Answer:
17.50%
Explanation:
The computation of the yield on 3 year treasury securities is shown below:
The Yield on 3 year is
= Risk free rate of return + Inflation premium + Market risk premium
= 2% + (3.5% + 6% + 6%) ÷ 3 years + 0
= 2% + 15.5% + 0
= 17.50%
Hence, the yield on 3 years is 17.50% by applying the above formulas by considering the given information
"A higher price level will increase the demand for money, but expectations of a rise in the price level will reduce the demand for money." Is this statement true or false according to the monetary approach? Why?"
Answer:
The statement is True
Explanation:
A higher price level is a term that describes an economic condition in which more money is required to purchase a given amount of goods and services, at a given period, tland this leads to inflation overtime.
However, with a higher expected price level, it implies that a decline in the real value of a constant nominal amount of money balances is expected. Thus, there is an high tendency among people to substitute away from holding money and toward holding non-liquid assets whose prices may rise with the in the foreseeable future.
The tri-star company currently use an old lathe that was purchase 2 years ago at $6000. This machine is being depreciatin on a MACRS five year (20%, 32%, 19%, 12%, 11%, 6%). The current market value for this machine is $3,000. The proposed new improved lathe cost $10,000 and additional installation fee of $1,000. The new lathe would require that inventories be increased by $800 and account receivable increase $600, but accounts payable would simultaneously increase by $700. Tri-Star's marginal federal-plus-state tax rate is 30%. What is the initial investment of company when evaluating the replacement of old lathe by the new one?
Answer:
$8,736
Explanation:
initial investment = capital expenditures (machine's purchase cost + installation costs) + any increase in working capital - disposal of old machine
capital expenditures = $10,000 + $1,000 = $11,000
after tax salvage value = market value + taxes on disposal
the current book value of the old machine = $6,000 - $1,200 - $1,920 = $2,880
taxes on salvage value = (book value - market value) x tax rate = ($2,880 - $3,000) x 30% = -$36
after tax salvage value = $3,000 - $36 = $2,964
net working capital = current liabilities - current assets
change in working capital = $800 + $600 - $700 = $700
initial investment = $11,000 + $700 - $2,964 = $8,736
A university bookstore buys mechanical pencils from a wholesaler. The wholesaler offers discount for large order quantity per shipment according to the following price schedule:
Order Quantity Price Per Unit
1 to 200 $4.00
201 to 1,000 $3.60
1,001 to 2,000 $3.40
2,001 and greater $3.25
The bookstore expects an annual demand of 2,500 units. It costs $10 to place an order, and the annual cost of holding a unit in stock is 30% of the unit’s procurement price. Determine the best order quantity.
Answer:
226 units
Explanation:
Formula : [tex]\sqrt{\frac{2 * Annual Demand * Ordering Cost}{Holding Cost}[/tex]
[tex]\sqrt{\frac{2*2500*10}{0.3*3.25} }[/tex] = 226
The economic order quantity is the minimum amount of inventory that a seller must keep to demand and lower the holding cost. The reorder point is the inventory management system in which a certain level of inventory is set as a trigger for reordering the stock. Ordering cost is determined by the number of order placed.
Lightning Remote Cars manufactures remote control cars for children. Historically, Lightning Remote Cars has manufactured their own tires they sell. However, a tire manufacturer has recently approached Lightning Remote Cars with an offer to produce their tires for them for $1.40 per tire. Lightning Remote Cars anticipates needing 50,000 tires this year to meet the demand for their remote control cars. What would be the total impact on operating income if the tires are purchased from the outside supplier
Answer:
operating income would decrease by $2,500 if tires are purchased
Explanation:
offer from outside vendor = $1.40 per tire
yearly demand = 50,000 tires
production costs:
direct materials $0.25direct labor $0.80variable manufacturing overhead $0.30fixed costs $0.50total costs = $1.85
total avoidable costs = $1.35
make tires buy tires differential amount
produce tires $92,500 $0 $92,500
buy tires $0 $95,000 ($95,000)
total $92,500 $95,000 ($2,500)
operating income would decrease by $2,500 if tires are purchased
Answer:
2,500
Explanation:
Giannitti Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below: Estimated machine-hours 72,700 Estimated variable manufacturing overhead $ 3.30 per machine-hour Estimated total fixed manufacturing overhead $ 838,730 The predetermined overhead rate for the recently completed year was closest to:
Answer:
The predetermined overhead rate for the recently completed year was closest to: $11.54 per machine-hour
Explanation:
Predetermined Overheads = Budgeted Fixed Overheads / Budgeted Activity
= $ 838,730 / 72,700
= $11.536864 or $11.54 per machine-hour.
Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the:_________.
a. investor sells the investment
b. investee declares a dividend
c. investee pays a dividend
d. earnings are reported by the investee in its financial statements
Answer: Earnings are reported by the investee in its financial statements
Explanation:
Equity method is when investments are being treated in associate companies and it is usually applied in cases whereby an investor entity holds about twenty to fifty percent of the associate company's voting stock. Due to this reason, it has a strong say in the associate company's management.
Under the equity method of accounting for investments, an investor recognizes its share of the earning in the period in which the earnings are reported by the investee in its financial statements.
The following data concerns a proposed equipment purchase: Cost$144,000 Salvage value$4,000 Estimated useful life 4years Annual net cash flows$46,100 Depreciation methodStraight-line Ignoring income taxes, the annual net income amount used to calculate the accounting rate of return is:
Answer: $74,000
Explanation:
The Average Investment refers to the average cash invested into a particular project and is useful in calculating the rate of return. The simple formula is to add the beginning value of the asset to its ending value and divide this by 2.
The ending value in this case would be the salvage value;
Average Investment = [tex]\frac{Beginning Cost of Machine + Salvage Value}{2}[/tex]
= [tex]\frac{144,000 + 4,000}{2}[/tex]
= $74,000
Bob is evaluating a bond issue to determine the right price for the bond. In his evaluation, he gathers the following information:
N = 8 years INT = .025 or 2.5% PMT = $25 FV = $1,000 (par value)
What is the above bond issue worth in today's dollars?
a. $1,000
b. $1,181.63
c. $1,200.50
d. None of the above
Answer:
The price of the bond is $1000. Thus, option a is the correct answer.
Explanation:
The price of a bond is calculated using the present value of the interest payments made by the bond, which is in the form of an annuity, plus the present value of the face value of the bond. The present value is calculated by discounting the annuity of interest and the face value by the YTM or yield to maturity. In case YTM is not provided, we assume that it is same as or equal to the coupon rate paid by the bond.
The formula for the price of the bond is attached.
Bond Price = 25 * [(1 - (1+0.025)^-8) / 0.025] + 1000 / (1+0.025)^8
Bond Price = $1000
Which of the following is a characteristic of a firm’s optimal dividend policy? It maximizes the firm’s stock price. It maximizes the firm’s return on equity. It maximizes the firm’s earnings per share. It maximizes the firm’s total assets.
Answer:
It maximizes the firm’s stock price.
Explanation:
The correct answer is “it maximizes the firm’s stock price” because the optimal dividend policy allows the variable risk parameters and it maximizes the firm’s value. Moreover, the dividend policy attracts the shareholders and it maintains the firm’s or the company’s worth in the market. Therefore, the optimal payment of dividend increases or maximizes the stock price.
_______________ of well-to-do individuals often put their own money into small new companies at an early stage of development, in exchange for owning some portion of the firm. Group of answer choices
Answer: C. A Network
Explanation:
One of the ways of raising capital is through the use of Angel Investors. These are usually well off individuals with excess cash for investment who look for companies to invest in at an early stage because they are trying to gain a positive return when the companies become successful.
To make their funds more substantial and their services easier to reach, Angel investors form networks to enable them achieve their mission of putting their own money into small new companies at an early stage of development, in exchange for owning some portion of the firm.
A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows.
A. True
B. False
Answer:
false
Explanation:
Fortune Enterprises is an all-equity firm that is considering issuing $13.5 million of perpetual debt. The interest rate is 10%. The firm will use the proceeds of the bond sale to repurchase equity. Fortune distributes all earnings available to stockholders immediately as dividends. The firm will generate $3 million of earnings before interest and taxes (EBIT) every year into perpetuity. Fortune is subject to a corporate tax rate of 40%. Suppose the personal tax rate on interest income is 55%, and the personal tax rate on equity income is 20%.
What is the annual after-tax cash flow to debt holders under each plan in Q7?
A. Debt holders get $0 mil. under the unlevered plan vs. 1.2 mil. under the levered plan
B. Debt holders get $1.2 mil. under the unlevered plan vs. 0.66 mil. under the levered plan
C. Debt holders get $0 mil. under the unlevered plan vs. 0.66 mil. under the levered plan
D. Debt holders get $0 mil. under the unlevered plan vs. 0.6075 mil. under the levered plan
Answer:
D. Debt holders get $0 mil. under the unlevered plan vs. 0.6075 mil. under the levered plan
Explanation:
interests paid to debt holders = $13,500,000 x 10% = $1,350,000
generally, interest revenue is taxed as ordinary revenue = corporate income tax rate (if debt holder is a business) or personal income tax (if debt holder is an individual).
under the first plan, debt holders get nothing because there is no outstanding debt since the company is an all equity firm.
under the second plan, if the personal tax rate on interest income is 55%, which is really high, the debt holders will earn $1,350,000 x (1 - 55%) = $607,500
OPR finds its cases through all of the following except which one? A. The investigation division of OPR.
Answer:
The investigation division of OPR.
Explanation:
OPR stands for Office of Professional Responsibility. It is a section of department of justice whose task is to monitor any misconduct in the government departments. It is responsibility of OPR to find any allegations that result in misconduct in department of attorney. The OPR finds its cases through all except the own division. There will be chance of familiarity and self review threats in such monitoring.
Nissan’s all-electric car, the Leaf, has a base price of $32,780 in the United States, but it is eligible for a $7500 federal tax credit. A consulting engineering company wants to evaluate the purchase or lease of one of the vehicles for use by its employees traveling to job sites in the local area. The cost for leasing the vehicle will be $4200 per year (payable at the end of each year) after an initialization charge of $2500 paid now. If the company purchases the vehicle, it will also purchase a home charging station for $2200 that will be partially offset by a 50% tax credit. If the company expects to be able to sell the car and charging station for 40% of the base price of the car alone at the end of 3 years, should the company purchase or lease the car? Use an interest rate of 10% per year and annual worth analysis.
Answer:
Nissan's all-electric car, the Leaf
PV cost of Leaf Purchase = $16,529
PV cost of Leasing = $12,944.78
The company should lease the car.
Explanation:
a) Costs incurred to purchase the Leaf:
Base price $32,780
less Federal tax credit ($7,500)
Charging station 2,200
less 50% tax credit (1,100)
Cash paid $26,380
Sales value after 3 yrs (9,851) ( $26,380 - 40% of base discounted to PV)
Net PV Investment $16,529
b) Calculation of Discounted Present Values of Payments under Leasing, using online financial calculator:
PV (Present Value) $12,944.78
N (Number of Periods) 3.000
I/Y (Interest Rate) 10.000%
PMT (Periodic Payment) $4,200.00
Starting Investment $2,500.00
Total Principal $15,100.00
Total Interest $2,129.50
c) The purchase of the Leaf would involve a present value cost of $26,380 after deducting all the savings from tax. The 40% sales value of the car at the end of 3 years = $13,112 ($32,780 x 40%). When this sales value is discounted to PV of $9,851, the PV of the car investments becomes $16,529 ($26,380 - $9,851). On the other hand, leasing will cost in PV the sum of $12,944.78
.
adjustments that increase or decrease earnings should be investigated with more skepticism.
Answer:
True of financial account auditors.
Explanation:
A financial account auditor often act as skeptics (having suspicion and lack of trust) when reviewing financial transactions.
Thus financial accounts adjustments that increase or decrease earnings are usually investigated with more skepticism by auditors. Such increased skepticism is important because it enables the auditor undo errors and better position the business for success.
You decide to borrow $100,000 at the riskless interest rate, and you then invest all $300,000 ($200,000 of your own cash and the $100,000 borrowed cash) in the market index fund. Calculate the expected return and standard deviation of this investment portfolio
You have $200,000 of cash. The riskless interest rate is 3%. The market index fund has an expected return of 10% and a standard deviation of 20%
You decide to borrow $100,000 at the riskless interest rate, and you then invest all $300,000 ($200,000 of your own cash and the $100,000 borrowed cash) in the market index fund. Calculate the expected return and standard deviation of this investment portfolio
Answer:
The expected return of this portfolio = 13.50%
standard deviation of this portfolio = 30.00%
Explanation:
From the information given:
The percentage of riskless = -100000/200000
The percentage of riskless = -0.50%
Now; the investment in market index = 1.50%
The expected return of this portfolio = 1.50 × 10% + ( - 0.5 ×3 %)
The expected return of this portfolio = 1.50 × 0.1 - 0.5 × 0.03
The expected return of this portfolio = 0.15 - 0.015
The expected return of this portfolio = 0.135
The expected return of this portfolio = 13.50%
standard deviation of this portfolio = the investment in market index × market index standard deviation
standard deviation of this portfolio = 1.50 × 20%
standard deviation of this portfolio = 30.00%
Salary expense was 15.5% of sales this year. If sales this year are $1,300,000 and are forecasted to be $1,500,000 next year, what is forecasted salary expense next year if all expenses maintain a constant percent of sales?
Answer:
Salary expense next year=$232,500
Explanation:
The ratio of expense to ales is an important which helps in the management and control overhead.
We can be predict the Salary expense using the information given about the relationship between salary expense and sales .
If salary expense is 15.5% of sales, then Salary expense this year =
15.5% × 1,300,000=$201,500
Salary expense next year = 15.5% × foretasted sales next year
= 15.5% × 1,500,000 = $232,500
We use 15.5% because the relationship between the expenses and the sales in proportion is expected to remain the same
Salary expense next year=$232,500
You have just turned 40 years old and are trying to decide who much money to put into your retirement plan. The plan works as follows: Every dollar in the plan earns 7% per year. You cannot make withdrawals until you retire on your sixty-fifth birthday. After that point, you can make withdrawals as you see fit. You decide that you will plan to live to 95 and work until your turn 65. You estimate that to live comfortably in retirement, you will need $250,000 per year starting at the end of the first year of retirement and ending on your 95th birthday. You already have $200,000 in the retirement plan. You will contribute the same amount to the plan at the end of every year that you work, starting next year. How much do you need to contribute each year to fund your retirement
Answer:
$31,886.09
Explanation:
years until retirement = 65 - 40 = 25 years
interest earned 7%
retirement age 65
expected life span after retiring = 95 - 65 = 30 years
financial needs during retirement $250,000 per year
current account balance $200,000
we must first determine how much money you will need when you are 65:
present value = $250,000 x 12.409 (PV annuity, 30 years, 7%) = $3,102,250
your $200,000 will be worth $200,000 x (1 + 7%)²⁵ = $1,085,486.53 in 25 years
so you need $3,102,250 - $1,085,486.53 = $2,016,763.47 extra
using the FV formula for an annuity:
$2,016,763.47 = payment x 63.249 (FV annuity, 25 years, 7%)
payment = $2,016,763.47 / 63.249 = $31,886.09
Peyton sells an office building and the associated land on May 1 of the current year. Under the terms of the sales contract, Peyton is to receive $1,763,800 in cash. The purchaser is to assume Peyton's mortgage of $1,058,280 on the property. To enable the purchaser to obtain adequate financing, Peyton is to pay the $105,828 in points charged by the lender. The broker's commission on the sale is $70,552. What is Peyton's amount realized? The amount realized by Peyton is $ .
Answer:
$2,645,700
Explanation:
realized amount = cash received + assumed mortgage - points paid by seller - broker's commission = $1,763,800 + $1,058,280 - $105,828 - $70,552 = $2,645,700
The amount realized includes all the money received and any debts assumed by the buyer, minus any expenses paid by the seller that are related to the transaction.
An estimated demand curve does not necessarily match actual data perfectly because A. it is not possible to accurately calculate the coefficients of the curve. B. demand is unpredictable. C. some factors that are not measured or observed may affect the curve. D. the random error term has too large of a range.
Answer:
C. some factors that are not measured or observed may affect the curve.
Explanation:
a lot of unforeseen circumstances might occur. these occurrences would not be measured in the estimated demand curve. this would lead to the estimated demand curve not matching the actual demand curve.
for example, the factors affecting the demand for bread are ; price, income, price of a substitutes. these are included in estimating the demand curve for bread. Assume that a study comes out stating that bread is harmful to the health.this reduces the demand for bread. this study wasn't anticipated and included in estimating the demand curve. as a result, the actual data would differ from the estimated data
Jacobsen Corporation prepares its financial statements applying U.S. GAAP. During its 2016 fiscal year, the company reported before-tax income of $621,000. This amount does not include the following two items, both of which are considered to be material in amount: Unusual gain $201,000 Loss on discontinued operations (301,000) The company's income tax rate is 30%. In its 2016 income statement, Jacobsen would report income from continuing operations of:
Answer:
Jacobsen Corporation
Income from continuing operations of $621,000 will be reported.
Explanation:
The income from continuing operations is the same thing as the operating income. It is the pre-tax income that is reported on Jacobsen Corporation's income statement for the year ended December 31, 2016. The tax rate of 30% is applied on this figure to obtain the income tax expense for the year. But, for Jacobsen that has other unusual items, these are taken into consideration before the income tax is imputed to obtain the after-tax income.
One measure of ____ is the extent to which the work of the department affects the final output of the organization.
Answer:
Centrality
Explanation:
Remember, a less central organization means more freedom. However, when the work of the departments in an organization can adversely affects the final output of the organization it tells us how central the organization is.
This Implies that the organization is following a structured system in which flexibility is not possible, and as a result any issues at other departments might affect output.
You purchased a bond 69 days ago for $891.26. You received an interest payment of $24.00 56 days ago. Today the bond’s price is $884.89. What is the holding period return (HPR) on the bond as of today?
Answer:
1.97%
Explanation:
The formula to calculate the holding period return is:
HPR=(Income generated+(ending value-initial value)/Initial value)*100
Income generated= $24
Ending value= $884.89
Initial value= $891.26
HPR=(24+(884.89-891.26)/891.26)*100
HPR=(24+(-6.37)/891.26)*100
HPR=(17.63/891.26)*100
HPR=0.0197*100
HPR= 1.97%
According to this, the holding period return (HPR) on the bond as of today is 1.97%.
If a firm raises capital by selling new bonds, it could be called the "issuing firm," and the coupon rate is generally set equal to the required rate on bonds of equal risk.
1. True
2. False
Answer: True
Explanation:
An issuing firm is an organization which registers, and then sells security like bonds and stocks on the primary market.
It should be noted that when a firm raises capital through the sale of new bonds, they can be also referred to a the issuing firm, and the coupon rate is usually set to be equal to the required rate on bonds of equal risk.
The holder of a promotional permit may:
Provide alcohol to a minor
Serve an intoxicated person
Offer in-store wine and beer samples
Sell alcohol to members in a private club
Answer:
Offer in-store wine and beer samples.
Explanation:
Promotional permit was established to allow a person promote sale of alcoholic beverages on behalf of the manufacturer. Such alcoholic beverage must however be sold on the premises of the licenced holder.
A promotional permit holder, according to the Texas Alcoholic Beverage Commission,which was established in 1935, may involve in the sales of alcoholic beverages in a state or premises of the license holder. It is to be noted that the license holder must qualify enough before being granted the permit and must also pay some fees before carrying on such activities.
As a holder of a promotional permit, you are allowed to offer in-store wine and beer samples.
A person with a promotional permit:
Is allowed to promote the sale of a certain brand of alcohol Must be in a contract with the brand they are promotingIn order to promote the brand of alcohol, the person may use sales strategies such as offering in-store wine and beer samples to people to get them to try out the brand that they are promoting.
In conclusion, a holder of a promotional permit can offer in-store wine and beer samples.
Find out more at https://brainly.com/question/5796198.
BPO Services is in the business of digitizing information from forms that are filled out by hand. In 2006, a big client gave BPO a distribution of the forms that it digitized in house last year, and BPO estimated how much it would cost to digitize each form. Form Type Mix of Forms Form Cost A 0.5 $3.75 B 0.5 $1.25 The expected cost of digitizing a form is $ . Suppose the client and BPO agree to a deal, whereby the client pays BPO to digitize forms. The price of each form processed is equal to the expected cost of the form that you calculated in the previous part of the problem. Suppose that after the agreement, the client sends only forms of type A. The expected digitization cost per form of the forms sent by the client is $ . This leads to an expected loss of $ per form for BPO. (Hint: Do not round your answers. Enter the loss as a positive number.)
Answer:
BPO Servicesa. The expected cost of digitizing a form is $2.50
b. The expected digitization cost per form of the forms sent by the client is $3.75, without a mix of forms.
c. This leads to an expected loss of $1.25 per form for BPO.
Explanation:
1. Data:
Form Type Mix of Forms Form Cost
A 0.5 $3.75
B 0.5 $1.25
b. Calculation of Expected Cost of digitizing a form:
Form Type Mix of Forms Form Cost Expected Cost
A 0.5 $3.75 $1.875 (0.5 * $3.75)
B 0.5 $1.25 $0.625 (0.5 * $1.25)
Total expected costs $2.50
c. Calculation of Expected cost of Form actually sent by Client without a mix of forms:
A 01 $3.75 $3.75 (1 * $3.75)
Total expected costs $3.75
d. Calculation of Expected Loss:
Expected Price = $2.50
Expected cost = $3.75
Expected loss = $1.25
e. The expected value (cost, price, or gain or loss) from the form digitization is the sum of all possible values from the mix of forms, each multiplied by the probability of its occurrence.
Ansara Company had the following abbreviated income statement for the year ended December 31, 20Y2:
(in millions)
Sales $25,790
Cost of goods sold $21,920
Selling, administrative, and other expenses 2,320
Total expenses $24,240
Income from operations $1,550
Assume that there were $5,620 million fixed manufacturing costs and $1,280 million fixed selling, administrative, and other costs for the year. The finished goods inventories at the beginning and end of the year from the balance sheet were as follows:
January 1 $3,060 million
December 31 $3,570 million
Assume that 20% of the beginning and ending inventory consists of fixed costs. Assume work in process and materials inventory were unchanged during the period.
Prepare an income statement according to the variable costing concept for Ansara Company for 20Y2.
Ansara Company
Variable Costing Income Statement
For the Year Ended December 31, 20Y2 (in millions)
Sales $ 21,920
Variable cost of goods sold:
Beginning inventory $ 1,841
Variable cost of goods manufactured 12,710
Ending inventory 2,149
Total variable cost of goods sold 18,670
Manufacturing margin $ 3,250
Variable selling and administrative expenses 870
Contribution margin $ 2,380
Fixed costs:
Fixed manufacturing costs $ 4,820
Fixed selling and administrative expenses 1,100
Total fixed costs 5,920
Income from operations $
Answer:
Ansara Company
Variable Costing Income Statement
For the Year Ended December 31, 20Y2 (in millions)
Sales $25,790
Variable cost of goods sold:
Beginning inventory ($3,060 × 80%) $2,448
Variable cost of goods manufactured ($21,920 × 80%) $17,536
Ending inventory ($3,570 × 80%) ($2,856)
Total variable cost of goods sold ($17,128 )
Contribution margin $ 8,662
Less (Period) Expenses :
Fixed manufacturing costs ($5,620)
Selling and administrative expenses :
Fixed selling and administrative expenses ($1,280)
Variable selling and administrative expenses ($1,040)
Income from operations $772
Explanation:
Variable Costing :
Product Cost = Only Variable Manufacturing Cost
= This is 80% of Cost of Goods Sold from our senario.
Period Cost = Fixed Manufacturing Costs + All Non - Manufacturing Cost (Variable and Fixed)
Note : Variable selling and administrative expenses is what remains after fixed selling, administrative, and other costs are removed from the total of selling, administrative, and other costs.
Because you can adapt to your audience while you are speaking, don't worry about analyzing the audience for an oral presentation.
A. True
B. False
Answer:
B. False.
Explanation:
This statement is false, due to the fact that a good oral presentation must be prepared before the presentation in accordance with all the procedures to be covered in the presentation. Therefore, the ideal is to know your audience before the presentation, so that there is a preparation aligned with their values and behaviors, in order to retain the attention and interaction of the participants, which makes the presentation more interesting and effective.
Scripting the presentation also avoids possible unforeseen events, in addition to being ideal to also be open to interactions, to provide important and impactful information, to prepare supporting material such as slides, and to always practice before the presentation, to be prepared and interacted on the subject addressed.
In May direct labor was 35% of conversion cost. If the manufacturing overhead for the month was $116,350 and the direct materials cost was $20,200, the direct labor cost was:
Answer:
Direct labor= $62,650
Explanation:
Giving the following information:
In May direct labor was 35% of conversion cost.
The manufacturing overhead for the month was $116,350.
The conversion costs are the sum of the direct labor and the manufacturing overhead:
Overhead= 65%= 116,350
Direct labor= 35%= ?
First, we need to determine the total amount of conversion costs:
Conversion costs= 116,350/0.65= 179,000
Now, the direct labor cost:
Direct labor= 179,000*0.35
Direct labor= $62,650
To retain high-performing engineers, a large semiconductor company provides corporate stock as part of the compensation package. In one particular year, the company offered 1000 shares of either class A or class B stock. The class A stock was selling for $30 per share at the time, and stock market analysts predicted that it would increase at a rate of 6% per year for the next 5 years. The class B stock was selling for $20 per share, but its price was expected to increase by 12% per year. At an interest rate of 8% per year, which stock should the engineers select on the basis of present worth analysis and a 5-year planning horizon?
Answer:
class A stocks
Explanation:
in 5 years, class A stock will be worth = $30 x (1 + 6%)⁵ = $40.15
in 5 years, class B stock will be worth = $20 x (1 + 12%)⁵ = $35.25
now we need to determine the present value if each stock:
class A stock present value = $40.15 / (1 + 8%)⁵ = $27.33
class B stock present value = $35.25 / (1 + 8%)⁵ = $23.99
since the present value of class A stock is higher, then the engineers should select that type of stocks.