Using the high-low method, the variable cost per gross-ton mile for Continental Railroad is $1.775, and the total fixed cost is $17,937,500. This was calculated by identifying the highest and lowest activity levels and their associated costs.
Explanation:To determine the variable cost per gross-ton mile and the total fixed cost using the high-low method from the operating data provided by Continental Railroad, we identify the months with the highest and lowest activity levels, which are April (highest) and February (lowest). The difference in gross-ton miles between these months is 9,500,000 - 2,500,000 = 7,000,000 gross-ton miles. Similarly, the difference in transportation costs is $34,800,000 - $22,375,000 = $12,425,000.
To calculate variable cost per gross-ton mile, divide the difference in costs by the difference in gross-ton miles: $12,425,000 ÷ 7,000,000 = $1.775. Hence, the variable cost is $1.775 per gross-ton mile. Next, to find the fixed costs, we calculate the total variable cost at the low activity level (February) by multiplying the variable cost per gross-ton mile by February's gross-ton miles: $1.775 * 2,500,000 = $4,437,500. Subtract this amount from the total cost of February to get the total fixed cost: $22,375,000 - $4,437,500 = $17,937,500. Therefore, the total fixed cost is $17,937,500.
The variable cost per gross-ton mile is $1.75, and the total fixed cost is $18,000,000.
To estimate the fixed and variable components of transportation costs using the high-low method, we need to identify the months with the highest and lowest activity levels (gross-ton miles). We then use these data points to calculate the variable cost per gross-ton mile and the total fixed cost.
Step 1: Identify the High and Low Activity Levels
From the given data:
Highest activity: May (12,750,000 gross-ton miles, $40,312,500 cost)
Lowest activity: February (2,500,000 gross-ton miles, $22,375,000 cost)
Step 2: Calculate the Variable Cost per Gross-Ton Mile
The high-low method formula for the variable cost per unit is:
[tex]\[ \text{Variable Cost per Gross-Ton Mile} = \frac{\text{Cost at High Activity} - \text{Cost at Low Activity}}{\text{High Activity Level} - \text{Low Activity Level}} \][/tex]
Substituting the values:
[tex]\[ \text{Variable Cost per Gross-Ton Mile} = \frac{40,312,500 - 22,375,000}{12,750,000 - 2,500,000} \][/tex]
[tex]\[ \text{Variable Cost per Gross-Ton Mile} = \frac{17,937,500}{10,250,000} \][/tex]
[tex]\[ \text{Variable Cost per Gross-Ton Mile} = 1.75 \][/tex]
Step 3: Calculate the Total Fixed Cost
To find the fixed cost, we use the total cost equation at either the high or low activity level:
[tex]\[ \text{Total Cost} = (\text{Variable Cost per Gross-Ton Mile} \times \text{Gross-Ton Miles}) + \text{Fixed Cost} \][/tex]
Using the high activity level data:
[tex]\[ 40,312,500 = (1.75 \times 12,750,000) + \text{Fixed Cost} \]\[ 40,312,500 = 22,312,500 + \text{Fixed Cost} \]\[ \text{Fixed Cost} = 40,312,500 - 22,312,500 \]\[ \text{Fixed Cost} = 18,000,000 \][/tex]
Steady As She Goes Inc. will pay a year-end dividend of $3.40 per share. Investors expect the dividend to grow at a rate of 5% indefinitely.
a. If the stock currently sells for $34.00 per share, what is the expected rate of return on the stock?
b. If the expected rate of return on the stock is 16.5%, what is the stock price?
Answer:
a.
15%
b.
29.57
Explanation:
The price of a stock whose dividends are expected to grow at a constant rate forever can be calculated using the constant growth model of the dividend discount model approach. The DDM values the stock based on the preset value of the expected future dividends from the stock. The price of the stock today under this model is,
P0 = D1 / r - g
Where
P0 = Price of stock
D1 = Future Dividend
r = Expected rate of return
g = Growth rate
a.
As we have the price of the price of the stock, we need to calculate the expected rate of return by extracting the formula.
r = (D1 / P0) + g
As per given data
P0 = Price of stock = $34
D1 = Future Dividend = $3.40
g = Growth rate = 5% = 0.05
Placing Values in the formula
r = ( $3.4 / 34 ) + 0.05
r = 0.15 = 15%
b.
As per given data
D1 = Future Dividend = $3.40
g = Growth rate = 5% = 0.05
r = Expected rate of return = 16.5%
Placing Values in the formula
P0 = D1 / r - g
P0 = $3.40 / (16.5% - 5%)
P0 = $29.57
Sheridan Company borrows $43,400 on July 1 from the bank by signing a $43,400, 8%, one-year note payable. (a) Prepare the journal entry to record the proceeds of the note. (b) Prepare the journal entry to record accrued interest at December 31, assuming adjusting entries are made only at the end of the year. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
Answer:
Sheridan Company
Journal Entries
Sr. No Particulars Debit Credit
1 Cash $ 43,400
Notes Payable $ 43,400
Sheridan Company borrows $43,400 on July 1 from the bank by signing a $43,400, 8%, one-year note payable.
2 Interest Expense $ 1736
Interest Payable $ 1736
Recorded Interest Accrued for 6 months
Explanation:
Calculation of Interest Payable
$ 43,400 * 8%= 3472
For 6 months = $ 3472/2= $ 1736
Notes Payable is a liability and interest Payable is also a liability .The Notes Payable will be due in one years time that is on 30 th June of the next year. From July to December there are 6 months so interest is calculated for 6 months.
Sheridan records a debit of $43,400 to Cash and a credit of $43,400 to Notes Payable when the note is issued. At the end of the year, Sheridan must also recognize $1,736 of accrued interest with a debit Interest Expense and a credit credit-to-interest payable.
Explanation:The subject deals with the concept of note payable and interest accrual in the field of Accounting. Let's calculate the interest and prepare the journal entries.
Proceeds of the note: When Sheridan borrows money, it will receive cash from the bank and have a note payable (liability). The journal entry to record this transaction will be:Debit: Cash $43,400
Credit: Notes Payable $43,400
Debit: Interest Expense $1,736
Credit: Interest Payable $1,736
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Courtney Corporation is considering two alternative investment proposals with the following data: Proposal X Proposal Y Investment $ 812,500 $ 390,000 Useful life 8 years 8 years Estimated annual net cash inflows for 8 years $ 125,000 $ 78,000 Residual value $ 40,000 $ 0 Depreciation method Straight-line Straight-line Required rate of return 14% 10% How long is the payback period for Proposal Y?
Answer:
5 years
Explanation:
As per given data
Proposal X Proposal Y
Investment $812,500 $390,000
Useful life 8 years 8 years
Estimated annual net cash inflows $125,000 $78,000
Residual value $40,000 $0
Depreciation method Straight-line Straight-line
Required rate of return 14% 10%
Payback period is the time in which a project returns back the initial investment in the form of net cash flow.
Proposal Y
Initial Investment = $390,000
Annual net cash inflows = $78,000
Payback period = Initial Investment / Annual net cash inflows
Payback period = $390,000 / $78,000
Payback period = 5 years
Purple, Inc, a domestic corporation, owns 80% of Blue, Ltd., a foreign corporation and Yellow, Inc, a domestic corporation. Purple also owns 50% of Green, Inc, a domestic corporation. Purple receives no distributions from any of these corporations. Which of these entities' net income are included in Purple's Federal tax return for the current year assuming Purple elects to include all eligible entities in its consolidated Federal income tax return?
a. Purple, Blue, Yellow, and Green.
b. Purple, Blue, and Yellow.
c. Purple, Blue, and Green.
d. Purple and Yellow.
Which one of the following is true? A. Most of the U.S. currency in existence circulates outside U.S. borders. B. Traveler's checks are not considered to be money because they are not valid unless signed. C. Balances in money market deposit accounts are counted in M1 but are not included in M2. D. Transaction deposits are counted in M2 but are not included in M1.
Answer:
A) Most of the U.S. currency in existence circulates outside U.S. borders.
Explanation:
Both the Secretary of the Treasury and the Federal Reserve estimate that around 60% of all US dollar bills are held in foreign countries.
The US dollar is considered the strongest and most stable currency in the world. That is the reason why so many governments use the US dollar as a reserve of value. Some foreign countries even adopted the US dollar as their own currency, e.g. El Salvador, Ecuador, Guam, Zimbabwe, etc.
It is true is that most of the U.S. currency in existence circulates outside U.S. borders.
In international trade, the United States dollars is the currency which forms the basis of trade for majority of country in the entire continent.
The US Dollars is used in international tarde because of the integrity and stability its offers in the foreign market
The Secretary of the Treasury and the Federal Reserve estimated that more then 60% of US dollar bills are circulating outside its borders.
Therefore, the Option A is correct because It is true is that most of the U.S. currency in existence circulates outside U.S. borders.
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enn Co.'s allowance for uncollectible accounts was $190,000 at the end of 2020 and $180,000 at the end of 2019. For the year ended December 31, 2020, Nenn reported bad debt expense of $31,000 in its income statement. What amount did Nenn debit to the appropriate account in 2020 to write off actual bad debts?
Answer:
$21,000
Explanation:
The computation is shown below:
Given that
Beginning balance of Allowance for Uncollectible = $180,000
Ending balance of Allowance for Uncollectible = $190,000
Bad debt exp reported = $31,000
Now considering the above information,
The Write off of actual bad debt is
= $180,000 + $31,000 - $190,000
= $21,000
We simply applied the above formula
During the month of March, Harley's Computer Services made purchases on account totaling $46,700. Also during the month of March, Harley was paid $12,800 by a customer for services to be provided in the future and paid $38,500 of cash on its accounts payable balance. If the balance in the accounts payable account at the beginning of March was $78,900, what is the balance in accounts payable at the end of March?
Answer:
$87,100
Explanation:
The calculation of balance in accounts payable is shown below:-
Balance in accounts payable = Beginning accounts payable + Purchases - Payments of accounts payable
= $78,900 + $46,700 - $38,500
= $125,600 - $38,500
= $87,100
So, for computing the balance in accounts payable we simply applied the above formula and here we will not consider the $12,800 as it is the nature of advance.
Final answer:
The balance in accounts payable at the end of March is $87,100, after accounting for the beginning balance, purchases made on account, and payments made.
Explanation:
To calculate the balance in accounts payable at the end of March for Harley's Computer Services, we need to take into account the beginning balance, the purchases made on account, and the payments made on the accounts payable balance. At the beginning of March, the balance was $78,900. During March, purchases on account added $46,700 to this balance, and payments of $38,500 reduced it.
Here's the calculation:
Beginning balance: $78,900
Purchases on account: +$46,700
Payments on accounts payable: -$38,500
Using these figures, the ending balance can be calculated as follows: Accounts payable at end of March: $78,900 + $46,700 - $38,500 = $87,100.
While working at a busy law firm, Bruce is using Skype to meet with a client in another state. Although Bruce is trying to concentrate, he is also replying to an important text on his phone and is handed an incoming fax by his assistant. Bruce takes notes on the meeting, but he notices later that several important details are missing. Bruce probably missed those details as a result of __________________ during his client meeting.
Final answer:
Bruce likely experienced absentmindedness because he was multitasking during the client meeting, causing him to miss important details.
Explanation:
Bruce probably missed those details as a result of absentmindedness during his client meeting. Absentmindedness is a lapse in memory caused by breaks in attention or when our focus is directed elsewhere. This can occur when someone is attempting to do multiple tasks at once and does not give their undivided attention to a single important task, such as during a client meeting when important information is being discussed.
In such situations, being always-plugged-in and trying to multitask, like replying to texts or dealing with incoming faxes while also engaging in a Sky.pe call, can cause one to miss critical details or be inattentionally blind to important aspects of their environment.
Under the gross method of accounting for purchases:
a. The purchase of inventory is recorded for its full amount.
b. The amount paid for inventory during the discount period is the full amount of the purchase minus the discount.
c. The amount paid for inventory after the discount period is the full amount of the purchase.
Answer:
all the options are correct:
a. The purchase of inventory is recorded for its full amount. b. The amount paid for inventory during the discount period is the full amount of the purchase minus the discount. c. The amount paid for inventory after the discount period is the full amount of the purchase.Explanation:
A typical journal entry to record the purchase of merchandise would be:
January 2, 2020, merchandise purchased on credit, terms 2/10, n/30.
Dr Merchandise inventory 10,000
Cr Accounts payable 10,000
if the invoice is paid within the discount period:
January 8, 2020, invoice is paid
Dr Accounts payable 10,000
Cr Cash 9,800
Cr Purchase discounts 200
if the invoice is not paid within the discount period:
January 18, 2020, invoice is paid
Dr Accounts payable 10,000
Cr Cash 10,000
Ron, the manager of a shipping company, introduces a set of communications, activities, and facilities designed to change health-related behaviors in ways that reduce health risks and subsequent medical costs. The program aims at specific health risks, such as high blood pressure, high cholesterol levels, smoking, and obesity. Based on these offerings, Ron has introduced a(n) _____.
Answer:
Employee wellness program
Explanation:
Employee welfare program insurance is a facility that most employers provide for their employee. This program is offered by employers to protect employees from health risks such as downgrade or smoking and drinking. as given in question, Ron is trying to reduce the health risks of his employees through communication. Therefore, we can conclude that Ron has introduced an employee welfare program.Paragon comma Inc.'s trial balance shows $ 255 comma 000 face value of bonds with a discount balance of $ 1 comma 200. The bonds mature in 10 years. How will the bonds be presented on the balance sheet? A. Bonds payable $ 255 comma 000 will be listed as a long-term liability. B. Bonds payable $ 255 comma 000 will be listed as a long-term liability. A $ 1 comma 200 discount on bonds payable will be listed as a contra current liability. C. Bonds payable $ 253 comma 800 (net of $ 1 comma 200 discount) will be listed as a long-term liability. D. Bonds payable $ 255 comma 000 will be listed as a long-term liability. A $ 1 comma 200 discount on bonds payable will be listed as a current liability.
Answer:
The correct option is C,Bonds payable $ 253 comma 800 (net of $ 1 comma 200 discount) will be listed as a long-term liability.
Explanation:
Upon issuance of the bonds,bonds payable would be credited with $255,000,the face value of the bond while discounts on bonds payable is debited with $1,200,with cash proceeds of $253,800($255,000-$1200) debited to cash accounts.
The $1,200 debited is a contra liability,the same way accumulated depreciation is a contra asset going against the non-current asset account in the balance.
By being contra liability,it effectively reduces bonds payable balance to $253,800,as a result the bonds is shown as a long term liability in the balance sheet
Tej Dhakar's company wants to establish kanbans to feed a newly established work cell. The following data have been provided. Note: This is a level production system. Daily demand 150 units Production lead time 3.00 days Safety stock 1.50 days Kanban size 50 units How many kanbans are needed? nothing kanbans (round your response to the nearest whole number).
Answer:
13.5
Explanation:
The calculation of Number of kanbans needed is shown below:-
Demand during lead time = Daily demand × Production lead time
= 150 × 3.00
= 450
Safety stock = Safety stock × Daily demand
= 1.50 × 150
= 225
Number of kanbans needed = (Demand during lead time + safety stock) ÷ Kanban size
= (450 + 225) ÷ 50
= 675 ÷ 50
= 13.5
So, for calculating the number of Kanbans needed we simply applied the above formula.
Jallouk Corporation has two different bonds currently outstanding. Bond M has a face value of $20,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $900 every six months over the subsequent eight years, and finally pays $1,300 every six months over the last six years. Bond N also has a face value of $20,000 and a maturity of 20 years; it makes no coupon payments over the life of the bond. The required return on both these bonds is 5.4 percent compounded semiannually. What is the current price of Bond M and Bond N
The current price of Bond M can be calculated by finding the present value of each cash flow using the required return rate, and then summing them up. The current price of Bond N is equal to its face value.
Explanation:To calculate the price of Bond M, we need to calculate the present value of each cash flow and sum them up. The cash flows consist of no payments for the first six years, $900 every six months for the next eight years, and $1,300 every six months for the last six years. We discount each cash flow using the required return rate, which is 5.4% compounded semiannually.
Calculating the present value of no payments for the first six years:PV = 0 (since there are no cash flows)Calculating the present value of $900 every six months for the next eight years:Number of periods = 8 (16 semiannual periods)Required return rate = 5.4% (0.054/2)PV = $900 * ((1 - (1 + 0.054/2)^(-16)) / (0.054/2))Calculating the present value of $1,300 every six months for the last six years:Number of periods = 6 (12 semiannual periods)Required return rate = 5.4% (0.054/2)PV = $1,300 * ((1 - (1 + 0.054/2)^(-12)) / (0.054/2))Summing up all the present values:Current price of Bond M = PV(no payments) + PV($900 payments) + PV($1,300 payments)To calculate the price of Bond N, since it makes no coupon payments over the life of the bond, its price is equal to its face value. Therefore, the current price of Bond N is $20,000.
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A major source of chicken feed in the United States is anchovies, small fish that can be scooped out of the ocean at low cost. Every 7 years, when the anchovies disappear to spawn, producers must turn to grain, which is more expensive, to feed their chickens. What is likely to happen to the cost of chicken when the anchovies disappear? A. The cost of chicken will increase. B. The cost of chicken will not change. C. The cost of chicken will fall. D. The cost of chicken is unrelated to the cost of anchovies. What is a substitute for chicken? A. Chicken feed B. Fish C. Turkey D. Both B and C. How are the markets for these substitutes affected when the anchovies disappear?
Final answer:
The cost of chicken is likely to increase when anchovies disappear because feed costs rise, leading to higher consumer prices. Fish and turkey, as substitutes for chicken, may see increased demand and potentially higher prices as a result.
Explanation:
When anchovies, a major source of chicken feed, disappear to spawn every 7 years and producers must turn to more expensive grain to feed their chickens, it is likely that the cost of chicken will increase. This is because the cost of production for chicken farmers goes up, which typically leads to higher prices for consumers.
A substitute for chicken can be other sources of animal protein such as fish and turkey. When anchovies disappear, the markets for these substitutes, fish and turkey, are likely to see increased demand, as consumers may turn to these alternatives if chicken becomes more expensive. This increased demand could potentially lead to higher prices in these substitute markets as well.
If a prospective employee is not offered his/her reservation utility or reservation wage, then he/she will: Question 6 options: tend to look for another job or withdraw from the labor market. accept the job because a wage below the reservation utility is very attractive. seek a larger fringe benefit package. use the job as the basis for a career, assuming that wages will increase beyond the marginal revenue product over time.
Answer:
If a prospective employee is not offered his/her reservation utility or reservation wage, then he/she will use the job as the basis for a career.
Explanation:
Reservation Utility or wage for an employee is the minimum level of utility guaranteed by his/her contract of employment before endorsement.
If a prospective employee is not offered his/her reservation utility or reservation wage, it could be because, He/she is an intern.
A skilled skilled professional with years of experience would scarcely experience this issue.
Therefore if an entry level prospective employee or intern is faced with this scenario, he/she could spin it to their advantage by using the job as the basis for a career.
Final answer:
A prospective employee who isn't offered a reservation wage will likely continue the job search or exit the labor market. The reservation wage is the minimum wage a worker will accept, including factors beyond pay. This baseline determines whether a job offer is acceptable or if the search for employment should continue.
Explanation:
If a prospective employee is not offered his/her reservation utility or reservation wage, then he/she will tend to look for another job or withdraw from the labor market. A reservation wage is the lowest wage that an unemployed worker would accept for a job, encompassing not just financial compensation but also other job characteristics such as working conditions and opportunities for advancement. The concept is that a potential employee will continue their job search until the offered wage meets or exceeds their reservation wage. This job search process can also be depicted using a reservation wage curve, displaying a negative relationship between the reservation wage and the duration of a person's job search, indicating that as time goes on, the individual might adjust their expectations in accordance with market conditions and personal financial pressures.
Conversely, accepting a job with a wage below one's reservation wage is unlikely as it would mean the worker is settling for less than the minimum they had determined acceptable. The reservation wage becomes a baseline for job acceptance decisions, and a worker is likely to keep looking for better opportunities if offers fall below this threshold.
with practical illustrations, discuss how managers can leverage on organizational behaviour components to maximize business success
Answer:
Through personality, leadership, Communication and culture.
Also, politics and power.
Explanation:
The concept or the behaviour that is known as or refer to as or called " organizational behaviour" can simply be defined as the way of people or workers in a particular company or organization. That is to say the way people behave in a particular organization or company.
Managers can leverage on organizational behaviour components to maximize business success through;
(1). LEADERSHIP: leadership style should go in line with the organization objectives. Leadership styles are different, it might be a style in which the leaders have to coach the workers and build relationships with workers will likely be able to get new ideas or it might be a situation in which the leader gives the directives and the workers just have to obey.
(2). COMMUNICATION: the various ways in which leaders and workers communicate in organizations is also different which include the use of technology in Communication e.g e-mails and the rest which can be used in discussion of matters in the organization. Good Communication in the company leads to more leads.
(3). CULTURE: Organizations culture are the things in which all workers must follow in their day to day interactions. Good organization cultures lead to efficiency.
Richman Co. purchased some equipment 3 years ago. The company's required rate of return is 12%, and the net present value of the project was $(900). Annual cost savings were: $10,000 for year 1; $8,000 for year 2; and $6,000 for year 3.
The amount of the initial investment was
a.
$18,316.
b.
$20,116.
c.
$20,478.
d.
$18,678.
Answer:
The correct answer is option (C) $20,478
Explanation:
Solution
Given that:
The Net present value is defined as:
Net present value
= Present value of all flow of cash discounted at the rate required of return - Initial investment
Thus,
$ - 900 = 10000/1.12 + 8000/ (1.12)^2 + 6000/(1.12)^3 - The initial investment
So,
Initial Investment = $ 19,578 + $ 900
= $ 20,478
Therefore the amount of initial investment was $20,478
The initial investment amount can be calculated by finding the present value of the cash flows and subtracting it from the net present value (NPV).
Explanation:The initial investment amount can be calculated by finding the present value of the cash flows and subtracting it from the net present value (NPV). In this case, the cost savings for each year need to be discounted back to the present value. The formula to calculate the present value of cash flows is:
PV = CF / (1 + r)^n
Where:
PV is the present valueCF is the cash flowr is the required rate of returnn is the number of yearsUsing this formula, the initial investment amount is $20,116 (option b).
Your Economics instructor assigns your class to investigate factors associated with the gross domestic product (GDP) of nations. Each student examines a different factor (such as life expectancy, literacy rate, etc.) for a few countries and reports to the class. Apparently some of your classmates do not understand Statistics very well because you know several of their conclusions are incorrect. Explain the mistakes in their statements below: a) "My correlation of -0.772 shows that there is almost no association between GDP and infant mortality rate." b) "There was a correlation of 0.44 between GDP and continent." c) "There was a very strong correlation of 1.22 between life expectancy and GDP." d) "The correlation between literacy rate and GDP was 0.83. This shows that countries wanting to increase their standard of living should invest heavily in education." e) "The correlation of 0.90 means that as GDP goes up, imports drop by 90%."
Several correlations were misinterpreted, either by associating non-numerical categories, ascribing proportions using correlation, extending correlations outside their range, misjudging the strength of correlation, or incorrectly attributing a cause-and-effect relationship.
Explanation:Each of these statements incorrectly applies correlation in a few ways:
Statement a) is incorrect since correlation value from -1 to -0.7 usually signifies a strong negative relationship, or in this case, as GDP increases, infant mortality decreases. Statement b) is incorrect because correlation cannot be applied on categorical variable. A GDP cannot be accurately correlated with a continent because continents are not numerical entities.Statement c) is incorrect as a correlation coefficient can only have values within the range of -1 to +1. Thus, a correlation of 1.22 is invalid.Statement d) though there's a strong correlation, directly implying this is causation and policy prescription may be misleading. Correlation doesn't imply causation.Statement e) is incorrect because correlation only signifies a relationship between two sets of data; it does not signify a proportionate causative effect. A correlation of 0.90 does not mean a 90% decrease in imports with an increase in GDP.Learn more about Correlation Misinterpretation here:
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Myles Manufacturing Company's accounting records reflect the following inventories: Dec. 31, 2014 Dec. 31, 2013 Raw materials inventory $620,000 $820,000 Work in process inventory 300,000 220,000 Finished goods inventory 380,000 100,000 During 2014, $900,000 of raw materials were purchased, direct labor costs amounted to $1,000,000, indirect labor costs amounted to $300,000, and manufacturing overhead was $960,000. Based upon the above information, cost of goods sold for the year is: Select one: a. $2,400,000. b. $2,380,000. c. $2,480,000. d. $2,700,000. e. $2,100,000.
Answer:
Myles Manufacturing Company
Cost of Goods Sold = $2,700,000
Explanation:
Cost of Goods Sold:
Beginning Inventory of Raw Materials = $820,000
Purchase of Materials = $900,000
Less closing inventory of Raw Materials = $620,000
Cost of Raw Materials used in production = $1,100,000
Opening WIP = $220,000
Cost of Raw Materials used in production = $1,100,000
Direct Labour = $1,000,000
Manufacturing Overhead = $960,000
Less Closing WIP = $300,000
Cost of Goods Manufactured = $2,980,000
Opening Finished Goods = $100,000
Cost of Goods Manufactured = $2,980,000
Less closing Finished Goods = $380,000
Cost of Goods Sold = $2,700,000
The effectiveness of an advertising campaign can be measured a. only after the campaign has been carried out completely and results have been tabulated. b. during the campaign to determine whether more or less funds should be allocated, but not after the campaign. c. only before the campaign begins, to prevent unnecessary expenditures. d. before, during, and after the campaign through the use of pretests, inquiries, and posttests. e. several weeks after the beginning of the campaign to determine whether the campaign is headed in the right direction.
Answer:
before, during, and after the campaign through the use of pretests, inquires and posttests.
Explanation:
Advertising campaigns can be defined as the advertisement of a product that focuses mainly on communicating a similar type of message to the potential customers. This can be achieved through different mediums inorder to create an awareness about the product.
Measurement of an effective advertising campaign is very necessary, it is used to determine how well a product will sell in the market.
The effectiveness of an advertising campaign can be evaluated by utilizing pretests, inquires and posttests to determine if the potential customers have seen the advertisement and how well they are responding to it.
The effectiveness of an advertising campaign can be measured: E) Before, during, and after the campaign through the use of pretests, inquiries, and posttests.
Here's a detailed explanation:
Before the campaign:
Pretests gauge the target audience's awareness, attitudes, and behaviors through surveys or focus groups. This helps predict campaign success and refine strategies.
During the campaign:
Ongoing inquiries assess campaign performance in real-time, including social media engagement and feedback. This enables flexible fund reallocation, strategy adjustments, and immediate response to feedback.
After the campaign:
Posttests evaluate campaign effectiveness by comparing post-campaign data to pre-campaign baselines, including sales figures, focus groups, and media impressions. This analysis offers valuable insights for improving future campaigns.
Evaluating before, during, and after the campaign provides a complete view of its impact, aiding informed decisions for future improvements.
The complete question is shown below:
The effectiveness of an advertising campaign can be measured:
A) only after the campaign has been carried out completely and results have been tabulated.
B) only before the campaign begins, to prevent unnecessary expenditures.
C) during the campaign to determine whether more or less funds should be allocated, but not after the campaign.
D) several weeks after the beginning of the campaign to determine whether the campaign is headed in the right direction.
E) before, during, and after the campaign through the use of pretests, inquiries, and posttests.
Suppose that you are considering taking out an adjustable-rate mortgage with the following terms: Amount borrowed: $350,000 Index rate: Prime Rate (Currently 2.25%) Margin: 200 basis points. Periodic cap: 1.5 percentage points Lifetime cap: 5 percentage points Amortization: 30 years If the interest rate changes at the end of every year and the prime rate increases to 2.60% during the first year, what will your monthly payment be in year 2? Assume that the lender will use monthly compounding.
Answer:
Monthly payment for year 2 is $1,782.64
Explanation:
According to the given data we have the following:
Mortgage amount .initial balance.(P) =$350,000
Initial interest rate=Prime rate + 200 basis points or 2%
2.25%+2%= 4.25%
Monthly rate 4.25%/12=0.003541666667
no of months (n)=30*12=360
To calculate the monthly payment be in year 2 we would have to use first the monthly payment formula as follows:
Monthly payment = P*i/(1-((1+i)^-n))
=350000*0.00354166667/(1-((1+0.00354166667)^-360))
=$1721.78962
Peroidic cap is 1.5%. it means rate cannot exceed 1.5% by previous adjusted rate
Interest rate for 2nd year =2.60%+2%=4.60%
increase in rate compared to previous year is not more than 1.5%. so interest rate=4.60%
Monthly rate 4.6%/12= 0.003833333333
no of months remaining (n)=29*12=348
First find closing balance at year 1
Unpaid balance at year 1 formula (P)=monthly payment *(1-((1+i)^-n))/i
1721.79*(1-((1+0.003541666667)^-288))/0.003541666667
310532.1673
Therefore, monthly payment in year 2= 310532.1673*0.0038333333/(1-((1+0.00383333333)^-288))
=1782.643774
Monthly payment for year 2 is $1,782.64
Sheffield Suppliers reported cost of goods sold for 2017 of $690,000 and retained earnings of $1,250,000 at December 31, 2017. Sheffield later discovered that its ending inventories at December 31, 2016 and 2017, were overstated by $48,000 and $64,800, respectively. Determine the corrected amounts for 2017 cost of goods sold and December 31, 2017, retained earnings. COGS Retained Earnings Corrected amounts $enter a dollar amount $enter a dollar amount
Answer:
Adjusted COGS = $706,800
Adjusted retained earnings = $1,185,200
Explanation:
Opening stock + purchases - Closing stock = Adjustment needed to COGS
- 48,000 + 0 - (-64,800) = Adjustment needed to COGS
-48,000 + 64,800 = Adjustment needed to COGS
Adjustment needed to COGS = $16,800
Adjusted COGS = $690,000 + $16,800 = $706,800
Adjusted retained earnings = $1,250,000 - 64,800 = $1,185,200
The most recent financial statements for Assouad, Inc., are shown here: Income Statement Balance Sheet Sales $3,900 Current assets $4,700 Current liabilities $860 Costs 1,900 Fixed assets 4,700 Long-term debt 3,610 Taxable income $2,000 Equity 4,930 Taxes (22%) 440 Total $9,400 Total $9,400 Net income $1,560 Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 50 percent dividend payout ratio. As with every other firm in its industry, next year's sales are projected to increase by exactly 20 percent. What is the external financing needed?
Final answer:
To calculate the external financing needed for Assouad, Inc., increase current assets, costs, and current liabilities by the sales growth of 20%, assess net income for the dividend payout policy, and deduct the increase in liabilities and retained earnings from additional assets needed. The calculation shows that Assouad, Inc. will require external financing of $2,360.
Explanation:
To determine the external financing needed for Assouad, Inc. as its sales are projected to increase by 20%, we first forecast the income statement and balance sheet entries that are proportional to sales. Since current assets, costs, and current liabilities are proportional to sales, we will increase these items by 20%.
The projected sales for next year would be $3,900 + ($3,900 * 20%) = $4,680. Accordingly, projected costs would be $1,900 + ($1,900 * 20%) = $2,280, taxable income would thus be projected at $2,400, and taxes at 22% of taxable income would be around $528. Net income would therefore be projected at $1,872. Given the 50% dividend payout, $936 will be paid out as dividends.
Now we examine the balance sheet. Projected current assets would be $4,700 + ($4,700 * 20%) = $5,640, and projected current liabilities would be $860 + ($860 * 20%) = $1,032. As long-term debt and equity are not proportional to sales, they will stay unchanged.
To find out the total external financing needed, we need to calculate the additional assets required which is the increase in current assets plus the increase in fixed assets (if any), and subtract the increase in liabilities (current liabilities here), and the retained earnings which are not paid out as dividends.
Since no new fixed assets or long-term debt/equity are being introduced according to the given information, the only external financing needed would come from covering the increased current assets that aren't financed by the increased current liabilities and retained earnings. Thus, external financing needed = ($5,640 - $1,032) - ($1,560 - $936), which is $2,984 - $624 = $2,360.
Credenza Industries is expected to pay a dividend of $ 1.55 at the end of the coming year. It is expected to sell for $ 64 at the end of the year. If its equity cost of capital is 9%, what is the expected capital gain from the sale of this stock at the end of the coming year?
Answer:
$3.87
Explanation:
Given the information:
Dividend of $ 1.55Cost of capital = 9%Selling price =$64the expected capital gain from the sale of this stock at the end of the coming year can be calculated :
= Expected selling price after a year -the stock current value
We need to find the stock current value
The current stock value is given by:
The Cost of equity = the change in market price + dividend
<=> [tex]9 \% \text { of } x=(64-x)+1.55[/tex]
<=> 1.09x = $65.55
<=> x = $60.13
=> the expected capital gain = $64 - $60.13 = $3.87
For its inspecting cost pool, Ellsworth, Inc. expected overhead cost of $400,000 and 4,000 inspections. The actual overhead cost for that cost pool was $460,000 for 5,000 inspections. The activity-based overhead rate used to assign the costs of the inspecting cost pool to products is:
A. $80 per inspection
B. $100 per inspection
C. $115 per inspection
D. $92 per inspection
Answer:
The correct answer is option B. $100 per inspection
Explanation:
Let's start by clarifying what Activity-based costing is.
This activity is one of the methods used in an organization in which its objective is to assign a cost to the activities used for the production of goods and services.
If we analyze the information we have, we know that the expected overhead cost is $ 400,000. If we divide this number by the inspections that are 4000, we will obtain the price per per inspection:
400000/4000 = 100.
Given this information we can say that the correct answer is option B.
On June 30, 2021, Mabry Corporation issued $5 million of its 8% bonds for $4.6 million. The bonds were priced to yield 10%. The bonds are dated June 30, 2021. Interest is payable semiannually on December 31 and July 1. If the effective interest method is used, by how much should the bond discount be reduced for the 6 months ended December 31, 2021?
Final answer:
The bond discount should be reduced by $30,000 for the six months ending December 31, 2021, when using the effective interest method of amortization.
Explanation:
To determine how much the bond discount should be reduced by for the six months ending December 31, 2021, we need to apply the effective interest method of amortization. Under this method, the amount of discount amortized in each period is the difference between the interest expense based on the market rate at issuance (the yield) and the actual cash interest paid. First, we calculate the interest expense for the period, which is the carrying amount of the bonds times the yield divided by 2 (because of semiannual interest). Then we subtract the actual interest paid, which is face value times the stated rate divided by 2. The difference reduces the bond discount.
Interest expense: $4.6 million x 10% x ½ = $230,000
Actual interest paid: $5 million x 8% x ½ = $200,000
Discount amortized: $230,000 - $200,000 = $30,000
The bond discount should be reduced by $30,000 for the period.
Bims Corporation uses the weighted-average method in its process costing system. The Assembly Department started the month with 2,600 units in its beginning work in process inventory that were 70% complete with respect to conversion costs. An additional 62,500 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 21,000 units in the ending work in process inventory of the Assembly Department that were 60% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Assembly Department for the month?
Answer:
Total equivalent units 56,700
Explanation:
Equivalent Units E.U) are notional whole units which represent incomplete work and are used to apportion costs between between work in progress and completed work.
To compute as
Equivalent Units = Degree of completion (%) × units
We will assume the company uses weighted average method of accounting for work-in progress.
Under the weighted average method of valuation, to account for completed units, it is assumed that the entire degree of work required is done in the period under consideration. So there is no separation of the completed units into opening inventory and fully worked.
Completed units = opening inventory + transferred in - closing inventory
= 2,600 + 62,500 - 21,000 = 44,100
Items Units Equivalent unit
Completed units 44,100 44,100× 100% = 44,100
Closing inventory 21,000 21,000 ×60% = 12,600
Total equivalent units 56,700
Indicate which of the following statements relate to financial accounting versus managerial accounting. 1. Must adhere to generally accepted accounting principles. 2. Primary users are external. 3. Past results and projected future results. 4. Reports prepared after the end of an accounting period. 5. Statements contained in annual reports. 6. Reports benefit internal users. 7. Reports come in a variety of formats, designed for the decision maker. 8. Information not disseminated to the general public. 9. Communicates information about the financial health of the company. 10. Includes information prepared for a range of decision makers within the organization.
Answer:
1. Financial accounting: must adhere to generally accepted accounting principles.
2. Managerial accounting: primary users are external.
3. Managerial accounting: past results and projected future results.
4. Financial accounting: reports prepared after the end of an accounting period.
5. Financial accounting: statements contained in annual reports.
6. Managerial accounting: reports benefit internal users.
7. Managerial accounting: reports come in a variety of formats, designed for the decision maker.
8. Managerial accounting: information not disseminated to the general public.
9. Financial accounting: communicates information about the financial health of the company. 10. Managerial accounting: includes information prepared for a range of decision makers within the organization.
Explanation:
Financial accounting is an accounting technique used for analyzing, summarizing and reporting of financial transactions like sales costs, purchase costs, payables and receivables of an organization using standard financial guidelines such as Generally Accepted Accounting Principles (GAAP). Examples of financial statements includes Balance sheet, cash-flow and income statement.
Managerial accounting also known as cost accounting is an accounting technique focused on identification, measurement, analyzing, interpretation, and communication of financial information to managers for better decisions making and pursuit of the organization's goals.
Financial accounting, aimed at external users, is linked with statements 1, 2, 4, 5, and 9. Managerial accounting, intended for internal use by the company's management, corresponds to points 3, 6, 7, 8, and 10.
Explanation:What determines which statement relates to Financial Accounting versus Managerial Accounting is their intended audience and how they are used within a company. Financial accounting relates to statements 1, 2, 4, 5, and 9. This is because it must adhere to generally accepted accounting principles (GAAP), is aimed at external users, is used in annual reports, has reports prepared after an accounting period, and is used to communicate the financial health of the company. These reports are regulated and standardized.
On the other hand, managerial accounting corresponds to statements 3, 6, 7, 8, and 10. Managerial accounting is typically used internally, has many different report formats for different decision-makers, includes past results and future projections, is not disseminated to the public, and is prepared for a variety of decision-makers within the organization. These reports are flexible and depend on the demands of the company's management.
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Mad Hatter Enterprises purchased new equipment for $358,000, terms f.o.b. shipping point. Other costs connected with the purchase were as follows: State sales tax $ 28,500 Freight costs 4,900 Insurance while in transit 730 Insurance after equipment placed in service 1,130 Installation costs 1,650 Insurance for the first year of operations 2,050 Testing 630 Required: Determine the capitalized cost of the equipment.
Answer:
$394,410
Explanation:
Data given
New equipment purchased = $358,000
State sales tax = $28,500
Freight costs = $4,900
Insurance while in transit = $730
Installation costs = $1,650
Testing = $630
The computation of capitalized cost of the equipment is shown below:-
Capitalized cost of the equipment = New equipment purchased + State sales tax + Freight costs + Insurance while in transit + Installation costs + Testing
= $358,000 + $28,500 + $4,900 + $730 + $1,650 + $630
= $394,410
Therefore for computing the capitalized cost of the equipment we simply applied the above formula.
The capitalized cost of the equipment purchased by Mad Hatter Enterprises is the sum of the purchase cost, state sales tax, freight costs, insurance during transit, installation costs, and testing, which totals to $394,410.
When calculating the capitalized cost of equipment for accounting purposes, we only include the costs necessary to acquire the equipment and prepare it for use. This means the purchase cost, any taxes paid at the time of purchase, freight and shipping costs, insurance during transit, installation costs, and any costs associated with testing and getting the equipment ready for use should be included. However, future operational costs, such as insurance after the equipment is put into service, are not capitalized.
Here is a breakdown of the costs that would be capitalized in the case of Mad Hatter Enterprises:
Equipment purchase cost: $358,000State sales tax: $28,500Freight costs: $4,900Insurance while in transit: $730Installation costs: $1,650Testing: $630The total capitalized cost is therefore the sum of these amounts:
$358,000 (purchase cost) + $28,500 (sales tax) + $4,900 (freight) + $730 (transit insurance) + $1,650 (installation) + $630 (testing) = $394,410.
Costs related to insurance after the equipment is in service and operational insurance for the first year are not capitalized but rather treated as operational expenses and expensed in the periods they are incurred.
The records of Norton, Inc. show the following for July. Standard labor-hours allowed per unit of output 1.2 Standard variable overhead rate per standard direct labor-hour $ 45 Good units produced 60,000 Actual direct labor-hours worked 73,600 Actual total direct labor $ 2,370,000 Direct labor efficiency variance $ 48,000 U Actual variable overhead $ 3,072,000 Required: Compute the direct labor and variable overhead price and efficiency variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)
Answer:
Direct labor rate variance = $162,000 U
Direct labor efficiency variance = $48,000 U
Variable overhead rate variance = $240,000 F
Variable overhead efficiency variance = $72,000 U
Explanation:
As per the data given in the question,
Direct labor efficiency variance = (Standard hour - Actual hour) × Standard rate
-$48,000 = (60,000 * 1.2 - 73,600) × Standard rate
Standard rate = -$48,000 ÷ -1,600
= 30
Direct labor rate variance = (Standard rate × Actual hour - Direct labor)
= (30 × 73,600 - $2,370,000)
= -$162,000
= $162,000 U
Direct labor efficiency variance = $48,000 U
Variable overhead rate variance = (Direct labor hour × Actual hour - actual variable overhead)
= ($45 × 73,600 -$3,072,000)
= $240,000 F
Variable overhead efficiency variance = (72,000 - 73,600) × $45
= $72,000 U