Lampshire Inc. is considering using stocks of an old raw material in a special project. The special project would require all 180 kilograms of the raw material that are in stock and that originally cost the company $2,466 in total. If the company were to buy new supplies of this raw material on the open market, it would cost $6.75 per kilogram. However, the company has no other use for this raw material and would sell it at the discounted price of $6.05 per kilogram if it were not used in the special project. The sale of the raw material would involve delivery to the purchaser at a total cost of $62 for all 180 kilograms. What is the relevant cost of the 180 kilograms of the raw material when deciding whether to proceed with the special project
Answer:
$1,153
Explanation:
The relevant of a materials that are already in stock is the higher or the resale value and the value in other use.
The resale value here represent opportunity cost- the amount that would be forgone should the material be used internally.
The value in other use is the worth of the material if they were converted for use for any other purpose. This was not given in the question and not applicable in the question
Hence the relevant cost of the material would the opportunity cost less the savings in transport cost
Cost = (180 × $6.75) - $62 = $1,153
Note that the historical cost of $2,466 is sunk cost and not relevant
Goldsmith Jewelry uses direct labor hours to apply overhead and estimated total overhead costs at $52,500 and direct labor hours at 12,500 for the second quarter. The direct labor quantity standard is 1.75 hours per unit, and the company produced 2,400 units in the second month of the second quarter. This required 4,450 direct labor hours. What value should be used for overhead applied in the total overhead variance calculation
Answer:
Explanation:
answer: $17,640
The value that should be used for overhead applied in the total overhead variance calculation is $17,640.
First step is to calculate the predetermined overhead rate
Predetermined overhead rate=Estimated overhead costs/ estimated direct labor hours
Predetermined overhead rate=$52,500/ 12,500
Predetermined overhead rate=$4.20/DLH overhead rate
Second step is to calculate Overhead applied
Overhead applied at standard hours allowed = $4.2 x 2,400 x 1.75
Overhead applied at standard hours allowed = $17,640
Inconclusion the value that should be used for overhead applied in the total overhead variance calculation is $17,640.
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Al has a tax service and accounting business in Redwood City. He decides to move to Center City, which is 150 miles away and sells his accounting practice to Able and Baker, a CPA firm. In the sales contract, he agrees that he will refrain from practicing accounting anywhere within a 20-mile radius of Redwood City for a period of two years. However, on weekends he returns to his house in Redwood City, and when clients call him, he meets with them in his home.
a. Al is in violation of the sales agreement.
b. The two-year provision is likely to be held invalid, because it is too long a period of time.
c. The agreement is invalid, because it is an illegal restraint of trade.
d. The agreement is illegal, because it is a violation of public policy.
Answer:Option(a) is correct option
Explanation:
According to the question, agreement between Al and CPA firm members suggests that Al cannot practice accounting under 20 miles of Redwood city for two years.
Even after being under contract conditions,Al tends to attend his accounting clients on weekends in his home situated in Redwood city.He is considered to be violating agreement terms because even though he is attending clients on weekends and in unofficial area ,he is still carrying out his accounting practice under 20 miles of Redwood city.Thus, sales agreement is getting breached by Al.
Other options are incorrect because two year period for refrain is not long as per agreement, agreement is not invalid and neither illegal because of public policy.Thus, the correct option is option(a).
The text discusses Captain Michael Abrashoff and how he changed his traditional management style to a more "bossless" leadership style to transform the USS Benfold’s crew of demoralized sailors into confident and inspired problem solvers to take the initiative. Some of Captain Abrashoff’s methods for becoming less of a boss and more of a leader included all of the following except:______.
a. leading by example.b. creating a climate of trust.c. generating unity.d. taking both calculated and uncalculated risks.e. communicating purpose and meaning.
Answer:
d. taking both calculated and uncalculated risks.
Explanation:
Captain Michael Abrashoff became the commander of United States Ships, USS Benfold at age thirty-six (36).
Captain Michael transited from his traditional management style to a more "bossless" leadership style, so as to transform the USS Benfold’s crew of demoralized sailors into confident and inspired problem solvers to take the initiative.
Captain Abrashoff’s approach in becoming a "bossless" (less of a boss) commander and more of a leader are;
- Leading his team by example.
- Creating a climate of trust among the USS Benfold’s crew of demoralized sailors.
- Generating unity in the crew, to foster oneness and boost their morale and team spirit.
- Communicating purpose and meaning to ensure the team work hard efficiently and effectively
Final answer:
Captain Michael Abrashoff used a team-oriented and less authoritative leadership style to transform the USS Benfold’s crew but did not use uncalculated risks as part of his methods. The correct option is (d).
Explanation:
Captain Michael Abrashoff transformed the USS Benfold's crew from demoralized sailors into confident, self-reliant problem solvers by adopting a more team-oriented and bossless leadership style.
This transition away from traditional authoritative command involved several key changes except for taking both calculated and uncalculated risks. Methods he used included leading by example, creating a climate of trust, generating unity, and effectively communicating purpose and meaning to his crew.
Leadership styles play a crucial role in the effectiveness and success of management. Abrashoff's approach was quite a shift from the authoritarian style, which focuses on command and control and assigns specific tasks with precise instructions.
His strategy was to foster teamwork and discipline, in stark contrast to laissez-faire leadership that allows group members to self-manage with very minimal guidance.
A successful sushi chain in Hong Kong spent $500,000 to conduct a study on whether to open a location in the United States. The study showed that the best place for the company to open their first location would be in Chicago. When conducting its capital budgeting analysis, how should the company account for the cost of the study when estimating the amount of the initial investment that the new store will require
When determining the initial investment for opening a new store, the sushi chain should include the cost of the study conducted. This cost is considered a sunk cost and should be added to the total initial investment amount.
When conducting its capital budgeting analysis, the sushi chain should account for the cost of the study as part of the initial investment for the new store in Chicago.
Include the $500,000 study cost in the total initial investment amount.
This cost would be considered a sunk cost, meaning it has already been incurred and cannot be recovered.
By adding the study cost to the initial investment, the company gets a more accurate picture of the total funds needed to open the location in Chicago.
Following are financial statement numbers and ratios for CVS Health Corporation for the year ended December 31, 2016. 2016 Total revenue (in millions) $177,526 Net operating profit margin (NOPM) 3.6% Net operating asset turnover (NOAT) 2.91 If we anticipate a 5% sales growth in 2017, what is the company’s projected net operating profit after tax (NOPAT) for 2017? Select one: A. $61,533 million B. $ 6,710 million C. $ 6,391 million D. $64,499 million E. None of the above
Answer:
The correct option is B,$6,710 million
Explanation:
First and foremost,one needs to be aware that net operating profit margin(NOPM) of 3.6% was computed by dividing operating profit after tax by the total revenue for 2016,hence we use same formula to determine the net operating profit after tax for 2017 by merely changing the subject of the formula.
NOPM=net operating profit after/total revenue
net operating profit after tax=NOPM*total revenue
NOPM remains at 3.6%
total revenue for 2017=total revenue for 2016*(1+growth rate)
total revenue for 2016 is $177,526 million
growth rate is 5%
total revenue for 2017= $177,526*(1+5%)=$ 186,402.30 million
Net operating profit after tax= 186,402.30 *3.6%=$ 6,710.48 million
Approximately $6710 million
Audio engineers at 3XT2 have determined that an anechoic additive will increase isolation and improve signal to noise by about 20%. To prep the site for the adhesive, you have to prime it and that costs you $35K separate from the additive. You have arranged to purchase the additive with a 5-year contract at $7K per year, starting 1 year from now. The annual price will increase by 12% per year starting in the sixth year and thereafter through year 13. Evaluated at 15%, the sound improvement better result in a net present worth profit of how much to negate the costs?
Answer:
The correct answer is $83230
Explanation:
Solution
Given that:
The Present worth of geometric series is shown below
= A *[1 - (1+g)^n /(1+i)^n] / (i-g)
Now,
The present cost of worth from EOY 5 to EOY 13 at EOY 4 = 7000 *[1 - (1+0.12)^9 /(1+0.15)^9] / (0.15-0.12)
Thus,
= 7000 *[1 - (1.12)^9 /(1.15)^9] / (0.03)
Which is,
= 7000 * 7.0572647
= 49400.85
Now, The NPW of all costs = 35000 + 7000*(P/A,15%,4) + 49400.85*(P/F,15%,4)
= 35000 + 7000*2.854978 + 49400.85*0.571753
= 83229.93
Therefore the sound improvement better result in a net present worth profit of how much to negate the costs is $83229.93 or 83230
Note: EOY = End of year.
11. H&H Bagels sells bagels in packages of six bagels. In April 2020, H&H sold 15,000 packages with a unit price of $8.80 each. H&H had $45,895 of fixed costs and calculated its breakeven volume at 6,850 packages for the month of April. What were H&H’s variable costs per unit and how much did H&H incur in total variable costs in April? A. $6.70 and $100,500 B. $2.10 and $14,385 C. $2.10 and $31,500 D. $6.70 and $45,895
Answer:
The correct answer is C.
Explanation:
Giving the following information:
In April 2020, H&H sold 15,000 packages with a unit price of $8.80 each. H&H had $45,895 of fixed costs and calculated its breakeven volume at 6,850 packages for April.
To calculate the unitary variable cost, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
6,850= 45,895 / ( 8.8 - unitary variable cost)
60,280 - 6,850unitary variable cost = 45,895
unitary variable cost= 14,385/6,850
unitary variable cost= $2.1
Total variable cost= 15,000*2.1= $31,500
Nicole is a manager at Frost Inc. She is very confident and optimistic, tends to use strong expressive forms of communication, and uses personal risk and self-sacrifice to attain her visions for her organization. Nicole is said to be a(n) _______ leader.
Answer:
Charismatic.
Explanation:
Nicole being a manager at Frost Inc. She is very confident and optimistic, tends to use strong expressive forms of communication, and uses personal risk and self-sacrifice to attain her visions for her organization.
Hence, Nicole is said to be a charismatic leader.
Charismatic leaders tend to be confidence and always encourage their subordinates or followers behaviors by way of persuasion, eloquent communication and personal convictions.
Nicole is considered a charismatic leader. Her optimism, powerful presence, expressive communication skills, and willingness to take personal risks and make sacrifices are major characteristics of such leadership style.
Explanation:Nicole is known as a charismatic leader. Charismatic leaders possess an exceptional personal charisma and effective expressive communication skills that both inspire and motivate their followers. They are often willing to take personal risks or to make self-sacrifices as part of their leadership style. Their optimism and vision for the organization are key features of their ability to inspire.
This type of leadership can bring about significant changes within organizations. A charismatic leader like Nicole is capable of rallying her team towards shared goals or visions, even in challenging circumstances, due to her powerful presence and communication abilities.
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Tiger Furnishings produces two models of cabinets for home theater
components, the Basic and the Dominator. Data on operations and costs
for March follow:
Basic Dominator Total
Units produced 850 300 1,150
Machine-hours 4,400 2,000 6,400
Direct labor-hours 2,700 2,800 5,500
Direct materials costs $11,000 $3,450 $14,450
Direct labor costs 58,300 32,300 90,600
Manufacturing overhead costs 191,950
Total costs $297,000
Required:
Compute the predetermined overhead rate assuming that Tiger Furnishings
uses direct labor-hours to allocate overhead costs.
Pre-determined overhead rate, per direct labor hour.
Answer:
211%
$34.9 per direct labor hour
Explanation:
As per the data given in the question,
Pre-determined overhead rate = Total overhead ÷ Direct labor cost
= $191,950 ÷ $90,600
= 211 % of Direct labor hour
Pre-determined overhead rate = Total overhead ÷ Direct labor hours
= $191,950 ÷ $5,500
= $34.9 per direct labor hour
We simply applied the above formulas to determine the value of predetermined overhead rate.
Under the allowance method of accounting for bad debts, why must uncollectible accounts receivable be estimated at the end of the accounting period? The IRS rules require the company to make the estimate. To determine the gross realizable value of accounts receivable. To match bad debt expense to the period in which the revenues were earned. To allow the collection department to schedule work for the next accounting period.
Answer:
Under the allowance method of accounting for bad debts, uncollectible accounts receivable are estimated at the end of the accounting period to match bad debt expense to the period in which the revenues were earned.
Explanation:
Allowance method as a term in financial accounting means uncollectible accounts receivable process that records an estimate of bad debt expense in the same accounting period as the sale.
The purpose of allowance method is to adjust accounts receivable appearing on the balance sheet.
therefore, under the allowance method of accounting for bad debts, uncollectible accounts receivable are estimated at the end of the accounting period to provides better matching of expenses and revenues on the income statement matching bad debt expense to the period in which the revenues were earned.
Under the allowance method, uncollectible accounts receivable are estimated to match bad debt expense to the revenue period and provide a more accurate picture of financial health.
The allowance method of accounting for bad debts requires the estimation of uncollectible accounts receivable at the end of the accounting period primarily to match bad debt expense to the period in which the revenues were earned. This process conforms to the matching principle in accounting, which states that expenses should be reported in the same period as the revenues they helped to generate. When a company prepares its financial statements, it must account for the potential bad debts to give a more accurate picture of its financial health. Thus, estimating the uncollectible accounts is necessary to determine the gross realizable value of accounts receivable.
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Cash 42,900 Accounts Receivable 123,500 Prepaid Insurance 27,000 Equipment 300,000 Accounts Payable 52,000 Salaries Payable 4,800 Common Stock 40,000 Retained Earnings 137,200 Dividends 5,000 Service Revenue 1,216,000 Salary Expense 660,000 Advertising Expense 275,000 Miscellaneous Expense 16,600 1,801,500 1,801,500 After identifying the errors, prepare a corrected unadjusted trial balance. For those boxes in which no entry is required, leave the box blank.
Answer and Explanation:
The preparation of the corrected unadjusted trial balance is presented below:
Ensemble Co
Unadjusted Trial Balance
For the Year Ending December 31, 2018
Particulars Debit Credit
Cash $42,900
Accounts receivable $123,500
Prepaid insurance $27,000
Equipment $300,000
Accounts payable $52,000
Salaries payable $4,800
Common stock $40,000
Retained earnings $137,200
Dividends $5,000
Service revenue $1,216,000
Salary expense $660,000
Advertising expense $275,000
Miscellaneous expense $16,600
Total $,450,000 $1,450,000
We simply debited the assets, dividend and expenses account and credited the revenues, liabilities and stockholder equity account
Beyer Company is considering the purchase of an asset for $220,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 12% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Year 1 Year 2 Year 3 Year 4 Year 5 Total Net cash flows $ 87,000 $ 56,000 $ 96,000 $ 126,000 $ 48,000 $ 413,000 a. Compute the net present value of this investment. b. Should Beyer accept the investment?
Answer:
a) NPV= $287,202.75
b) the project should be accepted
Explanation:
The Net present value (NPV) is the difference between the Present value (PV) of cash inflows and the PV of cash outflows. A positive NPV implies a good and profitable investment project and a negative figure implies the opposite.
NPV = PV of cash inflow - PV of cash outflow
Present value of cash inflow:
(87,000 × (1.12^(-1)) + ( 56,000 × 1.12^(-2)) +( 96000 ×1.12^(-3) + (126000 ×1.12^(-4) + ( 48,000× (1.12^(-5)) + (413,000×(1.12^(-5))
Initial cost = 220,000
NPV = 507,202.75 - 220,000 =
= $287,202.75
b) Since the project produced a positive NPV of $287,202.75, it implies that accepting the project would increase the wealth of the shareholders of Beyer Company by $287,202.75 . Therefore, the asset should be purchased
Final answer:
To decide if Beyer Company should purchase the asset, we compute its net present value by discounting its expected cash flows at 12%. The NPV is the sum of the discounted cash flows less the purchase price; a positive NPV indicates the purchase is a good investment.
Explanation:
To assess whether Beyer Company should purchase the asset, we need to compute the net present value (NPV) of this investment. The NPV is the sum of the present values of all cash flows associated with the investment, discounted at the required rate of return, which in this case is 12%.
The present value of each year's cash flow is calculated using the formula: Present Value = Net Cash Flow / (1 + r)t, where r is the discount rate and t is the time period. Table factors from the provided tables can be used to simplify this calculation for each year's cash flow.
Calculating NPV
Summing up all the discounted cash flows and then subtracting the initial investment of $220,000 will give us the NPV of the asset:
Year 1's discounted cash flow
Year 2's discounted cash flow
Year 3's discounted cash flow
Year 4's discounted cash flow
Year 5's discounted cash flow
NPV = (Sum of discounted cash flows) - Initial Investment
If the NPV is positive, it means the investment would add value to the company and Beyer should proceed with the purchase. If negative, the investment should not be undertaken.
The Western and Pacific Railroad has two divisions, the Western Division and the Pacific Division. The company recently invested $7,100,000 to maintain its railroad track. Pertinent data for the two divisions are as follows: Total Miles Traveled: Western Division 710,000 miles Pacific Division 1,110,000 miles The amount of track improvement cost that should be allocated to the Western Division is: (Round intermediate calculation to 1 decimal place.)
Answer:
Cost allocated to Western Division= $2,769,780.22
Explanation:
The track improvement cost should be fairly allocated to the divisions using the miles traveled as basis.
Total miles traveled = 710,000 + 1,110,000= 1,820,000
Cost allocated to Western division = (710,000/1820,000)× 7,100,000
= $2,769,780.22
Which of the following describes the budget balance as a percent of GDP in 2019?
a. The Federal government's budget balance as a percent of GDP was higher than predicted by the trendline (that is, the deficit is smaller), so fiscal policy was more expansionary than usual.
b. The Federal government's budget balance as a percent of GDP was lower than predicted by the trendline (that is, the deficit is bigger) ), so fiscal policy was more expansionary than usual.
c. The Federal government's budget balance as a percent of GDP was higher than predicted by the trendline (that is, the deficit is smaller), so fiscal policy was less expansionary than usual.
d. The Federal government's budget balance as a percent of GDP was lower than predicted by the trendline (that is, the deficit is bigger) ), so fiscal policy was less expansionary than usual.
e. The Federal government's budget balance as a percent of GDP was close to the prediction by the trendline (within 0.5%), so fiscal policy was just as expansionary as usual.
Answer:
The answer is option B) The Federal government's budget balance as a percent of GDP was lower than predicted by the trendline (that is, the deficit is bigger) ), so fiscal policy was more expansionary than usual.
Explanation:
The annual budget deficit increased from $585 billion (3.2% GDP) in 2016 to $984 billion (4.7% GDP) in 2019.
Contrary to fiscal predictions, The U.S. fiscal deficit increased by $1 trillion in 2019, the first time it has passed that level in a calendar year since 2012.
A situation like this necessitates an expansionary fiscal policy.
Expansionary Fiscal Policy is a tool used by government to increase disposable income by reducing tax and increasing government expenditure.
This will lead to an increase in aggregate demand and contributing to drawing down of budget surpluses.
Real per capita GDP in China in 1961 was about $350, but it doubled to about $700.00 by 1979. a. What was the average annual economic growth rate in China over the 18.00 years from 1961 to 1979? (NOTE: Round this to two places past the decimal point.) % b. Per capita real GDP doubled in China again in only seven years, reaching $1400.00 by 1986.00. What was the average annual economic growth rate between 1979 and 1986.00? (NOTE: Round this to two places past the decimal point.)
The average annual economic growth rate in China from 1961 to 1979 was 5.01%. The average annual economic growth rate between 1979 and 1986 was 9.5%.
Explanation:a. To find the average annual economic growth rate from 1961 to 1979, we need to calculate the growth rate based on the initial and final values. The initial value is $350 and the final value is $700. The formula to calculate the average annual growth rate is:
Growth Rate = ((Final Value / Initial Value) ^ (1 / Number of Years)) - 1
Using this formula, we get ((700 / 350) ^ (1 / 18)) - 1 = 0.0501 or 5.01%
b. For the average annual economic growth rate between 1979 and 1986, we use the same formula. The initial value is $700 and the final value is $1400. Plugging these values into the formula, we get ((1400 / 700) ^ (1 / 7)) - 1 = 0.095 or 9.5%
Hal and Gavin are siblings who own a mattress recycling company. Demand has been increasing for their services and the brothers are contemplating whether to open up an additional mattress drop off site in the downtown area. They estimate it would add $1 million in expenses with their profit increasing by $150 thousand each year for the next 5 years (all other things equal).
Required:
1. Hal and Gavin decide __________.
O to open a mattress drop off site downtown because the marginal cost of the new location is less than other similar projects.
O to not open a mattress drop off site downtown because the marginal costs prove to be too high.
O to open a mattress drop off site downtown because the expected marginal benefit is greater than the estimated marginal cost.
Hal and Gavin's decision against opening a new location lies in their projected financial loss. Although they could increase profits by $150,000 annually, the $1 million upfront cost would generate a net loss over five years as the anticipated profit ($750,000) is less than the estimated expenses.
Explanation:Hal and Gavin decide to not open a mattress drop off site downtown because the marginal costs prove to be too high. Here's why: they anticipate the new location would increase their expenses by $1 million, while only raising their profits by $150 thousand each year over the next five years. This means, over a five-year period, their profits would only amount to $750 thousand (5 years x $150 thousand per year), which is $250 thousand less than their estimated costs, indicating a net loss. Hence, the marginal cost to open up a new location (the additional $1 million) is greater than the marginal benefits (the added $750 thousand of profit).
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Clancy's Motors has the following demand to meet for custom manufactured fuel injector parts. The holding cost for that item is $0.75 per month and each setup costs $150. Lead-time is 0 months. Calculate the planned order releases using: (a) the EOQ technique, and (b) the POQ technique, (c) the lot-for-lot technique. What are the costs of each plan, including the holding cost of any inventory left over after month 7? Show POM-QM results.
Answer:
a) EOQ ≈ 250
b) POQ = 1.59 ≈ 2 months
c) Cost of EOQ = 1275 USD
Cost of POQ = 937.5 USD
Explanation:
Again, the essential data is not provided in this question but I have found this question on internet and I will share the required data here in this solution:
a) EOQ = Economic Order Quantity:
FIrst of all, we have to calculate EOQ and for that we have following formula:
Holding Cost = 0.75
Setup Cost = 150
So, here's the required data which is missing in the question:
Month 1 2 3 4 5 6 7
Requirement 100 150 200 150 100 150 250
Now, we are good to go:
So, from the above data we will calculate the Demand:
Demand (D) = Sum of requirement / Total Time Period
D = 100 + 150 + 200 + 150 + 100 + 150 + 250/ 7
D = 157.14
Formula for EOQ:
EOQ = [tex]\sqrt{\frac{2SD}{H} }[/tex]
S = Setup Cost = 150
D= Demand = 157.14
H = Holding Cost = 0.75
Let's plug in the values:
EOQ = [tex]\sqrt{\frac{2*150*157.14}{0.75} }[/tex]
EOQ = 250.71
EOQ ≈ 250
So, the economic order quantity for the above given data is 250 units.
b) POQ = Periodic Order Quantity
Periodic Order Quantity = Economic Order Quantity/ Demand
POQ = 250/157.14
POQ = 1.59 ≈ 2 months
Now, as we have both POQ and EOQ at hand. Next step is to calculate the cost of each plan as mentioned in the question. For which we need MRP of each plan.
1. Cost of Economic Order Quantity:
First of all let me write down the MRP = Materials Requirement Planning Data for EOQ:
Requirement 100 150 200 150 100 150 250
Available 0 150 0 50 150 50 150
Ordered 250 0 250 250 0 250 250
End Inventory 150 0 50 150 50 150 150 700
Now, Let's Calculate the Cost of EOQ:
Setup Cost = Number of Orders x Setup Cost Given
Setup Cost = 5 x 150
Setup Cost = 750 USD
Holding Cost = Holding Cost per item given x Number of Inventory held
Holding Cost = 0.75 x 700
Holding Cost = 525 USD
Now, Calculate the Total Cost of EOQ:
Total Cost of EOQ = Setup Cost + Holding Cost
Total Cost of EOQ = 750 + 525
Totol Cost of EOQ = 1275 USD
2. Cost of POQ:
Similarly, we have to calculate the Cost of POQ. For that, we need MRP of POQ as well:
MRP for POQ:
Requirement 100 150 200 150 100 150 250
Available 0 150 0 150 0 150 0
Ordered 250 0 350 0 250 0 250
End Inventory 150 0 150 0 150 0 0 450
Setup Cost = Number of Orders x Setup Cost Given
Setup Cost = 4 x 150
Setup Cost = 600 USD
Holding Cost = Holding Cost per item given x Number of Inventory held
Holding Cost = 0.75 x 450
Holding Cost = 337.5 USD
Total Cost of EOQ = Setup Cost + Holding Cost
Total Cost of EOQ = 600 + 337.5
Totol Cost of EOQ = 937.5 USD
Final answer:
Without detailed demand figures and inventory costs for Clancy's Motors, calculating planned order releases and their associated costs using EOQ, POQ, and lot-for-lot techniques is not possible. However, each technique is explained along with how costs would generally be calculated.
Explanation:
The question asks for the calculation of planned order releases for Clancy's Motors using three techniques: EOQ (Economic Order Quantity), POQ (Periodic Order Quantity), and the lot-for-lot technique, along with the costs associated with each plan, including the holding cost after month 7. However, the specific demand figures, along with other necessary data to perform these calculations directly relevant to Clancy's Motors, are missing. Therefore, a general explanation of each technique and how costs are calculated is provided instead.
EOQ is a formula used to determine the optimal order quantity that minimizes the total inventory costs, including ordering and holding costs. The EOQ model is used when demand is constant over the year and each new order is delivered in full when inventory reaches zero.
POQ is an inventory management policy that orders at fixed intervals and varies the quantity ordered each time. The goal is to match supply closely with predictable demand while minimizing inventory costs.
The lot-for-lot technique orders exactly what is required for the next period, minimizing holding costs but potentially increasing ordering costs if the demand is frequent.
Without specific demand figures or inventory costs directly from Clancy's Motors, a detailed calculation for each method and associated costs cannot be completed. Normally, costs are derived using formulas specific to each technique, factoring in aspects like ordering costs, holding costs, demand rate, and production or purchase cost per unit.
On January 1, 2020, the Sheridan Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2020. Sales units: First quarter 5,200; second quarter 6,000; third quarter 7,000. Ending raw materials inventory: 40% of the next quarter’s production requirements. Ending finished goods inventory: 25% of the next quarter’s expected sales units. Third-quarter production: 7,630 units. The ending raw materials and finished goods inventories at December 31, 2019, follow the same percentage relationships to production and sales that occur in 2020. 3 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $4 per pound. Prepare a production budget by quarters for the 6-month period ended June 30, 2020. SHERIDAN COMPANY Production Budget Quarter 1 2 Six Months : : Prepare a direct materials budget by quarters for the 6-month period ended June 30, 2020. SHERIDAN COMPANY Direct Materials Budget Quarter 1 2 Six Months : : $ $ $ $ $
Answer and Explanation:
The preparation of the production budget and direct material budget is presented below:
As per the data given in the question,
Sheridan company
Production Budget
For six months ending June 30,2020
Quarter
1 2 six months
Expected units sales 5,200 6,700
Add: units of desired ending finished goods 1,675 1,750
Total units 6,875 8,450
Less: Finished good units 1,300 1,675
Required units for production 5,575 6,775 12,350
Quarter 2 required finished goods = 25% × Unit sales of quarter 3
= 25% × 7,000
= 1,750
Sheridan company
Direct material Budget
For six months ending June 30,2020
Quarter Quarter
1 2 Six months 3
Units to be produced 5,575 6,775 7,630
Direct material per unit 3 3 3
Total need for production 16,725 20,325 22,890
Add: Required ending direct material 8,130 8,856
(20,325 × 40%) (22,890 × 40%)
Total material required 24,855 29,181
Less: Beginning direct material 6,690 8,130
(16,725 × 40%)
Direct material purchased 18,165 21,051
Cost per pound 4.00 4.00
Total cost $72,660 $84,204 $156,864
Sarah is a 50% partner in the SF Partnership and has an outside basis of $56,000 at the end of the year prior to any distributions. On December 31, Sarah receives a proportionate operating distribution of $20,000 cash. What is the amount and character of Sarah's recognized gain or loss and what is her basis in her partnership interest?
A) $0 gain, $36,000 basis.
B) $20,000 ordinary income, $56,000 basis.
C) $0 gain, $56,000 basis.
D) $20,000 ordinary income, $36,000 basis.
Answer:
A) $0 gain, $36,000 basis.
Explanation:
Any type of money that a partner receives from the partnership reduces the partner's basis in the partnership. Even when the partner receives a salary from the partnership it is called drawing, it is not considered salary expense.
Cash distributions reduce the partner's basis = basis - cash distribution = $56,000 - $20,000 = $36,000
Since the distribution is less than Sarah's basis, they are not taxable (Section 731)
Ralph Lauren, a designer of fine clothing, authorized Dan River Mills to market its product line of sheets under the Ralph Lauren brand name. In this business dealing, Dan River mills is contractually obligated to pay Ralph Lauren a % of sales of all Ralph Lauren branded sheet it sells. This type of business arrangement is an example of _________________________.
Answer:
Brand licensing.
Explanation:
Brand licensing can be defined as the leasing of a brand name to a different company for a particular period of time. It is very essential for product development and it also improves the marketing efforts.
Building a new brand name can be a very tedious task because it requires a lot of capital, therefore brand licensing is very important to the licensees because it gives them access to immediate entry into the market.
Brand licensing helps to create new channels of distribution of the product, or also paves way for the product to enter into new regions.
Final answer:
The business arrangement described is known as a licensing agreement, where a licensee sells products under the brand name of a licensor for a percentage of sales.
Explanation:
The type of business arrangement where Dan River Mills is authorized to market a product line under the Ralph Lauren brand name and is contractually obligated to pay Ralph Lauren a percentage of the sales from the branded sheets they sell is an example of a licensing agreement.
In a licensing agreement, the licensee (Dan River Mills) obtains the rights to use the licensor's (Ralph Lauren's) brand name, trademark, or patented technology. In return, the licensor receives a royalty or a percentage of the sales generated by the licensee. This is a common practice in the fashion industry and other sectors where brand recognition can add significant value to a product.
When launching any technology product, a firm such as GoPro must create a balance between what is technically possible and whether the intended customer has the right level of technological sophistication. the level of technological development of competitors. whether the technology provides benefits and responds to customer needs. what is most profitable in the first year.
Answer:
Whether the technology provides benefits and responds to customers needs
Explanation:
Technological innovation can be defined as the introduction of new technical products and services or improving an existing ones.
One major reason for this is to address human needs and better serve individual . Therefore whenever any firm wants to launch any new product , it is important that it must create a balance between what is technically possible and whether the new technology provides benefits and responds to customers needs.
When launching a technology product, a firm like GoPro must consider the technical capabilities, customer needs, and competition in order to create a successful product.
Explanation:When launching a technology product, a firm like GoPro must consider several factors in order to create a successful product. Firstly, they need to balance what is technically possible with the level of technological sophistication of their target customers. They need to ensure that their customers have the right level of technological understanding to use the product effectively. Secondly, the firm must assess whether the technology provides benefits and responds to customer needs. They need to ensure that the product solves a problem or fulfills a need for their customers. Lastly, they need to consider the level of technological development of their competitors. They must stay ahead of the competition by offering innovative features or functionalities that set them apart.
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Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results. a. In each dropdown that follows, select the correct sign [less than ( <), greater than (> ), or equal (=)] for each comparison, assuming periods of rising prices. 1. FIFO inventory LIFO inventory 2. FIFO cost of goods sold LIFO cost of goods sold 3. FIFO net income LIFO net income 4. FIFO income taxes LIFO income taxes b. Why would management prefer to use LIFO over FIFO in periods of rising prices? Income shown on the company’s tax return would be lower if LIFO rather than FIFO is used. Income shown on the company’s tax return would be higher if LIFO rather than FIFO is used. Cost of goods sold shown on the company’s income statement would be lower if LIFO rather than FIFO is used. Dividends shown on the company’s financial statements would be higher if LIFO rather than FIFO is used.
Answer and Explanation:
As per the data given in the question,
a)
1. FIFO inventory > LIFO inventory
(Because in case of LIFO recent purchases are considered in production first or sold first so the remaining inventory are old inventory which is less costlier.)
2. FIFO cost of goods sold < LIFO cost of goods sold
(Because in case of LIFO recent purchases are considered in production first which are expensive so the cost of production is greater than FIFO.)
3. FIFO net income > LIFO net income
(Because cost of production is less under FIFO and the value of closing inventory is high, therefore the net income is also high.)
4. FIFO income taxes > LIFO income taxes
(Since, income is high in FIFO, therefore the tax under FIFO will be higher.)
b) Management would like prefer to use LIFO over FIFO in periods of rising prices because Income shown in the company's Tax return will be higher if we use FIFO rather than using LIFO.
The only asset Bill purchased during 2019 was a new seven-year class asset. The asset, which was listed property, was acquired on June 17 at a cost of $50,000. The asset was used 40% for business, 30% for the production of income, and the rest of the time for personal use. Bill always elects to expense the maximum amount under § 179 whenever it is applicable. The net income from the business before the § 179 deduction is $100,000. Determine Bill's maximum deduction with respect to the property for 2019. a.$26,749 b.$1,428 c.$2,499 d.$33,375
Answer:
c.$2,499
Explanation:
Asset acquired on June 17 at a cost of $50,000.
The asset was used 40% for business, 30% for the production of income(40%+30%)= 70%
Hence:
$50,000 x .70 x .0714
= $2,499
Therefore Bill's maximum deduction with respect to the property for 2019 will be $2,499
Champaign Corporation purchases 45% of the common stock of Rockville, Inc. at a purchase price of $21.6 million cash. During the year, Rockville reports net income of $2,960,000 and pays $544,000 of cash dividends. At the end of the year, the market value of Champaign’s investment is $23.7 million. What is the year-end balance of the equity investment in Rockville? Select one: A. $22,687,200 B. $25,010,000 C. $24,332,500 D. $21,600,000 E. None of the above
Answer:
The correct option is A,$ 22,687,200
Explanation:
The year end balance of the equity investment of Champaign Corporation at year end is the initial price paid for the investment plus share of net income in the year less Champaign Corporation's share of cash dividends paid in the year as shown below:
Initial cost of investment $21,600,000
share of net income($2,960,000*45%) $ 1,332,000
Less:share of dividends($544,000*45%) ($244,800)
Year end balance of equity investment $ 22,687,200
The correct option is A.
It is important to note that dividends were deducted because it is more ike a cash out from the investment
Final answer:
The year-end balance of the equity investment in Rockville is $22,687,200, after adjusting the initial investment with Champaign's proportional share of Rockville's net income and dividends received. The correct option is a.
Explanation:
To calculate the year-end balance of the equity investment in Rockville, we need to adjust the initial investment amount for the share of net income and the dividends received. Champaign Corporation initially invested $21.6 million.
Champaign's share of Rockville's net income is 45% of $2,960,000, which equals $1,332,000. The share of cash dividends received is 45% of $544,000, which is $244,800.
The year-end balance is therefore calculated as follows:
Initial investment: $21,600,000
Share of net income: +$1,332,000
Less: Share of dividends received: -$244,800
Adding the net income share and subtracting the dividends from the initial investment, we get:
$21,600,000 + $1,332,000 - $244,800 = $22,687,200
So, the correct answer is A. $22,687,200.
Red Rock Bakery purchases land, building, and equipment for a single purchase price of $260,000. However, the estimated fair values of the land, building, and equipment are $126,000, $198,000, and $36,000, respectively, for a total estimated fair value of $360,000. Determine the amounts Red Rock should record in the separate accounts for the land, the building, and the equipment.
Answer:
Land ($91,000), building ($143,000) and equipment ($26,000)
Explanation:
We can allocate the fair values as follows:
Particulars Fair value Allocated amount
(a) (b) = (a)/Total*$260,000
Land $126,000 $91,000
Building 198,000 143,000
Equipment 36,000 26,000
Total $360,000 $260,000
The amount that the company would record for the individual asset is as provided above.
A country has an annual income per capita of $2,300. The country’s nominal economic growth rate is 1.5% while 37.7% of its population lives below the poverty line, and its literacy rate is 48% of the population. In addition, 54% of its labor force is in agriculture and 11% works in the business or the technology sectors. Based on the details of this country's economic growth, how would you classify this country?
Answer: Less - Developed Country
Explanation:
Less - Developed Countries (LDCs) are countries that are usually classified as 3rd world countries. They are characterised by low annual income.per capita and living standards as well as high poverty rates.
Their main industry is usually Agriculture and there are low literacy rates plaguing the country.
The Country described above is a less developed country. It has an annual income per capita of $2,300 which is quite small when compared with that of a Developed country like Liechtenstein with $165,000 annual income per capita.
Most of it's population engage in Agriculture as shown by the 54% ascribed to Agriculture and it has a literacy rate of 48% which is quite low.
All these as well as the 37.7% statistic showing how many people are in poverty confirms that this a Less Developed Country.
In 2016, Raleigh sold 1,000 units at $500 each, and earned net income of $40,000. Variable expenses were $300 per unit, and fixed expenses were $160,000. The same selling price is expected for 2017. Raleigh's variable cost per unit will rise by 10% in 2017 due to increasing material costs, so they are tentatively planning to cut fixed costs by $10,000. How many units must Raleigh sell in 2017 to maintain the same income level as 2016?
The number of units that must Raleigh sell in 2017 to maintain the same income level as 2016 is 1,118 units.
Computation of number of units to be sold:
For the Year 2016
Number of Units Sold = 1,000 units
Unit selling price = $500 per unit
Total Sales = $500 × 1,000 = $500,000
Variable Costs = $300 × 1,000
= $300,000
Contribution = $500,000 - $300,000
= $200,000
Fixed Costs = $160,000
Net Income = $200,000 - $160,000
= $40,000
For the Year 2017
Unit Selling Price = $500 per unit
Unit Variable Cost = $300 × 1.10
= $330 per unit
Contribution per unit = $500 - $330 = $170 per unit
Fixed Cost = $160,000 - $10,000 = $150,000
Now, to maintain the same income of $ 40,000 the Company have a total contribution
$150,000 + $40,000
= $190,000
Number of units to be sold = Total contribution ÷ Contribution per unit
= $190,000 ÷ $170
= 1,117.64
or
1,118 units.
Hence, The number of units that must Raleigh sell in 2017 to maintain the same income level as 2016 is 1,118 units.
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Final answer:
To maintain the net income of $40,000 in 2017 with increased variable costs and reduced fixed costs, Raleigh needs to sell approximately 1118 units.
Explanation:
To calculate how many units Raleigh needs to sell in 2017 to maintain the same level of net income as in 2016, we first need to establish the contribution margin per unit for 2016 and how it will change in 2017 due to the increase in variable costs.
The contribution margin per unit in 2016 was $200 ($500 selling price - $300 variable cost). With the variable cost per unit rising by 10% in 2017, the new variable cost per unit will be $330 ($300 + 10% of $300).
The tentative plan is to lower fixed costs from $160,000 to $150,000 in 2017. The contribution margin per unit in 2017 would be $170 ($500 selling price - $330 variable cost).
To maintain a net income of $40,000, Raleigh's total contribution margin in 2017 must cover the fixed costs and net income, which totals $190,000 ($150,000 fixed costs + $40,000 net income).
Therefore, the required number of units to sell in 2017 to achieve this would be $190,000 divided by the contribution margin per unit of $170, which equals approximately 1118 units.
Mountaineers Inc. expects the cost of goods sold to average 75 percent of sales revenue, and the company expects to sell 4,600 pairs of shoes in March for $240.00 each. Mountaineers Inc.’s target ending inventory is $18,000.00 plus 45 percent of the next month’s cost of goods sold. Use this information and the sales budget prepared to prepare Mountaineers Inc.’s inventory, purchases, and cost of goods sold budget for January and February.
Answer:
Explanation:
Cost Of Sales BudgetJanuaryFebruaryMarchSales Revenue660,000 440,000 1,104,000 Cost of Sales - 75$ of sales revenue495,000 330,000 828,000 Inventory BudgetJanuaryFebruarySales Revenue660,000 440,000 Ending Inventory166,500 390,600 Purchase BudgetJanuaryFebruarySales for the month660,000 440,000 Add: ending inventory desired166,500 390,600 Less: opening inventory240,750 166,500 Purchase Budget585,750 664,100 2
SIROM Scientific Solutions has $10 million of outstanding equity and $5 million of bank debt. The bank debt costs 5% per year. The estimated equity beta is 2. If the market risk premium is 9% and the risk-free rate is 3%, compute the weighted average cost of capital if the firm’s tax rate is 30%.
Answer:
15.167%
Explanation:
For computing the WACC we need to do the following calculations which are shown below:
Cost of equity = Risk free rate + Beta × Market risk premium
= 3% + 2 × 9%
= 21%
After tax cost of debt = Cost of debt × (1-Tax Rate)
= 5% × (1 - 0.30)
= 3.50%
Now
WACC = Weight of debt × Cost of debt + Weight of equity × Cost of equity
= 5 ÷ 15 × 3.50 + 10 ÷ 15 × 21
= 1.167% + 14%
= 15.167%