Answer and Explanation:
As per the data given in the question,
Differential analysis
Continue cup(Alt. 1) Discontinue cups(Alt 2)
Particulars Alt 1 Alt 2 Differential
Effect on income
Revenues $31,300 $0 $31,300
Costs:
Variable cost of goods sold $14,280 $0 $14,280
($16,800×(100%-15%)
Variable selling and admin expenses $10,020 $0 $10,020
($16,700(100%-40%)
Fixed cost $9,200 $9,200 $0
($16,800×15%+$16,700×40%)
Net income ($2,200) ( $9,200) ($7,000)
The following section is taken from Blossom's balance sheet at December 31, 2021. Current liabilities Interest payable $ 40,500 Long-term liabilities Bonds payable (8%, due January 1, 2025) 505,000 Interest is payable annually on January 1. The bonds are callable on any annual interest date. (a) Journalize the payment of the bond interest on January 1, 2022. (b) Assume that on January 1, 2022, after paying interest, Blossom calls bonds having a face value of $100,000. The call price is 103. Record the redemption of the bonds. (c) Prepare the adjusting entry on December 31, 2022, to accrue the interest on the remaining bonds.
Answer:
(a) Journalize the payment of the bond interest on January 1, 2022.
Dr Interest payable - bonds payable 40,400
Cr Cash 40,400
The interest expense on the bonds payable should have been accrued on the 2021 balance sheet, that is why we debit interest payable and not interest expense.
(b) Assume that on January 1, 2022, after paying interest, Blossom calls bonds having a face value of $100,000. The call price is 103. Record the redemption of the bonds.
Dr Bonds payable 100,000
Dr Call premium 3,000
Cr Cash 103,000
(c) Prepare the adjusting entry on December 31, 2022, to accrue the interest on the remaining bonds.
interest expense = $405,000 x 8% = $32,400
Dr Interest expense - bonds payable 32,400
Cr Interest payable - bonds payable 32,400
Final answer:
Long-term liabilities, such as bonds payable, require specific journal entries for payment and adjusting entries for accrued interest. Understanding these entries is key in handling financial obligations effectively.
Explanation:
Long-term liabilities are debts that are due to be paid beyond one year. They are shown on a company's balance sheet. When journalizing the payment of bond interest, the company would debit Interest Expense and credit Cash. If bonds are called, the company debits Bonds Payable, debits the related Premium on Bonds Payable account, and credits Cash for the amount paid. The adjusting entry on December 31, 2022, to accrue interest on the remaining bonds would involve debiting Interest Expense and crediting Interest Payable.
Bramble Kars provides shuttle service between four hotels near a medical center and an international airport. Bramble Kars uses two 10-passenger vans to offer 12 round trips per day. A recent month’s activity in the form of a cost-volume-profit income statement is shown below. Fare revenues (1,450 fares) $36,250 Variable costs Fuel $4,350 Tolls and parking 2,175 Maintenance 725 7,250 Contribution margin 29,000 Fixed costs Salaries 17,300 Depreciation 1,430 Insurance 1,110 19,840 Net income $9,160 Calculate the break-even point in dollars. Break-even point $ eTextbook and Media Calculate the break-even point in number of fares. Break-even point fares eTextbook and Media Without calculations, determine the contribution margin at the break-even point. Contribution margin at the break-even point $
Answer:
contribution margin at break even point = $19,840
Explanation:
total revenues $36,250
variable costs ($7,250)
fuel ($4,350)tolls and parking ($2,175)maintenance ($725)contribution margin $29,000
fixed costs ($19,840)
salaries ($17,300)depreciation ($1,430)insurance ($1,110)net income $9,160
contribution margin at break even point = $19,840
The contribution margin represents the point where total revenue is barely enough to cover for fixed expenses. Any revenue above the contribution margin will result in profits, but if revenues are lower, the company will suffer losses.
In this case, the contribution margin at break even point = total fixed expenses.
The formula used to calculate break even point in units is:
break even point in units = total fixed costs / contribution margin per unit
total fixed costs = $19,840contribution margin per unit = ($36,250/1,450 fares) - ($7,250/1,450 fares) = $25 - $5 = $20break even point in units = $19,840 / $20 = 992 fares
According to the U.S. Treasury Group of answer choices companies must accept some form of cash payment for goods and services, but not necessarily U.S. dollars. firms do not have to accept cash as payment for goods and services. the government will not accept cash in payment of taxes. U.S. dollars must be accepted as payment for any good or service sold in the United States.
Answer:
According to the U.S. Treasury U.S. dollars must be accepted as payment for any good or service sold in the United States.
Explanation:
The United States Treasury is charged with the responsibility of managing the dollar currency which is generally accepted as a legal tender in U.S.
They also manage the federal finances by collecting taxes. They accept cash as taxes.They manage the federal government's accounts and debt.They pay manage treasury bill.they also enforce financial policies made by government regarding taxes.In summary, the U.S. Treasury U.S. enforces the use of dollars as an acceptable form of payment for any good or service sold in the United States.
U.S. currency is declared to be the legal tender for all debts in the United States. Apart from cash, other modes of payment can also be accepted. In international trade, the currencies of the respective countries are usually involved.
Explanation:The U.S. currency, known as fiat money, is declared by the U.S. government to be legal tender for all debts, public and private, in the United States. This means that if you owe a debt, then legally speaking, you can pay that debt with U.S. currency.
While U.S. dollars must be generally accepted as payment in the United States, it's important to note that transactions don't strictly have to be performed using cash. For example, businesses can choose to accept cards or digital payments. In an international context, when trade across borders occurs, payments need to flow across borders too, usually in the form of different currencies. For instance, a Chinese firm exporting abroad will earn U.S. dollars but will need Chinese yuan to pay its inside expenses.
Learn more about Legal Tender and International Trade here:https://brainly.com/question/39652514
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Coffer Co. is analyzing two projects for the future. Assume that only one project can be selected. Project X Project Y Cost of machine $ 77,000 $55,000 Net cash flow: Year 1 28,000 2,000 Year 2 28,000 25,000 Year 3 28,000 25,000 Year 4 0 20,000 If the company is using the payback period method and it requires a payback of three years or less, which project should be selected?
Answer:
Hence, Project X should be selected because it has a payback period of 2 years 9 months which is less that the target payback period of 3 years
Explanation:
The payback period is the estimated length of time in years it takes
the net cash inflow from a project to equate and recoup the the initial cost
Where a project is expected to generate a series of equal annual net cash inflow, the payback period can be calculated as:
Project X
Initial Project Cost= 77,000
At the end of the 2nd year the total amount recouped would have = 28,000 +28000 = 56,000
Hence,
Payback period = 2 years + (77,000-56,000)/28,000× 12 months
= 2 years 9 months
Project Y
At the end of 3rd year the total amount recouped would have
= 2,000 + 25,000 + 25,000 = 52,000
Payback period = 3 years + (55,000-52,000)/20,000 × 12 months
= 3 years , 1.8 months
Decision:
The project with a payback period less than or equal to the target payback period of 3 years should be accepted. Otherwise, it should be rejected.
Hence, Project X should be accepted because it has a payback period of 2 years 9 months which is less that the target payback period of 3 years
Cheyenne Corporation obtained a franchise from Sage Hill Inc. for a cash payment of $128,000 on April 1, 2020. The franchise grants Cheyenne the right to sell certain products and services for a period of 8 years. Prepare Cheyenne’s April 1 journal entry and December 31 adjusting entry. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Answer and Explanation:
The journal entries are shown below:
On April 1
Franchise $128,000
Cash $128,000
(Being the franchise obtained is recorded)
It increased the assets and decreased the assets so both the accounts are debited and credited
On December 31
Amortization expense $12,000
Franchise $12,000
(Being amortization expense is recorded)
The computation is shown below:
= $128,000 × 9 months ÷ 12 months ÷ 8 years
= $12,000
It increased the expenses and decreased the assets so both the accounts are debited and credited
Final answer:
The transaction of obtaining a franchise by Cheyenne Corporation would involve a journal entry debiting 'Franchise' and crediting 'Cash'. The adjusting entry for amortization by the end of the year would debit 'Amortization Expense—Franchise' and credit 'Accumulated Amortization—Franchise' with the calculated prorated expense.
Explanation:
When Cheyenne Corporation obtains a franchise from Sage Hill Inc., the initial journal entry on April 1, 2020 would involve debiting the asset account 'Franchise' and crediting 'Cash' because an asset (the franchise rights) is being acquired for cash. Since the franchise has a limited life of 8 years, it must be amortized over this period. The yearly amortization expense is computed by dividing the initial franchise cost by the number of years, which in this case is $128,000 ÷ 8 = $16,000 per year. For the partial year from April 1 to December 31 (9 months), the prorated amortization expense would be $16,000 ÷ 12 × 9 = $12,000. Therefore, the December 31 adjusting entry involves debiting 'Amortization Expense—Franchise' and crediting 'Accumulated Amortization—Franchise'. The entries are as follows:
April 1, 2020
Debit Franchise $128,000Credit Cash $128,000December 31, 2020
Debit Amortization Expense—Franchise $12,000Credit Accumulated Amortization—Franchise $12,000Pocahontas School District, an independent public school district, financed the acquisition of a new school bus by signing a note for $105,000 plus interest on the unpaid balance at 6%. Annual principal payments of $35,000, plus interest, are due each July 1. Assuming that the District maintains its books and records in a manner that facilitates the preparation of the fund financial statements, the appropriate entry in the General Fund at the date of acquisition is
Answer:
Debit Expenditures $105,000
Credit Other financing sources $105,000.
Explanation:
Pocahontas School District Journal entry
Therefore Assuming that the District maintains its books and records in a manner that facilitates the preparation of the fund financial statements, the appropriate entry in the General Fund at the date of acquisition is
Debit Expenditures $105,000
Credit Other financing sources $105,000.
Because Pocahontas School District financed the acquisition of a new school bus by signing a note for $105,000 .
Suppose that there is asymmetric information in the market for used cars. Sellers know the quality of the car that they are selling, but buyers do not. Buyers know that there is a 40% chance of getting a "lemon", a low quality used car. A high quality used car is worth $30,000, and a low quality used car is worth $15,000. Based on this probability, the most that a buyer would be willing to pay for a used car is $ nothing. (Enter your response rounded to the nearest dollar.) Which of the following would best "solve" the asymmetric information problem in this market? A. High-quality sellers could offer warranties or product guarantees. B. Prohibiting the sale of low-quality cars. C. Low-quality sellers could establish industry standards. D. It is not possible to solve the asymmetric information problem in this market.
Answer:
Correct answer is A and C
Explanation:
Solution
For the price of the car,
The buyers willingly to pay for the used call is computed below:
From the question given, the probability the buyers know that there is a 40 % change of having a low quality used car
A quality of a higher used call is worth = $30,000'
A quality of a lower used call is worth= $15,000.
So,
The price of the car = lower quality of 40% * Higher quality of 60%
= 0.4 (15,000- X) + 0.6 (30,000)
X = 6000+ 18000
Therefore X = 24000
The value of buyers ready to pay for the car that is not new, but ude already is =$ 24,000
According to the simple monetary model, if money is growing at 5% in the United States and 6% in the United Kingdom, while real GDP if rising at 3% in the United States, and at 5% in the United Kingdom. a.What will this do to the exchange rate?b.From your answer in a above, would you increase or decrease your investments in the United Kingdom?c.What would you expect to happen to trade balance of the US? (hint: remember that trade balance = exports –imports)
Answer:
A)
Since the money supply is growing at a much faster rate than real GDP in the US, this means that the inflation rate in the US will be higher than the inflation rate in the UK. In both countries the money supply is growing at a faster rate, but the difference in the US is larger (money supply is growing 67% faster that real GDP), while the money supply in the UK is growing 20% faster than real GDP.
This means that the US dollar should depreciate against the British pound.
B)
If you have US dollars, then you should increase your investments in the UK because the pound will be worth more US dollars in the future.
C)
More American goods should be exported to the UK, and less British goods should be imported to the US. Since the US dollar should be cheaper, American products are cheaper. The opposite will happen to British products.
In the simple monetary model, increased U.S. interest rates from rising GDP lead to a decreased exchange rate, impacting investments and trade balance.
In the simple monetary model, an increase in the U.S. interest rate due to a rise in real GDP causes a decrease in the exchange rate, leading to the appreciation of the U.S. dollar and the depreciation of the British pound. This shift is represented by a movement along the AA-DD diagram.
Increasing investments in the United Kingdom would not be favorable due to the expected depreciation of the British pound, making U.S. assets more attractive. International investors may shift funds back to the United States.
With the appreciated U.S. dollar, the trade balance of the U.S. may worsen as exports become more expensive for other countries, potentially leading to a decrease in exports and an increase in imports.
Presented below is information related to Concord Corporation: Common Stock, $1 par $3410000 Paid-in Capital in Excess of Par―Common Stock 560000 Preferred 8 1/2% Stock, $50 par 2090000 Paid-in Capital in Excess of Par―Preferred Stock 388000 Retained Earnings 1440000 Treasury Common Stock (at cost) 150000 The total stockholders' equity of Concord Corporation is
Answer:
$7,738,000
Explanation:
The computation of total stockholders' equity is shown below:-
= $3,410,000 + $560,000 + $2,090,000 + $388,000 + $1,440,000 - $150,000
= $7,888,000 - $150,000
= $7,738,000
Therefore for computing the total stockholders' equity we simply add all values except treasury stock and deduct the treasury stock.
On March 1, 2022, Blossom Company acquired real estate, on which it planned to construct a small office building, by paying $94,000 in cash. An old warehouse on the property was demolished at a cost of $9,300; the salvaged materials were sold for $2,200. Additional expenditures before construction began included $3,100 attorney's fee for work concerning the land purchase, $6,400 real estate broker's fee, $10,900 architect's fee, and $18,600 to put in driveways and a parking lot.
Determine the amount to be reported as the cost of the land.
Answer:
$106,400
Explanation:
The cost of land includes the land itself, interventions related to the preparation of the land for its intended purpose, that do not depreciate, and any fees paid concerning specifically the acquisition of the land itself.
In this case, the following costs would be added to the cost of the land:
$94,000 paid for the land itself.
$9,300 paid for demolishing the warehouse (this is an intervention carried out to prepare the land for its intended use: constructing a building).
$3,100 paid to attorneys during the acquisition of the land.
Adding up these costs together we obtain the figure of $106,400. This is the total amount to be reported as the cost of the land.
The salvaged materials sold are not includd because they are obviously not part of the land.
The real estate broker's fee and the architect's fee are not included either because these fees are related to the building, not the land itself.
Finally, the driveway and parkway cost is not included either because, while land improvements, these are depreciable assets, and depreciable assets are not included in the cost of land, since land is considered to have permanent value, and thus, cannot be depreciated.
Fernwood Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $ 233,000 Cash dividends declared for the year 50,000 Proceeds from the sale of equipment 85,000 Gain on the sale of equipment 4,500 Cash dividends payable at the beginning of the year 22,000 Cash dividends payable at the end of the year 30,000 Net income for the year 110,000 The amount of cash paid for dividends was: Multiple Choice $52,000. $60,000. $58,000. $50,000. $42,000
Answer:
$58,000
Explanation:
Data given
Cash Dividends Payable at the beginning = $22,000
Cash dividends declared = $50,000
Cash dividends payable = $30,000
The computation of cash paid for dividends is shown below:-
Cash paid for dividends = Cash Dividends Payable at the beginning + Cash dividends declared - Cash dividends payable
= $22,000 + $50,000 - $30,000
= $58,000
Therefore for computing the cash paid for dividend we simply applied the above formula.
3. Problems and Applications Q3 Indicate whether each of the following actions represents foreign direct investment or foreign portfolio investment. Foreign Direct Investment Foreign Portfolio Investment Buying bonds issued by a foreign government Opening up a factory in a foreign country True or False: An individual investor is more likely to engage in foreign direct investment than a corporation.
Answer: Please refer to Explanation
Explanation:
Foreign Direct Investment refers to the establishment of a company in a country by a foreign company or the acquisition of a company by a foreign company. The main thing to note is that the foreign company is involved DIRECTLY in the running of the newly established or acquired company.
Foreign Portfolio Investment however, is investing in another country by means of purchasing shares, bonds or other financial instruments from that country.
Therefore we can then classify the above accordingly,
Buying bonds issued by a foreign government. FOREIGN PORTFOLIO INVESTMENT.
Opening up a factory in a foreign country. FOREIGN DIRECT INVESTMENT.
An individual investor is more likely to engage in foreign direct investment than a corporation. FALSE.
Foreign Direct Investment would simply be too expensive for the average individual to engage in. It is way more likely to be a Corperation.
Alfonso began the year with a tax basis in his partnership interest of $15,000. His share of partnership debt at the beginning and end of the year consists of $7,000 of recourse debt and $10,000 of nonrecourse debt. During the year, he was allocated $32,000 of partnership ordinary business loss. Alfonso does not materially participate in this partnership and he has $3,000 of passive income from other sources.A. How much of Alfonso’s loss is limited by his tax basis?
B. How much of Alfonso’s loss is limited by his at-risk amount?
C. How much of Alfonso’s loss is limited by the passive activity loss rules?
Answer:
A.Alfonso began the year with a tax basis in his partnership interest of $15,000 which means Alfonso’s basis before the loss allocation is $15,000 and $17,000 of which $32,000 loss allocation is been limited by his tax basis which definitely will be carry over to the next following year.
B.$5,000 of loss will remains after the tax basis and at-risk limitations, and Alfonso will have a $10,000 at-risk carryover.
C. $2,000
Explanation:
A.
Alfonso began the year with a tax basis in his partnership interest of $15,000 which means Alfonso’s basis before the loss allocation is $15,000 and $17,000 of which $32,000 loss allocation is been limited by his tax basis which definitely will be carry over to the next following year.
b.
Out of the $15,000 loss not limited by Alfonso’s tax basis, $10,000 is limited due to the fact that Alfonso’s at-risk amount is only $5,000( $15,000-$10,000)
Therefore $5,000 of loss will remains after the tax basis and at-risk limitations, and Alfonso will have a $10,000 at-risk carryover.
C.
Since Alfonso doesn’t participate in the partnership materially , he may try to only deduct the $5,000 loss which was left after the tax basis and at-risk limitations to the extent he has passive income from other sources. Hence, he may deduct $3,000 out of the $15,000 loss which will make him to have $2,000 as his passive activity loss carryover.
In 2016, Greece faced another set of hurdles in its ongoing saga of managing its debt. In order for Greece to maintain its obligations under the IMF and European Central Bank bailout packages, it must continue to cut government spending, particularly pensions that have put a strain on the budget. Greece's leaders, meanwhile, have argued that the required spending cuts will push the economy back into a recession. What will the required budget cuts do to an economy that is still experiencing slow growth
Answer:
AS decreases with negative impacts on aggregate output and prices.
Explanation:
Greece is cutting government spending, particularly pensions that have put a strain on the budget. This action will reduce the amount of money the citizens have and reduces the amount in the economy that can be used to increase production.
There are over 2.7 million pensioners in Greece, so a lot of households depend on them to make ends meet.
A reduction in pension will reduce disposable income that could have been put into local production. Aggregate supply will decrease, and the effect on output and prices will be a negative one.
gvWegmans Bakery produces cheese cake for sale. The bakery which operates 5 days per week and 52 weeks per year can produce cake at the rate of 40 cakes per day. The bakery sets up cake production operation and produces the predetermined quantity Q has been produced. The setup cost for a production run of cheese cake is $250. The holding cost is $5 per year. The annual demand for cheese cake is constant during the year and is equal to 4000. Determine the following: Round answers to nearest whole number. (a) the optimal production run quantity (Q). (b) the total annual inventory cost (AHC AOC). (c) the optimal number of production runs per year. (d) The run length (production run time).
Answer:
(a) the optimal production run quantity (Q) = 633
(b) the total annual inventory cost (AHC AOC) = $ 3,162.28
(c) the optimal number of production runs per year = 7
(d) The run length (production run time) = 16 days
Explanation:
(a) the optimal production run quantity (Q).
optimal production run quantity = √(2×Annual Demand×Setup Costs) / Holding Costs
= √(2×4000×$250)/ $5
= 633
(b) the total annual inventory cost (AHC AOC).
total annual inventory cost = Setup Costs + Holding Costs
= 4,000/633×$250+633/2×$5
= $1,579.78+$1,582.50
= $ 3,162.28
(c) the optimal number of production runs per year.
number of production runs per year = Total Demand / optimal production run quantity
= 4,000/633
= 7
(d) The run length (production run time).
production run time = optimal production run quantity / produce
= 633 / 40 cakes
= 16 days
The Donaldson Furniture Company produces three types of rocking chairs: the children's model, the standard model, and the executive model. Each chair is made in three stages: cutting, construction, and finishing. Stage Children's Standard Executive Cutting 5 hr 4 hr 7 hr Construction 3 hr 2 hr 5 hr Finishing 2 hr 2 hr 4 hr The time needed for each stage of each chair is given in the chart. During a specific week the company has available a maximum of 162 hours for cutting, 104 hours for construction, and 84 hours for finishing. Determine how many of each type of chair the company should make to be operating at full capacity.
Final answer:
To operate at full capacity, the company should make 10 children's chairs, 10 standard chairs, and 10 executive chairs.
Explanation:
To determine how many of each type of chair the company should make to be operating at full capacity, we need to consider the available hours for each stage and the time needed for each chair. Let's start by calculating the maximum number of chairs that can be made for each stage:
Cutting stage: 162 hours / (5 hours for children's + 4 hours for standard + 7 hours for executive) = 162 / 16 = 10.125, so the maximum number of chairs is 10 for cutting.
Construction stage: 104 hours / (3 hours for children's + 2 hours for standard + 5 hours for executive) = 104 / 10 = 10.4, so the maximum number of chairs is 10 for construction.
Finishing stage: 84 hours / (2 hours for children's + 2 hours for standard + 4 hours for executive) = 84 / 8 = 10.5, so the maximum number of chairs is 10 for finishing.
To maximize the production capacity, the company should make 10 children's chairs, 10 standard chairs, and 10 executive chairs.
Which of the follow are characteristics of the Republican Party?
Donkey is the symbol
supports gun rights
supports government interventions
Big in Northeast, West Coast, and large cities
Popular in Southern United States
Elephant is the symbol
Answer:
Supports Gun Rights
Popular in Southern United States
Elephant is the symbol
Explanation:
Leonard Stern, the chairman of Hartz Mountain, was concerned and outraged at the condition of New York City's homeless living in shelters and welfare hotels, and was determined to help them. Hartz Mountain backed loans for construction of clean, safe housing complexes, and helped create social programs to help homeless families. These efforts by Hartz Mountain are an example of a company's social responsibility to:
Answer:
These efforts by Hartz Mountain are an example of a company's social responsibility to: Philanthropy. It can also be called Corporate Philanthropic Responsibility.
Explanation:
Corporate philanthropic responsibility represents a company's contribution to the society in terms of making investments in educational programs, scholarships, health interventions, providing shelter and other notable feats that is supports community causes.
The intervention by Leonard Stern, the chairman of Hartz Mountain, who was concerned and outraged at the condition of New York City's homeless living in shelters and welfare hotels, and was determined to help them is a typical example of corporate philanthropic responsibility.
Thus providing the community clean, safe housing complexes, and helping to create social programs to help homeless families.
Two firms compete by setting quantities simultaneously (Cournot Competition) in a market where demand is described by � = 100 − 2(�! + �"). The marginal cost of production for Firm 1 and Firm 2 is $6 and $10 respectively. a. Derive the reaction function of each firm. b. Compute the Cournot equilibrium quantities. Note: answers may be fractions.
Answer:
(a).
(i). s1 = 1/4 ( 94 - 2s1), (ii). s2 = 1/4 (90 - 2s1).
(b). (i). s1 = 49/3, (ii). 43/3.
Explanation:
We are given that;
J = 100 – 2(s1 + s2).
Therefore, J = 100 - 2s1 - 2s2.
(a).
(i).For firm one;
Js1 = 100s1 - 2s1^2 - 2s1s2. ---------------(1).
Differentiate the equation above to give;
d Js1/d s1 = 100 - 4s1 - 2s2. -------------(2).
The expression (2) above is known as Marginal revenue 1.
Recall that for profit maximization; Marginal revenue = marginal cost.
Hence, 6 = 100 - 4s1 - 2s2.
Therefore, we have;
94 = 4s1 + 2s2.
The reaction function of firm 1;
s1 = 1/4 ( 94 - 2s1).
(ii). For firm two;
Js2 = 100 - 2s1 - 4s2.
Recall that for profit maximization; Marginal revenue = marginal cost.
10 = 100 - 2s1 - 4s2.
The reaction function of firm two;
s2 = 1/4 (90 - 2s1).
(b).
(I). s1 = 1/4 ( 94 - 2s1).
s1 = 1/4 ( 94 - 2 × (1/4) 90 - 2s1).
s1 = 1/4 ( 94 - 45 + s1).
s1 = 1/4 ( 49 + s1).
Solve for s1.
s1 = 49/3.
(ii). s2 = 1/4 (90 - 2s1).
s2 = 1/4 (90 - 2 × 49/3).
s2 = 43/3
Exercise 10-2 Make or buy LO P1 Gelb Company currently manufactures 40,000 units per year of a key component for its manufacturing process. Variable costs are $1.95 per unit, fixed costs related to making this component are $65,000 per year, and allocated fixed costs are $58,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.50 per unit. Calculate the total incremental cost of making 40,000 units and buying 40,000 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier?
Answer:
Buy
Explanation:
Allocated fixed costs are irrelevant for this decision because they can not be avoided, regardless of the alternatives being considered.
Making
Variable Cost ($1.95×40,000 units) $78,000
Fixed Costs $65,000
Total $143,000
Buying
Price ($3.50×40,000 units) $140,000
It costs $3,000 more to make the component than to buy from outside supplier.
Therefore, buy this component from the outside supplier
Electronic Superstore's inventory increases during the year by $5 million, and its accounts payable to suppliers increases by $7 million during the same period. What is the amount of cash paid to suppliers of merchandise during the reporting period if its cost of goods sold is $45 million? (Enter your answers in millions (i.e., $10,100,000 should be entered as 10.1).)
Answer:
$43.0 million
Explanation:
The movement in the balance of inventory at the start and end of a period is as a result of sales and purchases. While sales reduces the balance in inventory, purchases increases the balance. This may be expressed mathematically as
Opening balance + purchases - cost of goods sold = closing balance
The difference between the closing balance and the opening is$5 million
Hence the
Purchases - $45,000,000 = $5,000,000
Purchases = $5,000,000 + $45,000,000
= $50,000,000
The movement in the payable accounts may be expressed as
opening balance + purchases - cash paid = closing balance
$50,000,000 - cash paid = $7,000,000
Cash paid = $50,000,000 - $7,000,000
= $43,000,000
The Electronic Superstore paid $43 million in cash to its merchandise suppliers during the reporting period.
Explanation:The question is asking about the cash flow activities of the Electronic Superstore related to its suppliers. In this scenario, the company's cost of goods sold is $45 million, its inventory increased by $5 million, and its accounts payable increased by $7 million, all during the same period. To calculate the cash paid to suppliers, start with the cost of goods sold, add the increase in inventory (because these are goods that were bought but not yet sold), then subtract the increase in accounts payable (since this money is owed but has not yet been paid in cash).
So, here's the step-by-step calculation: Cash paid to suppliers = Cost of goods sold + Increase in inventory - Increase in accounts payable. Substituting the given values gives: Cash paid = $45 million + $5 million - $7 million = $43 million.
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Margaret Company reported the following information for the current year: Net sales $3,000,000 Purchases $1,957,000 Beginning Inventory $245,000 Ending Inventory $115,000 Cost of Goods Sold 65% of sales Industry Averages available are: Inventory Turnover 5.29 Gross Profit Percentage 28% How do the inventory turnover and gross profit percentage for Margaret Company compare to the industry averages for the same ratios? (Round inventory turnover to two decimal places. Round gross profit percentage to the nearest percent.)
Answer:
10.84 times
Explanation:
The computation of inventory turnover is shown below:-
Gross Profit Percentage = Gross Profit ÷ Net Sales × 100
Gross Profit = Sales - Cost of Goods Sold
= $3,000,000 × 65%
Cost of goods sold = $1,950,000
Gross Profit = $3,000,000 - $1,950,000
= $1,050,000
Gross Profit Percentage = $1,050,000 ÷ $3,000,000 × 100
= 35%
Inventory Turnover = Cost of Goods Sold ÷ Average Inventory
= ($245,000 + $115,000) ÷ 2
Average Inventory = $180,000
Inventory Turnover = Cost of goods sold ÷ Average inventory
= $1,950,000 ÷ $180,000
= 10.84 times
Pine Street Inc. makes unfinished bookcases that it sells for $58.10. Production costs are $37.49 variable and $10.50 fixed. Because it has unused capacity, Pine Street is considering finishing the bookcases and selling them for $74.91. Variable finishing costs are expected to be $5.79 per unit with no increase in fixed costs. Prepare an analysis on a per unit basis showing whether Pine Street should sell unfinished or finished bookcases. (Round answers to 2 decimal places, e.g. 15.25. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Answer:
Pine Street should sell finished bookcases because they have a higher contribution margin.
Explanation:
We compare the contribution margin of the two categories to find out whether Pine Street should sell unfinished or finished bookcases.
Pine Street Inc.
Unfinished bookcases
Contribution Margin
Sales Price $58.10
Less Production costs
Variable Costs $37.49
Fixed Costs $10.50 (47.99)
Contribution Margin $ 10.11
Pine Street should sell finished bookcases because they have a higher contribution margin. It is almost double of the unfinished book cases contribution margin.
Pine Street Inc.
Finished bookcases
CONTRIBUTION MARGIN
Sales Price $74.91
Less Production costs
Variable Costs $37.49 + $5.79 = $ 43.28
Fixed Costs $10.50 $ (53.78)
Contribution Margin $ 21.13
g You own a stock that is expected to earn 21 percent in an improving economy, 16 percent in a normal economy, and lose 5 percent in an economic downturn. There is 20 percent probability of an improved economy, 65 percent chance of a normal economy, and 15 percent chance of a downturn. What is your expected rate of return on this stock
Answer:
dd
Explanation:
mdd
In January 2012, one US dollar was worth 50.0 Indian rupees. Suppose that over the next year the value of the Indian rupee decreases to 57.0 Indian rupees to one US dollar. Suppose also that the price level of all goods and services in India, as measured in rupees, falls 21.0%, so that the Indian price index falls from a value of 100 to 79.0. At the same time, suppose that the US price level increases by 6%, to 106.1. By what percentage did the value of the real exchange rate change over this period? Please give your answer to the nearest whole percentage point. 2. What will happen to the following as a result of the changes?a) America's consumption of Indian goods and services will likely _______.b) India's consumption of American goods and services will likely _______.
The value of the real exchange rate has increased by 35% over this period.
Explanation:The real exchange rate is the nominal exchange rate adjusted for changes in the price level of goods and services in each country. To calculate the percentage change in the real exchange rate, we need to compare the change in the price levels of both countries.
The percentage change in the price level in India is calculated as (100 - 79)/100 = -21%. The percentage change in the price level in the US is 106.1 - 100 = 6.1%.
To calculate the percentage change in the real exchange rate, we can use the formula: Percentage change in real exchange rate = Percentage change in nominal exchange rate - Percentage change in price levels
The percentage change in the nominal exchange rate is (57 - 50)/50 * 100 = 14%. Therefore, the percentage change in the real exchange rate is 14% - (-21%) = 35%.
The value of the real exchange rate has increased by 35% over this period.
Rio Coffee Shoppe sells two coffee drinks, a regular coffee and a latte. The two drinks have the following prices and cost characteristics: Regular Coffee Latte Sales price (per cup) $ 1.60 $ 2.80 Variable costs (per cup) 0.90 1.70 The monthly fixed costs at Rio are $5,494. Based on experience, the manager at Rio knows that the store sells 70 percent regular coffee and 30 percent lattes. Required: How many cups of regular coffee and lattes must Rio sell every month to break even
Answer:
a) Regular coffee cups required to be sold = 4,690
b) Latte cups required to be sold = 2,010
Explanation:
As per the data given in the question,
For computing Contribution per mix :
Particulars Regular Coffee Latte
Sales price $1.60 $2.80
Less: variable cost $0.90 $1.70
Contribution $0.70 $1.10
Contribution per mix = ($0.70 × 70%) + ($1.10 × 30%)
= $0.82
Breakeven point at sales mix = Fixed cost ÷ Contribution per mix
=$5,494 ÷ $0.82
= 6,700 mixes
Requirement:
Cups of regular coffee for breakeven = Breakeven at sales mix × %of regular coffee sales
=6,700 × 70%
= 4,690 Cups
Cups of latte for breakeven = Breakeven at sales mix × %of latte sales
=6,700 × 30%
=2,010 Cups
Mertens Co. uses a periodic inventory system. Beginning inventory on January 1 was understated by $31,700, and its ending inventory on December 31 was understated by $16,300. In addition, a purchase of merchandise costing $20,700 was incorrectly recorded as a $2,070 purchase. None of these errors were discovered until the next year. As a result, taxable income for this year was:
Answer:
The answer is, The taxable income for this year was Understated by $3,230
Explanation:
Solution
Particulars: Under statement of beginning inventory January 1.
Amount: 31700
The Effect on taxable income :Overstated
Particulars: Under statement of Ending inventory December 31
Amount: -16300
The Effect on taxable income: Understated
Particulars: Purchases of Incorrect record of ($20700-$2070)
Amount: -18630
The Effect on taxable income: Understated
Particulars:Net Effect on taxable income for above transactions
Amount: -3230
The Effect on taxable income: Understated
Therefore, from the above information from the question stated, the taxable income for this year was Understated by $ 3,230
Indigo Corporation had a projected benefit obligation of $3,386,000 and plan assets of $3,617,000 at January 1, 2020. Indigo also had a net actuarial loss of $528,020 in accumulated OCI at January 1, 2020. The average remaining service period of Indigo’s employees is 7.70 years.Compute Indigo’s minimum amortization of the actuarial loss.Minimum amortization of the actuarial loss
Answer:
Amortized to pension expense $21,600
Explanation:
Compututation of Indigo’s minimum amortization of the actuarial loss
Amortization
Projected benefit obligation($3,386,000)
Plan assets $3,617,000
Corridor percentage10%
Corridor amount $361,700
Accumulated loss $528,020
Excess loss subject to amortization $166,320
($361,700- $528,020)
Average remaining service 7.70
Amortized to pension expense $21,600
($166,320÷7.70)
Therefore the Minimum amortization of the actuarial loss will be $21,600
Smart Stream Inc. uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cellular phones are as follows:
Variable costs per unit: Fixed costs:
Direct materials $150 Factory overhead $350,000
Direct labor 25 Selling and admin. exp. 140,000
Factory overhead 40
Selling and administrative expenses 25
Total $240
Smart Stream desires a profit equal to a 30% rate of return on invested assets of $1,200,000.
a. Determine the amount of desired profit from the production and sale of 10,000 cellular phones.
$
b. Determine the cost per unit for the production of 10,000 units of cellular phones.
$per unit
c. Determine the product cost markup percentage for cellular phones.
%
d. Determine the selling price of cellular phones. Round to the nearest dollar.
Cost $per unit
Markup $per unit
Selling price $per unit
Calculate desired profit, cost per unit, product cost markup percentage, and selling price for Smart Stream Inc. using the cost-plus approach to product pricing.
a. Desired profit: Desired profit = Rate of return on invested assets * Invested assets = 30% * $1,200,000 = $360,000.
b. Cost per unit: Cost per unit = Total costs / Number of units = $240 / 10,000 units = $24 per unit.
c. Product cost markup percentage: Markup percentage = (Desired profit + Total fixed costs) / Total variable costs * 100% = ($360,000 + $490,000) / ($150 + $25 + $40 + $25) * 100% = 103.08%.
d. Selling price: Selling price per unit = Cost per unit + Markup per unit = $24 + ($24 * 1.0308) = $24 + $24.92 = $48.92 (rounded to $49).
Infinity Clock Company prepared the following static budget for the year: Static Budget Units/Volume 9 comma 000 Per Unit Sales Revenue $ 5.00 $ 45 comma 000 Variable Costs 1.50 13 comma 500 Contribution Margin 31 comma 500 Fixed Costs 3 comma 000 Operating Income/(Loss) $ 28 comma 500 If a flexible budget is prepared at a volume of 9 comma 800 units, calculate the amount of operating income. The production level is within the relevant range.
Answer:
Net operating income= 31,300
Explanation:
Giving the following information:
Static Budget:
Units= 9,000
Selling price per unit= $5
Variable Costs per unit= $1.50
Fixed Costs= 3,000
We need to determine the operating income if 9,800 units were sold:
Sales= (9,800*5)= 49,000
Total variable costs= (9,800*1.5)= (14,700)
Contribution margin= 34,300
Fixed costs= (3,000)
Net operating income= 31,300