Answer:
$17,160
Explanation:
According to the scenario, computation of the given data are as follows,
Purchase price = $559,200
Useful life = 10 years or 120 months
Salvage value = $26,400
Total time in months(May1,2012 - Mar1,2021) = 106 months
So, depreciation cost = ($559,200 - $26,400) ÷ 120 = $4,440 per month
So, total depreciation cost for 106 months = $4,440 × 106 = $470,640
Book value = Purchase price - depreciation
= $559,200 - $470,640
= $88,560
Hence, Loss = Book value - sold value
= $88,560 - $71,400
= $17,160
last year, cayman corporation had sales of $26 million, total variable costs of $15 million, and total fixed costs of $5,000,000. in addition, they paid $4 million in interest to bondholders. cayman has a marginal tax rate of 21 percent. if cayman's sales increase by 15%, what should be the increase in operating income
Answer:
Cayman Corporation
The increase in operating income is 27.5% (or $1.65 million).
Explanation:
a) Data and Calculations:
Sales last year = $26 million
Total variable costs 15 million
Contribution margin $11 million
Fixed costs 5 million
Operating income $6 million
Bondholders' interest 4 million
Income before tax $2 million
Income taxes (21%) 0.42 million
Net income $1.58 million
Last Year Increase by 15%
Sales revenue = $26 million $29.9 million
Total variable costs 15 million 17.25 million
Contribution margin $11 million $12.65 million
Fixed costs 5 million 5.0 million
Operating income $6 million $7.65 million $1.65 m or 0.275
Bondholders' interest 4 million 4.0 million
Income before tax $2 million 3.65 million
Income taxes (21%) 0.42 million 0.7665 million
Net income $1.58 million 2.8835 million = 82.5%
Green Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $43 to buy from farmers and $14 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $19 or processed further for $18 to make the end product industrial fiber that is sold for $51. The beet juice can be sold as is for $34 or processed further for $22 to make the end product refined sugar that is sold for $51.
Required:
What is the financial advantage (disadvantage) for the company from processing one batch of sugar beets into the end products industrial fiber and refined sugar?
Answer:
Financial advantage $5
Explanation:
The computation of the financial advantage (disadvantage) for the company is shown below:
Combined sales value ($51 + $51) $102
Less: further processing ($18 + $22) -$40
Sugar beets cost -$43
Cost to crush -$14
Financial advantage $5
We simply deduct all cost from the revenue so that the financial advantage or disadvantage could come
Rounding in the calculation of monthly interest rates is discouraged. Such rounding can lead to answers different from those presented here. For long-term loans, the differences may be pronounced. Assume that you take out a $2000 loan for 30 months at 9% APR. How much of the first month's payment is interest
Answer:
the first month payment of interest is $74.70
Explanation:
The computation of the first month payment of interest is shown below
Given that
PV = $2,000
NPER = 30
RATE = 9% ÷ 12 = 0.75%
FV = $0
The formula is given below:
= -PMT(RATE;NPER;PV;FV;TYPE)
After applying the above formula, the monthly interest payment is $74.70
hence, the first month payment of interest is $74.70
Which of the following is incorrect?
a. Future value means earning interest on interest.
b. External equity and dividends can be used as plug variables in a financial plan.
c. A financial plug variable is the designated source of external financing needed to deal with any shortfall or surplus in financing and thereby bring the balance sheet into balance.
d. There are two primary mechanisms for electing directors: cumulative voting and straight voting.
e. The rate required in the market on a bond is the yield to maturity.
Answer:
b. External equity and dividends can be used as plug variables in a financial plan.
Explanation:
When the external equity and dividend is applied like the plus variables in the financial plan so as a plug variable it represent the external financing source i.e. dividend that required to deal with any deficit or surplus in the financing and the external equity is not a source of the external financing
Therefore the option b is considered
A company issues the following bonds on June 1, 2002. Series A (counts as two) Series B $50 million BBB June 1, 2030 June 1, 2008 100 Par Value Rating Maturity Call date Call price $50 million BBB June 1, 2030 Non-callable -- If both bonds have the same market liquidity, the yield-to-maturity on the Series A bond should be [ ] than yield-to-maturity on Series B bond. a) higher b) lower c) the same d) either higher or lower(depending notherfactors)
Answer: a. Higher
Explanation:
Series A is a callable bond which means that the company will be able to buy it back after a certain period of time at a price dictated in the contract.
This provision is an advantage to the Issuer but not the investors so the Issuer will have to pay the investors more to get them to buy the bond even with the presence of this provision.
This additional payment will come in the form of a higher yield. This is why callable bonds have higher yields than non-callable comparable bonds.
The likelihood that a decision maker will ever receive a payoff precisely equal to the EMV when making any one decision is: a. Low (near 0%) b. High (near 100%) c. Dependent on the number of alternatives d. Dependent upon the number of states of nature 3 points
Answer: low (near 0%)
Explanation:
The expected monetary value(EMV) simply refers to the amount of money that an economic agent can expect to make based on a particular decision that's made.
It should be noted that the likelihood that a decision maker will be able to receive a payoff that is exactly as thesame as the EMV when a decision is being made will be near to zero as it's very low that it'll happen.
1. Cullumber Cosmetics acquired 13% of the 301,200 shares of common stock of Elite Fashion at a total cost of $14 per share on March 18, 2020. On June 30, Elite declared and paid a $70,100 dividend. On December 31, Elite reported net income of $226,500 for the year. At December 31, the market price of Elite Fashion was $15 per share.
2. Bramble Inc. obtained significant influence over Kasey Corporation by buying 25% of Kasey’s 32,700 outstanding shares of common stock at a total cost of $10 per share on January 1, 2019. On June 15, Kasey declared and paid a cash dividend of $31,600. On December 31, Kasey reported a net income of $116,000 for the year.
Required:
Prepare all the necessary journal entries for 2019 for Cullumber Cosmetics.
Answer:
1. 18-Mar
Dr Available for Sale Securities $548,184
Cr Cash $548,184
30-Jun
Dr Cash $9,113
Cr Dividend Revenue $9,113
31-Dec
Dr Securities Fair Value Adjustment $39,156
Cr Unrealized Holding Gain $39,156
2.1-Jan
Dr Investmeht in Nadal Corp. $81,750
Cr Cash $81,750
15-Jun
Dr Cash $7,900
Cr Investment in Nadal Corp. $7,900
31-Dec
Dr Investment in Nadal $29,000
Cr Revenue from Investment in Sub $29,000
Explanation:
1.Preparation of all the necessary journal entries for 2019
18-Mar
Dr Available for Sale Securities $548,184
Cr Cash $548,184
(13%*301,200*$14)
(To purchase 10% of Ramirez Fashion)
30-Jun
Dr Cash $9,113
Cr Dividend Revenue $9,113
(13%$70,100)
(To record a 13% dividend revenue $70,100)
31-Dec
Dr Securities Fair Value Adjustment $39,156
Cr Unrealized Holding Gain $39,156
[($15-$14)*13%*301,200]
(To adjust securities to FMV in an Equity account)
2.1-Jan
Dr Investmeht in Nadal Corp. $81,750
Cr Cash $81,750
(25%*32,700*$10)
(To purchase 25% of Nadal Corp.)
15-Jun
Dr Cash $7,900
Cr Investment in Nadal Corp. $7,900
(25%$31,600)
(To record cash dividend of $31,600)
31-Dec
Dr Investment in Nadal $29,000
Cr Revenue from Investment in Sub $29,000
(25%*$116,000)
(To record 25% revenue of $116,000 from Nada)
Absorption and Variable Costing Comparisons: Production Equals Sales Assume that Smuckers manufactures and sells 30,000 cases of peanut butter each quarter.
The following data are available for the third quarter of 2017.
Total fixed manufacturing overhead.......................................................90,000
Fixed selling and administrative expenses........... .. . .. . .. . . . . .. . . . . . 20,000
Sale price per case..................................................................................32
Direct materials per case .......................................................................15
Direct labor per case ........................................................................6
Variable manufacturing overhead per case ..........................................3
a. Compute the cost per case under both absorption costing and variable costing.
b. Reconcile any differences in income. Explain.
c. Compute te net income under both absorption costing and variable costing.
Answer:
a. Cost per case under Absorption costing:
= Direct materials per case + Direct labor per case + Variable manufacturing overhead per case + Fixed manufacturing overhead per case
= 15 + 6 + 3 + 90,000/ 30,000 cases
= $27
Cost per case under Variable costing:
= Direct materials per case + Direct labor per case + Variable manufacturing overhead per case
= 15 + 6 + 3
= $24
b. First we need to calculate income under both methods:
Under Absorption costing:
= Sales - Cost of goods sold - Selling and Admin expenses
= (30,000 cases * 32) - (30,000 * 27) - 20,000
= $130,000
Under Variable Costing:
= Sales - Cost of Goods sold - Fixed manufacturing overhead - Selling and Admin expenses
= (30,000 * 32) - (30,000 * 24) - 90,000 - 20,000
= $130,000
There is no difference in income because the cases manufactured equals the cases sold.
Homestead Jeans Co. has an annual plant capacity of 65,000 units, and current production is 45,000 units. Monthly fixed costs are $54,000, and variable costs are $29 per unit. The present selling price is $42 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 18,000 units of the product at $32 each. Dawkins Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Homestead Jeans Co.
Required:
a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Dawkins order.
b. Briefly explain the reason why accepting this additional business will increase operating income.
c. What is the minimum price per unit that would produce a positive contribution margin?
Answer:
18000*2
Explanation:
Pharmicon, Inc., a pharmaceutical firm, discovered a complete cure for the common cold. The medicine could be put into a pill that would be taken once a day for a week. Knowing these results, directors of Pharmicon decided to delay the press release and bought thousands of shares of Pharmicon stock. After the purchases, Pharmicon issued a press release about the pill. The price of the stock skyrocketed. When the SEC found out about the purchases and the delay in the press release, it sued Pharmicon for violating Rule 10b-5. The court in this case would most likely rule in favor of Group of answer choices
Question Completion:
a. the SEC, because the information about the cure was material and was not disclosed to the public prior to the directors' purchase of the stock.
b.Pharmicon, because the information was not material.
c.the SEC, because owning company stock is a conflict of interest for the directors.
d.Pharmicon, because they issued a press release to the public
Answer:
Pharmicon, Inc.
The court in this case would most likely rule in favor of:
a. the SEC, because the information about the cure was material and was not disclosed to the public prior to the directors' purchase of the stock.
Explanation:
SEC's Rule 10b-5 forbids insider trading and, therefore, enables the SEC to sue individuals who use the privileged information they acquire about an entity's security to buy or sell the entity's securities. The information may be acquired illegally or legally, provided it is not publicly available. Insider trading exists when a professional breaches a fiduciary duty or betrays the trust and confidence reposed in him by trading on a security based on material, nonpublic information about the security.
Minors are liable for the reasonable value of the necessary:______.
a. actually furnished.
b. that they agreed to purchase.
c. that their parents agreed to pay for.
d. all of these.
Answer:
b. that they agreed to purchase.
Explanation:
A minor is a person who is under the age of 18 and unable to make decision on his own such as mentally impaired or incompetent persons .
A minor cannot enter a contract like adults but if under any circumstance they enter into a contract of sale purchase of daily goods like clothing etc, they are liable to pay the price which they agreed to pay.
Their parents are liable only if the contract was made according to the parent's will etc.
If the minor is unable to pay the agreed amount then the minor should return the goods or fulfill any other liability as imposed by the court of law.
Fabrick Company's quality cost report is to be based on the following data: Lost sales due to poor quality $ 78,000 Quality data gathering, analysis, and reporting $ 23,000 Net cost of spoilage $ 88,000 Re-entering data because of keying errors $ 98,000 Test and inspection of in-process goods $ 24,000 Final product testing and inspection $ 78,000 Statistical process control activities $ 49,000 Returns arising from quality problems $ 16,000 Downtime caused by quality problems $ 26,000 What would be the total appraisal cost appearing on the quality cost report
Answer:
$102,000
Explanation:
Calculation to determine What would be the total appraisal cost appearing on the quality cost report
Using this formula
Total appraisal cost=Test and inspection of in-process goods + Final product testing and inspection
Let plug in the formula
Total appraisal cost=$ 24,000+$78,000
Total appraisal cost=$102,000
Therefore What would be the total appraisal cost appearing on the quality cost report is $102,000
Robert Company, which allocates overhead to production on the basis of machine hours, reported the following data for the period just ended:
Actual units produced: 12,000
Actual variable overhead incurred: $77,770
Actual machine hours worked: 18,800
Standard variable overhead cost per machine hour: $4.50
Robert estimates that it takes 1.5 hours to manufacture a completed unit.
Required:
Compute all standards & variances. Prepare all journal entries using standard costing.
Answer:
Variable overhead rate variance = Actual Variable overhead incurred - Actual Hours of Input, at Standard Rate
Variable overhead rate variance = ($4.5*18800 - $77,700)
Variable overhead rate variance = $6,900 Favorable
Variable overhead efficiency variance = Actual Hours of Input, at Standard Rate - Standard Hours allowed for Actual Output at Standard Rate
Variable overhead efficiency variance = (12000*1.5 - $18,800)*$4.5 =
Variable overhead efficiency variance = $3,600 Unfavorable
Variable overhead cost variance = Actual Variable overhead incurred - Standard Hours allowed for Actual Output at Standard Rate
Variable overhead cost variance = (12000*1.5*$4.5) - $77,700
Variable overhead cost variance = $3,300 Favorable
For 2020, X Company's production budget was 3,500 units of finished product, and the budget for direct material costs was $24,080. Actual production in 2020 was 2,500 units of finished product, and actual direct material costs were $17,230. What was the static budget for direct material costs in 2020
Answer: $24,080
Explanation:
The Static budget is based on a particular level of production and once it is prepared, it does not change even if the assumptions used in the calculation of the budget changes.
In this case, the budgeted direct material cost is $24,080 for a production level of 3,500 units of finished goods. This material cost is therefore based on a certain production level which makes it the static budgeted amount for materials.
A trial balance before adjustment included the following:
Debit Credit
Accounts receivable $133,000
Allowance for doubtful accounts $1,080
Sales 471,000
Sales returns and allowances 5,200
Required:
Prepare journal entries assuming that the estimate of uncollectible is determined by taking (1) 4% of gross accounts receivable.
Riley has worked for Centrum Springs, Inc., for many years and has now been given the opportunity to advance in the company. His manager is retiring and hopes that Riley will take over for him. However, even though Riley is an experienced employee, there are many things that he still needs to learn. Riley has trained many new employees, but he has never held a management position. Riley needs to have a general understanding of what it takes to be a manager. There are many problems in Riley's department. There are no plans to fall back on in case the initial plan fails. Riley also will need to learn how to direct people in such a way that makes them want to do more than they absolutely have to. Riley feels that this is a great opportunity, and he is anxious to learn everything to be a great manager. He knows that if he performs well in this position, he will have the opportunity to move up the corporate ladder.
Refer to Centrum Springs, Inc. Riley's usual duties represent which of these areas?
a. Financial management
b. Operations management
c. Marketing management
d. Human resources management
e. Administrative management
Answer:
B. I hope i helped!
Explanation:
During 2019, Coronado Industries expected Job No. 26 to cost $300000 of overhead, $500000 of materials, and $200000 in labor. Coronado applied overhead based on direct labor cost. Actual production required an overhead cost of $370000, $610000 in materials used, and $260000 in labor. All of the goods were completed. What amount was transferred to Finished Goods?
Answer:
See below
Explanation:
Given the above information, first we will compute the predetermined overhead rate
Predetermined overhead rate
= Estimated manufacturing overhead / Estimated labor
= $300,000/$200,000
= 1.5
The next step is to apply the
= [(1.5 × $260,000) + $260,000 + $610,000]
= $390,000 + $260,000 + $610,000
= $1,260,000
1. Define business. Explain the functions of business.
[tex] \large{ \tt{☄ \: ANSWER}} : [/tex]
↦ Business is an economic activity that is directed towards acquiring and earning profit and wealth through customer's satisfaction. It plays an important role for the economic development of the country and uplift living standard of the people. Some of the functions of business are described below :
Creation of utilities : For the fulfillment of needs of customers , business creates various types of utilities. A business has many components and each component is involved in the creation of the certain utility. For instance : manufacturers create from utility , transportation system created place utility , warehousing time utility and insurance companies risk utility.Generation of employment : Business is a source of employment. Various types of employees are required to a business. In industries , both skilled and unskilled manpower are required for production , distribution and auxiliaries functions. Hence , the development of industry and commerce helps to solve the unemployment problem of a nation.Earning Foreign Currency : Business is the main source of earning Foreign Currency. Foreign currency can be earned by exporting surplus products and services to foreign countries. The development of export trade brings favourable balance in payment.Provides investment opportunities : Business provides investment opportunities to the investors in production and distribution activities. Depending on the nature of investment ; investors receive dividend , interest or other financial benefits. The persons of organizations having sufficient capital can invest their money in production and commercial activities according to their interest , capability and knowledge.[tex] \large{ \tt{✺ \: STUDY \: TIP}} : [/tex]
FEED YOUR BRAIN : Foods like apples , walnuts and blueberries can improve your ability to focus , retain information and remain mentally alert. ♪
ツ Hope I helped! ♡
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Which of the following is not an advantage of delegating authority at Red Frog Events?
a
Delegation helps develop subordinates
b
Subordinates learn how to make decisions
c
Some managers are too disorganized to delegate appropriately
d
An event manager can get more work done
Answer:
c. Some managers are too disorganized to delegate appropriately
Explanation:
Generally, the advantage of delegating authority in a firm can be numerous. Hence, considering the question, the benefit of delegating authority at Red Frog Events is no different.
Therefore, considering the available options, the statement that is NOT an advantage of delegating authority at Red Frog Events is "Some managers are too disorganized to delegate appropriately."
In contrast, some of the advantages of delegating authority are:
1. Delegation helps develop subordinates: as subordinates take more authority in some cases, they grow in decision-making and overall growth.
2. Subordinates learn how to make decisions: as subordinates are allowed to make decisions, they learn to understand how to make proper decisions
3. An event manager can get more work done: when subordinates are delegated with authority, it helps the manager focus more on other areas that need his attention, thereby getting more work done.
Define corporate culture. What are the components of a good corporate culture? Why do you think that corporate culture has such a huge impact on the success of a company? Please share your thoughts.
Answer:
Corporate culture, also known as company culture, refers to a set of beliefs and behaviors that guide how a company’s management and employees interact and handle external business transactions.
The management of Penfold Corporation is considering the purchase of a machine that would cost $270,000, would last for 5 years, and would have no salvage value. The machine would reduce labor and other costs by $60,000 per year. The company requires a minimum pretax return of 12% on all investment projects. The net present value of the proposed project is closest to:______.
a. $(11,700).
b. $(53,700).
c. $(269,997).
d. $(113,700).
Answer:
The correct answer is B.
Explanation:
Giving the following information:
Initial investment= $270,000
Cash flow= $60,000
Number of years= 5
Discount rate= 12%
To calculate the net present value (NPV), we need to use the following formula:
NPV= -Io + ∑[Cf/(1+i)^n]
∑[Cf/(1+i)^n]:
Cf1= 60,000/1.12= 53,571.43
Cf2= 60,000/1.12^2= 47,831.63
.....
Cf5= 60,000/1.12^5= 34,045.61
∑[Cf/(1+i)^n]= 216,286.57
Now, the NPV:
NPV= -270,000 + 216,286.57
NPV= -53,713.43
Cash Flows from Investing Activities would involve all of the following except:
A. The purchase of buildings.
B. The receipt of interest income on short-term investments.
C. The purchase of marketable securities.
D. The proceeds from the sale of equipment.
Answer:
B
Explanation:
there are three types of cash flows:
1. Investing cash flow - It involves the use of long term cash. it is the cash flow generated from the purchase and sale of fixed asset e.g. Sale of plant assets.
2. operating cash flow - it shows the net amount of cash generated from a company's normal business operation
3. financing cash flow - it shows the net amount of funding a company receives over a given period e.g. issuance of common stock
Jonathan has a debt of $3,000 that needs to be repaid with 3 annual equal principal repayments with interest on the outstanding balance. The debt has an annual effective interest rate of 8%. In order to match his payment obligations exactly, Jonathan decides to purchase the following zero coupon bonds. Time to Maturity Par Value 1 year $1,000 2 years $ 800 3 years $ 900 Calculate the number of units of the 3-year bond Jonathan should buy, assuming fractional purchase is possible
Answer:
Jonathan
The number of units of the 3-year bond that Jonathan should buy is:
3.88 or 3 and 22/25 bonds.
Explanation:
a) Data and Calculations:
Present value of debt = $3,000
Annual effective interest rate = 8%
Total future value of the debt with interest = $3,492.30
Equal annual repayment of the debt = $1,164.10 ($3,492.30/3)
Number of 3-year bond that Jonathan should buy = $3,492.30/$900 = 3.88 or 3 and 22/25 bonds
Time to Maturity Par Value
1 year $1,000
2 years $ 800
3 years $ 900
From an online calculator, the total amount to be paid with interest is $3,492.30:
N (# of periods) 3
I/Y (Interest per year) 8
PV (Present Value) 3000
FV (Future Value) 0
Results
PMT = $1,164.10
Sum of all periodic payments $3,492.30
Total Interest $492.30
Answer:
1.2
Explanation:
Given that we are making 3 Equal Principle Payments on a loan of $3000, the principle that we will repay each year will be [tex]\frac{3000}{3} = $1000[/tex].
First Year:
The interest that we will need to repay during the first year will be 3000*.08 which will be $240 dollars of interest, so we will be paying a total of 1000 + 240, or $1240 for the first year reducing the amount due to $2000.
Second Year:
The interest that we will need to repay during the second year will be 2000*.08 which will be $160 of interest, so we will be paying a total of 1000 + 160, or $1160 which will reduce the amount due $1000.
Third Year:
This is the year that we care for. We have a total interest amount of $80, so we will be paying a total of $1080 for the third year.
Given that the par value of the Zero Coupon bond for the third year is $900, we will need [tex]\frac{1080}{900} = 1.2[/tex] coupons for the final year, giving us our answer of 1.2 3-year bonds that Jonathan should buy.
Stunning Motors, Ltd. makes economy autos for the world market. Stunning has decided to branch out and produce economical, fuel efficient motor bikes. They are exploring a joint venture With Bay Bikes, a Chinese motorbike company active in the Chinese market. In the meantime, before any formal agreement on a joint venture is reached, Bay Bikes is working with Stunning's R&D engineers to create a feasibility study on the Chinese market potential. This is an example of ___________
a. product differentiation
b. non-equity-based strategic alliance
c. sole proprietorship
d. entrepreneurial orientation
Answer:
b. non-equity-based strategic alliance
Explanation:
In the case of the non-equity strategic alliance, the organizations develop the agreement for sharing the resources without developing the distinct entity or equity i.e. shared.
Non-equity alliances are considered to be loose and not formal as compared to the partnership involving equity.
So as per the given situation, the option b is correct
Yahir wants to become an Actor. What are the most helpful examples of milestones for this goal? Check all that apply.
taking an acting class
running a race
taking a science class
learning how to cook
participating in a school play
auditioning for a part in a television show
The helpful examples of milestones for becoming an actor includes:
taking an acting classparticipating in a school play auditioning for a part in a television showWho is an actor?An actor means someone who profession is based on acting on the stage, films, television etc.
The helpful examples of milestones for becoming an actor includes taking an acting class, participating in a school play and auditioning for a part in a television show.
Therefore, the Option A, E and F is correct.
Read more about Actor skills
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Bacchus Enterprises has $12B in book value of common stock selling at a book to market rate of 1.35 and a beta of 1.5. The combined preferred stock is valued at $8.5B with a beta of 1.23. The restructured debt has a book value of $4.8B in book value and has a coupon of 6%, maturing in 9 years, and selling at 102.5%. The market is doing quite well and is returning 14% with a risk free asset returning 4%. What is the Cost of Preferred Stock
Answer: 16.3%
Explanation:
Given the details in the question, the cost of preferred capital can be calculated using the CAPM method.
Cost of preferred stock using the Capital Asset Pricing Model is:
= Risk free rate + Beta * ( Market return - Risk free rate)
= 4% + 1.23 * (14% - 4%)
= 16.3%
Which facilities or amenities are most commonly available on a cruise chip?
Answer:
Generally, all cruise ship amenities have dining, entertainment, shopping or sporting facilities. There are bars and lounges as well, with some ships providing casinos and other adult-themed entertainment facilities.
Explanation:
Boenisch Corporation produces and sells a single product with the following characteristics: The company is currently selling 8,000 units per month. Fixed expenses are $406,000 per month. Management is considering using a new component that would increase the unit variable cost by $3. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 400 units. What should be the overall effect on the company's monthly net operating income of this change
Answer: Increase by $2,000
Explanation:
Current net operating income is:
= Contribution margin - Fixed costs
= (68 * 8,000) - 406,000
= $138,000
If component is added, Variable cost increases by $3 to $105. New contribution margin is:
= 170 - 105
= $65
Units sold increases by 400 to 8,400.
Net operating income becomes:
= (65 * 8,400) - 406,000
= $140,000
Net operating income increased by:
= 140,000 - 138,000
= $2,000
Tamarisk, Inc. purchased a delivery truck for $29,200 on January 1, 2020. The truck has an expected salvage value of $2,200, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 16,100 in 2020 and 12,800 in 2021.
1. Calculate depreciation expense per mile under units-of-activity method.
2. Compute depreciation expense for 2020 and 2021 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double- declining-balance method.
3. Prepare the journal entry to record 2020 depreciation.
4. Assume that Marigold uses the straight-line method. Show how the truck would be reported in the December 31, 2020, balance sheet.
Answer:
1. Depreciation expense per mile = $0.27 per mile
2-1. The straight-line method
We have:
Depreciation expense for 2020 = $3,375
Depreciation expense for 2021 = $3,375
2-2. Units-of-activity method
We have:
Depreciation expense for 2020 = $4,347
Depreciation expense for 2021 = $3,456
2-3. The double-declining-balance method
We have:
Depreciation expense for 2020 = $7,300
Depreciation expense for 2021 = $5,475
3. See the journal entries below.
4. Net book value = $25,825
Explanation:
1. Calculate depreciation expense per mile under units-of-activity method.
Depreciation expense per mile = (Purchase price delivery truck - Expected salvage value) / Expected driven miles = ($29,200 - $2,200) / 100,000 = $0.27 per mile
2. Compute depreciation expense for 2020 and 2021 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double- declining-balance method.
2-1. The straight-line method
Annual depreciation expense = (Purchase price of the delivery truck - Expected salvage value) / Estimated useful life = ($29,200 - $2,200) / 8 = $3,375
Therefore, we have:
Depreciation expense for 2020 = Annual depreciation expense = $3,375
Depreciation expense for 2021 = Annual depreciation expense = $3,375
2-2. Units-of-activity method
Depreciable amount = Purchase price of the delivery truck - Expected salvage value = $29,200 - $2,200 = $27,000
Therefore, we have:
Depreciation expense for 2020 = Depreciable amount * (Actual miles driven in 2020 / Expected driven miles) = $27,000 * (16,100 / 100,000) = $4,347
Depreciation expense for 2021 = Depreciable amount * (Actual miles driven in 2021 / Expected driven miles) = $27,000 * (12,800 / 100,000) = $3,456
2-3. The double-declining-balance method
Straight-line method depreciation rate = 1 / Estimated useful life = 1 / 8 = 0.1250, or 12.50%
Double-declining-balance method depreciation rate = Straight-line method depreciation rate * 2 = 12.50% * 2 = 25%
Therefore, we have:
Depreciation expense for 2020 = Purchase price of the delivery truck * Double-declining-balance method depreciation rate = $29,200 * 25% = $7,300
Depreciation expense for 2021 = (Purchase price of the delivery truck - Depreciation expense for 2020) * Double-declining-balance method depreciation rate = ($29,200 - $7,300) * 25% = $5,475
3. Prepare the journal entry to record 2020 depreciation.
3-1. The straight-line method
Date Particulars Debit ($) Credit ($)
2020 Depreciation expense 3,375
Accumulated dep. – Delivery truck 3,375
(To record 2020 depreciation expense.)
3-2. Units-of-activity method
Date Particulars Debit ($) Credit ($)
2020 Depreciation expense 4,347
Accumulated dep. – Delivery truck 4,347
(To record 2020 depreciation expense.)
3-3. The double-declining-balance method
Date Particulars Debit ($) Credit ($)
2020 Depreciation expense 7,300
Accumulated dep. – Delivery truck 7,300
(To record 2020 depreciation expense.)
4. Assume that Marigold uses the straight-line method. Show how the truck would be reported in the December 31, 2020, balance sheet.
Tamarisk, Inc.
Balance sheet (Partial)
As at the Year Ended December 31, 2020
Details $
Fixed Assets
Delivery truck 29,200
Accumulated depreciation (3,375)
Net book value 25,825
When the sales department needs to hire more staff, the corporate skills inventory system was used to determine if any current employees had the skills needed for the new position. This is an example of :________. .
Answer: Internal recruiting
Explanation:
Internal recruiting is when an organization fills its vacancies from its existing workforce.
In this case, rather than looking for applicants to the position outside the company, the company fills the available position with some of its staff. On the other hand, external recruitment is when the position is filled by outsiders.