Answer:
$10,000 unfavorable
Explanation:
The computation of the total variable overhead variance is shown below:
Total variable overhead variance is
= (Actual variable overhead cost - (manufactured units × standard variable overhead rate × required standard direct labor hours))
= ($40,000 - (2,500 units × $4 × 3)]
= $40,000 - $30,000
= $10,000 unfavorable
Since actual cost is more than the standard cost so it would be unfavorable variance
Fultz Company has accumulated the following budget data for the year 2017.
1. Sales: 30,000 units, unit selling price $85.
2. Cost of one unit of finished goods: direct materials 1 pound at $5 per pound, direct labor 3 hours at $15 per hour, and manufacturing overhead $5 per direct labor hour.
3. Inventories (raw materials only): beginning, 10,000 pounds; ending, 15,000 pounds.
4. Selling and administrative expenses: $170,000; interest expense: $30,000.
5. Income taxes: 30% of income before income taxes.
Required:
(a) Prepare a schedule showing the computation of cost of goods sold for 2017.
(b) Prepare a budgeted multiple-step income statement for 2017.
Answer:
Fultz Company
a) Computation of Cost of Goods Sold for 2017:
i) Cost of Materials:
1. Beginning inventory = 10,000 x $5 = $50,000
2. Ending inventory = 15,000 x $5 = $75,000
3. Cost of Materials used in production = 30,000 x $5 = $150,000
4. Purchased Materials = Cost of materials plus ending inventory less beginning inventory = $(150,000 + 75,000 - 50,000) = $175,000
ii) Cost Direct Labor and Manufacturing Overhead:
1. Direct labor hours = 3 x 30,000 = 90,000 hours
2. Direct labor = 3 x $15 x 30,000 = $1,350,000
3. Manufacturing overhead = $5 x 90,000 = $450,000
iii) Cost of Goods Sold:
Cost of Materials used in production = 30,000 x $5 = $150,000
Direct labor = 3 x $15 x 30,000 = $1,350,000
Manufacturing overhead = $5 x 90,000 = $450,000
Total = $1,950,000
b) Budgeted Multiple-step Income Statement for 2017:
Sales (30,000 x $85) = $2,550,000
less Cost of Sales = $1,950,000
Gross Profit = $600,000
less Selling & Administrative expenses = $170,000
EBIT = $430,000
less Interest expense = $30,000
Net Income before taxes = $400,000
30% Income Taxes = $120,000
Net Income after taxes = $280,000
Explanation:
a) There are no inventories of work in process and finished goods. Therefore, the cost of goods sold is not adjusted for these items.
b) EBIT = Earnings before interests and taxes. It an important financial measure that determines the effectiveness and efficiency of management to manage expenses in order to earn profits that could be distributed to fund owners and other stakeholders, e.g. government.
Which one of the following is an advantage of having an independent central bank? Central banks may be swayed by short term considerations and avoid inflationary policies. Central bank's actions can be frequently monitored by the legislative branch. The central bank independence does not appear to come at the cost of higher output or higher employment. The countries whose central banks are more independent have lower rates of inflation. All of the following are institutional features that make a central bank independent, except when: they are swayed by short run political considerations. they are not obligated to buy newly issued government bonds. their actions are not subject to frequent interference or review. the central bankers are appointed for a longer period of time.
Answer: 1. The countries whose central banks are more independent have lower rates of inflation.
2. They are swayed by short run political considerations
Explanation:
1. Central Banks that are less independent run the risk of the government putting too much pressure on them to embark on policies that would increase inflation such as making them print excessive amounts of currency. This has been corroborated by studies that show that indeed, countries with more independent central Banks have less inflation than countries with less independent Central Banks.
In the graph attached, notice how much lower inflation is in German and the USA due to a higher degree of Central Bank independence.
2. A Central bank that is Independent does not concern itself with Politics but rather with exercising it's mandate. Many a time leading politicians in Countries with less Independent Central Banks will pressure the central bank to roll out certain policies that enable their approval to rise and increase their chances of re-election regardless of how harmful these policies will be in the long run.
Sue and Andrew form SA General Partnership. Each person receives an equal interest in the newly created partnership. Sue contributes 1000 of cash and land with a FMV of 50000. Her basis in the land is 10000. Andrew contributes equipment with a FMV of 51000. His basis in the equipment is 35000. How much gain must the SA general partnership recognize on the transfer of these assets from Sue and Andrew?
Answer: $0
Explanation:
Gains are not recognized when assets are transferred. They are only recognised when assets are disposed of. In the above scenario, Sue and Andrew TRANSFERRED the assets to the company and so SA General Partnership cannot recognize a gain until the assets are disposed of.
It is worthy of note that a Carryover basis transaction has taken place in this scenario. This means that the basis in the assets of Sue and Andrew have been transferred to the SA General Partnership.
Joiner Lumber has projected these monthly sales estimates: April $1,800 May $2,400 June $2,700 July $2,900 The firm collects 25 percent of its sales in the month of sale, 60 percent in the month following the month of sale, and another 14 percent in the second month following the month of sale. The firm never collects 1 percent of its sales. What is the amount of cash collections in July
Answer:
Total cash collection= $2,681
Explanation:
Giving the following information:
Sales:
April= $1,800
May= $2,400
June= $2,700
July= $2,900
The firm collects 25 percent of its sales in the month of sale, 60 percent in the month following the month of sale, and another 14 percent in the second month following the month of sale.
Cash collection July:
From July= (2,900*0.25)= 725
From June= (2,700*0.60)= 1,620
From May= (2,400*0.14)= 336
Total cash collection= $2,681
10-20 Royal Cigar Company is preparing a budget for cash collections. Its sales for November and December are estimated as $90,000 and $100,000, respectively. Past practice indicates that sales in any given month are collected as follows: month of sale, 75%; month following the month of sale, 20%; uncollectible accounts, 5%. The company allows a 2% discount for cash collections in the month of sale. What is the net cash estimated to be collected in December
Answer:
$91,500
Explanation:
Given that cash collection pattern is as follows; month of sale, 75%; month following the month of sale, 20%; and a 2% discount for cash collections in the month of sale, it means that cash estimated for collection in December will include;
75% sales in December (net of the 2% discount to be given)20% sales in NovemberDiscount for December cash collection
= 2% * 75% * $100,000
= $1500
Hence, net cash estimated to be collected in December
= 75% * $100,000 + 20% * 90,000 - $1500
= $75,000 + $18,000 - $1500
= $91,500
The estimated net cash collection for the Royal Cigar Company in December, is calculated considering both the sales of December and the collections from November sales. Applying their discount and collections ratio, it results in a 73% collection from December's $100,000 sales, and 20% from November's $90,000 sales. Adding these together ($73,000 + $18,000), the net cash collection for December is estimated to be $91,000.
Explanation:To find the net cash collected by the Royal Cigar Company in December, you need to take into account both the sales made in December and the sales made in November that will be collected in December, while considering the percentages of payment month, discounts, and uncollected accounts.
First, let's calculate the cash collected from the sales made in December. We know that 75% of the sales are collected in the month of the sale, but there's a 2% discount, which means 73% of the $100,000 sales, which equals to $73,000.
Then, we add the cash collected from November sales in December, which, according to the company practice is 20% of the total November sales, so this is 20% of $90,000, which is $18,000.
We then sum the two amounts: $73,000 from December sales and $18,000 from November sales. So, the total estimated net cash collection in December is $91,000.
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The Genworth Company adopted the dollar-value LIFO method on January 1, 2021 when the inventory value of its one inventory pool was $522,000. The company decided to use an external index, the Consumer Price Index (CPI), to adjust for changes in the cost level. On January 1, 2021, the CPI was 240. On December 31, 2021, inventory valued at year-end cost was $588,000 and the CPI was 252.
Required:
1. Calculate the inventory value at the end of 2021 using the dollar-value LIFO method.
Answer:
$561,900
Explanation:
The computation of inventory value at the end is shown below:-
Inventory at base year price = Inventory valued at year-end cost × Jan 1 CPI ÷ End CPI
= $588,000 × 240 ÷ 252
= $560,000
Change from prior year = Inventory at base year price - Inventory pool
= $560,000 - $522,000
= $38,000
Dollar value inventory = Inventory pool + (Change from prior year × End CPI ÷ Jan 1 CPI)
= $522,000 + ($38,000 × 252 ÷ 240)
= $522,000 + $39,900
= $561,900
Final answer:
To calculate the inventory value at the end of 2021 using the dollar-value LIFO method, multiply the base year inventory value by the price index.
Explanation:
To calculate the inventory value at the end of 2021 using the dollar-value LIFO method, we need to first determine the inventory value at the base year (which is 2021 in this case). The base year inventory value is $522,000. Then, we need to calculate the price index for the current year. The price index is determined by dividing the current year's end inventory value ($588,000) by the current year's CPI (252). The price index is calculated as: 588,000 / 252 = 2,333.33. Finally, we multiply the base year inventory value by the price index to get the inventory value at the end of 2021. The inventory value at the end of 2021 using the dollar-value LIFO method is: 522,000 * 2,333.33 = $1,219,999.26.
The unemployment compensation program:
a. makes recessions more severe.
b. makes recessions more severe and inflationary episodes less severe.
c. makes recessions less severe and inflationary episodes more severe.
d. makes recession less severe.
e. has no effect on the severity of recessions and inflationary episodes.
Answer:
I would answer makes recession less severe
Explanation:
Unemployment compensation is an example of: automatic stabilizer
Final answer:
The unemployment compensation program acts as an automatic stabilizer, D. making recessions less severe by supporting aggregate demand through income support to the unemployed.
Explanation:
The unemployment compensation program is often seen as a form of automatic stabilizer that helps to cushion the economic blow of a recession by providing income support to those who lose their jobs. This income support helps to maintain aggregate demand by giving the unemployed funds to continue spending, preventing a steeper decline in economic activity. Thus, rather than making recessions more severe, the program tends to make recessions less severe.
During inflationary episodes, the effect of unemployment compensation is not as straightforward. While it can provide some countercyclical pressure by supporting demand, if the inflation is driven by cost-push factors, such as a rise in the price of oil, increased spending from unemployment benefits could contribute to the inflationary pressure. However, typically, inflation is not driven by such factors, and the main role of unemployment compensation is to stabilize output rather than influencing inflation significantly. In conclusion, the primary effect of unemployment compensation is as a stabilizer during recessions rather than as an inflationary force.
Selling, general, and administrative expenses were $59,000; net sales were $268,100; interest expense was $6,300; research and development expenses were $27,800; net cash provided by operating activities was $69,900; income tax expense was $6,700; cost of goods sold was $145,500. Required: a. Calculate operating income for the period. b. Calculate net income for the period.
Answer:
a. $35,800
b. $22,800
Explanation:
The computation of the net operating income and the net income is shown below:
a. Net operating income is
= Net sales - cost of goods sold - Selling, general, and administrative expenses - research and development expenses
= $268,100 - $145,500 - $59,000 - $27,800
= $35,800
b. Now the net income is
= Net operating income - interest expense - tax expense
= $35,800 - $6,300 - $6,700
= $22,800
We simply applied the formula in order to get the net operating income and the net income
Saskatchewan Forestry Company purchased a timber tract for $225,000 and estimates that it will be depleted evenly over its 10-year useful life with no residual value. Prepare the journal entry that would be recorded if 10 percent of the total timber is cut and placed into inventory during the current year
Answer:
generally you need to determine the cost per unit, but in this case you are given a percentage of depletion = 10% x $225,000 = $22,500 which determines the inventory value (or depletion expense if the timber is sold) during the year.
the journal entry should be:
December 31, 20xx
Dr Timber inventory 22,500
Cr Accumulated depletion - timber tract 22,500
Final answer:
A journal entry to record the depletion of timber at Saskatchewan Forestry Company involves debiting Depletion Expense and crediting Inventory—Timber by 10% of the initial cost of the timber tract, which amounts to $22,500 each.
Explanation:
The student's question is related to the journal entry for depletion expense in the accounting of natural resources by a company. When 10 percent of the timber is harvested from the tract purchased by Saskatchewan Forestry Company, an entry needs to be made to reflect the cost associated with the depletion of that portion of the timber tract.
Journal Entry Example:
Depletion Expense: $22,500
Inventory—Timber: $22,500
To record this journal entry: Debit Depletion Expense for the cost of the depleted timber, which is 10% of $225,000 (the cost of the timber tract), resulting in a value of $22,500. At the same time, we credit the Inventory—Timber account to reflect the addition of this timber to inventory, with the same value of $22,500.
Supler Corporation produces a part used in the manufacture of one of its products. The unit product cost is $19, computed as follows: Direct materials $ 7 Direct labor 5 Variable manufacturing overhead 2 Fixed manufacturing overhead 5 Unit product cost $ 19 An outside supplier has offered to provide the annual requirement of 6,600 of the parts for only $15 each. The company estimates that 80% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be:
Answer :
Advantage = $3
Explanation :
As per the data given in the question,
Particulars Manufacturing buying
Purchase from outside suppliers $15
Direct material $7
Direct labor $5
Variable manufacturing overhead $2
Fixed manufacturing overhead $4
Total cost $18 $15
Fixed manufacturing overhead = $5 × 80% = $4
Since it give the net advantage of $3
Hence, Supler Corporation should purchase from the outside supplier.
We compare the manufacturing and buying cost and according to the cost we take the decision. As we can see that the buying cost is less than the manufacturing cost so it would give the advantage of $3
On April 1, 2019, SBD Corp. paid $120,000 for rent on a new warehouse space one year in advance. On October 1, 2019, SBD Corp. entered into a lease agreement to rent out its old warehouse space it was no longer using. This agreement calls for SBD to receive $8,000 per month from the lessee (i.e. tenant), due and payable at the end of the 4-month lease term. On December 31, 2019, none of the rental payments from the lessee had yet been received.
a. if SBD makes the appropriate adjusting entry how much will be reported on the December 31, 2019, income statement for rent expense
b. If SBD makes the appropriate adjusting entry how much will be reported on the December 31 2019 balance sheet as prepaid rent and rent receivable respectively
Answer and Explanation:
a. Since the advance rent payment is made for $120,000 on April 1 but we have to reported till December 31 i.e for 9 months instead of 12 months
So, the amount reported is
= $120,000 × 9 months ÷ 12 months
= $90,000
Therefore, the adjusting entry is
Rent expense Dr $90,000
To Prepaid rent $90,000
(Being the rent expense is recorded)
And the other adjusting entry for 3 months for old warehouse is
Rent receivable Dr $24,000 ($8,000 × 3 months)
To Rent income $24,000
(Being the rent receivable is recorded)
Hence, the $90,000 should be reported as a rent expense on the income statement
b. After recording the appropriate adjusting entry, the amount reported as a prepaid rent and rent receivable in the asset side of the balance sheet is $30,000 and $24,000 respectively.
The December 31, 2019, income statement will report $16,000 as rent expense. The December 31, 2019, balance sheet will report $96,000 as prepaid rent and there will be no rent receivable reported.
Explanation:a. The appropriate adjusting entry for rent expense on the December 31, 2019, income statement would be $16,000. This is calculated by multiplying the monthly rental payment of $8,000 by the 2 months that have passed (October and November)
b. The appropriate adjusting entry for prepaid rent on the December 31, 2019, balance sheet would be $96,000. This is calculated by subtracting the amount already reported on the income statement ($16,000) from the total prepayment of $120,000. There would be no rent receivable reported on the balance sheet because the rental payments had not yet been received.
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On June 27, 2021, American Airlines distributed to its common shareholders 590,000 outstanding common shares of its investment in Kraft Foods. The book value on American Airline's books of Kraft's $1 par common stock was $3.90 per share. Immediately after the distribution, the market price of Kraft's stock was $4.40 per share. In its income statement for the year ended June 30, 2023, what amount should American Airlines report as gain on disposal of the stock (ignore taxes)?
Answer:
$295,000
Explanation:
Given the information:
Total outstanding common shares: 590,000Shares value before deal = $3.9Shares value after deal = $4.4The amount should American Airlines report as gain on disposal of the stock (ignore taxes) can be calculated as following formula:
Gain amount on disposal = Total number of shares × Difference in share value
= 590,000*($4.40 - $3.90)
= $295,000
Hence, gain on disposal of the stock of American Airlines is $295,000
Final answer:
American Airlines should report a gain on disposal of the Kraft Foods stock equal to the difference between the market price and the book value of the stock multiplied by the number of shares distributed.
Explanation:
In its income statement for the year ended June 30, 2023, American Airlines should report a gain on disposal of the Kraft Foods stock equal to the difference between the market price and the book value of the stock multiplied by the number of shares distributed. The market price of Kraft's stock was $4.40 per share, and the book value was $3.90 per share. So, the gain on disposal per share is $4.40 - $3.90 = $0.50. Therefore, the gain on disposal of the stock is $0.50 * 590,000 = $295,000.
Which of the following statement(s) is/are true?
A. The critical path is the path with the most activities.
B. The critical path is the path with the longest duration.
C. The critical path is the path with the greatest variability.
D. There can only be one critical path.
E. In CPM, another path could become critical.
F. In PERT, another path could become critical.
G. None of the above.
Answer:
The correct answer is option (F)In PERT, another path could become critical.
Explanation:
Solution
From the given question, the following statement is true, If In PERT another path could become critical.
Now,
Depending on the standard deviation of another path or way, even with a shorter duration or period, the higher degree of variability could bring about the change in a critical path or result in the critical path being changed.
The correct statements referring to the critical path in project management are B, E, and F: (B) It is the path with the longest duration, and in both CPM and PERT methodologies, (E and F) another path could become critical due to changes in the project.
Explanation:The critical path in project management is a key concept often examined in Business studies, specifically when discussing project management methodologies like Critical Path Method (CPM) and Program Evaluation and Review Technique (PERT). Clarifying the statements provided regarding the critical path:
Therefore, statements B, E, and F are true regarding the critical path.
In 2004, Horton Company purchased a tract of land as a possible future plant site. In January, 2012, valuable sulphur deposits were discovered on adjoining property and Horton Company immediately began explorations on its property. In December, 2012, after incurring $800,000 in exploration costs which were accumulated in an expense account, Horton discovered sulphur deposits appraised at $4,500,000 more than the value of the land. To record the discovery of the deposits, Horton should A) make no entry. B) debit $800,000 to an asset account. C) debit $4,500,000 to an asset account. D) debit $5,300,000 to an asset account.
Answer:
The correct answer is (b) Debit $800,000 to an asset account
Explanation:
Solution
Given that:
Under the principles or rules of Successful Efforts(SE) method, the cost of exploration is capitalized when the exploration is successful or useful.
Now,
The sulphur deposits have been found, hence exploration cost of $800,000 will be debited or deducted to Asset Account.
In conclusion, the accounting entry will be Debit $ 800,000 to Asset Account.
Pauley Company provides home health care. Pauley charges $35 per hour for the professional care. The variable costs are $21 per hour and the fixed costs are $78,000. Next year, Pauley would like to earn an operating income of $37,500. How many hours of the professional care must Pauley provide to achieve the target income? a.5,571 hours b.3,714 hours c.8,250 hours d.2,679 hours e.5,500 hours
Answer:
c.8,250 hours
Explanation:
The computation is shown below:
= (Fixed expenses + target profit) ÷ (Contribution margin per unit)
where,
Contribution margin per unit = Selling price per unit - Variable expense per unit
= $35 - $21
= $14
Now the number of hours to achieve the target income is
= ($78,000 + $37,500) ÷ ($14)
= 8,250 hours
We simply applied the above formula
Pack, Inc. applies manufacturing overhead on the basis of machine hours. The following estimates were used for the current year: Estimated Machine Hours 200,000 Estimated Manufacturing Overhead $1,000,000 Actual machine hours were 202,000 and actual manufacturing overhead was $1,005,000. What was Pack's over- or under-applied overhead for the year and what was its effect on cost of goods sold (prior to adjustment)?
Answer:
Instructions are below.
Explanation:
Giving the following information:
Estimated Machine Hours 200,000
Estimated Manufacturing Overhead $1,000,000
Actual machine hours were 202,000
actual manufacturing overhead was $1,005,000.
First, we need to calculate the estimated overhead rate for the period:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 1,000,000/200,000= $5 per machine hour
Now, we can allocate overhead based on actual hours:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 5*202,000= $1,010,000
Finally, we need to determine the under/over allocation:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 1,005,000 - 1,010,000= 5,000 overallocated
The effect on the cost of goods sold is that it will be overestimated in the income statement.
Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $38,000 and a remaining useful life of five years, at which time its salvage value will be zero. It has a current market value of $48,000. Variable manufacturing costs are $34,000 per year for this machine. Information on two alternative replacement machines follows. Alternative A Alternative B Cost $ 117,000 $ 119,000 Variable manufacturing costs per year 22,300 10,100 Calculate the total change in net income if Alternative A, B is adopted. Should Xinhong keep or replace its manufacturing machine? If the machine should be replaced, which alternative new machine should Xinhong purchase?
Answer:
Calculate the total change in net income if Alternative A, B is adopted.
If alternative A is adopted, the total change in net income will be:
Given:
Cost of new machine = $117,000
Market value of old machine = $48,000
Variable manufacturing cost savings = ($34,000 - $22,300)*5years
= $58,500
The total change in net income=
(market value of old machine+ savings on variable manufacturing costs - cost of new machine)
= $48,000 + $58,500 - $117,000
= - $10,500
The total change in net income if Alternative A is adopted is $10,500.
__________________________
If alternative B is adopted, the total change in net income will be:
Given:
Cost of new machine = $119,000
Market value of old machine = $48,000
Variable manufacturing cost savings = ($34,000 -$10100)*5years
= $119,500
The total change in net income=
(market value of old machine+ savings on variable manufacturing costs - cost of new machine)
=$48,000 + $119,500 - $119,000
= $48,500
The total change in net income if Alternative B is adopted is $48,500
__________________________
From the calculation, we could see net income for alternative B is higher and it is also positive, compared to alternative A which is a negative and lower.
Therefore, if the machine should be replaced, alternative B should be usrd
Clothing purchased land, paying $ 105 comma 000 cash and signing a $ 320 comma 000 note payable. In addition, Clawson paid delinquent property tax of $ 2 comma 000, title insurance costing $ 850, and $ 5 comma 500 to level the land and remove an unwanted building. Record the journal entry for purchase of the land. Begin by determining the cost of the land.
Answer:
Land $433,350 (debit)
Cash $113,350 (credit)
Note Payable $ 320,000 (credit)
Explanation:
IAS 16 - Cost of Asset includes Purchase Cost and other costs directly incurred in putting the asset in the location and condition intended for use by management.
Calculation of the Cost of Land
Purchase Price: Cash 105,000
: Note 320,000
Delinquent Property tax 2,000
Title Insurance 850
Preparation Costs 5,500
Total 433,350
Journal
Land $433,350 (debit)
Cash $113,350 (credit)
Note Payable $ 320,000 (credit)
When the cost of a resource is sunk, then the dual price can be interpreted as the:
a) maximum amount the firm should be willing to pay for multiple additional units of the resource.
b) minimum amount the firm should be willing to pay for multiple additional units of the resource.
c) maximum amount the firm should be willing to pay for one additional unit of the resource.
d) minimum amount the firm should be willing to pay for one additional unit of the resource.
Answer:
C. Maximum amount the firm should be willing to pay for one additional unit of the resource.
Explanation:
Dual pricing is similar to price discrimination. It is said to be the practice of setting different prices in different markets for the same product or service. This tactic may be used by a business for a variety of reasons, but it is most often an aggressive move to take market share away from competitors.
Dual pricing is illegal only when it can be proved that a manufacturer set prices unrealistically low for the purpose of unfairly driving out competition.
And in a case where the cost of a resource is been sunk, dual price is interpreted as the maximum amount the firm should be willing to pay for one additional unit of the resource.
Suppose Deed Corporation evaluates managerial performance using return on investment. Edith Carolina, as president of the company, may view the opportunity for taking on the cosmetics line differently from Michael Sanders, manager of the Cosmetics Division. What action would each of them prefer with respect to the decision of whether to take on the new cosmetics line
Answer:
Eddith Carolina could accept to take on the new cosmetic line, while Michael Sanders may reject same.
Explanation:
Eddith Carolina, been the president of the company, has shown that he's a risk taker. The idea behind this is that he is open to new opportunities that could otherwise improve his holdings and networth. The decision to take on a new cosmetic line is therefore in line with the policy of the President of the company. The implication is that Eddith Carolina is tilted to accepting the proposal.
Michael Sanders, on the other hand, is an ordinary employee. Even though he is the manager of the division, he bears no risk of ownership. And in an event of liquidation or solvency, he simply has no big collateral to part with, unlike the Eddith Carolinas. What individual like Michael Sanders are interested in is the protection of their job and income. Knowing the nature of an employee as conservative and risk averse and the fear of not loosing their paid job, it is therefore not surprising that Michael Sanders could reject the new cosmetic line bid.
Riverboat Adventures pays $120,000 plus $20,000 in closing costs to buy out a competitor. The real estate consists of land appraised at $22,100, a building appraised at $66,300, and paddle boats appraised at $81,600. Compute the cost that should be allocated to the building.
Answer:
$54,600
Explanation:
The computation of the cost that should be allocated to the building is shown below
Total purchase cost is
= $120,000 + $20,000
= $140,000
Total appraisal value is
= $22,100 + $66,300 + $81,600
= $170,000
Now cost allocated to building is
= Purchase cost × building appraisal value ÷ Total appraisal value
= $140,000 × $66,300 ÷ $170,000
= $54,600
We simply applied the above formula
Using the present value tables in Exhibits 26-3 and 26-4, Assume that the required rate of return for investment projects at Rippenstock Corporation is 12 percent. One department has proposed investment in new equipment with a 10-year life span and a present value of expected future annual cash flows of $120,000. The equipment’s initial outlay cost is $125,000 and it has a salvage value of $10,000. Will this investment project meet the required rate of return for the company? (Round your "PV factors" to 3 decimal places.)
Answer:
No
Explanation:
the required rate of return = 12%
if the present value of the project's cash flows after being discounted at the required rate of return = $120,000, then the net present value (NPV) of the project is negative. Future cash flows are discounted at the company's required rate of return, if they were discounted at a lower rate, their present value would be higher.
Any project with a negative NPV should be rejected because it doesn't provide enough cash flows.
In preparing its cash flow statement for the year ended December 31, 2021, Green Co. gathered the following data: Gain on sale of land $ 12,100 Proceeds from sale of land 21,600 Purchase of Black, Inc., bonds (face value $200,000) 363,000 Amortization of bond discount 4,200 Cash dividends declared 92,000 Cash dividends paid 76,000 Proceeds from sales of Green Co. common stock 153,000 In its December 31, 2021, statement of cash flows, what amount should Green report as net cash from financing activities?
Answer:
$77,000
Explanation:
Data provided as per the question below:-
Proceeds from sale of common stock = $153,000
Cash dividends paid = $76,000
The computation of net cash from financing activities is given below:-
Cash inflow from Financing Activities = Proceeds from sale of common stock - Cash dividends paid
= $153,000 - $76,000
= $77,000
Therefore for computing the net cash from financing activities we simply applied the above formula.
Final answer:
Green Co. should report $77,000 as net cash from financing activities, calculated by subtracting the cash dividends paid ($76,000) from the proceeds from sales of Green Co. common stock ($153,000).
Explanation:
The question is asking to calculate the net cash from financing activities for Green Co. Looking at the data provided:
Proceeds from sales of Green Co. common stock: $153,000Cash dividends declared: $92,000Cash dividends paid: $76,000In the cash flow statement, cash received from issuing stock is considered a financing activity. However, cash dividends declared is not a financing activity; only the cash dividends paid affects financing activities. Thus, to calculate net cash from financing activities, we only need to consider the proceeds from the sale of common stock and the cash dividends paid:
Net cash from financing activities = Proceeds from sale of common stock - Cash dividends paid
Net cash from financing activities = $153,000 - $76,000
Net cash from financing activities = $77,000
Therefore, Green Co. should report $77,000 as net cash from financing activities.
1. On November 16, 2019, a U.S. company makes a sale to a customer in Germany. Under the sale terms, the customer will pay the company €100,000 on March 16. On November 16, the company also enters a forward contract to sell €100,000 on March 16, 2020. On March 16, the company receives €100,000 from the customer and sells it using the forward contract. The company's accounting year ends December 31. Rates on the dates specified appear below: Spot Rate Forward Rate for March 16, 2020 Delivery November 16, 2019 $ 1.250 $ 1.248 December 31, 2019 1.260 1.255 March 16, 2020 1.265 1.265 2. At what amount will the company report sales revenue on its 2019 income statement? A. $125,000 B. $125,500 C. $124,800 D. $126,000
Answer:
$125,000
Explanation:
Given the following resorted data from the question:
Spot Rate Forward Rate for
March 16, 2020 Delivery
November 16, 2019 $1.250 $ 1.248
December 31, 2019 1.260 1.255
March 16, 2020 1.265 1.265
The applicable rate to use to calculate the amount the company will report sales revenue on its 2019 income statement is the spot rate ruling on the date the company made the sale to the customer in Germany, i.e. $1.250 on November 16, 2019.
Therefore, we have:
Sales revenue = €100,000 * $1.250 = $125,000.
Therefore, the amount the company will report sales revenue on its 2019 income statement is $125,000.
Saxbury Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 4,700 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 6.10 Direct labor $ 3.60 Variable manufacturing overhead $ 1.70 Fixed manufacturing overhead $ 3.90 Fixed selling expense $ 0.75 Fixed administrative expense $ 0.60 Sales commissions $ 0.50 Variable administrative expense $ 0.50 Required: a. For financial reporting purposes, what is the total amount of product costs incurred to make 4,700 units
Answer:
$71,910
Explanation:
The computation of the total amount of the product cost for 4,700 units is shown below:
= ( Direct materials per unit + Direct labor per unit + Variable manufacturing overhead per unit + Fixed manufacturing overhead per unit) × making units
= ($6.10 + $3.60 + $1.70 + $3.90) × 4,700 units
= $71,910
We simply considered the direct material, direct labor, variable manufacturing overhead, and the fixed manufacturing overhead as it comes under the product cost
Sleepgood Company produces and sells pillows. It expects to sell 10,000 pillows in the next month and will have 1,000 pillows in finished goods inventory at the end of the current month. Sleepgood would like to complete operations next month with at least 1,000 completed pillows in inventory. There is no ending work-in-process inventory. The pillows sell for $6 each. How many pillows would be produced in the next month? Group of answer choices 10,000 pillows 15,350 pillows 14,350 pillows 14,850 pillows
Answer:
Production budget for next month = 10,000 units
Explanation:
The production budgeted for a particular period is the expected units to be produced after adjusting the sales budget figures for opening and closing inventories.
Production budget = Sales budget + closing inventory - opening inventory
Opening inventory for next month = closing inventory for this month = 1000 units
Closing inventory for next month is given as 1000 units
Production budget = 10,000 + 1,000 -10000
= 10,000 units
Answer:
10,000 pillows
Explanation:
hope this helps:)
Presented below is the income statement of Cowan, Inc.: Sales revenue $372,700 Cost of goods sold 221,800 Gross profit $150,900 Operating expenses 80,800 Income before income taxes 70,100 Income taxes 26,900 Net income $ 43,200 In addition, the following information related to net changes in working capital is presented: Debit Credit Cash $14,100 Accounts receivable 22,000 Inventories $18,600 Salaries payable (operating expenses) 8,700 Accounts payable 13,700 Income taxes payable 2,700 The company also indicates that depreciation expense for the year was $16,700 and that the deferred tax liability account increased $4,200. Prepare a schedule computing the net cash flow from operating activities by using the indirect method that would be shown on a statement of cash flows.(Show amounts that decrease cash flow with either a - sign e.g. -10,000 or in parenthesis e.g. (10,000).) Cowan, Inc. Statement of Cash Flows (Partial) (Indirect Method) $ Adjustments to reconcile net income to $ $ Prepare a schedule computing the net cash flow from operating activities by using the direct method that would be shown on a statement of cash flows. Cowan, Inc. Statement of Cash Flows (Partial) Direct Method $ $ $
1-
Cowan Inc
Statement of Cash Flows (Partial)
(Indirect Method)
Cash flows from Operating Activities
Net Income 43200
Adjustment to reconcile
net income to net cash
provided by operating activities:
Increase in accounts receivable (22000)
Decrease in Inventories 18600
Decrease in salaries payable
(Operating expenses) (8700)
Increase in accounts payable 13700
Decrease in income taxes payable (2700)
Depreciation expense 16700
Increase in deferred tax liability 4200 19800
Net cash provided by operating activities 63000
2-
Cowan Inc
Statement of Cash Flows (partial)
(Direct Method)
Cash Flows from Operating Activities:
Cash Received from Customers (372700-22000) 350700
Cash paid to suppliers (221800-18600-13700) 189500
Operating Expenses Paid (80800+8700-16700) 72800
Taxes Paid (26900+2700-4200) 25400 287700
Net cash provided by operating activities 63000
Poulter Corporation will pay a dividend of $3.25 per share next year. The company pledges to increase its dividend by 5.1 percent per year, indefinitely. If you require a return of 11 percent on your investment, how much will you pay for the company’s stock today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
Price of stock = $55.08
Explanation:
The price of a stock is the present value of the future dividends discounted at the required rate of return.
P = D/(r-g)
P-price of stock today, D- Dividend in year's time, r- required rate of return,
g- growth rate in dividend
Using the following parameters:
P =?, r- 11%, g- 5.1%
P = 3.25/(0.11-0.051)
P = 55.08474576
Price of stock = $55.08
Metropolitan Power and Light is a monopoly in the electrical generation and distribution industry. Since it does not face any competition in its industry, it has become quite lax in research and development and has not made any improvements to its efficiency. It also spends lavishly on its corporate retreats because it has a high level of guaranteed profits every year. Its actions are an example of:
Answer: x-inefficiency.
Explanation: Since it does not face any competition in its industry, the actions of Metropolitan Power and Light are an example of x-inefficiency which is a situation in which monopolies find themselves wherein they do not have to act efficiently since they are protected from competitive pressures. X-inefficiency is also applied to analyzing the average costs in imperfectly competitive markets whose average costs are higher than they would be if the market was more efficient.
. On January 2, 2012, Wine Corporation wishes to issue $3,000,000 (par value) of its 8%, 10-year bonds. The bonds pay interest annually on January 1. The current yield rate on such bonds is 10%. Using the interest factors below, compute the amount that Wine will realize from the sale (issuance) of the bonds. Present value of 1 at 8% for 10 periods 0.4632 Present value of 1 at 10% for 10 periods 0.3855 Present value of an ordinary annuity at 8% for 10 periods 6.7101 Present value of an ordinary annuity at 10% for 10 6.1446 periods A) $3,000,000 B) $2,631,204 C) $3,000,018 D) $3,318,078
Answer:
The correct option is B,$2,631,204
Explanation:
The amount Wine corporation would realize from the sale of the bonds is the present value of all cash flows payable by the bond which includes the annual interest payments as well as the principal repayment in 10 years.
amount of interest payment=$3,000,000*8%=$240,000
The $240,000 would be received by investors for 10 years
The principal is the face value of $3000,000 payable in year ten
Present of face value=$3,000,000*0.3855=$1156500
present value of all interest payments=$240,000*6.1446=$1474704
Total present values=$1474704 +1156500 =$2631204