The break-even point in composite units for Madison Corporation based on the sales mix and provided cost data is 102102 units.
Explanation:The break-even point in composite units can be determined using the provided sales mix and the cost and price data for products M, N, and O from the Madison Corporation.
First, we calculate the contribution margin per unit for each product:
To find the weighted average contribution margin per composite unit based on the sales mix (3:1:2), we use the formula:
Weighted average contribution margin = (3*$4 + 1*$2 + 2*$3) / (3+1+2)
Weighted average contribution margin = ($12 + $2 + $6) / 6 = $20 / 6 = $3.33 (rounded to two decimal places)
Now, we calculate the break-even point in composite units by dividing the total fixed costs by the weighted average contribution margin per unit:
Break-even point in composite units = $340,000 / $3.33
Break-even point in composite units = 102102.10 units (rounded to nearest unit) = 102102 units
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The break-even point in: 1) Composite units = 17,000. 2) Individual units of products: - Product M = 85,000 units. - Product N = 170,000 units. - Product O = 113,333 units. 3) Total sales for the current sales ≈ $636,763.
To find the break-even point, we need to determine the total contribution margin and then divide the total fixed costs by the contribution margin per unit.
1) Composite Units:
Total contribution margin per composite unit = Total unit sales price - Total unit variable costs
= (3 × $7) + (1 × $4) + (2 × $6) - [(3 × $3) + (1 × $2) + (2 × $3)]
= $21 + $4 + $12 - ($9 + $2 + $6)
= $37 - $17
= $20.
Break-even point in composite units = Total fixed costs / Total contribution margin per composite unit
= $340,000 / $20
= 17,000 composite units.
2) Individual Units of Product:
To find the break-even point in individual units of each product, we first need to find the contribution margin per unit for each product:
- Product M: $7 - $3 = $4.
- Product N: $4 - $2 = $2.
- Product O: $6 - $3 = $3.
Now, we can find the break-even point for each product:
- Product M: $340,000 / $4 = 85,000 units.
- Product N: $340,000 / $2 = 170,000 units.
- Product O: $340,000 / $3 = 113,333 units.
3) Total Sales:
Total break-even sales = Total fixed costs / Contribution margin ratio
= $340,000 / ($20 / $37)
≈ $636,763.
So, the break-even point in:
1) Composite units = 17,000.
2) Individual units:
- Product M = 85,000 units.
- Product N = 170,000 units.
- Product O = 113,333 units.
3) Total sales ≈ $636,763.
The complete question is:
Madison Corporation sells three products (M, N, and O) in the following mix: 3:1:2. Unit price and cost data are:
Unit sales price: $7(M), $4(N), $6(O)
Unit variable costs: 3(M), 2(N), 3(O)
Total fixed costs are $340,000.
Required:
Determine the break-even point in:
1) composite units
2) individual units of product
3) total sales, for the current sales mix (round to the nearest unit).
In January, Prahbu purchased a new machine for use in an existing production line of his manufacturing business for $90,000. Assume that the machine is a unit of property and is not a material or supply. Prahbu pays $2,500 to install the machine, and after the machine is installed, he pays $1,300 to perform a critical test on the machine to ensure that it will operate in accordance with quality standards. On November 1, the critical test is complete, and Prahbu places the machine in service on the production line. On December 3, Prahbu pays another $3,300 to perform periodic quality control testing after the machine is placed in service.
How much will Prahbu be required to capitalize as the cost of the machine?
Final answer:
Prabhu will capitalize a total of $93,800 as the cost of his new machine, including the purchase cost, installation fee, and pre-service testing.
Explanation:
The cost that Prahbu will be required to capitalize as the cost of the machine includes the purchase price, installation costs, and costs for testing performed before placing the machine into service. Specifically, these costs are the purchase price of the machine ($90,000), the installation cost ($2,500), and the cost of the pre-service critical test ($1,300). However, the periodic quality control testing costs performed after the machine is placed in service ($3,300) are generally considered operational expenses and are not capitalized.
Therefore, the total cost Prahbu will capitalize for the machine is:
Purchase: $90,000
Installation: $2,500
Pre-service testing: $1,300
Total capitalized cost: $93,800
Final answer:
The capitalized cost of the machine is $93,800, which includes the purchase price, installation fees, and critical testing costs. Periodic testing costs after the machine's installation are not capitalized.
Explanation:
Prahbu needs to determine the cost of the machine for his manufacturing business. To calculate this, he needs to add the cost of the machine, the installation costs, and the costs of any additional services that are necessary to prepare the machine for its intended use. The initial purchase price of the machine is $90,000. The installation costs are an additional $2,500. The critical testing that is required to ensure the machine operates to quality standards was $1,300, which is considered a capital expenditure since it's necessary to bring the asset to a working condition. Therefore, these costs should be included in the capitalization of the machine's cost. The total capitalized cost is the sum of these amounts: $90,000 + $2,500 + $1,300, equalling $93,800.
However, the $3,300 paid for periodic quality control testing after the machine is in service is not capitalized as it is considered a periodic expense and not essential to bring the asset to a working condition. Thus, this amount should be treated as an expense in the period it was incurred.
IE 4-3....Suppose that a Demand shift (a change in income) moves this economy to Point F with Employment of 110 million people. The Circular Flow will be producing a Real GDP of ____________ billion with an equilibrium at Point U in the PPF. This is a ______________ situation..
Answer:
$3840
Depression (Major Recession)
Explanation:
In the problem above, if there is a shift in demand as a result of a change in income which moves the economy to point F. There will be a production of a Real GDP of approximately $3840 billion. Due to the change in the equilibrium position, the economic system will be a major recession which is also known as depression. This occurs because there is loss of customer confidence.
In 1993, the government increased the tax on gasoline producers from 14.1 cents per gallon to 18.4 cents per gallon. Our model of supply and demand predicts that:_____a. the demand for gasoline decreased. b. the supply for gasoline increased. c. the demand for gasoline increased. d. the supply for gasoline decreased. e. both the supply and demand for gasoline decreased.
Answer:
In 1993, the government increased the tax on gasoline producers from 14.1 cents per gallon to 18.4 cents per gallon. Our model of supply and demand predicts that
both the supply and demand for gasoline decreased.
Explanation:
The reason why both supply and demand will be decreased is a result in the increase of tax which will have direct effect on the price i.e the price will increase as result of tax increment and this will affect the rate at which the gasoline will be demanded for, hence; affects the supply rate as little quantity will be made available for sales.
First-degree price discrimination:
a. None of the answers are correct.
b. results in the firm extracting all surplus from consumers.
c. occurs when a firm charges each consumer the maximum price he or she would be willing to pay for each unit of the good purchased.
d. occurs when a firm charges each consumer the maximum price he or she would be willing to pay for each unit of the good purchased and results in the firm extracting all surplus from consumers.
Answer:
C ) occurs when a firm charges each consumer the maximum price he or she would be willing to pay for each unit of the good purchased and results in the firm extracting all surplus from consumers.
Explanation:
First-degree price discrimination is known as the perfect price discrimination because firm charges maximum price for each unit of good purchased by the customer. So the firm ables to extract all cosumer surplus.
(Last Word) From 2006-2010, the federal government paid $600 million in retirement benefits to deceased federal employees, with the checks being illegally cashed by relatives. This example illustrates
A. the benefits-received principle.
B. logrolling.
C. bureaucratic inefficiency.
D. the problem of limited and bundled choices.
Answer:
c. bureaucreatic inefficiency
Explanation:
When establishing the bureaucracy, it is essential to understand that it is based on issues such as the division of labor, the hierarchy of authority, rules and norms, professional commitment, rationality, impersonality as regards the application of procedures and rules or written records. In a negative connotation, bureaucracy is understood as inefficient administration by paperwork and formalities, and the excessive influence of civil servants in public affairs.
You are the manager of BlackSpot Computers, which competes directly with Condensed Computers to sell high-powered computers to businesses. From the two businesses’ perspectives, the two products are indistinguishable. The large investment required to build production facilities prohibits other firms from entering this market, and existing output firms operate under the assumption that the rival will hold constant. The inverse market demand for computes is P=5,900 – Q, and both firms produce at a marginal cost of $800 per computer. Currently, BlackSpot earns revenues of $4.25 million and profits (net of investment, R&D, and other fixed costs) of $890,000. The engineering department at BlackSpot has been steadily working on developing an assembly method that would dramatically reduce the marginal cost of producing these high powered computers and has fond a process that allows it to manufacture each computer at a marginal cost of $500. How will this technological advance impact your production and pricing plans? How will it impact Blackspot’s bottom line?
Answer and Explanation:
In order to know how this affects the production we will first find out the quantities produce before and after the technological advance.
Profit maximizing, MR = MC (Marginal revenue = Marginal Cost)
TR = P x Q
TR= (5900 - Q) x Q = 5900Q - Q^2
MR = 5900 - 2Q (Taking derivative)
Now, MR = MC
5900 - 2Q = 800
Q = 2550
After Technological advancement,
MR = MC
5900 - 2Q = 500
Q = 2700
After technological advancement, Backspot Computers are able to produce more quantities. An increase of 150 units. The technological advancement has helped them.
One of the ways Mark and Sue can prevent having a balance due next year is to use the Tax Withholding Estimator at IRS.gov and then adjust their withholding.
a. True
b. False
Answer:
a. True
Explanation:
They can check their withholding using the Tax Withholding Estimator at IRS.gov and adjust accordingly.
Answer:
True ( A )
Explanation:
Mark and sue can prevent having a balance due next year by making very good use of the tax withholding Estimator. this will help them update your current year income and other important factors that has a very significant effect on your tax.
A withholding estimator is an estimator found in the IRS website, it is used to help employees to do a checkup on their paycheck i.e to ensure that taxes been held from their paycheck is the right amount.
using an estimator you will require to enter an estimate of your yearly income and other forms of income and also your number of dependents if it has changed over the year this will help you know how your current year taxes will affect you while filing for your tax next year.
"A triangle has a perimeter of 13 and one side of length 3. If the lengths of the other two sides are equal, what is the length of each of them?"
Answer:
The length of each is 5
Explanation:
Perimeter of triangle = sum of three sides
Assuming the length of each of the equal sides is y
13 = y+y+3
13-3 = 2y
2y = 10
y = 10/2 = 5
On January 1, 2017, Garzon purchased 6% bonds issued by PBS Utilities at a cost of $40,000, which is their par value. The bonds pay interest semiannually on July 1 and January 1. For 2017, prepare entries to record Garzon's July 1 receipt of interest and its December 31 year-end interest accrual. (Do not round your intermediate calculations.)
Answer:
July 1st: Debit Cash=$1,200 Credit Interest Received=$1,200
December 31st: Debit Interest Receivable=$1,200, Credit Interest Earned= $1,200
Explanation:
July 1st Receipt of Interest
Step 1: Calculate Interest Receivable for the entire Year
=($40,000×6%)= 40,000×0.06= $2,400
=$2,400
Step 2: Calculate Interest Receivable for the first 6 months (Semi-annual Payment)
January 1st to July 1st is 6 Months, we therefore divide the annual interest receivable into 2
$2,400÷2=$1,200
Step 3: Entries for the July 1 Receipt of Interest
Debit Cash = $1,200
Credit Interest Received=$1,200
Step 4: Calculate the Interest Accrual for the Decembe 31st
Between July 1st and December 31st is equally 6 months, therefore, the remaining $1,200 is for the second half of the year.
Step 5: Entries for December 31st Interest Accrual
Debit Interest Receivable = $1,200
Credit Interest Earned= $1,200
A firm is considering a new project that will generate cash revenue of $1,300,000 and cash expenses of $700,000 per year for five years. The equipment necessary for the project will cost $300,000 and will be depreciated straight line over four years. What is the expected free cash flow in the second year of the project if the firm's marginal tax rate is 35%?
A) $416,250
B) $374,625
C) $341,250
D) $499,500
Answer:
A) $416,250
Explanation:
The computation of the free cash flow is shown below:
= (Cash revenues generated - cash expenses - depreciation expense) × (1 - tax rate) + depreciation expense
= ($1,300,000 - $700,000 - $75,000) × (1 - 0.35) + $75,000
= $525,000 × 0.65 + $75,000
= $416250
Simply we added the depreciation expense in the Earning after tax amount
The (Cash revenues generated - cash expenses - depreciation expense) × (1 - tax rate) is also known as Earning after tax
On January 1, 2017, Lynn Company borrows $3,000,000 from National Bank at 11% annual interest. In addition, Lynn is required to keep a compensatory balance of $300,000 on deposit at National Bank which will earn interest at 5%. The effective interest that Lynn pays on its $3,000,000 loan is a. 10.0%. b. 11.0%. c. 11.5%. d. 11.6%.
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Hayek Bikes prepares the income statement under variable costing for its managerial reports, and it prepares the income statement under absorption costing for external reporting. For its first month of operations, 400 bikes were produced and 240 were sold; this left 160 bikes in ending inventory. The income statement information under variable costing follows.
Sales (240 × $1,650) $ 396,000
Variable product cost (240 × $650) 156,000
Variable selling and administrative expenses (240 × $55) 13,200
Contribution margin 226,800
Fixed overhead cost 72,000
Fixed selling and administrative expense 85,000
Net income $ 69,800
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
For its first month of operations, 400 bikes were produced and 240 were sold; this left 160 bikes in ending inventory. The income statement information under variable costing follows.
Sales (240 × $1,650) $ 396,000
Variable product cost (240 × $650) 156,000
Variable selling and administrative expenses (240 × $55) 13,200
Contribution margin 226,800
Fixed overhead cost 72,000
Fixed selling and administrative expense 85,000
Net income $ 69,800
Under absorption costing the fixed costs are allocated to the production costs for the period.
Unitary cost= variable cost per unit + unitary fixed costs
Unitary cost= 650 + (72,000/400)= $830
Income statement:
Sales (240 × $1,650) $ 396,000
COGS= (240*830)= (199,200)
Gross profit= $196,800
Variable selling and administrative expenses= (13,200)
Fixed selling and administrative expense= (85,000)
Net operating income= $98,600
You have just been assigned as project manager for a large telecommunications project. This one year project is about halfway done. The project team consists of five sellers and 20 of your company's employees. You want to understand who is responsible for doing what on the project. Where would you find such information?
A. Responsibility assignment matrix
B. Resource histogram
C. Bar chart
D. Project organization chart
Answer: (A) Responsibility assignment matrix
Explanation:
Responsibility assignment matrix is plays an important role for completing the project as it describe about the business process and the participation for completing the various types of given task.
The main objective of the responsibility assignment matrix is that it assign the role for each participant for completing the given project. It is also known as the responsibility accountability matrix or the RACI matrix.According to the given question, the project manager assign a project related to the telecommunication and by using the responsibility assignment matrix we can easily find out the role of the each participant in the given project.
Therefore, Option (A) is correct.
How has the pattern of trade changed in the United States since 1960?
A. Exports and imports have grown at the same rate, and the United States has remained a net exporter.
B. Imports have grown faster than exports, and the United States has become a net importer.
C. Exports have grown faster than imports, and the United States has become a net importer.
D. Imports have grown faster than exports, and the United States has remained a net exporter.
E. Exports have grown faster than imports, and the United States has remained a net exporter.
Answer:
The correct answer is letter "B": Imports have grown faster than exports, and the United States has become a net importer.
Explanation:
International trade is not just a major engine of the U.S. economy, but for the global economy. The total trade share in terms of the global Gross Domestic Product was 25% in 1960 and it has raised to 56% in 2017. Though, imports have surpassed the level of exports, making America be a net importer. Main imports are in the form of raw materials for the production of different goods mainly vehicles, and clothing.
Problem 10-3A On January 1, 2017, Evers Company purchased the following two machines for use in its production process.
Machine A: The cash price of this machine was $37,500. Related expenditures included: sales tax $3,600, shipping costs $100, insurance during shipping $50, installation and testing costs $120, and $150 of oil and lubricants to be used with the machinery during its first year of operations. Evers estimates that the useful life of the machine is 5 years with a $5,950 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.
Machine B: The recorded cost of this machine was $180,000. Evers estimates that the useful life of the machine is 4 years with a $9,800 salvage value remaining at the end of that time period.
Prepare the following for Machine A. (Round answers to 0 decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
(1) The journal entry to record its purchase on January 1, 2017.
(2) The journal entry to record annual depreciation at December 31, 2017.
Answer:
Please see the solution below:
Explanation:
Machine A:
(i) Total Machine A Cost
Purchase Price = $37,500
Sales Tax = $3,600
Shipping Cost = $100
Insurance during shipping = $50
Installation and Testing Cost = $120
Total Machine A cost = $41,370
(ii) Depreciation
Recorded Cost = $41,370
Less: Salvage Value = $5,950
Useful Life = 5 years
Straight Line Method is used to find depreciation per yer will be:
Depreciation = $7,084
(1) The Journal Entry to record purchase of equipment (Machine A)
January 1, 2017
Dr. Equipment $41,370
Cr. Cash $41,370
(2) The Journal Entry to record annual depreciation (Machine A)
December 3, 2017
Dr. Depreciation $7,084
Cr. Accumulated Depreciation - Equipment $7,084
The total cost of Machine A is recorded as $41,370. The depreciation expense for the year end 2017 is calculated to be $7,084.
Explanation:The subject matter involves the calculation and recording of purchase and depreciation of assets, a core part of business accounting.
First, to figure out the cost of machine A, we add up the related costs to the purchase price: $37,500 + $3,600 + $100 + $50 + $120 = $41,370. The cost of lubricants is not included as it is an operational cost, not a purchase cost.
(1) Therefore, the journal entry on January 1, 2017, is Debit: Machinery (account title) for $41,370 which is the total cost of machine A.
To calculate annual depreciation, we use the straight-line method. Take the total cost of the machine ($41,370), subtract the salvage value ($5,950), and then divide by the useful life of the machine (5 years): ($41,370 - $5,950) / 5 = $7,084 (rounded to the nearest dollar).
(2) The journal entry on December 31, 2017, to record annual depreciation is Debit: Depreciation Expense for $7,084, and Credit: Accumulated Depreciation for $7,084.
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According to the modern view of the Phillips curve, expansionary macroeconomic policy that leads to inflation will reduce unemployment
a. only if people underestimate the inflationary side effects of the policy.
b. only if people overestimate the inflationary side effects of the policy.
c. if people accurately anticipate the inflationary side effects of the policy.
d. only if monetary policy provides the macroeconomic stimulus.
Answer:
a. only if people underestimate the inflationary side effects of the policy.
Explanation:
The modern Phillips curve suggests that as inflation increases, unemployment reduces and vice versa dependent on two factors; the level of inflation and the excess of growth rate of wages over the expected inflation. The larger the excess, the greater the effect of the expansionary monetary policy. Thus, if it is underestimated, then the unemployment will greatly reduce.
Nachman Industries just paid a dividend of D 0 = $1.32. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stock's current market value?
a. $41.59
b. $42.65
c. $43.75
d. $44.87
e. $45.99
Answer:
option D
Explanation:
End of PV Calculation PV of Dividend
Year (Div x PVIF9%,n)
1 $1.32(1.30) = $1.716 x 0.9174 $1.574
2 $1.716(1.10) = $1.8876 x 0.8417 $ 1.588
$3.162
Value of stock at the end of year 2 = $1.9820/0.04 = $49.55
P V of $38.275 at the end of year 2 = $49.55(PVIF 9%,2) = $41.71
∴ V = $3.162 + $41.71 = $44.87
Hence, the correct answer is option D
In preparing for the upcoming holiday season, Fresh Toy Company (FTC) designed a new doll called The Dougie that teaches children how to dance. The fixed cost to produce the doll is $100,000. The variable cost, which includes material, labor, and shipping costs, is $34 per doll. During the holiday selling season, FTC will sell the dolls for $42 each. If FTC over produces the dolls, the excess dolls will be sold in January through a distributor who has agreed to pay FTC $10 per doll. Demand for new toys during the holiday selling season is uncertain. The normal probability distribution with an average of 60,000 dolls and a standard deviation of 15,000 is assumed to be a good description of the demand. FTC has tentatively decided to produce 60,000 units (the same as average demand), but it wants to conduct an analysis regarding this production quantity before finalizing the decision.
Create a what-if spreadsheet model using formulas that relate the values of production quantity, demand, sales, revenue from sales, amount of surplus, revenue from sales of surplus, total cost, and net profit. What is the profit when demand is equal to its average (60,000 units)?
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Final answer:
To calculate total revenue, multiply the price per unit by the quantity sold. To calculate marginal revenue, subtract the total revenue of the previous level from the total revenue of the current level. The profit maximizing quantity is where marginal revenue equals marginal cost.
Explanation:
To calculate total revenue, multiply the price per unit by the quantity sold. In this case, the price of one dog coat is $72. To calculate marginal revenue, subtract the total revenue of the previous level from the total revenue of the current level. Total cost is the sum of fixed costs and variable costs. Marginal cost is the change in total cost divided by the change in quantity. The profit maximizing quantity is where marginal revenue equals marginal cost.
Quantity | Total Revenue | Marginal Revenue | Total Cost | Marginal Cost
1 | $72 | $72 | $164 | $100
2 | $144 | $72 | $248 | $84
3 | $216 | $72 | $362 | $114
4 | $288 | $72 | $546 | $184
5 | $360 | $72 | $816 | $270
On one diagram, plot the total revenue curve starting at zero quantity and increasing with each unit sold. Plot the total cost curve starting at the fixed cost and increasing with the variable cost for each unit sold. On another diagram, plot the marginal revenue curve as a horizontal line since the price is constant. Plot the marginal cost curve starting at the first unit and increasing with each additional unit. The profit maximizing quantity is where marginal revenue equals marginal cost, which is at a quantity of 4 units.
Item Prior year Current year Accounts payable 8,120.00 7,915.00 Accounts receivable 6,002.00 6,603.00 Accruals 1,020.00 1,571.00 Cash ??? ??? Common Stock 11,862.00 12,878.00 COGS 12,799.00 18,209.00 Current portion long-term debt 5,011.00 5,066.00 Depreciation expense 2,500 2,760.00 Interest expense 733 417 Inventories 4,243.00 4,814.00 Long-term debt 14,938.00 13,767.00 Net fixed assets 50,217.00 54,795.00 Notes payable 4,346.00 9,870.00 Operating expenses (excl. depr.) 13,977 18,172 Retained earnings 28,963.00 29,912.00 Sales 35,119 46,835.00 Taxes 2,084 2,775 What is the firm's cash flow from financing? Assignment is past due:
Answer:
$2,321
Explanation:
For computing the net cash flow from financing activities, first we have to determine the net income and then the dividend amount which is shown below:
Net income = Sales - Cost of Goods Sold - Operating Expenses - Depreciation Expense - Interest Expense - Taxes
= $46,835 - $18,209 - $18,172 - $2,760 - $417 - $2,775
= $4,052
Now the dividend would be computed below:
The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid
$29,912 = $28,963 + $4,052 - dividend paid
$29,912 = $33,015 - dividend paid
So, the dividend would be
= $33,015 - $29,912
= $3,103
Cash flow from Financing activities
Add: Increase in Common Stock $1,016 ($12,878 - $11,862)
Add: Current Portion Long-term Debt $55 ($5,066 - $5,011)
Less: Decrease in Long-term Debt -$1,171 ($13,767 - $14,938)
Add: Increase in Notes Payable $5,524 ($9,870 - $4,346)
Less: Dividend Paid $3,103
Net Cash flow from Financing activities $2,321
Buffalo in the United States almost became extinct while cattle, an animal that provides similar products, never has been close to extinction. The difference is due to
Question 1 options:
the greater marginal value of a buffalo relative to a steer, leading to the overharvesting of buffalo.
the greater marginal value of a head of cattle relative to buffalo, leading to over-hunting of buffalo.
the use of private property rights on cattle and common property rights on buffalo.
cattle existing in Europe also while buffalo were specific to North America.
Answer:
The greater marginal value of a buffalo relative to a steer, leading to the over harvesting of buffalo.
Explanation:
Marginal value looks at the increased amount of value that can be achieved by providing an additional source of output. So as the marginal value of Buffalo relative to a steer increases, people tends to over harvest it leading to its extinction.
Ethan's Eggroll House, a calendar year corporation, purchased a new computer and printer in January for $1,500. In February, the business purchased a new oven for $1,200. No other assets were purchased during the year. How much depreciation will be taken on these items in the current year if the taxpayer does NOT elect to use Section 179 and does NOT use bonus depreciation?A. $300 computer; $171 ovenB. $525 computer; $300 ovenC. $375 computer; $300 ovenD. $300 computer; $240 ovenE. $525 computer; $420 ovenF. $214 computer; $171 oven
The depreciation for the computer and printer is $300 per year and for the oven is $171 per year. This calculation is based on the Straight-Line Depreciation Method. The correct answer is (A) $300 computer; $171 oven.
Explanation:To answer this question, we need to understand that the IRS sets a different rate for different types of tangible business property that can be depreciated over time. The computer and printer are typically classified as 'Information Systems' which have a depreciable life of 5 years. The oven is classified as 'Restaurant Equipment' which has a depreciable life of 7 years.
To calculate annual depreciation, we use straight-line depreciation, wherein the value of an asset is reduced uniformly over its predetermined life. For the computer and printer, the annual depreciation would be $1500 / 5 years = $300. For the oven, the annual depreciation would be $1200 / 7 years = $171.43 (round up to $172).
Therefore, the correct answer would be $300 depreciation for the computer and printer and $171 for the oven, making the correct answer (A).
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Your uncle offers you a choice of $115,0 in 10 years or $52,000 today, if the money is discounted at 9%, which should you do ose? 2. If you invest $9,500 per period or the fotioning number of periods how much would you have? A. 10years at 10% B. 15years at 9%
Answer:
1) we would choose the second offer i.e. $52,000 today
2) For A) 10 years at 10%
Future value = $151,405.53
For B) 15 years at 9%
Future value = $278,928.70
Explanation:
1) Future value = $115,000
Time, n = 10 years
Discount rate, r = 9% = 0.09
Now,
Present value of the money provided after 10 years
= Future Value ÷ [ ( 1 + r )ⁿ ]
= $115,000 ÷ [ ( 1 + 0.09 )¹⁰ ]
= $48,577.24
Since,
The Present value of $115,000 is less than the money to offered today i.e $52,000
Hence, we would choose the second offer i.e. $52,000 today
2) Payment per period = $9,500
Future value = Yearly Payment × [ { ( 1 + r ) ⁿ - 1 } ÷ r ]
Thus,
For A) 10 years at 10%
Future value = $9,500 × [ { ( 1 + 0.1 )¹⁰ - 1 } ÷ 0.1 ]
= $151,405.53
For B) 15 years at 9%
Future value = $9,500 × [ { ( 1 + 0.09 )¹⁵ - 1 } ÷ 0.09 ]
= $278,928.70
Your client has been given a trust fund valued at $1.07 million. He cannot access the money until he turns 65 years old, which is in 30 years. At that time, he can withdrawal $28,500 per month. If the trust fund is invested at a 5.0 percent rate, how many months will it last your client once he starts to withdraw the money?
Answer:
285 Months
Explanation:
n = 30 years × 12 = 360
percent rate = 5.0 % divided by 12 = 0.417.
Now recalling the statement of time value for money,
We have future value = present value × ( 1 + rate) ∧ n
future value = 1, 070,000 × ( 1 + 0.417 ) ∧ 360
future value = 3.33065667 E 60
At age 65, the value 3.33065667 E 60 will be the present monthly withdrawal at $28,500.
present value of ordinary annuity, = annuity ( 1 - (1 + r) ∧ -n ÷ r
= 3.33065667 E 60 = 28500 (1 - ( 1 + 0.417) ∧ - n ÷ 0.417
= 3.33065667 E 60 ÷ 28500 = (1 - ( 1 + 0.417) ∧ - n ÷ 0.417
1.168651462 E 56 = (1 - ( 1 + 0.417) ∧ - n ÷ 0.417
we now introduce logs to determine the value of n
Solving further, we discovered that n= 285.
Therefore, the number of months it will last one he start to withdraw the money is 285 month
Final answer:
To find out how many months a trust fund will last with monthly withdrawals, calculate the future value of the trust fund and divide it by the withdrawal amount. It requires understanding annuity distributions and applying formulas for both future value and annuity present value in financial mathematics.
Explanation:
The student's question pertains to determining the duration of monthly withdrawals from a trust fund invested at a 5.0 percent rate until the fund is depleted. To solve this question, we must employ the concept of annuity distributions in financial mathematics. The trust fund grows for 30 years and then the client starts withdrawing money monthly. This situation calls for a calculation where both future value and present value of annuities must be considered.
First, we calculate the future value of the trust fund after 30 years. After that, we use the present value of an annuity formula to determine how many months the withdrawals of $28,500 will last. However, a crucial detail that is missing from the question is whether the trust fund continues to earn interest at the same rate after the client begins to withdraw money. Assuming it does not, the calculation would be more straightforward - simply dividing the total future value of the trust fund by the monthly withdrawal amount.
Assuming the trust fund does not earn interest after withdrawals begin, the calculation is:
Future Value of the trust fund: FV = P \\times (1 + r)^n
Future Value of $1.07 million invested for 30 years at 5% annual interest rate: FV = 1,070,000 \\times (1 + 0.05)^30
Calculate the total amount available for withdrawal.
Divide this total by the monthly withdrawal amount of $28,500 to determine the number of months the fund will last.
Without the precise calculations, we cannot provide an exact number of months. Nevertheless, these steps outline the process the student should follow to determine the duration of the trust fund's payouts.
Gion Company is considering eliminating its windows division, which reported an operating loss for the recent year of $105,000. Division sales for the year were $1,110,000 and its variable costs were $975,000. The fixed costs of the division were $220,000. If the windows division is dropped, 65% of the fixed costs allocated to it could be eliminated. The impact on Gion’s operating income from eliminating this business segment would be:
If Gion eliminates the Windows division, the impact on its operating income would be a negative $8,000.
Explanation:In order to determine the impact on Gion's operating income from eliminating the Windows division, we need to calculate the division's contribution margin. The contribution margin is the division's sales minus its variable costs.
The contribution margin for the windows division would be -
= $1,110,000 - $975,000
= $135,000.
If the division is dropped and 65% of the fixed costs allocated to it are eliminated, the impact on Gion's operating income would be:
Operating income impact = Division's contribution margin - 65% of its fixed costs
Operating income impact = $135,000 - (65% * $220,000)
= $135,000 - $143,000
= -$8,000
Therefore, the elimination of the Windows division would result in a negative impact of $8,000 on Gion's operating income.
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For a nonmonetary exchange of plant assets, accounting recognition should not be given to
a. a loss when the exchange has no commercial substance.
b. a gain when the exchange has commercial substance.
c. part of a gain when the exchange has no commercial substance and cash is paid (cash paid/received is less than 25% of the fair value of the exchange).
d. part of a gain when the exchange has no commercial substance and cash is received (cash paid or received is less than 25% of the fair value of the exchange).
Answer: The correct answer is "c. part of a gain when the exchange has no commercial substance and cash is paid (cash paid/received is less than 25% of the fair value of the exchange).".
Explanation: For a nonmonetary exchange of plant assets, accounting recognition should not be given to part of a gain when the exchange has no commercial substance and cash is paid (cash paid/received is less than 25% of the fair value of the exchange).
In nonmonetary exchanges of plant assets in accounting, recognition should not be given to part of a gain when the exchange lacks commercial substance and cash is received, as long as the cash paid or received is less than 25% of the fair value of the exchange.
Explanation:In the context of accounting, a nonmonetary exchange of plant assets pertains to a transaction where an entity swaps assets that are not cash, for something else. The key rule is that accounting recognition should not be given to part of a gain when the exchange has no commercial substance and cash is received, if the cash paid or received is less than 25% of the fair value of the exchange, as per the US GAAP regulations. Hence, answer (d) is the most appropriate.
The recognition of a loss or gain when the exchange has commercial substance doesn't generally result in a defiance with US GAAP rules on recognition. A nonmonetary exchange that has commercial substance will generally lead to recognition of a loss or gain due the fact that the future cash flows change as a result of the transaction.
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Telicia, a single taxpayer, purchased a famous painting for $69,000. Several years later, she sold it for $99,000. Telicia's marginal tax rate is 35%. Telicia's gain on the sale of the painting will be taxed at a rate of
Answer:
28%
Explanation:
Please see attachment
Bell is a product of the Baldwin company which is primarily in the Nano segment, but is also sold in another segment. Baldwin starts to create their sales forecast by assuming all policies (R&D, Marketing, and Production) for all competitors are equal this year over last. For this question assume that all 700 of units of Bell are sold in the Nano segment. If the competitive environment remains unchanged what will be the Bell product’s demand next year (in 000’s)?
Answer:
The bell product's demand will be 700 units multiplied by the annual percentage of population growth Demand = 700 * (1 + population growth in %).
Explanation:
Making the forecast where the competitors will do the same and no other change in the market is expected, the changes in demands could occur because the population grows and changes in technology. Since the forecast is only for the next year, changes in technology are not included (usually affects the long-term).
Audio City, Inc., is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized below: Current Year Previous Year Balance Sheet at December 31 Cash $ 70,100 $ 73,800 Accounts Receivable 16,600 22,000 Inventory 24,400 22,000 Equipment 231,000 154,000 Accumulated Depreciation—Equipment (66,000 ) (49,000 ) Total Assets $ 276,100 $ 222,800 Accounts Payable $ 8,400 $ 19,800 Salaries and Wages Payable 2,100 1,000 Note Payable (long-term) 62,000 79,000 Common Stock 108,000 74,000 Retained Earnings 95,600 49,000 Total Liabilities and Stockholders’ Equity $ 276,100 $ 222,800 Income Statement Sales Revenue $ 212,000 Cost of Goods Sold 94,000 Other Expenses 66,000 Net Income $ 52,000 Additional Data: Bought equipment for cash, $77,000. Paid $17,000 on the long-term note payable. Issued new shares of stock for $34,000 cash. Dividends of $5,400 were paid in cash. Other expenses included depreciation, $17,000; salaries and wages, $22,000; taxes, $27,000. Accounts Payable includes only inventory purchases made on credit. Because a liability relating to taxes does not exist, assume that they were fully paid in cash. Required: 1. Prepare the statement of cash flows for the current year ended December 31 using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)
Answer:
Closing Cash and Cash equivalents balance is $70,100 as per the statement of cash flows presented below in indirect format. the closing figure matches the balance sheet sheet figure of cash and cash equivalents for the current year.
For year reference, solution in excel format is also attached
Explanation:
Statement of Cash Flows for year ended 31 December 20x1
Net Profit before tax (Net Income + Tax) $79,000
Adjustment of Non Cash Expenses:
Depreciation $17,000
Increase in Salaries & Wages Payable $1,100
Working Capital Changes:
Increase in Inventory $(2,400)
Decrease in Accounts Receivables $5,400
Decrease in Accounts Payable $(11,400)
Cash generated from Operations $88,700
Tax Paid $(27,000)
Net cash from operating activities $61,700
Cash Flows from Investing Activities:
Purchase of equipment $(77,000)
Net cash from investing activities $(77,000)
Cash Flows from Financing Activities:
Proceeds from issue of shares $34,000
Payment of long term loans $(17,000)
Dividends paid $(5,400)
Net cash from Financing Activities $11,600
Net decrease in cash and cash equivalents $(3,700)
Opening cash and cash equivalents $73,800
Closing Cash and Cash Equivalents $70,100
Wendell Company provided the following pertaining to its recent year of operation:
• Common stock with a $10,000 par value was sold for S50,000 cash.
• Cash dividends totaling S20,000 were declared, of which S15,000 were paid.
• Net income was S70,000.
• A 5% stock dividend resulted in a common stock distribution, which had a S5,OOO par value and a S23,000 market value.
• Treasury stock costing 9,000 was sold for $7,000.
How much did Wendell's total stockholders' equity increase during the recent year of operation?
A. S107,000.
B. $84,000.
c. S98,000.
D. $112,000.
Answer:
Option (B) is correct.
Explanation:
Wendell's total stockholders' equity increase during the recent year of operation:
= Issued common stock - Cash dividend declared + Net Income - Stock dividend distributed + Sale of treasury stock below cost
= $50,000 - $20,000 + $70,000 - $23,000 + $7,000
= $84,000
Therefore, Wendell's total stockholders' equity increase by $84,000.
Holt Company purchased a computer for $8,000 on January 1, 2019. Straight-line depreciation is used, based on a 5-year life and a $1,000 salvage value. In 2021, the estimates are revised. Holt now feels the computer will be used until December 31, 2022, when it can be sold for $500?
Answer:
$2,350
Explanation:
On January 1, 2019
Cost of computer = $8,000
Useful life = 5 years
Salvage value = $1,000
Annual Depreciation = (8000 - 1000)/5
= 7000/5
= $1,400
In 2021 estimates are revised i.e after 2 years of use
Carrying value = 8000 - (2 × 1400)
= 8000 - 2800
= $5,200
Remaining Useful life after revised estimate = 2 years
Revised salvage value = 500
Annual depreciation = (5200 - 500)/2
= 4700/2
= $2,350