is indeed a pure "Counter Bid." Why whenever the offender becomes encouraged with just 2 choices, YES/NO, whenever an Offeror makes an object to something like the Offeree. and then when the promise offers a conditional response, it destroys the initial offer so it corresponds to Counter Offer.In quite a similar manner, the Nationwide reaction to Kemper's letter here alone leads to "Counter Bid" and becomes an Absolute acceptance, but not. i.e., there is no approval of an invitation, and no deal remains.There is, however, no "Acceptance" to either the original Bid, and therefore no binding mediation agreements between Nationwide and Kemper have been established.
Item 6Item 6 On July 15, 2018, Ortiz & Co. signed a contract to provide EverFresh Bakery with an ingredient-weighing system for a price of $90,000. The system included finely tuned scales that fit into EverFresh's automated assembly line, Ortiz's proprietary software modified to allow the weighing system to function in EverFresh's automated system, and a one-year contract to calibrate the equipment and software on an as-needed basis. (Ortiz competes with other vendors who offer ongoing calibration contracts for Ortiz's systems.) If Ortiz was to provide these goods or services separately, it would charge $60,000 for the scales, $10,000 for the software, and $30,000 for the calibration contract. Ortiz delivered and installed the equipment and software on August 1, 2018, and the calibration service commenced on that date. Assume that the scales, software and calibration service are viewed as one performance obligation. How much revenue will Ortiz recognize in 2018 for this contract?
Answer: $74,250
Explanation:
Ortiz put the individual goods together and so charged lower. The amount will need to be apportioned based on the amount they will charge had they sold the goods individually.
Total if sold individually;
= 60,000 + 10,000 + 30,000
= $100,000
Scales;
= (60,000/100,000) * 90,000
= $54,000
Software;
= (10,000/100,000) * 90,000
= $9,000
Calibration;
= (30,000/100,000) * 90,000
= $27,000
The Calibration service is for a year and commenced on August 1, and the year ended December 31 so Ortiz would have to account for a year given those 5 months alone.
= 27,000 * 5/12
= $11,250
The total revenue recognized in 2018;
= 54,000 + 9,000 + 11,250
= $74,250
According to the Law of Supply and Demand, what will happen when supply increases?
A Quantity supplied will decrease
B Demand will decrease
C Productivity will decrease
D Prices will decrease
Mickey is a 12-year-old dialysis patient. Three times a week for the entire year he and his mother, Sue, drive 20 miles one way to Mickey’s dialysis clinic. On the way home, they go 10 miles out of their way to stop at Mickey’s favorite restaurant. Their total round trip is 50 miles per day. How many of those miles, if any, can Sue use to calculate an itemized deduction for transportation? Use the mileage rate in effect for 2019.
Answer:
The right approach will be "$ 1123.2".
Explanation:
The number of miles to be used will be:
= [tex]40 \ miles \ round \ trip\times 3 \ trips \ per \ week\times 52 weeks[/tex]
= [tex]6240 \ miles[/tex]
Now,
The item deduction will be:
= [tex]Number \ of \ used \ miles\times 18 \ cents \ per \ mile[/tex]
= [tex]6240\times 1123.2[/tex]
= [tex]1123.2[/tex] ($)
A company currently has two product lines and is considering dropping
Product XYZ. Product ABC Product XYZ
Total Sales revenue $90,000 $60,000 $150,000
Cost of goods sold (all variable) $35,000 $40,000 $75,000
Contribution margin $55,000 $20,000 $75,000
Fixed costs $30,000 $25,000 $55,000
Operating Profit (Loss) $25,000 ($5,000) $20,000
Of the $55,000 of total fixed costs, $30,000 is rent. Each product is allocated $15,000. The rent will continue even if the product is dropped. The rest of the fixed costs are related to each product and would be saved if the product was dropped.
Required:
Should Product XYZ be dropped?
Answer:
Product XYZ should not be dropped. Because it is bringing a profit contribution of $5,000 towards fixed costs.
Explanation:
Calculating the Profit Contribution of Product XYZ
Sales revenue $60,000
Less Cost of Goods Sold ($40,000)
Contribution Margin $20,000
Less Traceable Fixed Costs ($30,000 - $15,000) ($15,000)
Profit Contribution $5,000
Hint : Remove the fixed cost element centrally controlled from Product XYZ fixed costs.
Since Product XYZ is bringing a profit contribution of $5,000 towards the fixed costs, it should not be dropped.
3.Griffin Corporation has decided to alter their dividend policy starting next year. They just paid out $1.75 per share in dividends and are planning a major expansion over the next 4 years. They have announced that they will not pay any dividends during this expansion period. Starting in year 5, they will resume their historical dividend payout of $1.75 a share. They plan on increasing this dividend by 3% each year, thereafter. If shareholders require a 12% return on this stock, what should the stock be selling for in the market
Answer:
$12.36
Explanation:
Div₀ = $1.75
Div₁ = $0
Div₂ = $0
Div₃ = $0
Div₄ = $0
Div₅ = $1.75
Div₆ = $1.8025
first we must determine the terminal value at year 5 = Div₆ / (Re - g) = $1.8025 / (12% - 3%) = $20.03
now we must discount the future dividends using Re = $1.75/1.12⁵ + $20.03/1.12⁵ = $0.99 + $11.37 = $12.36
Jim recently joined the Austin Barter Club, an organization that facilitates the exchange of services between its members. This year Jim provided lawn-mowing services to other club members. Jim received the following from the barter club. Determine the amount, if any, Jim should include in his gross income in each of the following situations:
A. Jim received $275 of car repair services from another member of the club.
B. Jim received a $150 credit that gave him the option of receiving a season pass at a local ski resort from another member of the club. However, he forgot to request the pass by the end of the ski session and his credit expired.
Answer:
Jim's Gross Income:
A. Car Repair $275
B. Option $0
Explanation:
Jim actually received the $275 car repair services from a club member and should include this sum in his gross income. However, since he did not actually receive the credit option of $150 for the local ski resort, because it expired, he should not include it in his gross income. The exchange was not complete since he did not benefit from the Ski Resort's free services.
Andrew lives in New York City and runs a business that sells boats. In an average year, he receives $793,000 from selling boats. Of this sales revenue, he must pay the manufacturer, a wholesale cost of $430,000; he also pays wages and utility bills totaling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $15,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also if Andrew does not operate this boat business, he can work as a financial advisor, receive an annual salary of $50,000 with no additional monetary costs, and rent out his showroom a the $15,000 per year rate. No other costs are incurred in running this boat business.
Identify each of Andrew's costs in the following table as either an implicit cost or an explicit cost of selling boats.
Implicit Cost Explicit Cost
The wages and utility bills that Andrew pays
The rental income Andrew could receive if he choose to rent out his showroom
The salary Andrew could earn if he worked as a financial advisor
The wholesale cost for the boats that Andrew pays the manufacturer
Complete the following table by determining Andrew's accounting profit of his boat business.
Profit (Dollars)
Accounting Profit
Economic Profit
Answer:
the solutions are below.
Explanation:
1. The wages and utility bills that Andrew pays is explicit cost
2. The rental income Andrew could receive if he choose to rent out his showroom is implicit cost
3. The salary Andrew could earn if he worked as a financial advisor s an implicit cost
4. The wholesale cost for the boats that Andrew pays the manufacturer is an explicit cost.
accounting profit = revenue - explicit cost
= 793000-[430000+301000]
=$62000
Economic profit = revenune - [explicit cost + implicit cost]
= 793000-[430000+301000+50000+15000]
= 793000-796000
= -$3000
Exercise 3-8 Applying Overhead; Journal Entries; Disposing of Underapplied or Overapplied Overhead [LO3-1, LO3-2, LO3-4] The following information is taken from the accounts of Latta Company. The entries in the T-accounts are summaries of the transactions that affected those accounts during the year. Manufacturing Overhead (a) 499,968 (b) 416,640 Bal. 83,328 Work in Process Bal. 5,360 (c) 778,000 319,500 93,500 (b) 416,640 Bal. 57,000 Finished Goods Bal. 33,000 (d) 674,000 (c) 778,000 Bal. 137,000 Cost of Goods Sold (d) 674,000 The overhead that had been applied to production during the year is distributed among Work in Process, Finished Goods, and Cost of Goods Sold as of the end of the year as follows:
Work in Process, ending $ 27,360
Finished Goods, ending 65,760
Cost of Goods Sold 323,520
Overhead applied $ 416,640
For example, of the $57,000 ending balance in work in process, $27,360 was overhead that had been applied during the year. Required:
1. Identify reasons for entries (a) through (d).
2. Assume that the underapplied or overapplied overhead is closed to Cost of Goods Sold. Prepare the necessary journal entry.
3. Assume that the underapplied or overapplied overhead is closed proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the necessary journal entry.
Answer:
1. a would be the Actual Manufacturing cost for the year
b would be the Manufacturing Overhead applied to the Work in Process
c is the Cost of Goods Manufactured in the year
d is the Cost of Goods Sold as shown in the same named account.
2.
DR Cost of Goods Sold $83,328
CR Manufacturing Overhead $83,328
3.
DR Work in Process $5,472
Finished Goods $13,152
Cost of Goods sold $64,704
CR Manufacturing Overhead $83,328
Working
Overhead is distributed as follows;
Work in process = 27,360/ 416,640 * 83,328 = $5,472
Finished Goods = 65,760/ 416,640 * 83,328 = $13,152
Cost of Goods sold = 323,520/416,640 * 83,328 = $64,704
The controller of Fortnight Co. has requested a quick estimate of the manufacturing supplies needed for the Cleveland Plant for the month of July, when production is expected to be 470,000 units to meet the ending inventory requirements and sales of 475,000 units. Fortnight Co.'s budget analyst has the following actual data for the last three months. Month Production in Units Manufacturing Supplies March 450,000 $723,060 April 540,000 853,560 May 480,000 766,560Using the high-low method to develop a cost estimating equation, the estimate of needed manufacturing supplies for July would be: (CMA adapted)
Answer:
Total cost= $752,060
Explanation:
To calculate the fixed and variable cost under the high-low method, we need to use the following formulas:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (853,560 - 723,060) / (540,000 - 450,000)
Variable cost per unit= $1.45
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 853,560 - (1.45*540,000)
Fixed costs= $70,560
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 723,060 - (1.45*450,000)
Fixed costs= $70,560
Now, the total cost for 470,000 units:
Total cost= 70,560 + 1.45*470,000
Total cost= $752,060
Page 4 of 17
Please read and answer each question carefully.
Summa
4. Which of the following is a contract?
A) O An Insurance policy
B) O A repair order
C) O Both of the above
D) O None of the above
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Answer:
C. Both of the above
Explanation:
Insurance policy and repair order are both contracts.
The insurance policy is an agreement between the insurer (person or company) and the policyholder (the person who takes the cover). On the other hand, the repair order is also a contract because it is an agreement between the company who will provide the service repair and the customer who will receive the service.
As long as both parties consent to the agreement, are capable of doing what is asked in the agreement and that the agreement is legal, then it is considered a contract.
By observing an individual’s behavior in the situations outlined below, determine therelevant income elasticities of demand for each good (i.e., whether the good is normal orinferior). If you cannot determine the income elasticity, what additional informationmight you need?
a. Bill spends all his income on books and coffee. He finds $20 while rummagingthrough a used paperback bin at the bookstore. He immediately buys a newhardcover book of poetry.
b. Bill loses $10 he was going to use to buy a double espresso. He decides to sell hisnew book at a discount to his friend and use the money to buy coffee.
c. Being bohemian becomes the latest teen fad. As a result, coffee and book pricesrise by 25 percent. Bill lowers his consumption of both goods by the same percentage.
d. Bill drops out of art school and gets an M.B.A. instead. He stops reading books anddrinking coffee. Now he reads The Wall Street Journal and drinks bottled mineralwater
Answer:
Normal goods are those goods which see their demand rise when income rises and fall when income falls. Inferior goods on the other hand will see their demand fall when income rises and vice versa.
a. Book = Normal Good
Coffee = Neutral good
The demand for Books increased when Bill had more money which makes it a normal good.
The demand for coffee did not change when new income came thereby making it a neutral good.
b. Book = Normal Good
Coffee = Inferior good
The demand for Books decreased when Bill had less money which makes it a normal good.
The demand for coffee increased when Bill's income reduced thereby making it an inferior good.
c. Book = Normal Good = Coffee
Both coffee and books are normal goods because Bill is buying less of them when their prices increase because it means that Bill has less income to spend on them.
d. More information needed.
We are unable to tell which goods are normal or inferior as we are not given information on the relative changes in demand as a result of income changing.
