Answer:
$11,000
Explanation:
The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.
The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.
The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.
An increase in assets other than cash is an outflow while an increase in liabilities is an inflow. Depreciation and other non-cash expenses deducted in the income statements are added back while the non-cash income such gain on asset are deducted from net income.
net investing cash flows
= $21,000 - $10,000
= $11,000
Riverside Manufacturing designs and manufactures bathtubs for home and commercial applications. Riverside recorded the following data for its commercial bathtub production line during the month of March:Standard DL hours per tub5Standard variable overhead rate per DL hour$6.00Standard variable overhead cost per unit$30.00Actual variable overhead costs$21,375Actual DL hours2,850Actual variable overhead cost per machine hour$7.50Actual tubs produced1,500What is the variable manufacturing overhead efficiency variance in March?
Answer:
variable overhead efficiency variance= $27,900 favorable
Explanation:
Giving the following information:
Standard DL hours per tub= 5 hours
Standard variable overhead rate per DL hour= $6.00
Actual DL hours= 2,850
Actual tubs produced= 1,500
To calculate the variable overhead efficiency variance, we need to use the following formula:
variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate
Standard quantity= 1,500units*5= 7,500
variable overhead efficiency variance= (7,500 - 2,850)*6
variable overhead efficiency variance= $27,900 favorable
WP Corporation produces products X, Y, and Z from a single raw material input in a joint production process. Budgeted data for the next month is as follows:
Product X Product Y Product Z
Units produced 1,900 2,400 3,400
Per unit sales value at split-off $17.00 $21.00 $19.00
Added processing costs per unit $2.00 $4.00 $4.00
Per unit sales value if processed further $22.00 $22.00 $27.00
The cost of the joint raw material input is $72,000.
Which of the products should be processed beyond the split-off point?
Answer:
Products X and Z
Explanation:
In-process research and development acquired in a business combination is Select one: A. credited to the Equity Investment account. B. recorded as indefinite-lived intangible assets, subject to amortization. C. expensed, consistent with the accounting treatment of a firm's own R & D expenditures. D. recorded as an indefinite-lived intangible asset, and annually tested for impairment.
Answer:
D. recorded as an indefinite-lived intangible asset, and annually tested for impairment.
Explanation:
In-process research and development acquired in a business combination is recorded as an indefinite-lived intangible asset, and annually tested for impairment.
In-process research and development costs are essential part of the financial income statement, it assist investors to make good, well-informed and tangible investment decisions in a newly acquired company.
D. Recorded as an indefinite-lived intangible asset, and annually tested for impairment, consistent with accounting standards for intangible assets.
In-process research and development (IPR&D) acquired in a business combination is accounted for as follows:
D. Recorded as an indefinite-lived intangible asset, and annually tested for impairment.
Here's why:
1. Indefinite-Lived Intangible Asset: IPR&D represents the value associated with ongoing research and development projects that have not yet reached the point of commercialization or technological feasibility. It is recognized as an indefinite-lived intangible asset because its future benefits are not constrained by a specific time period. This is in contrast to definite-lived intangible assets, which have a finite useful life and are subject to amortization.
2. Annual Impairment Testing: While IPR&D is initially recognized as an indefinite-lived asset, it is subject to annual impairment testing. This means that, at least annually, the company must assess whether there has been any impairment in the value of the IPR&D asset. If there is an indication that the asset's value has decreased (e.g., the research project is no longer viable or promising), an impairment charge is recorded to reduce the asset's carrying value to its recoverable amount.
3. Consistency with Accounting Standards: The accounting treatment of IPR&D acquired in a business combination is consistent with international accounting standards (e.g., IFRS) and generally accepted accounting principles (GAAP) in many jurisdictions. It reflects the economic reality that IPR&D represents valuable intellectual property that can contribute to the company's future profitability once successfully developed.
In summary, IPR&D acquired in a business combination is initially recognized as an indefinite-lived intangible asset, and it is subject to annual impairment testing to ensure its carrying value accurately reflects its recoverable amount based on its expected future benefits. This accounting treatment aligns with the treatment of other intangible assets and financial reporting standards.
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is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Thanos has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory. What is the total amount to be budgeted in pounds for direct materials to be purchased for the month
Answer:
$38,880
Explanation:
The calculation of direct material to be purchased is shown below:-
Direct materials to be purchased = (Budgeted Production × Number of raw material per unit) + Ending inventory - Beginning inventory
Direct materials to be purchased = (870 × 44) + 4,500 - 3,900
= $38,280 + 4,500 - 3,900
= $38,880
So, for calculating the direct material to be purchased we simply applied the above formula.
In a recent annual report, Rosh Corporation disclosed that 60,000,000 shares of common stock have been authorized. At the beginning of the fiscal year, a total of 36,356,357 shares had been issued and the number of shares in treasury stock was 7,171,269. During the year, 558,765 additional shares were issued, and the number of treasury shares increased by 3,034,188. Determine the number of shares outstanding at the end of the year. (Amounts to be deducted should be indicated by a minus sign.)
Answer:
33,880,934 stocks
Explanation:
total number of authorized stocks = 60,000,000
stocks issued at beginning of the year = 36,356,357
treasury stocks at beginning of the year = 7,171,269
net change in total stocks outstanding = additional shares issued - increase in treasury stocks = 558,765 - 3,034,188 = -2,475,423
total number of stocks outstanding = outstanding stocks at the beginning of the year + net change in stocks outstanding = 36,356,357 -2,475,423 = 33,880,934 stocks
During 2016, the Balboa Software Company incurred development costs of $2,000,000 related to a new software project. Of this amount, $400,000 was incurred after technological feasibility was achieved. The project was completed in the middle of the year and the product was available for release to customers on July 1. Year 2016 revenues from the sale of the new software were $500,000 and the company anticipated future additional revenues of $4,500,000. The economic life of the software is estimated at four years. Year 2016 amortization of software development costs should be:
Answer:
Software development to be recognized = Cost incurred after achievement of technological feasibility = $400,000
Explanation:
Useful life = 4 years
Annual amortization = $400,000 / 4 years = $100,000
Period of amortization in 2016 = July 1, 2016 to December 31, 2016 = 6 months
Year 2016 amortization = $100,000 × 6 months/12 months = $100,000 × 1/2 = $50,000
Coronado Industries is preparing its direct labor budget for May. Projections for the month are that 23400 units are to be produced and that direct labor time is three hours per unit. If the labor cost per hour is $12, what is the total budgeted direct labor cost for May
Answer:
$842,400
Explanation:
The direct labor cost given is a function number of hours needed to produce a unit, the number of units to product and the cost per labor hour.
The total budgeted direct labor cost is the product of these elements. Given that a unit requires 3 hours, the total number of hours required to produce 23400 units
= 23400 * 3
= 70200 hours
If the labor cost per hour is $12, the total budgeted direct labor cost for May
= 70200 * $12
= $842,400
Answer:
$842,400
Explanation:
Cost of labor which is incurred to produce a specific product is known as direct labor cost of that product. It is charged directly to the product cost as this cost is purely incurred in the production that specific product.
As per given Data
Projected units = 23,400
Hours per unit = 3 hours
Labor cost per hour = $12 per hour
Budgeted Direct labor hour = Projected units x Hours per unit x Labor cost per hour
Budgeted Direct labor hour = 23,400 units x 3 hours x $12 per hour
Budgeted Direct labor hour = $842,400
A company exchanged land and cash of $4,500 for similar land. The book value and the fair value of the land were $89,800 and $101,500, respectively. Assuming that the exchange has commercial substance, the company would record land-new and a gain/(loss) of: Land Gain/(loss) a.$106,000 $0 b.$106,000 $11,700 c.$94,300 $0 d.$94,300 $11,700
Answer:
b.$106,000 $11,700
Explanation:
Given that
Fair value = $101,500
Land and cash = $4,500
Book value = $89,800
The computation of record land-new and a gain/(loss) is shown below:-
Record Land New = Fair Value + Land and cash
= $101,500 + $4,500
= $106,000
Gain (loss) = Fair Value - Book value
= $101,500 - $89,800
= $11,700
Therefore the record of land new is $106,000 and gain is $11,700
The following transactions were selected from the records of OceanView Company:
July 12 Sold merchandise to Customer R, who charged the $3,500 purchase on his Visa credit card. Visa charges OceanView a 2 percent credit card fee.
15 Sold merchandise to Customer S at an invoice price of $10,500; terms 4/10, n/30.
20 Sold merchandise to Customer T at an invoice price of $5,800; terms 4/10, n/30.
23 Collected payment from Customer S from July 15 sale.
Aug. 25 Collected payment from Customer T from July 20 sale.
Required:
a. Assuming that Sales Discounts and Credit Card Discounts are treated as contra-revenues, compute net sales for the two months ended August 31.
The net sales for the OceanView Company for the two months ending August 31, after taking into account credit card and sales discounts, is $19,310.
Explanation:In order to answer the question, we first need to determine the gross sales and sales discounts. The gross sales refers to the total amount of sales before any deductions. On the other hand, sales discounts are reductions in the selling price of merchandise sold to customers, which in this case includes both the credit card discount for Customer R and the cash discounts for Customer S and T.
On July 12, OceanView sold merchandise for $3,500 to Customer R. However, as Visa charges a 2% credit card fee, the discount from this sale amounts to $70 (= $3,500 * 2%).
On July 15, the merchandise was sold to Customer S for $10,500 with terms 4/10, n/30. This means that if the invoice is paid within 10 days, a 4% discount can be taken. Given that they paid on July 23, they were within the ten-day window, and the discount amounts to $420 (= $10,500 * 4%).
On July 20, the merchandise was sold to Customer T, again totaling $5,800 and with the same terms; however, since they paid on August 25, beyond the 10-day terms, no discount applies.
To find the net sales for the period ending August 31, we sum all the sales and subtract the total sales discount. Hence, net sales is calculated as [($3,500 + $10,500 + $5,800) - ($70 + $420)] = $19,310.
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OceanView Company's net sales for the two months ended August 31st are approximately $16,230.
Assuming Sales Discounts and Credit Card Discounts are contra-revenues, here's how to compute net sales for OceanView Company for the two months ended August 31st:
Sales Revenue:
Customer S: $10,500Customer T: $5,800Credit Card Fee:
Visa charges a 2% fee on the $3,500 purchase by Customer R.Credit Card Fee = $3,500 * 2% = $70 (This is a contra-revenue deduction)Sales Discounts:
We don't have enough information to determine if either customer S or T took advantage of the 4/10 discount terms. Without knowing the payment dates, we cannot calculate potential discounts.Net Sales Calculation:Net Sales = Gross Sales Revenue - Credit Card Fee (Since Sales Discounts are unknown)Net Sales = ($10,500 + $5,800) - $70Net Sales = $16,300 - $70Net Sales = $16,230Your Competitive Intelligence team is predicting that the Baldwin Company will invest in adding capacity to their Beetle product this year. Assume Baldwin's product Beetle invests in increasing its capacity by 10% this year. Because of this new information, your company anticipates all other products in the Core segment will increase their capacity by the same amount. How much can the industry produce in the Core segment the next year
Answer: 13,288 units
Explanation:
I attached a table showing the production capacities since it was missing.
Since your company believes that all core products will increase capacity by the same amount, we can solve for this by,
= (1,200 + 1,450 + 1,040 + 1,050 + 100 + 1,200) * ( 1 + 0.1)
= 6,040 * 1.1
= 6,644
A tricky part of this question is that you have to remember that Baldwin can produce twice this as they could have a 2nd shift.
That means the value will become,
= 6,644 * 2
= 13,288 units
The industry can produce 13,288 units in the Core segment the next year.
Inflation, recession, and high interest rates are economic events which are characterized as Select one: a. Unsystematic risk that can be diversified away. b. Company-specific risk that can be diversified away. c. Systematic risk that can be diversified away. d. Market risk that cannot be diversified away. e. Diversifiable risk that can be diversified away.
Answer:
D.
Explanation:
Market Risks can be defined as the possibility of losses that the investor may face in investment because of the changes in the market factors. These market factors possess the power that influences the whole financial markets. It is also known as 'systematic risk.' Such risks can not be diversified.
The sources that lead to market risks are inflation, high-interest rates, recession, natural disasters, terrorist attacks, commodity risk, etc.
So, from the given options the correct one is D.
"Pep, Incorporated acquired 60% of Devin Company on January 1, 2018. On that date, Devin sold equipment to Pep for $45,000. On the sale date, the equipment had a cost of $120,000 and accumulated depreciation of $66,000 with a remaining life of 9 years. Devin reported net income of $300,000 for 2018. Pep uses the equity method to account for its investment in Devin. What is the amount of income from investment in Devin for 2018
Answer:
The amount of income from investment in Devin for 2018 is $184,800
Explanation:
According to the given data Net Income reported by Devin for 2018 is $300,000
To calculate the amount of income from investment in Devin for 2018 first we have to calculate the Total Income from Devin for 2018 as follows:
The Loss on Sale of Equipment= $120,000-$66,000-$45,000=$9,000
Difference in Dep=($54,000/9)-($45,000/9)=$1000
Therefore, Total Income from Devin for 2018=$300,000+$9,000-$1000
Total Income from Devin for 2018=$308,000
Therefore, Income from Devin reported on Pepe's books for 2018= $308,000*60%
Income from Devin reported on Pepe's books for 2018= $184,800
Rowland Perry, a headhunter in Manhattan, is required to find a capable candidate for the position of creative director for an ad agency. The creative director is a highly specialized position which requires the selected candidate to guide individual advertising campaigns for a diverse set of clients. Which of the following tools would help Rowland most in his search for a creative director?
1. Expert location system
2. Neural network
3. Data warehouse
4. Dash board
Answer:
The correct answer is 1. Expert location system
Explanation:
Expert location system is also referred to as Expertise Location Systems (ELS) that enable users to discover subject matter experts in order to to acquire or hire their knowledge.
From the given question, the tool that would help Rowland most in his search for a creative director is The Expert Location System( ELS)
Eduardo buys a delivery van (5-year MACRS property) to use in his flower store on June 18, 2019, at a cost of $18,000. On October 18, 2019, Eduardo takes advantage of a bankruptcy sale to purchase equipment for the flower store (7-year MACRS property) costing $34,000. Assuming that Eduardo does not wish to immediately expense any of the cost of the property purchased this year and elects not to claim bonus depreciation, what is his 2019 maximum allowable cost recovery deduction? Round your final answer to the nearest dollar amount.
Answer:
$16,500
Explanation:
When more than one asset is purchased for a lump sum, the basis of each is computed by apportioning the total cost based on the relative FMV of each asset. Lot #3 has a FMV that is 16.5% of the FMV of all of the lots purchased [$20,625 ÷ ($25,000 + $31,250 + $20,625 + $48,125)]. Thus, the basis of Lot #3 is $16,500 ($100,000 × 16.5%).
During November, TaskMaster purchased 184,000 pounds of direct materials at a total cost of $331,200. The total factory wages for November were $38,000, 90% of which were for direct labor. TaskMaster manufactured 22,000 units of product during November using 162,000 pounds of direct materials and 6,000 direct labor hours. What is the direct materials efficiency variance for November
Question
TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product.
Standard Standard Standard
Quantity Price Cost
Direct Materials 8 1.50 per pound $12.00
Direct Labor 0.25 6.20 per hour $1.55
13.55
During November, TaskMaster purchased 184,000 pounds of direct materials at a total cost of $331,200. The total factory wages for November were $38,000, 90% of which were for direct labor. TaskMaster manufactured 22,000 units of product during November using 162,000 pounds of direct materials and 6,000 direct labor hours. What is the direct materials efficiency variance for November
Answer:
Efficiency Variance $21,000 favorable
Explanation:
Direct material efficiency( usage variance) occurs when the actual quantity used used to achieve a given output is more or less than the standard quantity allowed to achieve same.
It will be computed as follows:
Pounds
22,000 units should have used (22,000 × 8) 176,000
but did use (actual quantity) 162,000
Efficiency variance (in pounds) 14000 favorable
Standard price × $1.50
Efficiency Variance $21,000 favorable
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
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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Sepulvada Manufacturing Corporation produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $4 per pound, but a 2% discount is usually taken. Freight costs are $.15 per pound, and receiving and handling costs are $.10 per pound. The hourly wage rate is $9.00 per hour, but a raise which will average $.25 will go into effect soon. Payroll taxes are $1.00 per hour, and fringe benefits average $2.00 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is 0.2 hours and 0.1 hours, respectively. The standard direct materials price per pound is:_______
Answer:
The standard direct materials price per pound is $4.165
Explanation:
In order to calculate the standard direct materials price per pound we would have to use the following formula:
standard direct materials price per pound=material cost per pound+freight cost per pound+handling cost per pound-discount on total cost.
discount on total cost=2%*$4.25=$0.085
Therefore, standard direct materials price per pound=$4+$0.15+$0.10-$0.085
standard direct materials price per pound=$4.165
The standard direct materials price per pound is $4.165
Rector Company manufactures a line of lightweight running shoes. CEO Mark Rector estimated that the company would incur $2,500,000 in manufacturing overhead during the coming year. When Rector Company uses direct labor hours as its manufacturing overhead application base, predetermined overhead rate is $10.00/DLH and when it uses machine hours as its manufacturing overhead application base, predetermined overhead rate is $6.25/MH. Additionally, he estimated the company would operate at a level requiring 250,000 direct labor hours and 400,000 machine hours. At the end of the year, Rector Company had worked 245,000 direct labor hours, used 410,000 machine hours, and incurred $2,515,000 in manufacturing overhead.
If Rector Company used direct labor hours as its manufacturing overhead application base, how much overhead was applied to jobs during the year?
Answer:
Allocated MOH= $2,450,000
Explanation:
Giving the following information:
The predetermined overhead rate is $10.00/DLH
Actual direct labor hours= 245,000 direct labor hours
We were provided with the predetermined overhead rate, we need to allocate overhead to the period based on actual direct labor hours:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 10*245,000
Allocated MOH= $2,450,000
Final answer:
When using direct labor hours as the manufacturing overhead application base, the total overhead applied to jobs during the year amounts to $2,450,000.
Explanation:
Overhead: When using direct labor hours as the manufacturing overhead application base, the predetermined overhead rate is $10.00/DLH. To calculate the overhead applied to jobs during the year, multiply the predetermined overhead rate by the actual number of direct labor hours worked. In this case, with 245,000 direct labor hours worked, the overhead applied would be $2,450,000.
Assume that the managers of Wolves Entertainment Corporation act in the best interests of its shareholders by following the primary goal of the firm as defined by finance. Which of the following capital structures (mix of debt and equity) should the firm’s managers choose? Question 10 options: 1) Stock Price=$20.00 Debt/Assets=40% Equity/Assets=60% Dividends=$1.25 2) Stock Price=$25.00 Debt/Assets=50% Equity/Assets=50% Dividends=$1.75 3) Stock Price=$30.00 Debt/Assets=60% Equity/Assets=40% Dividends=$1.65 4) Stock Price=$26.00 Debt/Assets=70% Equity/Assets=30% Dividends=$1.55
Answer:
The correct option is Stock Price=$30.00 Debt/Assets=60% Equity/Assets=40% Dividends=$1.65
Explanation:
The primary goal of the firm as defined by finance is the maximization of shareholders' wealth.This translates to enhancing the company's performance to an extent that share price is at the optimum possible.
In other words,the shareholders' wealth maximization option is that which gives the highest price per share,which is the third option:Stock Price=$30.00 Debt/Assets=60% Equity/Assets=40% Dividends=$1.65
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
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.
Walberg Associates, antique dealers, purchased goods for $38,100. Terms of the purchase were FOB shipping point, and the cost of transporting the goods to Walberg Associates's warehouse was $1,500. Walberg Associates insured the shipment at a cost of $210. Prior to putting the goods up for sale, they cleaned and refurbished them at a cost of $550. Determine the cost of inventory.
Answer:
$40,360
Explanation:
Data provided
Inventory price = $38,100
Transportation cost = $1,500
Shipment insurance = $210
Cleaning and refurbishing = $550
According to the situation the computation of total cost of inventory is shown below:-
Total cost of inventory = Inventory price + Transportation cost + Shipment insurance + Cleaning and refurbishing
= $38,100 + $1,500 + $210 + $550
= $40,360
Therefore for computing the total cost of inventory we simply applied the above formula.
Final answer:
The total cost of inventory for Walberg Associates is $40,360, calculated by adding the purchase cost, transportation, insurance, and refurbishing expenses together.
Explanation:
The cost of inventory for Walberg Associates, including the purchase price, transportation, insurance, and refurbishing costs, can be calculated as follows:
Cost of goods: $38,100Transportation costs (FOB shipping point): $1,500Insurance cost for the shipment: $210Cost to clean and refurbish the goods: $550To determine the total cost of inventory, we add up these expenses:
Total Cost of Inventory = $38,100 + $1,500 + $210 + $550
Total Cost of Inventory = $40,360
Therefore, the cost of inventory that should be recorded by Walberg Associates is $40,360.
Lake Incorporated purchased all of the outstanding stock of Huron Company paying $967,000 cash. Lake assumed all of the liabilities of Huron. Book values and fair values of acquired assets and liabilities were: Book Value Fair Value Current assets (net) $ 130,900 $ 124,200 Property, plant, equipment) 619,000 757,000 Liabilities 151,700 177,000 Lake would record goodwill of: Multiple Choice $368,800. $0. $262,800. $85,800.
Answer:
Goodwill is $262,800
Explanation:
Goodwill is the excess of purchase consideration over fair value of net assets
Fair value of net assets is the fair value of total assets minus fair value of total liabilities
Fair value of total assets=$124,200+$757,000=$881,200
fair value of total liabilities=$177,000
fair value of net assets=$881,200 -$177,000=$704,200
Goodwill=purchase consideration-net assets
purchase consideration is $967,000
fair value of net assets $704,200
goodwill=$967,000-$704,200
goodwill=$262,800
The correct option is the third option in the multiple choices
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.
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.
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.
The following materials standards have been established for a particular product: Standard quantity per unit of output 1.7 meters Standard price $19.80 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased 5,800 meters Actual cost of materials purchased $113,680 Actual materials used in production 5,100 meters Actual output 3,200 units What is the material quantity variance:
Answer:
$6,732 F
Explanation:
SQ = 1.7 meters per unit × 3,200 units = 5,440 meters
Materials quantity variance = (AQ - SQ) × SP
= (5,100 meters - 5,440 meters) × $19.80 per meter
= (-340 meters) × $19.80 per meter
= $6,732 F
Therefore the material quantity variance is
$6,732 F
Lightning Semiconductors produces 400,000 hi-tech computer chips per month. Each chip uses a component that Lightning makes in-house. The variable costs to make the component are $1.30 per unit, and the fixed costs are $1,300,000 per month. The company has been approached by a foreign producer who can supply the component, within acceptable quality standards, for $1.20 each. The fixed costs are unavoidable, and Lightning would have no other use for the facilities currently employed in making the component. What would be the effect on operating income if the company decides to outsource?
Answer:
an increase in operating income of $ 40,000.
Explanation:
Consider the Savings and Costs that arise with the outsource decision.
Note : Fixed Costs are incurred whether or not outsource decision is made ( unavoidable) and are therefore irrelevant for this decision.
Savings :
Variable Costs ( 400,000 × $1.30) 520,000
Costs :
Purchase Price ( 400,000 × $1.20) (480,000)
Effect : Net Income / (loss) 40,000
If the Company decides to outsource there will be an increase in operating income of $ 40,000.
You purchased 1,450 shares of stock in Natural Chicken Wings, Inc., at a price of $43.64 per share. Since you purchased the stock, you have received dividends of $1.13 per share. Today, you sold your stock at a price of $47.82 per share. What was your total percentage return on this investment?
Answer:
12.17%
Explanation:
The computation of total percentage return is shown below:
(Dividend per share + Capital gain per share ) ÷ Initial investment OR Purchase per share)
Where
Capital gain per share = (Sale price per share - Purchase price per share)
= ($47.82 - $43.64 + $1.13) ÷ $43.64)) × 100
= $5.31 ÷ $43.64 × 100
= 0.121677 × 100
= 12.17%
Therefore for computing the total percentage return we simply applied the above formula.