Answer and Explanation:
The given statement is true as the real options would provide the managers the flexibility for deciding to invest or wait so that it would make a more computed decision
The real option that permits the input or output in the production process that could vary so it would be investment timing option as here the timing plays a very vital role
The given situation represent a real option to expand as the firm would pursue the extra expansion contracts
The BCD Partnership plans to distribute cash of $20,000 to partner Brad at the end of the tax year. The partnership reported a loss for the year, and Brad's share of the loss is $10,000. At the beginning of the tax year, Brad's basis in his partnership interest, including his share of partnership liabilities, was $15,000. The partnership expects to report substantial income in future years.
Required:
a. What ordering rules are used to calculate Bradâs ending basis in his partnership interest?
b. How much gain or loss will Brad report for the tax year?
c. Will the deduction for the $10,000 loss be suspended? Why or why not?
d. Could any planning opportunities be used to minimize any negative tax ramifications of the distribution? Explain.
Answer:
See below
Explanation:
a.
The rules used here is called the ordering rules. It can also be called reduce basis distribution.
b.
For the tax year report , the gain would be $5,000
c.
The deduction for the loss of $10,000 could be suspended or put on hold.
The reason is that losses are not deductible to pay off shareholders
d.
It is true that there are planning opportunities, which could mitigate the negative tax ramifications of the distribution as are under tax diversification. Here, it will open more room for flexibility in order to optimally the most tax efficient method of liquidating assets.
At the end of the video, Keith Reinhard says that advertisers have the ability not only to lift up the brands they work for but also to lift up the human spirit. Do you think this is true? Is it their responsibility? Explain.
ahi-dasa-uxy j0in on g00gle meet
The Paralympic committee’s marketing team developed a mass-communication TV spot to raise awareness of the Paralympic brand. This type of TV spot is an example of ________.
A- Advertising
B- Guerilla marketing
C- Digital Marketing
When bonds are issued at a discount and the effective interest method is used for amortization, at each subsequent interest payment date, the cash paid is:
Question Completion:
A. More than the effective interest.
B. Less than the effective interest.
C. Equal to the effective interest.
D. More than if the bonds had been sold at a premium
Answer:
When bonds are issued at a discount and the effective interest method is used for amortization, at each subsequent interest payment date, the cash paid is:
B. Less than the effective interest.
Explanation:
This cash payment is the product of the bond's face value multiplied by the coupon rate. The interest expense is increased by the amortized portion of the discount for the particular period. This means that the interest expense will be higher than the cash payment for interest because of the discount granted at issuance. And the interest expense is the product of the outstanding debt multiplied by the effective interest rate.
The cash paid would be less than the effective interest at each subsequent interest payment date when bonds are issued at a discount and the effective interest method is used for amortization.
The cash payment is computed by multiplying the face value of the bond with coupon rate. Here, an increase in interest expense is seen due to the discount in the amortized part.
Thus, the payment of interest would exceed means that the interest the payments in cash due to the issuance of the bond at discount.
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On June 30, Petrov Co. has $140,800 of accounts receivable.
July 4 Sold $8,075 of merchandise (that had cost $5,168) to customers on credit, terms n/30.
9 Sold $20,398 of accounts receivable to Main Bank. Main charges a 8% factoring fee.
17 Received $4,441 cash from customers in payment on their accounts.
27 Borrowed $11,656 cash from Main Bank, pledging $15,153 of accounts receivable as security for the loan.
Required:
Prepare journal entries to record the above selected July transactions.
Answer:
July 04
Dr Accounts receivable $8,075
Cr Sales $8,075
July 04
Dr Cost of goods sold $5,168
Cr Merchandise inventory $5,168
July 09
Dr Cash $18,766.16
Dr Factoring fee expense $1,631.84
Cr Accounts receivable $20,398
July 17
Dr Cash $4,441
Cr Accounts receivable $4,441
July 27
Dr Cash $11,656
Cr Notes payable $11,656
July 27
No journal entry
Explanation:
Preparation of journal entries to record July transactions.
July 04
Dr Accounts receivable $8,075
Cr Sales $8,075
July 04
Dr Cost of goods sold $5,168
Cr Merchandise inventory $5,168
July 09
Dr Cash $18,766.16
($20,398-$1,631.84)
Dr Factoring fee expense $1,631.84
($20,398*8%)
Cr Accounts receivable $20,398
July 17
Dr Cash $4,441
Cr Accounts receivable $4,441
July 27
Dr Cash $11,656
Cr Notes payable $11,656
July 27
No journal entry
Kesselring Corporation makes one product and has provided the following information to help prepare the master budget for the next three months of operations: Budgeted unit sales (all on credit): July8,400 August8,800 September12,200 Raw materials requirement per unit of output 4pounds Raw materials cost$3.00per pound Direct labor requirement per unit of output 2.8direct labor-hours Direct labor wage rate$18.00per direct labor-hour Predetermined overhead rate (all variable)$11.00per direct labor-hour The ending finished goods inventory should equal 40% of the following month's sales. The budgeted finished goods inventory balance at the end of August is closest to: (Round your intermediate calculations to 2 decimal places.) Select one: A. $454,816 B. $358,192 C. $304,512 D. $150,304
Sunland Company is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $24 and Sunland would sell it for $62. The cost to assemble the product is estimated at $26 per unit and the company believes the market would support a price of $87 on the assembled unit. What decision should Sunland make
Answer: Sell before assembly, the company will be better off by $1 per unit.
Explanation:
To solve the above question, we need to calculate the incremental profit or loss first. This will be:
= After assembling sales value - Unassembled unit sales value - Coat if further processing
= $87 - $62 - $26
= -$1
Since there is an incremental loss of $1, then the correct answer is "Sell before assembly, the company will be better off by $1 per unit".
You purchased five August 13 futures contracts on soybeans at a price quote of 1056′6. Each contract is for 5,000 bushels with the price quoted in cents and 1/8 ths of a cent per bushel. Assume the contract price is 1061′4 when you close out your contract six weeks from now. What will be your total profit or loss on this investment? A) $6,480.75 B) $1,187.50 C) $950.25 D) $24,000.00 E) $16,200.50
Answer:
B) $1,187.50
Explanation:
The computation of the total profit or loss on this investment is given below:
Expiration price = 1061'4 = 1061 + 4 ÷ 8 = 1061.50
Quoted price = 1056'6 = 1056 + 6 ÷ 8 = 1056.75
Now the profit is
= (1061.50 - 1056.75) × 5000 × 5
= $1,187.50
Hence, the profit on this investment is $1,187.50
The selection of delegates to the national convention produces _____.
eligen a los presidentes
Standard quantity 7.0 liters per unit Standard price $ 1.50 per liter Standard cost $ 10.50 per unit The company budgeted for production of 2,800 units in April, but actual production was 2,900 units. The company used 21,200 liters of direct material to produce this output. The company purchased 19,100 liters of the direct material at $1.60 per liter. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for April is
Answer:
$1,350U
Explanation:
Calculation to determine what The materials quantity variance for April is
Using this formula
Materials quantity variance=(AQ-SQ)*SP
Let plug in the formula
Materials quantity variance=[21,200 liters-(2,900 units*7.0 liters )*$ 1.50
Materials quantity variance{(21,200-20,300)*$1.50
Materials quantity variance=900*$1.50
Materials quantity variance=$1,350 U
Therefore the Materials quantity variance is $1,350 Unfavorable
The gross domestic product (GDP) of the United States is defined as the __________all _____________ in a given period of time.
Based on this definition, indicate which of the following transactions will be included in (that is, directly increase) the GDP of the United States in 2018
a. Rotato, a U.S. tire company, produces a set of tires at a plant in Michigan on September 13, 2018. It sells the set of tires to Speedmaster for use in the production of a two-door coupe that will be made in the United States in 2018.
b. Zippycar, a U.S. automobile company, produces a convertible at a manufacturing plant in Minneapolis on January 21, 2018. It sells the car at a dealership in Houston on February 10, 2018.
c. Sofaland, a Swedish furniture company, produces a table at a plant in Virginia on December 5, 2018. It sells the table to a college student on December 24.
d. You chop down a cherry tree on your property in California and make a dining room table in 2018. A similar table sells for $800 in a local furniture store.
Answer:
MARKET VALUE OF
FINAL GOODS AND SERVICES, PRODUCED IN THE U.S.
NOT INCLUDED
INCLUDED
INCLUDED
NOT INCLUDED
Explanation:
Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year
GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export
Net export = exports – imports
When exports exceed import there is a trade deficit and when import exceeds import, there is a trade surplus.
Items not included in the calculation off GDP includes:
1. services not rendered to oneself
2. Activities not reported to the government
3. illegal activities
4. sale or purchase of used products
5. sale or purchase of intermediate products
a. the tire sold is not included in US GDP because it is an intermediate good. An intermediate good is a good that is used in the production of other goods. The tire is used as an input in the production of a two-door coupe
b. The car would be included as part of business spending in US GDP
C. The table would be included in GDP as part of consumption spending on durables
d. Services rendered to ones self is not recorded in GDP
During 2020, Vaughn Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Vaughn for a lump sum of $131,670 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below.
Type No. of Chairs Estimated Selling
Price Each
Lounge chairs 880 $90
Armchairs 660 80
Straight chairs 1,540 50
During 2020, Sarasota sells 440 lounge chairs, 220 armchairs, and 264 straight chairs.
What is the amount of gross profit realized during 2020? What is the amount of inventory of unsold straight chairs on December 31, 2020?
Answer:Gross profit realized during 2020 =$30,899
amount of inventory of unsold straight chairs on December 31, 2020 =$63,800
Explanation:
A)Vaughn Furniture Company purchases a carload of wicker chairs at a cost of a lump sum of $131,670 in 2020
Now the total number of chairs purchased per type is;
Lounge chairs 880
Armchairs 660
Straight chairs 1,540
Total = 3,080 chairs purchased
Also, Vaughn sells
440 Lounge chairs at $90 each = 440 x 90=$39,600
220 Armchairs at $80 each= 220 x 80 =$ 17600
264 Straight chairs at $50 each = 264 x 50 =$13,200
Total selling price of 924 chairs =$39,600+$ 17600+$13,200 =$70,400
Now , if 3,080 chairs can be purchased for a-lump sum amount of $131,670
924 chairs can be puchased in a lump sum of (924 x 131,670) /3080
=$39,501
Remember that the Selling price for 924 chairs =$70,400
Gross profit realized during 2020 = $70,400 -$39,501=$30,899
b).
Estimated Selling Price value for straight chair =$50
Straight chairs remaining= 1540-264=1276
1276 at $50 each = 1276 X 50 =$63,800
Assume that your father is now 40 years old, that he plans to retire in 20 years, and that he expects to live for 25 years after he retires, that is, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as $75,000 has today. (He realizes that the real value of his retirement income will decline year-by-year after he retires.) His retirement income will begin the day he retires, 20 years from today, and he will then receive 24 additional annual payments. Inflation is expected to be 4% per year from today forward; he currently has $200,000 saved; and he expects to earn a return on his savings of 7% per year, annual compounding. To the nearest dollar, how much must he save during each of the next 20 years (with deposits being made at the end of each year) to meet his retirement goal
Answer:
Explanation:
People deserve a break, Just give them time.
You are considering opening a small flower store. You anticipate that you will earn $100,000 each year in revenue. It will cost you $30,000 each year to rent the space necessary to run your business. Additionally, you will need to spend $10,000 each year on flower seeds, utilities, and other expenses necessary to operate your flower shop. You have just graduated from college with a degree in economics and have received an offer to work for a firm with a yearly salary of $70,000.
What is your anticipated economic profit of opening the flower shop?
Based on this information, you ________ open the flower store.
1. The anticipated economic profit for opening the flower shop is $130,000.
2. Based on the information, you should not open the flower store.
Data and Calculations:
Annual revenue = $100,000
Rent expense = $30,000
Cost of goods and others = $10,000
Accounting income = $60,000
Opportunity cost = $70,000
Economic loss = ($10,000) ($60,000 - $70,000)
Anticipated economic profit = $130,000 ($60,000 + $70,000)
Thus, the opening of the flower shop will produce an economic loss for the entrepreneur.
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Presented below is information for Marin Company.
1. Beginning-of-the-year Accounts Receivable balance was $23,100.
2. Net sales (all on account) for the year were $104,700. Marin does not offer cash discounts.
3. Collections on accounts receivable during the year were $85,400.
Marin is planning to factor some accounts receivable at the end of the year. Accounts totaling $13,900 will be transferred to Credit Factors, Inc. with recourse. Credit Factors will retain 6% of the balances for probable adjustments and assesses a finance charge of 5%. The fair value of the recourse obligation is $1,075.
Required:
Prepare (summary) journal entries to record the items noted above.
Answer:
Debit Accounts Receivable for $104,700; and Credit Sales Revenue for $104,700.
Debit Cash for $85,400; and Credit Accounts Receivable for $85,400.
Explanation:
The (summary) journal entries to record the items noted will look as follows:
Particulars Debit ($) Credit ($)
Accounts Receivable 104,700
Sales Revenue 104,700
(To record net sales (all on account) for the year.)
Cash 85,400
Accounts Receivable 85,400
(Collections on accounts receivable during the year.)
The management of National Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2022, the accounting records show these data.
Inventory, January 1 (10,000 units) $35,000
Cost of 120,000 units purchased 468,500
Selling price of 98,000 units sold 750,000
Operating expenses 124,000
Units purchased consisted of 35,000 units at $3.70 on May 10; 60,000 units at $3.90 on August 15; and 25,000 units at $4.20 on November 20. Income taxes are 28%.
Required:
Prepare comparative condensed income statements for 2022 under FIFO and LIFO.
Answer:
National Inc.
Comparative condensed income statements for 2022
FIFO LIFO
Sales $750,000 750,000
Less Cost of Sales ($371,200) ($394,500)
Gross Profit $378,800 $355,500
Less Expenses
Operating expenses ($124,000) ($124,000)
Operating Profit $254,800 $231,500
Income tax expense ($71,344) ($64,820)
Net Income (Loss) $183,456 $166,680
Explanation:
FIFO
Assumes that the units to arrive first will be sold first. Therefore, the Cost of Goods Sold will be based on the earlier (old) prices.
Cost of Sales = 10,000 x $3.50 + 35,000 x $3.70 + 53,000 x $3.90 = $371,200
LIFO
Assumes that the units to arrive last will be sold first, Hence the Cost of Goods Sold will be based on the later (new) prices.
Cost of Sales = 25,000 x $4.20 + 60,000 x $3.90 + 15,000 x $3.70 = $394,500
The Rosa model of Mohave Corp. is currently manufactured as a very plain umbrella with no decoration. The company is considering changing this product to a much more decorative model by adding a silk-screened design and embellishments. A summary of the expected costs and revenues for Mohave's two options follows:
Rosa Umbrella Decorated Umbrella
Estimated demand 22,000 units 22,000 units
Estimated sales price $24.00 $34.00
Estimated manufacturing cost per unit
Direct materials $14.50 $16.50
Direct labor 3.50 6.00
Variable manufacturing overhead 2.50 4.50
Fixed manufacturing overhead 5.00 5.00
Unit manufacturing cost $25.50 $32.00
Additional development cost $10,000
Required:
1. Determine the increase or decrease in profit if Mohave sells the Rosa Umbrella with the additional decorations.
2. Should Mohave add decorations to the Rosa umbrella?
3-a. Suppose that the higher price of the decorated umbrella is expected to reduce estimated demand for this product to 20,000 units. Determine the increase or decrease in profit if Mohave sells the Rosa Umbrella with the additional decorations.
3-b. Should Mohave add decorations to the Rosa umbrella?
Answer:
Mohave Corp.
1. The increase in profit if Mohave sells the Rosa Umbrella with the additional decorations is:
= $67,000.
2. Mohave should add the decorations to the Rosa Umbrella. It makes some profits unlike when the Umbrella is without decorations.
3a. The increase in profit if Mohave sells the Rosa Umbrella with the additional decorations is:
= $63,000.
3b. Mohave should still add the decorations to the Rosa Umbrella. It makes some profits unlike when the Umbrella is without decorations.
Explanation:
a) Data and Calculations:
Rosa Umbrella Decorated Umbrella
Estimated demand 22,000 units 22,000 units
Estimated sales price $24.00 $34.00
Estimated manufacturing cost per unit
Direct materials $14.50 $16.50
Direct labor 3.50 6.00
Variable manufacturing overhead 2.50 4.50
Fixed manufacturing overhead 5.00 5.00
Unit manufacturing cost $25.50 $32.00
Additional development cost $10,000
Total revenue $528,000 $748,000
Total manufacturing cost 561,000 704,000
Additional development costs 10,000
Operating profit ($33,000) $34,000
Increase in profit = $67,000 = ($33,000) - $34,000
Decreased Demand to 20,000:
Total revenue $528,000 $680,000
Total manufacturing cost 561,000 640,000
Additional development costs 10,000
Operating profit ($33,000) $30,000
Increase in profit = $63,000 = ($33,000) - $30,000
Assume initially that the price of X (the quantity of which is measured on the horizontal axis) is $9 and the price of Y (the quantity of which is measured on the vertical axis) is $4. If the price of X now declines to $6, the budget line will Multiple Choice be unaffected. shift outward on the vertical axis. shift inward on the horizontal axis. shift outward on the horizontal axis.
Answer:
The budget line will shift outward on the horizontal axis.
Explanation:
One of the laws of the demand is that the lower the price of a good, the higher the quantity of that good that is purchased.
From the question, a decline in the price of X from $9 to $6, will lead to an increase in the quantity of X that is bought.
Since the price of Y still remains at $4, if the price of X now declines to $6, the budget line will shift outward on the horizontal axis.
Pickering Financial Management believes that the biotechnology industry is a good investment and is considering investing in one of two companies. However, one company, BrightWorid, Inc., uses the FIFO method of inventory, and another company, BioTech, Inc., uses LIFO. Because the companies use two different methods and because BioTech is a much larger company, it is difficult to compare their net incomes to see which is a better investment. The following information about the two companies is available from their annual reports:
BrightWorid, Inc.
2018 2017
Inventory $ 96,000 $ 80,000
Cost of goods sold. 1,144,000 913,000
Sales....... 1,760,000 1,660,000
Net income 197,000 190,000
BioTech, Inc. 2018 2017
Inventory (See Note), 344,000 $ 299,000
Cost of goods sold 3,864,000 4,224,000
Sales 7,360,000 7,040,000
Net income 830,000 730,000
Notes to the Financial Statement. If BioTech had used the FIFO method, inventory would have been $21.000 higher at the end of 2017 and $26,000 higher at the end of 2018.
To better compare the two companies, Pickering wants you to prepare the following analysis.
Showthe computation of BioTech's cost of goods sold in 2018 using the LIFO method.
Prepare summary journal entries for 2018 for BioTech's purchases of inventory (assume all purchases are on account), sales (assume all are on account), and cost of goods sold. A T- account has been set up for inventory. Post these transactions into the T-account. The company uses the perpetual inventory method.
Show the computation of BioTech's cost of goods sold for 2018 using the FIFO method.
Compute the gross profit percentage for 2018 for both BrightWorid and BioTech using FIFO figures for both.
Compute the inventory turnover for 2018 for both BrightWorid and BioTech using FIFO figures for both.
Which company appears stronger? Support your answer.
Answer:
Pickering Financial Management
A. Summary journal entries for 2018: BioTech:
Debit Inventory $3,909,000
Credit Accounts Payable $3,909,000
To record the purchase of inventory on account.
Debit Accounts Receivable $7,360,000
Credit Sales revenue $7,360,000
To record the sale of goods on account.
Debit Cost of goods sold $3,864,000
Credit Inventory $3,864,000
To record the cost of goods sold.
B. T-accounts:
Inventory
Account Titles Debit Credit
Beginning balance $299,000
Accounts Payable 3,909,000
Cost of goods sold $3,864,000
Ending balance 344,000
C. Computation of Cost of Goods Sold using the FIFO method:
Beginning inventory $320,000
Purchases 3,909,000
Goods available 4,229,000
less Ending inventory 370,000
Cost of goods sold $3,859,000
D. The gross profit percentage, using FIFO:
BrightWorld BioTech
Gross profit percentage 35% 48%
E. Inventory Turnover: 20x 21x
F. BioTech is doing better and appears stronger than BrightWorld. Its gross profit margin is higher than BrightWorld's. It turns its inventory 21 times as against BrightWorld's 20x, though they are maintaining similar level of net income percentages.
Explanation:
a) Data and Calculations:
Inventory methods:
BrightWorld, Inc. = FIFO (First-in, First-out)
BioTech, Inc. = LIFO (Last-in, First-out)
BrightWorid, Inc.
2018 2017 Average
Inventory $ 96,000 $ 80,000 $88,000
Sales....... 1,760,000 1,660,000
Cost of goods sold. 1,144,000 913,000
Gross profit 616,000 747,000
Net income 197,000 190,000
BioTech, Inc.
2018 2017
Inventory (See Note), 344,000 $ 299,000
Cost of goods sold 3,864,000 4,224,000
Sales 7,360,000 7,040,000
Net income 830,000 730,000
BioTech, Inc. Inventory using FIFO:
2018 2017 Average
Inventory $370,000 $320,000 $345,000
Sales 7,360,000 7,040,000
Cost of good sold 3,859,000 using FIFO
Gross profit 3,501,000
LIFO
Cost of goods sold $3,864,000
Ending inventory 344,000
Goods available $4,208,000
Beginning inventory 299,000
Purchases $3,909,000
Gross profit percentage:
BrightWorld = Gross profit/Sales * 100 = $616,000/1,760,000 * 100 = 35%
BioTech = $3,501,000/$7,360,000 * 100 = 48%
Inventory Turnover = Net Sales/Average Inventory
BrightWorld = $1,760,000/$88,000 = 20x
BioTech = $7,360,000/$345,000 = 21x
hich of the following constitutes a proposal of actions required by an
hieve its objectives?
A. Financial resources
B. Leading
C. Organising
D. Planning
Answer:
not sure but i think the answer is c)
Explanation:
Answer:
B
Explanation:
Lower property taxes
ect the degree of leverage that completes the following sentence. Thedegree of operating leverage (DOL) is the percentage change in EPS that results from a given percentage change in sales, and it equals the product of the degrees of operating and financial leverage. Expert Analysts Resources (EAR) has provided you with the following information about three companies you are currently evaluating: Praxis Corp. Three Waters Co. Axis Chemical Co. Degree of Operating Leverage (DOL) 2.0 3.0 3.0 Degree of Financial Leverage (DFL) 6.5 4.0 3.5 According to this information, which company would be considered the riskiest
Answer: Praxis Corp
Explanation:
To know the company that would be considered the riskiest, we've to calculate the degree of total leverage for each firm and this will be:
Praxis Corp:
Degree of total leverage = Degree of operating leverage × Degree of financial leverage
= 2.0 × 6.5
= 13.0
Three Waters Co.
Degree of total leverage = Degree of operating leverage × Degree of financial leverage
= 3.0 × 4.0
= 12.0
Axis Chemical Co.
Degree of total leverage = Degree of operating leverage × Degree of financial leverage
= 3.0 × 3.5
= 10.5
Based on the calculation, since the degree of total leverage for Praxis Corp is the highest, it simply means that it's the riskiest.
Identify which economic indicator should be used to track each of the following. a. The overall size of the economy the unemployment rate real GDP nominal GDP real GDP growth b. Labor market performance inflation business confidence the unemployment rate consumer confidence c. The future trajectory of economic activity the employment cost index real GDP inflation annual growth of the S&P 500 d. Wages and benefits business confidence real GDP the employment cost index consumer confidence
Answer:
a. The overall size of the economy ⇒ real GDP
The real GDP is adjusted for inflation and so would show the overall size of the economy in more accurate terms.
b. Labor market performance ⇒ the unemployment rate
The unemployment rate is best used to show how the labor market is performing because it shows the amount of people who are employed and those who are not in a given period.
c. The future trajectory of economic activity ⇒ annual growth of the S&P 500
The S&P 500 shows the performance of 500 large companies in the U.S. Their performance can be used to anticipate the trajectory of future economic activity because they influence the economy due to their large size.
d. Wages and benefits ⇒ the employment cost
The employment cost shows the wages and benefits that have to be paid to labor.
Company A is a manufacturer with sales of $3,400,000 and a 60% contribution margin. Its fixed costs equal $1,600,000. Company B is a consulting firm with service revenues of $3,500,000 and a 25% contribution margin. Its fixed costs equal $410,000. Compute the degree of operating leverage (DOL) for each company. Which company benefits more from a 20% increase in sales.
Answer:
DOL of Company A= 4.63
DOL of Company B=1.88
Company A benefits more from a 20% increase in sales
Explanation:
The degree of operating leverage measures the volatility in the operating profit of a business as result of the proportion of fixed cost to its total costs.
The operating Leverage = Contribution margin/Operating income
Contribution = Contribution % × sales value
Operating income = Contribution - Fixed cost
Company A
Contribution margin= 60%× 3,400,000 = 2,040,000
Operating income = 60%× 3,400,000 - 1,600,000= 440,000
DOL =2,040,000 /440,000 = 4.634
DOL of Company A= 4.63
Company B
Contribution margin= 25%× 3,500,000=875000
Operating income = 875,000 - 410,000 =465000
DOL = 875,000 /465,000 × 100 =1.88
DOL=1.88
If both companies experience an increase of 20%, the corresponding increase in profit would be:
Company A= 4.63× 20= 92.6%
Company B = 1.88 × 20 = 37.6%
Company A benefits more
DOL of Company A= 4.63
DOL of Company B=1.88
Company A benefits more from a 20% increase in sales
Hugo Inc., a calendar year taxpayer, sold two operating assets this year. The first sale generated a $38,700 Section 1231 gain, and the second sale generated a $59,400 Section 1231 loss. As a result of these sales, Hugo should recognize: Multiple Choice $20,700 ordinary loss $38,700 Section 1231 gain treated as capital gain and $59,400 ordinary loss $20,700 capital loss None of these choices are correct
Answer:
$20,700 ordinary loss
Explanation:
Based on the information given if the first Operating assets generated a gain of the amount of $38,700 while the second assets generated a loss of the amount of $59,400 after been sold out which indicate or means that Hugo should recognize the amount of $20,700 ORDINARY LOSS which is calculated as :
Ordinary loss =-$59,400+$38,700
Ordinary loss =-$20,700
Therefore As a result of these sales, Hugo should recognize:$20,700 ORDINARY LOSS
Changes in Growth and Stock Valuation Consider a firm that had been priced using a 10 percent growth rate and a 13 percent required rate. The firm recently paid a $2.40 dividend. The firm has just announced that because of a new joint venture, it will likely grow at a 11 percent rate. How much should the stock price change (in dollars and percentage)
Answer:
Change in dollars $45.20
Change in percentage 51.36%
Explanation:
Calculation to determine How much should the stock price change (in dollars and percentage)
First step is to calculate the Price before change
Price before change= ($2.40*1.10)/(.13 - .10)
Price before change = $2.64/0.03
Price before change = $88
Second step is to calculate Price after change
Price after change=($2.40*1.11)/(.13 - .11)
Price after change=$2.664/0.02
Price after change = $133.2
Now let calculate the in dollars and percentage
Change in dollars=$133.2 -$88
Change in dollars=$45.20
Change in percentage=$45.20/$88
Change in percentage=0.5136*100
Change in percentage=51.36%
Therefore How much should the stock price change (in dollars and percentage) will be :
Change in dollars $45.20
Change in percentage 51.36%
The E.N.D. partnership has the following capital balances as of the end of the current year: Pineda $ 180,000 Adams 160,000 Fergie 150,000 Gomez 140,000 Total capital $ 630,000 Answer each of the following independent questions: Assume that the partners share profits and losses 3:3:2:2, respectively. Fergie retires and is paid $183,000 based on the terms of the original partnership agreement. If the goodwill method is used, what is the capital balance of the remaining three partners
Answer:
Goodwill Calculation
Amount paid to Fergie $183,000
Less: Fergie Capital $150,000
Goodwill $33,000
Fergie's share is 20% in Goodwill. Total Goodwill = $33,000 / 20% = $165,000
Calculation of Capital Balance After Fergie's retirement
Pineda Adams Fergie Gomez Total
Opening Balance $180,000 $160,000 $150,000 $140,000 $630,000
Add: Goodwill $49,500 $49,500 $33,000 $33,000 $165,000
(Distributed - 3:3:2:2)
Less: Amount Paid - - ($183,000) - ($183,000)
Balance $229,500 $209,500 - $173,000 $612,000
Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Division Osaka Yokohama Sales $ 10,200,000 $ 32,000,000 Net operating income $ 816,000 $ 3,200,000 Average operating assets $ 2,550,000 $ 16,000,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 17%. Compute the residual income for each division. 3. Is Yokohama’s greater amount of residual income an indication that it is better managed?
Answer: See explanation
Explanation:
1. The return on investment for Osaka will be:
= (816000/10200000) × (10200000 × 2550000)
= 32%
The return on investment for Yokohama will be:
= (3200000/32000000) × (32000000/16000000)
= 20%
2. See attachment
3. Yokohama’s greater amount of residual income is not an indication that it is better managed. Since Yokohama Division is bigger than Osaka Division, it's expected that Yokohama will have a greater residual amount.
Toyota manufactures in Japan most of the vehicles it sells in the United Kingdom. The base platform for the Toyota Tundra truck line is ¥1,650,000. The spot rate of the Japanese yen against the British pound has recently moved from ¥197/£ to ¥190/£. How does this change the price of the Tundra to Toyota's British subsidiary in British pounds?
Answer and Explanation:
The computation of the change in price is shown below:
Original import price
= 1,650,000 ÷ 197
= 8375.63
The new import price is
= 1,650,000 ÷ 190
= 8,684.21
Now the percentage change in price is
= (8,684.21 - 8375.63) ÷ 8375.63
= 3.68%
This would be equal to the percentage change in the Japanese yen as the price of the truck remains unchanged
State of the Economy Probability of the States Percentage Returns Economic recession 25% 5% Moderate economic growth 50% 10% Strong economic growth 25% 13% The standard deviation from investing in the asset is:
Answer:
The standard deviation from investing in the asset is 14.40%.
Explanation:
Note: The data in the question are first sorted before answering the question as follows:
State of the Economy Probability of the States Percentage Returns
Economic recession 25% 5%
Moderate economic growth 50% 10%
Strong economic growth 25% 13%
The standard deviation from investing in the asset is:
The explanation of the answer is now given as follows:
Note: See the attached excel file for the calculation of Variance from investing in the asset.
From the attached excel file, we have:
Variance = 2.07%
Therefore, we have:
Standard deviation = Variance^0.5 = 2.07%^0.5 = 14.40%
Therefore, the standard deviation from investing in the asset is 14.40%.
The behavioral approach is being applied when a corporate trainer ______. Group of answer choices gives a motivational speech to the executive team to boost morale administers an Emotional Intelligence test to match leaders and followers uses assessments to help leaders discover their relative focus on goals vs. people offers employees an in-depth look at their personality traits for behavioral improvement
Answer:
The right option is C (uses assessments.........vs. people).
Explanation:
Throughout the enterprise, the behavioral approach, which describes the conduct of managers, is used by allowing representatives to determine their attention on objectives and individuals.This highlights empirical research into observed behavioral reactions and their situational factors.Such given solutions do not concern the solution in question. Thus, the answer above is right.