Answer:
The correct answer is Debit Interest Expense, $5,100.
Explanation:
Note is a promissory note with a written promise made by the borrower to the lender (payee) to pay a certain, definite sum at a specified date.
Interest expense on the notes is calculated as: Principal x Interest Rate x Time
In this case, the total interest expense is $170,000 x 9%/12 x 6 months = $7,650.
Interest expense as at December 31, 2021 is therefore $7,650 / 6 x 4 = $5,100.
The agreement of the trial balance totals is an indication that all transactions have been properly
recorded in the books of accounts. Do you agree with this statement?
Required:
Outline 4 reasons to justify your response
Answer:
NO, I do not agree with this statement.
Explanation:
So, a TRIAL BALANCE is a list in which all entries(debits and credits statement) for a particular business, firm, company or organization are kept and BALANCED. A trial balance also contains information about the organization or company's dividends, liabilities, expenses and many more.
The reason the Statement in the question is faulted is because TRIAL BALANCE does NOT prove the the record is ACCURATE, there is no guarantee that the record is ACCURATE although it shows to some extent that the record are PRECISED BUT NOT ACCURATE.
The Four Reasons to Justify the answer are;
(1). ERROR OF COMMISSION: error that occurs when amount is entered in a wrong account.
(2). ERROR OF OMISSION: error that occurs when data is being omitted.
(3). ERROR OF PRINCIPLE: error that occurs when data is recorded in the wrong ledger.
(4). COMPENSATING ERROR: this error cause offset of another error.
As a group, oligopolists would always earn the highest profit if they would a. produce the perfectly competitive quantity of output. b. produce more than the perfectly competitive quantity of output. c. charge the same price that a monopolist would charge if the market were a monopoly. d. operate according to their own individual self-interests.
Answer:
The correct answer is C)
Explanation:
Oligopolists make the highest profits when they form a cartel that gives them the "advantage" of a Monopolist.
When they come together to agree on decision relating to price and units produced or supplied, they are able to adjust the said factors such that it gives them more profit that if they operated as single entities with slight competition against each other.
Cheers!
Oligopolists can earn the highest profit by acting as a monopoly, but individual interests and competition often drive them towards a state of perfect competition.
Explanation:To maximize their joint profits, oligopolists as a group should opt to act like a monopoly. This implies they should produce less than the perfectly competitive quantity of output (options a and b) and charge a higher price than perfect competitors, similar to a monopolist (option c). However, this is challenging in practice as individual oligopolists have incentives to produce more (option d) for higher individual profits. This action could lead to a situation akin to perfect competition, where all oligopoly firms may end up earning zero economic profits due to fierce competition. This dilemma is known as the 'Prisoner's Dilemma' in game theory. Therefore, while acting as a monopoly would maximize joint profits, individual actions often lead the market closer to perfect competition.
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Fabulous Fabrics budgeted to manufacture 1300 curtains in February. Actual output for March was with total direct materials cost of $3700 and total direct labor cost of $5250. The direct labor standard is 20 minutes per curtain at a direct labor rate of $15.50 per hour. The direct material standard is 0.75 yards of direct materials per curtain at a cost of $11 per pound. Actual direct labor hours were 150.
A variance analysis for February may show a direct labor rate variance of ______. (Round any intermediary calculations and your final answer to the nearest cent.)
Answer:
$2,925 Unfavorable
Explanation:
The computation of direct labor rate variance is shown below:-
Actual rate = Direct labor cost ÷ Actual direct labor hours
= $5,250 ÷ 150
= 35
Direct labor rate variance = (Selling rate - Actual rate) × Actual hours rate
= ($15.50 - 35) × 150
= -$19.5 × 150
= $2,925 Unfavorable
Therefore for computing the direct labor rate variance we simply applied the above formula.
Cougar Corp. sold 2-year, 6%, $300,000, bonds on January 1, 2020 for $270,000. Interest is paid semi-annually on June 30 and December 31. 2 points What is the journal entry to record the issuance of the Bond on 1/1/2020? 8 points: Complete the amortization schedule below. Period ended Cash Paid Interest expense amortization Carrying amount 06/30/2020 12/31/2020 06/30/2021 12/31/2021
Answer:
Dr Cash $270,000
Dr discount on bonds payable($300,000-$270,000) $30,000
Cr bonds payable $300,000
Explanation:
First and foremost we need to determine the yield to maturity on this bond using rate formula in excel:
=rate(nper,pmt,-pv,fv)
nper is the number of interest payments the bond would make,which is 2
years multiplied 2 since interest is paid twice i.e nper is 4
pmt is the semiannual interest payable =$300,000*6%*6/12=$9000
pv is the current price of $270,000
fv is the face value of $300,000
=rate(4,9000,-270000,300000)=5.88%
5.88% is the semiannual rate
5.88%*2=11.76% is the annual yield
The annual yield is made use of in the attached amortization schedule.
1. The journal entry to record the Bonds Issuance on January 1, 2020, is as follows:
Debit Cash $270,000
Debit Bond Discounts $30,000
Credit Bonds Payable $300,000
To record the issuance of the bonds.
2. The completion of the Amortization Schedule is as follows:
Period ended Cash Paid Interest Expense Amortization Carrying amount
01/01/2020 $270,000
06/30/2020 $9,000 $16,500 $7,500 277,500
12/31/2020 $9,000 $16,500 $7,500 285,000
06/30/2021 $9,000 $16,500 $7,500 292,500
12/31/2021 $9,000 $16,500 $7,500 $300,000
Data and Calculations:
Face value of bonds = $300,000
Bonds Proceeds = $270,000
Bonds Discounts = $30,000 ($300,000 - $270,000)
Maturity period = 2 years
Coupon interest rate = 6%
Interest payment = semi-annually on June 30 and December 31
Amortization method = Straight-line
Semi-annual amortization = $7,500 ($30,000/4)
Cash payment = $9,000 ($300,000 x 6% x 1/2)
Interest Expense = $16,500 ($9,000 + $7,500)
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On January 1, Boston Enterprises issues bonds that have a $1,900,000 par value, mature in 20 years, and pay 6% interest semiannually on June 30 and December 31. The bonds are sold at par. 1. How much interest will Boston pay (in cash) to the bondholders every six months? 2. Prepare journal entries to record (a) the issuance of bonds on January 1, (b) the first interest payment on June 30, and (c) the second interest payment on December 31. 3. Prepare the journal entry for issuance assuming the bonds are issued at (a) 98 and (b) 102.
Answer:
Boston Enterprises
1. Bond Interests every six months:
Interest = $1,900,000 x (6%/2)= $57,000
2. Journal entries:
a) Issuance of bonds on January 1:
Debit Cash Account with $1,900,000
Credit Bonds Payable with $1,900,000
To record the issue of bonds at par value, 20 years' maturity at 6% semiannually.
b) First Interest Payment on June 30:
Debit Interest Expense with $57,000
Credit Cash Account with $57,000
To record payment of interest.
c) Second Interest Payment on December 31:
Debit Interest Expense with $57,000
Credit Cash Account with $57,000
To record payment of interest.
3. Journal Entries for issuance of bonds:
a) at $98,
Debit Cash Account with $1,862,000
Debit Bonds Discount with $38,000
Credit Bonds Payable with $1,900,000
To record the issue of bonds at $98 (discount).
b) at $102
Debit Cash Account with $1,938,000
Credit Bonds Payable with $1,900,000
Credit Bonds Premium with $38,000
To record the issue of bonds at $102 (premium).
Explanation:
a) Bond interest: Since the bond's interest of 6% are paid semiannually, the effective interest rate is 3% (6%/2). The interest payment would be $57,000 every six months. This is equal to 3% of $1,900,000.
b) Bonds are sold at a discount when the market interest rate exceeds the coupon rate of the bond. The purpose of issuing at a discount is to make the bonds attractive vis-a-vis the market interest rate. The bondholders will then benefit from the interests and being repaid at the par value.
c) Bonds are sold at a premium when the coupon rate of the bond exceeds the market interest rate. This yields more for the issuer. The bondholders benefit from the interest payments.
Consider an indifference curve for someone deciding how to allocate time between work (and thus consumption) and leisure. Suppose the wage increases. The substitution effect induces a person to work and consume in response to higher wages. If consumption is a normal good, the income effect induces the person to consume when the wage rises, but if consumption is an inferior good, the income effect induces the person to consume in response to higher wages. True or False: It is possible that the person's consumption falls as a result of the higher wage. True False
Answer: True if Consumption is of Inferior Good
Explanation:
Inferior goods are inversely related to wages. They are consumed because wages are less and people do not have the capacity to buy what they really want which are normal goods. If wages rise, people will leave Inferior goods for normal goods which is to reduce consumption of normal goods.
Examples of inferior goods are off brand cereals. Notice how as wages increase they are bought less of and instead their more popular counterparts are purchased.
Novak provides environmentally friendly lawn services for homeowners. Its operating costs are as follows. Depreciation $2,400 per month Advertising $400 per month Insurance $2,400 per month Weed and feed materials $15 per lawn Direct labor $31 per lawn Fuel $2 per lawn Novak charges $100 per treatment for the average single-family lawn. Determine the company’s break-even point in number of lawns serviced per month. Break-even point enter the company’s break-even point in number of lawns lawns
Answer: 100 lawns
Explanation:
The Break-Even Point is the point where expenses/costs equal revenue.
First calculate the costs starting with the fixed costs which are Depreciation, advertising and insurance
= 2,400 + 400 + 2,400
= $5,200
Then the Variable costs per units which are, Weed and feed materials, Direct labor and Fuel.
= 15 + 31 + 2
= $48
Now calculate the Contribution Margin ratio which is,
= (Sales - Variable Cost ) / Sales
= (100 - 48) / 100
= 52%
With Contribution Margin, Break-Even sales can be calculated as,
Breakeven sales = fixed costs / contribution margin ratio
Breakeven sales = 5,200/52%
Breakeven sales in cash = $10,000
Breakeven sales in lawns = breakeven sales / sales per unit
Breakeven sales in lawns = 10,000/100
Breakeven sales in lawns = 100 lawns
Novak breaks even at servicing 100 lawns.
Swifty Corporation spent $4400 to produce Product 89, which can be sold as is for $5500, or processed further incurring additional costs of $1650 and then be sold for $7700. Which amounts are relevant to the decision about Product 89
Answer:
Relevant:
$5,500
$1,650
$7,700
Explanation:
The only data irrelevant is the first production cost. The $4,400 is not relevant because it is a sunk cost. It will remain constant in both choices. The other costs and income are relevant because they vary on each decision. The $4,400 should not be a part of the decision making process.
Products with positive externalities are underconsumed, thus creating a market failure. How can the government correct this failure? I. By taxing the output of the product to increase tax revenue II. By paying subsidies to the producers, to lower the cost of the product to potential buyers III. By reducing the marginal social benefit of the product, thus eliminating the externality IV. By requiring producers to manufacture more of the product V. By producing it themselves and distributing it free or at very low cost to consumers
Answer:
The government can correct the failure of consuming products with positive externalitiies by:
By paying subsidies to the producers, to lower the cost of the product to potential buyersExplanation:
A positive externality occurs when the production as well as the consumption of a particular product or service generates a social benefit that impacts on a third party not involved in the transaction.
Example of such products and services include, education, Telecommunication, good road, electric power, transportation and logistics services.
Take for instance, if the government pays money to the providers of electric power thereby subsidizing its cost, it will drastically reduce the cost of production and benefit the final consumers who will now purchase goods at cheaper rates.
Similarly, reducing the cost of education for low income earners will increase the participation of school goers among the under privileged and reduce drop out rates. the ripple effect is reduction in crime and increase in skilled labor for the nation's human resource capital pool.
Answer:
The answer is 2 and 5 ( II and V)
Explanation:
Which of the following statements is correct? Revenue is recognized at the time of shipment when goods are shipped FOB destination. Sales returns and allowances are reported as operating expenses on an income statement. A seller records revenue when title and risks of ownership transfer to the buyer. Sales discounts are reported as cost of sales on an income statement.
Answer:
The correct answer to the following question will be Option C.
Explanation:
The buyers, as well as sellers, must negotiate an understanding as to who is capable of paying certain transport costs and also who, whenever the item is delivered, assumes the default risk throughout transportation.A seller reports compensation whenever the purchaser has the transition of titles as well as ownership uncertainties.The other three options are not related to a certain scenario. So that option C is the right answer.
Considering the available options, the correct statement is "A seller records revenue when title and risks of ownership transfer to the buyer."
Under the accounting principles, a seller can choose to record revenue in as much the sales have been made regardless of whether payment has been made or not.
In a business transaction, a sale has been made when the title and risks of ownership transfer to the buyer.
Hence, in this case, it is concluded that the correct answer is option C. "A seller records revenue when title and risks of ownership transfer to the buyer."
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Even though no final conclusion is currently warranted, a number of research papers, including those of Fama and French, have argued that:________.
a. there is no noticeable difference in the returns of growth versus value stocks.
b. growth stocks outperform value stocks.
c. stocks with high book-value-to-stock-price ratios outperform stocks with low ratios.
d. no observable differences in returns can be associated with varying price-earnings ratios.
e. stocks with low earnings-to-price ratios outperform stocks with high ratios.
Answer:
c
Explanation:
Even though no final conclusion is currently warranted, a number of research papers, including those of fama and French, have argued that:
The correct option is option c.
c.stocks with high book-value-to-stock-price ratios outperform stocks with low ratios.
Rest all option are absurd in context of the question.
Choose the correct statement.
A. Marginal revenue equals total revenue divided by quantity sold.
B. For a monopoly, marginal revenue equals price.
C. For a monopoly, total revenue equals marginal revenue multiplied by the quantity sold.
D. When price is lowered to sell one more unit, the lower price results in a revenue loss and the increased quantity sold results in a revenue gain.
Answer:
D) When price is lowered to sell one more unit, the lower price results in a revenue loss and the increased quantity sold results in a revenue gain.
When you offer a sales discount, you are losing revenue since marginal revenue is lower than price, but at the same time if the marginal revenue is ≥ to marginal cost, then your profit and total revenue is increasing.Explanation:
the other statements are false because:
A. Marginal revenue equals total revenue divided by quantity sold. FALSE, MARGINAL REVENUE IS THE REVENUE GENERATED BY SELLING ONE ADDITIONAL UNIT. B. For a monopoly, marginal revenue equals price. FALSE, FOR A MONOPOLY MARGINAL REVENUE IS LOWER THAN PRICE. C. For a monopoly, total revenue equals marginal revenue multiplied by the quantity sold. FALSE, TOTAL REVENUE = PRICE X QUANTITY SOLD"Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $ 1 comma 000, and a coupon rate of 7.4 % (annual payments). The yield to maturity on this bond when it was issued was 6.4 %. What was the price of this bond when it was issued?"
Answer:
$ 1,072.23
Explanation:
Price of the Bond is the Present Value of the Bond.
Thus, Calculate the Present Value of this Bond
N= 10
PMT = $1,000×7.4% = $ 74
YTM = 6.4%
FV = $1,000
P/YR = 1
PV = ?
Using a Financial Calculator PV is $ 1,072.23
Answer:
$1,072.22
Explanation:
Price of the bond is the present value of all cash flows of the bond. These cash flows include the coupon payment and the maturity payment of the bond. Both of these cash flows discounted and added to calculate the value of the bond.
According to given data
Face value of the bond is $1,000
Coupon payment = C = $1,000 x 7.4% = $74 annually
Number of periods = n = 10 years
Market Rate = 6.4% annually
Price of the bond is calculated by following formula:
Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]
Price of the Bond = $74 x [ ( 1 - ( 1 + 1.064% )^-10 ) / 1.064% ] + [ $1,000 / ( 1 + 1.064% )^10 ]
Price of the Bond = $534.47 + $537.75 = $1072.22
Price of the Bond = $5,627.25
You are consulting for a beverage distributor who is interested in determining the benefits it could achieve from implementing new information systems. What will you advise as the first step? Group of answer choices Identify the business ecosystem the distributor is in. Implement a strategic transition to the new system. Perform a strategic systems analysis. Benchmark existing systems.
Answer: Perform a strategic systems analysis
Explanation:
According to the given question, the best advise is to perform a strategic system analysis for determining the various types of benefits by implementing the various types of new information system.
The main objective of the strategic system analysis is to conduct the various types of research in the company by formulating different types of strategy in an organization.
The strategic system analysis helps in measuring all the external as well as internal environment and evaluating all the business strategies.
Therefore, the given answer is correct.
MF Corp. has an ROE of 16% and a plowback ratio of 50%. If the coming year's earnings are expected to be $2 per share, at what price will the stock sell? The market capitalization rate is 12%. (Do not round intermediate calculations.) Price $ b. What price do you expect MF shares to sell for in three years? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer:
$31.49 per share
Explanation:
The price of the shares after 3 years according to the Dividend Valuation formula would be:
Future Value after three years = Po * (1 + g)^3
And here,
Po = Do * (1 + g) / (k - g)
So this means that the the above equation becomes:
Future Value after three years = E1 * (1 - b) / (k - g) * (1 + g)^3
Here
E1 is the earnings per share $2
b is 50%
k is the shareholder's rate of return, which is 12%
g = Plowback ratio * ROE = 50% * 16% = 8%
Now by putting values, we have:
Future Value after three years = $2 * (1 - 50%) / (12% - 8%) * (1 + 8%)^3
= $31.49 per share
Sam and Drew are equal partners in SD LLC formed on June 1 of the current year. Sam contributed land that he inherited from his uncle in 2013. Sam's uncle purchased the land in 1986 for $30,000. The land was worth $100,000 when Sam's uncle died. The fair market value of the land was $200,000 at the date it was contributed to the LLC.
Drew has significant experience developing real estate. After the LLC is formed, he will prepare a plan for developing the property and secure zoning approvals for the LLC. Drew would normally bill a third party $50,000 for these efforts. Drew also will contribute $150,000 of cash in exchange for his 50% interest in the LLC. The value of his 50% interest is $200,000.
How much gain or income will Sam recognize on his contribution of the land to the LLC? What is the character of any gain or income recognized?
Answer:
How much gain or income will Sam recognize on his contribution of the land to the LLC?
$0What is the character of any gain or income recognized?
None, since no gain or loss is recognized.Explanation:
§ 721 establishes that when partners' contribute assets (e.g. property) to a partnership or limited liability company, they do not need to recognize any gain or loss regarding the contribution.
In this case, Sam is contributing property to an operating partnership, so he does not need to recognize any gain or loss. His basis on the partnership will be $100,000 which is the current basis on the land. Sam's basis on the land is equal to the fair market value of the land when his uncle died. His uncle's estate was taxed back then for the gain between the original purchase price and the FMV.
Mary Co. paid dividends of $5,000, $6,200, and $8,000 during Year 1, Year 2, and Year 3, respectively. The company had 1,700 shares of 3.5%, $100 par value preferred stock outstanding that paid a cumulative dividend. The company also had 5,000 shares of $1 par value common stock outstanding. What is the total amount of dividends paid to common shareholders during Year 3
Answer :
Amount of dividend paid =$1,350
Explanation :
The computation is shown below:
As per the data given in the question,
Dividend per year for preferred stock = $1700 × $100 × 3.5%
= $5,950
Particulars Year 1 Year 2 Year 3
Preferred dividend $5,000 $6,200 $6,650
($700+$5,950)
Preferred dividend in arrears $950 $700
($5,950-$5,000) ($5,950+$950-$6,200)
Therefore dividends for common shareholders is
= $8,000 - $6,650
= $1,350
. Tiger Mfg. owns a manufacturing facility that is currently sitting idle. The facility is located on a piece of land that originally cost $159,000. The facility itself cost $1,390,000 to build. As of now, the book value of the land and the facility are $159,000 and $1,258,000, respectively. The firm owes no debt on either the land or the facility at the present time. The firm received a bid of $1,200,000 for the land and facility last week. The firm's management rejected this bid even though they were told that it is a reasonable offer in today's market. If the firm was to consider using this land and facility in a new project, what cost, if any, should it include in the project analysis?
Answer: $1,200,000
Explanation:
The firm should include $1,200,000 as the cost of the Manufacturing facility for a new project in it's analysis.
This is because $1,200,000 is the opportunity cost of not selling the facility. The old costs that were incurred for the land and the facility are to be considered sunk costs as they have already been incurred and the only relevant cost now is what the market will pay for the facility which is $1,200,000.
Final answer:
In the project analysis for Tiger Mfg.'s potential use of an idle manufacturing facility and land, only the opportunity cost, which is the forgone sale price of $1,200,000, should be included.
Explanation:
The question revolves around determining the relevant costs that Tiger Mfg. should include in the project analysis for utilizing an idle manufacturing facility and land, which have book values of $1,258,000 and $159,000 respectively, and for which they recently rejected a $1,200,000 offer. In project analysis, the focus should be on incremental cash flows or costs and benefits that would change as a result of undertaking the project. In this case, the original cost and the book value of the land and facility are sunk costs and should not be considered in the project analysis. However, if the project precludes the sale of the land and facility, the potential sale price (opportunity cost) of $1,200,000 represents the economic cost that should be factored into the project analysis.
The following data is available for three different alternatives. Assume an interest rate of 9% per year, compounded annually.
Alternative A Alternative B Alternative C
Initial Cost 7,000 8,600 14,000
Annual Benefit 1,375 793 6,007
Useful Life (yrs) infinite 18 9
Alternatives B and C are replaced at the end of their useful lives with identical replacements. Using present worth analysis, find the best alternative.
To determine the best option using present worth analysis at a 9% interest rate, calculate the present value of the benefits for each alternative. Use the perpetuity formula for Alternative A and equivalent annual benefits for Alternatives B and C considering their respective lifespans and replacement costs. The alternative with the highest present worth is the best option.
Explanation:To find the best alternative using present worth analysis, we need to calculate the present value (PV) of each alternative at the 9% per year interest rate over the given lifespan of the alternatives. Since Alternative A has an infinite lifespan, its annual benefit of $1,375 will be perpetually received, which means we can use the perpetuity formula to calculate its present worth. The formula for perpetuity is PV = (Annual Benefit / Interest Rate).
For Alternative A:
Present Worth (PW) = $1,375 / 0.09 = $15,277.78Alternatives B and C are finite and will be replaced with identical replacements at the end of their useful lives, thus we can consider them as perpetuities as well, but we need to calculate the equivalent annual benefit that takes the replacement cost into account.
For Alternative B (18-year lifespan):
Capital Recovery Factor (CRF) = (Interest Rate * (1 + Interest Rate)^n) / ((1 + Interest Rate)^n - 1)Equivalent Annual Benefit (EAB) = (Annual Benefit - (Initial Cost * CRF))Present Worth (PW) = EAB / Interest RateFor Alternative C (9-year lifespan):
Repeat the same CRF and EAB calculation with 9 yearsCalculate the PW using the obtained EABOnce the PW for B and C are calculated, compare the PW of all three alternatives. The alternative with the highest present worth is considered the best financial option.
When Chris Mittelstaedt says, "People like to be part of something bigger than themselves," what are the implications for employee motivation?
Answer:
When Chris Mittelstaedt says, “People like to be part of something bigger than themselves,"
He means that the Association or cluster of individuals whose one among the part an individual need to be. Once an individual is in him selves /her selves he's non-creative or unaccompanied, however once it get-together with an association of individuals, it efficiency increases and he/she could be a part of group/combination/establishment/relationship and not alone.
Crusoe Waterworks Company provides plumbing services. Transactions of Crusoe Waterworks during the first year of operations are given below. a) The owner, Robin Crusoe, invested $5,000 cash in the company. The cash was deposited in the business checking account. b) Paid $4,000 cash for equipment to be used for plumbing repairs. c) Borrowed $26,000 from a local bank and deposited the money in the checking account. d) Paid $700 rent for the year. e) Purchased $1,500 of office supplies on account. f) Completed a plumbing repair project for a local lawyer and received $3,400 cash. Calculate the amount of total owner's equity after recording the transactions. Assume office supplies of $1,500 are left at the end of the year. Group of answer choices $7,700 $3,400 $5,000 $26,000
Answer:
$7,700
Explanation:
Equity of a company is Total Assets minus Total liabilities. Equity is the business worth for shareholders. For Crusoe Waterworks Company the equity will be the initial capital investment by Robin Crusoe plus any revenue received from the business operations.
The equity will be calculated by,
Equity = Capital Investment + Revenue - Expense
Equity = $5,000 + $3,400 - $700
21. In the chart below, both suppliers have the same average lead time. If you want equivalent service levels against the planned lead time in your planning system for these suppliers, which of the following describes the lead time input to the planning system for these suppliers: a. Lead times for both suppliers should be the same b. Lead time for supplier 1 needs to be greater than lead time for supplier 2 c. Lead time for supplier 2 needs to be greater than lead time for supplier 1
Answer:
a. Lead time for both suppliers should be the same
Explanation:
Lead time is the time required from order to delivery of good. The supplier 1 has less variability as compared to supplier 2 but the average lead time for both supplier will be the same. The supplier 1 has higher delivery time but no of days are lesser. The supplier 2 has higher number of days but less delivery time than supplier 1. The average lead time will be same for both the suppliers.
Deal is a product of the Digby company. Digby's sales forecast for Deal is 505 units. Digby wants to have an extra 10% of units on hand above and beyond their forecast in case sales are better than expected. (They would risk the possibility of excess inventory carrying charges rather than risk lost profits on a stock out.) Taking current inventory into account, what will Deal's Production After Adjustment have to be in order to have a 10% reserve of units available for sale?
Answer:
Production Units = 555.5 or 556 units
Explanation:
Digby's Sales Forecast for Deal = 505 units.
Digby wants to have extra 10% of units = 100% + 10%
Taking current inventory into account? But, we don't know the current inventory in this question. So, We will calculate the that 10% extra only. If we knew the current inventory then we would have calculated after the adjustment of the current inventory.
Here's the formula to calculate the production units:
Production units = Number of Sales x (100% + Extra Units Percentage)
Production Units = 505 units x (100% + 10%)
Production Units = 505 units x 110%
Production Units = 555.5 or 556 units
Wehrs Corporation has received a request for a special order of 8,600 units of product K19 for $45.50 each. The normal selling price f this product is $50.60 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $16.30 5.60 2.80 $30.40 irect labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The ustomer would like some modifications made to product K19 that would increase the variable costs by $5.20 per unit and that would equire a one-time investment of $45,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order.
Required: Determine the effect on the company's total net operating income of accepting the special order
Answer:
Increase in the net income=$ 89,160
Explanation:
The amount of the financial advantage or disadvantage would be determined as follows:
Unit variable cost of order = 16.30 + 5.60+ 2.80+5.20 = 29.9
$
Sales from special order) ($45.50× 8,600) 391300
Variable cost of special order ($29.9× 8,600) 257,140
Contribution from special order 134,160
Cost of special machine (45,000)
Increase in contribution 89,160
Increase in the net income=$ 89,160
Note the fixed manufacturing overhead is irrelevant, they are cost that would be incurred whether or not the order is accepted
An outside supplier has offered to make the part and sell it to the company for $25.10 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including the direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition, the space used to make part E14 could be used to make more of one of the company's other products, generating an additional segment margin of $25,500 per year for that product. The annual financial advantage (disadvantage) for the company as a result of buying part E14 from the outside supplier should be:
Final answer:
The annual financial advantage (disadvantage) for the company as a result of buying part E14 from the outside supplier can be calculated by comparing the costs of producing the part internally versus buying it externally.
Explanation:
The annual financial advantage (disadvantage) for the company as a result of buying part E14 from the outside supplier can be calculated by comparing the costs of producing the part internally versus buying it externally.
If the company produces the part internally, it incurs various costs such as direct labor, variable costs, allocated general overhead, and the opportunity cost of using the space to make other products. On the other hand, if the company buys the part from the outside supplier, it only incurs the cost of purchasing the part.
To calculate the annual financial advantage (disadvantage), we subtract the cost of buying the part from the cost of producing the part internally and also add the additional segment margin generated from using the freed-up space. The result would be the net financial impact of the decision.
What is the quantity of money demanded when the interest rate is 6%? quantity: $ billionbillion What is the quantity of money demanded when the interest rate is 8%? quantity: $ billionbillion Choose the statement that best explains the relationship between the quantity of money demanded and the interest rate on bonds. If the interest rates increase, the quantity of money demanded decreases. If the interest rates increase, money demand falls. If the interest rates increase, money demand increases. If the interest rates increase, the quantity of money demanded increases.
Question
Using the attached hypothetical demand curve, answer the following questions:
What is the quantity of money demanded when the interest rate is 6%?What is the quantity of money demanded when the interest rate is 8%? Choose the statement that best explains the relationship between the quantity of money demanded and the interest rate on bonds.
A) If the interest rates increase, the quantity of money demanded decreases.
B) If the interest rates increase, money demand falls.
C) If the interest rates increase, money demand increases.
D) If the interest rates increase, the quantity of money demanded increases.
Answer 1) & 2)
When the interest rate is 6%, the demand for money is $40 billion, and when the interest rate climbs to 8%, the money nosedives to $20 billion.
Answer 3):
The correct choice is B)
Explanation:
The relationship between interest rate and money demand is very simple. The higher the rate, the higher the cost of capital. The higher the cost of capital, the lower the Return On Investment. Because businesses are structured to thrive on more profit or returns, business owners, generally will gun for more money when there is a lower interest rate thus creating a surge in demand.
Kindly note that the analysis is based the assumption that all other factors remain constant.
Cheers!
Sneakers Incorporated designs and manufactures fashion sneakers. For the coming year, the company scheduled production of 50,000 sneakers. Budgeted costs for this product are as follows: Unit Costs Total (50,000 units) Variable manufacturing costs $40 $2,000,000 Variable selling expenses 15 750,000 Fixed manufacturing costs 12 600,000 Fixed operating expenses 10 500,000 Total costs and expenses $77 $3,850,000 The management of Sneakers is considering a special order from Discount Kicks for an additional 20,000 sneakers. These sneakers would carry the Discount Kicks label, rather than the Sneakers Inc. label. In all other responds, they would be identical to the regular Sneakers Inc. fashion sneakers. Although Sneaker Inc. regularly sells its sneakers to retail stores at a price of $180 each, Discount Kicks has offered to pay only $45 per sneaker. However, because no sales commissions would be involved with this special offer, Sneaker Inc. will incur variables selling expenses of only $10 per units on these sales rather than the $15 it normally incurs. Accepting the order would cause no change in the company’s fixed manufacturing cost or fixed operating cost. Sneaker Inc. has enough plant capacity to product 70,000 sneakers per year. A. Using incremental revenue and incremental costs, compute the expected effect of accepting this special order on Sneaker Inc. operating income.
Answer:
Net loss $100,000
Explanation:
The relevant cost for decision to accept the special order are
I Incremental Revenue from the special order
2. incremental variable cost
Note that whether or not the special order is accepted the fixed manufacturing and fixed operating expenses of would be incurred either way. Therefore , they are not relevant for the decision
Variable cost cost= 40 +10= 50
Sales revenue from the special order $
(45 × 20,000) 900000
Variable cost of the special order (50× 20,000) (1,000,000 )
Net loss 100,000
An unfavorable labor efficiency variance is created when: Multiple Choice actual labor hours worked exceed standard hours allowed. actual hours worked are less than standard hours allowed. actual wages paid are less than amounts that should have been paid. actual units produced exceed budgeted production levels. actual units produced exceed standard hours allowed.
Answer:
actual labor hours worked exceed standard hours allowed.
Explanation:
In simple words, The variation in labor productivity tests the capacity to employ labor as expected. This variability is measured as the discrepancy between both the real working hours used only to manufacture an element, magnified by the standard labor rate, and the standard amount that would have been used.
Thus, from the above we can conclude that the correct option is A.
Consider the economy of Arcadia. Its households spend 75% of increases in their income. There are no taxes and no foreign trade. Its currency is the arc. Potential output is 600 billion arcs. Suppose that actual output is 700 billion arcs, and the government of Arcadia decides to tax its citizens. To bring the economy to potential output, the government should:
Answer:
The economy has an actual output of 700 billion, and its potential ouput was 600 billion, therefore, we can say that the economy is already performing well, beyond potential, for this reason, the government should simply not intervene, because government intervetion reduces the economic efficiency of market outcomes.
If the economy was below potential, the government could tax some of the 25% income that households save, in order to increase spending. This would promote economic growth, bringing the economy closer to potential.
Jamara has started a home party business that hosts parties and those attending paint signs. Jamara must pay $500 a year to be a representative for Paint A Sign. In addition, Jamara buys all the materials for the parties, including the metal base, the paints, brushes, stencils, and transfers. These items all add up to $10 on average. Jamara charges each participant $25 for each sign they make. For Jamara's Paint A Sign business, the gross margin or contribution margin for Jamara's business is:
Answer:
Unit contribution margin= $15
Explanation:
Giving the following information:
These items all add up to $10 on average. Jamara charges each participant $25 for each sign they make.
The contribution margin is the result of deducting from the selling price, the unitary variable cost.
Unit contribution margin= selling price - unitary variable cost
Unit contribution margin= 25 - 10
Unit contribution margin= $15
Final answer:
The gross margin or contribution margin for Jamara's Paint A Sign party business is $15 per sign, calculated by subtracting the variable cost of $10 for materials from the revenue of $25 per sign.
Explanation:
To calculate the gross margin or contribution margin for Jamara's home party Paint A Sign business, we need to consider the revenues generated from the parties and subtract the variable costs associated with hosting those parties.
The revenue per sign is $25, which is what each participant pays. The variable cost per sign is $10 for materials. Therefore, the gross margin per sign would be the revenue per sign minus the variable cost per sign:
Gross Margin per sign = Revenue per sign - Variable cost per sign
Gross Margin per sign = $25 - $10
Gross Margin per sign = $15
Note that this calculation does not take into account the annual fee of $500, which is a fixed cost and doesn't vary with the number of signs made or parties hosted.