Colt Carriage Company offers guided horse-drawn carriage rides through historic Charleston comma South Carolina. The carriage business is highly regulated by the city. Colt Carriage Company has the following operating costs during April: LOADING...(Click the icon to view the information.) During April (a month during peak season), Colt Carriage Company had 13 comma 500 passengers. Sixty percent of passengers were adults ($23 fare) while 40% were children ($15 fare). Requirements 1. Prepare the company's contribution margin income statement for the month of April. Round all figures to the nearest dollar. 2. Assume that passenger volume increases by 10% in May. Which figures on the income statement would you expect to change, and by what percentage would they change? Which figures would remain the same as in April?
Answers
Answer:
1) Colt Carriage Company
Income Statement
For the month ended April 202x
Revenues:
Adults passengers $186,300Children $81,000 Total revenues $267,300Variable costs:
City fees $26,730Souvenirs $7,425Brokerage fees $11,340Carriage drivers $52,650Total variable costs $98,145Contribution margin $169,155
Period costs:
Depreciation $2,900Horse leases $48,000Marketing expenses $7,350Payroll expenses $7,600Total period costs $65,850Operating profit $103,305
2) If the total amount of passengers increase by 10%, then all variable costs will increase by 10% except brokerage fees which would increase only by 6%. Revenues should also increase by 10%. Period costs should not change.
Contribution margin should increase by 10.29% and operating profit would increase by 16.81%.
Explanation:
since the information is not complete, I looked it up:
Revenues
13,500 passengers:
8,100 x $23 = $186,300
5,400 x $15 = $81,000
total $267,300
variable costs:
fees paid to the city 10% of total revenue
souvenirs $0.55 per passenger
brokerage fees 60% of total tickets x $1.40
carriage drivers $3.90 per passenger
fixed costs:
depreciation $2,900
horse leases $48,000
marketing expenses $7,350
payroll expenses $7,600
Related Questions
1. Certain balance sheet accounts in a foreign subsidiary of Shaw Company on December 31, 20X1, have been restated in U.S. dollars as follows: Restated at Current Rates Historical Rates Accounts Receivable, Current $ 100,000 $ 110,000 Accounts Receivable, Long-Term 50,000 55,000 Prepaid Insurance 25,000 30,000 Patents 40,000 45,000 Total $ 215,000 $ 240,000 What total should be included in Shaw's balance sheet for December 31, 20X1, for these items?
Answers
Answer:
The total that should be included in Shaw's balance sheet for December 31, 20X1 is $215,000
Explanation:
The amount that should be included in Shaw's balance sheet for December 20X1 would be
Particulars Stated at Current Rates
Accounts Receivable, Current $100,000
Accounts Receivable, Long-Term $50,000
Prepaid Insurance $25,000
Patents $40,000
Total $215,000
When Acme Dynamite produces 250 units of output, its variable cost is $2,000, and its fixed cost is $500. It sells each unit of output for $25. If the price of dynamite drops to $10, should Acme Dynamite continue to operate in the short run?
Answers
Answer:
The firm will continue to produce in the short run.
Explanation:
Given the number of units produced by Acme Dynamite = 250 units.
The variable cost of producing the 250 units = $2000
The fixed cost = $500
The selling price = $25 per unit.
The new price after the fall in price = $10
Total revenue from the selling of 250 units = 250 × 10 = $2500
Since the revenue received is covering the variable cost and fixed cost. Thus, the firm will produce or continue to produce in the short run.
The following information concerns the intangible assets of Epstein Corporation: On June 30, 2021, Epstein completed the acquisition of the Johnstone Corporation for $2,420,000 in cash. The fair value of the net identifiable assets of Johnstone was $2,050,000. Included in the assets purchased from Johnstone was a patent that was valued at $91,200. The remaining legal life of the patent was 13 years, but Epstein believes that the patent will only be useful for another eight years. Epstein acquired a franchise on October 1, 2021, by paying an initial franchise fee of $250,800. The contractual life of the franchise is 11 years. Required: 1. Prepare year-end adjusting journal entries to record amortization expense on the intangibles at December 31, 2021. 2. Prepare the intangible asset section of the December 31, 2021, balance she
Answers
Answers:
a. Acquisition of cost of corporation = $2,420,000
Less: Fair value of net identifiable assets = $2,050,000
Cost of good will = $370,000
Note: Goods will is not amortized
b. Cost of patent purchase = $91,200
Legal life = 13 years
Estimated useful life= 8 years
Ammortization = Cost / Estimated useful life
= $91,200/8 years
=$11,400
Ammortization per annum is $11,400
Patent is purchased on 30/6/2021
Calculation of amortization for 6 months periods
Amortization for 6 months (July-December)= $11,400 * 6/12
=$5,700
Note: Amortization should be amortized on basis of their amortized value that is, 8 years.
c. Calculation of amortization cost for franchise
Cost = $250,800
Life=11
Purchased on 1/10/2021
Amortization = Cost / Estimated useful life
= $250,080/11
=$22,800
Amortization per annum is $22,800
Calculation of the amortization for 3 month period=
Amortization of 3 month (Oct-Dec.) = $22,800 * 3/12
=$5,700
d, Journal Entries Debit$ Credit$
Amortization Expenses 5,700
Patent 5,700
(To record the amortization expenses)
Amortization Expenses 5,700
Franchise 5,700
(To record the amortization expenses)
e. Partial Balance Sheet
Assets $ $
Current Assets
Long term Assets
Tangible assets 2,050,000
Intangible assets
Goodwill 370,000
Patent 91,200
Less: Accumulated Depreciation 11,400 79,800
Franchise 250,800
Less: Accumulated Depreciation 22,800 228,000
If the dividend yield for year one is expected to be 5% based on the current price of $50, what will year three dividend (DIV3) be if dividends grow at a constant 4%
Answers
Answer:
Div₃ = $2.81
Explanation:
dividend yield = current dividend / current stock price
0.05 = current dividend / $50
current dividend = $50 x 0.5 = $2.50
Div₀ = $.250
Div₁ = $2.50 x 1.04 = $2.60
Div₂ = $2.60 x 1.04 = $2.704 = $2.70
Div₃ = $2.704 x 1.04 = $2.81
A company estimates that warranty expense will be 4% of sales. The company's sales for the current period are $185,000. The current period's entry to record the warranty expense is:
Answers
The journal entry for recording the warranty expense is
Dr Warranty Expense 7,400
Cr Estimated Warranty Liability 7,400
Journal entry:Dr Warranty Expense 7,400 (185,000 x 0.04)
Cr Estimated Warranty Liability 7,400
(being warranty expense is recorded)
here expense is debited as it increased the expense and liability should be credited as it also increased the liability.
Learn more about journal entry here: https://brainly.com/question/24345471
The entry for the warranty expense would be recorded in the form of the Journal entry by debiting the Warranty Expense and crediting the Estimated Warranty Liability with the amount of $7,400.
What is the Journal entry?Journal entry is defined as the primary books of accounting, it records the financial transactions of the firm as a form of recording the transaction by applying the golden rules of accounting.
This process of recording involves of transactions by giving the debit as well as credit effect of the transaction in such a manner that the transactions are recorded properly.
The Journal entry of the given case is:
Warranty Expense a/c Dr. $7,400
To Estimated Warranty Liability a/c $7,400
(being warranty expense is recorded)
The amount is calculated as:
185,000 × 0.04 = $7,400
Therefore, both the accounts are recorded with the $7,400.
Learn more about the Journal entry, refer to:
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Speedy Auto Repairs uses a job-order costing system. The company’s direct materials consist of replacement parts installed in customer vehicles, and its direct labor consists of the mechanics’ hourly wages. Speedy’s overhead costs include various items, such as the shop manager’s salary, depreciation of equipment, utilities, insurance, and magazine subscriptions and refreshments for the waiting room.
The company applies all of its overhead costs to jobs based on direct labor-hours. At the beginning of the year, it made the following estimates:
Direct labor-hours required to support estimated output 20,000
Fixed overhead cost $ 350,000
Variable overhead cost per direct labor-hour $ 1.00
Required:
1. Compute the predetermined overhead rate.
2. During the year, Mr. Wilkes brought in his vehicle to replace his brakes, spark plugs, and tires. The following information was available with respect to his job:
Direct materials $ 590
Direct labor cost $ 109
Direct labor-hours used 6
Compute Mr. Wilkes’ total job cost.
3. If Speedy establishes its selling prices using a markup percentage of 40% of its total job cost, then how much would it have charged Mr. Wilkes?
Answers
Answer:
Instructions are below.
Explanation:
Giving the following information:
Direct labor-hours required to support estimated output 20,000
Fixed overhead cost $ 350,000
Variable overhead cost per direct labor-hour $ 1.00
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= (350,000/20,000) + 1
Predetermined manufacturing overhead rate= $18.5 per direct labor hour
Job:
Direct materials $ 590
Direct labor cost $ 109
Direct labor-hours used 6
Total cost= 590 + 109 + 6*18.5
Total cost= $810
Finally, the selling price:
Selling price= 810*1.4= $1,134
Suppose that the government imposes a $2 a cup tax on coffee. The rise in the price of a Starbucks coffee will be ______, coffee. The number of cups of coffee bought in coffee shops will _______.
Answers
Answer:
increase, decrease
Explanation:
In simple words, when the tax was imposed on the product the company will ultimately bear it to the final consumer which means the price will rise. However when the price of the product rises the demand for that product decreases due to the fact that many individuals would not be able to buy it now from their limited income, this phenomenon is called price elasticity due to income.
Answer:
increasedecreaseExplanation:
On April 30, 2018, Quality Appliances purchased equipment for $280,000. The estimated service life of the equipment is six years and the estimated residual value is $19,000. Quality's fiscal year ends on December 31.
Required:
Calculate depreciation for 2013 and 2014 using each of the three methods listed. Quality calculates partial year depreciation based on the number of months the asset is in service.
2013 2014
1. Straight-Line
2. Sum-of-the-years'digits
3. Double-declining balance
Answers
Answer:
The answer is b
Explanation:
hope this helped
The decision to accept an additional volume of business should be based on a comparison of the revenue from the additional business with the sunk costs of producing that revenue.
a) true
b) false
Answers
Answer:
false
Explanation:
Sunk cost is cost that has already been incurred and cannot be recovered. it should not be considered when making future decisions
Sibling Furniture Company manufactures and sells oak tables and chairs. Price and cost data for the furniture follow:
Furniture has three sales representatives: Archie, Bryce, and Crissy. Archie sold 70 tables with 8 chairs each. Bryce sold 50 tables with 4 chairs each. Crissy sold 80 tables with 6 chairs each.
Requirement
Calculate the total contribution margin and the contribution margin ratio for each sales representative (round to two decimal places) Before calculating the total contribution margin, begin by identifying and calculating the total number of tables and chairs sold by each sales representative for the period.
Sales representative Tables sold Chairs per table Total chairs sold
Archie
Bryce
Cory
Answers
Answer:
contribution margin CMR (%)
Archie $51,100 39.9%
Bryce $26,500 20.7%
Cory $50,400 39.4%
Total $128,000 100%
Explanation:
sales price per table $1,100
variable production costs $715
sales commissions $55
contribution margin per table $330
sales price per chair $100
variable production costs $45
sales commissions $5
contribution margin per chair $50
Archie sold 70 tables and 560 chairs, total contribution margin:
tables ⇒ 70 x $330 = $23,100
chairs ⇒ 560 x $50 = $28,000
total = $51,100
Bryce sold 50 tables and 200 chairs, total contribution margin:
tables ⇒ 50 x $330 = $16,500
chairs ⇒ 200 x $50 = $10,000
total = $26,500
Cory sold 80 tables and 480 chairs, total contribution margin:
tables ⇒ 80 x $330 = $26,400
chairs ⇒ 480 x $50 = $24,000
total = $50,400
contribution margin %
Archie $51,100 39.9%
Bryce $26,500 20.7%
Cory $50,400 39.4%
Total $128,000 100%
During 2008, Gum Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar sales are 2 percent within twelve months following the sale and 4 percent in the second twelve months following the sale. Sales and actual warranty expenditures for the years ended December 31, 2008 and 2009, are as follows:
Sales Actual Warranty Expenditures
2008 $150,000 $2,250
2009 250,000 7,500
$400,000 $9,750
What amount should Gum report as estimated warranty liability on its December 31, 2009 balance sheet?
a. $7,500
b. $4,250
c. $11,250
d. $14,250
e. $16,500
Answers
Answer:
d. $14,250
Explanation:
Calculation of the amount that Gum should report as estimated warranty liability on its December 31, 2009 balance sheet
First step
2% within twelve months following the sale + 4 % in the second twelve months following the sale.
Will give us 6%
Second step is to calculate the estimated warranty liability that should be reported
Sales Total of $400,000×6%
=$24,000
Hence,
Estimated warranty liability =$24,000 -Total of actual warranty expenditures of $9,750
Estimated warranty liability=$14,250
Therefore the amount that Gum should report as estimated warranty liability on its December 31, 2009 balance sheet will be $14,250
Jonas is a 60% owner of Ard, an S corporation. At the beginning of the year, his stock basis is zero. Jonas’s basis in a $20,000 loan made to Ard and evidenced by Ard’s note has been reduced to $0 by prior losses. During the year, Jonas’s net share of Ard’s taxable income is $10,000. At the end of the year, Ard makes a $15,000 cash distribution to Jonas. After these transactions, what is Jonas’s basis in his stock, and what is his basis in the debt? What is Jonas’s recognized capital gain?
Answers
Answer:
The person ‘J’ basis in the stock is $0.
The person ‘J’ basis in his debt is $0.
The capital gain arises as result of distribution is $5,000
Explanation:
J’ share of net income is $10,000 and the distribution of cash to person ‘J’ is $15,000, therefore, the person ‘J’ basis in his stock is first increased by $10,000 and then decreased by $15,000 but it cannot be negative, hence the person ‘J’ basis in his stock is reduced to $0.
During the current year the person ‘J’ share in taxable income is $10,000, hence there is no loss, So the shareholders ‘J’ basis on debt remains $0 or when the company starts making money again, the basis of loan will automatically increase.
The person ‘J’ basis in his debt is $0.
The capital gain on distribution of cash is calculated as follows;
Capital Gain = Cash Distribution - J's basis in is stock
=$15,000 - $10,000
=$5,000
Therefore, the capital gain on distribution of cash is $5,000.
1. Calculate the growth rate between 2010 and 2014 for a company with the following revenue. Year Revenue 2010 735 2011 985 2012 1152 2013 1347 2014 1658 2015 1895
Answers
Answer: 230.75 (units/ year)
Explanation:
To compute the growth rate between 2010 and 2014, we use the following formula :
Growth rate = [(Revenue in 2014) -(Revenue in 2010)]÷ [Difference between 2010 and 2014]
From the table, Revenue in 2010 = 735
Revenue in 2014= 1658
Then, Growth rate = (1658 -735)÷ (2014-2010)
= 923÷ 4
= 230.75
Hence, the growth rate between 2010 and 2014 = 230.75 (units/ year)
ack Hammer invests in a stock that will pay dividends of $3.06 at the end of the first year; $3.42 at the end of the second year; and $3.78 at the end of the third year. Also, he believes that at the end of the third year he will be able to sell the stock for $56. What is the present value of all future benefits if a discount rate of 13 percent is applied
Answers
Answer:
$46.82
Explanation:
Present value is the sum of discounted cash flows
present value can be calculated using a financial calculator
Cash flow in year 1 = $3.06
Cash flow in year 2 = $3.42
Cash flow in year 3 = $3.78 + $56 = $59.78
I = 13%
Present value = $46.82
To find the PV 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
Marco was an economics major in college until he discovered he could major in strength and conditioning. Then he switched majors. Clearly, learning about this field is important to him. Mike and Bob are addressing
Answers
n the video, Marco says he was an economics major in college until he discovered he could major in strength and conditioning. Then he switched majors. Clearly, learning about this field is important to him. Mike and Bob are addressing ............... when they send Marco to seminars instead of, for example, increasing his salary in exchange for his continued high performance at MBSC. They could maintain Marco’s high level of motivation by:........................
A. Sending him on an all-expense-paid Caribbean cruise for two weeks
B. Reimbursing his tuition as he seeks a master’s degree in fitness management
C. Reassuring him that he has a job with MBSC as long as he performs well
D. Setting up an employee discount program at a nearby coffee shop, laundromat, and tasalon
Answer:
Valence
C. Reassuring him that he has a job with MBSC as long as he performs well
Explanation:
By sending Marco to seminars, Mike and Bob are addressing VALENCE; a psychological value an individual put on another person, in relation to the attractiveness of individual whose a psychological value has been placed. In this case, a psychological value placed on Macro by his managers is the valuable rewards they would get from his professional development, rather than increasing his salary in exchange for high performance.
Therefore, they could maintain Marco’s high level of motivation by reassuring him that he has a job with MBSC as long as he performs well.
To determine the realized return on an investmen, the investor needs to know:________
1. Income received
2. The cost of an investment
3. The sale price of the investment
a. 2 and 3
b. 2 and 4
c. 1 and 4
d. 1 and 3
Answers
Answer:
The correct answer all of the above is missing
Explanation:
In order to determine the realized return on investment, for instance, stock, one needs to the income received(dividend) the initial purchase price as well as the sale price of the investment as shown in the formula below:
return on investment=P1-Po+D/Po
P1 is the sale price of investment
Po is the initial cost of investment
D is the income received
Purchases Budget in Units and Dollars Budgeted sales of The Music Shop for the first six months of 2014 are as follows: Month Unit Sales Month Unit Sales January 130,000 April 215,000 February 160,000 May 180,000 March 200,000 June 240,000 Beginning inventory for 2014 is 30,000 units. The budgeted inventory at the end of a month is 40 percent of units to be sold the following month. Purchase price per unit is $5. Prepare a purchases budget in units and dollars for each month, January through May.
Answers
Answer:
Instructions are below.
Explanation:
Giving the following information:
Sales:
January 130,000
February 160,000
March 200,000
April 215,000
May 180,000
June 240,000
Beginning inventory for 2014 is 30,000 units.
The budgeted inventory at the end of a month is 40 percent of units to be sold the following month.
The purchase price per unit is $5.
To calculate the production required for each month, we need to use the following formula:
Production= sales + desired ending inventory - beginning inventory
January:
Sales= 160,000
Desired ending inventory= (160,000*0.4)= 64,000
Beginning inventory= (30,000)
Total= 164,000
Total cost= 164,000*5= $820,000
February:
Sales= 130,000
Desired ending inventory= (200,000*0.4)= 80,000
Beginning inventory= (64,000)
Total= 146,000
Total cost= 146,000*5= $730,000
March:
Sales= 200,000
Desired ending inventory= (215,000*0.4)= 86,000
Beginning inventory= (80,000)
Total= 206,000
Total cost= 206,000*5= $1,030,000
April:
Sales= 215,000
Desired ending inventory= (180,000*0.4)= 72,000
Beginning inventory= (86,000)
Total= 201,000
Total cost= 201,000*5= $1,005,000
May:
Sales= 180,000
Desired ending inventory= (240,000*0.4)= 96,000
Beginning inventory= (72,000)
Total= 204,000
Total cost= 204,000*5= $1,020,000
Moss County Bank agrees to lend the Sunland Company $605000 on January 1. Sunland Company signs a $605000, 6%, 9-month note. What is the adjusting entry required if Sunland Company prepares financial statements on June 30
Answers
Answer:
DR Interest Expense $18,150
CR Interest Payable $18,150
Explanation:
June 30 would mean that 6 months have elapsed since the note was issued. The interest rate is an annual one so will have to be adjusted for 6 months.
The interest expense so far will be;
= 605,000 * 6% * [tex]\frac{6}{12}[/tex]
= $18,150
This figure is to be debited to the Interest Expense account to show that it is an expense and credited to the Interest Payable account.
The following events occur for The Underwood Corporation during 2021 and 2022, its first two years of operations.
June 12, 2021 Provide services to customers on account for $41,000.
September 17, 2021 Receive $25,000 from customers on account.
December 31, 2021 Estimate that 458 of accounts receivable at the end of the year will not be received.
March 4, 2022 Provide services to customers on account for $56,000.
May 20, 2022 Receive $10,000 from customers for services provided in 2021.
July 2, 2022 Write of the remaining amounts owed from services provided in 2021.
October 19, 2022 Receive $ 45,000 from customers for services provided in 2022.
December 31, 2022 Estimate that 45% of accounts receivable at the end of the year will not be received.
Record transactions for each date. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) Provide services to customers on account for $35,000.
Answers
Answer:
Journal Entries are given below
Explanation:
June 12, 2021
Provide services to customers on account of $41,000.
DEBIT CREDIT
Receivable account $41,000
Services Revenue $41,000
September 17, 2021
Receive $25,000 from customers on account.
DEBIT CREDIT
Cash $25,000
Receivable $25,000
December 31, 2021
Estimate that 45% of accounts receivable at the end of the year will not be received.
DEBIT CREDIT
Bad debt($16,000x45%) $7,200
Allowance for doubtful debt $7,200
March 4, 2022
Provide services to customers on account for $56,000
DEBIT CREDIT
Receivable account $56,000
Services Revenue $56,000
May 20, 2022
Receive $10,000 from customers for services provided in 2021.
DEBIT CREDIT
Cash $10,000
Receivable $10,000
July 2, 2022
Write of the remaining amounts owed from services provided in 2021.
Working: $41,000 - $25,000 - $10,000 = $6,000
DEBIT CREDIT
Allowance for doubtful debt $6,000
Account Receivable $6,000
October 19, 2022
Receive $ 45,000 from customers for services provided in 2022.
DEBIT CREDIT
Cash $45,000
Receivable $45,000
December 31, 2022
Estimate that 45% of accounts receivable at the end of the year will not be received.
DEBIT CREDIT
Bad debt (w) $3,750
Allowance for bad debt $3,750
Working:
($56,000 - $45,000) x45% = $4,950
Balance in Allowance account at 31 dec 2021 = 7,200
Bad debt written off = 6,000
Remaining balance = 1,200
Allowance for doubtful debt at 31 dec 2022 = $4,950 - $1,200
Allowance for doubtful debt at 31 dec 2022 = $3,750
Consider this case: Mildred’s Brewing Corp. needs to take out a one-year bank loan of $500,000 and has been offered loan terms by two different banks. One bank has offered a simple interest loan of 11% that requires monthly payments. The loan principal will be paid back at the end of the year. Another bank has offered 8% add-on interest to be repaid in 12 equal monthly installments. Based on a 360-day year, what will be the monthly payment for each loan for November? (Hint: Remember that November has 30 days.) Value Simple interest monthly payment Value Add-on interest monthly payment
Answers
Answer:
Mildred's Brewing Corp.
Monthly Payment for each loan for November:
a) Simple Interest = $55,000/12
= $4,583
b) Value Add-on interest monthly payment
= $43,494.31 ($521,931.68/12)
Explanation:
a) Data:
Bank loan = $500,000
Terms by bank one:
Simple interest of 11% paid monthly
Loan principal to be repaid at the end of the year.
Terms by bank two:
Add-on (Compound) interest = 8%
Repayment of interest and loan principal in 12 equal monthly installments.
b) Total Simple Interest Calculation:
Monthly Simple interest = ($500,000 x 11% )
= $55,000
c) Add-on Interest Calculation:
Using an online calculator, the total add-on interest will be $21,932.68 at an effective interest rate of 0.667% compounded monthly or 8%/12.
Principal = $500,000.00
Total interest $21,931.68
Principal + Interest $521,931.68
Monthly Repayment = $43,494.31 ($521,931.68/12)
d) The simple interest option will cost $55,000 in simple interest and the loan repayment at year-end of $500,000. The Add-on interest with equal monthly repayment of interest and principal will be $43,494.31, which costs $21,931.68 in total compound interest.
Free Spirit’s marketing and sales director doesn’t think that the firm’s market is big enough for the firm to break even. In fact, she believes that the firm will be able to sell only about 200,000 units. However, she also thinks that the demand for Free Spirit’s product is relatively inelastic (so the firm can increase the sales price without significantly decreasing the volume of product sold). Assuming that the firm can sell 200,000 units, what price must it set to break even? $67.69 per unit $85.50 per unit $78.38 per unit $71.25 per unit
Answers
Answer:
$60.75
Explanation:
your question seems incomplete. here is the full question used in answering this question
Free Spirit Industries Inc. is considering a project that will have fixed costs of $10,000,000. The product will be sold for $41.50 per unit, and will incur a variable cost of $10.75 per unit. p na r so Free Spirit's marketing and sales director doesn't think that the firm's market is big enough for the firm to break even. In fact, she believes that the firm will be able to sell only about 200,000 units. However, she also thinks that the demand for Free Spirit's product is relatively inelastic (so the firm can increase the sales price without significantly decreasing the volume of product sold). Assuming that the firm can sell 200,000 units, what price must it set to break even? O $57.71 per unit O $72.90 per unit O $60.75 per unit O $66.83 per unit
Breakeven price = (fixed cost / quantity sold) + variable price per unit
($10,000,000 / 200,000) + $10.75 = $60.75
Patton Company purchased $400,000 of 10% bonds of Scott Co. on January 1, 2011, paying $376,100. The bonds mature January 1, 2021; interest is payable each July 1 and January 1. The discount of $23,900 provides an effective yield of 11%. Patton Company uses the effectiveinterest method and plans to hold these bonds to maturity. 5. On July 1, 2011, Patton Company should increase its Held-to-Maturity Debt Securities account for the Scott Co. bonds by
Answers
Answer:
$685.55
Explanation:
Patton company ;
Bond payments $376,100 × 0.055
= $20,685.55
Less face amount $400,000 × 0.05
= $20,000
Held-to-maturity debt securities $685.55
($20,685.55 - $20,000)
Note:
Effective yield(market rate)
= 11% ÷ 2
= 5.5%
Bonds
= 10% ÷ 2
= 5%
Assume a nominal interest rate on one-year US Treasury Bills of 4.60% and a real rate of interest of 2.50%. Using the Fisher Effect Equation, what is the approximate expected rate of inflation in the US over the next year
Answers
Answer:
2.0488%
Explanation:
Fisher Effect Equation = ( 1 + nominal rate ) = ( 1 + inflation rate ) x (1 + real rate)
= ( 1 + 0.046) = ( 1 + inflation rate ) x (1 + 0.025)
( 1 + inflation rate ) = ( 1 + 0.046) / (1 + 0.025)
( 1 + inflation rate ) = 1.020488
Inflation rate = 1.020488 - 1 = 0.020488 = 2.0488%
Smith buys and sells equity securities. On December 15, 2021, Smith purchased $522,000 of Jones shares and elected the fair value option to account for the Jones investment. As of December 31, 2021, the Jones shares had a fair value of $578,000. In the 2021 financial statements, Smith will report (ignore taxes):
Answers
Answer:
Smith will report an investment income of $56,000 in its income statement.
Explanation:
Based on the information given we were told that Smith made a purchased of the amount of $522,000 of Jones shares in which as of December 31, 2021, the Jones shares also had a fair value of the amount of $578,000 this means that Smith will report an investment income of $56,000 ($578,000-$522,000) in its income statement.
Carla Vista Company has the following information available for September 2020.
Unit selling price of video game consoles $410
Unit variable costs $328
Total fixed costs $36,900
Units sold 600
1. Compute the unit contribution margin.
2. Prepare a CVP income statement that shows both total and per unit amounts.
3. Compute Carla Vista’ break-even point in units.
4. Prepare a CVP income statement for the break-even point that shows both total and per unit amounts.
Answers
Answer:
Instructions are below.
Explanation:
Giving the following information:
Unit selling price of video game consoles $410
Unit variable costs $328
Total fixed costs $36,900
Units sold 600
First, we need to determine the unitary contribution margin:
Unitary contribution margin= 410 - 328= $82
Contribution margin income statement:
Sales= 600*410= 246,000
Total variable cost= 600*328= (196,800)
Total contribution margin= 49,200
Fixed costs= (36,900)
Net operating income= $12,300
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 39,200/82
Break-even point in units= 478 units
Finally, the income statement for the break-even point:
Sales= 478*410= 195,980
Total variable cost= 478*328= (156,784)
Total contribution margin= 39,196
Total fixed costs= (39,200)
Net operating income= (4)
Childress compnay produces three products, K1, S5, and G9. Each product uses the same type of material. K1 uses 4.5 pounds of the material, S5 uses 3 pounds , and G9 uses 5.5 pounds. Demand for all products is strong but only 59900 pounds of material are available. Information about the selling price per unit and variable cost per unit of each product follows.
K1 S5 G9
Selling price $158.38 $114.80 $204.52
Variable costs 86.00 91.00 139.00
Required:
Calculate the contribution margin per pound for each of the three products.
Answers
Answer:
Product K1 S5 G9
$ $ $
Contribution per pound 16.08 7.93 11.91
Explanation:
Contribution per pound is equate to contribution per unit divided quantity of material required per unit of product.
Contribution per pound = Contribution per unit/quantity of material
Contribution per unit =selling price - variable cost per unit
Product K1 S5 G9
$ $ $
Selling price 158.38 114.80 204.52
Variable cost (86.00) (91.00) (139.00)
Contribution per unit 72.38 23.8 65.52
Material per unit (pounds) 4.5 3 5.5
Contribution per pound 16.08 7.93 11.91
Landow Company uses variable costing for internal purposes and wants to restate income to that of absorption costing for external reporting purposes. Landow's income under variable costing is $630,000. Fixed production cost in ending inventory is $120,000 and $85,000 in beginning inventory. What is Landow's income under absorption costing?
Answers
Answer:
$635,000
Explanation:
The computation of the net income under absorption costing is shown below:
= Income under variable costing + fixed production cost in ending inventory - beginning inventory
= $630,000 + $120,000 - $85,000
= $635,000
By adding the fixed cost and deduct the beginning inventory to the variable costing income we can easily calculate the absorption costing income
Simon recently received a credit card with an 18% nominal interest rate. With the card, he purchased an Amazon Kindle for $350. The minimum payment on the card is only $10 per month
a. If Simon makes the minimum monthly payment and makes no other charges, how many months will it be before he pays off the card. Round to the nearest month.
b. If Simon makes monthly payment of $30, how many months will it be before he pays off the card. Round to the nearest month.
c. How much more in total payments will Simon make under the $10-a-month plan than under the $30-a-month plan? Make sure you use three decimal places for N.
Answers
Answer:
A.50 months
B.12.92 months
C.$112.38
Explanation:
a). Using this formula
PV of Annuity = Monthly Payment * [{1 - (1 + r)-n} / r]
Where,
PV of Annuity =$350
Monthly Payment =$10
r=(0.18/12)
Let plug in the formula
$350 = $10 * [{1 - (1 + 0.18/12)-n} / (0.18/12)]
$350 / $10 = {1 - (1.015)-n} / 0.015
35 * 0.015 = 1 - (1.015)-n
(1.015)-n = 1 - 0.525
-n[log(1.015)] = log(0.475)
-n[0.0149] = -0.7444
n = -0.7444 / -0.0149
n= 50 months
b). Using this formula
PV of Annuity = Monthly Payment * [{1 - (1 + r)-n} / r]
Where,
PV of Annuity =$350
Monthly Payment =$30
r=(0.18/12)
Let plug in the formula
$350 = $30 * [{1 - (1 + 0.18/12)-n} / (0.18/12)]
$350 / $30 = {1 - (1.015)-n} / 0.015
11.67 * 0.015 = 1 - (1.015)-n
(1.015)-n = 1 - 0.175
-n[log(1.015)] = log(0.825)
-n[0.0149] = -0.1924
n = -0.1924 / -0.0149 =
n=12.92 months
c). Calculation for the Total Amount Paid under $10-a-month plan
Using this formula
Total Amount Paid under $10-a-month plan = No. of Payments * Monthly Payment
Where,
No.of Payments =50
Monthly Payment=10
Let plug in the formula
Total Amount Paid under $10-a-month plan= 50 * $10 = $500
Calculation for the Total Amount Paid under $30-a-month plan
Using this formula
Total Amount Paid under $30-a-month plan = No. of Payments * Monthly Payment
Where,
No. of Payments =12.92
Monthly Payment=$30
Let plug in the formula
Total Amount Paid under $30-a-month plan= 12.92 * $30 = $387.62
Hence,
Total Amount Paid under $10-a-month plan -Total Amount Paid under $30-a-month plan
= $500 - $387.62
= $112.38
On March 12, Medical Waste Services provides services on account to Grace Hospital for $10,900, terms 3/10, n/30. Grace pays for those services on March 20.
For Medical Waste Services, record the service on account on March 12 and the collection of cash on March 20.
Record service revenue on account
date general journl Debit credit
March 12
Record cash revenue on account
date general journl Debit credit
March 20
Answers
Answer:
March 12
Accounts Receivable 10900 Dr
Service Revenue 10900 Cr
March 20
Cash 10573 Dr
Service discount 327 Dr
Accounts Receivable 10900 Cr
Explanation:
March 12
The provision of services on account is recorded by a debit ot the asset account in form of accounts receivable and a credit to the service revenue. The full amount/ gross amount of service revenue is recorded as we assume that we use the gross method to record the service revenue.
March 20
The terms of credit which are 3/10 means that a 3% discount is allowed by Medical Waste Services if the Grace Hospital pays within the 10 days of the service provided on account. As the Grace Hospital pays within this period, a service discount of 10900 * 0.03 = 327 is allowed.
The remaining cash to be collected is 10900- 327 = 10573
Bustillo Incorporated is working on its cash budget for March. The budgeted beginning cash balance is $35,000. Budgeted cash receipts total $142,000 and budgeted cash disbursements total $151,000. The desired ending cash balance is $30,000. To attain its desired ending cash balance for March, the company needs to borrow:
Answers
Answer:
$4,000
Explanation:
Bustillo Incorporated
Cash Budget
For the month of March, 202x
Beginning cash balance $35,000
Total cash collections $142,000
Total cash disbursements ($151,000)
Ending cash before financing $26,000
Desired minimum cash balance ($30,000)
Financing needs ($4,000)