Answer:
Activity variance = $858 unfavorable
Explanation:
The activity variance occurs as result of the difference between the actual level of work (activity) done and the budgeted level of work as planned.
$
Planned budget (1060 + (429× 11)) = 5,779
Flexible budget (1060 + (429 ×13) = 6,637
Activity variance 858 unfavorable
Which of the following describes the budget balance as a percent of GDP in 2019?
a. The Federal government's budget balance as a percent of GDP was higher than predicted by the trendline (that is, the deficit is smaller), so fiscal policy was more expansionary than usual.
b. The Federal government's budget balance as a percent of GDP was lower than predicted by the trendline (that is, the deficit is bigger) ), so fiscal policy was more expansionary than usual.
c. The Federal government's budget balance as a percent of GDP was higher than predicted by the trendline (that is, the deficit is smaller), so fiscal policy was less expansionary than usual.
d. The Federal government's budget balance as a percent of GDP was lower than predicted by the trendline (that is, the deficit is bigger) ), so fiscal policy was less expansionary than usual.
e. The Federal government's budget balance as a percent of GDP was close to the prediction by the trendline (within 0.5%), so fiscal policy was just as expansionary as usual.
Answer:
The answer is option B) The Federal government's budget balance as a percent of GDP was lower than predicted by the trendline (that is, the deficit is bigger) ), so fiscal policy was more expansionary than usual.
Explanation:
The annual budget deficit increased from $585 billion (3.2% GDP) in 2016 to $984 billion (4.7% GDP) in 2019.
Contrary to fiscal predictions, The U.S. fiscal deficit increased by $1 trillion in 2019, the first time it has passed that level in a calendar year since 2012.
A situation like this necessitates an expansionary fiscal policy.
Expansionary Fiscal Policy is a tool used by government to increase disposable income by reducing tax and increasing government expenditure.
This will lead to an increase in aggregate demand and contributing to drawing down of budget surpluses.
Poulter Corporation will pay a dividend of $3.25 per share next year. The company pledges to increase its dividend by 5.1 percent per year, indefinitely. If you require a return of 11 percent on your investment, how much will you pay for the company’s stock today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
Price of stock = $55.08
Explanation:
The price of a stock is the present value of the future dividends discounted at the required rate of return.
P = D/(r-g)
P-price of stock today, D- Dividend in year's time, r- required rate of return,
g- growth rate in dividend
Using the following parameters:
P =?, r- 11%, g- 5.1%
P = 3.25/(0.11-0.051)
P = 55.08474576
Price of stock = $55.08
Under the allowance method of accounting for bad debts, why must uncollectible accounts receivable be estimated at the end of the accounting period? The IRS rules require the company to make the estimate. To determine the gross realizable value of accounts receivable. To match bad debt expense to the period in which the revenues were earned. To allow the collection department to schedule work for the next accounting period.
Answer:
Under the allowance method of accounting for bad debts, uncollectible accounts receivable are estimated at the end of the accounting period to match bad debt expense to the period in which the revenues were earned.
Explanation:
Allowance method as a term in financial accounting means uncollectible accounts receivable process that records an estimate of bad debt expense in the same accounting period as the sale.
The purpose of allowance method is to adjust accounts receivable appearing on the balance sheet.
therefore, under the allowance method of accounting for bad debts, uncollectible accounts receivable are estimated at the end of the accounting period to provides better matching of expenses and revenues on the income statement matching bad debt expense to the period in which the revenues were earned.
Under the allowance method, uncollectible accounts receivable are estimated to match bad debt expense to the revenue period and provide a more accurate picture of financial health.
The allowance method of accounting for bad debts requires the estimation of uncollectible accounts receivable at the end of the accounting period primarily to match bad debt expense to the period in which the revenues were earned. This process conforms to the matching principle in accounting, which states that expenses should be reported in the same period as the revenues they helped to generate. When a company prepares its financial statements, it must account for the potential bad debts to give a more accurate picture of its financial health. Thus, estimating the uncollectible accounts is necessary to determine the gross realizable value of accounts receivable.
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Using the present value tables in Exhibits 26-3 and 26-4, Assume that the required rate of return for investment projects at Rippenstock Corporation is 12 percent. One department has proposed investment in new equipment with a 10-year life span and a present value of expected future annual cash flows of $120,000. The equipment’s initial outlay cost is $125,000 and it has a salvage value of $10,000. Will this investment project meet the required rate of return for the company? (Round your "PV factors" to 3 decimal places.)
Answer:
No
Explanation:
the required rate of return = 12%
if the present value of the project's cash flows after being discounted at the required rate of return = $120,000, then the net present value (NPV) of the project is negative. Future cash flows are discounted at the company's required rate of return, if they were discounted at a lower rate, their present value would be higher.
Any project with a negative NPV should be rejected because it doesn't provide enough cash flows.
Champaign Corporation purchases 45% of the common stock of Rockville, Inc. at a purchase price of $21.6 million cash. During the year, Rockville reports net income of $2,960,000 and pays $544,000 of cash dividends. At the end of the year, the market value of Champaign’s investment is $23.7 million. What is the year-end balance of the equity investment in Rockville? Select one: A. $22,687,200 B. $25,010,000 C. $24,332,500 D. $21,600,000 E. None of the above
Answer:
The correct option is A,$ 22,687,200
Explanation:
The year end balance of the equity investment of Champaign Corporation at year end is the initial price paid for the investment plus share of net income in the year less Champaign Corporation's share of cash dividends paid in the year as shown below:
Initial cost of investment $21,600,000
share of net income($2,960,000*45%) $ 1,332,000
Less:share of dividends($544,000*45%) ($244,800)
Year end balance of equity investment $ 22,687,200
The correct option is A.
It is important to note that dividends were deducted because it is more ike a cash out from the investment
Final answer:
The year-end balance of the equity investment in Rockville is $22,687,200, after adjusting the initial investment with Champaign's proportional share of Rockville's net income and dividends received. The correct option is a.
Explanation:
To calculate the year-end balance of the equity investment in Rockville, we need to adjust the initial investment amount for the share of net income and the dividends received. Champaign Corporation initially invested $21.6 million.
Champaign's share of Rockville's net income is 45% of $2,960,000, which equals $1,332,000. The share of cash dividends received is 45% of $544,000, which is $244,800.
The year-end balance is therefore calculated as follows:
Initial investment: $21,600,000
Share of net income: +$1,332,000
Less: Share of dividends received: -$244,800
Adding the net income share and subtracting the dividends from the initial investment, we get:
$21,600,000 + $1,332,000 - $244,800 = $22,687,200
So, the correct answer is A. $22,687,200.
Which of the following statement(s) is/are true?
A. The critical path is the path with the most activities.
B. The critical path is the path with the longest duration.
C. The critical path is the path with the greatest variability.
D. There can only be one critical path.
E. In CPM, another path could become critical.
F. In PERT, another path could become critical.
G. None of the above.
Answer:
The correct answer is option (F)In PERT, another path could become critical.
Explanation:
Solution
From the given question, the following statement is true, If In PERT another path could become critical.
Now,
Depending on the standard deviation of another path or way, even with a shorter duration or period, the higher degree of variability could bring about the change in a critical path or result in the critical path being changed.
The correct statements referring to the critical path in project management are B, E, and F: (B) It is the path with the longest duration, and in both CPM and PERT methodologies, (E and F) another path could become critical due to changes in the project.
Explanation:The critical path in project management is a key concept often examined in Business studies, specifically when discussing project management methodologies like Critical Path Method (CPM) and Program Evaluation and Review Technique (PERT). Clarifying the statements provided regarding the critical path:
Therefore, statements B, E, and F are true regarding the critical path.
The income statement and a schedule reconciling cash flows from operating activities to net income are provided below ($ in thousands) for Peach Computers. PEACH COMPUTERS Income Statement For the Year Ended December 31, 2021 Sales $ 305 Cost of goods sold (185 ) Gross margin 120 Salaries expense $ 41 Insurance expense 19 Depreciation expense 11 Loss on sale of land 5 76 Income before tax 44 Income tax expense (22 ) Net income $ 22 Reconciliation of Net Income To Net Cash Flows from Operating Activities Net income $ 22 Adjustments for Noncash Effects Depreciation expense 11 Loss on sale of land 5 Changes in operating assets and liabilities: Decrease in accounts receivable 6 Increase in inventory (13 ) Decrease in accounts payable (8 ) Increase in salaries payable 5 Decrease in prepaid insurance 9 Increase in income tax payable 20 Net cash flows from operating activities $ 57 Required: 1. Calculate each of the following amounts for Peach Computers. 2. Prepare the cash flows from operating activities section of the statement of cash flows (direct method).
Answer:
Kindly check Explanation
Explanation:
1.) Cash received from customers during the reporting period
(Sale + decrease in acc receivable)
($305 + $6) = $311
2.)Cash paid to suppliers of the goods
(COGS+ increase in inventory+ decrease in acc payable)
($185 + $13 + $8) = $206
3.) Cash paid to employees
(salary- increase in salary payable)
($41 - $5) =$36
4.) Cash paid for insurance
($19 - $9[decrease in prepaid insurance) = $10
5.)Cash paid for income tax
($22 - $20[Increase in income tax payable]) = $2
B.) Cash received from customers during the reporting period - - - - - - - - $311
Cash paid to suppliers of the goods - -($206)
Cash paid to employees - - - - - - - - - - - ($36)
Cash paid for insurance - - - - - - - - - - - - ($10)
Cash paid for income tax - - - - - - - - - - - - ($2)
Cash flow from operating activities - - - - $57
Real per capita GDP in China in 1961 was about $350, but it doubled to about $700.00 by 1979. a. What was the average annual economic growth rate in China over the 18.00 years from 1961 to 1979? (NOTE: Round this to two places past the decimal point.) % b. Per capita real GDP doubled in China again in only seven years, reaching $1400.00 by 1986.00. What was the average annual economic growth rate between 1979 and 1986.00? (NOTE: Round this to two places past the decimal point.)
The average annual economic growth rate in China from 1961 to 1979 was 5.01%. The average annual economic growth rate between 1979 and 1986 was 9.5%.
Explanation:a. To find the average annual economic growth rate from 1961 to 1979, we need to calculate the growth rate based on the initial and final values. The initial value is $350 and the final value is $700. The formula to calculate the average annual growth rate is:
Growth Rate = ((Final Value / Initial Value) ^ (1 / Number of Years)) - 1
Using this formula, we get ((700 / 350) ^ (1 / 18)) - 1 = 0.0501 or 5.01%
b. For the average annual economic growth rate between 1979 and 1986, we use the same formula. The initial value is $700 and the final value is $1400. Plugging these values into the formula, we get ((1400 / 700) ^ (1 / 7)) - 1 = 0.095 or 9.5%
1. On November 16, 2019, a U.S. company makes a sale to a customer in Germany. Under the sale terms, the customer will pay the company €100,000 on March 16. On November 16, the company also enters a forward contract to sell €100,000 on March 16, 2020. On March 16, the company receives €100,000 from the customer and sells it using the forward contract. The company's accounting year ends December 31. Rates on the dates specified appear below: Spot Rate Forward Rate for March 16, 2020 Delivery November 16, 2019 $ 1.250 $ 1.248 December 31, 2019 1.260 1.255 March 16, 2020 1.265 1.265 2. At what amount will the company report sales revenue on its 2019 income statement? A. $125,000 B. $125,500 C. $124,800 D. $126,000
Answer:
$125,000
Explanation:
Given the following resorted data from the question:
Spot Rate Forward Rate for
March 16, 2020 Delivery
November 16, 2019 $1.250 $ 1.248
December 31, 2019 1.260 1.255
March 16, 2020 1.265 1.265
The applicable rate to use to calculate the amount the company will report sales revenue on its 2019 income statement is the spot rate ruling on the date the company made the sale to the customer in Germany, i.e. $1.250 on November 16, 2019.
Therefore, we have:
Sales revenue = €100,000 * $1.250 = $125,000.
Therefore, the amount the company will report sales revenue on its 2019 income statement is $125,000.
Clothing purchased land, paying $ 105 comma 000 cash and signing a $ 320 comma 000 note payable. In addition, Clawson paid delinquent property tax of $ 2 comma 000, title insurance costing $ 850, and $ 5 comma 500 to level the land and remove an unwanted building. Record the journal entry for purchase of the land. Begin by determining the cost of the land.
Answer:
Land $433,350 (debit)
Cash $113,350 (credit)
Note Payable $ 320,000 (credit)
Explanation:
IAS 16 - Cost of Asset includes Purchase Cost and other costs directly incurred in putting the asset in the location and condition intended for use by management.
Calculation of the Cost of Land
Purchase Price: Cash 105,000
: Note 320,000
Delinquent Property tax 2,000
Title Insurance 850
Preparation Costs 5,500
Total 433,350
Journal
Land $433,350 (debit)
Cash $113,350 (credit)
Note Payable $ 320,000 (credit)
Riverboat Adventures pays $120,000 plus $20,000 in closing costs to buy out a competitor. The real estate consists of land appraised at $22,100, a building appraised at $66,300, and paddle boats appraised at $81,600. Compute the cost that should be allocated to the building.
Answer:
$54,600
Explanation:
The computation of the cost that should be allocated to the building is shown below
Total purchase cost is
= $120,000 + $20,000
= $140,000
Total appraisal value is
= $22,100 + $66,300 + $81,600
= $170,000
Now cost allocated to building is
= Purchase cost × building appraisal value ÷ Total appraisal value
= $140,000 × $66,300 ÷ $170,000
= $54,600
We simply applied the above formula
Tiger Furnishings produces two models of cabinets for home theater
components, the Basic and the Dominator. Data on operations and costs
for March follow:
Basic Dominator Total
Units produced 850 300 1,150
Machine-hours 4,400 2,000 6,400
Direct labor-hours 2,700 2,800 5,500
Direct materials costs $11,000 $3,450 $14,450
Direct labor costs 58,300 32,300 90,600
Manufacturing overhead costs 191,950
Total costs $297,000
Required:
Compute the predetermined overhead rate assuming that Tiger Furnishings
uses direct labor-hours to allocate overhead costs.
Pre-determined overhead rate, per direct labor hour.
Answer:
211%
$34.9 per direct labor hour
Explanation:
As per the data given in the question,
Pre-determined overhead rate = Total overhead ÷ Direct labor cost
= $191,950 ÷ $90,600
= 211 % of Direct labor hour
Pre-determined overhead rate = Total overhead ÷ Direct labor hours
= $191,950 ÷ $5,500
= $34.9 per direct labor hour
We simply applied the above formulas to determine the value of predetermined overhead rate.
Goldsmith Jewelry uses direct labor hours to apply overhead and estimated total overhead costs at $52,500 and direct labor hours at 12,500 for the second quarter. The direct labor quantity standard is 1.75 hours per unit, and the company produced 2,400 units in the second month of the second quarter. This required 4,450 direct labor hours. What value should be used for overhead applied in the total overhead variance calculation
Answer:
Explanation:
answer: $17,640
The value that should be used for overhead applied in the total overhead variance calculation is $17,640.
First step is to calculate the predetermined overhead rate
Predetermined overhead rate=Estimated overhead costs/ estimated direct labor hours
Predetermined overhead rate=$52,500/ 12,500
Predetermined overhead rate=$4.20/DLH overhead rate
Second step is to calculate Overhead applied
Overhead applied at standard hours allowed = $4.2 x 2,400 x 1.75
Overhead applied at standard hours allowed = $17,640
Inconclusion the value that should be used for overhead applied in the total overhead variance calculation is $17,640.
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Shelly's assets include money in checking and saving accounts, investments in stocks and mutual funds, and personal property such as furniture, appliances, an automobile, a coin collection, and jewelry. Shelly calculates that her total assets are $165,200. Her current unpaid bills, including an auto loan, credit card balances, and taxes, total $21,300. Calculate Shelly's net worth.
Answer:
Shelly's net worth is $143,900
Explanation:
An individual's net worth is the net value of all the asset owned, when all the liabilities have been subtracted. It is simple the total of what is owned minus what is owed. Hence, for shelly:
Total assets = $165,200
Total liabilities = $21,300
∴ Net worth = 165,200 - 21,300 = $143,900
Pack, Inc. applies manufacturing overhead on the basis of machine hours. The following estimates were used for the current year: Estimated Machine Hours 200,000 Estimated Manufacturing Overhead $1,000,000 Actual machine hours were 202,000 and actual manufacturing overhead was $1,005,000. What was Pack's over- or under-applied overhead for the year and what was its effect on cost of goods sold (prior to adjustment)?
Answer:
Instructions are below.
Explanation:
Giving the following information:
Estimated Machine Hours 200,000
Estimated Manufacturing Overhead $1,000,000
Actual machine hours were 202,000
actual manufacturing overhead was $1,005,000.
First, we need to calculate the estimated overhead rate for the period:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 1,000,000/200,000= $5 per machine hour
Now, we can allocate overhead based on actual hours:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 5*202,000= $1,010,000
Finally, we need to determine the under/over allocation:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 1,005,000 - 1,010,000= 5,000 overallocated
The effect on the cost of goods sold is that it will be overestimated in the income statement.
Lampshire Inc. is considering using stocks of an old raw material in a special project. The special project would require all 180 kilograms of the raw material that are in stock and that originally cost the company $2,466 in total. If the company were to buy new supplies of this raw material on the open market, it would cost $6.75 per kilogram. However, the company has no other use for this raw material and would sell it at the discounted price of $6.05 per kilogram if it were not used in the special project. The sale of the raw material would involve delivery to the purchaser at a total cost of $62 for all 180 kilograms. What is the relevant cost of the 180 kilograms of the raw material when deciding whether to proceed with the special project
Answer:
$1,153
Explanation:
The relevant of a materials that are already in stock is the higher or the resale value and the value in other use.
The resale value here represent opportunity cost- the amount that would be forgone should the material be used internally.
The value in other use is the worth of the material if they were converted for use for any other purpose. This was not given in the question and not applicable in the question
Hence the relevant cost of the material would the opportunity cost less the savings in transport cost
Cost = (180 × $6.75) - $62 = $1,153
Note that the historical cost of $2,466 is sunk cost and not relevant
Saxbury Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 4,700 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 6.10 Direct labor $ 3.60 Variable manufacturing overhead $ 1.70 Fixed manufacturing overhead $ 3.90 Fixed selling expense $ 0.75 Fixed administrative expense $ 0.60 Sales commissions $ 0.50 Variable administrative expense $ 0.50 Required: a. For financial reporting purposes, what is the total amount of product costs incurred to make 4,700 units
Answer:
$71,910
Explanation:
The computation of the total amount of the product cost for 4,700 units is shown below:
= ( Direct materials per unit + Direct labor per unit + Variable manufacturing overhead per unit + Fixed manufacturing overhead per unit) × making units
= ($6.10 + $3.60 + $1.70 + $3.90) × 4,700 units
= $71,910
We simply considered the direct material, direct labor, variable manufacturing overhead, and the fixed manufacturing overhead as it comes under the product cost
Supler Corporation produces a part used in the manufacture of one of its products. The unit product cost is $19, computed as follows: Direct materials $ 7 Direct labor 5 Variable manufacturing overhead 2 Fixed manufacturing overhead 5 Unit product cost $ 19 An outside supplier has offered to provide the annual requirement of 6,600 of the parts for only $15 each. The company estimates that 80% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be:
Answer :
Advantage = $3
Explanation :
As per the data given in the question,
Particulars Manufacturing buying
Purchase from outside suppliers $15
Direct material $7
Direct labor $5
Variable manufacturing overhead $2
Fixed manufacturing overhead $4
Total cost $18 $15
Fixed manufacturing overhead = $5 × 80% = $4
Since it give the net advantage of $3
Hence, Supler Corporation should purchase from the outside supplier.
We compare the manufacturing and buying cost and according to the cost we take the decision. As we can see that the buying cost is less than the manufacturing cost so it would give the advantage of $3
A country has an annual income per capita of $2,300. The country’s nominal economic growth rate is 1.5% while 37.7% of its population lives below the poverty line, and its literacy rate is 48% of the population. In addition, 54% of its labor force is in agriculture and 11% works in the business or the technology sectors. Based on the details of this country's economic growth, how would you classify this country?
Answer: Less - Developed Country
Explanation:
Less - Developed Countries (LDCs) are countries that are usually classified as 3rd world countries. They are characterised by low annual income.per capita and living standards as well as high poverty rates.
Their main industry is usually Agriculture and there are low literacy rates plaguing the country.
The Country described above is a less developed country. It has an annual income per capita of $2,300 which is quite small when compared with that of a Developed country like Liechtenstein with $165,000 annual income per capita.
Most of it's population engage in Agriculture as shown by the 54% ascribed to Agriculture and it has a literacy rate of 48% which is quite low.
All these as well as the 37.7% statistic showing how many people are in poverty confirms that this a Less Developed Country.
Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results. a. In each dropdown that follows, select the correct sign [less than ( <), greater than (> ), or equal (=)] for each comparison, assuming periods of rising prices. 1. FIFO inventory LIFO inventory 2. FIFO cost of goods sold LIFO cost of goods sold 3. FIFO net income LIFO net income 4. FIFO income taxes LIFO income taxes b. Why would management prefer to use LIFO over FIFO in periods of rising prices? Income shown on the company’s tax return would be lower if LIFO rather than FIFO is used. Income shown on the company’s tax return would be higher if LIFO rather than FIFO is used. Cost of goods sold shown on the company’s income statement would be lower if LIFO rather than FIFO is used. Dividends shown on the company’s financial statements would be higher if LIFO rather than FIFO is used.
Answer and Explanation:
As per the data given in the question,
a)
1. FIFO inventory > LIFO inventory
(Because in case of LIFO recent purchases are considered in production first or sold first so the remaining inventory are old inventory which is less costlier.)
2. FIFO cost of goods sold < LIFO cost of goods sold
(Because in case of LIFO recent purchases are considered in production first which are expensive so the cost of production is greater than FIFO.)
3. FIFO net income > LIFO net income
(Because cost of production is less under FIFO and the value of closing inventory is high, therefore the net income is also high.)
4. FIFO income taxes > LIFO income taxes
(Since, income is high in FIFO, therefore the tax under FIFO will be higher.)
b) Management would like prefer to use LIFO over FIFO in periods of rising prices because Income shown in the company's Tax return will be higher if we use FIFO rather than using LIFO.
Saskatchewan Forestry Company purchased a timber tract for $225,000 and estimates that it will be depleted evenly over its 10-year useful life with no residual value. Prepare the journal entry that would be recorded if 10 percent of the total timber is cut and placed into inventory during the current year
Answer:
generally you need to determine the cost per unit, but in this case you are given a percentage of depletion = 10% x $225,000 = $22,500 which determines the inventory value (or depletion expense if the timber is sold) during the year.
the journal entry should be:
December 31, 20xx
Dr Timber inventory 22,500
Cr Accumulated depletion - timber tract 22,500
Final answer:
A journal entry to record the depletion of timber at Saskatchewan Forestry Company involves debiting Depletion Expense and crediting Inventory—Timber by 10% of the initial cost of the timber tract, which amounts to $22,500 each.
Explanation:
The student's question is related to the journal entry for depletion expense in the accounting of natural resources by a company. When 10 percent of the timber is harvested from the tract purchased by Saskatchewan Forestry Company, an entry needs to be made to reflect the cost associated with the depletion of that portion of the timber tract.
Journal Entry Example:
Depletion Expense: $22,500
Inventory—Timber: $22,500
To record this journal entry: Debit Depletion Expense for the cost of the depleted timber, which is 10% of $225,000 (the cost of the timber tract), resulting in a value of $22,500. At the same time, we credit the Inventory—Timber account to reflect the addition of this timber to inventory, with the same value of $22,500.
Mountaineers Inc. expects the cost of goods sold to average 75 percent of sales revenue, and the company expects to sell 4,600 pairs of shoes in March for $240.00 each. Mountaineers Inc.’s target ending inventory is $18,000.00 plus 45 percent of the next month’s cost of goods sold. Use this information and the sales budget prepared to prepare Mountaineers Inc.’s inventory, purchases, and cost of goods sold budget for January and February.
Answer:
Explanation:
Cost Of Sales BudgetJanuaryFebruaryMarchSales Revenue660,000 440,000 1,104,000 Cost of Sales - 75$ of sales revenue495,000 330,000 828,000 Inventory BudgetJanuaryFebruarySales Revenue660,000 440,000 Ending Inventory166,500 390,600 Purchase BudgetJanuaryFebruarySales for the month660,000 440,000 Add: ending inventory desired166,500 390,600 Less: opening inventory240,750 166,500 Purchase Budget585,750 664,100 2
SIROM Scientific Solutions has $10 million of outstanding equity and $5 million of bank debt. The bank debt costs 5% per year. The estimated equity beta is 2. If the market risk premium is 9% and the risk-free rate is 3%, compute the weighted average cost of capital if the firm’s tax rate is 30%.
Answer:
15.167%
Explanation:
For computing the WACC we need to do the following calculations which are shown below:
Cost of equity = Risk free rate + Beta × Market risk premium
= 3% + 2 × 9%
= 21%
After tax cost of debt = Cost of debt × (1-Tax Rate)
= 5% × (1 - 0.30)
= 3.50%
Now
WACC = Weight of debt × Cost of debt + Weight of equity × Cost of equity
= 5 ÷ 15 × 3.50 + 10 ÷ 15 × 21
= 1.167% + 14%
= 15.167%
. On January 2, 2012, Wine Corporation wishes to issue $3,000,000 (par value) of its 8%, 10-year bonds. The bonds pay interest annually on January 1. The current yield rate on such bonds is 10%. Using the interest factors below, compute the amount that Wine will realize from the sale (issuance) of the bonds. Present value of 1 at 8% for 10 periods 0.4632 Present value of 1 at 10% for 10 periods 0.3855 Present value of an ordinary annuity at 8% for 10 periods 6.7101 Present value of an ordinary annuity at 10% for 10 6.1446 periods A) $3,000,000 B) $2,631,204 C) $3,000,018 D) $3,318,078
Answer:
The correct option is B,$2,631,204
Explanation:
The amount Wine corporation would realize from the sale of the bonds is the present value of all cash flows payable by the bond which includes the annual interest payments as well as the principal repayment in 10 years.
amount of interest payment=$3,000,000*8%=$240,000
The $240,000 would be received by investors for 10 years
The principal is the face value of $3000,000 payable in year ten
Present of face value=$3,000,000*0.3855=$1156500
present value of all interest payments=$240,000*6.1446=$1474704
Total present values=$1474704 +1156500 =$2631204
When launching any technology product, a firm such as GoPro must create a balance between what is technically possible and whether the intended customer has the right level of technological sophistication. the level of technological development of competitors. whether the technology provides benefits and responds to customer needs. what is most profitable in the first year.
Answer:
Whether the technology provides benefits and responds to customers needs
Explanation:
Technological innovation can be defined as the introduction of new technical products and services or improving an existing ones.
One major reason for this is to address human needs and better serve individual . Therefore whenever any firm wants to launch any new product , it is important that it must create a balance between what is technically possible and whether the new technology provides benefits and responds to customers needs.
When launching a technology product, a firm like GoPro must consider the technical capabilities, customer needs, and competition in order to create a successful product.
Explanation:When launching a technology product, a firm like GoPro must consider several factors in order to create a successful product. Firstly, they need to balance what is technically possible with the level of technological sophistication of their target customers. They need to ensure that their customers have the right level of technological understanding to use the product effectively. Secondly, the firm must assess whether the technology provides benefits and responds to customer needs. They need to ensure that the product solves a problem or fulfills a need for their customers. Lastly, they need to consider the level of technological development of their competitors. They must stay ahead of the competition by offering innovative features or functionalities that set them apart.
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You have just completed a $ 19,000 feasibility study for a new coffee shop in some retail space you own. You bought the space two years ago for $ 97,000, and if you sold it today, you would net $ 111,000 after taxes. Outfitting the space for a coffee shop would require a capital expenditure of $ 31,000 plus an initial investment of $ 4,700 in inventory. What is the correct initial cash flow for your analysis of the coffee shop opportunity?
Answer:
$146,700
Explanation:
The computation of the correct initial cash flow is shown below:
Expected after tax cash flows from sale of space $111,000
Add: Increase in working capital $4,700
Add: Outfitting expenses $31,000
Initial cash flow $146,700
We simply added the above expenses so that the initial cash flow could come i.e to be shown in the computation part
The Western and Pacific Railroad has two divisions, the Western Division and the Pacific Division. The company recently invested $7,100,000 to maintain its railroad track. Pertinent data for the two divisions are as follows: Total Miles Traveled: Western Division 710,000 miles Pacific Division 1,110,000 miles The amount of track improvement cost that should be allocated to the Western Division is: (Round intermediate calculation to 1 decimal place.)
Answer:
Cost allocated to Western Division= $2,769,780.22
Explanation:
The track improvement cost should be fairly allocated to the divisions using the miles traveled as basis.
Total miles traveled = 710,000 + 1,110,000= 1,820,000
Cost allocated to Western division = (710,000/1820,000)× 7,100,000
= $2,769,780.22
In 2004, Horton Company purchased a tract of land as a possible future plant site. In January, 2012, valuable sulphur deposits were discovered on adjoining property and Horton Company immediately began explorations on its property. In December, 2012, after incurring $800,000 in exploration costs which were accumulated in an expense account, Horton discovered sulphur deposits appraised at $4,500,000 more than the value of the land. To record the discovery of the deposits, Horton should A) make no entry. B) debit $800,000 to an asset account. C) debit $4,500,000 to an asset account. D) debit $5,300,000 to an asset account.
Answer:
The correct answer is (b) Debit $800,000 to an asset account
Explanation:
Solution
Given that:
Under the principles or rules of Successful Efforts(SE) method, the cost of exploration is capitalized when the exploration is successful or useful.
Now,
The sulphur deposits have been found, hence exploration cost of $800,000 will be debited or deducted to Asset Account.
In conclusion, the accounting entry will be Debit $ 800,000 to Asset Account.
10-20 Royal Cigar Company is preparing a budget for cash collections. Its sales for November and December are estimated as $90,000 and $100,000, respectively. Past practice indicates that sales in any given month are collected as follows: month of sale, 75%; month following the month of sale, 20%; uncollectible accounts, 5%. The company allows a 2% discount for cash collections in the month of sale. What is the net cash estimated to be collected in December
Answer:
$91,500
Explanation:
Given that cash collection pattern is as follows; month of sale, 75%; month following the month of sale, 20%; and a 2% discount for cash collections in the month of sale, it means that cash estimated for collection in December will include;
75% sales in December (net of the 2% discount to be given)20% sales in NovemberDiscount for December cash collection
= 2% * 75% * $100,000
= $1500
Hence, net cash estimated to be collected in December
= 75% * $100,000 + 20% * 90,000 - $1500
= $75,000 + $18,000 - $1500
= $91,500
The estimated net cash collection for the Royal Cigar Company in December, is calculated considering both the sales of December and the collections from November sales. Applying their discount and collections ratio, it results in a 73% collection from December's $100,000 sales, and 20% from November's $90,000 sales. Adding these together ($73,000 + $18,000), the net cash collection for December is estimated to be $91,000.
Explanation:To find the net cash collected by the Royal Cigar Company in December, you need to take into account both the sales made in December and the sales made in November that will be collected in December, while considering the percentages of payment month, discounts, and uncollected accounts.
First, let's calculate the cash collected from the sales made in December. We know that 75% of the sales are collected in the month of the sale, but there's a 2% discount, which means 73% of the $100,000 sales, which equals to $73,000.
Then, we add the cash collected from November sales in December, which, according to the company practice is 20% of the total November sales, so this is 20% of $90,000, which is $18,000.
We then sum the two amounts: $73,000 from December sales and $18,000 from November sales. So, the total estimated net cash collection in December is $91,000.
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Valorous Corporation will pay a dividend of $ 1.90 per share at this year's end and a dividend of $ 2.35 per share at the end of next year. It is expected that the price of Valorous' stock will be $ 41 per share after two years. If Valorous has an equity cost of capital of 8%, what is the maximum price that a prudent investor would be willing to pay for a share of Valorous stock today?
Answer:
The multiple choices are as follows:
a) 41.45
b) 42.40
c) 38.92
d) 40.22
The correct option is C,$38.92
Explanation:
The maximum price a prudent and rational investor would be willing to pay for a share of Valorous stock today is the present value of future cash flows promised by the stock.
The stock promised to pay dividend of $1.90 at year end ,$2.35 next year and would command a price of $41 per share at the end of next year.
Share price=$1.90/(1+8%)+$2.35/(1+8%)^2+$41/(1+8%)^2=$38.92
The above calculation makes of use of discounting factor which is given by 1/(1+r)^n
r is the cost of capital of 8%
n is the relevant of cash flow