Final answer:
The current total firm value of Widget Corp. is $39,643.09 million.
Explanation:
To calculate the current total firm value of Widget Corp., we need to find the present value of its future free cash flows. The formula for calculating the present value of a growing perpetuity is FCF / (WACC - g), where FCF is the free cash flow, WACC is the weighted average cost of capital, and g is the growth rate. Let's break down the calculation:
Year 1: Present value of FCF₁ = FCF₁ / (1 + WACC) = $1,835.00 million / (1 + 0.0846) = $1,692.49 million
Year 2: Present value of FCF₂ = FCF₂ / (1 + WACC)² = $1,835.00 million * (1 + 0.2140) / (1 + 0.0846)² = $1,835.00 million * 1.2140 / 1.0766 = $2,058.87 million
Year 3: Present value of FCF₃ = FCF₃ / (1 + WACC)³ = $1,835.00 million * (1 + 0.2140)² / (1 + 0.0846)³ = $1,835.00 million * 1.2140² / 1.0766³ = $2,268.86 million
After Year 3: Present value of perpetual cash flows = FCF₄ / (WACC - g) = $1,835.00 million * (1 + 0.0282) / (0.0846 - 0.0282) = $1,835.00 million * 1.0282 / 0.0564 = $33,623.87 million
Finally, we sum up the present values of the free cash flows:
Total firm value = Present value of FCF₁ + Present value of FCF₂ + Present value of FCF₃ + Present value of perpetual cash flows = $1,692.49 million + $2,058.87 million + $2,268.86 million + $33,623.87 million = $39,643.09 million
Therefore, the current total firm value of Widget Corp. is $39,643.09 million.
At a time when demand for ready-to-eat cereal was stagnant, a spokesperson for the cereal maker Kellogg’s was quoted as saying, " . . . for the past several years, our individual company growth has come out of the other fellow’s hide." Kellogg’s has been producing cereal since 1906 and continues to implement strategies that make it a leader in the cereal industry. Suppose that when Kellogg’s and its largest rival advertise, each company earns $2 billion in profits. When neither company advertises, each company earns profits of $16 billion. If one company advertises and the other does not, the company that advertises earns $56 billion and the company that does not advertise loses $4 billion. For what range of interest rates could these firms use trigger strategies to support the collusive level of advertising?
Answer: i ≤ 23% Collision is profitable under usual trigger strategy
Explanation:
Given Data;
When both advertise = $2 billion
When neither advertise = $16 billion
When one advertise ( cheats )= 54 billion
The other loses = $4 billion
Period for each cheating = 1
Therefore:
Cheat - Collision / Collision - period for each cheating
= 54 - 16 / 16 - 1
= 38 / 15
= 2.533 ≤ ( 1/i )
Collusion is profitable under usual trigger strategies
Mosbey Inc. is working on its cash budget for June. The budgeted beginning cash balance is $29,000. Budgeted cash receipts total $187,000 and budgeted cash disbursements total $186,000. The desired ending cash balance is $51,000. The excess (deficiency) of cash available over disbursements for June will be:
Answer:
The excess cash available will be $30,000
Explanation:
The following information were given:
beginning cash balance = $29,000
budgeted cash receipt = $187,000
budgeted cash disbursement = $186,000
desired ending cash balance = $51,000
required = excess (deficiency) of cash available over disbursement.
To calculate the excess (deficiency) of cash available over disbursement, disbursements will be deducted from all the cash received and available, if the difference is positive, then the cash available is excess, if negative, then the cash available is deficiency. This is calculated as follows
Total cash available = beginning cash balance + budgeted cash receipt
= 29,000 + 187,000 = $216,000
Total disbursements = $186,000
∴Excess (deficiency) of cash available = 216,000 - 186,000 =$30,000 (excess)
Concord Corporation sells a product for $50 per unit. The fixed costs are $760000 and the variable costs are 60% of the selling price. As a result of new automated equipment, it is anticipated that fixed costs will increase by $120000 and variable costs will be 50% of the selling price. The new break-even point in units is:
Answer:
35,200
Explanation:
The BEP which is the break even point is the point where the company's sales or revenue generated is equal to the cost incurred. As such, the BEP is the number of units that must be sold for the company to make neither a profit nor a loss.
Both sales and variable cost are dependent on the number of units sold.
The sales less the variable cost gives the contribution margin. The contribution margin less the fixed cost gives the net operating income.
With the purchase of the new equipment,
Fixed costs = $760000 + $120000
= $880,000
Variable cost per units
= 50% * $50
= $25
Let the number of units to break even be t
t(50 - 25) = 880,000
t = 880,000/25
= 35,200 units
The Alpha Company produces toys for national distribution. Standards for a particular toy are: Materials: 12 ounces per unit at 56¢ per ounce. Labor: 2 hours per unit at $2.75 per hour. During the month of December, the company produced 1,000 units. Information for the month follows: Materials: 14,000 ounces were purchased and used at a total cost of $7,140. Labor: 2,500 hours worked at a total cost of $8,000. Calculate the labor rate variance and the labor efficiency variance, respectively. Rate Variance Efficiency Variance
Answer:
a. Labor rate variance = - $1,125 (adverse )
b. Labor efficiency variance = - $1,375 (adverse)
Explanation:
a. Labor rate variance
Actual labor rate = $8,000 / 2,500 = $3.20 per hour
Labor rate variance = Actual hours * (Standard rate - Actual rate) = 2,500 * ($2.75 - $3.20) = - $1,125 adverse
b. Labor efficiency variance
Standard labor hours = Actual units * Standard hour per unit = 1,000 * 2 = 2,000 hours
Labor efficiency variance = (Standard labor hours - Actual labor hours) * Standard rate = (2,000 - 2,500) * $2.75 = - $1,375 (adverse)
The labor rate variance for Alpha Company is $1,125 (Unfavorable), and the labor efficiency variance is $1,375 (Unfavorable).
First, we calculate the Labor Rate Variance (LRV) using the formula:
LRV = (Actual Hourly Wage - Standard Hourly Wage) × Actual Hours Worked
Given:
Actual Hourly Wage = Total Labor Cost / Actual Hours Worked = $8,000 / 2,500 = $3.20 per hourStandard Hourly Wage = $2.75 per hourActual Hours Worked = 2,500 hoursSo:
LRV = ($3.20 - $2.75) × 2,500 = $0.45 × 2,500 = $1,125 (Unfavorable)
Next, we calculate the Labor Efficiency Variance (LEV) using the formula:
LEV = (Actual Hours Worked - Standard Hours Allowed) × Standard Hourly Wage
Given:
Standard Hours Allowed = Standard Hours Per Unit × Actual Units Produced = 2 hours/unit × 1,000 units = 2,000 hoursActual Hours Worked = 2,500 hoursStandard Hourly Wage = $2.75 per hourSo:
LEV = (2,500 - 2,000) × $2.75 = 500 × $2.75 = $1,375 (Unfavorable)
To sum up:
Rate Variance: $1,125 (Unfavorable)Efficiency Variance: $1,375 (Unfavorable)Drew Corp had a beginning balance on January 1, 2019 in Accounts Receivable of $200,000 and a beginning credit balance in the Allowance for Doubtful Accounts of $4,000. During 2019, Drew sold $1,000,000 of goods on credit and collected $800,000. If Drew estimates that 2% of their ending accounts receivable will eventually not be collected, the adjusting journal entry for the Bad Debt Expense will include a credit to Allowance for Doubtful Accounts of A. $ 4,000 B. $ 8,000 C. $ 16,000 D. $ 6,980 E. none of the listed choices
Answer:
The adjusting journal entry for the Bad Debt Expense will include a credit to Allowance for Doubtful Accounts of A. $ 4,000
Explanation:
Ending balance in Accounts Receivable = Beginning balance in Accounts Receivable + Sales on credit - Cash Collected = $200,000 + $1,000,000 - $800,000 = $400,000
Drew estimates that 2% of their ending accounts receivable will eventually not be collected.
Estimated uncollectible = 2% x $400,000 = $8,000
Drew Corp had a beginning credit balance in the Allowance for Doubtful Accounts of $4,000. Bad debts expense = $8,000 - $4,000 = $4,000
The adjusting journal entry for the Bad Debt Expense:
Debit Bad debts expense $4,000
Credit Allowance for Doubtful Accounts $4,000
The risk-free rate, average returns, standard deviations, and betas for three funds and the S&P 500 are given below. Fund Avg Std Dev Beta A 17.5 % 26.5 % 1.35 B 12.5 % 23.5 % 1.10 C 13.5 % 20.5 % 1.15 S&P 500 10 % 15 % 1 rf 4.0 % If these portfolios are subcomponents that make up part of a well-diversified portfolio, then portfolio ______ is preferred.
Answer:
Portfolio A is preferred.
Explanation:
Given the following sorted data from the question:
Fund Avg Std Dev Beta
A 17.5% 26.5% 1.35
B 12.5% 23.5% 1.10
C 13.5% 20.5% 1.15
S&P 500 10% 15% 1
rf 4.0%
To determine the preferred portfolio, the Treynor measure for each portfolio is estimated as follows:
Treynor measure = (Avg - rf rate) / beta
Therefore, we have:
Treynor measure of Portfolio A = (17.5% - 4.0%) / 1.35 = 10.00%
Treynor measure of Portfolio B = (12.5% - 4.0%) / 1.10 = 7.73%
Treynor measure of Porfolio C = (13.5% - 4.0%) / 1.15 = 8.26%
Since the 10% Treynor measure of Portfolio A is the highest, Portfolio A is preferred.
During the recent recession sparked by financial crisis, the U.S. economy suffered tremendously. Suppose that, due to the recession U.S. GDP dropped from $14 trillion to $12.5 trillion. This fall in GDP was due to a drop in consumption of $1 trillion and a drop in investment of $500 billion. The U.S. government, under the Obama administration, responded to this recession by increasing government purchases Suppose that government spending had no impact on consumption, investment, or net exports If the Obama administration wanted to bring GDP back up to $14 trillion, government spending would have to rise by ________
Answer:
$1.5 trillion
Explanation:
According to the scenario, computation of the given data are as follow:-
As we know that,
Real GDP = Consumption + Investment + Government Spending + (Export-Import)
US GDP dropped from $14 trillion to $12.5 trillion. The consumption decreased by $1 trillion and investment decreased by $500 billion. So in order to increase the GDP from $12.5 trillion to $14 trillion, the government should have to increase their expenditure by $1.5 trillion.
24. What percentage of jobs are NOT advertised?
50%
80%
70%
40%
Answer:
70%
Explanation:
Most Jobs Are Not Published
But just sending out resumes, even hundreds of them, in response to ads probably won't help that much. The reason, Youngquist says: Most jobs aren't posted or advertised publicly.
Answer:
70% jobs are not advertised.
hope it helps!
9. Mackenzie PLC is considering expanding a production line. The new equipment for the line will cost $255,000. In addition, the cost of delivery is $12,250 and there is an annual maintenance contract for $1,500. The new line is expected to generate cash flows for the next four years of 65,000; 98,000; 126,000; and 132,000. Mackenzie's discount rate for the project is 9 3/8%. The net present value of the project is closest to:
Answer:
Net Present Value = $59,632.78
Explanation:
The net present value NPV) of a project is the present value of cash inflow less the present value of cash outflow of the project.
NPV = PV of cash inflow - PV of cash outflow
Present value of cash inflow:
65,000 × (1.09375)^(-1) + 98000 ×(1.09375)^(-2)+ 126,000 ×(1.09375)^(-3)+ 132,000 × (1.09375)^(-4)= 326882.7792
PV of annual maintenance cost :
=1,500 × (1- 1.09375^(-4))/0.09375
=4819.84773
NPV = 26882.7792 - 4819.84773 - (255,000+12250)
= 59,632.78
A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate. It currently has 15 years remaining to maturity. Interest rates on similar obligations are now 10 percent. Assume Ms. Bright bought the bond three years ago when it had a price of $1,060. Further assume Ms. Bright paid 40 percent of the purchase price in cash and borrowed the rest (known as buying on margin). She used the interest payments from the bond to cover the interest costs on the loan.
a. What is the current price of the bond? (Input answer to 2 decimal places.)
b. What is her dollar profit based on the bond's current price? (Do not round intermediate calculations and round answer to 2 decimal places.)c. How much of the purchase price of $1,060 did Ms. Bright pay in cash? (Do not round intermediate calculations and round answer to 2 decimal places.)
Answer:
A.) $1,152.12
B.) $92.12
C.) $424.00
Explanation:
Given
period (t) = 15 years
Coupon rate = 12%
Rate (r) = 10%
Par value = $1000
Purchase price = $1060
A.) Current price of bond :
Price = Coupon payment × [(1 - (1 + r)^-t) /r] + [par value / (1+r)^t]
Coupon payment = 12% × 1000 = $120
Plugging our values
Price = 120 × [(1-(1+0.1)^-15)/0.1] + [1000/1.1^15]
Price = $1,152.12
B.) Dollar profit on bond
Dollar profit = Current price - Purchase price
Dollar profit = $1,152.12 - $1060 = $92.12
C.)Amount paid in cash
40% of purchase amount was paid in cash
0.4 × 1060 = $424.00
Answer:
a) $1,153.72
b) $93.72
c) $424
Explanation:
Given:
Original bond was issued at 12%
YTM = 10%
Years left, N = 15 years.
a) The current price of bond:
Using Excel function, we have:
=PV(10%/2,2*15,-12%*1000/2,-1000)
= $1153.72
The current price of bond is $1,153.72
b) Dollar profit based on bond's current price will be calculated as:
Bond's current price - purchase price
= $1,153.72 - $1,060
= $93.72
Dollar profit = $93.72
c) The purchase price of $1,060 Ms. Bright paid in cash will be:
$1,060 * 40%
= $424
Sandhill Co. had the following account balances: Sales revenue $ 431000 Cost of goods sold 226000 Salaries and wages expense 33500 Depreciation expense 64000 Dividend revenue 11400 Utilities expense 23100 Rent revenue 58800 Interest expense 36100 Sales returns and allow. 33200 Advertising expense 38100 What would Sandhill report as total revenues in a single-step income statement?
Answer:
$468,000
Explanation:
The computation of the total revenues in case for single-step income statement is shown below:
= Sales revenue - sales return and allowances + dividend revenue + rent revenue
= $431,000 - $33,200 + $11,400 + $58,800
= $468,000
We simply added all the revenues which increased the sales for the company after considering the sales return and allowances
The number at the bottom right of each supplier’s box shows the portion of Boeing’s costs in thelast year that went to that supplier. The number at the bottom right of each customer’s boxshows the portion of the customer’s capital expenditure (money spent in high value purchases)in the last year that went to Boeing. For which company shown was Boeing the primary plansupplier in the last year?
Answer:
both
United Continental with a capital expenditure of 60.68%Southwest Airlines with a capital expenditure of 51.38%Explanation:
Since United Continental's purchases of Boeing planes represent over 60% of their capital expenditures, this means that Boeing had to be the primary plane supplier. Even if the company purchased planes form other manufacturer, their purchases would not even be 40% of the company's purchases.
The same applies to Southwest Airlines, even though the purchases from Boeing are a little lower, they are still over 51%. This means the company could not have spent more money on purchasing planes from another company. The maximum purchase from another airplane manufacturer would have been less than 49% at most.
Besides the previous analysis, you must also consider that the company spends money on things besides airplanes, e.g. new training facilities, equipment, computer software, other vehicles, etc.
Boeing the primary plane supplier in the last year for both companies i.e United Continental and Southwest Airlines.
From the information given, United Continental had a capital expenditure of 60.68% while the capital expenditure of Southwest Airlines was 51.38%.
Since the purchases of the planes by United Continental's is more than 60% of their capital expenditures, then it simply means that Boeing is the primary plane supplier. Also, the purchases of the planes by Southwest Airlines is more than 51% of their capital expenditures, then it simply means that Boeing is the primary plane suppliers.In conclusion, Boeing is the primary plane supplier in the last year for both companies.
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OptiLux is considering investing in an automated manufacturing system. The system requires an initial investment of $4 million, has a 20-year life, and will have zero salvage value. If the system is implemented, the company will save $500,000 per year in direct labor costs. The company requires a 10% return from its investments. 1. Compute the proposed investment’s net present value. 2. Using your answer from part 1, is the investment’s internal rate of return higher or lower than 10%?
Net Present Value (NPV) and Internal Rate of Return (IRR) are key to making a capital budgeting decision. You can calculate NPV using the formula: NPV = Σ [CFt / (1+r)^t] - C0. Then, compare NPV to the required return to determine if IRR is above or below the discount rate.
Explanation:The given scenario is a case of capital budgeting, wherein OptiLux is considering a manufacturing investment. Net Present Value (NPV) and Internal Rate of Return (IRR) are the major tools for making a capital budgeting decision.
1. The NPV of the proposed investment could be computed via the formula: NPV = Σ [CFt / (1+r)^t] - C0. 'CFt' is the cash inflow during period t, 'r' is the discount rate, and 't' is the time period. For this scenario, CFt would be the annual savings of $500,000, r would be the required return of 10%, and the initial investment (C0) is $4 million. By calculating NPV, we will find whether or not the proposed investment adds value to the firm above the required return.
2. As for IRR, it's the discount rate that makes NPV equal to zero. If the NPV is positive at the 10% discount rate, it shows that our IRR is higher than 10%, and if the NPV is negative, our IRR is lower than 10%. Given this, you can make a decision on the IRR based on the calculated NPV.
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To calculate the net present value (NPV) of the proposed investment in the automated manufacturing system, we need to calculate the present value of the cash flows over the 20-year life of the system. The NPV will help us determine if the investment's internal rate of return (IRR) is higher or lower than 10%.
Explanation:To determine the net present value (NPV) of the proposed investment in the automated manufacturing system, we need to calculate the present value of the cash flows over the 20-year life of the system. The cash flow in each year is the direct labor cost savings of $500,000.
Using a 10% discount rate, we can calculate the present value of each cash flow using the formula: PV = CF/(1+r)^n, where CF is the cash flow, r is the discount rate, and n is the time period.
Year 1: PV = $500,000/(1+0.10)^1 = $454,545.45Year 2: PV = $500,000/(1+0.10)^2 = $413,223.14...Year 20: PV = $500,000/(1+0.10)^20 = $89,051.72
The NPV is the sum of all the present values: NPV = $454,545.45 + $413,223.14 + ... + $89,051.72. Calculate the sum of all the present values to get the NPV of the proposed investment.
To determine if the investment's internal rate of return (IRR) is higher or lower than 10%, we can compare the NPV to zero. If the NPV is positive, it implies that the IRR is higher than 10%. If the NPV is negative, it implies that the IRR is lower than 10%. If the NPV is exactly zero, it implies that the IRR is exactly 10%.
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You are a professional financial analyst that is employed to help evaluate possible merger and acquisition candidates. You have already reviewed the numbers, and the company seems solid on paper. You are unable to make a visit to the company yourself and are instead sending one of your direct reports to conduct the visit on your behalf. This is his first site visit, and he wants to review the work you have already done to familiarize himself with the company and asks for advice on things to look for. You offer to give advice on ways to find out if the company is "cooking its books" and what to look for when you conduct a "smell test."
What financial ratios should he be looking at and what do they tell you?
Answer:
Explanation:
Below are some of the financial ratios he should consider:
a) Financial leverage ratios: This is used to measure the company earnings to service debt payments.
b) Return on investment: This is the ratio that is used to evaluate the profitability of the firm and the profit that is available to the stakeholders after all payments have been made.
c) Price to Earnings Ratio: This is an indicator of the price of the company's stock concerning the earnings per share. It is used to analyze if the stock price is over-priced or under-priced.
J. Ross and Sons Inc. has a target capital structure that calls for 40 percent debt, 10 percent preferred stock, and 50 percent common equity. Ross' common stock currently sells for $40 per share. The firm recently paid a dividend of $2 per share on its common stock, and investors expect the dividend to grow indefinitely at a constant rate of 10 percent per year. J. Ross's cost of retained earnings is closest to: a. 15.50 percent b. 12.20 percent c. 16.34 percent d. 10.42 percent
Answer:
The cost of retained earnings is 15.50%
Explanation:
The cost of retained earnings is the cost of equity capital to the firm. We will use the dividend discount model equation to calculate the cost of retained earnings.
The constant growth model of DDM is used to calculate the price of a stock whose dividends are expected to grow at a constant rate every year. The formula for price today under this model is,
P0 = D0 * (1+g) / (r - g)
Where,
D0 * (1+g) which is the dividend expected for the next period of D1r is the cost of equityg is the growth rate in dividendsAs we already have the price today, the D0 and the growth rate, we can plug in these variables in the equation to calculate the cost of retained earnings.
40 = 2 * (1+0.1) / (r - 0.1)
40 * (r - 0.1) = 2.2
40r - 4 = 2.2
40r = 2.2 + 4
r = 6.2 / 40
r = 0.155 or 15.5%
What was the original purpose of the English jail, as conceived by King Henry II?
a. To confine offenders awaiting execution
b. To house offenders awaiting transfer to prison
c. To house suspects awaiting trial
d. To punish individuals convicted of crimes
Answer:
c. To house suspects awaiting trial
Explanation:
King Henry II established jails in the 12th century during his reign for the primary purpose of housing suspects awaiting trial. People who were already convicted of crimes but awaiting punishment were also kept in jails before their fate as decided. The King put in place a county Sheriff who oversaw the collection of rent for the King and also had a say on people who who went to jail. This was among the early forms of jails established.
Today, the current jails have the same model with the first jails, albeit with several other functions. People who commit crimes are kept in jails, those awaiting trials, parole and probation violators, are also kept in jails.
The original purpose of the English jail, as introduced by King Henry II, was to house suspects who were awaiting trial. This represented the shift from immediate punishment without a formal trial to a more centralized, formal justice system.
Explanation:
The original purpose of the English jail, as conceived by King Henry II, was c. To house suspects awaiting trial. This marked a significant shift from previous practices of self-regulation in communities towards the centralized system of justice we see today. Prior to this development, punishments were typically carried out immediately, without a formal trial process. However, Henry II introduced the concept of holding alleged offenders in a 'gaol' or jail until they could be brought to a formal trial. Hence, the inception of the practice of jailing suspects pending their trial.
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A loop of wire carrying a current of 2.0 A is in the shape of a right triangle with two equal sides, each 15 cm long. A 0.7 T uniform magnetic field is parallel to the hypotenuse. Find the magnitude of the resultant magnetic force on the two sides.
Answer:
F = 0.312 N
Explanation:
Given,
Current, I = 2 A
Length of the equal side = 15 cm = 0.15 m
Magnetic field, B = 0.7 T
Magnetic filed is parallel to hypotenuse
θ = 135°
Force on the first side of the triangle
[tex]F = i BL \sin \theta[/tex]
Force on the another side
[tex]F = i BL \sin \theta[/tex]
Resultant magnetic Force
[tex]F = 2 \times 2\times 0.7 \times 0.15 \sin 135^0[/tex]
F = 0.312 N
Mountaineers Inc. sells its rock-climbing shoes worldwide. Mountaineers Inc. expects to sell 4,000 pairs of shoes for $165.00 each in January, and 2,000 pairs of shoes for $220.00 each in February. All sales are cash only. Prepare the sales budget for January and February. Mountaineers Inc. expects cost of goods sold to average 75 percent of sales revenue, and the company expects to sell 4,600 pairs of shoes in March for $240.00 each. Mountaineers Inc.’s target ending inventory is $18,000.00 plus 45 percent of the next month’s cost of goods sold. Use this information and the sales budget prepared to prepare Mountaineers Inc.’s inventory, purchases, and cost of goods sold budget for January and February.
Answer:
expected sales January, 4,000 pairs of shoes at $165 each = $660,000
expected sales February, 2,000 pairs of shoes at $220 = $440,000
expected COGS = 75% of expected revenue
expected sales March, 4,600 pairs of shoes at $240 = $1,104,000
ending inventory = $18,000 plus 45% of next month's COGS
Sales budgetMonth January February March
Units 4000 2000 4600
Price $165 $220 $240
Total sales $660,000 $440,000 $1,104,000
Inventory, Purchases and COGS Budget
January February March
cost of goods sold $495,000 $330,000 $828,000
+ desired ending inventory $166,500 $390,600 ?
Total merchandise required $661,500 $720,600 ?
- beginning inventory ($315,000) ($346,500) ($374,100)
budgeted purchases $346,500 $374,100 ?
The Paris Company provides catering services. The cost of catering supplies is $300 per month plus $100 per job catered plus $25 per meal served. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company budget for May was 27 jobs to be catered and 160 meals to be served. The actual activity for May was 26 jobs catered and 192 meals served, and the actual cost of catering supplies was $7,620.
The cost of catering supplies in Paris' planning budget for the month of May was:
a. $6,700
b. $7,700
c. $7,400
d. $7,000
Answer:
d. $7,000
Explanation:
The computation of the cost of catering supplies in case of planning budget is shown below:
= Cost of catering supplies + cost per job × number of jobs + cost per meal served × number of meals
= $300 + $100 × 27 jobs + $25 × 160 meals
= $300 + $2,700 + $4,000
= $7,000
We simply applied the above formula so that the cost of catering supplies for planning budget could come
Oering's Furniture Corporation is a Virginia-based manufacturer of furniture. In a recent year, it reported the following activities
Net income $ 5,147
Purchase of property, plant, and equipment 2,084
Borrowings under line of credit (bank) 1,129
Proceeds from issuance of stock 26
Cash received from customers 37,179
Payments to reduce long-term debt 61
Sale of marketable securities 237
Proceeds from sale of property and equipment 6,892
Dividends paid 293
Interest paid 103
Purchase of treasury stock (stock repurchase) 2,571
Required: Based on this information, present the investing and financing activities sections of the cash flow statement. (List cash outflows as negative amounts.)
Answer and Explanation:
The presentation of the investing and financing activities are presented below:
Cash flow from investing activities
Purchase of property, plant, and equipment -$2,084
Proceeds from sale of property and equipment $6,892
Sale of marketable securities $229
Cash flow provided by investing activities $5,037
Cash flow from financing activities
Borrowings under line of credit $1,129
Proceeds from issuance of stock $26
Payments on long-term debt -$61
Payment of dividends -$293
Purchase of treasury stock -$2,571
Net cash flow from financing activities $1,770
The positive sign indicates the cash inflow and negative sign indicates the cash outflow
Cash flow from investing activities
Purchase of property, plant, and equipment -$2,084
Proceeds from sale of property and equipment $6,892
Sale of marketable securities $229
Cash flow provided by investing activities $5,037
Cash flow from financing activities
Borrowings under line of credit $1,129
Proceeds from issuance of stock $26
Payments on long-term debt -$61
Payment of dividends -$293
Purchase of treasury stock -$2,571
Net cash flow from financing activities $1,770
Like this way, it is to be presented.
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Yosemite Bike Corp. manufactures mountain bikes and distributes them through retail outlets in California, Oregon, and Washington. Yosemite Bike has declared the following annual dividends over a six-year period ended December 31 of each year: 20Y1, $24,250; 20Y2, $9,000; 20Y3, $106,750; 20Y4, $95,000; 20Y5, $110,000; and 20Y6, $165,000. During the entire period, the outstanding stock of the company was composed of 25,000 shares of cumulative preferred 2% stock, $80 par, and 100,000 shares of common stock, $4 par. Required: 1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears at the beginning of 20Y1. Summarize the data in tabular form. If required, round your answers to two decimal places. If the amount is zero, please enter "0".
Answer:
See the explanation below.
Explanation:
Note: Find attached the summary table.
Total annual dividend payable to cumulative preferred 2% stock = 25,000 * $80 * 2% = $40,000
For 20Y1
Dividend declared = $24,250
Total payable to cumulative preferred 2% stock = $24,250
Cumulative preferred stock per share = $24,250 / 25,000 = $0.97 per share
Total cumulative preferred carried forward = $40,000 - $24,250 = $15,750
Total dividend payable to common stock = $0
Common stock dividend per share = $0
For 20Y2
Dividend declared = $9,000
Total payable to cumulative preferred 2% stock = $9,000
Cumulative preferred stock per share = $9,000 / 25,000 = $0.36 per share
Total cumulative preferred carried forward = $40,000 - $9,000 + $15,750 = $46,750
Total dividend payable to common stock = $0
Common stock dividend per share = $0
For 20Y3
Dividend declared = $106,750
Total payable to cumulative preferred 2% stock = $40,000 + $46,750 = $86,750
Cumulative preferred stock per share = $86,750 / 25,000 = $3.47 per share
Total dividend payable to common stock = $106,750 - $86,750 = $20,000
Common stock dividend per share = $20,000 / 100,000 = $0.20 per share
For 20Y4
Dividend declared = $95,000
Total payable to cumulative preferred 2% stock = $40,000
Cumulative preferred stock per share = $40,000 / 25,000 = $1.60 per share
Total dividend payable to common stock = $95,000 - $40,000 = $55,000
Common stock dividend per share = $55,000 / 100,000 = $0.55 per share
For 20Y5
Dividend declared = $110,000
Total payable to cumulative preferred 2% stock = $40,000
Cumulative preferred stock per share = $40,000 / 25,000 = $1.60 per share
Total dividend payable to common stock = $110,000 - $40,000 = $70,000
Common stock dividend per share = $70,000 / 100,000 = $0.70 per share
For 20Y6
Dividend declared = $165,000
Total payable to cumulative preferred 2% stock = $40,000
Cumulative preferred stock per share = $40,000 / 25,000 = $1.60 per share
Total dividend payable to common stock = $165,000 - $40,000 = $125,000
Common stock dividend per share = $125,000 / 100,000 = $1.25 per share
To determine the total dividends and per-share dividends declared on each class of stock for each of the six years, calculate separately for preferred stock and common stock.
Explanation:To determine the total dividends and per-share dividends declared on each class of stock for each of the six years, we need to calculate them separately for preferred stock and common stock. For preferred stock, we multiply the number of preferred shares by the dividend rate (2%) to find the total annual dividend, and then divide it by the number of preferred shares to find the per-share dividend. For common stock, we divide the total dividend by the number of common shares to find the per-share dividend.
In 20Y1, the total dividend for preferred stock is $500 (25,000 shares × 2%) and the per-share dividend is $0.04 ($500 ÷ 25,000 shares). For common stock, the per-share dividend is $0.19 ($24,250 ÷ 100,000 shares).In 20Y2, there is no dividend for preferred stock because it is cumulative and there were no dividends in arrears. For common stock, the per-share dividend is $0.09 ($9,000 ÷ 100,000 shares).In 20Y3, the total dividend for preferred stock is $1,000 (25,000 shares × 2%) and the per-share dividend is $0.04 ($1,000 ÷ 25,000 shares). For common stock, the per-share dividend is $0.82 ($106,750 ÷ 130,000 shares).In 20Y4, the total dividend for preferred stock is $1,000 (25,000 shares × 2%) and the per-share dividend is $0.04 ($1,000 ÷ 25,000 shares). For common stock, the per-share dividend is $0.95 ($95,000 ÷ 100,000 shares).In 20Y5, the total dividend for preferred stock is $1,000 (25,000 shares × 2%) and the per-share dividend is $0.04 ($1,000 ÷ 25,000 shares). For common stock, the per-share dividend is $1.10 ($110,000 ÷ 100,000 shares).In 20Y6, the total dividend for preferred stock is $1,000 (25,000 shares × 2%) and the per-share dividend is $0.04 ($1,000 ÷ 25,000 shares). For common stock, the per-share dividend is $1.65 ($165,000 ÷ 100,000 shares).Learn more about Dividends here:https://brainly.com/question/33428821
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Name three types of capital. Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box. Physical capital Scientific capital Human capital Productive capital Social capital
Answer:
The three types of from the options provided include:
Physical capital Human capital Social capitalExplanation:
Physical capital is a factor of production consisting of tangible properties that a company owns such as machinery, real estate and any other asset that is used to produce goods.
Human capital refers to the value that manpower contributes to production. It includes the labor, knowledge, creativity, skills and competences contributed by skilled and unskilled labor to the production of goods and services.
Social capital is the value that networks, strategic partnerships and relationships brings to an organization. It is proven that social capital drives economic growth of any organization.
Moreno Company publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $20 per year. During November 2020, Moreno sells 15,000 subscriptions beginning with the December issue. Moreno prepares financial statements quarterly and recognizes subscription revenue at the end of the quarter. The company uses the accounts Unearned Subscription Revenue and Subscription Revenue.
A. Prepare the entry in November for the receipt of the subscriptions
B. Prepare the adjusting entry at December 31, 2020, to record sales revenue recognized in December 2020.
C. Prepare the adjusting entry at March 31, 2021, to record sales revenue recognized in the first quarter of 2021.
Answer and Explanation:
The journal entries are shown below:
A. Cash $300,00
To Unearned Subscription Revenue $300,000
(Being the receipts of the subscription is recorded)
For recording this we debited the cash as it increased the assets and also increased the liability so unearned subscription revenue is credited
B. Unearned Subscription Revenue $300,000
To Subscription Revenue $300,000
(Being the sales revenue is recorded)
For recording this we debited the unearned subscription revenue as it reduced the liabilities and at the same time it increase the revenue so the subscription revenue is credited
C. Unearned Subscription Revenue $75,000
To Subscription Revenue $75,000
(Being the sales revenue is recorded)
The computation is shown below:
= $300,000 × 3 months ÷ 12 months
= $75,000
For recording this we debited the unearned subscription revenue as it reduced the liabilities and at the same time it increase the revenue so the subscription revenue is credited
The three months are calculated from December 31 to March 31
A company began construction of a new warehouse on Jan 1, 2018. The building was finished and ready for use on Sept 30, 2019. Expenditures on the project were as follows: January 1, 2018 $ 313,000 September 1, 2018 $ 465,000 December 31, 2018 $ 465,000 March 31, 2019 $ 465,000 September 30, 2019 $ 313,000 The company had $5,500,000 in 15% bonds outstanding through both years. The capitalized interest in 2018 was:
Answer:
$70,200
Explanation:
the formula to determine the amount of interest capitalized is:
$313,000 x 15% x 1 (whole 2018) = $46,950$465,000 x 15% x 4/12 (Sept.-Dec.) = $23,250total $70,200US GAAP allows companies to treat the cost of borrowing (interests) during the project's inception period as part of the original capital investment amount.
The manufacturing overhead budget at Rost Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 2,800 direct labor-hours will be required in September. The variable overhead rate is $7.00 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $43,120 per month, which includes depreciation of $3,640. All other fixed manufacturing overhead costs represent current cash flows. The September cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
Answer:
Total overhead cash disbursement= $59,080
Explanation:
Giving the following information:
Estimated direct labor hours= 2,800
The variable overhead rate is $7.00 per direct labor-hour.
Estimated fixed manufacturing overhead= $43,120 per month
Includes depreciation of $3,640
To calculate the cash disbursement, we need to deduct from the fixed manufacturing overhead the depreciation expense because it is not a cash disbursement.
Variable overhead= 7*2,800= 19,600
Fixed overhead= 43,120-3,640= 39,480
Total overhead cash disbursement= $59,080
Final answer:
The September cash disbursements for manufacturing overhead on the manufacturing overhead budget should be $62,720.
Explanation:
The September cash disbursements for manufacturing overhead on the manufacturing overhead budget should be calculated by multiplying the budgeted direct labor-hours by the variable overhead rate and adding the fixed manufacturing overhead.
In this case, the budgeted direct labor-hours for September is 2,800 and the variable overhead rate is $7.00.
So, the variable overhead cost is 2,800 x $7.00 = $19,600.
The fixed manufacturing overhead is $43,120 per month, which includes depreciation of $3,640.
So, the September cash disbursements for manufacturing overhead will be $19,600 + $43,120 = $62,720.
A chocolatier, Alain, in Belgium conducted extensive market research and focus groups, to understand the perfect chocolate for a distinct group of consumers. The perfect piece of chocolate would have a target weight of 60 grams. The voice of the specific consumers prefers a specification of +/- 2 grams. Alain has targeted a selling price of 15 Euros a piece. A box of dozen would be 150 Euros, gift wrapped for special occasions. Alain searched for a depositor that would give the most accurate fill weight, with a tight tolerance, a machine that would not only make elegant shapes of chocolate with precise caramel filling and clean impression. A confectionery machinery maker, Mod d’Art has several models. Model A. costs $5,000 and could produce fill weights at average of 60.50 grams, and standard deviation of 1.5 grams. Model B. costs $15,000, but with a standard deviation of 0.95 grams, with 59.95 grams average fill weight. Model C. runs $25,000; this deluxe model has standard deviation of 0.60 grams, average fill weight of 60.15 grams.
Answer :
Voice of consumer = 4
Cpk of Model A= 0.333
Cpk of Model B= 0.7017
Cpk of Model C= 1.1388
Explanation :
As per the data given in the question,
Voice of consumer = Upper limit - Lower limit
= 62 - 58
= 4
Cp of Model A = Voice of consumer ÷ (6 × Standard deviation)
= 4 ÷ (6 × 1.5)
= 0.4444
Cpk of Model A = Min(Cpl, Cpu)
and Cpl = (Mean-lower limit) ÷ (3 × standard deviation)
Cpu = (Upper limit- Mean) ÷ (3 × standard deviation)
So, Cpk of Model A = Min((60.5 - 58) ÷ (3 × 1.5), (62 - 60.5) ÷ (3 × 15))
= Min(0.555, 0.333)
Hence, , Cpk of Model A = 0.333
Cp of Model B = (62-58) ÷ (6 × 0.95)
= 0.7017
Cpk of Model B = Min((59.95 - 58) ÷ (3 × 0.95), (62 - 59.95) ÷ (3 ×0.95))
Cpk of Model B = 0.6842
Cp of Model C = (62 - 58) ÷ (6 × 0.60)
= 1.111
Cpk of Model C = Min((60.15 - 58) ÷ (3 × 0.60), (62 - 59.95) ÷ (3 ×0.60))
= 1.1388
Urban Outfitters wants to raise $25 million to finance the construction of a new store, and the company wishes to raise the funds through direct finance. Which of the following methods could it use? A. It could sell $25 million in bonds. B. It could borrow $25 million from a bank. C. It could issue $25 million in stock. D. It could choose either A or C.
Answer: D. It could choose either A or C.
Explanation: Direct finance involves the borrowing of funds from the financial market without the use of intermediaries. As such, it helps avoid the costs that might be incurred from the use of such intermediaries such as banks, brokers etc. Example of such financing is the issuance of shares, bonds, the purchase of newly issued commercial papers etc. In order to raise $25 million through direct finance to finance the construction of its new store, the company Urban Outfitters can either sell the amount needed to be raised in bonds or it could issue the same amount in stock.
Trini Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 8,100 direct labor-hours will be required in May. The variable overhead rate is $1.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,440 per month, which includes depreciation of $8,910. All other fixed manufacturing overhead costs represent current cash flows. The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
Answer:
$102,870
Explanation:
The computation of Total cash disbursements is shown below:-
Variable overhead = Direct labor budget × Variable overhead rate
= 8,100 × $1.40
= $11,340
Fixed expenses incurred in cash = Total fixed expenses - Depreciation
= $100,440 - $8,910
= $91,530
Total cash disbursements = Total variable manufacturing overhead + Fixed cash overhead
= $91,530 + $11,340
= $102,870
Therefore for computing the Total cash disbursements we simply applied the above formula.
Ramirez Corporation sells two types of computer hard drives. The sales mix is 30% (Q-Drive) and 70% (Q-Drive Plus). Q-Drive has variable costs per unit of $90 and a selling price of $150. Q-Drive Plus has variable costs per unit of $105 and a selling price of $195. Ramirez's fixed costs are $891,000. How many units of Q-Drive would be sold at the break-even point?
Answer:
Break-even point in units= 3,300 units
Explanation:
Giving the following information:
The sales mix is 30% (Q-Drive) and 70% (Q-Drive Plus).
Q-Drive has variable costs per unit of $90 and a selling price of $150.
Q-Drive Plus has variable costs per unit of $105 and a selling price of $195.
Ramirez's fixed costs are $891,000.
To calculate the break-even point in units, we need to use the following formula for the company as a whole:
Break-even point (units)= Total fixed costs / Weighted average contribution margin ratio
Weighted average contribution margin ratio= (weighted average selling price - weighted average unitary variable cost)
Weighted average contribution margin ratio= (0.3*150 + 0.7*195) - (0.3*90 + 0.7*105)
Weighted average contribution margin ratio= 81
Break-even point (units)= 891,000/81
Break-even point (units)= 11,000 units
Now, for Q-Drive:
Break-even point in units= 11,000*0.3= 3,300 units
You are given the following information about Palmer Golf Shop, Inc. The 2018 balance sheet of Palmer Golf Shop, Inc., showed long-term debt of $2.5 million, and the 2019 balance sheet showed long-term debt of $2.35 million. The 2019 income statement showed an interest expense of $175,000. What was the firm’s cash flow to creditors during 2019? The 2018 balance sheet of Palmer Shop, Inc., showed $725,000 in the common stock account and $3.75 million in the additional paid-in surplus account. The 2019 balance sheet showed $955,000 and $3.6 million in the same two accounts, respectively. If the company paid out $635,000 in cash dividends during 2019, what was the cash flow to stockholders for the year? What is cash flow from assets? Suppose you also know that the firm’s net capital spending for 2019 was $500,000 and that the firm increased its net working capital investment by $65,000. What was the firm’s 2019 operating cash flow, or OCF?
Answer and Explanation:
The computation is shown below:
a. Cash Flow to Creditors
Cash Flow to Creditors = Interest Expenses Paid – Net Increase in Long term debt
= Interest Expenses Paid – [Long term debt at the end – Long term Debt at the Beginning]
= $175,000 – [$2,350,000 - $2,500,000
= $175,000 - (-$150,000)
= $325,000
b. Cash Flow to Stockholders
Cash Flow to Stockholders = Dividend Paid – Net New Equity
= Dividend Paid – [(Ending common stock balance + Additional paid-in surplus account at the end) - (Beginning common stock balance + Additional paid-in surplus account at the beginning)
= $635,000 – [($955,000 + $3,600,000) – ($725,000 + $3,750,000)]
= $635,000 – [$4,555,000 - $4,475,000]
= $635,000 - $80,000
= $555,000
c. Cash Flow from assets
Cash Flow from assets = Cash Flow to Creditors + Cash Flow to Stockholders
= $325,000 + $555,000
= $880,000
d. Operating Cash Flow
As We know that,
Cash flow from assets = Operating Cash flows – Change in Net Working capital – Net Capital Spending
$880,000 = Operating cash flow - ($65,000) - $500,000
So,
Operating cash flow = $880,000 + $65,000 + $500,000
= $1,445,000