Answer:
The real rate of return is 23.0%.
Explanation:
This can be calculated as follows:
Gain due to dollar depreciation = (1.65 - 1.31) / 1.31 = 0.260, or 26.0%
Inflation rate = Increase in dollar price = 9%
Real rate of return = (Gain due to dollar depreciation + Interest rate on pounds) - Inflation rate = (26.0% + 6%) - 9% = 23.0%
Therefore, the real rate of return is 23.0%.
The demand for textbooks is Q = 200 – P + 25 U – 50 P beer. Assume that the unemployment rate U is 8 and the price of beer P beer is $2. When the average price of a textbook is P = $100, the price elasticity of demand is:
Answer: -0.5
Explanation:
Based on the information given, the price elasticity of demand will be calculated as follows:
= dQ/dP × P/Q
where,
dQ/dP = -1
P = 100
Q = 200 – P + 25 U – 50 P beer
Q = 200 - 100 + 25(8) - 50(2)
Q = 200 - 100 + 200 - 100
Q = 200
Therefore, dQ/dP × P/Q
= -1 × (100/200)
= -1 × 1/2
= -1 × 0.5
= -0.5
The price elasticity of demand is -0.5.
Tip Top Corp. produces a product that requires nine standard gallons per unit. The standard price is $6 per gallon. If 3,400 units required 31,800 gallons, which were purchased at $5.88 per gallon, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance
Answer:
Results are below.
Explanation:
To calculate the direct material price, quantity, and total variance; we need to use the following formulas:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (6 - 5.88)*31,800
Direct material price variance= $3,816 favorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (9*3,400 - 31,800)*6
Direct material quantity variance= $7,200 unfavorable
Total direct material cost variance= 3,816 - 7,200
Total direct material cost variance= $3,384 unfavorable
Henry has a defined benefit plan that promises an annual retirement benefit based on 2% of his final 5-year average annual salary for each year of service. At retirement, Henry has 21 years of service and had an average salary of $95,000 over the last 5 years. His annual benefit will be:_______a. $15,200. b. $95,000. c. $60,500. d. $49,875. e. $39,900.
Answer: e. $39,900
Explanation:
Henry's defined benefit can be calculated by the formula:
= Average salary over the last 5 years * Years of service at retirement * annual retirement benefit percentage based on 5 year average salary
= 95,000 * 21 * 2%
= $39,900
For each transaction, indicate the impact each item had on income and the dollar amount of the change in income, if any. Input decreases to net income as negative values. Upon completion, compare the amount of income with the amount reported on the income statement.
Prepare journal entries to record the following merchandising transactions of Lowe’s, which uses the perpetual inventory system. (Hint: It will help to identify each receivable and payable; for example, record the purchase on August 1 in Accounts Payable—Aron.)
Aug. 1 Purchased merchandise from Aron Company for $7,500 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1.
Aug. 5 Sold merchandise to Baird Corp. for $5,200 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $4,000.
Aug. 8 Purchased merchandise from Waters Corporation for $5,400 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8.
Aug. 9 Paid $125 cash for shipping charges related to the August 5 sale to Baird Corp.
Aug. 10 Baird returned merchandise from the August 5 sale that had cost Lowe’s $400 and was sold for $600. The merchandise was restored to inventory.
Aug. 12 After negotiations with Waters Corporation concerning problems with the purchases on August 8, Lowe’s received a credit memorandum from Waters granting a price reduction of $400 off the $5,400 of goods purchased.
Aug. 14 At Aron’s request, Lowe’s paid $200 cash for freight charges on the August 1 purchase, reducing the amount owed to Aron.
Aug. 15 Received balance due from Baird Corp. for the August 5 sale less the return on August 10.
Aug. 18 Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12.
Aug. 19 Sold merchandise to Tux Co. for $4,800 under credit terms of n/10, FOB shipping point, invoice dated August 19. The merchandise had cost $2,400.
Aug. 22 Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Lowe’s sent Tux a $500 credit memorandum toward the $4,800 invoice to resolve the issue.
Aug. 29 Received Tux’s cash payment for the amount due from the August 19 sale less the price allowance from August 22.
Aug. 30 Paid Aron Company the amount due from the August 1 purchase.
Answer:
Lowe Company
1. Impact on Income and the Dollar Amount:
Aug. 1 No impact
Aug. 5 +$5,200 - $4,000 = +$1,200
Aug. 8 No impact
Aug. 9 = -$125
Aug. 10 -$600 +$400 = -$200
Aug. 12 None
Aug. 14 None
Aug. 15 -$92
Aug. 18 +$50
Aug. 19 +$4,800 -$2,400 = $2,400
Aug. 22 -$500
Aug. 29 -$43
Aug. 30 None
Total = +$2,690
2. Journal Entries:
Aug. 1 Debit Inventory $7,500
Credit Accounts Payable (Aron Company) $7,500
Purchase of goods on credit terms of 1/10, n/30, FOB destination, invoice dated August 1.
Aug. 5 Debit Accounts Receivable (Baird Corp.) $5,200
Credit Sales Revenue $5,200
Sale of goods on credit terms of 2/10, n/60, FOB destination, invoice dated August 5.
Debit Cost of goods sold $4,000
Credit Inventory $4,000
Cost of goods sold.
Aug. 8 Debit Inventory $5,400
Credit Accounts Payable (Waters Corporation) $5,400
Purchase of goods on credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8.
Aug. 9 Debit Freight-in $125
Credit Cash $125
Freight-in paid for cash.
Aug. 10 Debit Sales Returns $600
Credit Accounts Receivable (Baird Corp.) $600
Goods returned by a customer.
Debit Inventory $400
Credit Cost of goods sold $400
Cost of returned goods.
Aug. 12 Debit Accounts Payable (Waters Corporation) $400
Credit Inventory $400
Price reduction granted by Waters.
Aug. 14 Debit Accounts Payable (Aron) $200
Credit Cash $200
Part-payment to Aron on account.
Aug. 15 Debit Cash $4,508
Debit Cash Discounts $92
Credit Accounts Receivable (Baird Cop.) $4,600
Cash received on account.
Aug. 18 Debit Accounts Payable (Waters Corporation) $5,000
Credit Cash $4,950
Credit Cash Discounts $50
Cash payment on account.
Aug. 19 Debit Accounts Receivable (Tux Co.) $4,800
Credit Sales Revenue $4,800
Credit sales on terms of n/10, FOB shipping point, invoice dated August 19.
Debit Cost of goods sold $2,400
Credit Inventory $2,400
Cost of goods sold.
Aug. 22 Debit Sales Allowances $500
Credit Accounts Receivable (Tux Co.) $500
Sales allowances granted to Tux Co. on account.
Aug. 29 Debit Cash $4,257
Debit Cash Discounts $43
Credit Accounts Receivable (Tux Co.) $4,300
Aug. 30 Debit Accounts Payable (Aron Company) $7,300
Credit Cash $7,300
Cash payment on account.
Explanation:
a) Data and Analysis:
Aug. 1 Inventory $7,500 Accounts Payable (Aron Company) $7,500
credit terms of 1/10, n/30, FOB destination, invoice dated August 1.
Aug. 5 Accounts Receivable (Baird Corp.) $5,200 Sales Revenue $5,200
credit terms of 2/10, n/60, FOB destination, invoice dated August 5.
Cost of goods sold $4,000 Inventory $4,000
Aug. 8 Inventory $5,400 Accounts Payable (Waters Corporation) $5,400
credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8.
Aug. 9 Freight-in $125 Cash $125
Aug. 10 Sales Returns $600 Accounts Receivable (Baird Corp.) $600
Inventory $400 Cost of goods sold $400
Aug. 12 Accounts Payable (Waters Corporation) $400 Inventory $400
Aug. 14 Accounts Payable (Aron) $200 Cash $200
Aug. 15 Cash $4,508 Cash Discounts $92 Accounts Receivable $4,600
Aug. 18 Accounts Payable (Waters Corporation) $5,000 Cash $4,950 Cash Discounts $50
Aug. 19 Accounts Receivable (Tux Co.) $4,800 Sales Revenue $4,800 credit terms of n/10, FOB shipping point, invoice dated August 19. Cost of goods sold $2,400 Inventory $2,400
Aug. 22 Sales Allowances $500 Accounts Receivable (Tux Co.) $500
Aug. 29 Cash $4,257 Cash Discounts $43 Accounts Receivable $4,300
Aug. 30 Accounts Payable (Aron Company) $7,300 Cash $7,300
Select the statement below that is true. A. Non-satiation means that more is always better. B. Indifference means that only a particular combination of goods are preferable to the consumer. C. The consumer's preference is indicated by the Y axis. D. Completeness means that none of the items in a set should be missing.
Answer:
A
Explanation:
When there is non satiation, a consumer is yet to be fully satisfied, thus the consumer would benefit from additional consumption up to the point that utility is reached.
completeness means that if a consumer prefers bundle b to c or choice c to b. the consumer is indifferent between both choices
Indifference means that a consumer does not mind various combination of two goods that are on the same indiffernce curve
Sheffield Co. had retained earnings of $19900 on the balance sheet but disclosed in the footnotes that $2800 of retained earnings was restricted for building expansion and $800 was restricted for bond repayments. Cash of $2200 had been set aside for the plant expansion. How much of retained earnings is available for dividends?a. $12,000.b. $13,000.c. $15,000.d. $10,000.
Answer:
$16,300
Explanation:
Calculation to determine How much of retained earnings is available for dividends
Using this formula
Retained earnings=Retained earnings - Retained earnings for restricted plant expansion - Restricted for bond repayments
Let plug in the formula
Retained earnings= $19,900 - $2,800 - $800
Retained earnings= $16,300
Therefore the amount of retained earnings that is available for dividends is $16,300
Some costs that possibly could be traced directly to cost objects are nonetheless classified as indirect costs because:
Answer:
A. such costs cannot be traced to objects in a cost-effective manner
Explanation:
In the case when some cost that could be traced to cost objective are categorized as the indirect cost as such cost could not be traced with regard to the object on the cost effective as it might be possible to trace the cost but it might not be worth
So in this case it should be categorized as the indirect cost and the same is allocated to the cost object
urtle Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $ 150 100 % Variable expenses 75 50 % Contribution margin $ 75 50 % The company is currently selling 6,500 units per month. Fixed expenses are $206,000 per month. The marketing manager believes that a $6,300 increase in the monthly advertising budget would result in a 100 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
Answer:
Net increase in operating income = $1,200
Explanation:
Contribution margin per unit = $150 - $75 = $75 per unit
if marketing expenses increase by $6,300, the total number of units sold will incerase by 100 units. Differential increase in contribution margin = $75 x 100 = $7,500. Differential increase in fixed expenses = $6,300. Net increase in operating income = $7,500 - $6,300 = $1,200
You are given the following data on the Employed, Unemployed, and the Labor Force for 1997: Population 16 years old or over (millions) 203.1 Employed (millions) 129.6 Unemployed (millions) 6.7 The total labor force in millions in the economy for 1997 equals:__________
Answer:
136.30 million
Explanation:
Total Labor force = Total of the Unemployed + Total of the Employed
Total Labor force = 129.6 million + 6.7 million
Total Labor force = 136.30 million
So, the total labor force in millions in the economy for 1997 equals 136.30 million
4) The returns on the Bledsoe small-cap fund are the most volatile of all the mutual funds offered in the 401k plan. Why would you ever want to invest in the fund
Answer:
The summary of the given question is summarized in the explanation below.
Explanation:
Users might also opt for investment in a somewhat more "unstable" investment, and that we might risk lower because everything depends instead on the sensitivity of something like the participant's risks.A cautious investor can't invest throughout the micro-cap financing, whereas a risky investor is otherwise able to bear the risk as well as therefore an investment upon that condition increased risk would be equivalent to greater rewards.what is autocratic leadership
Answer:
An authoritarian leadership style is exemplified when a leader dictates policies and procedures, decides what goals are to be achieved, and directs and controls all activities without any meaningful participation by the subordinates. Such a leader has full control of the team, leaving low autonomy within the group.
In its most recent annual report, Appalachian Beverages reported current assets of $39,900 and a current ratio of 1.90. Assume that the following transactions were completed: (1) purchased merchandise for $5,100 on account and (2) purchased a delivery truck for $10,000, paying $2,000 cash and signing a two-year promissory note for the balance.
Required:
Compute the updated current ratio.
Answer:
Appalachian Beverages
The Updated current ratio is:
= 1.65
Explanation:
a) Data and Calculations:
Current assets = $39,900
Current ratio = 1.90
Current liabilities = $21,000 ($39,900/1.90)
Current Assets:
Beginning balance = $39,900
Inventory $5,100
Cash ($2,000)
Ending balance = $43,000
Current Liabilities:
Beginning balance = $21,000
Accounts Payable $5,100
Ending balance = $26,100
Analysis of Transactions:
1. Inventory $5,100 Accounts Payable $5,100
2. Delivery Truck $10,000 Cash $2,000 Two-year Note Payable $8,000
Updated current ratio = Current assets/Current liabilities
= $43,000/$26,100
= 1.65
Products whose demand rises when another product’s price increases are called
substitute goods.
complementary goods.
elastic goods.
clearance goods.
Answer:
They are called Substitute goods.
The products whose demands rise as described relative to another product are called; Substitute goods.
What are substitute goods?From the knowledge of microeconomics, two goods are considered substitutes if the products could be used for the same purpose by the consumers. In essence, a consumer perceives both goods as somewhat comparable.
In such cases, having more of one good causes the consumer to desire less of the other good.
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Crane Company uses the periodic inventory system. For the current month, the beginning inventory consisted of 483 units that cost $63 each. During the month, the company made two purchases: 723 units at $66 each and 362 units at $68 each. Crane Company also sold 1195 units during the month. Using the average cost method, what is the amount of ending inventory
Answer:
$24,445.67
Explanation:
The average cost method calculates an average costs out of the units available for sale. The average cost is then used to value cost of sales and the inventory value.
Unit Cost = Total Cost ÷ Units available for sale
therefore,
Unit Cost = (483 x $63 + 723 x $66 + 362 x $68) ÷ 1,568
= $65.538
Now,
Ending Inventory = Units in stock x Unit Cost
= (1,568 - 1,195) x $65.538
= $24,445.67
Using the average cost method, the amount of ending inventory is $24,445.67.
Simba orally agrees to work with Lion King, Inc. in New York City for two years. Simba moves his family to New York from California and begins work. Three months later, Simba is fired for no stated cause. Simba sues for reinstatement and back pay. What legal theory will Lion King Inc. use in court
Answer: Positive Theory of law
Explanation:
The legal theory that Lion King Inc. will use in court is the positive Theory of law.
It should be noted that positive theory of law helps in the protection of individual rights, used in settling dispute and also used in the maintenance of order in the society.
Therefore, Lion King can used this in settling the dispute with Simba.
The Legal Theory Lion King Inc. will use in court the theory of positive law, which is used to maintain social order, resolve civil disputes, and protect the rights of individuals and governed through laws enacted by the state.
In the theory of positive law, it is governments who create and enact laws so that there is a regulation of human behavior and actions, in favor of justice and protection of the rights and duties of citizens.
Therefore, Lion King Inc. will use positive law theory to resolve the dispute with former employee Simba. This case will be judged according to the law in force at that location regarding the lack of formal contract and labor rights.
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Paradise Travels is an all-equity firm that has 10,000 shares of stock outstanding at a market price of $25 a share. Management has decided to issue $25,000 worth of debt and use the funds to repurchase shares of the outstanding stock. The interest rate on the debt will be 7.3 percent. Calculate the break even EBIT. Look at lecture material .
Answer:
$1.62
Explanation:
Calculation to determine the break even EBIT
First step is to determine the Number of shares purchased
Number of shares purchased= $25,000 / $25
Number of shares purchased= $1,000
Second step is to determine the EBIT
EBIT / 10,000 = [EBIT - ($25,000 * 0.073)] / (10,000 - 1,000)
EBIT / 10,000 = (EBIT - $1,825) / 9,000
9,000 EBIT = 10,000 EBIT - $16,425,000
1,000 EBIT = $16,425,000
EBIT=$16,425,000/1,000
EBIT = $16,425
Now let determine the Earning per Shares at Break-even level of earning
Earning per Shares at Break-even level of earning= [EBIT - ($25,000 * 0.073)] / (10,000 - 1,000)
Earning per Shares at Break-even level of earning= ($16,425 - $1,825) / 9,000
Earning per Shares at Break-even level of earning= $14,600 / 9000
Earning per Shares at Break-even level of earning= $1.62
Therefore the break even EBIT is $1.62
Sommers Co.'s bonds currently sell for $1,080 and have a par value of $1,000. They pay a $100 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,125. What is their yield to maturity (YTM)
Answer:
9.01%
Explanation:
Calculation to determine their yield to maturity (YTM)
We would be using financial calculation to determine their yield to maturity (YTM)
N =15 years
PV=$1,080
PMT=$100
FV=$1,000
Hence,
I/YR=YTM=9.01%
Therefore their yield to maturity (YTM) is 9.01%
Direct labor or machine hours may not be the appropriate cost driver for overhead in all areas of manufacturing due to the complexities of many manufacturing processes. Many companies use activity-based costing (ABC) which uses multiple drivers (items that consume resources) rather than just one driver to apply overhead to their activities. With ABC, a company can use a cost driver that has a direct cause/effect relationship in its applied overhead costs. Waterways looked into ABC as a method of costing because of the variety of items it produces and the many different activities in which it is involved. The activities listed below are a sample of possible cost pools for Waterways. Assembling Payroll Billing Plant supervision Digging trenches Product design Janitorial Purchasing materials Machine maintenance Selling Machine setups Testing Molding Welding Packaging For each of the above cost pools, what would be the likely activity cost driver
Answer:
Waterways Corporation
Cost Pools Possible Activity Cost Drivers
Assembling Direct labor hours
Payroll Number of employees
Billing Number of invoices
Plant supervision Number of factory workers
Digging trenches Depth of trenches
Product design Number of designs
Janitorial Floor space
Purchasing materials Units of materials
Machine maintenance Maintenance hours
Selling Units sold
Machine setups Number of machine setups
Testing Testing hours
Molding Number of units molded
Welding Machine hours
Packaging Number of units packaged
Explanation:
a) Cost Pools for Waterways:
Assembling
Payroll
Billing
Plant supervision
Digging trenches
Product design
Janitorial
Purchasing materials
Machine maintenance
Selling
Machine setups
Testing
Molding
Welding
Packaging
Albatross Company purchased a piece of machinery for $60,000 on January 1, 2019, and has been depreciating the machine using the double-declining-balance method based on a five-year estimated useful life and no salvage value. On January 1, 2021, Albatross decided to switch to the straight-line method of depreciation. The salvage value is still zero and the estimated useful life did not change. Ignore income taxes.
Required:
a. What type of accounting change is this, and how should it be handled?
b. Prepare the journal entry to record depreciation for 2017. Show all calculations clearly.
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Answer:
Currently, the income statement for company reflects a total period cost for depreciation of $7,876,000
Vermicelli Company plans to sell 300,000 units of finished product in July and anticipates a growth rate in sales of 5% per month. The desired monthly ending inventory in units of finished product is 80% of the next month's estimated sales. There are 250,000 finished units in inventory on June 30th. Vermicelli Company's production requirement in units of finished product for the three-month period ending September 30th is: (CMA adapted)
Suppose the government misjudges the natural rate of unemployment to be much lower than it actually is, and thus undertakes expansionary fiscal and monetary policies to lower it. a. These policies might at first succeed because multiple choice 1 in the long run, as aggregate demand increases, unemployment is reduced. in the long run, as aggregate demand decreases, unemployment is reduced. in the short run, as aggregate demand increases, unemployment is reduced. in the short run, this action will decrease aggregate demand and unemployment. b. These policies might at first succeed, but eventually multiple choice 2 in the long run, as aggregate demand increases, the aggregate supply curve will shift right, reducing unemployment and returning the economy to full employment. in the short run, as aggregate demand increases and unemployment is reduced, workers will demand higher wages, the aggregate demand curve will shift left, and the economy will return to the natural rate of unemployment. in the short run, this action will decrease aggregate demand, lower unemployment, and return the economy to full employment. in the long run, as aggregate demand increases and unemployment is reduced, workers will demand higher wages, the aggregate supply curve will shift left, and the economy will return to the natural rate of unemployment.
Answer:
In the long run as aggregate demand increases and unemployment is reduced workers will demand higher wages the aggregate supply curve will shift left, and the economy will return to the natural rate of unemployment.
Explanation:
In the case when the government misjudge the natural unemployment rate and it is less than the actual one so in the long run, the aggregat demand rises also the unemployment decreased due to which the workers demand for higher wages is also decreased. This lead to the shifting of the aggregate supply to the left and the economy would return to the natural unemployment rate
A college uses advisors who work with all students in all divisions of the college. The most useful allocation basis for the salaries of these employees would likely be: ___________.
a. number of students advised from each division.
b. relative salaries of division heads.
c. square footage of each division.
d. number of classes offered in each division.
e. student graduation rate.
Answer: a. number of students advised from each division
Explanation:
An allocation base simply refers to the the basis upon which the overhead cost of an entity is allocated. This can.be done by the machine hours used, square footage occupied etc.
Since the college uses advisors who work with all students in all divisions of the college, the most useful allocation basis for the salaries of these employees would likely be the number of students that are advised from each division.
Therefore, the correct option is A.
Horizontal analysis evaluates a series of financial statement data over a period of time Group of answer choices that has been arranged from the highest number to the lowest number. that has been arranged from the lowest number to the highest number. to determine which items are in error. to determine the amount and/or percentage increase or decrease that has taken place.
Answer:
C) to determine the amount and/or percentage increase or decrease that has taken place.
Explanation:
Horizontal analysis can be regarded as an approach which is been used in analyzing financial statements through making comparism between specific financial information for a particular accounting period along with the information from other periods. This approach is been used by Analysts to make analysis of historical trends.
It should be noted that Horizontal analysis evaluates a series of financial statement data over a period of time to determine the amount and/or percentage increase or decrease that has taken place.
Explain the concept of the voice of the customer (VOC). Why would a clear VOC process be important in the supplier to receiving organization relationship
Answer:
See the explanation below.
Explanation:
a. Explain the concept of the voice of the customer (VOC).
Voice of the customer (VOC) can be described as a detailed process of collecting data on expectations, preferences, and aversions of a customer.
VOC means emphasizing the consumer, their opinions, experiences, and input about the brand of a company.
b. Why would a clear VOC process be important in the supplier to receiving organization relationship?
Voice of Customer process gives a company the opportunity to listen to each customer, act on their feedback, and analyze the data to improve operations. Therefore, the company would be able to avoid potential problems for future customers by being attentive and responsive, and it can obtain immediate benefit from customers who provide positive feedback.
The ability to measure a customer's experience at important touch points in real time is one of the key advantages of VOC process. Therefore, one of the best things a company can do is just ask its customers what they want and create a relationship from there.
Expense A is a fixed cost; expense B is a variable cost. During the current year the activity level has increased, but is still within the relevant range. In terms of cost per unit of activity, we would expect that
Answer:
b) Expense B has decreased.
Explanation:
a) Expense A has remained unchanged.
b) Expense B has decreased.
c) Expense A has decreased.
d) Expense B has increased.
Fixed costs are costs that do not vary with output. e,g, rent, mortgage payments
If production is zero or if production is a million, Mortgage payments do not change - it remains the same no matter the level of output.
Hourly wage costs and payments for production inputs are variable costs
Variable costs are costs that vary with production
If a producer decides not to produce any output, there would be no need to hire labour and thus no need to pay hourly wages.
Let assume fixed cost is 100 pounds when output is 10 units
Fixed cost per unit = fixed cost / output
100 / 10 = 10
Fixed cost per output when output increases to 20 units is
100 / 20 = 5
fixed cost per unit falls as output increases
A pension fund has an average duration of its liabilities equal to 17 years. The fund is looking at 4-year maturity zero-coupon bonds and 4% yield perpetuities to immunize its interest rate risk. How much of its portfolio should it allocate to the zero-coupon bonds to immunize if there are no other assets funding the plan
Answer:
40.91%
Explanation:
Duration perpetuity = 1.04/4%
Duration perpetuity = 1.04/0.04
Duration perpetuity = 26 years
Now, 17 = (Wz)*4 + (1 - Wz)*26
17 = 4Wz + 26 - 26Wz
26Wz - 4Wz = 26 - 17
22Wz = 9
Wz = 9/22
Wz = 0.409091
Wz = 40.91%
So, 40.91% of its portfolio should be allocated to the zero-coupon bonds to immunize, if there are no other assets funding the plan.
The reported net incomes for the first 2 years of Splish Products, Inc., were as follows: 2020, $156,100; 2021, $196,600. Early in 2022, the following errors were discovered.
a. Depreciation of equipment for 2020 was overstated $15,500.
b. Depreciation of equipment for 2021 was understated $36,200.
c. December 31, 2020, inventory was understated $45,400.
d. December 31, 2021, inventory was overstated $17,200.
Required:
Prepare the correcting entry necessary when these errors are discovered.
Answer and Explanation:
The preparation of the correcting entry is as follows;
Retained Earning $37,900 (-$17,200 + $15,500 - $36,200)
To Inventory $17,200
To Accumulated Depreciation $20,700
(Being the correcting entry is recorded)
here the retained earning is debited as it decreased the equity and the other two accounts are credited as it decreased the assets
The Foster Insurance company developed standard times for processing claims. When a claim was received at the processing center, it was first reviewed and classified as simple or complex. The standard time for processing was:
Question Completion:
simple claim - 36 mins
complex claim - 1.25 hrs
Employees were expected to be productive 7.5 hrs per day. Compensation costs were $135 per day per employee. During July, which had 20 working days, the following number of claims were processed:
simple claims - 3,000 processed
complex claims - 960 processed
REQUIRED
a. Calculate the number of workers that should have been available to process July claims.
b. Assume that 23 workers were actually available throughout the month of july. calculate a labor efficiency variance expressed as both a number of workers and a dollar amount for the month.
Answer:
The Foster Insurance Company
a. The number of workers that should have been available to process July claims is;
= 20 workers.
b. Labor efficiency variance:
Number of workers = 3 U
Dollar value of variance = $8,100 U
Explanation:
a) Data and Calculations:
Standard time for processing simple claims = 36 minutes (0.6 hours)
Standard time for processing complex claims = 1.25 hours
Compensation costs per employee per day = $135
Expected number of hours per employee per day = 7.5 hours
Number of days worked in the month of July = 20 days
Number of simple claims processed = 3,000
Number of complex claims processed = 960
Total number of hours for processing claims in July:
Simple claims = 1,800 (3,000 * 0.6 hours)
Complex claims = 1,200 (960 * 1.25 hours)
Total hours worked in July = 3,000 hours
Hours worked per day = 150 hours (3,000/20 days)
Standard number of workers to process July claims = 20 (150/7.5)
Actual number of workers available for July claims = 23
Labor efficiency variance:
Number of workers = 3 U (20 - 23)
Dollar value of variance = $8,100 U (20 - 23) * ($135 * 20)
MC Qu. 93 Job A3B was ordered by a customer on... Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $3,000 of direct materials and used $4,500 of direct labor. The job was not finished by the end of the month, but needed an additional $3,500 of direct materials and additional direct labor of $7,500 to finish the job in October. The company applies overhead at the end of each month at a rate of 200% of the direct labor cost incurred. What is the balance in the Work in Process account at the end of September relative to Job A3B
Answer:
$16,500
Explanation:
Note: Work In Process simply mean the cost of Job which is not complete.
Work In Process = Direct Materials + Direct Labor + Overhead Cost
Work In Process = $3,000 + $4,500 + ($4,500*200%)
Work In Process = $3,000 + $4,500 + $9,000
Work In Process = $16,500
So, the balance in the Work in Process account at the end of September relative to Job A3B is $16,500.
Suppose the U.S. foreign assets are 67 percent of the U.S. GDP, and the U.S. foreign liabilities are 95 percent of the U.S. GDP. Moreover, suppose that 66 percent of U.S. foreign assets are denominated in foreign currencies, while all liabilities to foreigners are denominated in U.S. dollars. How will a 13 percent depreciation of the dollar affect foreigners' net foreign claims on the U.S. measured in U.S. dollars (as a percent of U.S. GDP)
Answer:
8.58% of US GDP is the answer for the required question.
Explanation:
US Foreign Assets = 67% of US GDP
US Liabilities = 95% of US GDP
66% of US Foreign Assets = Foreign Currencies
All Liabilities to Foreigners = US Dollars.
Depreciation rate = 13%
Solution:
Consider the following formula for this problem:
Change in external wealth in US dollar = (Change in foreign assets in dollars) - (Change in foreign liabilities in US dollars)
Liabilities are already denominated in dollars in our instance, but assets are not. As a result, we'll use the formula above to calculate the dollar value of the foreign assets. However, because the dollar value of net external assets fluctuates, we must also consider the rate of depreciation.
Change in dollar value of foreign currency denominated asset = rate of depreciation x Share of the foreign currency
Share of the foreign Currency = 66%
Rate of Depreciation = 13%
= 0.13 x 0.66 = 0.0858 = 8.58%
Hence,
8.58% of US GDP is the answer for the required question.