Answer:
(a) Cash payments to employees
Cash-flow classification: Operating activities
(b) Redemption of bonds payable
Cash-flow classification: Financing activities
(c) Sale of building at book value
Cash-flow classification: Investing activities
(d) Cash payments to suppliers
Cash-flow classification: Operating activities
(e) Exchange of equipment for furniture
Cash-flow classification: Significant non-cash activities
(f) Issuance of preferred stock
Cash-flow classification: Financing activities
(g) Cash received from customers
Cash-flow classification: Operating activities
(h) Purchase of treasury stock
Cash-flow classification: Financing activities
(i) Issuance of bonds for land
Cash-flow classification: Significant non-cash activities
(j) Payment of dividends
Cash-flow classification: Financing activities
(k) Purchase of equipment
Cash-flow classification: Investing activities
(l) Cash payments for operating expenses
Cash-flow classification: Operating activities
A manufacturing company can make 100 units of a necessary component part with the following costs: Direct Materials $120,000 Direct Labor 25,000 Variable Overhead 45,000 Fixed Overhead 20,000 If the manufacturing company can purchase the component externally for $190,000 and $5,000 of the fixed costs can be avoided, what is the correct make-or-buy decision
Answer: See explanation
Explanation:
Based on the information given, the relevant cost to make will be:
Direct Materials = $120,000
Add: Direct Labor = $25,000
Add: Variable Overhead = $45,000
Add: Fixed Overhead = $5,000
Relevant cost to make = $195,000
The relevant cost to buy is $190,000.
Therefore, the cost to buy is less as there'll be a net operating Income increase of $5000.
Chapter 13: Statement of Cash Flows Amount OA, IA, or FA (for extra credit only) Accounts payable increase $ 9,000 Accounts receivable increase 4,000 Salaries payable decrease 3,000 Amortization expense 6,000 Cash balance, January 1 22,000 Cash balance, December 31 15,000 Cash paid as dividends 29,000 Cash paid to purchase land 90,000 Cash paid to retire bonds payable at par 60,000 Cash received from issuance of common stock 35,000 Cash received from sale of equipment 17,000 Depreciation expense 29,000 Gain on sale of equipment 4,000 Inventory decrease 13,000 Net income 76,000 Prepaid expenses increase 2,000 Using the information above, calculate the cash flow from operating activities using the indirect method.
Answer:
Net Cash flow from operating activities $120,000.00
Explanation:
The computation of the cash flows from operating activities is shown below:
Cash flow from operating activities
Income $76,000.00
Less: Gain on sale of equipment (4,000.00)
Add: Depreciation expense 29,000.00
Add: Amortisation expense 6,000.00
Adjustments:
Add: Account payable increase 9,000.00
Less: Account receivable increase (4,000.00)
Less: Salaries payable decrease (3,000.00)
Add: Inventory decrease 13,000.00
Less: Prepaid expese increase (2,000.00)
Net Cash flow from operating activities $120,000.00
Atlas Corporation reported the following earnings per share information in its current annual report. The company has only one class of stock outstanding.
Net income $7,121
Dividends to common shareholders $2,033
Weighted average common shares outstanding 4,221
Weighted average dilutive shares 4,305
Basic and diluted earnings per share were, respectively:____.
a. $1.21 and $1.18.b. $2.17 and $2.13.
c. $1.69 and $1.65.d. $1.69 and $1.18.
e. none of these are correct.
Answer:
c. $1.69 and $1.65
Explanation:
Calculation to determine Basic EPS
Using this formula
Basic EPS =Net income/Weighted average common shares outstanding
Let plug in the formula
Basic EPS = $7,121 / 4,221
Basic EPS = $1.69
Calculation for Diluted EPS
Using this formula
Diluted EPS=Net income/Weighted average dilutive shares
Let plug in the formula
Diluted EPS = $7,121 / 4,305
Diluted EPS = $1.65
Therefore Basic and diluted earnings per share were, respectively:$1.69 and $1.65
Alert Security Services Co. End-of-Period Spreadsheet For the Year Ended October 31, 2019 Adjusted Trial Balance Income Statement Balance Sheet Account Title Dr. Cr. Dr. Cr. Dr. Cr. Cash 71 Accounts Receivable 519 Supplies 24 Prepaid Insurance 18 Land 590 Equipment 236 Accum. Depr.-Equipment 47 Accounts Payable 212 Wages Payable 24 Brenda Schultz, Capital 1,028 Brenda Schultz, Drawing 47 Fees Earned 578 Wages Expense 142 Rent Expense 71 Insurance Expense 59 Utilities Expense 41 Supplies Expense 35 Depreciation Expense 24 Miscellaneous Expense 12 1,889 1,889 Prepare the two closing entries for Alert Security Services Co. For a compound transaction, if an amount box does not require an entry, leave it blank.
Answer:
Alert Security Services Co.
Closing Journal Entries:
October 31, 2019:
Debit Fees Earned $578
Credit Income Summary $578
To close the revenue account to the income summary.
October 31, 2019:
Debit Income Summary $384
Credit:
Wages Expense $142
Rent Expense 71
Insurance Expense 59
Utilities Expense 41
Supplies Expense 35
Depreciation Expense 24
Miscellaneous Expense 12
To close the expenses to the income summary.
Explanation:
a) Data and Calculations:
Alert Security Services Co.
End-of-Period Spreadsheet For the Year Ended October 31, 2019
Adjusted Trial Balance Income Statement Balance Sheet
Account Title Dr. Cr. Dr. Cr. Dr. Cr.
Cash 71 71
Accounts Receivable 519 519
Supplies 24 24
Prepaid Insurance 18 18
Land 590 590
Equipment 236 236
Accum. Depr.-Equipment 47 47
Accounts Payable 212 212
Wages Payable 24 24
Brenda Schultz, Capital 1,028 1,028
Brenda Schultz, Drawing 47 47
Fees Earned 578 578
Wages Expense 142 142
Rent Expense 71 71
Insurance Expense 59 59
Utilities Expense 41 41
Supplies Expense 35 35
Depreciation Expense 24 24
Miscellaneous Expense 12 12
Total 1,889 1,889 384 578 1,505 1,311
You have $20 to spend. You want to buy a new bike helmet because your old one is
damaged. You also want to buy a new CD. However, you can only afford one of them. How
would you decide which item to buy?
Answer: I would buy the bike helmet.
Explanation:
The bike helmet is needed, but the CD is only wanted. Therefore, it would be smarter to buy the bike helmet and invest in buying the CD later.
A worker who loses a job at a call center because business firms switch the call center to another country is an example of which type of unemployment?
Answer:
"Structural unemployment" is the right approach.
Explanation:
The terminology economists mischaracterize unemployment, which seems to be the consequences of such an absence or failure of coordination of talents as well as of opportunities, is defined as Structural unemployment.This would be caused by economic shifts that prevent jobless persons from finding opportunities throughout different firms with very high qualifications.JKL has 3 million shares of common stock outstanding and 80,000 bonds outstanding. The bonds pay semi-annual coupons at an annual rate of 9.05%, have 6 years to maturity and a face value of $1,000 each. The common stock currently sells for $30 a share and has a beta of 1. The bonds sell for 94% of face value and have a 10.42% yield to maturity. The market risk premium is 5.5%, T-bills are yielding 5% and the tax rate is 30%. What is the firm's capital structure weight for equity
Answer:
54.48%
Explanation:
The computation of the weight of equity is given below;
But before that we need to do the following calculations
Total Equity
= 3 million shares × $30
= $90 million
The Value of Debt,
Total Debt = 80,000 (1,000)(0.94)
= $75.2 million
Now the weight of equity is
= $90 million ÷ ($90 million + $75.2 million)
= 54.48%
Suppose that the Federal Reserve is conducting an expansionary monetary policy. It will _____ Treasury bills on the open market, so that the money supply will _____, interest rates will _____, planned investment spending will _____, and the AD curve will shift to the _____. sell; increase; rise; rise; left buy; increase; fall; rise; right sell; decrease; rise; fall; left buy; decrease; fall; fall; left
Answer:
buy; increase; fall; rise; right.
Explanation:
Fiscal policy in economics refers to the use of government expenditures (spending) and revenues (taxation) in order to influence macroeconomic conditions such as Aggregate Demand (AD), inflation, and employment within a country. Fiscal policy is in relation to the Keynesian macroeconomic theory by John Maynard Keynes.
A fiscal policy affects combined demand through changes in government policies, spending and taxation which eventually impacts employment and standard of living plus consumer spending and investment.
An inflationary gap, also known as the expansionary gap in economics is used to measure the difference between the gross domestic product (GDP) and the current level of real Gross Domestic Products that exists when a country's economy is guaged at a full employment rate. This eventually causes the price of goods and services to go up with a low income level.
Basically, an expansionary fiscal policy will cause the total increase in aggregate demand to be greater than the initial increase in aggregate demand due to the multiplier process.
Hence, the Fed will buy Treasury bills on the open market, so that the money supply will increase, interest rates will fall, planned investment spending will rise, and the aggregate demand (AD) curve will shift to the right.
Aggregate demand (AD) can be defined as the total quantity of output (final goods and services) that is demanded by consumers at all possible price levels in an economy at a particular time.
An aggregate demand curve gives a negative relationship between the aggregate price level for goods or services and the quantity of aggregate output demanded in an economy at a specific period of time.
A two-year bond with par value $1,000 making annual coupon payments of $80 is priced at $1,000.What will be the realized compound return if the one-year interest rate next year turns out to be 6%?
Answer:
10%
Explanation:
Calculation to determine what will be the realized compound
First step is to calculate the new price
Using this formula
New price of the bond = PV of the final coupon payment + PV of the maturity amount.
Let plug in the formula
New price of the bond=80/1+r+1,000/1+r
Where,
r represent the yield to maturity
Second step is to Substitute 0.06 for r in the above equation
New price of the bond =80/1+0.06+1000/1+0.06
New price of the bond=1080/1.06
New price of the bond=1018.87
Now let Calculate the rate of return of the bond
Using this formula
Rate of return=Coupon+New price-old price/Initial price
Let plug in the formula
Rate of return=$80+1018.87-1000/1000
Rate of return=98.87/1000
Rate of return=0.09887*100
Rate of return= 9.887%
Rate of return=10% Appropriately
Therefore what will be the realized compound is 10%
Swifty Corporation uses job order costing for its brand new line of sewing machines. The cost incurred for production during 2019 totaled $27000 of materials, $18000 of direct labor costs, and $14000 of manufacturing overhead applied. The company ships all goods as soon as they are completed which results in no finished goods inventory on hand at the end of any year. Beginning work in process totaled $23000, and the ending balance is $17000. During the year, the company completed 25 machines. How much is the cost per machine?
Answer:
$2,600
Explanation:
Calculation to determine How much is the cost per machine
First step is to calculate the Total cost of making machines
Using this formula
Total cost of making machines
=Cost of materials +cost of direct labor+ manufacturing overhead cost+Beginning work in process-ending work in process
Let plug in the formula
Total cost per machine=$27000 +$18000 + $14000+$23000-$17000
Total cost per machine=$65,000
Now let calculate the cost per machine
Using this formula
Cost per machine
=Total cost of making machines /number of machines
Let plug in the formula
Cost per machine =$65,000/25
Cost per machine =$2,600
Therefore the Cost per machine is $2,600
There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,265 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $32,000 $22,500 $4,500 $59,000 Beta Project 8,000 23,000 27,627 58,627 A. Calculate the internal rate of return on both projects. Use the IRR spreadsheet function to calculate internal rate of return. Alpha Project fill in the blank 1 68.275 % Beta Project fill in the blank 2 % B. Make a recommendation on which one to accept.
Answer:
Alpha = 42%
25%
I would accept the alpha project because it has the higher IRR
Explanation:
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 with a financial calculator
Alpha
Cash flow in year 0 = $-35,265
Cash flow in year 1 = $32,000
Cash flow in year 2 = $22,500
Cash flow in year 3 = $4,500
IRR = 42%
Beta
Cash flow in year 0 = $-35,265
Cash flow in year 1 =8,000
Cash flow in year 2 =23,000
Cash flow in year 3 =27,627
IRR = 25%
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.
Mars, Inc. follows IFRS for its external financial reporting, while Jerome Company uses GAAP for its external financial reporting. During the year ended December 31, 2021, both companies changed from using the completed-contract method of revenue recognition for long-term construction contracts to the percentage-of-completion method. Both companies experienced an indirect effect, related to increased profit-sharing payments in 2021, of $30,000. As a result of this change, how much expense related to the profit-sharing payment must be recognized by each company on the income statement for the year ended December 31, 2021
Answer:
Mars, Inc (IFRS) and Jerome Company (GAAP) for External Reporting
Change from completed-contract method of revenue recognition for long-term construction contracts to the percentage-of-completion method.
Mars, Inc Jerome Company
Expenses to be recognized $0 $30,000
Explanation:
GAAP and IFRS previously recognized two methods for accounting for long-term construction contracts: the completed contract method and the percentage of completion method. GAAP allowed for an adjustment to be made to the income as a result of a change in method for unrecognized expenses in the previous period, whereas IFRS did not allow such an adjustment. However, the harmonized revenue standards under GAAP ASC 606 and IFRS 15 now stress the performance obligations that have been met under any contract as the standard criteria to measure revenue recognition.
The probability of the economy booming is 10 percent, while it is 60 percent for being normal, and 30 percent for being recessionary. A stock is expected to return 16 percent in a boom, 11 percent in a normal economy, and lose 8 percent in a recession. What is the standard deviation of the returns?
Answer:
9.15%
Explanation:
Expected return = Respective return * Respective probability
Expected return = (0.1*16) + (0.6*11) + (0.3*-8)
Expected return = 5.8%
Probability Return Probability*(Return-Expected Return)^2
0.1 16 [0.1*(16-5.8)^2] = 10.404
0.6 11 [0.6*(11-5.8)^2] = 16.224
0.3 -8 [0.3*(-8-5.8)^2] = 57.132
Total = 83.76%
Standard deviation = [Total probability*(Return-Expected Return)^2/Total probability]^(1/2)
Standard deviation = (83.76)^(1/2)
Standard deviation = 9.15204895092%
Standard deviation = 9.15%
What are some solutions for schools to fix the problem of too much work/homework given by teachers
they could give out less homework
give out weekly packets instead of a lot of daily work
only do necessary work
do more work in class
give homework every 2 weeks
or stop giving homework all together
In working with a client named Fred, you realize that he did not report income that he should have on a return. Fred reported $10,000 of income on the return but should have reported $13,500. What is Fred’s obligation going forward regarding this incident?
a) Fred must maintain records for 5 years from the year the return was filed
b) Fred must maintain records for 6 years from the year the return was filed
c) Fred must maintain records for 8 years from the year the return was filed
d) Fred must maintain records for 10 years from the year the return was filed
Answer:
b) Fred must maintain records for 6 years from the year the return was filed
Explanation:
A person that prepares tax is required by the Internal Revenue Service to keep tax returns and supporting documents for at least 3 years.
However when the tax preparer fails to report correct income amount they are required to keep records for at least the last 6 years.
The underreported income must be greater than 25% of the income.
In the given scenario the Fred reported $10,000 instead of $13,500.
The unreported amount is $3,500
Percentage not reported = (3,500 ÷ 13,500) * 100 = 25.925%
So Fred will need to keep records for the next 6 years
At the beginning of the month, the Forming Department of Martin Manufacturing had 11,000 units in inventory, 40% complete as to materials, and 10% complete as to conversion. During the month the department started 61,000 units and transferred 63,500 units to the next manufacturing department. At the end of the month, the department had 8,500 units in inventory, 85% complete as to materials and 60% complete as to conversion. If Martin Manufacturing uses the weighted average method of process costing, compute the equivalent units for materials and conversion respectively for the Forming Department. Multiple Choice
Answer:
Materials ⇒ 70,725 units Conversion ⇒ 68,600 unitsExplanation:
Using the weighted average method, the equivalent units are the Units transferred out plus the equivalent closing inventory.
Materials:
= Units transferred out + Closing equivalent units
= 63,500 + (85% * 8,500)
= 70,725 units
Conversion:
= 63,500 + (60% * 8,500)
= 68,600 units
What does job title mean on a work application?
Answer:
The position or name for the job or thing a employee is doing.
Examples:
Administrative Assistant
Receptionist
Office Manager
Auditing Clerk
Bookkeeper
Account Executive
Branch Manager
Business Manager
Team Leader
Manager
Assistant Manager
Executive
Director
Coordinator
Administrator
Controller
Officer
Organizer
Supervisor
Superintendent
Hope this helps!!
Northern Company has the following information available for the past quarter: Division A Division B Division C Sales $250,000 $400,000 $350,000 Variable expenses 52% 30% 40% Fixed expenses controllable by division manager $60,000 $200,000 $175,000 Fixed expenses controllable by others $10,000 $5,000 $7,500 Unallocated expenses for all three divisions are $22,000. What is the contribution controllable by the division manager in Division C
Answer:
Controllable contribution = $35,000
Explanation:
The controllable contribution of the divisional manager is the difference between the sales revenue and the costs controllable by the manager. It is a metric to measure the performance of a divisional manager
sales revenue = $350,000
Variable expenses = 40%× 350,000
Controllable costs = (40%×350,000)+ 175,000= 315,000
Controllable contribution= $350,000 - 315,000 = 35,000
Controllable contribution = $35,000
For the month of June, Beeman Corp. estimated sales revenue at $600,000. Beeman pays sales commissions that are 4% of sales revenue. The sales manager's salary is $285,000. Additional estimated selling expenses that total 1% of sales revenue Miscellaneous selling expenses are $15,000. How much are budgeted selling expenses for the month of July, if Beeman estimates sales revenues to be $540,000
Answer: $327000
Explanation:
The budgeted selling expenses for the month of July, if Beeman estimates sales revenues to be $540,000 will be:
Sales Commission = $540000 × 4% = $21600
Add: Sales Manager Salary = $285,000
Add: Additional Selling Expense = $540000 × 1% = $5,400
Add: Miscellaneous Selling Expense = $15,000
Therefore, Buedgeted Selling Expense = $327000
In X1, Adam and Jason formed ABC, LLC, a car dealership in Kansas City. In X2, Adam and Jason realized they needed an advertising expert to assist in their business. Thus, the two members offered Cory, a marketing expert, a one-third capital interest in their partnership for contributing his expert services. Cory agreed to this arrangement and received his capital interest in X2. If the value of the LLC's capital equals $180,000 when Cory receives his one-third capital interest, which of the following tax consequences does not occur in X2?A. Cory reports $60,000 of ordinary income in X2.B. Adam, Jason, and Cory receive an ordinary deduction of $20,000 in X2.C. Adam and Jason receive an ordinary deduction of $30,000 in X2.D. Cory reports $60,000 of ordinary income in X2, and Adam and Jason receive an ordinary deduction of $30,000 in X2.
Answer: B. Adam, Jason, and Cory receive an ordinary deduction of $20,000 in X2.
Explanation:
Based on the information given, since the value of the LLC's capital equals $180,000 after Cory receives his one-third capital interest, Cory will report (⅓ × $180000) = $60,000 of ordinary income in X2.
Also, Adam and Jason will receive an ordinary deduction of $30,000 in X2. The sentence that "Adam, Jason, and Cory receive an ordinary deduction of $20,000 in X2" is wrong. They do not get sane amount as Cory gets a higher amount.
Adam decided to play a practical joke on Linda, a coworker. As Linda was leaving the office one night, Adam, wearing a mask, stepped out from behind some bushes. He pointed a handgun made out of licorice at her and demanded her purse. He then pushed the candy gun to her head and told her if she told anybody he'd kill her. Linda was very scared during the whole incident. She did not think it was funny when Adam pulled the mask off and took a bite out of the gun as he gave her the purse back. Which statement is correct?
A) Yes, as his conduct was intentional.
B) Yes, but only if Adam intended to cause Linda serious emotional distress.
C) No, since he was only playing a practical joke.
D) No, since Linda was not physically hurt by Adam.
Answer:
A) Yes, as his conduct was intentional.
Explanation:
Since in the question it is mentioned that adam decided to play a joke with the linda who is a coworker. Due to the acts of adam the linda was too scared during the whole incident
So as per the given options, the first option is correct as the act done by the adam is intentionally just for his fun
So, the option a is correct
Suppose that you are in charge of hiring a new employee for your firm. You have to decide between two persons. One is a person with many years of experience in a company very similar to yours who has only a high school education. The other person is a recent university graduate with a degree in a field closely related to your company's business. Which person would you choose? Discuss.
Answer:
The one with many years ofexperience
Explanation:
1 experience
2 knows the job
3 proven to be dependable hence the many years of experience
The expected cash balance at January 1, 2016, is $62,000. Brewster wants to maintain a cash balance at the end of each month of at least $60,000. Short-term borrowings at 1% interest per month will be used to accomplish this, if necessary. Borrowings (in multiples of $1,000) will be made at the beginning of the month in which they are needed, with interest for that month paid at the end of the month. Prepare a cash budget for the quarter ended March 31, 2016.
Answer: Check attachment
Explanation:
The cash budget for the quarter ended March 31, 2016 has been attached.
Note that in the calculation that is attached:
Cash available = Beginning cash balance + Cash receipt + Short term borrowing
Ending balance = Cash available - Total cash disbursement
Check attachment for further details and explanation.
Which of these scenarios best describe an open account?
A: Goods are shipped to the importer with terms of remittance in 30, 60, or 90 days.
B: The exporter (seller) receives payment in advance through wire transfers, credit cards, or Internet escrow accounts, similar to PayP/al.
C: A bank commi/ts to the exporter to pay for the goods on behalf of the importer as long as the terms of the sale are met.
D: Goods are shipped to the importer/buyer for resale to other customers. Good are paid for only when the goods have been sold.
Answer:it is A
Explanation:
Just took the test. Goods are shipped to the importer with terms of remittance in 30,60, or 90 days.
Goods are shipped to the importer with positions of remittance in 30, 60, or 90 days is scenarios best describe an open account. The remittance is paid to the importer.
What is open account?Open account is the sales transaction where the goods are delivered before the payment is due. This is beneficial for the importer, but it involves the high risk to the exporter.
It is also called account payable by the bearer. The example of Open account is trade credit which is not fully pay off, a deferred cost schedule for an goods, a past due account.
Thus, option A is correct.
For more details about open account, click here:
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A company making tires for bikes is concerned about the exact width of its cyclocross tires. The company has a lower specification limit of 22.8 mm and an upper specification limit of 23.3 mm. The standard deviation is 0.14 mm and the mean is 23.1 mm. What is the process capability index for the process?
Answer:
the process capability index for the process is 0.4761
Explanation:
The computation of the process capability index for the process is shown below:
= minimum of [(23.3-23.1) ÷ (3 × 0.14),(23.1 - 22.8) ÷ (3 × 0.14)]
= minimum of (0.4761, 0.7142)
= 0.4761
Hence, the process capability index for the process is 0.4761
The same should be considered and relevant
The shareholders' equity of Green Corporation includes $200,000 of $1 par common stock and $400,000 of 6% cumulative preferred stock. The board of directors of Green declared cash dividends of $60,000 in 2011 after paying $20,000 cash dividends in each of 2010 and 2009. What is the amount of dividends common shareholders will receive in 2011?
a. 28000
b. 30000
c. 50000
d. 25000
Answer:
Option a (28000) is the right option.
Explanation:
Given:
Preferred stock,
= $400,000
In year 2009 and 2010, the dividends paid,
= $20,000 each year
Dividends declared,
= $60,000
Now,
The preferred dividend per year will be:
= [tex]Preferred \ stock\times 6 \ percent[/tex]
= [tex]400000\times 6 \ percent[/tex]
= [tex]24,000[/tex] ($)
Arrears in preferred dividend per year will be:
= [tex]24000-20000[/tex]
= [tex]4000[/tex] ($)
For preferred stock, the total dividends arrears will be,
= [tex]4000\times 2[/tex]
= [tex]8000[/tex] ($)
hence,
The dividends which are received by the common stock holders will be:
= [tex]Dividends \ declared-Preferred \ dividend-Arrears \ in \ preferred \ dividend[/tex]
By putting the values, we get
= [tex]60000-24000-8000[/tex]
= [tex]28000[/tex]
On Point, Inc., is interested in producing and selling a deluxe electric pencil sharpener. Market research indicates that customers are willing to pay $40 for such a sharpener and that 20,000 units could be sold each year at this price. The cost to produce the sharpener is currently estimated to be $34. a. If On Point requires a 20 percent return on sales to undertake production of a product, what is the target cost for the new pencil sharpener
Answer: $32
Explanation:
The target cost would be such that 20% of the $40 that people are willing to pay would be profit.
The target profit is therefore:
= 20% * 40
= $8
Target cost is therefore:
= Amount customers would pay - Target profit
= 40 - 8
= $32
Answer:
The answer is $32 for sure :)
12-3. (Break-even point and selling price) Simple Metal Works, Inc. will manufacture and sell 300,000 units next year. Fixed costs will total $350,000, and variable costs will be 65 percent of sales. The firm wants to achieve a level of earnings before interest and taxes of $250,000. What selling price per unit is necessary to achieve this result
Answer:
Selling price= $5.08
Explanation:
Giving the following information:
Number of units= 300,000
Fixed costs= $350,000
Desired profit= $250,000
Variable cost rate= 0.65
First, we need to calculate the unitary contribution margin using the break-even point formula:
Break-even point in units= (fixed costs + desired profit)/ contribution margin per unit
300,000 = (350,000 + 250,000) / contribution margin per unit
300,000 contribution margin per unit = 600,000
contribution margin per unit= 600,000/300,000
contribution margin per unit= $2
If the variable cost rate is 0.65, then:
Unitary varaible cost= 2/0.65= $3.08
Selling price= contribution margin per unit - unitary varaible cost
Selling price= 2 - (-3.08)
Selling price= $5.08
"The following accounts increased/(decreased) during 2020: Accounts Receivable ($12,000), Inventory $11,000, and Accounts Payable ($13,000). Prepare the cash flows from operating activities section of Bloom's 2020 statement of cash flows using the indirect method."
Solution :
The Cash flow from the operating activities
Sales revenue $ 2,00,000
Less : Cost of goods sold $ 1,20,000
Less : operating expenses paid
(excluding depreciation, 50,000 - 21,000) $ 29,000
Cash generated from the operating activities $ 51,000
Increase in current assets liabilities
Increase in accounts receivable $ 12,000
Increases in inventory $ 11,000
Increase in accounts payable $ 13,000
Cash flow from the operating activity $ 41,000
Consider the two countries of Swala and Atlantis. Swala is a major producer of wheat and rice while Atlantis specializes in the production of marble and automobile parts. Engaging in free trade benefits both countries since Swala is an agrarian nation and Atlantis lacks arable land. This follows the theory of comparative advantage, and we can say that engaging in free trade benefits all countries that participate in it; however, this conclusion is based on which inaccurate assumptions?
a. We have assumed a simple world in which there are only two countries.
b. We have assumed the prices of resources and exchange rates in the two countries are dynamic.
c. We have assumed there are barriers to the movement of resources from the production of one good to another within the same country.
d. We have assumed that agrarian nations do not specialize in producing fertilizers.
e. We have assumed diminishing returns to specialization.