Answer: customer's beginning tax basis = $10,000
Explanation:
Customer's beginning tax basis are the initial cost of the partnership for commission legal and organizational fees and these are not deductible from the cost basis.
Given: A customer subscribes to a $10,000 limited partnership interest.
That means initial cost = $10,000
So, the customer's beginning tax basis = $10,000
Maria is an investment adviser who is working through investment objectives and risk tolerance with a new client, Bobby. Bobby indicates that he'd like to see some capital appreciation, achieve at least some income, and wants to maintain a relatively high level of safety and principal protection. The BEST recommendation that Maria can make to Bobby is that Bobby invest in
Answer:
The best recommendation that Maria can make to Bobby is that Bobby should invest in Federal Government Bonds and Treasury Bills.
However, it all depends on what his investments priorities and approach are. For a relatively high level of safety and principal protection, Federal Government Bonds and Treasury Bills are the best bet.
Any other investment that will offer some income will be too risky for safety.
Explanation:
Risk appetite determines a person's investment profile. However, it must be clear that higher returns on investment go with higher risks. Every high return investment compensates for the high risks. It is even the riskiest not to invest. Risk should be studied and accepted when it cannot be avoided. We usually say, "you cannot eat your cake and have it."
Gullett Corporation had $26,000 of raw materials on hand on November 1. During the month, the Corporation purchased an additional $75,000 of raw materials. The journal entry to record the purchase of raw materials would include a:
Answer:
debit to Raw Materials of $75,000
Explanation:
In this scenario, the journal entry to record the purchase of raw materials would include a debit to Raw Materials of $75,000. A debit is an entry recording a sum owed, listed on the left-hand side or column of an account. Therefore in accounting, since Gullet Corporation's purchase was for an "additional" $75,000 worth of raw material, they owe that money to the company and must make it up through sales that those materials should generate in the future. That is why it is recorded as a debit.
se the following information for Jett Co. to answer the following question: 2015 2014 Sales 1,200 1,000 COGS 850 700 Operating Expenses 200 200 Income Taxes 30 35 Jett Co.'s gross profit, operating profit and net profit margins for 2015 are: A. 50.0%, 32.5%, 22.5% respectively. B. 29.2%, 12.5%, 10.0%, respectively. C. 27.0%, 11.0%, 10.5%, respectively. D. 21.5%, 17.5%, 12.0%, respectively.
Answer:
B. 29.2%, 12.5%, 10.0%
Explanation:
Gross Profit = Sales - Cost of goods sold / Sales
Gross Profit = $1,200 - $850 / $1,200
Gross Profit = $350 / $1,200
Gross Profit = 0.2917
Gross Profit = 29.17%
Operating profit = Sales - Cost of goods sold - Operating Expenses / Sales
Operating profit = $1,200 - $850 - $200 / $1,200
Operating profit = $150 / $1,200
Operating profit = 0.125
Operating profit = 12.5%
Net profit margin = Sales - Cost of goods sold - Income Taxes / Sales
Net profit margin= $1,200 - $850 - $200 - $30 / $1,200
Net profit margin $120 / $1,200
Net profit margin= 0.1
Net profit margin= 10%
Suppose that, during a recession, the government borrows money to provide free movies as a distraction from the poor economy. Which of the following statements are correct?
A. The free movies as a distraction from the poor economy will likely raise interest rates as the government borrows more money to finance the purchase.
B. This policy will likely be accompanied by an impact lag as the policy takes time to make its way to the people.
C. The provision of free movies is an example of an automatic stabilizer.
D. The government is engaging in contractionary fiscal policy.
E. Crowding-out will occur as individuals choose to rely on free movies instead of purchasing their own.
Answer: A. . The free movies as a distraction from the poor economy will likely raise interest rates as the government borrows more money to finance the purchase.
B. This policy will likely be accompanied by an impact lag as the policy takes time to make its way to the people.
E. Crowding-out will occur as individuals choose to rely on free movies instead of purchasing their own
Explanation:
We are informed that during a recession, the government borrows money to provide free movies as a distraction from the poor economy.
The effect of this is that there will be a likely increase in the interest rates because the government borrows more money to finance the purchase of tickets.
Also, due to the free movies, there'll be an impact lag as the policy will take time before it make its way to the people and there will also be crowding-out because the individuals will rely on free movies instead of purchasing their own.
When a standalone organization is created and owned by two or more parent companies together, the strategic alliance is referred to as a(n) _____.
Answer:
Joint venture
Explanation:
A joint venture is one where two or more parties agree to pool their resources together to accomplish a particular goal.
Each participant shares in the profit, loss, and cost associated with the business.
However the venture an entity that is independent of the participant's other business interest.
So when a standalone organization is created and owned by two or more parent companies together, it is called a joint venture
Your task is to take this _______and construct a graphical representation of the data. In doing so, you determine that as the price of soda rises, the quantity of soda demanded decreases. This confirms the _______ .
Answer:
1. Demand Schedule
2. Law Of Demand
Explanation:
A demand schedule in economics is a tabular representation that describes the quantity demanded of a good or service at different price levels.
In other words, demand schedule depicts the quantity or units of a good or service will be purchased at various price points.
On the other hand, the law of demand states that, given that, all things being equal, as the price of a good increases, quantity demanded decreases; and at the same time, as the price of a good decreases, quantity demanded increases.
Hence, it is can be concluded that, in this case, Your task is to take this DEMAND SCHEDULE and construct a graphical representation of the data. In doing so, you determine that as the price of soda rises, the quantity of soda demanded decreases. This confirms the LAW OF DEMAND.
Answer:
Given the data, a graphical representation of an increase in price of soda resulting in a decrease in quantity demanded of soda, ceteris paribus, is given below in the attachment.
Explanation:
This confirms the law of demand, which states that, all other things being equal, the higher the price of a commodity, the lower the quantity demanded of it.
Other things that are held equal or constant include:
- taste of the consumer
- income level of the consumer
- interest rate in the economy
- level of production or supply of the commodity; etc.
View attachment below, for the graph illustrating THE LAW OF DEMAND.
- DD represents the demand curve
- The vertical axis represents the prices
- The horizontal axis represents the quantities demanded
- The equilibrium point is also seen at D4.
Windy Inc. is considering expanding on some land that it currently owns. The initial cost of the land was $300,000 and it is currently valued at $251,900. The company has some unused equipment that it currently owns valued at $30,000 that could be used for this project if $15,000 is spent for equipment modifications. What is the amount of the initial cash flow for this expansion project
Answer:
The amount of the initial cash flow for this expansion project is $15,000.
Explanation:
It is important to remember that Sunk costs are not relevant for decision making.
Sunk Cost are costs already incurred as a results of past decisions.
The Cost of Land of $300,000 and the Cost of Equipment Valued at $30,000 are both Sunk costs and are not relevant for this expansion project.
The Relevant Costs (Initial Cash Flow) is $15,000 for modifications.
Assume an investor purchases the net assets of an investee for the cash purchase price is $50,400. The investor is willing to purchase the investee's business for this amount because the fair value of PPE is $47,040 and the fair value of a (previously unrecognized) customer list is $10,080 (the fair values of all other assets and liabilities are equal to their book values). The investee company reports the following balance sheet on the acquisition date:
Cash $1,680 Accounts payable 3,360
Accounts receivable $3,360 Accrued liabilities 5,040
Inventories 6,720
Current assets 11,760 Current liabilities 8,400
Long-tem liabilities 6,720
PPE, net 16,800 Stockholders' equity 13,440
Total liabilities & equity $28,560 Total assets $28,560
Parts A and B are independent of each other.
A. Provide the journal entry if the investor pays cash and purchases the assets and assumes the liabilities of the investee company.
B. Provide the journal entry if the investor pays cash and purchases all of the stock of the investee's shareholders.
Answer and Explanation:
The Journal entries are shown below:-
A. Cash Dr, $1,680
Accounts receivable Dr, $3,360
Inventories Dr, $6,720
PPE, net Dr, $16,800
To Accounts payable $3,360
To Accrued liabilities $5,040
To Long-term liabilities $6,720
To Cash $13,440
(Being purchase of the assets and assumption of the liabilities is recorded)
B. Equity investment Dr, $13,440
To Cash $13,440
(Being purchase of the assets and assumption of the liabilities is recorded)
Crane Company has gathered the following information.
Units in beginning work in process 0
Units started into production37,300
Units in ending work in process8,200
Percent complete in ending work in process:
Conversion costs40%
Materials100%
Costs incurred:
Direct materials$78,330
Direct labor$66,500
Overhead$105,114
1. Compute equivalent units of production for materials and for conversion costs.
Materials
Conversion Costs
The equivalent units of production
2. Determine the unit costs of production. (Round unit costs to 2 decimal places, e.g. 2.25.)
Materials
Conversion Costs
Unit costs
$
$
3. Show the assignment of costs to units transferred out and in process.
Units transferred out $
Units in ending work in process
Answer:
1. Compute equivalent units of production for materials and for conversion costs
Equivalent units of Materials: (Units in Beginning Work in process + Units started into production - Units in ending work in process) + Units in ending work in process
= (0 + 37,300 - 8,200) + 8,200
= 37,300
Equivalent units of conversion costs : (Units in Beginning Work in process + Units started into production - Units in ending work in process) + (Units in ending work in process * 40%)
= (0 + 37,300 - 8,200) + (8,200 * 40%)
=29,100 + 3,280
= 32,380
2. Determine the unit costs of production
Unit costs of materials = Direct materials / Equivalent units of Materials
= $78,330 / 37,300
= $2.1
Unit costs of conversion costs = (Direct labor + Overhead) / Equivalent units of conversion costs
= ($66,500 + $105,114) / 32,380
= $171,614 / 32,380
= $5.3
3. Show the assignment of costs to units transferred out and in process
Units ending work in process = Materials + Conversion costs
where, Materials = 8,200 * $2.1 = $8,202
Conversion costs = 3,281 * $5.3 = $17,389
( 8,200 * 40%)
Units ending work in process = $8,202 + $17,389
= $25,591
If portfolio weights are positive: 1) Can the return on a portfolio ever be less than the smallest return on an individual security in the portfolio? 2) Can the variance of a portfolio ever be less than the smallest variance of an individual security in the portfolio? A) 1) yes; 2) no B) 1) no; 2) yes C) 1) no; 2) no D) 1) maybe; 2) no E) 1) yes; 2) yes
Answer: B) 1) no; 2) yes
Explanation:
The return on a portfolio when the portfolio weights are positive will be between the highest return and the lowest return. It cannot exceed these limits.
With Variance however, the variance of a portfolio can be less than the smallest variance of an individual security in the portfolio because in the calculation of portfolio variance, the correlation is used in the calculation (refer to formula below). As a result, if the securities are negatively correlated, it could lead to a lower value than the smallest variance in the portfolio.
Variance of Portfolio = (w(1)^2 * o(1)^2) + (w(2)^2 * o(2)^2) + (2 * (w(1)*o(1)*w(2)*o(2)*q(1,2)))
Highlighted portion is the correlation. If this is negative, Portfolio variance will reduce to a point lower than the lowest individual variance.
Based on the information given, the correct option will be B. 1) no; 2) yes
It should be noted that the return on a portfolio when the portfolio weights are positive will be calculated as the value that is between the highest return and the lowest return.
In such a case, the return on a portfolio can never be less than the smallest return on the individual security in the portfolio. Also, the variance of a portfolio can be less than the smallest variance of the individual security in the portfolio.
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Using the financial data below, prepare a statement of cash flows for the year ended December 31, 2014 for Summer Peebles, Inc. using the indirect method.
Summer Peebles, Inc.
Income Statement
Year Ending December 31, 2014
Sales $1,000.00
Cost of Goods Sold -$650.00
Depreciation Expense -$100.00
Sales and General Expense-$100.00
Interest Expense -$50.00
Income Tax Expense - $40.00
Net Income $60.00
Summer Peebles, Inc.
Balance Sheets as of December 31, 2013 and 2014
Assets 2013 2014
Cash $50.00 $60.00
Accounts Receivable, Net $500.00 $520.00
Inventory $750.00 $770.00
Current Assets $1,300.00 $1,350.00
Fixed Assets, Net $500.00 $550.00
Total Assets $1,800.00 $1,900.00
Liabilities and Equity
Notes Payable to Banks $100.00 $75.00
Accounts Payable $590.00 $615.00
Interest Payable $10.00 $20.00
Current Liabilities $700.00 $710.00
Long-Term Debt $300.00 $350.00
Deferred Income Tax $300.00 $310.00
Capital Stock $400.00 $400.00
Answer:
Summer Peebles, Inc.
Statement of cash flows for the year ended December 31, 2014
Cash Flow From Operating Activities
Net Income before tax and interest $150.00
Adjustment for non-cash items :
Depreciation Expense $100.00
Adjustment for changes in working capital items :
Increase in Accounts Receivable ($20.00)
Increase in Inventory ($20.00)
Decrease in Notes Payable to Banks ($25.00)
Increase in Accounts Payable $25.00
Interest Paid ($10.00 + $50.00 - $20.00) ($40.00)
Income taxes Paid ($300.00 + $40.00 - $310.00) ($30.00)
Net Cash flow from Operating Activities $140.000
Cash Flow From Investing Activities
Purchase of Fixed Assets ($50.00)
Net Cash flow from Investing Activities ($50.00)
Cash Flow From Financing Activities
Long term debt issue $50.00
Net Cash flow from Financing Activities $50.00
Movement During the year $10.00
Cash and Cash Equivalents at Beginning of the year $50.00
Cash and Cash Equivalents at the End of the Year $60.00
Explanation:
Under the Indirect method, Cash flow from Operating Activities is determined by adjusting the Net Profit / Income before tax and interest with non-cash items previously deducted or add to it and any changes in working capital items.
By automating its shop floor, your company expects to save $81,000 annually. If the automation costs $225,000, what is the payback period of the automation?
Answer:
2.78
Explanation:
Calculation for the payback period of the automation
Using this formula
Payback period = Automation cost/ Amount to saved annually
Let plug in the formula
Payback period =$225,000/$81,000
Payback period =2.78
Therefore the payback period of the automation will be 2.78
All of the following are assumptions facing opposing forces of reducing costs and adapting to local markets that international business people should be aware of except? Homogenous customer needs worldwide People around the world are willing to sacrifice preferences for lower prices and higher quality Economies of scale can be obtained in production and marketing through supplying worldwide Lowering international synergy and cost via the value chain matrix
Answer: Lowering international synergy and cost via the value chain matrix
Explanation:
Theodore Levitt came up with some assumptions facing opposing forces of reducing costs and adapting to local markets that international business people should be aware of which include;
On a global scale, customer needs are beginning to become homogeneous.People are willing to sacrifice their preferences for better quality products at a cheaper quality which gives Multinational Companies a chance to offer them better products than local producers due to their large sizes and Economies of scale.Having to supply the world can lead to Economies of scale in production and marketing due to the larger market.Lowering international synergy and cost via the value chain matrix is not one of the assumptions espoused by Theodore Levitt and so is the correct answer.
Kunkel Company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow:
Mercon Wurcon
Direct materials cost per unit $ 9.00 $ 7.00
Direct labor cost per unit $15.00 $ 17.00
Direct labor-hours per unit 0.40 4.80
Number of units produced 4,000 8,000
These products are customized to some degree for specific customers.
Required:
1. The company's manufacturing overhead costs for the year are expected to be $1,600,000. Using the company's conventional costing system, compute the unit product costs for the two products.
2. Management is considering an activity-based costing system in which half of the overhead would continue to be allocated on the basis of direct labor-hours and half would be allocated on the basis of engineering design time. This time is expected to be distributed as follows during the upcoming year:
Mercon Wurcon Total
Engineering design time (in hours) 8,000 8,000 16,000
Compute the unit product costs for the two products using the proposed ABC system.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Mercon Wurcon
Direct materials cost per unit $ 9.00 $ 7.00
Direct labor cost per unit $15.00 $ 17.00
Direct labor-hours per unit 0.40 4.80
Number of units produced 4,000 8,000
A. First, we need to calculate the predetermined overhead rate:
Total direct labor hours= 0.4*4,000 + 4.8*8,000= 40,000
Overhead= 1,600,000
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 1,600,000/40,000
Predetermined manufacturing overhead rate= $40 per direct labor hour
Now, we can determine the unitary product cost.
Mercon= 9 + 15 + 40*0.4= $37
Wurcon= 7 + 17 + 4.8*40= $216
B.
Mercon Wurcon Total
Engineering design time (in hours) 8,000 8,000 16,000
Now, we have two different allocation rates:
Direct-labor hours= 800,000/40,000= $20 per direct labor hour
Engineer desing= 800,000/16,000= $50 per engineer desing hour
Finally, we can determine the unitary product cost:
Engineer design per unit:
Mercon= 8,000/4,000= 2
Wurcon= 8,000/8,000= 1
Mercon= 9 + 15 + (20*0.4 + 50*2) = $132
Wurcon= 7 + 17 + (20*4.8 + 50*1)= $170
The Keynesian link between the money market and the goods and services market is __________. Changes in the money market must affect the __________ market before the goods and services market is affected.
Answer:
Indirect; investment.
Explanation:
John Maynard Keynes was a British economist born on the 5th of June, 1883 in Cambridge, England. He was famous for his brilliant ideas on government economic policy and macroeconomics which is known as the Keynesian theory. He later died on the 23rd of April, 1946 in Sussex, England.
The Keynesian link between the money market and the goods and services market is indirect. Changes in the money market must affect the investment market before the goods and services market is affected.
According to the Keynesian Transmission Mechanism, the link between the money market and the goods and services market is indirect; because at first, short-term interest rates are lowered by an increase in the supply of reserves and then with time both the bond and bank loan rates falls. Consequently, this would make investments and aggregate demand (AD curve shifts rightward) to rise or increase as a result of the low cost of capital for investors and by extension it boost the level of production or quantity of output (real gross domestic product or Real GDP).
This ultimately implies that, the interest rates affects the real and costs of capital (monetary changes).
"Jaymes Corporation produces high-performance rotors. It expects to produce 78,000 rotors in the coming year. It has invested $12,566,667 to produce rotors. The company has a required return on investment of 18%. What is its ROI per unit
Answer:
$29
Explanation:
The computation of return on investment per unit is shown below:-
Return on investment = Total Investment × Required Rate on Investment
= $12,566,667 × 18%
= $2,262,000.06
Return in investment per unit = Required ROI ÷ Total Rotors
= $2,262,000.06 ÷ 78,000
= $29
Therefore for computing the return on investment we simply applied the above formula.
"If the top two companies in the golf club industry merged, their new market share would equal 15% of the market. This industry's new HHI would be 995. According to the FTC's historical guidelines for mergers, would the FTC approve this merger
Answer:
Yes, the FTC would ignore the merger and allow it to go through.
Explanation:
here are the options to the question ;
O No, the FTC would probably challenge the merger
O Maybe. The FTC would scrutinize the merger and make a case-by-case decislon.
Yes, the FTC would ignore the merger and allow it to go through.
HHI is used to calculate market power.
if the HHI index is less than 1000 post merger, the merger would be allowed to go through.
If the HHI index is between 1000 - 1800 post merger and the change in HHI is more than 100 after the merger, The FTC would scrutinize the merger and make a case-by-case decislon.
If the HHI index is more than 1800 post merger and the change in HHI is more than or equal to 50, he FTC would probably challenge the merger
During March, Pendergraph Corporation incurred $65,000 of actual Manufacturing Overhead costs. During the same period, the Manufacturing Overhead applied to Work in Process was $67,000. The journal entry to record the incurrence of the actual Manufacturing Overhead costs would include a:
Answer:
debit to Manufacturing Overhead of $65,000
Explanation:
Manufacturing overhead cost are those that are shared to different processes that do not contribute directly to product being manufactured.
For example raw materials is a direct contributor to goods, while labour is a overhead cost that indirectly contributed to the good.
On the given scenario it is the actual amount incurred that will be debited to the books of the company.
So there will be a debit to Manufacturing Overhead of $65,000
Psymon Company, Inc. sells construction equipment. The annual fiscal period ends on December 31. The following adjusted trial balance was created from the general ledger accounts on December 31:________.
Account Titles Debits Credits
Cash $ 45,190
Accounts Receivable 19,200
Inventory 69,500
Property and Equipment 53,000
Accumulated Depreciation $ 22,300
Liabilities 32,100
Common Stock 96,000
Retained Earnings, January 1 12,200
Sales Revenue 195,500
Sales Returns and Allowances 7,300
Sales Discounts 8,600
Cost of Goods Sold 105,200
Salaries and Wages Expense 18,200
Office Expense 19,200
Interest Expenses 2,300
Income Tax Expense 10,410
Totals $ 358,100 $ 358,100
Prepare a multistep income statement that would be used for internal reporting purposes. Treat Sales Discounts and Sales Returns and Allowances as contra-revenue accounts. TIP: Some of the accounts listed will appear on the balance sheet rather than the income statement.
Prepare a multistep income statement that would be used for external reporting purposes, beginning with the amount for Net Sales.
Compute the gross profit percentage.
Answer:
Prepare a multi-step income statement that would be used for internal reporting purposes.
Psymon Company, Inc.
Income Statement
For the year ended December 31, 202x
Sales revenue $195,500
Sales discounts $8,600
Sales returns and allowances $7,300
Net sales $179,600
Cost of goods sold $105,200
Gross profit $74,400
Expenses:
Salaries and Wages Expense $18,200
Office Expense $19,200
Income from operations $37,000
Interest Expenses $2,300
Income Tax Expense $10,410
Net income $24,290
Prepare a multi-step income statement that would be used for external reporting purposes
Psymon Company, Inc.
Income Statement
For the year ended December 31, 202x
Net sales $179,600
Cost of goods sold ($105,200)
Gross profit $74,400
Gross profit margin 41.43%
Operating expenses:
Salaries and Wages Expense $18,200 Office Expense $19,200 ($37,400)Income from operations (EBIT) $37,000
Other revenues and expenses:
Interest Expenses $2,300Earnings before taxes $34,700
Income Tax Expense $10,410
Net income $24,290
The bonds of CYTK, Inc. carry a 12% annual coupon, have a $1,000 face value, and mature in 5 years. Bonds of equivalent risk yield 9%. What is the market value of CYTK bonds
Answer:
The market value of CYTK bonds is $1,116.69.
Explanation:
This can be calculated as follows:
Annual coupon = $1000 × 12% = $120
Annual coupon discount factor based ordinary annuity = ((1-(1/(1 + r))^n)/r)
Where;
r = rate of return of equivalent bond = 9%, or 0.09
n = number of years to maturity = 5
Therefore, we have
Annual coupon discount factor = ((1-(1/(1.09))^5)/0.09) = 3.88965126335172
PV of coupon = $120 × 3.88965126335172 = $466.76
PV of the face value of the bond = Face value ÷ (1 + r)^n = 1,000 ÷ (1 + 0.09)^5 = $649.93
Therefore, we have:
Market value of CYTK bonds = PV of coupon + PV of the face value of the bond = $466.76 + $649.93 = $1,116.69
Therefore, the market value of CYTK bonds is $1,116.69.
Your firm has total sales of $22,980, costs of $14,715, and depreciation of $6,045. The tax rate is 34 percent. There are no interest expenses or other income. What is the operating cash flow?
Answer:
Thus, Operating cash flow for company is $7,510.20.
Explanation:
Total Sales = $22,980
Cost of goods sold = $14,715
Depreciation = $6,045
Profit before tax = Total Sales – Cost of goods sold – Depreciation
= $22,980 – $14,715 – $6,045
=$2,220
Profit before tax is $2,220
Tax rate = 34%
Net profit = profit before tax × (1 – 34%)
= $1,465.20
Net profit for company is $1,465.20.
Operating cash flow = Net profit + Depreciation
= $1,465.20 + $6,045
= $7,510.20
Thus, Operating cash flow for company is $7,510.20.
You would like to have $50,000 in 15 years. To accumulate this amount you plan to deposit each year an equal sum in the bank, which will earn 7% interest annually. Your first payment will be made at the end of the year.
Required:
A) How much must you deposit annually to accumulate this amount?
B) If you decide to make a lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be?
C) At the end of five years, you will receive $10,000 and deposit this in the bank towards your goal of $50,000 at the end of 15 years. In addition to this deposit, how much must you deposit in equal annual deposits in order to reach your goal?
Answer:
ah
Explanation:
._.
Port Allen Chemical Company processes raw material D into joint products E and F. Raw material D costs $4 per liter. It costs $100 to convert 100 liters of D into 60 liters of E and 40 liters of F. Product F can be sold immediately for $4 per liter or processed further into Product G at an additional cost of $3 per liter. Product G can then be sold for $9 per liter.
a. Determine whether Product F should be sold or processed further into Product G.
b. Calculate the net advantage (disadvantage) of further processing.
c. Use a negative sign with your answer to indicate a net disadvantage (if applicable).
Answer:
a) Product G should be produced and sold
b) Net financial advantage $80
Explanation:
A company should process further a product if the additional revenue from the split-off point is greater than than the further processing cost.
Also note that all cost incurred up to the split-off point are irrelevant to the decision to process further .
$
Revenue after split-off point
($9× 40 litres) 360
Revenue at the slit of point
($4 × 40) (160)
Additional income from further processing 200
Further processing cost ($3× 40) (120)
Incremental income from further processing 80
Incremental income from further processing = $80
a) The product F should be processed further and sold as product G. Doing so would increase the net income by $80.
b) Net advantage $80
Equivalent Units and Cost per Equivalent Unit-Weighted-Average Method [LO5-2, LO5-3]
Pureform, Inc., uses the weighted-average method in its process costing system. It manufactures a product that passes through two departments. Data for a recent month for the first department follow:
Units Materials Labor Overhead
Work in process inventory, beginning 58,000 $ 56,200 19,700 $24,100
Units started in process 549,000
Units transferred out 570,000
Work in process inventory, ending 37,000
Cost added during the month $ 743,270 $ 243,460 $297,540
The beginning work in process inventory was 80% complete with respect to materials and 65% complete with respect to labor and overhead. The ending work in process inventory was 60% complete with respect to materials and 40 % complete with respect to labor and overhead.
Required:
1. Compute the first department's equivalent units of production for materials, labor, and overhead for the month.
2. Determine the first department's cost per equivalent unit for materials, labor, and overhead for the month. (Round your answers to 2 decimal places.)
Overhead Labor Materials
1. Equivalent units of production
2. Cost per equivalent unit
Answer:
Material Labour Overhead
1) Total equivalent unit 607,000 584,800 584,800
2) Cost per equivalent unit (a/b) 1.32 0.45 0.55
Explanation:
Under the weighted average method of valuation, to account for completed units, it is assumed that the entire degree of work required is done in the period under consideration. So there is no separation of the completed units into opening inventory and fully worked.
Cost per equivalent unit = cost / total equivalent units
1) Equivalent units of production
Material Labour Overhead
Unit EU EU EU
Transferred out 570,000 570,000 570,000 570,000
Work in progress 37,000 22,200 14,800 14,800
Total equivalent unit 607,000 584,800 584,800
% of work done on WIP 60% 40% 40%
Note the equivalent unit for WIP is computed by multiplying the degree of work done (in %) by the units of WIP for each of the element of cost.
For example, the EU of material for WIP = 60% × 37,000 = 22,200
2. Cost per equivalent unit
$ $ $
Cost brought forward 56,200 19,700 24,100
Cost incurred and added 743,270 243,460 297,540
Total cost (a) 799,470 263,160 321,640
Total equivalent unit(b) 607,000 584,800 584,800
Cost per equivalent unit (a/b) 1.32 0.45 0.55
Cost per equivalent unit = Total cost / total equivalent units
Wolverine Company financial statements included the effects of these errors: Reported Net Income for Year 1 was $20,000. Reported Net Income for Year 2 was $18,000. Indicate the error in 12/31/2 Retained Earnings:
Answer:
Net income year 2 = $21,300
Explanation:
I looked for the missing information and found this:
Year Depreciation overstated Prepaid expense omitted
1 $2,500 $2,000
2 $4,000 $2,700
If your question doesn't include the same values, just adjust the answer.
Year 2's net income = net income (year 2) + overstated depreciation (year 2) + omitted prepaid expenses (year 1) - omitted prepaid expenses (year 2) = $18,000 + $4,000 + $2,000 - $2,700 = $21,300
The valuation of marketable securities on the balance sheet requires the securities on the balance sheet requires the separation of investment securities into three categories: held to maturity: trading securities and securities available for sale trading and securities available for sale.
a. True
b. False
Answer: True
Explanation:
The valuation of marketable securities on the balance sheet requires the securities on the balance sheet requires the separation of investment securities into three categories.
The categories are held to maturity which are the securities that are bought and then kept until they mature; the trading securities and then the securities that are available for sale.
Black Friday, the day after Thanksgiving, is the largest shopping day of the year. Do the early shoppers, who often wait in line for hours in the cold to get doorbuster sale items, have elastic or inelastic demand?
Answer:
Early shoppers have elastic demand because of the quantity demanded. That changes significantly as the result of a price change. Elastic means ‘sensitive’. Which means shoppers are responding to Black Friday deals currently happening so they can buy products they/want/need at the prices they wish to spend.
Answer: I personally would say the shoppers who wait in line for hours have an elastic demand.
Explanation: The reason why they have an elastic demand is because an elastic demand means when an elastic product is defined as one where a change in the price of the product leads to a significant change in the demand for that product. Which the people waiting outside are buying the item due to the change in price.
The_____ will solve for the expected return measured in an investor’s domestic currency for a foreign asset denominated its own currency.
Answer:
The Intertemporal Capital Asset Pricing Model (ICAPM)
Explanation:
The Intertemporal Capital Asset Pricing Model (ICAPM) is an useful way to calculate investor returns.
This method which involves predicting model allows an investor to measure their expected return in his own domestic currency. In a sense, It tells the investors the risk to profit gain of an investment.
The marketing department of a reputable firm wants to improve strategic decision making, track the actions of other players in the market, and provide early warning of opportunities and threats. Which of the following would help the firm achieve its objectives?
A) Data warehousing
B) strategic planning competitive marketing intelligence
D) customer relationship management
E) ethnographic research
Answer:
The answer is C. competitive marketing intelligence
Explanation:
Competitive marketing intelligence may be a powerful research-based method employed by a company to collect, analyze, and use information collected on competitors, economic conditions, customers etc to a achieve business's competitive advantage.
The information-gathering analysis process can help a corporation develop its strategy or identify competitive gaps. It identifies threats and opportunities within the business
A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows under:________
a. operating activities
b. investing activities
c. noncash investing and financing activities
d. financing activities
Answer:
b. investing activities
Explanation:
Cash flow can be defined as the net amount of cash and cash-equivalents that is flowing into (received) and out (given) of a business. There are three components of the cash flow;
1. Operating cash flow: all cash generated from the business activities of an organization.
2. Financing cash flow: all payments made by an organization and profits from issuance of debts and equity.
3. Investing cash flow: costs associated with purchasing of capital assets and investments of cash resources in other businesses.
A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows under investing activities.
Generally, investing activities comprises of purchasing physical assets, investing in securities and the sale of assets or securities associated with the company.
Hence, a company that purchases equipment for $32,000 cash should show the transaction on the statement of cash flows under investing activities.