Answer:
a. C(x) = 0.097x + 1.32
b. Fixed cost = $1.32
c. the total cost of producing 1000 cups is $98.32.
d. The total cost of producing 1001 cups is $98.417.
e. The marginal cost of any cup is $0.097. It means to produce one additional cup of coffee, the manager has to spend $0.097.
Explanation:
a. Find a formula for C(x)
Slope = (High cost - Low cost) / (High units - Low units) = (40.12 - 11.02) / (400 - 100) = 29.10/300 = 0.097
Using the equation form:
y = bx + a .......................... (1)
Where, using the high cost and high units:
y = cost = C(x) = $40.12
b = Slope = 0.097
x = units = 400
a = Fixed cost = ?
Substituting the values into equation (1) and solve for a, we have:
40.12 = (0.097 * 400) + a
40.12 = 38.80 + a
a = 40.12 - 38.80
a = 1.32
Therefore, we have:
C(x) = 0.097x + 1.32
b. What is the fixed cost?
From part a above, we have:
a = Fixed cost = $1.32
c. Find the total cost of producing 1000 cups
This implies that x = 1000
Substituting x = 1000 into the cost function C(x) = 0.097x + 1.32, we have:
C(1000) = (0.097 * 1000) + 1.32 = $98.32
Therefore, the total cost of producing 1000 cups is $98.32
d. Find the total cost of producing 1001
This implies that x = 1001
Substituting x = 1001 into the cost function C(x) = 0.097x + 1.32, we have:
C(1001) = (0.097 * 1001) + 1.32 = $98.417
Therefore, the total cost of producing 1001 cups is $98.417
e. What is the marginal cost of any cup and what does this mean to the manager.
The marginal cost of any cup is $0.097.
The meaning of the marginal cost to the manager is that to produce one additional cup of coffee, he has to spend $0.097.
Q2. Management is equally important to run a political organisation as it is to run an
economic organisation. Which feature of management is being reflected in the given
statement?
(a) Management is goal oriented
(b) Management is multidimensional
(c) Management is all pervasive
(d) Management is a group activity
03.
'Objectives of an enterprise play a vital role'. These should be
(a) Expressed in measurable terms (b) Written statements
(c) Issued by top management
(d) All the above
In a marketing firm, the Financial Manager pays more attention towards an increase in
the marketing cost as compared to a 15% increase in the courier expenses.
Identify the concept being used by the manager.
(a) Management by exception
(b) Critical point control
(c) Corrective action
(d) None of the above
Answer:
Q2. B
Because a management is basically Base of separation of powers where all organs get work to do
Q3. A
Q4. B
Superstition Industries has a $2,000,000 asset investment and is subject to a 30% income tax rate. Cash inflows from the project are expected to average $400,000 before tax over the next few years; in contrast, average income before tax is anticipated to be $350,000. The company's after-tax accounting rate of return on this investment is:
Answer:
12.25%
Explanation:
Calculation to determine what The company's after-tax accounting rate of return on this investment is:
Using this formula
After-tax accounting rate of return =Avarage income/Average investment
Let plug in the formula
After-tax accounting rate of return=($350,000*70%)/$2,000,000
(100%-30%=70%)
After-tax accounting rate of return=$245,000/$2,000,000
After-tax accounting rate of return=0.1225*100
After-tax accounting rate of return=12.25%
Therefore The company's after-tax accounting rate of return on this investment is:12.25%
Some insurance companies begin paying claims only after the policyholder has paid a certain amount of money called a...
1) Premium
2) Term
3) Deductible
Bramble Corporation produces snowboards. The following per unit cost information is available: direct materials $10, direct labor $4, variable manufacturing overhead $6, fixed manufacturing overhead $13, variable selling and administrative expenses $5, and fixed selling and administrative expenses $13. Using a 40% markup percentage on total per unit cost, compute the target selling price.
Answer:
See below
Explanation:
Given the above information, we will use variable costing to calculate the unitary cost.
Total unitary cost = Direct material + Direct labor + Variable overhead + Variable selling and administrative
= $10 + $4 + $6 + $5
= $25
Selling price = $25 × 1.40
Selling price = $35
Therefore, the targeted selling price is $35
Marley Company has the following information for March: Sales $912,000 Variable cost of goods sold 474,000 Fixed manufacturing costs 82,000 Variable selling and administrative expenses 238,100 Fixed selling and administrative expenses 54,700 Determine the following for Marley Company for the month of March: a. Manufacturing margin $fill in the blank 1 b. Contribution margin $fill in the blank 2 c. Operating income
Answer:
Results are below.
Explanation:
The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead).
Manufacturing contribution margin= 912,000 - 474,000
Manufacturing contribution margin= 438,000
Now, the total contribution margin:
Total contribution margin= manufacturing contribution margin - Variable selling and administrative expenses
Total contribution margin= 438,000 - 238,100
Total contribution margin= $199,900
Finally, the income statement:
Sales= 912,000
Total Variable cost= 474,000 + 238,100= (712,100)
Total contribution margin= 199,900
Fixed manufacturing costs= (82,000)
Fixed selling and administrative expenses= (54,700)
Net operating income= 63,200
For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2018 for $2,750,000. Its useful life was estimated to be five years, with a $155,000 residual value. At the beginning of 2021, Clinton decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows:_______.
($ in thousands)
Year Straight Line Declining Balance Difference
2018 $ 548 $ 1,200 $ 652
2019 548 720 172
2020 548 432 (116 )
$ 1,644 $ 2,352 $ 708
Required:
Prepare any 2021 journal entry related to the change.
Answer:
Dr Depreciation expense(notes) $81,000
Cr To Accumulated depreciation $81,000
Explanation:
Preparation of any 2021 journal entry related to the change.
First step is to Compute the new depreciation related to the change.
Details Amount
Asset’s cost at the beginning $2,750,000
Accumulated depreciation to date ($ 2,352,000)
Less Undepreciated cost $ 398,000
($2,750,000- $2,352,000)
Less Estimated residual value ($155,000)
To be depreciated over remaining 3 years $ 243,000
($398,000-$155,000)
Annual straight-line depreciation for remaining 3 years =$ 243,000/ 3 years $81,000
Now let prepare the Journal entry
Dr Depreciation expense(notes) $81,000
Cr To Accumulated depreciation $81,000
Which sentence in the passage uses the correct calculation of economic order quantity, or EOQ, for this example?
A firm manufacturing airtight containers has an annual demand of 3,000 units. The cost per order is $200. The firm incurs a carrying cost of $10 per unit. The inventory management department has a weekly meeting. During the discussion, (A) Joe puts forth that they should use an EOQ of 346 units. (B) According to Austin, the EOQ should be 400 units. Gracie states that the EOQ should be 250 units.
A.
B.
Answer: 346 units(a)
Explanation: you multiply2* 3,000 *200 then divide by 10 and then square root it
Spencer Co. has a $420 petty cash fund. At the end of the first month the accumulated receipts represent $65 for delivery expenses, $215 for merchandise inventory, and $34 for miscellaneous expenses. The fund has a balance of $106. The journal entry to record the reimbursement of the account includes a: Multiple Choice Debit to Petty Cash for $420. Debit to Cash Over and Short for $106. Credit to Cash for $314. Credit to Inventory for $215. Credit to Cash Over and Short for $106.
Answer:
Credit to Cash for $314
Explanation:
The journal entry to record the reimbursement of the account is given below:
Delivery expenses A/c Dr. $65
Merchandise inventory A/c Dr. $215
Miscellaneous expenses A/c Dr. $34
To Cash A/c $314
(Being the reimbursement of the account is recorded)
Here the delivery expense, merchandise inventory and miscellaneous expense is debited as it increased the assets & expenses and credited the cash as it decreased the assets
Splish Brothers Inc. sold its accounts receivable of $70,300. What entry should Splish Brothers make, given a service charge of 4% on the amount of receivables sold?
3.1 Define the following concepts:
e-Business
Nepotism
Cronyism
Embezzlement
Bribery
An e-Business refers to an internet-based marketplaces that facilitate buying and selling of goods between merchants and customers.
What is Nepotism?Nepotism refers to an act of granting of favour to one's relatives.
What is Cronyism?Cronyism refers to an act of showing favoritism to one's friends when appointing for new positions
What is Embezzlement?Embezzlement refers to a misappropriation of public funds by an employee, official etc
What is Bribery?Bribery refers to an act of offering something of value to another person in order to receive something in exchange
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Roberto Corporation was organized on January 1, 2021. The firm was authorized to issue 88,000 shares of $5 par common stock. During 2021, Roberto had the following transactions relating to shareholders' equity: Issued 10,100 shares of common stock at $6.90 per share. Issued 20,800 shares of common stock at $9.30 per share. Reported a net income of $109,000. Paid dividends of $41,000. Purchased 3,600 shares of treasury stock at $11.30 (part of the 20,800 shares issued at $9.30). What is total shareholders' equity at the end of 2021
Answer:
$290,450
Explanation:
The computation of the total shareholder equity for the year 2021 is shown below:
= Common stock issued + Net income - Dividends - Treasury stock purchased
= (10,100 shares × $6.90) + (20,800 shares × $9.30) + $109,000 - $41,000 - (3,600 shares × $11.30)
= $69,690 + $193,440 + $109,000 - $41,000 - $40,680
= $290,450
Hence, the total stockholder equity for the year 2021 is $290,450
Wellington Corp. has outstanding accounts receivable totaling $6.5 million as of December 31 and sales on credit during the year of $24 million. There is also a credit balance of $12,000 in the allowance for doubtful accounts. If the company estimates that 6% of its outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year
Answer:
$508,000
Explanation:
Calculation to determine what will be the amount of bad debt expense recognized for the year
Using this formula
Bad debt expense=(Outstanding accounts receivable*Uncollectible outstanding receivables percentage)-Credit balance)
Let plug in the formula
Bad debt expense=($6.5million*8%)-$12,000
Bad debt expense=$520,000-$12,000
Bad debt expense=$508,000
Therefore what will be the amount of bad debt expense recognized for the year is $508,000
Godfrey Corporation holds, as a long-term investment available-for-sale securities costing $69,000. At December 31, 2017, the fair value of the securities is $64,100. Show the financial statement presentation of the available-for-sale securities and related accounts. Assume the available-for-sale securities are noncurrent.
GOLDFREY CORPORATION
Balance Sheet Entry field with correct answer
December 31, 2017
Entry field with correct answer Investments
Entry field with correct answer Investment In Stock, at fair value
Entry field with correct answer 64100
Entry field with correct answer Stockholders' Equity
Entry field with correct answer Less :
Entry field with incorrect answer now contains modified data
Entry field with correct answer 4900
Answer:
Godfrey Corporation
GOLDFREY CORPORATION
Balance Sheet (Partial)
December 31, 2017
Noncurrent assets:
Investments:
Investment In Stock, at fair value $64,100
Stockholders' Equity:
Common stock
Retained earnings
Less :
Unrealized loss $4,900
Explanation:
a) Data and Calculations:
Long-term investment available for sale:
Cost = $69,000
Fair value 64,100
Unrealized loss $4,900
b) The correct entry would have been to reduce the net income by the unrealized loss. However, for simplicity, this is showed as a reduction of the Retained Earnings in the balance sheet.
What's the likely outcome of many people attempting to buy a small amount of goods?
A. recession
B. inflation
C. elasticity
D. deflation
Answer: B (inflation)
Explanation:
Q 12.3: The Unitas, Sayers, and Blanda partnership is terminated when the claims of company creditors exceed partnership assets by $50,000. The capital balances for Unitas, Sayers, and Blanda are $35,000, $5,000, and $0, respectively. The original claims of the creditors were negotiated by Sayers and Blanda. Identify the partner(s) personally and individually liable for all partnership liabilities.
Answer:
The Sayers and Blanda are personally and individually liable for all partnership liabilities.
Explanation:
From the scenario, Sayers and Blanda are the general partners, while Unitas appears to be a limited partner. Thus, only the general partners, who are always active in the business, are responsible for the partnership liabilities because the liability of Unitas is limited to the capital he contributed to the partnership. First, Blanda will make good his deficiency in capital, and then, he and Sayers will redeem the remaining liability.
Economical solar energy and energy from fusion have been identified as two of engineering's grand challenges. While work continues on these grand challenges, conservation of energy from non-renewable sources is vital. On a practical level, installing low thermal emissivity windows (low-e windows) on buildings can contribute to energy conservation. Installing low-e windows on a small office building is estimated to cost $9,000. The windows are expected to last 8 years and have no salvage value at that time. The energy savings from the windows are expected to be $2,775 in the 1st year. After the 1st year, the savings are expected to increase by $125 each year due to escalating fossil fuel costs. MARR is 12% per year and annual worth is the preferred measure of economic worth.
Are the low-e windows an economically attractive investment?
The annual worth of installing the low-e windows is $_________
Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is +1.
The low-e window investment _______attractive.
Answer:
Economical Solar and Fusion Energy
The annual worth of installing the low-e windows is $_1,327________
Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is +1.
The low-e window investment ___is____attractive.
Explanation:
a) Data and Calculations:
Present values:
Year Annual PV Factor PV of
Savings Savings
Year 1 $2,775 0.893 $2,478.075
Year 2 $2,900 0.797 2,311.300
Year 3 $3,025 0.712 2,153.800
Year 4 $3,150 0.636 2,003.400
Year 5 $3,275 0.567 1,856.925
Year 6 $3,400 0.507 1,723.800
Year 7 $3,525 0.452 1,593.300
Year 8 $3,650 0.404 1,474.600
Total $25,700 4.968 $15,595
Annual Worth of the Present Value of savings = $15,595/4.968 = $3,139
Annual worth of the Present Value of investment costs = $9,000/4.968
= $1,812
Annual worth = $1,327 ($3,139 - $1,812)
Suppose firms become very optimistic about future business conditions and invest heavily in new capital equipment.
Show the short-run effect of this optimism on the aggregate-demand curve.
Aggregate DemandAggregate SupplyLRASPrice LevelQuantity of OutputAggregate Demand Aggregate Supply LRAS
Which of the following reasons could explain why the aggregate quantity of output supplied changes?
A. Wages are not sticky.
B. The price level has risen.
C. Prices are sticky.
D. People have misperceptions about the price level.
Answer:
Aggregate Supply Curve = Shifts leftward.
Aggregate Demand Curve = Shifts Rightward.
In the short run, companies will become more optimistic and when they invest in new equipment, Aggregate supply curve shifts left because of the input prices of the new equipment.
Aggregate demand curve will shift right because of people will be optimistic about future business opportunities as well.
Reasons why aggregate quantity of output supplied changes.
B. The price level has risen.
C. Prices are sticky.
D. People have misperceptions about the price level.
The price level will rise in the short run due to the investment in more equipment and as prices are sticky, people will have misconceptions about the price level thinking that it will remain high which is why supply changes.
Use the information presented in Northeastern Mutual Bank's balance sheet to answer the following questions.
Bank's Balance Sheet
Assets Liabilities and Owners' Equity
Reserves $175 Deposits $1,400
Loans $700 Debt $225
Securities $875 Capital (owners' equity) $125
Suppose the owners of the bank contribute an additional $200 from their own funds and use it to buy securities in the name of the bank. This would increase the securities account and the account. This would also bring the leverage ratio from its initial value of to a new value of . Which of the following is true of the capital requirement?
A. The higher the percentage of assets a bank holds as loans, the higher the capital requirement.
B. It specifies a minimum leverage ratio for all banks.
C. Its intended goal is to protect the interests of those who hold equity in the bank.
Answer and Explanation:
In the case when the bank borrow $200 so it would be increase the capital account
The initial value of the leverage ratio is
= total assets ÷ total equity
= (Reserves+ loans+ securities) ÷ (owner's enquity)
= ($175 + $700 + $875) ÷ $125
= $1750 ÷ 125
= 14
Now the new value of the leverage ratio is
= total assets ÷ total equity
= (Reserves+ loans+ securities) ÷ (owner's enquity)
= ($175 + $700 + $875 + $200) ÷ $125 +
= $1950 ÷ $125
= 15.6
The statement i.e. true for the capital requirement is that the more the percentage of the asset the bank hold the greater the capital requirement
Find the standard deviation of this sample: 4, 7, 9, 12, 15
The standard deviation is a measure of spread which depicts how much a distribution deviates from the mean or average value of the distribution. The standard deviation of the sample is 4.28
The sample :
4, 7, 9, 12, 15Mean, μ = ΣX/ n ; n = sample size
Mean = (4 + 7 + 9 + 12 + 15) / 5
Mean = 47/5
Mean = 9.4
The standard deviation = √[Σ(X - μ)² / (n - 1)]
Standard deviation = √[(4-9.4)² + (7-9.4)² + (9-9.4)² + (12-9.4)² + (15-9.4)²] / (5 - 1)
Standard deviation = √(73.2 / 4) = √18.3
The standard deviation = 4.28
Therefore, the standard deviation of the sample is 4.28
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18. When a court says that an agreement is illegal, it most likely means that the agreement: A. has not mentioned a time period for which the agreement is valid.B. does not identify the parties involved in the agreement.C. is related to buying and selling of trade secrets.D. violates public policy.
When a court says that an agreement is illegal, it most likely means that the agreement violates public policy. Thus the correct answer is D.
What is an agreement?When two individuals or parties are ready to provide consent on similar gaols to achieve the common objective with teh help of offer and acceptance indicates the occurrence of agreement.
The agreement violates public policy as it is illegal which harms the society or citizens of the country. The action breaks the law, and negatively affects the welfare of the people it is declared to be against public policy.
Therefore, option D violates public policy is the appropriate answer.
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benefits of online shopping?
Answer:
Saves time
Explanation:
+
What is one way you can meet students with common interests in an online school?
O A dedicated learning space.
O National clubs
O The OLS
O Class Connects
Answer: National Clubs
Explanation:
There are national clubs where students with common interests can meet via an online school such as the K12 online national clubs. Enrolling for the club is not a difficult process and the schedule can then be accessed from the Class Connect schedule.
These clubs offer a diverse range of interests and subjects such as engineering, sketching and others and they are led by teachers from a school which is K-12 registered and powered.
The general factory overhead and purchasing department expenses are common costs that the company allocates to all of its products using total sales dollars as the allocation base. The equipment used to manufacture Product A does not wear out through use and it has no resale value. What is the financial advantage (disadvantage) of dropping Product A
Answer: Disadvantage of $52,000
Explanation:
Financial advantage(disadvantage) of dropping Product A will depend on if the savings associated with the drop will be more than the contribution margin that A brings in.
If the product is dropped, the fixed costs that would be dropped are: the salary of the manager, the advertising for the product and the insurance on the inventories of the product.
The other fixed costs are either general or irrelevant (product does not wear so depreciation is irrelevant)
Advantage (disadvantage) = Savings - Contribution margin
= (65,000 + 35,000 + 8,000) - 160,000
= (52,000)
Suppose payments will be made for 7 1/4 years at the end of each month from an ordinary annuity earning interest at the rate of
4.25%/year compounded monthly. If the present value of the annuity is $47,000, what should be the size of each payment from the
annuity? (Round your answer to the nearest cent.)
Please help!
Answer:
The size of the payment = $628.63
Explanation:
An annuity is a series of equal payment or receipt occurring for certain number of period.
The payment in question is an example of an annuity . We can work back the size of the payment using the present value of the ordinary annuity formula stated below
The Present Value of annuity = A × (1- (1+r)^(-n))/r
A- periodic cash flow,= ? r- monthly rate of interest - 4.25%/12= 0.354%
n- number of period- (71/4×12)= 87.
Let y represent the size of the payment, so we have
47,000 = y × ( 1-1.00354^(-87))/0.00354
47,000 = y× 74.76
y =47,000/74.7656= 628.63
The size of the payment = $628.63
In the audit of notes payable, an auditor testing the ASB balance assertion of accuracy and valuation most likely would: ________
a. read directors' and finance committee's minutes for authorization of financing transactions.
b. select a sample of paid notes and trace interest expense to the general ledger account.
c. select a sample of paid notes and recalculate interest expense for the period under audit.
d. select a sample of notes payable and vouch cash receipt to the bank statement.
Answer:
I think it's c
Explanation:
In the Ford Pinto Case Study, executives at Ford Motor Co. argued that “if the cost to repair the defect means a potential loss of profit, then we do not repair the defect.” In free market theory, this view makes use of
a.
Pareto efficiency.
b.
intrinsic value.
c.
tradeable property rights.
d.
cost-benefit analysis.
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The view of the executives at Ford Motor Co. uses cost-benefit analysis.
What is the cost-benefit analysis?The cost-benefit analysis refers to the process that is used to determine whether the decision or action is beneficial or not. The profit or beneficial effect of the decision is calculated by considering the cost that is associated with the action.
In the given case the executive consider the cost to repair the defect and observed its effect on the profit. They stated that if the cost to repair the defect causes of potential loss of profit to the company they will not choose to repair the same.
Therefore the correct option is D.
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The physical units method of joint cost allocation allocates costs based on a.the estimated selling price of the various finished products minus the costs to sell the products. b.the market values of the various finished products. c.a weight factor multiplied by physical units. d.an objective, quantitative metric such as pounds, square feet, or gallons.
Answer:
d. an objective, quantitative metric such as pounds, square feet, or gallons.
Explanation:
In Accounting, Costing is the measurement of the cost of production of goods and services by assessing the fixed costs and variable costs associated with each step of production. The various type of costs are;
1. Product cost is the expenses incurred when a product is sold.
2. Period cost refers to the period in which costs are incurred.
3. Fixed cost refers to costs that remains constant over variations in production activity, irrespective of amount of goods.
3. Variable cost refers to cost which are the same per unit of production but vary directly with level of output.
4. Direct costs refer to the costs that are peculiar to a particular department or area while indirect cost can't be traced to any.
5. Manufacturing overhead are all indirect cost required in producing a good that isn't associated with direct materials or direct labor.
Generally, the physical units method of joint cost allocation allocates costs based on an objective, quantitative metric such as pounds, square feet, or gallons.
Fly-By-Night Couriers is analyzing the possible acquisition of Flash-in-the-Pan Restaurants. Neither firm has debt. The forecasts of Fly-By-Night show that the purchase would increase its annual aftertax cash flow by $390,000 indefinitely. The current market value of Flash-in-the-Pan is $8 million. The current market value of Fly-By-Night is $29 million. The appropriate discount rate for the incremental cash flows is 8 percent. Fly-By-Night is trying to decide whether it would offer 30 percent of its stock or $12 million in cash to Flash-in-the-Pan. a. What is the synergy from the merger
Answer:
the synergy of the merger is $4,875,000
Explanation:
The computation of the synergy of the merger is shown below;
= Annual cash flow ÷ discount rate
= $390,000 ÷ 8%
= $4,875,000
By dividing the annual cash flow from the discount rate we can get the synergy of the merger
Hence, the synergy of the merger is $4,875,000
Marc is 32 and married to Estella, who is 30. Estella is a stay-at-home mom to their two children, ages 1 and 4. They currently live on Marc's salary of $110,000 (after taxes) that just about meets their household expenses. They would like to make sure that if Marc dies, they replace his income for 17 years, which would match their mortgage maturity and their kids would be well off to college; fund the children's college education ($300,000); establish a retirement fund for Estella ($250,000) to supplement Marc's Social Security retirement benefits; cover funeral costs ($10,000); and establish a 3-month emergency fund. If Estella dies, they want to have enough insurance to be able to pay for child care ($36,000 per year) and housekeeping services ($12,000 per year) for 17 years, to establish an emergency fund, and for funeral costs. They have the following financials:
Marc's employer provides a year's salary life insurance. Family is eligible for Social Security survivor benefits of $55,000 if Marc dies. Household expenses would be 20% lower if either parent dies. Current savings and investments of $23,000.
Using the financial needs approach, how much life insurance would you recommend?
A. $905,500 on Marc; $778,500 on Estella
B. $1,015,500 on Marc; $756,500 on Estella
C. $487,500 on Marc; $340,500 on Estella
D. $1,063,500 on Marc; $708,500 on Estella
Answer:
B. $1,015,500 on Marc ; $756,500 for Estella
Explanation:
Marc has current salary of $110,000 with which he runs the household expenses. If Marc dies then there should be more insurance coverage because he is the only person who earns in the house. Estella is a house wife and insurance coverage for her is lower than Marc because he will still be able to continue his earning.
The following December 31, 2021, fiscal year-end account balance information is available for the Stonebridge Corporation:
Cash and cash equivalents
Accounts receivable (net) 5,700
Inventory l 27,000
Property, plant, and equipment (net) 67,000
Accounts pay able 46,000
Salaries payable 18,000
Paid-in capitapoints 135,000
The only asset not listed is short-term investments. The only liabilities not listed are $37000 notes payable due in two years and related accrued interest of $1,000 due in four months. The current ratio at year-end is 1.6:1
Required: Determine the following at December 31, 2021:
1. Total current assets
2. Short-term investments
3. Retained earnings
Answer:
1. Total current assets = $104,000
2. Short term investments = $4,300
3. Retained earnings = $27,000
Explanation:
Note: The data given in the question are not complete and merged together. The complete sorted data are now given as follows:
Details Amount ($)
Cash and cash equivalents 5,700
Accounts receivable (net) 27,000
Inventory 67,000
Property, plant, and equipment (net) 160,000
Accounts pay able 46,000
Salaries payable 18,000
Paid-in capital 135,000
The explanation of the answer is now given as follows:
1. Total current assets
Current liabilities = Accounts playable + Salaries payable + Accrued interest = $46,000 + $18,000 + $1,000 = $65,000
Current ratio = 1.6:1
Current ratio = Current assets / Current liabilities .............. (1)
Substituting the relevant values into equation (1) ans solve for Current assets, we have:
1.6 = Current assets / $65,000
Current assets = 1.6 * $65,000 = $104,000
Therefore, wee have:
Total current assets = $104,000
2. Short-term investments
Current assets = Cash and cash equivalents + Accounts receivables + Inventory + Short term investments ............... (2)
Substituting the relevant values into equation (2) ans solve for Short-term investments, we have:
$104,000 = $5,700 + $27,000 + $67,000 + Short term investments
$104,000 = $99,700 + Short term investments
Short term investments = $104,000 - $99,700 = $4,300
3. Retained earnings
Long term liabilities = Notes payable due in two years = $37,000
Fixed assets = Property, plant, and equipment (net) = $160,000
Current assets + Fixed assets = Current liabilities + Long term liabilities + Paid in capital + Retained earnings ................. (3)
Substituting the relevant values into equation (3) ans solve for Retained earnings, we have:
$104,000 + $160,000 = $65,000 + $37,000 + $135,000 + Retained earnings
$264,000 = $237,000 + Retained earnings
Retained earnings = $264,000 - $237,000 = $27,000