Answer:
Explanation:
1
Units %Material
Units completed & Transferred 289,000 100 289,000
Units of ending WIP 68,000 75 51,000
Equivalent units of production 340,000
% Conversion EUP Conversion
Units completed & transferred out 100 289,000
Units of ending WIP 25 17,000
Equivalent units of production 306,000
2
Material Conversion
Beginning WIP 20,000 6,200
Added cost in June 214,600 131,500
Total 234,600 137,700
Equivalent unit of production 340,000 306,000
Cost /equivalent unit 0.69 0.45
3
EUP Cost/ EUP Total
Material 51,000 0.69 35,190
Conversion 17,000 0.45 7,650
Total cost of ending WIP 42,840
for materials ,conversion
4
EUP Cost / EUP Total
Material 289,000 0.69 199,410
Conversion 289,000 0.45 130,050
Total cost of units transferred out 329,460
5
Reconciliation report
Cost of beginning WIP 20,000 6,200 26,200
Cost added in the month 214,600 131,500 346,100
Total 372,300
Cost of units transferred out 329,460
Cost of ending WIP 42,840
Total 372,300
From 1991 to 2000, the U.S. economy had an annual inflation rate of around 2.76%. The historical annual nominal risk-free rate for this same period was around 5.71%. Using the approximate nominal interest rate equation and the true nominal interest rate equation, compute the real interest rate for that decade. What is the estimated real interest rate using the approximate nominal interest rate equation for that decade?
Answer:
2.95% and 2.87%
Explanation:
The computation of the approximate real rate and the estimated real interest rate is shown below:
The Approximate real rate is
= Historic annual nominal risk free rate - Annual inflation rate
= 5.71% - 2.76%
= 2.95%
And, the estimated real interest rate is
= (1 + historical annual nominal risk free rate) ÷ (1 + annual inflation rate) - 1
= (1 + 0.0571) ÷ (1 + 0.0276) - 1
= 2.87%
We simply applied the above formulas so that each one could be determined
Rizio Co. purchases a machine for $12,500, terms 210, n60, FOB shipping point. Rizio paid within the discount period and took the $250 discount. Transportation costs of $360 were paid by Rizio. The machine required mounting and power connections costing $895. Another $475 is paid to assemble the machine, and $40 of materials are used to get it into operation. During installation, the machine was damaged and $180 worth of repairs were made. Compute the cost recorded for this machine.
Answer:
Cost of machine= $14,200
Explanation:
According to International Accounting standards(IAS) 16 property plan and equipment (PPE), the cost of an asset is the purchase cost plus other costs of bringing it to the intended working conditions.
So we will add the purchase cost to the installation cost , freight charges.
Note that the cost of the power connections, assembling and material used for installations all represent cost associated to bring the machine into ready for use.
Cost of machine = (12,500 - 250) + 360 + 895 + 475 + 40 + 180= 14,200
Cost of machine= $14,200
Which of the following is not considered to be a liability? Answers: a. Wages Payable b. Unearned Revenues c. Accounts Payable d. Accounts Receivable
Answer:
d. Accounts Receivable.
Explanation:
In Financial accounting, liability can be defined as the amount of money being owed by an individual or organization to another.
Simply stated, liability is a debt being owed and as such it usually has "payable" in its account title on the balance sheet.
Generally, liabilities are recorded on the right side of the balance sheet and it comprises of financial informations such as warranties, bonds, loans, deferred revenues, mortgages, account payable etc.
Accounts Receivable is not considered to be a liability because it is the payment a business firm would receive from its customers for goods purchased or services taken on credit. Accounts Receivable are recorded in the current assets section of the balance sheet because they add value to a business firm.
An investor considers investing $10,000 in the stock market. He believes that the probability is 0.30 that the economy will improve, 0.40 that it will stay the same, and 0.30 that it will deteriorate. Further, if the economy improves, he expects his investment to grow to $15,000, but it can also go down to $8,000 if the economy deteriorates. If the economy stays the same, his investment will stay at $10,000.a. What is the expected value of his investment?b. Should he invest the $10,000 in the stock market if he is risk neutral?c. Is the decision clear-cut if he is risk averse? Explain.
Answer:
a. What is the expected value of his investment?
$10,900b. Should he invest the $10,000 in the stock market if he is risk neutral?
If the investor is risk neutral, then he pays little attention to market risk, therefore, he/she should invest because the expected value is higher than the investment.c. Is the decision clear-cut if he is risk averse?
If the investor is risk averse, it means that he/she is afraid of market risk and likes to make decisions that involve the least possible risk. In this case, the possibility of losing money is not that large (in my opinion) and the expected value is relatively high, but a risk averse investor would probably prefer an investment that yields a lower rate but is more secure, e.g. US securities.Explanation:
total investment $10,000
if economy improves = 0.30 x $15,000 = $4,500if economy remains the same = 0.40 x $10,000 = $4,000if economy deteriorates = 0.30 x $8,000 = $2,400total expected value = $10,900
App Holdings is expected to pay dividends of $1.50 every six months for the next three years. If the current price of App Holdings stock is $22.60, and App Holdings' equity cost of capital is 18%, what price would you expect App Holdings' stock to sell for at the end of three years
Answer:
The answer is $34.36
Explanation:
FV = PV x (1 + R x ((1 + r))^T = $22.6 x (1 + {($1.5 / $22.60) x [1 + (18% / 2)]}^6 = $34.36
During June, Vixen Company sells $850,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 3% of the selling price. Customers returned $14,000 of merchandise for warranty replacement during the month. The entry to settle the customer warranties is:
Answer: Debit Warranty Expense $25,500; credit Estimated Warranty Liability $25,500.
Explanation:
From the question, we are informed that during June, Vixen Company sells $850,000 in merchandise that has a one year warranty and that experience shows that warranty expenses average about 3% of the selling price and that customers returned $14,000 of merchandise for warranty replacement during the month.
The entry to settle the customer warranties is to debit Warranty Expense $25,500 and then credit Estimated Warranty Liability $25,500.
The warranty expense is calculated as:
= 3% × $850,000
= 0.03 × $850,000
= $25,500
Primus Corp. is planning to convert an existing warehouse into a new plant that will increase its production capacity by 45 percent. The cost of this project will be $7,125,000. It will result in additional cash flows of $1,875,000 for the next eight years. The discount rate is 12 percent.
a) What is the payback period?
b) What is the NPV for this project?
c) What is the IRR?
Answer:
3.8 years
$2,189,324.56
20.33%
Explanation:
Payback period calculates how long it takes to recover the amount invested in a project from its cumulative cash flows.
Payback period = amount invested / cash flows = $7,125,000 / $1,875,000 = 3.8 years
Net present value is the present value of after tax cash flows from an investment less the amount invested.
Net present value can be calculated using a financial calculator
cash flow in year 0 = $-7,125,000.
cash flow each year from year 1 to 8 = $1,875,000
I = 12%
NPV = $2,189,324.56
Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested
IRR can be calculated using a financial calculator
cash flow in year 0 = $-7,125,000.
cash flow each year from year 1 to 8 = $1,875,000
I = 12%
IRR = 20.33%
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
To find the IRR using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
10. You recently sold 200 shares of Apple stock to your brother. The transfer was made through a broker, and the trade occurred on the NYSE. This is an example of:
Answer:
A secondary market transaction
Explanation:
Secondary market transaction: In this transaction, the transaction which is already issued to the public are sold by another investors.
In this type market, the investors buy and sell securities which are theirs . It is what most people typically think of as the "stock market," though stocks are also sold on the primary market when they are first issued.
So in the question, the transfer was made through a broker which implies it deals in the secondary market.
Primary market transaction: In this transaction, the company directly sells the new stocks, bonds, etc to the public for the first time.
Future market transaction: This is the transaction which occurs in the near future to buy some specific quantities at the future price.
What is the value of a zero-coupon bond with a yield to maturity of 9 percent, a par value of $1,000, and 10 years to maturity? (Assume semi-annual compounding)
Answer:
$414.64
Explanation:
For computing the value of zero-coupon bond we need to apply the present value formula i.e to be shown in the attachment
Given that,
Future value = $1,000
Rate of interest = 9% ÷ 2 = 4.5%
NPER = 10 years × 2 = 20 years
PMT = $0
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after applying the above formula, the present value is $414.64
The aggregate demand and aggregate supply model is a useful simplification of the macroeconomy used to explain short-run fluctuation in economic activity around its long-run trend.
a) The vertical axis of a diagram of the aggregate demand and aggregate supply curves measures which of the following?
A. An economy's price level.
B. The amount of a particular representative good produced in the economy.
C. The price of a particular representative good produced in the economy.
b) Which of the following are reasons that the short-run aggregate supply curve slopes upward?
A. As the price level rises, firms expand their production because they can sell their output for more money.
B. As the price level rises, firms find it more profitable to hire workers at any given wage.
C. As the price level rises, firms decrease their investment, because it is more expensive to purchase capital.
Answer:
The correct answers are:
a) A. An economy's price level.
b) A. As the price level rises, firms expand their production because they can sell their output for more money.
Explanation:
On the one hand, in this type of economic model, the aggregate supply and demand represent the economy's price and quantity level regarding the output of the country as a whole. Therefore that in the vertical axis of the diagram the curves measures the price level of the economy and in the horizontal axis the curves measure the output that the economy produces at that given price.
On the other hand, the slope of the aggregate supply is upward because of the same reason as it is in the supply curve, because of the law of the supply, that states that there is a direct relationship between the price of the good an its quantity offered. Thefore that when the price level rises the firms will produce more because they can sell their production at a higher price.
Gugenheim, Inc., has a bond outstanding with a coupon rate of 6.5 percent and annual payments. The yield to maturity is 7.7 percent and the bond matures in 21 years. What is the market price if the bond has a par value of $2,000?
Answer:
Price of bond=$1,753.96
Explanation:
The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).
Value of Bond = PV of interest + PV of RV
The value of bond for Gugenheim, Inc can be worked out as follows:
Step 1
Calculate the PV of interest payments
Annual interest payment
= 6.5%% × 2000 = 130
PV of interest payment
PV = A× (1- 1+r)^(-n)
A- 130, r- 7.7, n- 21
= 130 × (1-(1.077)^(-21)/0.077) = 1,332.743
Step 2
PV of redemption Value
PV = RV × (1+r)^(-n)
RV - 2000, r- 7.7%, n- 21
PV = 2000 × (1.077)^(-21) = 421.2115063
Step 3
Price of bond
= 1,332.743 + 421.211
=$1753.955
Price of bond=$1,753.96
Suppose a stock has an expected return of 12% and a standard deviation of 6%. What is the likelihood that this stock returns between 12% and 18%
Answer: 34.13%.
Explanation:
Given : Expected return : [tex]\mu=12\%=0.12[/tex]
Standard deviation: [tex]\sigma=6\%=0.06[/tex]
Let x be the stock returns.
Then, the probability that stock returns between 12% and 18%:
[tex]P(0.12<x<0.18)=P(\dfrac{0.12-0.12}{0.06}<\dfrac{x-\mu}{\sigma}<\dfrac{0.18-0.12}{0.06})\\\\=P(0<Z<1)\ \ \ [\because z=\dfrac{x-\mu}{\sigma}]\\\\=P(Z<1)-P(Z<0)\\\\=0.8413-0.5\ \ \ \text{[By z-table]}\\\\=0.3413[/tex]
Hence, the likelihood that this stock returns between 12% and 18% is 34.13%.
Mr. and Ms. Kingsley owned acre as joint tenants in fee simple absolute. Ms Kingsley secretly conveyed her interest to herself in an instrument that added, "I hereby terminate the joint tenancy in Black-acre with Mr. Kingsley." Ms. Kingsley thereafter leased a portion of the property to Mr. Matthew, over the objections of Mr. Kingsley for Mr. Matthew to use for holding boxing matches. Their lease provided that Mr. Matthew would pay $1000.00 on the first day of each month during which he was permitted to use the property. Mr. Kingsley demanded from Ms. Kingsley one-half of the rents received from Mr. Matthew.
Required:
Describe the property relations between the parties and Mr. Kingsley's rights and remedies.
Answer:
Mr. and Ms. Kingsley as Joint Tenants
1. Property Relations between Mr. and Ms. Kingsley: The titles show that the Kingsleys are living together but not married partners. However, the Black-acre is jointly owned by these partners. Each has equal rights and obligations over the acre. Ms. Kingsley does not have absolute right to sell or lease any part of the acre without the consent of Mr. Kingsley or without obtaining a court permit to sell or lease, especially upon Mr. Kingsley's objections. She also lacks the legal right to secretly "terminate the joint tenancy in Black-acre" without the knowledge of Mr. Kingsley or without going through the applicable court process.
2. Mr. Kingsley's Rights and Remedies: Having leased a portion of the acre to Mr. Matthew, Mr. Kingsley is entitled to half of the monthly lease payments. He also has the right to demand from Ms. Kingsley one-half of the rents from the lease. He can, in the absence of Ms. Kingsley's refusal, initiate a court process to enforce his joint-tenancy rights.
Explanation:
Joint-tenancy can exist between Mr. Kingsley and Ms. Kingsley, whether they are legally married or not. Joint-tenancy can also exist between two or more parties without the intention of marriage. The term is a legal term that describes an equally shared ownership interest in a property. Joint-tenancy deeds are established in order to avoid the need for a probate in the case of a party's death.
The Freeman Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 34 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project.
a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.)
b. Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)
c. Suppose the appropriate discount rate is 12 percent. What is the NPV of the project?
Complete question is given at the end of the question.
Answer with Explanation:
Requirement 1:
Net Income is an accounting profits which includes both cash flow items and non cash flow items. It can be calculated as under:
Net Income = (Sales - Cost - Depreciation) - (Income Before Tax * Tax Rate)
The computation is given in the Second excel sheet attached.
Requirement 2:
According to relevant costing principles if the cost is relevant then it must satisfy following conditions:
Must be cash flow in nature.Must be Future related (no past commitments).Differential or must be incrementalSo this means that the depreciation would not be taken into account as it is not a relevant cost and thus must not be included as an incremental cost.
Incremental Cash flow can be calculated using the following formula:
Incremental Cash Flow = Net Income + Depreciation (Removing its impact) - Working Capital Injection + Working Capital Withdrawal
The calculation for each year is shown in the second attachment.
Requirement 3:
The NPV can be calculated by discounting each year cash flow by the rate of return which in this case is 12%.
The formula for calculating the NPV is as under:
NPV = Investment in year zero - Net Cash Flow of Y1 / (1 + r)^1 - Net Cash Flow of Y2 / (1 + r)^2 - Net Cash Flow of Y3 / (1 + r)^3 - Net Cash Flow of Y4 / (1 + r)^4
The computation of NPV is given in the second attachment given below:
The ___________ organization becomes a central hub surrounded by networks of outside suppliers and specialists, and parts can be added or taken.
Answer: modular
Explanation:
A modular organizational structure is a form of business which can be separated and then recombined so as to bring about efficiency at the workplace.
In modular structure, the business is grouped into small, strategic business units that focuses on a particular element of the process in the organization. It leads to flexibility and efficiency.
A bond that pays interest annually yielded 6.01 percent last year. The inflation rate for the same period was 3 percent. Given that information, the actual real rate of return on this bond for last year was _____percent.
Answer:
2.3%
Explanation:
The computation of the actual real rate of return is shown below:-
Actual real rate of return on this bond for last year = ((1 + Nominal rate of interest ) ÷ (1 + Inflation rate of return)) - 1
= ((1 + 0.0601) ÷ (1 + 0.03)) - 1
= 1.0601 ÷ 1.03 - 1
= 1.023 - 1
= 0.023
or
= 2.3%
Therefore for computing the actual rate of return we simply applied the above formula.
1. Stock A has an expected return of 7%, a standard deviation of expected returns of 35%, a correlation coefficient with the market of -0.3, and a beta coefficient of -0.5. Stock B has an expected return of 12% a standard deviation of returns of 10%, a 0.7 correlation with the market, and a beta coefficient of 1.0. Which security is riskier
Answer:
Option A is riskier
Explanation:
In this question, we want to know which of the two stocks is riskier.
To answer this, we can use the standard deviation of returns as a risk measure.
For a security with a big value for standard deviation of returns, its per period returns are wider making its range per day large.
Hence, what this means is that out of the two stocks, the one with a larger value of standard deviation of returns will guarantee more risk as it is expected to give a better ranges of price
Now back to the values in the question, we can see that the standard deviation of returns of stock A is greater than that of stock B which this makes it a more risky option
Many Western European countries are giving monetary incentives to employees who have multiple children. Why would they do this? How would a baby boom change Japan's demographics?
Answer:
The incentive is to encourage more families to have more children.
A baby boom in Japan will ensure that there is enough workforce to maintain the growing economy in the future.
Explanation:
The western countries, especially Europe is battling with population decline, which is estimated to have an economic impact in the future, due to a potential decline in the labor force in the future. To counter this, many of these western nations have crated policies that encourages childbirth by providing incentive for families with multiple children, reducing tax for such families, and even as far as up to 12 to 16 months paid paternity and maternity leave, when a couple has a new baby. Couples are also given government paychecks when they go on childbirth leave.
Japan is one of the countries that has been experiencing a population decline in recent years. The number of death seem to be more than the number of births. The general effect is the fear of a dwindling work force of the future. This will lead to more people retiring later, and there would be a huge pressure on the pension schemes, and the economy as a whole due to this. A population boom will mean that a future workforce is guaranteed, and the retirement age lowered, and the call for dependency on automation due to a shrinking workforce can be reviewed.
Many of the western and developed nations are now giving incentives to those who produce more than one child or multiple children.
As their economy is getting old and is aging hence in order to company the problem of the aging of population monetary incentives are given. The baby boom is a condition related to the growth of babies. Japan is a greying nation that has a negatively declining trend of population. Due to the larger medical aid population is getting older and the birth rate is low. A baby boom may lead to an increase in youth and the young population. More children and more people.Learn more about the Western European countries that are giving monetary incentives.
brainly.com/question/20414870.
Raphael's Performance Pizza is a small restaurant in Philadelphia that sells gluten-free pizzas. Raphael's very tiny kitchen has barely enough room for the three ovens in which his workers bake the pizzas. Raphael signed a lease obligating him to pay the rent for the three ovens for the next year. Because of this, and because Raphael's kitchen cannot fit more than three ovens, Raphael cannot change the number of ovens he uses in his production of pizzas in the short run.
However, Raphael's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Raphael lets them know how many workers he needs for each day of the week. In the short run, these workers are____________ inputs, and the ovens are_____________ inputs.
Answer:
However, Raphael's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Raphael lets them know how many workers he needs for each day of the week. In the short run, these workers are variable inputs, and the ovens are fixed inputs.
Explanation:
In the long run, all inputs are variable because eventually lease contracts expire, or they can move to new facilities. But on the short run, some inputs are fixed due to certain restraints. In this case, the restraints are the size of the kitchen and the lease contract for three ovens.
In the short run, the only input that Raphael can vary is the number of workers that he employs every week.
Wolford Department Store is located in midtown Metropolis. During the past several years, net income has been declining because suburban shopping centers have been attracting business away from city areas. At the end of the company’s fiscal year on November 30, 2017, these accounts appeared in its adjusted trial balance.
Accounts Payable $34,304
Accounts Receivable 22,016
Accumulated Depreciation's Equipment 87,040
Cash 10,240
Common Stock 44,800
Cost of Goods Sold 786,304
Freight-Out 7,936
Equipment 200,960
Depreciation Expense 17,280
Dividends 15,360
Gain on Disposal of Plant Assets 2,560
Income Tax Expense 12,800
Insurance Expense 11,520
Interest Expense 6,400
Inventoryv 33,536
Notes Payable 55,680
Prepaid Insurance 7,680
Advertising Expense 42,880
Rent Expense 43,520
Retained Earnings 18,176
Salaries and Wages Expense 149,760
Sales Revenue 1,157,120
Salaries and Wages Payable 7,680
Sales Returns and Allowances 25,600
Utilities Expense 13,568
Additional data: Notes payable are due in 2021.
Required:
Prepare a multiple-step income statement. (List other revenues before other expenses.)
Answer:
Wolford Department Store
Income Statement
For the year ended November 30. 2017
Sales Revenue
Total sales $1,157,120
Less Sales return $25,600
Net Sales Revenue $1,131,520
Less : Cost of goods sold $786,304
Gross Profit $345,216
Operating Expenses
Selling Expenses
Freight out $7,936
Advertising expenses $42,880
Administrative expenses
Depreciation Expenses $17,280
Salaries and wages Expenses $149,760
Rent Expenses $43,520
Utilities Expenses $13,568
Insurance Expenses $11,520
Total Operating Expenses $286,464
$58,752
Other Income and Expenses
Gain on disposal of equipment $2,560
Less: Interest Expenses $11,520
Net Other Income and Expenses -$8,960
Less: Income Tax Expenses $12,800
Net Income $36,992
Consider a product with a daily demand of 600 units, a setup cost per production run of $200, a monthly holding cost per unit of $5.00, and an annual production rate of 300,000 units. The firm operates and experiences demand 300 days per year.
Required:
a. What is the optimum size of the production run?
b. What is the average holding cost per year?
c. What is the setup cost per year?
d. What is the total cost per year if cost of each unit is 10 dollars?
e. Suppose that management mistakenly used the basic EOQ model to calculate the batch size instead of using the POQ model. How much money per year has that mistake cost the company?
Answer:
a. 3,795 units
b. $1,897.50
c. $2,845.80
d. $42,693.80
Explanation:
Optimum size for the Production ran is the size that minimizes Set-up costs and Holding costs.
Optimum size for the Production = √ (2 × Annual Production × Set-up cost) / Holding Cost per unit
Optimum size for the Production = √ (2 × 600 × 300 × $200) / $5.00
= 3,794.73 or 3,795 units
Average Holding Cost = Optimum size for the Production / 2
= 3,795 units / 2
= $1,897.50
Set - up Cost = Total Annual Production / Optimum size for the Production × Set - up cost per unit
= ((600 × 300) / 3,795)× $5.00
= $237.15
Annual cost = $237.15 × 12
= $2,845.80
Total Cost Calculation
Purchase Price (3,795 × $10) = $37,950.50
Holding Cost = $1,897.50
Set - up Cost = $2,845.80
Total Cost = $42,693.80
POQ = Optimum size for the Production / Annual Demand
= 3,795 units / (300 × 600)
= 0.021
If the USA could produce 1 ton of potatoes or 0.5 tons of wheat per worker per year, while Ireland could produce 3 tons of potatoes or 2 tons of wheat per worker per year, there can be mutual gains from trade if:
This question is incomplete because the options are missing; here are the options:
A. The USA specializes in potatoes because of its comparative advantage in producing potatoes.
B. The USA specializes in wheat because of its absolute advantage in producing wheat.
C. The USA specializes in wheat because of its comparative advantage in producing wheat.
D. There can be no mutual gains from trade.
The correct answer to this question is A. The USA specializes in potatoes because of its comparative advantage in producing potatoes.
Explanation:
In economics, a country has a comparative advantage, if it can produce a specific good at a lower opportunity cost, which implies the loss of choosing the product over others is low. Also, mutual gains are possible if each country specializes in the product with a comparative advantage. Moreover, to know which country has an opportunity advantage you need to calculate the opportunity cost of 1 unit, or, in this case, 1 ton of the product.
In the case of the U.S. you already know 1 ton of potatoes is equivalent to 0.5 tons of wheat, which is the opportunity cost. Now, let's calculate this factor for the production of 1 ton of potatoes in Ireland
3 tons of potatoes = 2 tons of wheat 1. Use 3 (tons of potatoes) and divide both numbers into three
3 tons of potatoes/ 3 = 2 tons of wheat / 3
1 ton of potatoes = 0.66
This shows the opportunity cost in the USA is lower and this represents a comparative advantage as less is lost when potatoes are chosen over wheat. Thus, to benefit both countries the USA should specialize in potatoes due to the higher comparative advantage or lower opportunity cost.
Ecker Company reports $1,925,000 of net income for 2017 and declares $269,500 of cash dividends on its preferred stock for 2017. At the end of 2017, the company had 300,000 weighted-average shares of common stock.
1. What amount of net income is available to common stockholders for 2017?
2. What is the company's basic EPS for 2017?
Answer:
(A) $1,655,500
(B) $5.52 per share
Explanation:
Ecker company announced a net income of $1,925,000
They also declare a cash dividend of $269,500
The company has 300,000 weighted average shares of common stock
(A) The amount of net income available to common stockhloders for 2017 can be calculated as follows
Net income available to common stockhloders= Net income- Preferred Cash dividend
= $1,925,000-$269,500
= $1,655,500
(B) The common basic EPS for 2017 can be calculated as follows
Common basic EPS= Net income available to stockholders/weighted average outstanding shares
= $1,655,500/300,000
= $5.52 per share
Builtrite bonds have the following: 5 ½% coupon, 11 years until maturity, $1000 par and are currently selling at $1054. If you want to make an 5% return, what would you be willing to pay for the bond?
Answer:
$1,041.53
Explanation:
The price that a rational investor would pay for the bond yearning for 5% rate of return can be determined using excel pv function below:
=-pv(rate,nper,pmt,fv)
rate is the yield expected by the investor
nper is the number of annual coupons remaining i.e 11
pmt is the amount of annual coupon=face value*coupon rate=$1000*5.5%=$55
fv is the face value of $1000
=-pv(5%,11,55,1000)=$1,041.53
On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: For all journal entries, if an amount box does not require an entry, leave it blank. 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 20Y1 July 1 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31 b. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y2 June 30 3. Determine the total interest expense for 20Y1. $ 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest
Answer and Explanation:
1 . The journal entries are shown below;
Cash Dr $42,309,236
Discount on bond payable $3,690,764
To Bond payable $46,000,000
(Being the issuance of the bond is recorded)
2. a.
Interest expense Dr $2,392,269
To Discount on bond payable ($3,690,764 ÷ 20 years × 2) $92,269.10
To Cash $23,000,000 ($46,000,000 ÷ 2 years)
(Being the interest expense is recorded)
b.
Interest expense Dr $2,392,269
To Discount on bond payable ($3,690,764 ÷ 20 years × 2) $92,269.10
To Cash $23,000,000 ($46,000,000 ÷ 2 years)
(Being the interest expense is recorded)
3. Total interest expense is $2,392,269
4. Yes, bond payments will always be lower than the face value of bonds, if the contract rate is lower than the interest rate on the market.
The stock in Bowie Enterprises has a beta of .85. The expected return on the market is 11.50 percent and the risk-free rate is 2.85 percent. What is the required return on the company's stock?
Answer:
10.203%
Explanation:
The stock in Bowie's enterprises has a beta of 0.85
The expected return on the market is 11.50%
The risk free rate is 2.85%
Therefore, the required return on the company's stock can be calculated as follows
Required return= Risk free rate+beta(market rate-risk free rate)
= 2.85+0.85(11.50-2.85)
= 2.85+ 0.85(8.65)
= 2.85+7.3525
= 10.203%
Hence the required rate in the company's stock is 10.203%
Pinnacle Financial Services managers meet annually to create a list of potential future complications and plan how to respond to each possibility. Pinnacle is practicing _______ planning. single-use ad-hoc divisional-level contingency functional-level
Answer: contingency
Explanation:
Contingency planning is a form of planning that is used by an organization in order to plan ahead in case an event occurs. Contingency plans can also be called a 'Plan B' due to the fact that it's an alternative action in case things does not go as planned.
Therefore, based on the question, Pinnacle is practicing contingency planning.
Bonita Industries applies overhead to production at a predetermined rate of 80% based on direct labor cost. Job No. 130, the only job still in process at the end of August, has been charged with manufacturing overhead of $5100. What was the amount of direct materials charged to Job 130 assuming the balance in Work in Process inventory is 45000?
Answer:
Direct Materials $ 33525
Explanation:
Bonita Industries
Job No. 130,
Manufacturing overhead $5100.
Direct Labor = $ 6375
5100 80
x 100
Using cross product direct labor = 5100 *100/80= 6375.
We have
Work in Process inventory $ 45000
Less
Manufacturing overhead $5100.
Direct Labor $ 6375
Direct Materials $ 33525
The Work in Process is debited with Direct Materials, Direct Labor and Manufacturing Overheads.
As we know the Direct Labor and Manufacturing Overheads we can find out the Direct Materials by subtracting the Direct Labor and Manufacturing Overheads from the Work In Process Inventory balance.
Sinking fund bonds: A. Are bearer bonds. B. Are registered bonds. C. Require equal payments of both principal and interest over the life of the bond issue. D. Require the issuer to set aside assets at specified amounts to retire the bonds at maturity. E. Decline in value over time.
Answer:
The answer is D.
Explanation:
Sinking funds require the issuer(borrower) to set aside assets at specified amounts to retire the bonds at maturity. Sinking fund helps the issuer to secure a bond with lower yield.
An agreed amount is deposited at an agreed period (e.g yearly) so as to pay of the par value or principal value at maturity.
Assume that ExxonMobil uses a standard cost system for each of its refineries. For the Houston refinery, the monthly fixed overhead budget is $8,000,000 for a planned outputs of 5,000,000 barrels. For September, the actual fixed cost was $8,750,000 for 5,100,000 barrels.
Required
a. Determine the fixed overhead budget variance.
b. If fixed overhead is applied on a per-barrel basis, determine the volume variance.
c. Provide formulas and an explanation.
Answer:
a. Fixed overhead budget variance = Budgeted fixed overhead - Actual fixed overhead
= $8,000,000 - $8,750,000
= $750,000 Unfavorable
b. Predetermined overhead rate per barrel = $8,000,000 / 5,000,000
= $1.60 per barrel
Fixed overhead applied = 5,100,000 * $1.60
= $8,160,000
Fixed overhead volume variance = Fixed overhead applied - Budgeted fixed overhead
= $8,160,000 - $8,000,000
= $160,000 Favorable
c. Fixed overhead budget variance = Budgeted fixed overhead - Actual fixed overhead
Predetermined overhead rate per barrel = Budgeted fixed overhead / Planned outputs
Fixed overhead volume variance = Fixed overhead applied - Budgeted fixed overhead