Answer:
The item price relative of ingredients A, B and C is 118, 113 and 91
Explanation:
Given
-----------------Cost per Pound ($)
Ingredient ---- Beginning ------ Ending Quantity (pounds) per 100 Pounds of Product
A ---------------- 2.50 ------ 2.95 ------ 25
B ---------------- 8.75 ------ 9.90 ------- 10
C ----------------- 0.99 ----- 0.90 ----- 60
Required
Calculate the price relatives for all ingredients
The price relatives for each ingredient is calculated using the following formula.
Price Relative = (P' * Q)/P°
Where
P' = Ending Cost per pound
P° = Beginning Cost per pound
Q = Quantity
The quantity is uniform for all products because it's measured per 100 pounds of each product.
So, Q = 100
Calculating Price Relative of A
P' of Ingredient A = 2.95
P° of Ingredient A = 2.50
By Substituting the right values in the given formula
P = (2.95 * 100)/2.50
P = 295/2.50
P = 118
Calculating Price Relative of B
P' of Ingredient B = 9.90
P° of Ingredient B = 8.75
By Substituting the right values in the given formula
P = (9.90 * 100)/8.75
P = 990/8.75
P = 113.1429
P = 113 ( Approximated)
Calculating Price Relative of C
P' of Ingredient C = 0.9
P° of Ingredient C = 0.99
By Substituting the right values in the given formula
P = (0.9 * 100)/0.99
P = 90/0.99
P = 90.90909
P = 91 (Approximated).
Hence, the item price relative of ingredients A, B and C is 118, 113 and 91
The debt has an interest rate of 8.50% (short term) and 10.50% (long term). The expected rate of return on the company's shares is 17.50%. There are 7.66 million shares outstanding, and the shares are trading at €36. The tax rate is 25%. Assume the company issues €50 million in new equity and uses the proceeds to retire long-term debt. Also assume the company's borrowing rates are unchanged and the short-term debt is permanent. Use the three-step procedure.a. Calculate the cost of equity after the capital restructuring
Answer:
Re = 16.02%
Explanation:
current stock price 36 x 7,660,000 = 275,760,000
cost of equity = 17.5%
current short term debt = 141,600,000
cost of short term debt = 8.5%
current long term debt = 210,600,000
cost of long term debt = 10.5%
total financing = 627,960,000
equity = 275,760,000 / 627,960,000 = 0.4391short term debt = 141,600,000 / 627,960,000 = 0.2255 long term debt = 210,600,000 / 627,960,000 = 0.3354WACC = (0.4391 x 0.175) + (0.2255 x 0.085 x 0.75) + (0.3354 x 0.105 x 0.75) = 0.0768 + 0.0144 + 0.0264 = 0.1176 or 11.76%
under the new structure:
total financing = 627,960,000
equity = 325,760,000 / 627,960,000 = 0.5188short term debt = 141,600,000 / 627,960,000 = 0.2255 long term debt = 160,600,000 / 627,960,000 = 0.2557assuming WACC remains unchanged:
0.1176 = (0.5188 x Re) + (0.2255 x 0.085 x 0.75) + (0.2557 x 0.105 x 0.75) = (0.5188 x Re) + 0.0144 + 0.0201 = (0.5188 x Re) + 0.0345
0.5188 x Re = 0.1176 - 0.0345 = 0.0831
Re = 0.0831 / 0.5188 = 0.1602 or 16.02%
Imperial Jewelers manufactures and sells a gold bracelet for $403.00. The company’s accounting system says that the unit product cost for this bracelet is $264.00 as shown below:
Direct materials $143
Direct labor 90
Manufacturing overhead 31
Unit product cost $264
The members of a wedding party have approached Imperial Jewelers about buying 22 of these gold bracelets for the discounted price of $361.00 each. The members of the wedding party would like special filigree applied to the bracelets that would require Imperial Jewelers to buy a special tool for $454 and that would increase the direct materials cost per bracelet by $8. The special tool would have no other use once the special order is completed.
To analyze this special order opportunity, Imperial Jewelers has determined that most of its manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $7.00 of the overhead is variable with respect to the number of bracelets produced. The company also believes that accepting this order would have no effect on its ability to produce and sell jewelry to other customers. Furthermore, the company could fulfill the wedding party’s order using its existing manufacturing capacity.Required:1. What is the financial advantage (disadvantage) of accepting the special order from the wedding party?2. Should the company accept the special order?
Answer:
a) Financial advantage $2,208
b) The company should accept the special order, as it will increase its profit by $2,208
Explanation:
The relevant costs for decision to accept the special order are
I Incremental Revenue from the special order
2. incremental variable cost
3. The cost of the special tool
Unit variable cost = 143 + 90 + 8 + 7 = $240
Note that that the increase in material cost of $8 and the variable manufacturing overhead of $7 are relevant to the special order decision. Hence they are added.
And the balance of manufacturing overhead would be incurred either way. Therefore , they are not relevant for the decision
$
Sales revenue from special order
(22× $361.00) 7942
Variable cost of special order
(22× $240 ) (5280 )
Cost of special tool (454)
Financial advantage 2,208
The company should accept the special order, as it will increase its profit by $2,208
Sandy's Sauces, which produces stir-fry sauces, is developing direct material standards. Each bottle of sauce requires 0.70 kilograms of base. The allowance for waste is 0.05 kilograms per bottle, while the allowance for rejects is 0.09 kilograms per bottle. What is the standard quantity of base per bottle? Group of answer choices
A. 0.75 kilograms
B. 0.70 kilograms
C. 0.84 kilograms
D. 0.79 kilograms
Answer:
C) 0.84 kilograms
Explanation:
The standard material quantity = kilograms per bottle + allowance for waste + allowance for rejects = 0.70 kg + 0.05 kg + 0.09 kg = 0.84 kg
The standard material quantity is the budgeted (estimated) amount of direct materials needed to produce one unit of output. The total standard quantity = standard material quantity times total units produced.
Mariposa Inc is considering improving its production process by acquiring a new machine. There are two machines management is analyzing to determine which one it should purchase. The company requires a 14% rate of return and uses straight-line depreciation to a zero book value. Machine A has a cost of $290,000, annual operating costs of $8,000, and a 3-year life. Machine B costs $180,000, has annual operating costs of $12,000, and has a 2-year life. Whichever machine is purchased will be replaced at the end of its useful life. Which machine should Mariposa purchase and why?
Answer:
Machine B should be purchased because it has a lower equivalent annual cost
Explanation:
To determine the better of the two options, we would compare the equivalent annual cost of each options using a discount rate of 14% per annum
Equivalent annual cost = Total PV of cost /Annuity factor
Total PV of cost = Initial cost + PV of annual operating cost
PV of annual operating cost= Annual operating cost × Annuity factor
Annuity factor = (1- (1+r)^(-n))/r
r- rate , n- years
Machine A
PV of annual operating cost = 8,000 × (1- 1.14^(-3)/0.14= 18573.05622
PV of total cost = 290,000 +18573.05622 = 308,573.06
Uniform Annual cost = 308,573.06 /2.321632027 = 132,912.13
Equivalent annual cost = $132,912.13
Machine B
PV of annual operating cost = 12,000 × (1- 1.14^(-2)/0.14= 19759.92613
PV of total cost = 180,000 + 19759.92613 = 199,759.93
Equivalent annual cost = 199,759.93 /1.6466=$121,312.15
Equivalent annual cost = $121,312.15
Machine B should be purchased because it has a lower equivalent annual cost
Total PV of cost
Crane Company purchased $1080000 of 8%, 5-year bonds from Swifty, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $1129896 at an effective interest rate of 7%. Using the effective interest method, Crane Company decreased the Available-for-Sale Debt Securities account for the Swifty, Inc. bonds on July 1, 2021 and December 31, 2021 by the amortized premiums of $3048 and $3192, respectively. At December 31, 2021, the fair value of the Swifty, Inc. bonds was $1164000. What should Crane Company report as other comprehensive income and as a separate component of stockholders’ equity? $40344
Answer: $27,864
Explanation:
The amount that should be recorded as other comprehensive income is the fair value less the sales price and the amortized premiums to reflect the true value of the investment,
= 1,164,000 - 1,129,896 - 3,048 - 3,192
= $27,864
$27,864 is the amount Crane Company should report as other comprehensive income and as a separate component of stockholders’ equity.
Step Up Ladders Company provides the following financial information: Income from operations $400,000 Interest expense 47,000 Gains/(losses) on sale of equipment 3,000 Net income 350,000 Total assets at Jan. 1 2,600,000 Total assets at Dec .31 3,400,000 Calculate return on investment based on the information given above. (Round your answer to two decimal places.)
Answer:
13.33%
Explanation:
Income from operations $400,000
Interest expense 47,000
Gains/(losses) on sale of equipment 3,000
Net income 350,000
Total assets at Jan. 1 2,600,000 Total assets at Dec .31 3,400,000
the formula used to calculate return on investment (ROI) is:
ROI = income from operations / average total assets
ROI = $400,000 / {($2,600,000 + $3,400,000) / 2} = $400,000 / $3,000,000 = 0.1333 or 13.33%
Return on investment measures the profitability of an investment during a period of time.
You are a self-employed profit-maximizing consultant specializing in monopolies. Five firms are currently seeking your advice, and although the information they have supplied to you is incomplete, your expert knowledge allows you to go back and make a definite recommendation in each case. Select one of the following recommendations for each firm in the short run.
a. remain at the current output level
b. increase output
c. reduce output
d. shut down
Answer:
The answer is option A) The short run recommendation for a monopolistic firm is to remain at the current output level
Explanation:
In the short run, monopolistic firms could record losses but still continue to run in anticipation of a sustainable profit in the long run.
A self-employed profit-maximizing consultant specializing in monopolies understands that the short run losses experienced in a monopoly is also an advantage in that it reduces the participation of more players in the same industry/ market segment.
The best recommendation would be to remain at the current output level during the short run to cut losses, sustain patronage and then develop a long term strategy that will guarantee profitability in the long run.
Wellington Corp. has outstanding accounts receivable totaling $6 million as of December 31 and sales on credit during the year of $30 million. There is also a debit balance of $24,000 in the allowance for doubtful accounts. If the company estimates that 8% of its outstanding receivables will be uncollectible, what will be the balance in the allowance for doubtful accounts after the year-end adjustment to record bad debt expense
Answer :
Balance in allowance = $480,000
Explanation :
As per the data given in the question,
Receivable totaling = $6 million
Credit = $30 million
Now the uncollectible amount is
= $6,000,000 × 8%
= $480,000
After adjustment, the amount is
= $480,000 + $24,000
= $504,000
Now the Adjusting entry is:
Ba debts expense $504,000
To allowance for doubtful debts $504,000
(Being the bad debt expense is recorded)
r. and Mrs. Chalk have three dependent children, ages 3, 6, and 9. Assume the taxable year is 2019. Compute their child credit if AGI on their joint return is $91,300. Compute their child credit if AGI on their joint return is $465,700. Compute their child credit if AGI on their joint return is $197,000 and assume that they have one non-child dependent who meets the requirements for the child credit.
Answer:
Compute their child credit if AGI on their joint return is $91,300.
Child tax credit for 2019 was $2,000 per qualifying child under 16
total child tax credit = $2,000 x 3 = $6,000
Compute their child credit if AGI on their joint return is $465,700.
Child tax credit for 2019 was $2,000 per qualifying child under 16, but if phases out after $400,000. For each $1,000 above the threshold, the tax credit is reduced by $50.
total child tax credit = $6,000 - (66 x $50) = $6,000 - $3,300 = $2,700
Compute their child credit if AGI on their joint return is $197,000.
Child tax credit for 2019 was $2,000 per qualifying child under 16, plus $500 per qualifying dependent that is not a child.
total child tax credit = $6,000 + $500 = $6,500
Expand Your Critical Thinking 15-02 a1-a4 In the course of routine checking of all journal entries prior to preparing year-end reports, Betty Eller discovered several strange entries. She recalled that the president’s son Joe had come in to help out during an especially busy time and that he had recorded some journal entries. She was relieved that there were only a few of his entries, and even more relieved that he had included rather lengthy explanations. The entries Joe made were: (1) Work in Process Inventory 20,000 Cash 20,000 (This is for materials put into process. I don’t find the record that we paid for these, so I’m crediting Cash because I know we’ll have to pay for them sooner or later.) (2) Manufacturing Overhead 8,500 Cash 8,500 (This is for bonuses paid to salespeople. I know they’re part of overhead, and I can’t find an account called "Non-Factory Overhead" or "Other Overhead" so I’m putting it in Manufacturing Overhead. I have the check stubs, so I know we paid these.) (3) Wages Expense 108,000 Cash 108,000 (This is for the factory workers’ wages. I have a note that employer payroll taxes are $16,200. I still think that’s part of wages expense and that we’ll have to pay it all in cash sooner or later, so I credited Cash for the wages and the taxes.)
Answer:
Sr. No Particulars Debit Credit
Given
1 Work in Process Inventory 20,000 Dr
Cash 20,000 Cr
2 Manufacturing Overhead 8,500 Dr
Cash 8,500 Cr
3 Wages Expense 108,000 Dr
Cash 108,000 Cr
Required
1. Work in Process Inventory 20,000 Dr
Materials 20,000 Cr
2. Selling (Salaries) Expenses 8,500 Dr
Cash 8,500 Cr
3. Wages Expense 108,000 Dr
Payroll Taxes 16,200 Cr
Cash 91 800 Cr
Rectified Entries Would be
1 Materials 20,000 Dr
Accounts Payable 20,000 Cr
As there is no record of payment for material
Cash 20,000 Dr
Materials 20,000 Cr
Materials will be credited as they have been put to work in process and cash will be debited to counter the effect of the original entry.
2. Cash 8500 Dr
Manufacturing Overhead 8500 Cr
The original entry will be reversed to counter its effect and a new correct entry will be passed.
Selling (Salaries) Expenses 8,500
Cash 8,500
3. Cash 16,200 Dr
Payroll Taxes 16,200 Cr
Cash will be debited with an amount equal to payroll taxes and payroll taxes will be credited to complete the original entry.
Which of the following statements is true regarding the cognitive evaluation theory? This theory is based on three needs: need for achievement, need for power, and need for affiliation. This theory hypothesizes that extrinsic rewards will reduce intrinsic interest in a task. This theory proposes that employees inherently dislike work and must therefore be directed or even coerced into performing it. This theory states that the factors that lead to job satisfaction are separate and distinct from those that lead to job dissatisfaction. This theory is also called motivation-hygiene theory.
Answer:
This theory hypothesizes that extrinsic rewards will reduce intrinsic interest in a task.
Explanation:
Cognitive evaluation theory: In psychology, the term "cognitive evaluation theory" is described as one the different theories that are being designed to determine the specific effects associated with external consequences on an individuals' internal motivation. However, the cognitive evaluation theory describes that an individual is being encountered with two distinct types of motivation i.e, the extrinsic and the intrinsic motivation that generally corresponds to two types of motivators.
The cognitive evaluation theory suggests that extrinsic rewards can reduce intrinsic motivation. It is based on three psychological needs and proposes that job satisfaction and dissatisfaction are separate factors.
Explanation:The cognitive evaluation theory is a psychological theory that suggests that the introduction of extrinsic rewards can decrease intrinsic motivation. This theory is based on the idea that people have three psychological needs: the need for achievement, the need for power, and the need for affiliation. The theory proposes that when individuals receive external rewards for performing a task, it can undermine their internal motivation and interest in that task.
However, the cognitive evaluation theory does not state that employees inherently dislike work or need to be coerced into performing it. Rather, it focuses on how different types of rewards can affect intrinsic motivation. Additionally, the theory also suggests that factors leading to job satisfaction are separate from those leading to job dissatisfaction, indicating that they are distinct constructs.
The cognitive evaluation theory is sometimes referred to as the motivation-hygiene theory, but it is important to note that it is different from Herzberg's Two-Factor Theory of Motivation, which specifically focuses on job satisfaction and dissatisfaction.
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Crowder Company acquired a tract of land containing an extractable natural resource. Crowder is required by the purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 5,000,000 tons and that the land will have a value of $1,000,000 after restoration. Relevant cost information follows:
Land $9,000,000
Estimated restoration costs 1,500,000
If Crowder maintains no inventories of extracted material, what should be the depletion expense per ton of extracted material?
a. $2.10
b. $1.90
c. $1.80
d. $1.60
Answer:
B) $1.90
Explanation:
total reserves = 5,000,000 tons
value after restoration = $1,000,000
land cost:
land $9,000,000
restoration costs $1,500,000
total depreciable value = $9,000,000 + $1,500,000 - $1,000,000 = $9,500,000
using the units of depletion depreciation method, the depletion expense per ton = total depreciable value / total reserves = $9,500,000 / 5,000,000 tons = $1.90 per ton
this means that for every ton of extracted material, the company must record a $1.90 depletion expense.
Final answer:
The depletion expense per ton for the Crowder Company, considering the costs of the land and the estimated restoration costs against the recoverable reserves, is $2.10 per ton.
Explanation:
The student is asking how to calculate the depletion expense per ton of extracted material for the Crowder Company. The company acquired land with an extractable natural resource and is obliged to restore the land after extraction. We know the cost of the land is $9,000,000 and the estimated restoration costs are $1,500,000. We also know that the geological surveys estimated the recoverable reserves to be 5,000,000 tons. To calculate the depletion expense per ton, we need to sum the cost of the land ($9,000,000) and the restoration costs ($1,500,000), resulting in a total of $10,500,000. Then we divide this total cost by the recoverable reserves in tons to find the depletion expense per ton.
The formula is: Depletion Expense per Ton = (Land Cost + Restoration Costs) / Recoverable Reserves. So, Depletion Expense per Ton = ($9,000,000 + $1,500,000) / 5,000,000 tons = $2.10 per ton.
Which of the following should be included in the cash flow projections for a new product? I. Money already spent for research and development of the new product II. Capital expenditures for equipment to produce the new product III. Increase in working capital needed to finance sales of the new product IV. Interest expense on the loan used to finance the new product launch
Final answer:
Cash flow projections for a new product should include capital expenditures, increases in working capital needed to finance the product's sales, and interest expense on loans. However, money spent on research and development, being sunk costs, are not included.
Explanation:
When projecting cash flows for a new product, several key elements must be considered to ensure the projections are realistic and cover all necessary aspects of the project financing and execution. These include:
Capital expenditures for equipment to produce the new product (II) - This involves the money spent on acquiring or upgrading physical assets like machinery, which is essential for manufacturing the new product.Increases in working capital needed to finance sales of the new product (III) - Additional funds may be required to manage day-to-day operational expenses as sales volumes of the new product increase.Interest expense on the loan used to finance the new product launch (IV) - If financing is obtained through loans, the interest expense is a recurring cost that affects cash flow and must be included.However, money already spent on research and development (I) are typically considered 'sunk costs' and should not be included in future cash flow projections as they do not affect the future inflows or outflows of cash related to the new product.
Final answer:
Cash flow projections for a new product should include capital expenditures for production equipment, increased working capital to finance sales, and interest expense on loans for product launch, but not money previously spent on research and development.
Explanation:
When projecting cash flows for a new product, certain elements should be included in the projections. Specifically, capital expenditures for equipment to produce the new product (II), the increase in working capital needed to finance sales of the new product (III), and the interest expense on the loan used to finance the new product launch (IV) are essential in your cash flow projections.
However, money already spent for research and development of the new product (I) is considered a sunk cost and is not typically included in forward-looking cash flow projections.
rivack Corporation has a standard cost system in which it applies overhead to products based on the standard direct labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Budgeted variable overhead cost per direct labor-hour $ 4.00 Total budgeted fixed overhead cost per year $ 528,180 Budgeted direct labor-hours (denominator level of activity) 75,455 Actual direct labor-hours 84,000 Standard direct labor-hours allowed for the actual output 82,000 Required: 1. Compute the predetermined overhead rate for the year. Be sure to include the total budgeted fixed overhead and the total budgeted variable overhead in the numerator of your rate. (Round your answer to the nearest whole dollar amount.) 2. Compute the amount of overhead that would be applied to the output of the period. (Round your intermediate calculations and final answer to the nearest whole dollar amount.)
Answer:
Instructions are below.
Explanation:
Giving the following information:
Budgeted variable overhead cost per direct labor-hour $ 4.00
Total budgeted fixed overhead cost per year $ 528,180
Budgeted direct labor-hours= 75,455
Standard direct labor-hours allowed for the actual output 82,000
To calculate the estimated manufacturing overhead rate we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= (528,810/75,455) + 4= $15.63 per direct labor hour
Now, we can allocate overhead based on standard hours allowed:
Allocated MOH= Estimated manufacturing overhead rate* Standard amount of allocation base
Allocated MOH= 15.63*82,000= $1,281,600
f hospitals decide to increase the price of emergency appendectomies (surgery operation to remove inflamed appendix) in order to increase its revenues, Question 5 options: A) It will be successful since the demand is inelastic. B) It will be successful since the supply is inelastic. C) It will be successful since the demand is elastic. D) Then the reason that it will NOT be successful is because the demand curve is downward sloping.
Answer:
A) It will be successful since the demand is inelastic
Explanation:
Elasticity of demand measures the responsiveness of quantity demanded to changes in price.
Demand is inelastic if a change in price has little or no effect on quantity demanded.
If demand is inelastic and prices increase, total revenue would increase because there would be a negligible change in quantity demanded.
Demand is elastic if a small change in price has a greater effect on the quantity demanded.
If demand is elastic and price is increased, Quanitity demanded would fall and revenue would fall
I hope my answer helps you
The hospitals will likely be successful in increasing revenues by raising the price of emergency appendectomies due to the inelastic demand for such urgent medical procedures.
Explanation:If hospitals decide to increase the price of emergency appendectomies with the expectation to increase revenues, the outcome will depend on the price elasticity of demand for the surgery. Option A is correct because emergency appendectomies have an inelastic demand, meaning consumers are relatively unresponsive to price changes due to the urgent and life-saving nature of the surgery. People with an inflamed appendix need the procedure regardless of the cost, and since alternatives are not available, demand is inelastic. Therefore, when prices increase, the hospital is likely to see increased revenues as the quantity demanded does not significantly decrease.
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Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2017, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container. Budgeted quantity Budgeted price Direct materials 0.90 pounds $60 per pound Direct labor 0.10 hours $30 per hour During June, Heavy Products produced and sold 19,000 containers using 1,200 pounds of direct materials at an average cost per pound of $63 and 17,100 direct manufacturing labor-hours at an average wage of $31.25 per hour. The direct manufacturing labor price variance during June is ________.
Answer:
$950,400 Favorable
Explanation:
The computation of direct manufacturing labor price variance is shown below:-
Standard quantity for production = 19,000 × 0.90
= 17,100
Direct Material flexible-Budget variance = Standard Quantity × Standard Price - Actual Quantity × Actual Price
= 17,100 × $60 - 1,200 × $63
= 1,026,000 - $75,600
= $950,400 Favorable
Therefore for computing the direct manufacturing labor price variance we simply applied the above formula.
Poseidon Co. holds 70% of the common stock of Saturn Co. In the current year, Poseidon report sales of $2,400,000 and cost of goods sold of $1,800,000. For this same period, Saturn has sales of $900,000 and cost of goods sold of $540,000. During the current year, Saturn sold merchandise to Poseidon for $300,000. Poseidon still possesses 40% of this inventory at the end of the current year. Saturn had established the transfer price based on its normal markup. What are consolidated sales and cost goods sold
Final answer:
Consolidated sales are $3,300,000 and consolidated cost of goods sold are $2,340,000.
Explanation:
Consolidated sales and cost of goods sold are calculated when a parent company owns a significant percentage of the common stock of another company. In this scenario, Poseidon Co. holds 70% of the common stock of Saturn Co. To calculate consolidated sales, we need to add the sales of both companies. In this case, Poseidon reported sales of $2,400,000 and Saturn reported sales of $900,000. Therefore, consolidated sales would be $2,400,000 + $900,000 = $3,300,000.
To calculate consolidated cost of goods sold, we need to add the cost of goods sold of both companies. Poseidon reported a cost of goods sold of $1,800,000 and Saturn reported a cost of goods sold of $540,000. Therefore, consolidated cost of goods sold would be $1,800,000 + $540,000 = $2,340,000.
28. David is in the business of sharpening skates for college hockey teams. He signed a contract on August 1, 2019 for $28,000 with Bentley University ("Bentley") to sharpen the team’s skates for the 2019-2020 hockey season, which is played from the months of September 2019 through March 2020. The contract states that Bentley will pay David a deposit of $8,000 on August 31, 2019, $8,000 on October 31, 2019, $4,000 on December 31, 2019 and the remaining $8,000 on March 31, 2020. David performed the services as contracted throughout the hockey season. What was the amount of revenue David should recognize for year-end December 31, 2019 on the Bentley contract? A. $0 B. $16,000 C. $20,000 D. $28,000
Answer:
The correct answer is:
$20,000 (C.)
Explanation:
To calculate the revenue recognized for the year-end on the contract, the earnings and the period will be written out clearly as follows:
Total worth of contract = $28,000
August 31, 2019 revenue = $8,000
October 31, 2019 revenue = $8,000
December 31, 2019 revenue = $4,000
March 31, 2020 revenue = $8,000
Therefore, revenue recognized for year-end December 31, 2019 on the Bentley contract is the total revenue received between August and December 2019, and it is calculated below as:
8,000 + 8,000 + 4,000 = $20,000
Develop a worksheet that can be used to simulate the bids made by the two competitors. Strassel is considering a bid of $120000 for the property. Using a simulation of 1000 trials, what is the estimate of the probability Strassel will be able to obtain the property using a bid of $120000? Round your answer to 1 decimal place. Enter your answer as a percent.
Answer:
20%
Explanation:
Simulation is imitation of a situation that represents its operations overtime. Simulation is used for performance tuning. The use of simulation in business is gaining significance. Simulation is used to analyze current situation and predict future. Strassel is using 1000 trials for a bid of $120,000. The estimated probability that Strassel will get the property at a bid of $120,000 is 20%.
What is the most important way the federal reserve ensures the United States money supply is safe and in circulation
Answer:
Federal Reserve increases the money supply in the hands of the public if it buys back issued securities from large banks.
Explanation:
Federal Reserve increases the money supply in the hands of the public if it buys back issued securities from large banks. Conversely, Federal Reserve decreases the money supply in the hands of the public if it sells securities. As a result, the money supply increases.
Federal reserve provides and maintains an effective and efficient payment system. It also regulates banking operations.
Liang Company began operations in Year 1. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows.
Year 1 Sold $1,345,434 of merchandise (that had cost $975,000) on credit, terms n/30.
Wrote off $18,300 of uncollectible accounts receivable.
Received $669,200 cash in payment of accounts receivable.
In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable would be ______.
The estimated bad debt at the end of Year 1 for the Liang Company is calculated as 1.5% of the remaining accounts receivable ($657,934), which results in $9,869.01.
Explanation:The Liang Company ended its first year with some transactions that involved credit sales, account receivable payments, and bad debts. The company sold $1,345,434 of merchandise from which $18,300 was written off as bad debts and $669,200 was received in cash. To calculate the potential bad debts at the end of the year, we apply the bad debt estimation rate, which is 1.5%. This rate is applied to the total amount of accounts receivable left (which is the initial credit sales minus the cash received and the bad debts).
Here is the step-by-step process:
Calculate the total receivables at the end of the year: $1,345,434 (credit sales) - $18,300 (write offs) - $669,200 (cash received) = $657,934. Apply the estimated bad debt rate on the remaining receivable amount: 1.5% of $657,934 = $9,869.01. This value represents the estimated bad debts. Learn more about Bad Debts Estimation here:
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Final answer:
Liang Company will calculate the estimated bad debts at 1.5% of the adjusted total accounts receivable, which must be derived from the credit sales minus collections and write-offs.
Explanation:
The student's question is about how to account for the estimation of bad debts at the end of the fiscal year. Liang Company estimated that 1.5% of accounts receivable would be uncollectible. To calculate this, Liang Company needs to determine the total accounts receivable at the end of the year, which includes sales on credit, minus any collections and write-offs. If they have not provided the year-end total accounts receivable, the company would take the credit sales made during the year and adjust it for any cash received and any write-offs. The estimation of bad debts would then be 1.5% of the adjusted accounts receivable total.
Which of the following combinations of actions by Congress and the Federal Reserve would be most effective in stimulating an economy that is operating below full employment? An increase in the money supply when personal income taxes decrease. An increase in the money supply when personal income taxes increase. An increase in the money supply when government spending decreases. An increase in interest rates when government spending increases. A decrease in interest rates when personal income taxes increase.
Answer:
The most effective combinations of actions by Congress and the Federal Reserve in stimulating an economy that is operating below full employment is An increase in the money supply when personal income taxes decrease.
Explanation:
The congress and Federal reserve can stimulate the economy with the applicable fiscal policies especially when the economy is operating below full employment.
Expansionary fiscal policy is a tool used by congress and Federal Reserve to increase money supply in circulation by reducing tax rates, this is will create more disposable income in households which will lead to increase in demand. Once demand increases, the ripple effect on the economy is increase in employment opportunities.
Therefore, the most effective combinations of actions by Congress and the Federal Reserve in stimulating an economy that is operating below full employment is an increase in the money supply when personal income taxes decrease.
The multiplier for a futures contract on a stock market index is $50. The maturity of the contract is 1 year, the current level of the index is 1,800, and the risk-free interest rate is 0.5% per month. The dividend yield on the index is 0.2% per month. Suppose that after 1 month, the stock index is at 1,820. a. Find the cash flow from the mark-to-market proceeds on the contract. Assume that the parity condition always holds exactly. (Round intermediate calculations to 2 decimal places.)
Final answer:
The mark-to-market cash flow from the futures contract after the stock market index rises from 1,800 to 1,820 is $1,000. This is calculated using the multiplier of $50 and the change in the index level.
Explanation:
Understanding the Futures Contract
The student is seeking to calculate the mark-to-market cash flows of a futures contract on a stock market index with specific parameters given. Since the multiplier is $50, and after one month, the index has risen from 1,800 to 1,820, the mark-to-market gain would be the difference in the index levels multiplied by the multiplier. Therefore, the calculation would be (1820 - 1800) x $50 = $1,000. This would be the cash flow from the mark-to-market proceeds. A key concept to remember is that futures contracts are marked to market daily, meaning the change in value is settled between the parties at the end of each trading day.
The parity condition was also mentioned but no further calculation using this was required. Had it been necessary, the parity condition would ensure that the futures price adjusts considering the risk-free interest rate and the dividend yield on the index. However, to answer the student's question, this detail isn't needed.
Freemore Company has the following sales budget for the last six months of 2018: July $205,000 October $187,000 August 168,000 November 200,000 September 205,000 December 182,000 Sales are immediately due, however the cash collection of sales, historically, has been as follows: 55% of sales collected in the month of sale, 35% of sales collected in the month following the sale, 7% of sales collected in the second month following the sale, and 3% of sales are uncollectible. Cash collections for October are ________.
Answer:
Cash collections for October are $174,600
Explanation:
The following information are given for the amounts collected on sales:
month of sale = 55%
month following sale = 35%
second month following sale = 7%
sales uncollectible = 3%
For the month of October, the cash collections will be from July and October sales.
From July sales
October is the month following July sales, therefore, 35% of the sales from July will be collected in October.
July sales = $205,000
percentage collected in October = 35% = 35/100 = 0.35
∴ cash collected in October from July sales = 0.35 × 205,000 = $71,750
From October sales
55% of sales is collectible in the month of sales
Sales in October = $187,000
55% = 55/100 = 0.55
∴ cash collectible from October sales = 0.55 × 187,000 = $102,850
∴ Total cash collections in October = cash from July sales + cash from October sales
= 71,750 + 102,850 = $174,600
The current stock price of Alcoa is $110, and the stock does not pay dividends. The instantaneous risk-free rate of return is 5%. The instantaneous standard deviation of Alcoco's stock is 30%. You want to purchase a put option on this stock with an exercise price of $115 and an expiration date 30 days from now. According to the Black-Scholes OPM, you should hold __________ shares of stock per 100 put options to hedge your risk.
Explanation:
d_1 = (ln(S/K) + (r + (s^2)/2)t)/(s√(t))
d_2 = d_1 - s√(t))
where S= current stock price
K = option strike price
t = time to maturity
s = volatility
r = risk free rate
c = call premium
d_1 = (ln(70/75) + (0.06 + (0.40^2)/2)× 0.083)/0.40√(.0833)
= -0.49646
d_2 = -0.49646 - .40√(.0833)
= -0.61193
N(d_1) = can be found using the z -table and it is the call option's delta value.
N(d_1) = N(-0.49646) = 0.31
Rexford Corporation produces three products, with costs and selling prices as follows: Product A Product B Product C Machine hours per unit 3 1 2
Maximum demand 500 units
Selling price per unit $30 $20 $15
Variable costs per unit $18 $15 $ 6
Contribution Margin per unit $12 $ 5 $ 9
Machining is the bottleneck. The total machine time available is 2,100 hours. What is the maximum contribution margin that Rexford can earn by optimal use of the constrained resource?
Answer:
$9,400
Explanation:
For computing the maximum contribution margin we need to do following calculations
Contribution Margin
Product A = ($12 ÷3) = 4
Product B = ($5 ÷ 1) = 5
Product C = ($9 ÷ 2) = 4.50
So, the ranking order would be product B > product C > product A
Now
Total machine hours available = 2,100 hours
And,
Time for making 500 units of B
= 500 × 1
= 500 hours
For making 500 units of C, the time taken is
= 500 × 2
= 1000 hours
So the remaining hours left is
= 2,100 hours - 1,000 hours - 500 hours
= 600 hours
So, for A the manufactured is
= 600 ÷ 3
= 200
And, finally the Maximum contribution margin is
= (200 × $12) + (500 × 5) + (500 × 9)
= $2,400 + $2,500 + $4,500
= $9,400
operation, 2,300 units were produced and 1,800 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: Variable manufacturing costs $23.00 per unit Variable marketing costs $6.00 per unit Fixed manufacturing costs $15 per unit Administrative expenses, all fixed $21.00 per unit Ending inventories: Direct materials -0- WIP -0- Finished goods 500 units What is the contribution margin using variable costing
Answer:
$124,200
Explanation:
Contribution margin is net of sales value and variable cost. This value is available to cover the fixed cost of the business and profit after adjusting fixed cost.
As per given data
Price = $98
Numbers of units sold = 1,800
Total Sales = $98 x 1,800 = $176,400
Variable cost = $23 x 1,800 units = $41,400
Variable marketing cost = $6 x 1,800 = $10,800
Total Variable cost = $41,400 + $10,800 = $52,200
Contribution Margin = Total Sales - Total Variable cost
Contribution Margin = $176,400 - $52,200
Contribution Margin = $124,200
Answer:
$124,200
Explanation:
Swan Textiles Inc contribution margin using variable costing
Total sales = $98.00 × 1,800 = $176,400
Variable cost of goods sold = $23.00 × 1,800 = $41,400
Variable marketing costs = $6.00 × 1,800 = $10,800
Total variable costs ($41,400+ $10,800)= $52,200
Contribution margin = $176,400 - $52,200 = $124,200
Therefore the contribution margin using variable costing will be $124,200
Perry Corporation produces and sells a single product. Data for that product are: Sales price per unit $275 Variable cost per unit $210 Fixed expenses for the month $640,000 Currently selling 10,500 units Upper management is considering using a biodegradable packaging which costs $12 more per unit but it produces less waste in the long run. Management plans to increase advertising by $11,000 per month to advertise this new feature to their packaging. They believe that environmentally friendly people will switch to their product resulting in an increase in sales of 2500 units per month. How many units would the company have to sell to maintain current operating income if these changes are implemented
Answer:
13,085 units
Explanation:
The computation of the units needed to sell is shown below:
But before that first we have to compute the current operating income which is shown below:
Current operating income = Sales - variable cost - Fixed cost
= ($275 - $210) × 10,500 units - $640,000
= $42,500
Now
Increased fixed cost is
= $640,000 + $11,000
= $651,000
And,
Increased variable cost per unit is
= $210 + $12
= $222
Now
Sales needed to maintain Current operating income is
= (Fixed cost + Current operating income) ÷ (Sales price per unit - Variable cost per unit)
= ($651,000 + $42,500) ÷ ($275 - $222)
= 13,085 units
Columbus Company owns 25% of Zanesville Inc. and accounts for the investment using the equity method. During the year, Zanesville Inc. reports a net loss of $1,602,000 and pays total dividends of $73,800. Which of the following describes the change in Columbus’s investment in Zanesville during the year? Select one: A. The investment increases by $326,700. B. The investment decreases by $232,750. C. The investment decreases by $418,950. D. The investment decreases by $400,500. E. None of the above
Answer:
The correct option is C,the investment decreases by $418,950.
Explanation:
The equity method of accounting for stock investment requires that the investor should increase its investment value by the share of net income in a year and decrease same by the amount of cash dividends received from the investee company.
However,the opposite would be the case of net loss recorded in the year under review(share of net loss would be deducted from investment value) as shown below:
Share of net loss ($1,602,000*25%) ($400,500)
share of cash dividends($73,800*25%)($18,450)
total reduction in investment value ($418,950 )
Newton Corporation entered into the following transactions during its first year of operations. (Assume all transactions involve cash.) 1) Acquired $1,300 of capital from the owners. 2) Purchased $330 of direct raw materials. 3) Used $230 of these direct raw materials in the production process. 4) Paid production workers $430 cash. 5) Paid $230 for manufacturing overhead (applied and actual overhead are the same). 6) Started and completed 250 units of inventory. 7) Sold 80 units at a price of $6 each. 8) Paid $70 for selling and administrative expenses. The amount of net income for the year was:
Answer:
Net Income $ 125.2
Explanation:
Capital acquired and the amount of material purchased is not accounted for. Only amount of material used is accounted for .
Newton Corporation
Income Statement
Sales 80* $ 6= $ 480
Less COGS $ 284.8
Gross Profit $ 195.2
Less Selling and Administrative Expense $ 70
Net Income $ 125.2
We calculate the COGS for number of the units sold.
Calculation Of Cost Of Goods Sold
Direct Material used $ 230
Direct Labor $ 430
Production Overheads $ 230
Total Manufacturing Costs $ 890
Total units completed 250
Cost of 1 unit = Total Cost/ Total Units= $ 890/250= $ 3.56 per unit
Cost of 80 Units = $ 3.56 * 80= $ 284.8