Answer:
Unit product cost= $95
Explanation:
Giving the following information:
Direct materials $30 per unit
Direct labor $45 per unit
Variable manufacturing overhead $20 per unit
Under the variable costing method, the unit product cost is calculated using the direct material, direct labor, and variable manufacturing overhead:
Unit product cost= 30 + 45 + 20= $95
Nathan is working on the operating budgets for his company. He has already done the sales and production budgets, and he is now working on the direct materials, direct labor, and manufacturing overhead budgets. He decides to do the direct labor budget first, then the manufacturing overhead budget, then the direct materials budget. Do you think this is an appropriate way to prepare the budgets
Answer:
Yes that is an appropriate way ti prepare an operating budget.
Explanation:
An operating budget is a financial statement that reflects reflects operating activities and its cost implications.
It outlines other budgets like ending fines the financial plan for each operating sub sector such as sales, production, direct labor, manufacturing overhear, etc. for a particular period.
Nathan's method of preparing the operating budget for his company is appropriate because he is following the correct sequence.
To prepare an operating budget, the sales and production budgets are captured first, followed by direct materials, direct labor, manufacturing overhead, direct labor, direct materials and other other additional budget before the budgeted income statement is prepared.
Final answer:
Nathan's approach to preparing the direct labor, manufacturing overhead, and direct materials budgets can be suitable, especially if direct labor costs influence manufacturing overhead. However, the sequence might differ based on the company's operational needs and the flexibility required for the budgets to reflect actual conditions.
Explanation:
When Nathan is working on the operating budgets for his company and decides to prepare the direct labor budget, manufacturing overhead budget, and then the direct materials budget, his approach can be considered appropriate depending on the interdependencies of those budgets. Since direct labor costs can directly influence manufacturing overhead through labor-related expenses such as payroll taxes and benefits, it is reasonable to calculate labor costs first. However, it is essential that other elements, such as direct materials, are not overlooked since they may also affect both labor and overhead costs.
According to best practices in budgeting, flexible budgeting can be beneficial. A flexible budget allows for sensitivity analysis and can be adjusted to reflect actual operating conditions, providing managers with a tool to manage costs effectively under different scenarios. By following a flexible budget approach, Nathan ensures that the budget will remain dynamic and adaptable, reflecting changes in demand, resource consumption, and costs.
It's also essential to consider that each company might have different requirements on budget sequence based on their operational workflow. In some cases, the need for materials might dictate labor and overhead, suggesting another sequence could be more appropriate. Ultimately, cost accounting and understanding the specific needs of the company are crucial to ensure the efficiency of the budgeting process.
Eric was in the store and started looking at riding lawn mowers. He didn't come to this store for the purpose of purchasing one, but he started considering it once he was there. However, he did not purchase one on that trip. Instead he went to other stores to look at their mowers, he asked his neighbor and his brother-in-law about their mowers, and he searched the Internet before he decided on the brand to purchase. Which type of decision making did Eric undertake?
Answer:
Extended decision making
Explanation:
Decision making can be described as the process of making a choice between two or more alternatives. It involves analysing various alternatives and then identifying the right action to take.
Extended decision making involves the choices made by customers during the purchase of an unintended/unfamiliar product or a product with a high price. This type of decision making requires a prolonged thought and search effort inorder to arrive at a suitable choice.
Inorder for a brand to have a positive effect on extended decision makers, it is essential that they create a large social media presence where individuals can share their various views on the product.
You are an investor evaluating a project which is going to take 8 years. The project will pay $500,000 at the beginning of each year starting a year from now. These payments will grow at 2% for the first two years, then 3.5% for the following two years and then stay consistent at 4% until the end of the project. In the last year of the project you will receive a lump sum of $1 million while also paying a lump sum of $200,000. If your expected retrun on this project is 12.5%, what is the PV of the project?
Answer:
Present Value of the project is $3,295,932
Explanation:
Present value is the discounted value of all the cash inflows and outflows of the project. It can be calculated using a required rate of return.
All the cash flows first grew at the specified growth rate each year and then discounted using required rate of return.
Working for present value of the project is attached please find it.
What are the five basis principles of finance? Briefly explain them (no more than 250 words). (10 marks)
Answer:
1. Time Value Money
2. Agency Problem
3. Cash Flow Matters
4. Risk Should be Rewarded
5. Market Prices Reflect Information
Explanation:
Time Value of Money
A very important Principle in Finance. Time Value of money refers to the fact that what money is worth today is not what it will be worth tomorrow. Tomorrow, that money will probably be worth less due to the effects of inflation eroding it's value. For this reason it is therefore possible to invest in the present and expect a higher value in future because your money becomes stronger. For example, rent for a building could be $2,000 in 2015 but is now $3,000 in 2020. This is because Inflation we the value of the Dollar and so prices went up to compensate.
Agency Problem.
This principle states that the goals of management and the goals of shareholders may differ sometimes. When this happens there is a conflict of interest and the managers might just undertake actions that are not in the interest of the shareholders.
CashFlow Matters
Actual cash is needed in finance to run the business and engage in transactions that help move the business forward. Simply having potential income is not good enough and so cash is Paramount. For this reason there is a very important financial statement called the Cash Flow Statement which a company uses to see how much cash it actually has on hand.
Risk Should be Rewarded
In finance there is a basic premise that the more risk you undertake, the more you should be compensated. If the risk you are taking is high then the benefit must be high as well. This is why riskier financial instruments are ascribed higher rewards and lower risk instruments have a lower reward. For example, US T-bills are known as the safest of instruments and for this reason have very low rates.
Market Prices Reflect Information
Market Prices in finance are considered right because they reflect the information in the market surrounding the asset in question. This means that Financial markets regulate their own prices based on information available and so that is the price trades should be conducted at.
he Assembly Department of ByteSize, Inc., manufacturer of computers, incurred $ 260 comma 000 in direct material costs and $ 70 comma 000 in conversion costs. The equivalent units of production for direct materials and conversion costs are 1 comma 000 and 600, respectively. The weightedminusaverage method is used. The cost per equivalent unit of production (EUP) for conversion costs is
Answer:
Cost per equivalent unit for conversion cost = $116.66
Explanation:
Under the weighted average method of valuation, to account for completed units, it is assumed that the entire degree of work required to a complete a set of work is done in the period under consideration.So there is no separation of the completed units into opening inventory and fully worked.
To determine the cost per equivalent unit, we use the formula below:
Cost per equivalent unit = $70,000/600
= $116.66
Answer:
$ 166.67
Explanation:
The Concept of Equivalent units measures the number of units completed in terms of completion in input elements of materials and conversion costs.
cost per equivalent unit = Total conversion cost / total equivalent units of conversion
= $ 70,000 / 600
= $ 166.67
Therefore, cost per equivalent unit of production (EUP) for conversion costs is $ 166.67 .
Calculate Payroll An employee earns $44 per hour and 1.5 times that rate for all hours in excess of 40 hours per week. Assume that the employee worked 55 hours during the week, and that the gross pay prior to the current week totaled $63,800. Assume further that the social security tax rate was 6.0%, the Medicare tax rate was 1.5%, and federal income tax to be withheld was $633.
Answer: $1750
Explanation:
Given Data
Earnings = $44/ hr
Overtime Earnings = 1.5 times Of $44
= $66
Hours worked during the week = 55 hrs
Social security tax rate = 6.0%
Medicare tax rate = 1.5%
Federal income tax = $633
Therefore:
Gross pay = Normal pay + overtime pay
Normal pay
= $44 * 40 hrs
= $1760
Overtime pay
= $66 * 15 hrs
= $990
Gross pay = $1760 + $990
= $1750
Social security tax
= 0.06 * $2750
= $165
Medicare tax
= 0.015 * $2750
= $41.25
Total tax
= $633 + $41.25 + $165
= $839.25
Net pay
= $2750 - $839.25
= $1910.75
Freeland Company sells Popits for $20. The following is the projected Income Statement for 2018. Variable costs are the cost of the Popits, $10 each, plus a 10% sales commission paid to the worker. Sales $300,000 Cost of Popits Sold 150,000 Gross Margin 150,000 Operating Expenses Salaries and Commissions 60,000 Rent 24,000 Other Fixed Expenses 10,000 Total Operating Expenses 94,000 Net Income $ 56,000 For Freeland, the number of Popits she needs to sell to break even are A. 6,620 B. need more information to calculate this C. 9,074 D. 8,000 E. 11,750
Answer:
D. 8,000
Explanation:
The computation of break even is shown below:-
Variable cost per unit = Cost of Popits per unit + Sales commission per unit
= $10 + (10% × $20)
= $10 + $2
= $12
Contribution margin per unit = Sales per unit - Variable cost per unit
= $20 - $12
= $8
Total fixed Cost = Salaries + Rent + Other fixed cost
= ($60,000 - $30,0000) + $24,000 + $10,000
= $30,000 + $24,000 + $10,000
= $64,000
Now,
Break-even units = Fixed cost ÷ Contribution per unit
= $64,000 ÷ 8
= 8,000
Therefore for computing the break-even units we simply applied the above formula.
A company began a new development project in 2017. The project reached technological feasibility on June 30, 2018, and was available for release to customers at the beginning of 2019. Development costs incurred prior to June 30, 2018, were $3,800,000 and costs incurred from June 30 to the product release date were $2,150,000. The 2019 revenues from the sale of the new software were $4,000,000, and the company anticipates additional revenues of $6,500,000. The economic life of the software is estimated at four years. Amortization of the software development costs for the year 2019 would be:
Answer:
$818,935
Explanation:
Percentage of-revenue method:
$4,000,000
($4,000,000 + 6,500,000) = $10,500,000
Hence;
$4,000,000/$10,500,000
= 38.09 %
Amortization = 38.09% ×$2,150,000
= $818,935
Therefore the amortization of the software development costs would be $818,935
You own a portfolio that is 22 percent invested in Stock X, 37 percent in Stock Y, and 41 percent in Stock Z. The expected returns on these three stocks are 12 percent, 15 percent, and 17 percent, respectively. What is the expected return on the portfolio?
Answer:
15.16%
Explanation:
The computation of expected return on the portfolio is shown below:-
Expected return on portfolio = (Return on Stock X × Weight of Stock X) + (Return on Stock Y × Weight of Stock Y) + (Return on Stock Z × Weight of Stock Z)
= (12% × 22%) + (15% × 37%) + (17% × 41%)
= 2.64% +5.55% + 6.97%
= 15.16%
So, for computing the expected return on the portfolio we simply applied the above formula.
Final answer:
To find the expected return on a portfolio, multiply the weight of each stock by its expected return and sum the results, resulting in an expected return of 18.13% for this portfolio.
Explanation:
The expected return on the portfolio can be calculated by multiplying the weight of each stock by its expected return and then summing the results.
Expected return = (0.22 x 0.12) + (0.37 x 0.15) + (0.41 x 0.17)
Expected return = 0.0554 + 0.0555 + 0.0704 = 0.1813 or 18.13%
Identify whether the market supply curve will shift right or left or will stay the same for the following: a. Firms in an industry are required to pay a fine for their carbon dioxide emissions. b. Companies are sued for polluting the water in a river. c. Power plants in a specific city are not required to address the impact of their air quality emissions. d. Companies that use fracking to remove oil and gas from rock are required to clean up the damage.
Answer:
1. In first example, supply curve moves to the left. Delivery curve moves to the left as supply is heading downward due to variables apart from rate change. In this scenario, the cost of output rises due to the current penalty, and vendors will be able to produce less at the same amount.
2. In second scenario, businesses are prosecuted for contaminating river water, rises in manufacturing prices and vendors will be able to produce worse at the same amount. The output curve then shifts for its left.
3. In third case the output curve will remain the same. That's since the quantities given does not change.
4. In this situation, the harm done by drilling must be cleaned up by the businesses. Hence, production cost rises, and vendors will be willing to provide worse at the provided price. The supply curves then shifts to the left.
2. You can spend spring break either working at home for $80/day for 5 days or go to Florida for the week. If you stay home, your expenses will total about $100. If you go to Florida, the airfare, hotel, food and miscellaneous expenses will total about $700. What is the opportunity cost of going to Florida? Bonus point: What is the definition of opportunity cost?
Answer:
-$1,000
-The opportunity cost refers to the benefit that you don't receive when you choose an option over another one.
Explanation:
The opportunity cost of going to Florida would include the amount you won't spend on the trip that is $700. Also, it includes the benefit of staying at home that is working for $80/day for 5 days that is equal to $400 minus the expenses that are $100. According to this, the opportunity cost is: $700+$300= 1,000.
CarMax Inc. reports sales of $15,875,118 thousand and cost of sales of $13,691,824 thousand for the year ended February 28, 2017. The gross profit for the year is: A. $2,183,294 thousand B. $1,464,362 thousand C. 86.2% D. 13.8% E. There is not enough information to determine gross profit.
Answer: A. $2,183,294 thousand
Explanation:
Gross Profit is calculated by deducting the Cost of Goods sold from the Sales figure.
In this case therefore the Gross Profit would be,
Gross Profit = 15,875,118 - 13,691,824
Gross Profit = $2,183,294 thousand.
$2,183,294 is the Gross Profit for year therefore Option A is correct.
Netscrape Communications does not currently pay a dividend. You expect the company to begin paying a dividend of $3.20 per share in 15 years, and you expect dividends to grow perpetually at 4.2 percent per year thereafter. If the discount rate is 15 percent, how much is the stock currently worth? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
The stock is currently worth approximately $29.63, given an expected dividend of $3.20 in 15 years, growing perpetually at 4.2%.
To calculate the present value of the stock, we can use the Gordon Growth Model, also known as the Dividend Discount Model (DDM). The formula for the present value of a stock using the Gordon Growth Model is:
[tex]\[ P = \frac{D_1}{r - g} \][/tex]
Where:
[tex]- \( P \) = Present value of the stock[/tex]
[tex]- \( D_1 \) = Dividend expected in the next period[/tex]
[tex]- \( r \) = Discount rate[/tex]
[tex]- \( g \) = Growth rate of dividends[/tex]
Given:
[tex]- \( D_1 = \$3.20 \) (dividend expected in 15 years)[/tex]
[tex]- \( r = 15\% \) (discount rate)[/tex]
[tex]- \( g = 4.2\% \) (growth rate of dividends)[/tex]
Let's calculate the present value:
[tex]\[ P = \frac{\$3.20}{0.15 - 0.042} \][/tex]
[tex]\[ P = \frac{\$3.20}{0.108} \][/tex]
Tyron manages with McGregor's Theory X in mind, and, as a result, his employee, Cassie, is losing interest in her job. If Tyron could abandon his current beliefs, he might instead acknowledge that there is "no one best way" to manage. He might consider Cassie's values, goals, skills, and attitudes, along with other factors, both internal and external to the firm, to improve performance. If so, he would be using the
Final answer:
Tyron should consider using Theory Y approach to improve performance and employee satisfaction.
Explanation:
The approach that Tyron should consider using is Theory Y. Theory Y managers assume that employees seek inner satisfaction and fulfillment from their work, and they function better under leadership that allows them to participate in setting their personal and work goals. In a Theory Y workplace, employees are given more autonomy and are encouraged to provide input on matters of efficiency and safety. By adopting this approach, Tyron can improve performance, employee satisfaction, and overall organizational output.
Dunstreet's Department Store would like to develop an inventory ordering policy with a 95 percent probability of not stocking out. To illustrate your recommended procedure, use as an example the ordering policy for white percale sheets. Demand for white percale sheets is 4,500 per year. The store is open 365 days per year. Every four weeks (28 days) inventory is counted and a new order is placed. It takes 6 days for the sheets to be delivered. Standard deviation of demand for the sheets is five per day. There are currently 190 sheets on-hand. How many sheets should you order
Answer:
277 sheets
Explanation:
As per the data given in the question,
Z at 95% = 1.64485
Safety stock = Z × Standard deviation × (Lead time + Period)^(1÷ 2)
= 1.64485 × 5 × (6+28)^(1÷ 2)
= 47.955
Daily demand = 4500 ÷ 365
= 12.33
Reorder point = (Daily demand × (lead time + period)) + safety stock
= (12.33 × (28 + 6)) + 47.955
= 467.175
Sheets to be ordered = Reorder point - sheets in hand
= 467.175 - 190
= 277.175
= 277 sheets
Ajax Company presently leases a copy machine on a monthly basis. The lease agreement requires a fixed fee each month in addition to a charge per copy. The Company made 2,400 copies and paid a total of $162 in lease payments in September. In October they made 3,500 copies and paid a total of $195 in lease payments. Using these two data points and the high-low method, determine the Company’s variable cost per copy.
Answer:
Variable cost per copy =$ 0.03
Explanation:
The high and low techniques helps to analyse a cost into its variable and fixed cost component.
The formula is given below:\
Variable cost per copy = (cost at high act. - cost at low act)/(high act - low act)
Fixed cost = cost at high activity - (Vc/copy × high act)
VC per copy = ( 195 - 162)/(3500-2400) copies
=$ 0.03 per copy
Total fixed cost = 195 - (0.03× 3500)
= 195 - 105
=$90
15. Rick Barr Inc. is considering a new product line that has expected sales of $500,000 per year for each of the next 5 years. New equipment that is required to produce the new product will cost $800,000. The equipment has a useful life of 5 years and an $80,000 salvage value and will be sold at the end of year 5 for its salvage value. Total variable costs of the product line are $230,000 per year, total fixed costs (not including depreciation) will be an additional $100,000 per year and the initial working capital investment, to buy inventory, will be $10,000. The discount rate (interest rate) for the project is 10% and the company’s tax rate is 35%. What is the total cash flow of year 5 for the company? A. $250,900 B. $160,900 C. $240,900 D. $256,750
Answer: A.) $250,900
Explanation:
Given the following ;
Working Capital = $10,000
Salvage value = $80,000
Cost of equipment = 800,000
Tax rate = 35%
Number of useful years = 5 years
The formula for cash flow is = EBIT * (1 - tax rate) + Depreciation + Salvage Value + Working Capital released
Depreciation = (cost - Salvage value) ÷ Number of useful years
Depreciation = $(800,000 - 80,000)/5
Depreciation = $720,000÷5 = $144,000
EBIT = Sales - Variable costs - Fixed costs - Depreciation
EBIT = $500,000 - $230,000 - $100,000 - $144,000
EBIT = $26,000
Cash flow = $26,000(1 - 0.35) +$144,000 + $80,000 + $10,000
Cashflow = $250,900
Which of the following management actions is permissible during a union certification election? Promising benefits to employees if they reject the union Requiring all employees to attend "captive audience" speeches in the company auditorium regarding the union organizing effort Requiring small groups of employees to meet with management in a supervisor’s conference room to discuss the organizing effort Asking employees in advance of the election how they feel about the union
Answer:
Requiring all employees to attend “captive audience” speeches in the company auditorium regarding the union organizing effort
Explanation:
In simple words, union certification election refers to the electoral process under which the labor force of an organisation chooses its leader for a fixed period of time as determined by the rules. This process is usually seen in large organisations where a thousands of labor workforce is included.
Just like any other process, in these elections also the candidates are supposed to present themselves against the voters and tell them their ideas and the works they are going to perform.
During May, Joliet Fabrics Corporation manufactured 530 units of a special multilayer fabric with the trade name Stylex. The following information from the Stylex production department also pertains to May.
Direct material purchased: 18,300 yards at $1.41 per yard $ 25,803
Direct material used: 9,800 yards at $1.41 per yard 13,818
Direct labor: 2,400 hours at $9.18 per hour 22,032
The standard prime costs for one unit of Stylex are as follows:
Direct material: 20 yards at $1.38 per yard $ 27.60
Direct labor: 4 hours at $9.00 per hour 36.00
Total standard prime cost per unit of output $ 63.60
Required: Compute the following variances for the month of May. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).
Answer:
Direct material price variance = -$294 Unfavorable
Direct material quantity variance = $1,104 Favorable
Direct material purchase price variance = 549 Unfavorable
Direct labor rate variance = $432 Unfavorable
Direct labor efficiency variance = -$2,520 Unfavorable
Explanation:
The computation of given question is shown below:-
Standard hours = 530 × 4
= 2,120
Direct material price variance = (Standard price - Actual price) × Actual quantity
= ($1.38 - $1.41) × 9,800
= -$0.03 × 9,800
= -$294 Unfavorable
Direct material quantity variance = (Standard quantity - Actual quantity) × Standard price
= (530 × 20 - 9,600) × $1.38
= (10,600 - 9,800) × $1.38
= 800 × $1.38
= $1,104 Favorable
Direct material purchase price variance = (Standard price - Actual price) × Actual quantity
= ($1.38 - $1.41) × 18,300
= -$0.03 × 18,300
= $549 Unfavorable
Direct labor rate variance = (Standard rate - Actual rate) × Actual hours
= ($9 - $9.18) × 2,400
= -$0.18 × 2,400
= $432 Unfavorable
Direct labor efficiency variance = (Standard hours - Actual Hours) × Standard rate
= (2,120 - 2,400) × $9.00
= -280 × $9.00
= -$2,520 Unfavorable
1. Direct Material Price Variance: $549 Unfavorable. 2. Direct Material Quantity Variance: $1,104 Favorable 3. Direct Labor Rate Variance: $432 Unfavorable 4. Direct Labor Efficiency Variance: $2,520 Unfavorable
To compute the variances for the month of May for Joliet Fabrics Corporation, we need to calculate the following:
1. Direct Material Price Variance
2. Direct Material Quantity Variance
3. Direct Labor Rate Variance
4. Direct Labor Efficiency Variance
1. Direct Material Price Variance (DMPV)
[tex]\[ \text{DMPV} = (\text{Actual Price} - \text{Standard Price}) \times \text{Actual Quantity Purchased} \][/tex]
[tex]\[ \text{Standard Price} = \$1.38 \, \text{per yard} \][/tex]
[tex]\[ \text{Actual Price} = \$1.41 \, \text{per yard} \][/tex]
[tex]\[ \text{Actual Quantity Purchased} = 18,300 \, \text{yards} \][/tex]
[tex]\[ \text{DMPV} = (\$1.41 - \$1.38) \times 18,300 = \$0.03 \times 18,300 = \$549 \, \text{Unfavorable} \][/tex]
2. Direct Material Quantity Variance (DMQV)
[tex]\[ \text{DMQV} = (\text{Actual Quantity Used} - \text{Standard Quantity Allowed}) \times \text{Standard Price} \][/tex]
[tex]\[ \text{Standard Quantity Allowed}[/tex] = [tex]\text{Standard Quantity per Unit}[/tex] [tex]\times[/tex] Actual Output}
Standard Quantity per Unit = 20 [tex]\text{yards/unit}[/tex]
Actual Output = 530 , [tex]\text{units}[/tex]
[tex]\[ \text{Standard Quantity Allowed} = 20 \times 530 = 10,600 \, \text{yards} \][/tex]
[tex]\[ \text{Actual Quantity Used} = 9,800 \, \text{yards} \][/tex]
[tex]\[ \text{DMQV} = (9,800 - 10,600) \times \$1.38 = (-800) \times \$1.38 = -\$1,104 \, \text{Favorable} \][/tex]
3. Direct Labor Rate Variance (DLRV)
[tex]\[ \text{DLRV} = (\text{Actual Rate} - \text{Standard Rate}) \times \text{Actual Hours Worked} \][/tex]
[tex]\[ \text{Standard Rate} = \$9.00 \, \text{per hour} \][/tex]
[tex]\[ \text{Actual Rate} = \$9.18 \, \text{per hour} \][/tex]
[tex]\[ \text{Actual Hours Worked} = 2,400 \, \text{hours} \][/tex]
[tex]\[ \text{DLRV} = (\$9.18 - \$9.00) \times 2,400 = \$0.18 \times 2,400 = \$432 \, \text{Unfavorable} \][/tex]
4. Direct Labor Efficiency Variance (DLEV)
[tex]\[ \text{DLEV} = (\text{Actual Hours Worked} - \text{Standard Hours Allowed}) \times \text{Standard Rate} \][/tex]
[tex]\[ \text{Standard Hours Allowed}[/tex] =[tex]\text{Standard Hours per Unit}[/tex] [tex]\times[/tex] Actual Output
Standard Hours per Unit= 4 hours/unit
Actual Output} = 530units
Standard Hours Allowed = 4 ×530 = 2,120 hours
Actual Hours Worked = 2,400hours
DLEV = (2,400 - 2,120) × $9.00 = 280 × $9.00 = $2,520 Unfavorable
Blue Co. has a patent on a communication process. The company has amortized the patent on a straight-line basis since 2014, when it was acquired at a cost of $36 million at the beginning of that year. Due to rapid technological advances in the industry, management decided that the patent would benefit the company over a total of six years rather than the nine-year life being used to amortize its cost. The decision was made at the end of 2018 (before adjusting and closing entries). What is the appropriate patent amortization expense in 2018?
Answer:
Appropriate patent amortization expense = $10 million
Explanation:
As per the data given in the question,
Annual amortization expense = Cost ÷ Time
= $36 ÷ 9
= $4 million
Year 2018 Amortization Expense 4 Years = $4 million × 4
= $16 million
Unamortized cost = $36 million - $16 million
= $20 million
Year 2018 Amortization expense 4 years = $20 million ÷ 2
= $10 million
uses job order costing to measure and track product costs. Raleigh has determined that machine hours drive its manufacturing overhead costs. During the month of June, the following data were available for Product #95: Direct labor 350 hours at $10 per hour Direct materials 40 square yards at $25 per yard Machine hours used 1,000 hours If total manufacturing overhead costs during the month totaled $100,000 when a total of 25,000 machine hours were used, what will be the total manufacturing cost of Product #95?
Answer:
Allocated MOH= $4,000
Explanation:
Giving the following information:
Machine hours used 1,000 hours
If total manufacturing overhead costs during the month totaled $100,000 when a total of 25,000 machine hours were used
First, we need to calculate the estimated overhead rate:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 100,000/25,000= $4 per machine hour
Now, we can allocate overhead to Product 95:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 4*1,000= $4,000
MC Qu. 93 Schrank Company is trying to decide how... Schrank Company is trying to decide how many units of merchandise to order each month. The company's policy is to have 25% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 37,000 units, 27,000 units, and 47,000 units, respectively. How many units must be purchased in September
Answer:
Units to be purchased in September = 32,000 units
Explanation:
The units to be be purchased = Sales for the current month + closing inventory - opening inventory
Closing inventory for September = 25% × October sales
= 25% × 47,000 = 11,750
Opening inventory in September = closing inventory of August
Closing inventory of August =25% × September sales
= 25% × 27,000 = 6750
Units to be purchased i September =
27,000 +11,750 - 6,750 = 32,000 units
Tell Her I Said So, Ltd. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. Inputs Standard Quantity or Hours per Unit of Output Standard Price or Rate Direct materials 4.2 grams $ 2.95 per gram Direct labor 1.25 hours $ 10.00 per hour Variable manufacturing overhead 1.25 hours $ 4.00 per hour The company planned to produce 10,800 units of output during June and has reported the following actual results for the product for June: Actual output 11,250 Units Raw materials purchased/used 46,000 grams Actual price of raw materials $ 3.05 per gram Actual direct labor-hours 16,875 Hours Actual direct labor rate $ 9.00 per hour Actual variable overhead rate $ 4.50 per hour Assume all of the materials purchased was used during the month to produce the 11,250 units. Calculate: a. The DM activity variance b. The DM spending variance c. The DM price variance d. The DM quantity variance
Answer:
Explanation:
Given details:
Standard Quantity ()SQ = Expected Consumption for Actual output=4.2 gms p.u of output
Standard price p.u of material consumed (SP)= $2.95 per gram
The actual quantity of material consumed(AQ)=46000 grams
Actual price p.u of material consumed(AP)= $ 3.05 per gram
Purchase Quantity (PQ)=46000 grams
Standard Hours (SH)=Expected time for Actual output=1.25 hours p.u
Actual Rate per hour (AR)=$ 9 ph
Actual hours paid for (AH)=16875 hours
Standard rate ph (SR)=$10 ph
a Direct material Activity variance=SQXSP-BQXSP
= (11250X4.2X2.95)-(10800X4.2X2.95)
= $5575.5
b Direct Material Spending Variance=AQXAP-AQXSP
= (46000 X 3.05)-(46000 X 2.95)
= 140300-135700
= $ 4600
c Direct Material Price Variance=AQXSP-AQXAP
= (46000 X 2.95)-(46000 X 3.05)
= 135700 -140300
= $ 4600
d Direct Material Quantity Variance=SQXSP-AQXSP
= (11250 X4.2 X2.95)-(46000 X 2.95)
=139387.5-135700
= $3687.5
Wilcox Electronics uses sales journal, purchases journal, cash receipts journal, cash payments journal, and general journal. Identify the journal in which each transaction should be recorded. a. Sold merchandise on credit. e. Sold merchandise for cash. b. Purchased shop supplies on credit. f. Purchased merchandise on credit. c. Paid an employee’s salary in cash. g. Purchased inventory for cash. d. Borrowed cash from the bank. h. Paid cash to a creditor. (Page 278).
Each transaction is to be recorded in a specific journal: Sales Journal for selling merchandise on credit, Purchases Journal for buying supplies or merchandise on credit, Cash Payments Journal for paying an employee's salary, buying inventory, or paying a creditor all in cash, General Journal for borrowing cash, and Cash Receipts Journal for selling merchandise for cash.
Explanation:The transactions in the question should be recorded in the following journals:
Sold merchandise on credit: This would be recorded in the Sales Journal.Purchased shop supplies on credit: This would be recorded in the Purchases Journal.Paid an employee’s salary in cash: This would go in the Cash Payments Journal.Borrowed cash from the bank: This would be recorded in the General Journal.Sold merchandise for cash: This would be recorded in the Cash Receipts Journal.Purchased merchandise on credit: This should be logged in the Purchases Journal.Purchased inventory for cash: This would go in the Cash Payments Journal.Paid cash to a creditor: This would be recorded in the Cash Payments Journal.Learn more about Journal Entries here:https://brainly.com/question/33762471
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How do insurance companies make money
Answer: They make money from monthly payments by customers.
Explanation:
Insurance companies make money primarily from insurance premiums paid by their clients and from investment income by investing unused funds. Actuaries help predict claims and set premium rates to ensure profits. These companies need to balance providing affordable premiums with high enough rates to cover potential claims and generate profits.
Insurance companies generate revenue through two main sources: insurance premiums and investment income. Clients pay premiums in exchange for coverage, which collectively allows the insurer to negotiate lower service rates and cover claims.
Actuaries within these companies predict possible claims based on historical patterns and set premium rates that cover these claims while still ensuring profitability.
Beyond premiums, insurers invest the funds they accumulate — that aren't immediately needed to pay out claims — in safe, liquid assets. These investments must be readily accessible, so they are typically quite conservative. However, this investment strategy still yields returns, contributing additional revenue to the insurance company.
Despite careful planning, unexpected events like natural disasters can result in substantial losses for insurance companies. Nevertheless, adequately set premiums and investment strategies generally let an insurance company cover its losses, pay out dividends to shareholders, and maintain a profitable business model.
Tim's gross pay for this month is $ 9 comma 050. His gross yearminustominusdate pay, prior to this month, totaled $ 113 comma 000. What is the amount of FICA tax withheld from Tim's pay for this month? (Assume an OASDI rate of 6.2%, applicable on the first $118,500 earnings, and a Medicare rate of 1.45%, applicable on all earnings. Do not round any intermediate calculations, and round your final answer to the nearest cent.)
Answer:
Total FICA Tax withheld $ 472.23
Explanation:
FICA Tax is comprised of OASDI rate of 6.2%, and a Medicare rate of 1.45%.
Given
Taxable Earnings $118,500
Earned Pay $ 113, 000
Calculated Data
Current Taxable Income $ 5,500 ( $118,500- $ 113, 000)
OASDI rate of 6.2%, is applicable on $ 5,500
A Medicare rate of 1.45%, is applicable on gross pay $ 9,050
Working
OASDI Tax= 6.2 % of $ 5,500= $ 341
Medicare tax = 1.45% of $ 9,050= $ 131.225= $ 131.23
Total FICA Tax withheld = $ 341+$ 131.23=$ 472.23
Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: Year 1 2 3 4 5 FCF ($ million) 53 68 78 75 82 After 5 years, the free cash flows are expected to grow at the industry average of 4% per year. Using the discounted free cash flow model and a weighted average cost of capital of 14%: Estimate the enterprise value of Heavy Metal. If Heavy Metal has no excess cash, debt of $300 million, and 40 million shares outstanding, estimate its share price.
Answer:
Enterprise Value of Heavy Metal =$820
Share price of Heavy Metal = $9.53
Explanation:
Base on the scenario been describe in the question, we can use the following method to solve the given problem.
a)Terminal Value
= 82 / (14% – 4%) = $820
Enterprise Value of Heavy Metal
Terminal Value= 53 / 1.14 + 68/1.14^2 + 78 / 1.14^3 + (75 + 820) / 1.14^4 =$681
b) Share price of Heavy Metal
=(Enterprise value + cash – Debt) / Shares outstanding
Share price of Heavy Metal= (681 + 0 – 300)/40 = $9.53
To estimate the enterprise value and share price of Heavy Metal Corporation, we use the discounted free cash flow model and a weighted average cost of capital (WACC) of 14%. The enterprise value is calculated by finding the present value of the projected free cash flows over the next five years, plus a perpetual growth rate applied to the last cash flow. To calculate the share price, we subtract the debt from the enterprise value and divide by the number of shares outstanding.
Explanation:To estimate the enterprise value of Heavy Metal Corporation, we will calculate the present value of the projected free cash flows. In this case, we have free cash flows for the first five years, and then a perpetual growth rate of 4% is applied to the last cash flow. Using the discounted free cash flow model and a weighted average cost of capital (WACC) of 14%, we can calculate the present value of each cash flow. Adding these present values together will give us the enterprise value.
To estimate the share price, we need to subtract the debt from the enterprise value and divide by the number of shares outstanding. In this case, the debt is $300 million and there are 40 million shares outstanding. Dividing the enterprise value minus the debt by the number of shares gives us the share price.
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Onshore Bank has $20 million in assets with risk-adjusted assets of $10 million. CET1 capital is $500,000, additional Tier I capital is $50,000, and Tier II capital is $400,000. How will each of the following transactions affect the value of the CET1, Tier I, and total capital ratios? What will the new values of each ratio be? a. The bank repurchases $100,000 of common stock with cash. b. The bank issues $2 million of CDs and uses the proceeds to issue category 1 mortgage loans with a loan-to-value ratio of 80 percent.
Answer:
Explanation:
If the bank repurchases $100,000 0f the common stock with cash, CET 1capitaldecreases to $400,000 ($500,000 - $100,000).
The Tier I capital decreases to $450,000 ($500,000 + $50,000 - $100,000).
The Tier II capital is $400,000.
The total capital decreases to $850,000 ($400,000+$50,000+$400,000).
We need to calculate the new ratios
CET 1 ratio = decreased CET 1 capital/risk-adjusted assets
= $400,000/$10,000,000
= 4.00%
Tier 1 ratio = decreased Tier 1 capital/risk-adjusted assets
= $450,000/$10,000,000 = 4.50%
Total capital ratio = decreased total capital/risk-adjusted assets
= $850,000/$10,000,000
= 8.50%
b) The uninsured mortgages have a risk weight of 35%.
Hence, the risk-weighted assets increase to $10,700,000 ($10,000,000 +$2,000,000*35%).
Hence, we have to calculate the new ratios.
CET 1 ratio = decreased CET 1 capital/risk-adjusted assets
= $500,000/$10,700,000
= 4.67%
Tier 1 ratio = decreased Tier 1 capital/risk-adjusted assets
= $550,000/$10,000,000
= 5.14%
Total capital ratio = decreased total capital/risk-adjusted assets
= $950,000/$10,000,000
= 8.88%
. Wholesale Banners pays $ 300 comma 000 cash for a group purchase of land, building, and equipment. At the time of acquisition, the land has a market value of $ 33 comma 000, the building $ 264 comma 000, and the equipment $ 33 comma 000. Journalize the lump-sum purchase.
Answer:
Land $30,000
building $240,000
Equipment $30,000
To Cash $300,000
(Being the lump sum purchase is recorded)
Explanation:
For journalizing the lump sum purchase entry first we need to compute the allocated cost assigned to each asset which is shown below
(A) (B) (A × B)
Asset Market value Percentage of total value Purchase price Assigned value
Land $33,000 10% $300,000 $30,000
Building $264,000 80% $300,000 $240,000
Equipment $33,000 10% $300,000 $30,000
Total value $330,000
Now the journal entry is
Land $30,000
building $240,000
Equipment $30,000
To Cash $300,000
(Being the lump sum purchase is recorded)
We simply debited the assets as it increased the asset account and at the same time the cash is paid so it decreased the asset account
On January 1, 2021, Tru Fashions Corporation awarded restricted stock units (RSUs) representing 15 million of its $1 par common shares to key personnel, subject to forfeiture if employment is terminated within three years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. On the grant date, the shares had a market price of $6.00 per share.1. Determine the total compensation cost pertaining to the RSUs.2. Prepare the appropriate journal entry to record the award of RSUs on January 1, 2018.3. Prepare the appropriate journal entry to record compensation expense on December 31, 2018.4. Prepare the appropriate journal entry to record compensation expense on December 31, 2019.5. Prepare the appropriate journal entry to record compensation expense on December 31, 2020.6. Prepare the appropriate journal entry to record the lifting of restrictions on the RSUs and issuing shares at December 31, 2020.
Answer and Explanation:
1. The Computation of compensation expenses is shown below:-
Compensation cost = Restricted stock units × Market price
= 15 million × $6.00
= $90.00 million
The Journal entry is shown below:-
2. No Journal entry is required
3. Compensation expenses Dr, $30 million
(15 million × $6.00) ÷ 3))
To paid in capital-restricted stock $30 million
(Being compensation expense is recorded)
4. Compensation expenses Dr, $30 million
(15 million × $6.00) ÷ 3))
To paid in capital-restricted stock $30 million
(Being compensation expense is recorded)
5. Compensation expenses Dr, $30 million
(15 million × $6.00) ÷ 3))
To paid in capital-restricted stock $30 million
(Being compensation expense is recorded)
6. Paid in capital-restricted stock $105 million
To common stock $15 million
To paid in capital - excess of par $90 million
(15 million × $6.00)
(Being common stock issued at grant date is recorded)