Answer:
$4,350
Explanation:
Calculation to determine your net profit or loss on this investment
Net profit = (-$0.60 - $42.70 + $52) × 100 × 5
Net profit= $4,350
Therefore your net profit or loss on this investment is $4,350
MC Qu. 149 Trago Company manufactures... Trago Company manufactures a single product and has a JIT policy that ending inventory must equal 30% of the next month's sales. It estimates that May's ending inventory will consist of 85,500 units. June and July sales are estimated to be 285,000 and 295,000 units, respectively. Trago assigns variable overhead at a rate of $2.30 per unit of production. Fixed overhead equals $405,000 per month. Compute the number of units to be produced and use this amount to compute the total budgeted overhead that would appear on the factory overhead budget for the month of June.
Answer:
$1067400
Explanation:
The computation of the number of units and factory overhead is given below:
units to be produced in june is
= ending inventory + sales - beginning inventory
= (30% of 295000) + 285000 - 85500
= 288000 Units
Now
Overheads budgeted for june
= variable overheads + fixed overheads
= (288000 × 2.3) + 405000
= 662400+405000
= $1067400
Your company is considering a project that will cost $100. The project will generate after-tax cash flows of $37.50 per year for five years. The WACC is 10 percent and the firm's D/A ratio is 0.70. The flotation cost for equity is 6 percent, the flotation cost for debt is 3 percent, and your firm does not plan on issuing any preferred stock within its capital structure. If your firm follows the practice of incorporating flotation costs into the project's initial investment, what is the weighted average flotation cost for the firm
Answer:
3.9%
Explanation:
Calculation to determine the weighted-average flotation cost for the firm
Using this formula
Weighted-average flotation cost =D/A ratio(Flotation cost for debt)+ Flotation cost for debt(Flotation cost for equity)
Let plug in the formula
Weighted-average flotation cost=.7(3%) + .3(6%)
Weighted-average flotation cost=.0021+.0018
Weighted-average flotation cost=.0039*100
Weighted-average flotation cost= 3.9%
Therefore the weighted-average flotation cost for the firm is 3.9%
The Learning Journal is a space where you should reflect on what was learned during the week and how it applies to your daily life and will help you with your life (career) goals.
a. True
b. False
The management of Fuzzy Button Clothing Company controls 58% of the company's stock. The firm did not meet any of its quarterly sales projections for the last year. Some of the firm's institutional investors are worried that the firm's poor performance is partly because management has not been focused on maximizing shareholder wealth. Which of the following measures would the institutional investors most likely want to see implemented?
A. They would like to see the size of the board of directors increased, because larger boards usually implement a higher degree of corporate governance.
B. They would like to see that the company has an interlocking board of directors with one of the company's strategic partners
C. They would like to see that the majority of the company's board of directors is composed of true outsiders.
It is reasonable to assume that a firm's management is going to be ultimately motivated to act in their own best interest. It can be a serious problem for shareholders if management's self-interests do not align with shareholders' self-interests. Select the statement that best describes the board of directors' actions in the following scenario:
Happy Lion Manufacturing Inc. currently has $1.1 billion in cash on its balance sheet. The CFO thinks the firm will need $600 million in cash to finance operations for the next year. The CFO has recommended that the firm keep the excess cash in a marketable securities portfolio to allow for unexpected costs. However, the board of directors has decided that the firm will pay this money out to the shareholders in the form of a cash dividend.
D. The board's decision will give management the incentive to make decisions that are not in the shareholders' best interest.
E. The board's decision will help align management's interests with the shareholders' interests.
F. The board's decision is extremely risky and not very practical Flash Player WIN 32,0,0.387
Answer:
Fuzzy Button Clothing Company
1. The measure that the institutional investors would most likely want to see implemented is:
C. They would like to see that the majority of the company's board of directors is composed of true outsiders.
Happy Lion Manufacturing Inc.
2. The statement that best describes the board of directors' actions in the following scenario is:
E. The board's decision will help align management's interests with the shareholders' interests.
Explanation:
a) Data and Calculations:
Fuzzy Button Clothing Company
Management control = 58%
Institutional and other stockholders = 42% (100% - 58%)
Happy Lion Manufacturing Inc.
Cash on its balance sheet = $1.1 billion
Cash needed to finance operations next year = $600 million
Excess cash = $500 million ($1.1 billion Minus $600 million)
CFO's recommendation = keep excess cash in a marketable securities for unexpected costs
Board of directors' decision = pay the excess out to the shareholders in the form of a cash dividend.
Whose unemployment rates are commonly higher in the U.S. economy: whites, nonwhites, young, middle aged, college graduates, or high school graduates?
A. high school graduates
B. young
C. middle aged
Answer:
Non whites, young and high school gradates.
Explanation:
The US unemployment rate is about 5.9% and has decreased form 6.9% in 2020. Most of unemployment people are the youth and non whites and school pass outs.Calculate the present value of the after tax net returns to land in the 7th year if thereal pre-tax net returns to land today are $250, real net returns to land are assumedto increase by 5% each year, inflation is 4%, the marginal tax rate is 20%, and thepretax risk adjusted discount rate is 10%.
a. 270.10
b. 216.08
c. 105.27
d. 163.84
Answer:
b. $216.08
Explanation:
Fn = Fo * (1+g)^n
Fn = $250*(1.05)^7
Fn = $250*1.40710
Fn = $351.775
Nominal net returns = $351.775 * (1.04)^7
Nominal net returns = $351.775 * 1.315932
Nominal net returns = $462.912
After tax return = Nominal net returns * (1 - 20%)
After tax return = $462.912 * (1 - 0.2)
After tax return = $370.33
After-tax, risk adjusted discount rate = 0.1*(1 - 0.2)
After-tax, risk adjusted discount rate = 0.1*0.8
After-tax, risk adjusted discount rate = 0.08
After-tax, risk adjusted discount rate = 8%
PV after-tax net return in 7th year = After tax return * (1+8%)^-7
PV after-tax net return in 7th year = $370.33 * (1+0.08)^-7
PV after-tax net return in 7th year = $370.33 * 0.583490
PV after-tax net return in 7th year = $216.08
On January 1, 2018, Ameen Company purchased major pieces of manufacturing equipment for a total of $36 million. Ameen uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2020, the book value of the equipment was $30 million and its tax basis was $20 million. At December 31, 2021, the book value of the equipment was $28 million and its tax basis was $12 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2021 was $50 million.
Required:
a. Prepare the appropriate journal entry to record Ameenâs 2021 income taxes. Assume an income tax rate of 25%.
b. What is Ameenâs 2021 net income?
Answer:
1.31-Dec-21
Dr Income tax expense $12.50
Cr To Income taxes payable $11.00
Cr To Deferred tax liability $1.50
2.$37.50 million
Explanation:
1. Preparation of the appropriate journal entry to record Ameenâs 2021 income taxes. Assume an income tax rate of 25%.
Depreciation as per books for 2021 = $30 - $28 Depreciation as per books for 2021= $2 million
Depreciation as per tax for 2021 = $20 - $12
Depreciation as per tax for 2021 = $8 million
Taxable income = $50 + $2 - $8
Taxable income = $44 million
JOURNAL ENTRIES - Ameen Company (In million)
31-Dec-21
Dr Income tax expense $12.50
Cr To Income taxes payable ($44*25%) $11.00
Cr To Deferred tax liability ($6*25%) $1.50
(To record income tax expense)
2. Calculation to determine What is Ameenâs 2021 net income?
Ameen's 2021 net income = $50 - $12.50
Ameen's 2021 net income = $37.50 million
Therefore Ameen's 2021 net income is $37.50 million
The pre-tax accounting income is $44 million and the income tax payable amount is $11 million.
What do you mean by Pre-tax accounting income?Pre-tax revenue is the company's income left over after all operating costs, including interest and depreciation, have been deducted from sales or income, but before deducted income tax.
Pre-tax profits provide insight into the financial performance of a company prior to tax impact.
Calculation of taxable income for 2021:
a)
[tex]\rm\,Taxable \,Income = \\Pre-Tax \; Accounting \; Income + (Excess \;of Book Depreciation \;over \; tax \; depreciation)\\\\\rm\,Taxable \,Income = 50 + (2 - 8)\\\\\rm\,Taxable \,Income = \$44 \;Million\\\\Income\,tax\, Payable = 44 \times 25\%\\\\Income\,tax\, Payable = \$11 Million[/tex]
Journal entry to record Ameena's 2021 income taxes is attached below.
b) Ameena's net income will be :
[tex]\rm\,Ameen's \; 2021 \;net \; income = \$50 - \$12.50\\\Ameen's \; 2021 \;net \; income = $37.50 \rm\,million[/tex]
Hence, The pre-tax accounting income is $44 million and the income tax payable amount is $11 million.
To learn more about pre-tax accounting income, refer:
https://brainly.com/question/26891310
Dome Metals has credit sales of $144,000 yearly with credit terms of net 120 days, which is also the average collection period. Assume the firm adopts new credit terms of 5/10, net 120 and all customers pay on the last day of the discount period. Any reduction in accounts receivable will be used to reduce the firm's bank loan which costs 10 percent. The new credit terms will increase sales by 20% because the 5% discount will make the firm's price competitive.
Required:
a. If Dome earns 25 percent on sales before discounts, what will be the net change in income if the new credit terms are adopted?
b. Should the firm offer a discount?
Answer:
a. The net change in income if the new credit terms are adopted is a net gain of $2,880.
b. Since the discount of 5% will result in a net gain which is $2,880, the firm should offer a discount.
Explanation:
a. If Dome earns 25 percent on sales before discounts, what will be the net change in income if the new credit terms are adopted?
Old sales = $144,000
New Sales = Old sales * (100% + Percentage sales increase) = $144,000 * (100% + 20%) = $172,800
Increase in Sales = New Sales - Old sales = $172,800 - $144,000 = $28,800
Increase in Profit from new sales = Profit Margin * Increase in Sales = 25% * $28,800 = $7,200
Average Accounts Receivable without discount = Average Collection Period * Average daily Sales = 120 * ($144,000 / 360) = $48,000
Average Accounts Receivable with discount = Average Collection Period * Average daily Sales = 10 * ($172,800 / 360) = $4,800
Reduction in Accounts Receivable = Average Accounts Receivable without discount - Average Accounts Receivable with discount = $48,000 - $4,800 = $43,200
Loan balance as a result of reduction in accounts receivable. Therefore, we have:
Interest Saving = Interest Rate * Loan Reduction = 10% * $43,200 = $4,320
Cost of Discount = Discount Rate * New Sales = 5% * $172,800 = $8,640
Net Gain (loss) = Increase in Profit form new sales + Interest Saving - Cost of Discount = $7,200 + $4,320 - $8,640 = $2,880
Therefore, the net change in income if the new credit terms are adopted is an net gain of $2,880.
b. Should the firm offer a discount?
Since the discount of 5% will result in a net gain which is $2,880, the firm should offer a discount.
Reynold's Grocery has fixed costs of $327,000, the unit selling price is $26, and the unit variable costs are $20. What are the break-even sales in units (rounded to a whole number) if the variable costs are decreased by $5? a.16,350 units b.29,727 units c.54,500 units d.21,800 units
Answer:
b.29,727 units
Explanation:
Break even Point = Fixed Costs ÷ Contribution per unit
therefore
Break even Point = $327,000 ÷ $11
= 29,727 units
Accurate Metal Company sold 36,500 units of its product at a price of $340 per unit. Total variable cost per unit is $179, consisting of $172 in variable production cost and $7 in variable selling and administrative cost. Compute the manufacturing margin for the company under variable costing.
Answer: $6,132,000
Explanation:
The manufacturing margin for the company under variable costing will use the variable production costs only as these are the variable costs incurred during manufacturing:
Variable manufacturing margin = ( Sales price - Variable cost per unit) * number of units
= (340 - 172) * 36,500
= 168 * 36,500
= $6,132,000
Suppose you entered a contract to buy your friend's iPad. Without your knowledge, it was malfunctioning at the time you bought it, and it died soon after you started using it. Your friend had recently removed a large number of applications from the iPad that were not working. Although he honestly thought the problem was with the applications and not the iPad itself, he failed to tell you about the problem. You reasonably concluded, based on your inspection of all of the current applications on the iPad, that it was functioning properly. Can you rescind the contract to buy the iPad?
a. Yes, due to fraud.
b. Yes, due to innocent misrepresentation.
c. Yes, due to mutual mistake.
d. Yes, due to undue influence.
e. No, the latent malfunction was not material, because the iPad was functioning when you bought it.
Answer:
Can you rescind the contract to buy the iPad?
b. Yes, due to innocent misrepresentation.
Explanation:
You can rescind the contract without damages or you claim damages based on the loss that you have already incurred for the contract. An innocent misrepresentation occurs when the misrepresentation is not fraudulent nor negligent. Therefore, you can rescind the contract or affirm it. But if the misrepresentation is fraudulent or negligent, you can rescind the contract as well as claim damages.
The Perry Company reported Accounts Receivable, Net of $66,000 at the beginning of the year and $72,900 at the end of the year. If the company's net sales revenue during the fourth year was $882,000, what are the days to collect during year? (Round all calculations to 1 decimal place.)
a. 8.3
b. 30.2
c. 12.1
d. 28.7
Answer:
d. 28.7
Explanation:
Calculation to determine the days to collect during year
Using this formula
Average collection period=Average accounts receivables/Net sales*365
Where,
Average accounts receivables=$66,000+$72,900/2
Average accounts receivables=$69,450
Let plug in the formula
Collection period =$69,450/$882,000*365
Collection period=28.7 days
Therefore the days to collect during year is 28.7days
Many talented teachers at Sunnydale High School resigned from their jobs in the past year. The Administrative President of the school board is in a fix and is unable to identify a reason for this attrition. The school pays competitive wages to its teachers and even gave them a pay hike recently. In this scenario, which of the following points should Sunnydale's Administrative President keep in mind when devising a solution to the problem?
a. Money is the main reason people leave, so the school administration should give its employees a bonus along with the pay hike.
b. When pay is competitive, other job factors become more important than the pay employees receive.
c. Employees are bound to leave, and there is not much employers can do to retain them.
d. Teachers usually leave their jobs because of involuntary turnover, so pay is not a major factor in their retention.
Answer:
b. When pay is competitive, other job factors become more important than the pay employees receive.
Explanation:
In the case when pay should be treated as the competitive so the factors that represent higher orders or requirement becomes more significant if we compared with the money also these requirements could not be fully satisfied due to this they will resign
So as per the given situation, the option b is correct
And, the rest of the options should be considered wrong
If the United States passed a tariff on imported steel which of the following would directly benefit?
A. Foreign steal companies
B. All Americans would benefit because of the lower price for steel
C. Businesses which imports steel
D. American steel producers
businesses which imports steel C
On May 1, Carlisle Co. sold inventory to a customer for $1,000 2/10, n/30. Carlisle Co. uses the gross method for reporting sales discounts. The customer paid the account in full on May 20. What will be the Net Sales reported on the Income Statement from these tranactions
Answer:
The Net Sales that will reported on the Income Statement from these transactions is $1,000.
Explanation:
The term "2/10, n/30" implies that the customer will enjoy a 2% discount if it pays within 10 days but must pay the total amount within 30 days.
However, customer paid on May 20 which is outside the 2% discount period. This implies the customer did not enjoy the 2% discount. That is, the customer paid the full amount of $1,000. Therefore, the net sales is $1,000 from these transactions.
Therefore, the Net Sales that will reported on the Income Statement from these transactions is $1,000.
On January 1, 2021, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this date was $101,600. The ending inventory, valued at year-end costs, and the relative cost index for each of the next three years is below:
Year-end Ending inventory at year-end costs Cost Index
2021 $131,040 1.05
2022 150,040 1.10
2023 160,320 1.20
In determining the inventory balance for Badger to report in its 12/31/2022 balance sheet: _____________-
a. An additional layer of $12,760 is added to the 12/31/2021 balance.
b. An additional layer of $24,760 is added to the 12/31/2021 balance.
c. An additional layer of $23,760 is added to the 12/31/2021 balance.
d. None of these answer choices are correct.
Answer:
a. An additional layer of $12,760 is added to the 12/31/2021 balance.
Explanation:
The computation of the inventory balance is given below:
2021 Base year cost is
= $131,040 ÷ 1.05
= $124,800
Additional layer is
= $124,800 - $101,600
= $23,200
2022 Base year cost is
= $150,040 ÷ 1.10
= $136,400
Additional layer is
= ($136,400 - $124,800 ) × 1.10
= $11,600 1.10
= $12,760
Therefore the first option is correct
When the price elasticity of demand for a good is very elastic, quantity demanded is _____ to a change in price and the demand curve is relatively _____. Group of answer choices
Answer:
1. Responsive
2. Elastic
Explanation:
When the price elasticity of demand for a good is very elastic, quantity demanded is RESPONSIVE to a change in price and the demand curve is relatively ELASTIC.
This is because the price elasticity of demand measures the responsiveness of the quantity demanded to a change in price.
Consequently, as the quantity demanded changes, the demand curve then becomes relatively elastic, by shifting either to the right or left.
A manufacturer uses machine hours to assign overhead costs to products. Budgeted information for the next year follows. Budgeted factory overhead costs $ 669,600 Budgeted machine hours 7,200 Compute the plantwide overhead rate for the next year based on machine hours.
Answer: $93 per machine hour
Explanation:
The plantwide rate shows the cost per labor hour(machine hour in this case) for overhead incurred by the entire production plant.
Plantwide overhead rate based on machine hours:
= Budgeted factory overhead costs / Budgeted machine hours
= 669,600 / 7,200
= $93 per machine hour
The Most Brilliant Professor Mullen Company's past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale; the remainder (5%) is never collected. Budgeted credit sales were: January $240,000 February 144,000 March 360,000 The cash inflow (CRJ) in the month of March is expected to be A) $271,200. B) $205,200. C) $216,000. D) $259,200.
Answer: A. $271,200
Explanation:
Cash inflow in March will be:
= (60% * March sales) + (30% * February sales) + (5% * January sales)
= (60% * 360,000) + (30% * 144,000) + (5% * 240,000)
= 216,000 + 43,200 + 12,000
= $271,200
You feel that you will need $2.2 million in your retirement account and when you reach that amount, you plan to retire. You feel you can earn an APR of 10.2 percent compounded monthly and plan to save $305 per month until you reach your goal. How many years will it be until you reach your goal and retire
Answer: 40.7 years
Explanation:
You can use Excel to sold for this using the NPER function.
Rate = 10.2% / 12 months = 0.85%
Payment is $305 per month
Present value is $0
Future value is $2,200,000
Number of periods = 488.1979353
In years this is:
= 488.1979353 / 12
= 40.7 years
Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $249,400. The equipment was expected to have a useful life of four years, or 8,800 operating hours, and a residual value of $20,600. The equipment was used for 3,080 hours during Year 1, 1,848 hours in Year 2, 2,464 hours in Year 3, and 1,408 hours in Year 4. Required: 1. Determine the amount of depreciation expense for the four years ending December 31 by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the four years by each method. Round the answer for each year to the nearest whole dollar. Depreciation Expense Year Straight-Line Method Units-of-Activity Method Double-Declining- Balance Method Year 1 $fill in the blank 1 $fill in the blank 2 $fill in the blank 3 Year 2 $fill in the blank 4 $fill in the blank 5 $fill in the blank 6 Year 3 $fill in the blank 7 $fill in the blank 8 $fill in the blank 9 Year 4 $fill in the blank 10 $fill in the blank 11 $fill in the blank 12 Total $fill in the blank 13 $fill in the blank 14 $fill in the blank 15 2. What method yields the highest depreciation expense for Year 1
Answer:
Straight line :
Depreciation expense each of the four years is $57,200
total depreciation = $228,800
Double declining :
Year 1 = $124,700
Year 2 = $62350
Year 3 = $31,175
Year 4 = $15,588
Total depreciation expense = $233,813
Activity based depreciation
year 1 = $80,080
year 2 = $48,048
year 3 = $64,064
year 4 = $36,608
Total depreciation expense = $288,800
the deprecation method that yields the highest depreciation expense in year 1 is the double declining method
Explanation:
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
($249,400 - $20,600) / 4 = $57,200
Depreciation expense each of the four years is $57,200
total depreciation = $57,200 x 4 = $228,800
Depreciation expense using the double declining method = Depreciation factor x cost of the asset
Depreciation factor = 2 x (1/useful life) = 2/4
Year 1 = 2/4 x $249,400 = 124,700
book value = $249,400 - 124,700 = 124,700
Year 2 = 2/4 x 124,700 = 62350
Book value = 124,700 - 62350 = 62350
Year 3 = 2/4 x 62350 = 31,175
book value = 62350 - 31,175 = 31,175
Year 4 = 2/4 x 31,175 = 15,587.50
Addition of the depreciation expenses = $233,812.50
Activity method based on hours worked = (hours worked that year / total hours of the machine) x (Cost of asset - Salvage value)
($249,400 - $20,600) / 8,800 = 26
year 1 = 26 x 3,080 = $80,080
year 2 = 26 x 1,848 = $48,048
year 3 = 26 x 2,464 = $64,064
year 4 = 26 x 1,408 = $36,608
Addition of the depreciation expenses = $288,800
Colorado Cleaning has a 5-year maximum acceptable payback period. The firm is considering the purchase of a new washing machine and must choose between two alternative ones. The first machine requires an initial investment of $25,000 and generates annual after-tax cash inflows of $6,500 for each of the next 8 years. The second machine requires an initial investment of $75,000 and provides an annual cash inflow after taxes of $9,500 for 15 years.
Required:
a. Determine the payback period for each machine.
b. Comment on the acceptability of the machines, assuming that they are independent projects.
c. Which machine should the firm accept? Why?
d. Do the machines in this problem illustrate any of the weaknesses of using payback? Discuss.
Answer:
a) Payback period = period up to which cumulative cash flow is negative +
(negative cumulative cash flow /cash flow succeeding
the above period)
Project A - Up to year 4 ,cash flow recovered = 3000 * 4 = 12,000
Payback period =14,000/3,000 = 4.67 years
Project B= Cash flow recovered up to year 5 = 4000 * 5 = 20000
Payback period = 21,000/4,000 =5.25 years
b) On the basis of the Payback period, Project A should be selected, as it has a lower payback period and is also within the maximum acceptable payback period. back period.(4.67 < 5)
Project B should not be selected as its payback recovery is not within the maximum acceptable payback period (5.25 >5 )
c) Machine A should be selected as it has a lower payback period. than machine B.
d)The payback period ignores the life present value of cash flow and also the life of the machine each project has.
so the decision on the basis of the payback period may not be accurate.
A company's ratio of liabilities to stockholders' equity decreased from 0.6 to 0.4 during the year. This is a.an improvement in the margin of safety for creditors. b.an indication that the company's level of debt is increasing. c.a negative change in the company's financial position. d.an improvement in the company's net income.
Answer:
A)an improvement in the margin of safety for creditors.
Explanation:
Margin of safety can be regarded as a principle of investing whereby an investor only make purchases of securities during the time when the market price is below their intrinsic value significantly. In a case whereby
the market price of a security falls below ones estimation of its intrinsic value significantly, then the difference that exist there is regarded as margin of safety. Margin of safety can as well be regarded as financial ratio which gives measurement of the amount of sales which exceed the break-even point. Most times investors may create a margin of safety with regards to their own risk preferences, purchasing of securities in a time that there is a difference give room for an investment to be made with minimal downside risk.
For instance, company's ratio of liabilities to stockholders' equity decreased from 0.6 to 0.4 during the year.
Swifty Corporation manufactures a product with a unit variable cost of $100 and a unit sales price of $176. Fixed manufacturing costs were $480000 when 10000 units were produced and sold. The company has a one-time opportunity to sell an additional 1000 units at $145 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:
Income would increase by $45000.
Income would increase by $3000.
Income would increase by $145000.
Income would decrease by $3000.
Coronado Industries is using the target cost approach on a new product. Information gathered so far reveals:
Expected annual sales 350000 units
Desired profit per unit $0.35
Target cost $168000
What is the target selling price per unit?
a. $0.48
b. $0.35
c. $0.70
d. $0.83
Answer:
1. Swifty Corporation
If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:
Income would increase by $45000.
2. Coronado Industries:
The target selling price per unit is:
d. $0.83
Explanation:
a) Data and Calculations:
Swifty Corporation:
Variable cost per unit = $100
Sales price per unit = $176
Contribution margin per unit = $76 ($176 - $100)
Fixed manufacturing costs = $480,000
Production and sales units = 10,000 units
Revenue from special order = $145,000 ($145 * 1,000)
Variable costs for 1,000 units 100,000 ($100 * 1,000)
Contribution margin $45,000 ($145,000 - $100,000)
Fixed costs for special order $0
Net income = $45,000
Coronado Industries:
Expected annual sales 350,000 units
Desired profit per unit $0.35
Target cost $168,000
Desired profit = $122,500 (350,000 * $0.35)
Total sales revenue = $290,500 ($168,000 + $122,500)
Target selling price per unit = $0.83 ($290,500/350,000)
Differences in net operating income between absorption costing and variable costing are due to the ______. Multiple choice question. amount of sales revenue reported timing of when fixed manufacturing overhead is expensed amount of selling and administrative cost expensed format of the income statements
Answer:
timing of when fixed manufacturing overhead is expensed
Explanation:
When there is the difference with respective to the net operating income under the absorption costing and the variable costing so it is because of the timing when the fixed manufacturing overhead should be incurred or expensed
So as per the given situation, second option is correct
And, the same should be relevant
If fixed costs are $1,464,000, the unit selling price is $220, and the unit variable costs are $114, what are the break-even sales (units) if fixed costs are increased by $46,400? a.11,399 units b.21,374 units c.17,099 units d.14,249 units
Answer:
d.14,249 units
Explanation:
Break-even sales (units) = Fixed Costs ÷ Contribution per unit
Where,
Contribution per unit = Unit Selling Price - Unit Variable Cost
= $106
therefore,
Break-even sales (units) = ($1,464,000 + $46,400) ÷ $106
= 14,249
thus,
the break-even sales (units) if fixed costs are increased by $46,400 is 14,249 units.
The following transactions took place in Boeing Business.
01.03.2021 - Purchase of goods costing Rs. 150000 from Airbus
company on credit.
05.03.2021 - Return of goods costing Rs. 30000 to Airbus
20.03.2021 - Sale of goods costing Rs. 100000 for Rs. 160000 on
credit
29.03.2021 - Payment of sales commission of Rs. 10000
02.04.2021 – Settlement of the full amount due to Airbus
What is the accounting equation which shows the net impact of the
above transactions in Boeing business as at 31.03.2021?
Assets
Liabilities
+
Equity
Answer:
1) Dr: Goods/Inventory (Asset increase) 150000
Cr: Payable (Liability increase) 150000
2) Dr: Payable (Liability decrease) 30000
Cr: Goods (Asset decrease) 30000
3) Dr: Payable (Liability decrease) 30000
Cr: Goods (Asset decrease) 30000
4) Dr: Receivables (Asset increase) 160000
Cr: Goods (Asset Decrease) 100000
Cr: Profit and loss (Equity increase) 60000
5) Dr: Commission Expense (Equity decrease) 10000
Cr: Cash (Asset Decrease) 10000
6) Dr: Payable (Liability decrease) 120000
Cr: Cash (Asset Decrease) 120000
Hixson Company manufactures and sells one product for $34 per unit. The company maintains no beginning or ending inventories and its relevant range of production is 20,000 units to 30,000 units. When Hixson produces and sells 25,000 units, its unit costs are as follows:
Amount Per Unit
Direct materials $8.00
Direct labor $5.00
Variable manufacturing overhead $1.00
Fixed manufacturing overhead $6.00
Fixed selling expense $3.50
Fixed administrative expense $2.50
Sales commissions $4.00
Variable administrative expense $1.0
Required:
1. For financial accounting purposes, what is the total amount of product costs incurred to make 25,000 units? What is the total amount of period costs incurred to sell 25,000 units?
2. If 24,000 units are produced, what is the variable manufacturing cost per unit produced? What is the average fixed manufacturing cost per unit produced?
3. If 26,000 units are produced, what is the variable manufacturing cost per unit produced? What is the average fixed manufacturing cost per unit produced?
4. If 27,000 units are produced, what are the total amounts of direct and indirect manufacturing costs incurred to support this level of production?
5. What total incremental manufacturing cost will Hixson incur if it increases production from 25,000 to 25,001 units?
6. What is Hixson’s contribution margin per unit? What is its contribution margin ratio?
7. What is Hixson’s break-even point in unit sales? What is its break-even point in dollar sales?
8. How much will Hixson’s net operating income increase if it can grow production and sales from 25,000 units to 26,500 units?
9. What is Hixson’s margin of safety at a sales volume of 25,000 units?
10. What is Hixson degree of operating leverage at a sales volume of 25,000 units?
Answer:
Hixson Company
1. Total amount of product costs incurred to make 25,000 units is:
= $500,000
Total amount of period costs incurred to sell 25,000 units is:
= $187,500
2. Variable manufacturing cost per unit of 24,000 units is:
= $14.00
The fixed manufacturing cost per unit is:
= $6.25
3. The variable manufacturing cost per unit is:
= $14.00
The fixed manufacturing cost per unit produced is:
= $5.77
4. If 27,000 are produced, the total amounts of direct and indirect manufacturing costs incurred to support this level of production are:
Direct manufacturing costs = $378,000
Indirect manufacturing costs = $150,000
5. The total incremental manufacturing cost that Hixson will incur if it increases production from 25,000 to 25,001 units is:
= $14.
6. Contribution margin per unit is:
= $15
Contribution margin ratio is:
= 44%
7. Break-even point in unit sales is:
= 20,000 units
Break-even point in dollars sales = $300,000/44.1176%
= $680,000
8. The net operating income will increase to $97,500 ($15 * 6,500)if it can grow production and sales from 25,000 to 26,500.
9. Hixson's margin of safety at sales volume of 25,000 units is:
= $170,000
10. Degree of operating leverage at a sales volume of 25,000 units is:
= 3.85
Explanation:
a) Data and Calculations:
Selling price per unit = $34
Production and sales unit = 25,000 units
Unit costs at 25,000 units
Per Unit
Direct materials $8.00
Direct labor $5.00
Variable manufacturing overhead $1.00
Fixed manufacturing overhead $6.00
Fixed selling expense $3.50
Fixed administrative expense $2.50
Sales commissions $4.00
Variable administrative expense $1.00
Total cost per unit $31.00
Product costs (financial accounting):
Per Unit
Direct materials $8.00
Direct labor $5.00
Variable manufacturing overhead $1.00
Fixed manufacturing overhead $6.00
Total product costs per unit $20.00
Period costs:
Fixed selling expense $3.50
Sales commissions $4.00
Total selling period costs per unit $7.50
1. Total amount of product costs incurred to make 25,000 units is:
= $500,000 ($20 * 25,000)
Total amount of period costs incurred to sell 25,000 units is:
= $187,500 ($7.50 * 25,000)
2. Variable manufacturing cost per unit of 24,000 units is:
= $14.00
The fixed manufacturing cost per unit is:
= $6.25 ($6 * 25,000/24,000)
3. The variable manufacturing cost per unit is:
= $14.00
The fixed manufacturing cost per unit produced is:
= $5.77 ($6 * 25,000/26,000)
4. If 27,000 are produced, the total amounts of direct and indirect manufacturing costs incurred to support this level of production are:
Direct manufacturing costs = $378,000 ($14 * 27,000)
Indirect manufacturing costs = $150,000 ($6 * 25,000)
5. The total incremental manufacturing cost that Hixson will incur if it increases production from 25,000 to 25,001 units is $14.
Contribution margin per unit:
Selling price = $34
Variable costs = 19
Contribution = $15
6. Contribution margin per unit is $15 ($34 - $19).
Contribution margin ratio is 44% ($15/$34 * 100)
7. Break-even point in unit sales = FC/CM per unit
= $300,000/$15
= 20,000 units
Break-even point in dollars sales = $300,000/44.1176%
= $680,000 (20,000 * $34)
8. The net operating income will increase to $97,500 ($15 * 6,500)if it can grow production and sales from 25,000 to 26,500.
9. Hixson's margin of safety at sales volume of 25,000 units is:
= $170,000 ($850,000 - $680,000)
10. Degree of operating leverage at a sales volume of 25,000 units is:
= Contribution margin/net operating income
= $375,000/$97,500
= 3.85
Granfield Company is considering... Granfield Company is considering eliminating its backpack division, which reported an operating loss for the recent year of $42,300. The division sales for the year were $965,700 and the variable costs were $478,000. The fixed costs of the division were $530,000. If the backpack division is dropped, 40% of the fixed costs allocated to that division could be eliminated. The impact on Granfield's operating income for eliminating this business segment would be:____.
a. $269,200 increase.
b. $476,000 decrease.
c. $206,800 increase.
d. $269,200 decrease.
e. $476,000 increase.
Answer:
$275,700 Decrease
Explanation:
Calculation to determine what The impact on Granfield's operating income for eliminating this business segment would be:
Using this formula
Impact on Operating income=Saving in Relevant fixed cost -Loss of Contribution Margin of backpack division
Let plug in the morning
Impact on Operating income=($530,000*40%)-($965,700-$478,000)
Impact on Operating income=$212,000-$487,700
Impact on Operating income=$275,700
Decrease in net Operating income
Therefore The impact on Granfield's operating income for eliminating this business segment would be:$275,700 Decrease
Kelly Industries issued 11% bonds, dated January 1, with a face value of $140,000 on January 1, 2021. The bonds mature in 2031 (10 years). Interest is paid semiannually on June 30 and December 31. For bonds of similar risk and maturity the market yield is 12%. What was the issue price of the bonds
Answer:
$131,971.06
Explanation:
Using a financial calculator, the bond issue price can be determined by first of all set the calculator to its end mode before making the following inputs:
N=20(number of semiannual periods in 10 years=10*2=20)
PMT=7700 (semiannual coupon=face value*coupon rate/2= $140,000*11%/2)
I/Y=6(semiannual yield=12%/2=6%)
FV=140000(the bond's face value is $140,000)
CPT
PV=$131,971.06
