Answer:
Option (C) is correct.
Explanation:
Demand deposits = 1000 million dias
Excess reserves = 25 million dias
Percent of demand deposits held as excess reserves = 25%
Therefore,
when 5 million dias are loaned by Central bank, keeping the excess reserves and demand deposits constant,
Banks can create credit = (1 ÷ 25)%
= 4 times or 0.04
Money supply of Namdia change:
= Demand deposits × 0.04
= 1,000 × 0.04
= 40 million dias
Net income was $476,000.Issued common stock for $73,000 cash.Paid cash dividend of $12,000.Paid $110,000 cash to settle a note payable at its $110,000 maturity value.Paid $119,000 cash to acquire its treasury stock.Purchased equipment for $90,000 cash. Use the above information to determine this company's cash flows from financing activities. (Amounts to be deducted should be indicated with a minus sign.)
Answer:
Net Cash flow from Financing activities -$168,000
Explanation:
Financing activities: It records those activities which affect the long term liability and shareholder equity balance. The issue of shares is an inflow of cash whereas redemption and dividend is an outflow of cash.
Cash flow from Financing activities
Issuance of common stock $73,000
Cash dividends declared and paid -$12,000
Payment of note payable -$110,000
Purchase of treasury stock -$119,000
Net Cash flow from Financing activities -$168,000
The net income is shown under the operating activities and the equipment purchase is shown in the investing activity. Hence, it is ignored
inkal Co. was formed on January 1, 2017 as a wholly owned subsidiary of a US corporation. Sinkal's functional currency was the stickle (§). The following transactions and events occurred during 2017: Jan 1 Sinkal issued common stock for §1,000,000 June 30 Sinkal paid dividends of §20,000 Dec. 31 Sinkal reported net income of §80,000 for the year Exchange rates for 2017 were: Jan 1 §1 = $.48 June 30 §1 = $.46 Dec. 31 §1 = $.42 Average §1 = $.44
What was the amount of the translation adjustment for 2017?
Answer:
It would decrease the net assets by $60,800
Explanation:
The computation of the translation adjustment for 2017 is shown below:
For common stock
= Issued amount × (revised exchange rate - exchange rate)
= $1,000,000 × (0.42 - 0.48)
= -$60,000
For dividend
= Dividend paid × (revised exchange rate - exchange rate)
= $20,000 × (0.42 - 0.46)
= -$800
For net income
= Net income × (revised exchange rate - exchange rate)
= $80,000 × (0.42 - 0.42)
= $0
So, it would decrease the net assets by $60,800 ($60,000 + $800)
To meet sales requirements and to have 2,500 units of finished goods on hand at December 31, 2017, the production budget shows 9,000 required units of output. The total unit cost of production is expected to be $18. Flint uses the first-in, first-out (FIFO) inventory costing method. Interest expense is expected to be $3,500 for the year. Income taxes are expected to be 40% of income before income taxes. In 2017, the company expects to declare and pay an $8,450 cash dividend.
Answer:
Please refer the detail in the explanation box below:
Explanation:
The question is incomplete!!!
Please refer below the complete question
Krause Industries? balance sheet at December 31, 2016, is presented below.
KRAUSE INDUSTRIES
Balance Sheet
December 31, 2016
Assets
Current Assets
Cash $7,500
Accounts receivable 73,500
Finished goods inventory (1,500 units) 26,320
Total current assets 107,320
Property, Plant, and Equipment
Equipment $40,010
Less: Accumulated depreciation 10,200 29,810
Total assets $137,130
Liabilities and Stockholders' Equity
Liabilities
Notes payable $27,820
Accounts payable 45,040
Total liabilities 72,860
Stockholders' Equity
Common stock $38,930
Retained earnings 25,340
Total stockholders' equity 64,270
Total liabilities and stockholders' equity $137,130
Budgeted data for the year 2017 include the following.
2017
Quarter 4 Total
Sales budget (8,000 units at $32) $76,800 $256,000
Direct materials used 11,280 62,500
Direct labor 12,500 50,900
Manufacturing overhead applied 10,000 49,660
Selling and administrative expenses 15,250 75,000
To meet sales requirements and to have 2,500 units of finished goods on hand at December 31, 2017, the production budget shows 9,000 required units of output. The total unit cost of production is expected to be $18. Krause uses the first-in, first-out (FIFO) inventory costing method. Interest expense is expected to be $3,500 for the year. Income taxes are expected to be 40% of income before income taxes. In 2017, the company expects to declare and pay an $10,450 cash dividend.
The company?s cash budget shows an expected cash balance of $5,880 on December 31, 2017. All sales and purchases are on account. It is expected that 60% of quarterly sales are collected in cash within the quarter and the remainder is collected in the following quarter. Direct materials purchased from suppliers are paid 50% in the quarter incurred and the remainder in the following quarter. Purchases in the fourth quarter were the same as the materials used. In 2017, the company expects to purchase additional equipment costing $9,380. $7,848 of depreciation expense on equipment is included in the budget data and split equally between manufacturing overhead and selling and administrative expenses. Krause expects to pay $9,450 on the outstanding notes payable balance plus all interest due and payable to December 31 (included in interest expense $3,500, above). Accounts payable at December 31, 2017, includes amounts due suppliers (see above) plus other accounts payable of $7,540. Unpaid income taxes on December 31 will be $7,700.
Prepare a budgeted classified balance sheet on December 31, 2017.
Answer:
KRAUSE INDUSTRIES
Balance Sheet
31-Dec-2017
Assets Amount
Current Assets
Cash $5,880
Accounts receivable ($76,800 x 40%) $30,720
Finished goods inventory (2,500 units x $18) $45,000
Total current assets $81,600
Property, Plant, and Equipment
Equipment $49,390
Less: Accumulated depreciation -$18,048 $31,342
Total assets $112,942
Liabilities and Stockholders' Equity
Liabilities
Notes payable ($27,820-$9,450) $18,370
Income Tax Payable $7,700
Accounts payable $7,540
Total liabilities $33,610
Stockholders' Equity
Common stock $38,930
Retained earnings $40,402
Total stockholders' equity $79,332
Total liabilities and stockholders' equity $112,942
The student's business question involves financial budgeting, production planning, and break-even analysis, including concepts like break-even price point and short-run shutdown price point to aid in making informed business decisions.
Explanation:The student's question pertains to various business concepts, particularly those related to financial budgeting, production planning, and cost analysis. In this context, we calculate key points like break-even price points, short-run shutdown price points, and interpret the figures to make informed business decisions.
For instance, if a firm's total cost when producing 1,000 units is $4,000 and the total variable cost is $2,800, the break-even price point would be $4.00. This indicates the price per unit at which total revenues would exactly cover total costs. Similarly, the short-run shutdown price point is the price at which the company would cover its variable costs, which is $2.80 in this scenario. This price point helps the firm decide whether to stay operational or shut down in the short run.
Understanding these concepts is crucial for a business to ensure profitability, manage production effectively, and make strategic financial decisions.
Which of the following costs are most likely to be classified as variable?
A. Factory rent.
B. Manager salaries.
C. Insurance.
D. Direct materials.
E. Straight-line depreciation.
Answer:
Correct answer is D. Direct materials
Explanation:
Among the given choices, direct materials is most likely to be classified as variable cost. Direct materials are the supplies used in manufacturing products which can be directly identified in the output production. It is a main component which is traceable to create or produce products. Basically, all manufacturing industries used direct materials as their variable cost in their production.
Variable costs are costs that vary with the level of production. Direct materials and straight-line depreciation are examples of variable costs. Factory rent, manager salaries, and insurance are typically classified as fixed costs.
Explanation:Variable costs are the costs that vary with the level of production. Based on the information provided, the costs most likely to be classified as variable are:
Direct materials: These costs vary based on the quantity of materials used in production. For example, if more units are produced, more materials will be needed.
Straight-line depreciation: This cost is associated with the wear and tear of assets over time. If more units are produced, the depreciation expense will be higher.
Factory rent, manager salaries, and insurance are more likely to be classified as fixed costs, as these costs do not directly vary with the level of production.
Colex wishes to bid on a contract that is expected to yield after-tax net cash flows of $25,000 in year 1, $30,000 in year 2, and $35,000 per year in years 3-8. To obtain the contract, Colex will need to invest $110,000 to reconfigure a packaging system, $20,000 (after-tax) to retrain current employees, and $15,000 (after-tax) on an environmental impact study that is required to be completed on acceptance of the contract. What is the project’s internal rate of return?a. 14.9%b. 16.2%c. 16.7%d. 14.1%
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Tamarisk, Inc. has 1,000,000 authorized shares of $24 par value common stock. As of June 30, 2020, there were 800,000 shares issued and outstanding. On June 30, 2020, the board of directors declared a $0.50 per share cash dividend to be paid on August 1, 2020. Prepare the necessary journal entries to be recorded on (a) the date of declaration, (b) the date of record, and (c) the date of payment.
Answer:
Explanation:
The journal entries are shown below:
a. Retained earning A/c Dr $400,000
To Dividend payable A/c $400,000
(Being cash dividend declared)
b. No journal entry is required
c. Dividend payable A/c Dr $400,000
To Cash A/c
(Being the payment is made for cash)
The computation of the dividend is shown below:
= 800,000 shares × $0.50 per share
= $400,000
When the size of the money supply grows faster than the amount of ________________ being produced, the value of money decreases (inflation occurs)..
Answer:
Goods and services
Explanation:
Devaluation occurs when the size of money supply grows faster than the amount of goods and services being produced
Double-declining balance On January 1, 2021, the Excel Delivery Company purchased a delivery van for $51,000. At the end of its five-year service life, it is estimated that the van will be worth $4,800. During the five-year period, the company expects to drive the van 154,000 miles. Required: Calculate annual depreciation for the five-year life of the van using each of the following methods.
Answer:
$18,480
Explanation:
Cost of van = $51,000
Useful life = 5 years
Salvage value = $4,800
Using the straight line, Annual depreciation
= (51000 - 4800)/5
= $9,240
Using the Double-declining balance method,
Annual depreciation = 2 × 9,240
= $18,480
The Greenbriar is an all-equity firm with a total market value of $551,000 and 21,700 shares of stock outstanding. Management is considering issuing $153,000 of debt at an interest rate of 9 percent and using the proceeds on a stock repurchase. Ignore taxes. How many shares will the firm repurchase if it issues the debt securities?
Answer:
$6,026
Explanation:
The computation of the repurchase shares is shown below:
= Debt value ÷ market price per share
where,
Total market value is $551,000
And, the market price share would be
= Total market value ÷ outstanding stock
= $551,000 ÷ 21,700 shares
= $25.39
Now put these values to the above formula
So, the shares would be equal to
= $153,000 ÷ $25.39
= $6,026
Henna Co. produces and sells two products, T and O. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 60,000 units of each product. Sales and costs for each product follow. Product T Product Sales $ 1,020,000 $ 1,020,000 Variable costs 612,000 204,000 Contribution margin 408,000 816,000 Fixed costs 258,000 666,000 Income before taxes 150,000 150,000 Income taxes (35% rate) 52,500 52,500 Net income $ 97,500 $ 97,500Compute the break even point in dollar sales for each product.
Answer:
Break-even point in dollar sales
= Fixed cost
Contribution margin ratio
Product T
Contribution margin ratio
= Contribution
Sales
= $408,000
$1,020,000
= 0.40
Break-even point in dollar sales
= $258,000
0.4
=$645,000
Product O
Contribution margin ratio
= $816,000
$1,020,000
= 0.80
Break-even point in dollar sales
= $666,000
0.80
= $832,500
Explanation:
In this case, we need to calculate the contribution margin ratio of the two products, which is the ratio of contribution to sales. Then, we will determine the break-even point in dollar sales, which equals fixed cost divided by contribution margin ratio.
To calculate the break-even point in dollar sales for each product, divide the fixed costs by the contribution margin ratio.
Explanation:To calculate the break-even point in dollar sales for each product, you need to divide the fixed costs by the contribution margin ratio. The contribution margin ratio is calculated by dividing the contribution margin by the sales. For Product T, the break-even point in dollar sales would be $258,000 divided by $408,000, which equals $0.63. For Product O, the break-even point in dollar sales would be $666,000 divided by $816,000, which equals $0.81.
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Market Enterprises would like to issue $1,000 bonds and needs to determine the approximate rate it would need to pay investors. A firm with similar risk recently issued bonds with the following current features: a 5% coupon rate, 10 years until maturity, and a current price of $1,170.50. At what rate would Market Enterprises expect to issue bonds, assuming annual interest payments? Please round to the closest answer. (Solve this problem using either Excel's "Goal Seek" function, plug into tvm tables, or a financial calculator.)
Answer:
It will use a 3% rate
Explanation:
We need to solve for the discount rate which makes the coupon payment and maturity of the similar bond equal their current market value of 1,170.50
This is done using excel goal seek tool:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 50.00 (1,000 x 5%)
time 10 years
rate 0.030011
[tex]50 \times \frac{1-(1+0.030011)^{-10} }{0.030011} = PV\\[/tex]
PV $426.4860
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 1,000.00
time 10.00
rate 0.030011071
[tex]\frac{1000}{(1 + 0.030011)^{10} } = PV[/tex]
PV 744.01
PV c $426.4860
PV m $744.0139
Total $1,170.5000
market rate = 0.030011071 = 3%
The procedure will be to build up the formulas and link the rates to a cell.
and then, click on the total cell and use goal seek changing the rate cell
Singapore's real GDP was 188 billion dollars in 2005 and 196 billion dollars in 2006. The population was 4.4 million in 2005 and 4.5 million in 2006. Calculate Singapore's economic growth rate in 2006, the growth rate of real GDP per person in 2006, and the approximate number of years it will take for real GDP per person in Singapore to double if the 2006 economic growth and population growth rates are maintained.
Answer:
* Singapore's economic growth rate in 2006: 4.26%
* Growth rate of real GDP per person in 2006: 1.94%
* The approximate number of years it will take for real GDP per person in Singapore to double if the 2006 economic growth and population growth rates are maintained: 36 years
Explanation:
* Singapore's economic growth rate in 2006: Real GDP in 2006/ Real GDP in 2005 -1 = 196/188 -1 = 4.26%;
* Growth rate of real GDP per person in 2006:
+ Real GDP per person in 2005: 188 billion/4.4 million = $42,727.3
+ Real GDP per person in 2006: 196 billion/4.5 million = $43,555.6
+ Growth rate of real GDP per person in 2006 = 43,555.6/42,727.3 -1 = 1.94%
* The approximate number of years it will take for real GDP per person in Singapore to double if the 2006 economic growth and population growth rates are maintained:
Denote x is the number of years need to be found
Population growth rate in 2006: 4.5/4.4 -1 = 2.27%
The expected GDP per person after x years : 43,555.6 x 2 = $87,111
The expected GDP per person = Real GDP after x years / Population after x years = 87,111
<=> 196,000 x 1.0426^x / 4.5 x 1.0227^x = 87,111 ( unit is million)
<=> 1.0426^x / 1.0227^x = 1.99 <=> x = 36 years
Third State Bank wants to add a new branch office. It has determined that the cost of construction of the new facility will be $1.5 million with another $500,000 in organizational costs. The bank has estimated that it will generate $319,522 per year in net revenues. If the new branch is expected to last 20 years, what is the expected rate or return on this investment? (Round to the nearest whole percent)
a. 6 percent
b. 21 percent
c. 15 percent
d. 32 percent
e. 25 percent
Can you provide a step-by-step process and the functions to solve this problem on a financial calculator
Answer:
c. 15 percent
Explanation:
From this scenario, we have the following information:
Total investment (cash outflow) = $1,500,000 + $500,000 = $2,000,000
The cash inflow in every of 20 years is $319,522
In excel, the formula is Rate(20,-$2000000,$319522) = 15%
If we do calculation manually, we have to solve this equation:
$2,000,000 = $319,522/(1+r)^1 + $319,522/(1+r)^2+.....+ $319,522/(1+r)^20
in which r is expected rate of return.
You can see both 2 calculation in excel attached
Final answer:
To calculate the expected rate of return on the investment, we need to use the net present value (NPV) formula. By discounting each year's net revenue and summing them up, we can calculate the total present value of cash flows. The expected rate of return is the discount rate that results in an NPV of zero, which in this case is approximately 15 percent.
Explanation:
To calculate the expected rate of return on this investment, we need to use the net present value (NPV) formula:
NPV = Total Present Value of Cash Flows - Initial Investment
The total present value of cash flows is calculated by discounting each year's net revenue using the appropriate discount rate. In this case, we'll use a 10% discount rate:
- Initial Investment = $1.5 million + $0.5 million = $2 million
- Net Revenue per year = $319,522
- Duration of investment = 20 years
Calculating the present value for each year's net revenue and summing them up:
PV = $319,522 / [tex](1 + 0.10)^1[/tex] + $319,522 / [tex](1 + 0.10)^2[/tex] + ... + $319,522 / [tex](1 + 0.10)^{20}[/tex] = $5,122,452
Now, we can calculate the NPV:
NPV = $5,122,452 - $2,000,000 = $3,122,452
The expected rate of return is the discount rate that results in an NPV of zero. We can use a financial calculator or trial-and-error to find this rate. In this case, the expected rate of return is approximately 15 percent. So the correct answer is option c. 15 percent.
In a Cournot duopoly, we find that Firm 1's reaction function is Q1 = 50 - 0.5Q2, and Firm 2's reaction function is Q2 = 75 - 0.75Q1. What is the Cournot equilibrium outcome in this market?A) Q1 = 20 and Q2 = 60B) Q1 = 20 and Q2 = 20C) Q1 = 60 and Q2 = 60D) Q1 = 60 and Q2 = 20
Answer:
A) Q1 = 20 and Q2 = 60
Explanation:
Please find the attached file with the solution.
Final answer:
To determine the Cournot equilibrium in this duopoly, we solve the reaction functions of Firm 1 and Firm 2 simultaneously. Substituting Q1 into Q2's reaction function, we find Q2 equals 60. Subsequently, solving for Q1 gives us Q1 equals 20, resulting in an equilibrium of Q1 = 20 and Q2 = 60 (Answer A).
Explanation:
To find the Cournot equilibrium outcome in a duopoly, we must solve the reaction functions of the two firms simultaneously. Given Firm 1's reaction function Q1 = 50 - 0.5Q2 and Firm 2's reaction function Q2 = 75 - 0.75Q1 we can substitute Q1 into Q2's reaction function to solve for Q2:
Q2 = 75 - 0.75(50 - 0.5Q2)
Q2 = 75 - 37.5 + 0.375Q2
Q2 = 37.5 + 0.375Q2
Q2 - 0.375Q2 = 37.5
0.625Q2 = 37.5
Q2 = 60
Now that we have Q2, we can solve for Q1:
Q1 = 50 - 0.5(60)
Q1 = 50 - 30
Q1 = 20
Thus, the Cournot Nash Equilibrium is Q1 = 20 and Q2 = 60, which corresponds to answer choice A.
Which of the following bankruptcy verdicts for consumers permit removal of some debts?
a. Chapter 7
b. Chapter 11
c. Chapter 13
d. All of the above
e. None of the above
Answer:
c. Chapter 13
Explanation:
Chapter 13 bankruptcy allows an individual to pay loans in monthly installments for 3 or 5 years. It uses all the disposable income and after 3 or 5 years, all remaining debt is removed. Hence it allows for removal of some debts.
Liabilities are often created as a result of an expense incurred by a company. Which of the following liabilities is not the result of an expense incurred by the company?A) Sales tax payable B) State unemployment tax payable C) Federal unemployment tax payable D) Estimated warranty payable
Answer and Explanation:
C) Federal unemployment tax payable
Some jobs in the economy are no longer needed after an advancement in technology. A person who loses his or her job this way would be considered _________.
Group of answer choices:
1. cyclically unemployed.
2. a discouraged worker.
3. frictionally unemployed.
4. overemployed.
5. structurally unemployed.
Answer and Explanation:
5. structurally unemployed.
A company sold PP&E for $200 cash. Prior to the sale, the net book value of the PP&E on the financial statements was $240. Thus, the company recorded a Loss on Sale of Equipment of $40 in Net Income. What is the operating cash flow in this transaction?
Answer:
The operating cash flow in this transaction is zero
Explanation:
Please see attachment.
Final answer:
The operating cash flow in the transaction is $200.
Explanation:
The student asked about the calculation of operating cash flow when there is a sale of property, plant, and equipment (PP&E). In the given scenario, the company sold PP&E for $200 cash and recorded a loss on sale of equipment of $40 in Net Income since the net book value was $240 prior to the sale.
When considering the impact of this transaction on the operating cash flow, it's crucial to note that while the loss reduces net income, the actual cash received from the sale needs to be added back to the Net Income when using the indirect method for the statement of cash flows.
Therefore, the operating cash flow in this transaction would be $200, since it's the cash inflow from the sale. The loss of $40 is accounted for in the net income but does not affect cash since it's a non-cash expense.
In setting up a kanban control system you need to determine the number of kanban card sets needed. If the expected demand during lead time is 25 per hour, the safety stock is 20 percent of the demand during lead time, the container size is 5, and the lead time to replenish an order is 5 hours, what the number of kanban card sets is needed?
Final answer:
To determine the number of kanban card sets needed in a kanban control system, calculate the demand during lead time, the safety stock, and divide it by the container size.
Explanation:
To determine the number of kanban card sets needed in a kanban control system, you need to consider several factors. In this case, the expected demand during lead time is 25 per hour, the safety stock is 20% of the demand during lead time, the container size is 5, and the lead time to replenish an order is 5 hours.
First, calculate the demand during lead time by multiplying the expected demand per hour (25) by the lead time (5). This gives us a demand of 125.
Next, calculate the safety stock by multiplying the demand during lead time (125) by the safety stock percentage (20%) and dividing it by the container size (5). This gives us a safety stock of 25.
Finally, add the demand during lead time (125) to the safety stock (25) and divide the result by the container size (5) to determine the number of kanban card sets needed. In this case, the number of kanban card sets needed is 30.
Calliope Corp. has outstanding 400 shares of common stock of which Yak, So, Day, and Ren each own 100 shares or 25 percent. No stock is considered constructively owned by any of the shareholders under section 318. Calliope redeems 34 shares from Yak, 24 shares from So, and 42 shares from Day. Which shareholder(s) qualify for exchange treatment on this redemption?
I. Yak
II. So
III. Day
a. I and II only.
b. III only.
c. None.
d. II only.
Answer:
Day
Explanation:
To qualify as an exchange, a redemption must be substantially disproportionate. It should be below 80% of what it was before the redemption
They had 25% 80% would be 20% so those shareholders below 20% will be considered exchange:
Yak: 100 - 34 = 66 then 66 / 300 = 22%
So: 100 - 24 = 76 then 76/300 = 25.33%
Day 100 - 42 = 58 then 58/300 = 19.33%
Dya qualifies as decrease below 80% of their previous percentage of owership
A large number of U.S. firms send jobs to low-wage nations as it enables them to:
a. get better quality products.
b. politically dominate the economies where they are offshoring.
c. obtain diversified products.
d. raise the price of their products.
e. reduce their cost of production.
Answer:
e. reduce their cost of production.
Explanation:
As we know mostly, the production processes of the well-known and big companies in USA held in developing countries. Because, the point is about labor cost. The wage rate in USA is more than in developing countries. Then, it will decrease the total cost of the production. Following this, these companies can decrease prices for substitution effect, or even if increase to get more profit. This process is called job outsourcing. The job outsourcing has negative effect on USA employment market. However, this is fact that the persons who are living under lower life standards will have willingness to work and these people live in Asian, African and Latin American countries.
Colortrigon Company makes a variety of paper products. One product is 30 lb copier paper, packaged 3,000 sheets to a box. One box normally sells for $20. A large bank offered to purchase 6,000 boxes at $15 per box. Costs per box are as follows: Direct materials $6 Direct labor 2 Variable overhead 2 Fixed overhead 3 No variable marketing costs would be incurred on the order. The company is operating significantly below the maximum productive capacity. No fixed costs are avoidable. Should Colortrigon accept the order?
a.Yes, income will increase by $19,000.
b.No, income will decrease by $43,000.
c.No, income will decrease by $86,000.
d.Yes, income will increase by $30,000.
e.It doesn't matter; there will be no impact on income.
Answer:
d.Yes, income will increase by $30,000
Explanation:
The net profit from this order = Revenue – all expense related = number of unit sold x (price per unit – cost per unit) =
6,000 boxes x (price $15 – Direct materials $6 - Direct labor $2 - Variable overhead $2 - Fixed overhead $3 but avoidable) = 6000 x (15-6-2-2-0) = $30,000
Final answer:
Colortrigon Company should accept the offer as it will increase income by $30,000. The fixed costs are unavoidable, and operating below capacity, the additional order will cover variable costs with additional revenue to contribute to fixed costs.
Explanation:
The Colortrigon Company is operating below capacity and has an offer to sell 6,000 boxes of copier paper at a reduced price of $15 per box. To determine if they should accept the offer, we need to calculate the incremental income from accepting the offer versus the costs involved. The costs per box are as follows: direct materials $6, direct labor $2, and variable overhead $2, totaling to $10 in variable costs per box. The fixed overhead is $3 per box, but since it is unavoidable and the company is operating below capacity, it won't change with the order. Therefore, for the 6,000 boxes, the incremental revenue is $90,000 ($15 per box), and the incremental variable costs are $60,000 ($10 per box). The increase in income is the incremental revenue minus the incremental variable costs, which is $30,000. So, accepting the offer would increase Colortrigon's income by $30,000.
A stock with a beta of zero would be expected to have a rate of return equal to:
Answer:
A stock with a beta of zero would be expected to have a rate of return equal to the risk free rate of return.
Explanation:
A stock with the Beta of zero has 0 co relation with market movements and is unaffected by the changes in the stock market. This stock would have the expected return equal to the risk free rate of return.
The CAPM formula for rate of return is
Risk free rate of retun + (Beta * Market risk premium)
Because the Beta is 0 the second part of the equation will also be 0 the the stock would have the same rate of return as the risk free rate of return.
Weber Interstate Paving Co. had $450 million of sales and $225 million of fixed assets last year, so its FA/Sales ratio was 50%. However, its fixed assets were used at only 65% of capacity. If the company had been able to sell off enough of its fixed assets at book value so that it was operating at full capacity, with sales held constant at $450 million, how much cash (in millions) would it have generated?
Answer:
Sales = $450 million
Fixed assets = $225 million
Fixed assets/Sales ratio = 50%
At 100% Capacity
Fixed assets = 100/65 x $225 million = $346.15 million
The amount of cash generated from the sale of fixed assets at book value is $346.15 million.
Explanation:
The amount of cash generated from the the sale of fixed assets at book value equals 100/65 of the original book value. The original book value was calculated based on 65% capacity. Since the company is now operating at full capacity (100%), the book value becomes 100/65 of the original book value.
Answer:
78.75
Explanation:
1)Sales at Full Capacity=Actual sales /% capacity used =450/65%=692.31
2)Target FA/Sales ratio =FA/Capacity sales = 225/692.31=32.5%
3)Optimal FA =Sales(after possible selling FA ) / Target FA/Sales ratio=
450 /32.5%=146.25
4)Cash generated =Actual FA – Optimal FA= 225 -146.25=78.75
ren Pork Company uses the value basis of allocating joint costs in its production of pork products. Relevant information for the current period follows: Product Pounds Price/lb. Loin chops 3,000 $ 5.00 Ground 10,000 2.00 Ribs 4,000 4.75 Bacon 6,000 3.50 The total joint cost for the current period was $43,000. How much of this cost should Wren Pork allocate to Loin chops
Answer:
Allocated costs Loin Chop= $5,590
Explanation:
Giving the following information:
Product - Pounds - Price/lb.
Loin chops 3,000lb $ 5.00/lb
Ground 10,000lb $2.00/lb
Ribs 4,000lb $4.75/lb
Bacon 6,000lb $3.50/lb
The total joint cost for the current period was $43,000
First, we need to calculate the weighted average lb participation of Loin Chops:
Total lb= 23,000
Weighted average lb= 3,000/23,000= 0.13
Now, we can allocate the joint costs:
Loin Chop= $43,000*0.13= $5,590
A manufacturing plant has found that purchasing a computerized electronic machine system decreased the need for additional workers. Which of the following has occurred?
a) Job exportationb) Outsourcingc) Automationd) Offshoring
Answer:
C. Automation
Explanation:
The situation explained in the question perfectly explains Automation. New technologies and advancements lead to more efficient and advanced procedures and processes, particularly when such procedures and processes require very little human interaction or assistance. Now if we talk about the manufacturing industry, procedures like CAD (computerized aided design), CAM (computer aided manufacturing) and EDI (electronic data interchange) have pretty much eased and transformed the manufacturing procedures and environments.
Job exportation mostly relates to employment in international corporations usually located in growing and developed countries.
Outsourcing is the contracting out of certain aspects of business to third party specialist organizations who mostly specialize in that particular work domain.
Offshoring is the transfer and reallocation of SBU (strategic business units) from one country to another.
An investment of $93000 was made by a business club. The investment was split into three parts and lasted for one year. The first part of the investment earned 8% interest, the second 6%, and the third 9%. Total interest from the investments was $ 7170. The interest from the first investment was 6 times the interest from the second. Find the amounts of the three parts of the investment.
Answer:
Amount of three parts of investment are
72000, 16000 and 5000
Explanation:
We have given total investment = $93000
Let the investment made by three businessman are x , y and z
So [tex]x+y+z=93000[/tex]-----eqn 1
It is given interest rates are 8 % , 6% and 9 %
And time = 1 year
Total interest = $7170
So [tex]0.08x+0.06y+0.09z=7170[/tex]----eqn 2
It is given that interest from first investment is 6 times the interest from second investment
So [tex]0.08x=6\times 0.06y[/tex]
[tex]0.08x=0.36y[/tex] ----- eqn 3
After solving eqn 1 eqn 2 and eqn 3
x = 72000
Y = 16000
And z = 5000
To find the amounts of the three parts of the investment with different interest rates, we can set up a system of equations based on the given information and solve for the variables.
Explanation:To find the amounts of the three parts of the investment, we can set up a system of equations based on the given information:
Let x be the amount invested at 8%, y be the amount invested at 6%, and z be the amount invested at 9%.
We know that
x + y + z = $93000 (equation 1)0.08x + 0.06y + 0.09z = $7170 (equation 2)0.08x = 6 * (0.06y) (equation 3)Solving this system of equations, we can find the values of x, y, and z. Once we have those values, we can determine the amounts of each part of the investment.
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Jimmer’s nominal income will go up by 10 percent next year. Inflation is expected to be – 2 percent next year. By approximately how much will Jimmer’s real income change next year?
Answer:
Nominal interest rate (n) = 10% = 0.10
Inflation rate (i) = -2% = -0.02
Real interest rate (r) = ?
Application of Fisher's Equation
(I + n) = (1 + r)(1 + i)
(1 + 0.10) = (1 + r)(1 + -0.02)
1.10 = (1 + r)(0.98)
1.10 = 1 + r
0.98
1.1224 = 1 + r
1.1224 - 1 = r
r = 0.1224 = 12.24%
Jimmer's real income will change by 12.24% next year.
Explanation:
In the determination of the rate of change in real income, there is need to apply Fisher's equation. The nominal rate and inflation rate have been given, thus, we will make the real rate the subject of the formula.
Revive Co. has outstanding 20-year noncallable bonds with a face value of $1000. These bonds have a current market price of $1382.73 and an annual coupon rate of 13%. The comp;any faces a tax rate of 35%.
If the company wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt?A. 6.9%B 5.75%C 5.18%D 6.61%
Answer:
5.75%
Explanation:
Firstly, we need to find the yield-to-maturity (YTM) of current outstanding bond as below:
Bond market price = Coupon/(1 + YTM) + Coupon/(1 + YTM)^2 + Coupon/(1 + YTM)^3 +...+ Coupon/(1 + YTM)^20 + Face value/(1 + YTM)^20, or:
1,382.73 = 130/(1 + YTM) + 130/(1 + YTM)^2 + 130/(1 + YTM)^3 +...+ 130/(1 + YTM)^20 + 1,000/(1 + YTM)^20
Solve the equation, we get YTM = 8.85%.
So, if he company wants to issue new debt, its after-tax cost of debt is 8.85% x (1 - 35%) = 5.75%
Upper management of a clothing store in the mall has decided that a good way to motivate employees is to consult with them about ways to bring in more customers. A memo is sent to store managers asking them to encourage participation from all employees. One store manager has hired five new employees who just graduated from high school and are working the three summer months before leaving for college. The manager scrutinizes and directs them in every detail of their job. Each time they make a mistake they are reprimanded, told their pay may be docked, and reminded that there are always other people who will gladly take their place. This manager decides he will forward his suggestions to management but not ask his workers for suggestions. What approach is upper management using, as opposed to the store manager?
Answer:
Consider the following analysis.
Explanation:
The manager's assumption is that the employee work only for their own benefits and they need immediate punishment for poor work, intermediation, and minute-level supervision. This proves that he uses Theory X.
The upper management, on the other hand, is trying to initiate consultation with the employees before bringing out any improvement plan in the business process. This type of management style implicitly assumes that the employees are motivated and self-directed. This is Theory Y.
So, the first option should be correct.
Equity theory is something not contextual here. Equity theory works on the reduction of perceived inequality in the input and output of the employees as a means of motivation.