Answer:
a.
Average cost per meal = Variable cost per meal + Fixed cost allocated to one meal sold = $4 + Total fixed cost/ Number of meals sold per day = $4 + 1,200/750 = $5.60.
b.
Price per one meal as per the leader of the Scout = 150/30 = $5
As the selling price is $0.60 lower than the average cost per meal ($5-$5.60), the owner has come up with the loss of $0.60 per meal served under the Scout leader's suggestion.
However, his calculation is not reasonable, because among the $5.60 cost per meal, there is a factor of allocated fixed cost equals to $1.6 per meal which will incurred regardless of the suggestion being accepted or not.
Given his restaurant does not run at full capacity, his profit per one meal from accepting the offer should be calculated as Price per one meal as per Scout leader offer - Variable cost per one meal = $5 - $4 = $1.
Explanation:
Calculate current average cost per meal and analyze a new offer in a restaurant.
A. To determine the current average cost per meal, you need to calculate the total cost per day and divide it by the number of meals served.
Total Cost Per Day = Fixed Costs + (Variable Costs Per Meal x Number of Meals)
Total Cost Per Day = $1,200 + ($4 x 750) = $4,200
Average Cost Per Meal = Total Cost Per Day / Number of Meals = $4,200 / 750 = $5.60
B. If the owner were to accept the offer for 30 Girl Scouts for $150, the cost per meal would be $5. If the current cost per meal is $5.60 and the owner would lose $0.60 per meal, it's not advisable to accept the offer.
Epsilon Co. can produce a unit of product for the following costs: Direct material $ 8.80 Direct labor 24.80 Overhead 44.00 Total product costs per unit $ 77.60 An outside supplier offers to provide Epsilon with all the units it needs at $66.20 per unit. If Epsilon buys from the supplier, the company will still incur 35% of its overhead. Epsilon should choose to:
Answer:
Make since the relevant cost to make it is $62.20.
Explanation:
There is an option below the question ask for details
The computation of the total product cost is shown below:
= Direct material per unit + Direct labor per unit + Overhead cost per unit
where,
Overhead cost per unit would be
= Overhead cost per unit × remaining percentage
= $44 × 65%
= $28.6
All the other items values would remain the same
Now put these values to the above formula
So, the value would equal to
= $8.80 + $24.80 + $28.6
= $62.20
Since the given total product cost is more than the computed one so the company will choose make option and for decision making we take only 65% which is relevant
Digger Enterprises purchased equipment for $64,000. In addition, shipping charges of $800 were incurred to obtain the equipment. The company paid $5,000 to construct a foundation and install the equipment. The equipment is estimated to have a residual value of $6,000 at the end of its 5-year useful life. Using the straight-line method, what is the book value of the equipment at the end of the third full year of use?
a. $22,120
b. $28,400
c. $31,520
d. $25,520
Answer:
Option (C) is correct.
Explanation:
Total cost:
= Purchase cost + shipping charge + Installation charges
= $64,000 + $800 + $5,000
= $69,800
Depreciation expense:
= (Cost - Salvage value) ÷ Estimated Useful life
= ($69,800 - $6,000) ÷ 5
= $12,760 per year
Total depreciation expense up to 3rd year:
= $12,760 per year × 3
= $38,280
Therefore,
Book value of the equipment at the end of the third full year of use:
= Cost of equipment - Total depreciation expense up to 3rd year
= $69,800 - $38,280
= $31,520
Using cost analysis to analyze the money being spent by a firm is analogous to using ____________ to analyze the money coming into the firm.A. sales analysis
B. traditional accounting reports
C. performance analysis
D. the iceberg principle
E. TQM methods
Answer:
A. sales analysis
Explanation:
A sales analysis is a common breakdown of sales, where a company can see how many products or services has it sold over a given period of time.
Like cost analysis is useful for determining which costs can be cut down and which ones are justified, a sales analysis determines which product segment brings in the most revenue, creating an incentive for improvement.
Purple, Inc., a domestic corporation, owns 100% of Blue, Ltd., a foreign corporation and Yellow, Inc., a domestic corporation. Purple also owns 40% of Green, a domestic corporation. Purple receives no distributions from any of these corporations. Which of these entities' net income is included in Purple's GAAP income statement for current-year financial reporting purposes?
a.Purple, Blue, and Yellow.
b.Purple, Yellow, and Green.
c.Purple, Blue, Yellow, and Green.
d.Purple, Blue, and Green.
Answer: a.Purple, Blue, and Yellow.
Explanation: he does not have a controlling interest in green yet because it's percentage of control is still below 50% so it cannot report green's income.
Net income under variable costing is contribution margin less Select one: a. cost of goods sold. b. fixed manufacturing overhead and fixed selling and administrative expenses. c. fixed manufacturing overhead and variable manufacturing overhead. d. variable selling and administrative expenses and fixed selling and administrative expenses.
Answer:b fixed manufacturing overhead and fixed selling and administrative expenses.
Explanation:
Variable costing deducts variable costs from revenue to arrive at contribution margins from which all fixed cost are deducted to arrive at the net income.
The cost of goods sold, variable costs and other costs are not deducted from the contribution margin except the fixed cost in variable costing method.
Jobs that are grouped into the same pay grade should
a. be paid at different wage rates because the worth of these jobs to the organization may differ.
b. be paid within a range that may overlap with adjoining grades, so that an employee with experience can be paid as much as or more than a newer employee in a higher grade.
c. all receive the same wage rate in order to achieve equality.
d. be paid within a range that does not overlap with bordering job grades so that distinctions between grades are maintained.
Answer:
The correct answer is letter "B": be paid within a range that may overlap with adjoining grades, so that an employee with experience can be paid as much as or more than a newer employee in a higher grade.
Explanation:
It is important within the work frame that job positions around almost the same level of wages consider the level of experience or the employees. Workers whose experience is greater should receive more compensations not only in gratitude for their years of collaboration but also as a way to motivate them to keep their work up. The wage should be equal or as close as the wage that the next grade employees perceive, new or not.
Pay grades are often designed to overlap with adjoining job grade ranges, enabling experienced employees to earn as much or more than newer employees in a higher grade. This approach encourages professional growth and job loyalty.
Explanation:Jobs that are grouped into the same pay grade should generally be paid within a range that may overlap with adjoining grades (option b). This allows for an employee with experience to earn as much or even more than a newer employee with a higher grade. This system helps to reflect the value of work experience and skill development and promotes employee loyalty and longevity.
Options a, c, and d can apply in certain situations, but they are not as commonly used or as flexible. Option A tends to undervalue certain roles, Option C might discourage professionalism and personal development, and Option D could potentially inhibit mobility within the company.
Learn more about Pay Grades here:https://brainly.com/question/989444
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The diamond framework is NOT LIKELY to answer which of the following questions about competing on an international basis? A. Where will the foreign entrants come from?B. Which countries have the weakest foreign rivals?C. What are the attributes of a country's business environment?D. What location of value chain activities is most beneficial?E. What are the disadvantages of allowing foreign competition?E. What are the disadvantages of allowing foreign competition?
Answer:
E
Explanation:
The diamond framework is one of the five major strategic options for entering foreign markets and it is not likely to answer questions on What are the disadvantages of allowing foreign competition?
The diamond framework does not directly address the disadvantages of allowing foreign competition, as it is designed to analyze competitive advantages of nations. It focuses on where foreign entrants may originate, identification of weak foreign rivals, attributes of a country's business environment, and beneficial locations for value chain activities.
Explanation:The diamond framework is a conceptual model that helps to analyze the competitive advantages of nations, focusing primarily on four aspects: factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry. When considering the diamond framework, it is not likely to answer the question about the disadvantages of allowing foreign competition (E). This is because the framework is designed to assess and identify the competitive advantages of a country in the global marketplace, rather than focusing on the negative aspects of foreign competition.
Questions that the diamond framework can typically address include identifying where foreign entrants may come from, which countries have the weakest foreign rivals, the attributes of a country's business environment, and where along the value chain activities should be located to be most beneficial. Additionally, it might address overall patterns of international competition and trade, such as the attraction of capital and labor, and the economic impact of free market economies.
Swifty Corporation records purchases at net amounts. On May 5 Swifty purchased merchandise on account, $85000, terms 2/10, n/30. Swifty returned $5400 of the May 5 purchase and received credit on account. At May 31 the balance had not been paid. The amount to be recorded as a purchase return is $5400. $5508. $5292. $4860.
Answer:$5400
Explanation:
In sales merchandise a seller can give a trade or a cash discount. A trade discount is giving based on the volume of sales, while a cash discount is giving to encourage prompt cash payment and it will be accorded the buyer once the conditions of payment is met.
The above scenario is a cash discount which means 2% cash discount will be giving if payment is made whithin 10 days and it should be made within 30 days. The amount of cash discount is there after deducted from the income statement as an expenses, though for the trade discount this is deducted directly to the sales journal.
Swift only return goods of $5400 and this is the amount to be recognized as purchase return.
A company has 525 shares of $50 par value preferred stock outstanding, and the call price of its preferred stock is $61 per share. It also has 21,000 shares of common stock outstanding, and the total value of its stockholders' equity is $716,625. The company's book value per common share equals: $33.29.
$31.80.
$32.88.
$34.13.
$32.60.
Answer:
$32.60
Explanation:
The formula and the computation is shown below:
Book value per share = (Total equity - preferred stock) ÷ (outstanding number of shares)
where,
Total equity is $716,625
Preferred stock would be
= 525 shares × $61
= $32,025
And, the outstanding number of shares is 21,000 shares
So, the book value per share would be
= ($716,625 - $32,025) ÷ (21,000 shares)
= ($684,600) ÷ (21,000 shares)
= $32.60
Following her 18th birthday, Madison began investing $24 at the end of each week in an account earning 7% per year compounded weekly. She plans to continue making weekly investments until she turns 68. If she had waited until she turned 47, how much would she have to invest weekly in order to have the same retirement nest egg at age 68? Round to the nearest cent. (Hint: Find the size of the retirement nest egg, then use that to solve for CF under the shorter investment scenario)
Answer:
The answer is $26.80.
Explanation:
*Some inputs for the calculation as below:
One year period has 52 weeks
=> At the time she turns 68, she will have: (68-18) x 52 = 2,600 equal weekly cash flows; At the time she turns 47, she will have: (47-18) x 52 = 1,508 equal weekly cash flows.
* Present value of the investment plan lasting until she turns 68:
[ 24 / (7%:52) ] x [ 1 - (1+ (7%/52)^(-2,600) ] = $17,289.
* To have the same retirement nest egg at age 68, the present value of the investment plan lasting until she turns 47 should be equal to $17,289. Denote x is the weekly investment under the shorter investment scenario, we have:
[x / (7%:52) ] x [ 1 - (1+ (7%/52)^(-1,508) ] = $17,289 <=> x = $26.80.
On January 1, 2017, Larkspur Company purchased $440,000, 10% bonds of Aguirre Co. for $407,614. The bonds were purchased to yield 12% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2022. Larkspur Company uses the effective-interest method to amortize discount or premium. On January 1, 2019, Larkspur Company sold the bonds for $409,094 after receiving interest to meet its liquidity needs.
Prepare the amateur eyes is your schedule for the bonds.
Answer:
Period Carrying coupon Interest Amortization End Carrying
July 2017 407,614 22000 24456.84 2456.84 410,071
Dic 2017 410,071 22000 24604.25 2604.25 412,675
July 2018 412,675 22000 24760.51 2760.51 415,436
Dec 2018 415,436 22000 24926.14 2926.14 418,362
Loss on sale 9,268
Explanation:
The interest expense will be determinate as the market rate times carrying value
Then, it will amortize between the difference in the actual cash payment and the interest expense calculate with the market rate
The carrying value will increase over time as it needs to match the face value at maturity.
Then after Dec 31 2019 we sale the bond and we determinate the loss on sale:
418,362 - 409,094 = 9,268
Suppose that the MPC is 0.7, there is no investment accelerator, and there are no crowding-out effects. If government expenditures increase by $30 billion, then aggregate demand a. shifts rightward by $100 billion. b. shifts rightward by $51 billion. c. shifts rightward by $170 billion. d. shifts rightward by $72.8 billion.
Answer:
a. shifts rightward by $100 billion
Explanation:
Step 1. Given information.
MPC = 0.7
Step 2. Formulas needed to solve the exercise.
Impact in the aggregate demand = 1 / (1-mpc) * total increase expenditures.
Step 3. Calculation.
Impact in the aggregate demand = 1 / (1-0.7) * 30 million = 100 billion
Step 4. Solution.
What actually occurs is that if government increases its expenditures, this means that the output levels in the economy will increase.
Thus, aggregate demand curve will shift right the overall increase by 100 billions.
Assume the four major grocery stores in a large metropolitan area decide to meet secretly to fix prices for meat. It would be easiest to maintain this arrangement when:
Answer:
The correct answer is Option (3): The number of additional competitors is very small.
Explanation:
Competitors can come together to engage in price fixing, which is either a verbal or written agreement between the firms to either raise, lower or maintain prices of products at a given time. Some government laws encourage firms to set their own prices by themselves without any form of agreement with another firm in the same or similar line of business. Sometimes, these competitors can fix prices of goods in secret and these government bodies do term the act illegal.
These price fixing activities are usually being carried out effectively “in secrete” when other competitors are very small.
Mad Hatter Enterprises purchased new equipment for $373,000, terms f.o.b. shipping point. Other costs connected with the purchase were as follows: State sales tax $ 30,000 Freight costs 6,400 Insurance while in transit 880 Insurance after equipment placed in service 1,280 Installation costs 2,400 Insurance for the first year of operations 2,800 Testing 780
Answer: $332,540
Explanation: find attached my solution in the document below.
NB : note that the Insurance after equipment placed in service and Insurance for the first year of operations was not added because these are to be termed expenses to be deducted in the P & L account.
The newshole ______. Group of answer choices
a. is news content (not space used by ads) that takes up about 35 to 50 percent of the space in a typical metropolitan daily newspaper
b. refers to those parts of the public agenda that are ignored by news media
c. refers to a story that is somewhat incomplete but printed anyway
d. is a form of yellow journalism
e. refers to the space for advertising left over after the news content goes into the paper
Answer: Option A
Explanation: A news hole refers to a concept of journalism that depicts to the amount of room in a newspaper that is accessible every day. Generally, the column space designated for news hole are the leftover spaces after paid commercials are packed in.
As per the recent reports by some agencies, famous newspapers like economic timer or new York times gives 35 percent to 50 percent space in their publish for the news content.
Thus, from the above we can conclude that the correct option is A.
Final answer:
The newshole is the portion of a newspaper available for news content after advertising space is allocated, comprising about 35 to 50 percent of the newspaper's space.
Explanation:
The term newshole refers to the space in a newspaper or other publication that is available for news content after all the advertising content has been placed. The correct answer to the question is "The newshole is news content (not space used by ads) that takes up about 35 to 50 percent of the space in a typical metropolitan daily newspaper." Newspapers dedicate significant portions of their layout to advertisements, which finance their operations, and the remaining space, or newshole, is what's left for journalists to fill with news coverage. In the context of political coverage, factors such as pack journalism and a focus on campaign strategy over substantive reporting can influence the quality and depth of news content in this limited space.
A single stock futures contract on a nondividend-paying stock with current price $180 has a maturity of one year.
a. If the T-bill rate is 4.0%, what should the futures price be? (Round your answer to 2 decimal places.) Futures price $
b. What should the futures price be if the T-bill rate is still 4.0% and the maturity of the contract is three years? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Futures price $
c. What if the interest rate is 6.5% and the maturity of the contract is three years? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Futures price $
Answer:
a. $187.20.
b. $202.48.
c. $217.43.
Explanation:
Please find the below for detailed explanations and calculations:
We have the formula for determining the future price of the non-dividend-paying stock as below:
Future price = Spot price x (1+ annual risk free rate )n; which n = number of year(s) to maturity.
Thus, apply the general formula above, we have the below calculations:
a. Future price = 180 x (1+4%)^1 = $187.20;
b. Future price = 180 x ( 1+4%)^3 = $202.48;
c. Future price = 180 x (1+6.5%)^3 = $217.43.
To have a monopoly, barriers to entering the market must be so high that no other firms can enter. Do network externalites create or remove barriers to entry? Explain. Network externalities ______.
(A) create barriers to entry because a firm efficiently offers products that satisfy consumer preferences.
(B) remove barriers to entry because such externalities require multiple firms to provide the goods and services in the network.
(C) create barriers to entry because consumption of a firm's product decreases the value of goods and services produced by other firms.
(D) create barriers to entry because if a firm can attract enough customers initially, it can attract additional customers as its product's value increases by more people using it, which attracts even more customers.
(E) create barriers to entry because economies of scale are so large that one firm can supply the entire market at lower average total cost than can two or more firms.
Answer: Option D
Explanation: Network externalities are indeed an economic principle that defines the conditions in which a product or service's value increases or decreases as the number of customers increases or declines.
As the availability of an item raises the price of the product falls it becomes less valuable, according to the traditional economic theory. This is termed "positive externalities of the network" or "network influence."
Thus, somehow it creates barriers for other firms by prepairng a strong customer base for an experienced firm.
Commerce Corporation has a high probability of operating at 46,000 activity hours during the upcoming period, and lower probabilities of operating at 36,000 hours and 56,000 hours. The company's flexible budget revealed the following: 36,000 Hours 46,000 Hours 56,000 Hours Variable costs $ 162,000 $ 207,000 $ 252,000 Fixed costs 880,000 880,000 880,000 Commerce’s flexible-budget formula, where Y is defined as total cost and AH represents activity hours, is: (Round intermediate calculations to 2 decimal places.)
Answer:
Y = $4.50 AH + $880,000
Explanation:
Hours 36,000 46,000 56,000
Var. Cost $162,000 $207,000 $252,000
Var. Cost per hour (*) $4.50 $4.50 $4.50
Fixed cost $880,000 $880,000 $880,000
---------------------------------------------------------------------------------
(*) Var. Cost per hour = Var. Cost / Hours
Y = $4.50 AH + $880,000
Hope this helps!
On Dec. 20, X-Mart received a $100 allowance because the merchandise it purchased on account, earlier in the month, was of poor quality. Demonstrate the required journal entry on X-Mart's books for the allowance assuming the perpetual inventory method.
Answer:
See explanation section
Explanation:
The journal entry to record the $100 received as allowance because of the poor quality product is as follows:
Debit Accounts payable $100
Credit Inventory/Merchandise Inventory $100
Since the X-mart company purchased the inventory on account, the supplier became payable for X-mart. Therefore, he made a journal entry with a payable account as credit. As the X-mart company now returned the defective goods due to poor quality, the supplier will get less amount. Therefore, it (supplier - a payable) becomes a debit. As X-mart returned the product, the inventory becomes a credit.
Final answer:
The allowance received by X-Mart for poor quality merchandise would lead to a journal entry debiting Accounts Payable and crediting Inventory by $100 each under the perpetual inventory system.
Explanation:
When X-Mart received a $100 allowance for poor quality merchandise, it needs to adjust its accounting records under the perpetual inventory system. The journal entry to record the allowance would involve decreasing the inventory account since the goods are defective, and a reduction of accounts payable, assuming the original purchase was on account.
The journal entry would be:
Debit: Accounts Payable $100
Credit: Inventory $100
This entry signifies that the liability to the vendor reduces by $100 because of the allowance and at the same time, it also reflects a reduction in the value of inventory by the corresponding amount.
A machine cell uses 195 pounds of a certain material each day. Material is transported in vats that hold 25 pounds each. Cycle time for the vats is about 2.25 hours. The manager has assigned an inefficiency factor of .10 to the cell. The plant operates on an eight-hour day. How many vats will be used?
Answer:
Number of vats used is 3
Explanation:
Number of pounds used per hour, D = 195 ÷ 8
= 24.375 pounds per hour
Cycle time, T = 2.25
Inefficiency factor, e = 0.19
Material held in vats, C = 25 pounds
Now,
Let, n be total number of vats
Thus,
n = [tex]\frac{DT(1+e)}{C}[/tex]
on substituting the respective values, we get
n =[tex]\frac{25.75\times2.25\times(1+0.10)}{25}[/tex]
or
n = 2.413 ≈ 3
Number of vats used is 3 [since vats cannot be in fraction]
Outsourcing:
A. transfers traditional internal activities to outside vendors.
B. utilizes the efficiency that comes with specialization.
C. allows the outsourcing firm to focus on its key success factors.
D. All of these are true of outsourcing.
E. None of these is true of outsourcing.
Answer: Option D
Explanation: Outsourcing is an arrangement where one organization employs another organization to be responsible for an in-house planned or ongoing operation and sometimes requires the transition of staff and properties from one organization to another.
There are number of reasons why company outsource their activities some of which could be lesser cost, focus on core activities and use of specialization etc.
Outsourcing is generally performed by organisations that are operating their business at a very high scale and the management is unable to monitor and perform all jobs efficiently.
Which of the following statements is right about facility location analysis?
A. Facility location analysis considers the competitive imperative to be close to customers as to timeliness of deliveries.
B. Facility location analysis considers the competitive imperative of lowest total cost.
C. Facility location analysis considers the competitive imperative of a favorable business climate as indicated by the presence of other companies in the same industry.
D. Facility location analysis considers the competitive imperative of locating near the appropriate labor pool to take advantage of low wage costs and/or skill levels. All of the above.
Answer:
The correct answer is letter "A": Facility location analysis considers the competitive imperative to be close to customers as to timeliness of deliveries.
Explanation:
Facility location is part of the research and computational geometry in charge of determining the localization of a company's branches to be closest as possible to the firm's target customers, workers, and suppliers by minimizing the costs. Other factors such as free trading zones or environmental policies are also taken into consideration.
Annual demand for a new assembled product is expected to be 80,000 units. Work content time for the product is 22.7 min. The assembly line operates 50 wk/yr, 40 hr/wk. Expected line efficiency is 95%. With one worker per station, determine (a) average hourly production rate, (b) cycle time, and (c) ideal minimum number of workers.
Answer:
average hourly production = 40 units
cycle time = 1.425 min
ideal minimum number of work = 16 worker
Explanation:
given data
annual demand for product = 80,000 units
Work content time = 22.7 min
work for week = 50 wk/yr
no of hr/week = 40 hr/wk
efficiency = 95% = 0.95
to find out
average hourly production rate and cycle time and ideal minimum number of worker
solution
we get here average hourly production rate that is express as
average hourly production = [tex]\frac{Da}{50H}[/tex] ........1
average hourly production = [tex]\frac{80000}{50*40}[/tex]
average hourly production = 40 units
and
cycle time is
cycle time = [tex]\frac{60*efficiency}{average\ hourly\ production}[/tex]
cycle time = [tex]\frac{60*0.95}{40}[/tex]
cycle time = 1.425 min
and
ideal minimum number of work is
W = minimum integer ≥ [tex]\frac{time}{cycle\ time}[/tex]
W = minimum integer ≥ [tex]\frac{22.7}{1.425}[/tex]
ideal minimum number of work = 15.93 = 16 workers
If an investor anticipates an annual rental income from a leased property to be $400,000 dollars, this expected sum has a direct bearing on what the investor will pay for the property. This is an example of
Answer:
Principle of anticipation
Explanation:
The principle of anticipation is a way to measure or calculate the value of a property. According to this rule the value of a property depends on the anticipated or expected income or cash flows the property can generate in the future. The higher the anticipated or expected income or cash flow the higher the value of the property will be. For example if a commercial building has a anticipated income of rent of $100,000 and the another building has an anticipated income of rent of $200,000, the building with the higher anticipated income will have a higher price if all other things are equal. In this case the anticipated annual rental income has a direct bearing on what the investor will pay for the property. So this is an example of the principle of anticipation.
If an investor anticipates an annual rental income from a leased property to be $400,000 dollars, this expected sum has a direct bearing on what the investor will pay for the property. This is an example of highlights the importance of understanding present value in property valuation.
This situation exemplifies the concept of present value, which is crucial for valuing an asset based on its future income streams.
Investors calculate the present value of future rental incomes to determine a fair price for the property today, adjusting for the time value of money since a dollar today is worth more than a dollar in the future.For example, if the expected rental income is $400,000 annually, and we assume an interest rate of 5%, the investor will discount this future income to its present value to determine how much they should be willing to pay. Calculating present value ensures that the price paid for the property reflects its potential to generate future income efficiently.Piercing the corporate veil means revealing to shareholders the internal rules of corporate management.
a. True
b. False
Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division’s return on investment (ROI), which has been above 25% each of the last three years. Derrick is considering a capital budgeting project that would require a $5,150,000 investment in equipment with a useful life of five years and no salvage value. Holston Company’s discount rate is 17%. The project would provide net operating income each year for five years as follows:Sales $4,300,000 Variable expenses 1,900,000 Contribution margin 2,400,000 Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs$765,000 Depreciation765,000 Total fixed expenses 1,530,000 Net operating income $870,000 Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.1. Compute the project's net present value.net present value2. Compute the project's simple rate of return.simple rate of return percent
Answer:
1. $80,855.50
2. 16.89%
Explanation:
The computations are shown below:
1. The computation of the Net present value is shown below
= Present value of all yearly cash inflows after applying discount factor + salvage value - initial investment
where,
The Initial investment is $5,150,000
All yearly cash flows would be
= Net operating income + depreciation expense
= $870,000 + $765,000
= $1,635,000
The yearly cash flows would be
= Annual cash flows × PVIFA for 5 years at 17%
= $1,635,000 × 3.1993
= $5,230,855.50
Refer to the PVIFA table
Now put these values to the above formula
So, the value would equal to
= $5,230,855.50 - $5,150,000
= $80,855.50
b. The formula to compute the simple rate of return is shown below:
= Annual net operating income ÷ Initial investment
= $870,000 ÷ $5,150,000
= 16.89%
The amount of planned consumption spending that would take place if real GDP were zero is called:
O induced planned consumption spending.
O exogenous planned consumption spending.
O autonomous planned consumption spending.
O break even planned consumption spending.
Answer:
autonomous planned consumption spending.
Explanation:
Consumption is utility derived from purchase and use of products and services. There are several types of consumption, which are, induced and autonomous consumption. Induced consumption is determined by the level of real GDP. On the other hand, in the absence of real GDP, there will still be consumption which is referred to as autonomous planned consumption spending.
Burns Corporation's net income last year was $98,300. Changes in the company's balance sheet accounts for the year appear below: Increases (Decreases) Asset and Contra-Asset Accounts: Cash and cash equivalents $ 20,500 Accounts receivable $ 13,400 Inventory $ (16,500 ) Prepaid expenses $ 4,400 Long-term investments $ 10,300 Property, plant, and equipment $ 74,900 Accumulated depreciation $ 32,200 Liability and Equity Accounts: Accounts payable $ (18,700 ) Accrued liabilities $ 17,100 Income taxes payable $ 4,300 Bonds payable $ (64,800 ) Common stock $ 42,800 Retained earnings $ 94,100 The company did not dispose of any property, plant, and equipment, sell any long-term investments, issue any bonds payable, or repurchase any of its own common stock during the year. The company declared and paid a cash dividend of $4,200. Required: a. Prepare the operating activities section of the company's statement of cash flows for the year. (Use the indirect method.) b. Prepare the investing activities section of the company's statement of cash flows for the year. c. Prepare the financing activities section of the company's statement of cash flows for the year.
Burns Corporation's net cash provided by operating activities is $132,900, net cash used in investing activities is $85,200, and net cash used in financing activities is $26,200. These are derived using the indirect method based on the changes in the balance sheet accounts provided. The overall change in cash flows is calculated by adjusting for these activities.
Here is how you can prepare Burns Corporation's Statement of Cash Flows for the year:
Operating Activities (Indirect Method):
Start with the net income for the year: $98,300
Add: Depreciation (balance sheet indicates this increased): $32,200
Adjust for changes in working capital:
Increase in Accounts Receivable: ($13,400)
Decrease in Inventory: $16,500
Increase in Prepaid Expenses: ($4,400)
Decrease in Accounts Payable: ($18,700)
Increase in Accrued Liabilities: $17,100
Increase in Income Taxes Payable: $4,300
Net cash provided by operating activities: $132,900
Investing Activities:
Increase in Long-term Investments: ($10,300)
Purchase of Property, Plant, and Equipment: ($74,900)
Net cash used in investing activities: ($85,200)
Financing Activities:
Decrease in Bonds Payable: ($64,800)
Common Stock issued: $42,800
Dividends Paid: ($4,200)
Net cash used in financing activities: ($26,200)
Will’s Whitewater Rafting sold 3 acres of land used in the business. The sales price was $6,000 and the adjusted basis of the land was $4,200. Will receives a down payment of $4,000 at the time of sale and the remaining $2,000 early next year. The realized gain on the sale is $___. Will’s recognized gain for the current year is $_____ and the gain recognized next year will be $_____.
a. 1,800;
b. 1,200 ($1,800/$6,000 = 30%; $4,000 x .30 = $1,200);
c. 600 (30% x $2,000 = $600)
Answer:a. 1,800;
b. 1,200 ($1,800/$6,000 = 30%; $4,000 x .30 = $1,200);
c. 600 (30% x $2,000 = $600)
Explanation:
In tax accounting, adjusted basis refers to the original cost, or the net cost of an asset, after adjusting various tax-related items normally reduced by depreciation deductions.
Given:
Selling Price(S.P) = $6,000
Adjusted Basis (A.B) = $4200
The gain realized from the sale of the land would be:
= S.P - A.B = $(6,000-4200)= $1,800
Now, we calculate the percentage profit on gain realized to enable ease of gain calculation for fragmented payments.
The percentage gain (P.G) is:
(S.P-A.B)/S.P * 100 = (6,000-1,800)/6000 * 100
P.G = (1,800/6,000) * 100 = 30%
Therefore we say that:
Recognized Gain on current year = Amount paid * P.G = $(4,000*0.3) = $1,200
And
Recognized Gain next year = Amount paid * P.G = $(2,000 * 0.3) = $600
Note: P.G is percentage gain.
Compute the annual dollar changes and percent changes for each of the following accounts. (Decreases should be indicated with a minus sign. Round percent change to one decimal place.) Current Year Prior Year Short-term investments $ 380,834 $ 240,061 Accounts receivable 103,020 106,337 Notes payable 0 94,802
Answer:
Explanation:
The computation is shown below:
(A) (B) (A - B)
Current Year Prior Year Dollar change
Short-term investments $380,834 $240,061 $140,773
Accounts receivable $103,020 $106,337 -$3,317
Notes payable $0 $94,802 -$94,802
Now the percentage change would be
= (A - B) ÷ (B) × 100
For Short-term investments = 58.64%
For Accounts receivable = - 3.12%
For Notes payable = - 100%
Final answer:
To calculate the annual changes, subtract the prior year value from the current year value. Then divide that number by the prior year value and multiply by 100 to get the percent change. Results show increases in Short-term investments and decreases in Accounts receivable and Notes payable.
Explanation:
To compute the annual dollar changes and percent changes for each account, we subtract the prior year value from the current year value to get the dollar change. Then, we divide the dollar change by the prior year value and multiply by 100 to get the percent change.
For Short-term investments, the dollar change is $380,834 - $240,061 = $140,773. The percent change is ($140,773 / $240,061) * 100, which gives approximately 58.6%.For Accounts receivable, the dollar change is $103,020 - $106,337 = -$3,317 (a decrease). The percent change is (-$3,317 / $106,337) * 100, which gives approximately -3.1%.For Notes payable, the dollar change is $0 - $94,802 = -$94,802 (a decrease). Since there was no balance in the current year, the percent change is not applicable here.