Answer:
Net income= 56,300
Explanation:
Giving the following information:
Fixed expenses 104,900
First, we need to determine unitary values:
Selling price= 330,000/5,000= $66
Unitary variable expenses= 175,000/5,000= $35
Now, we can redo the contribution margin income statement for 5,200 units:
Sales= 66*5,200= 343,200
Total variable cost= 35*5,200= (182,000)
Total contribution margin= 161,200
Fixed costs= (104,900)
Net income= 56,300
All of the following are protective functions of packaging except: Group of answer choices Cushioning the contents All are protective functions Being tamper-proof Providing uniform weight distribution Enclosing the materials
Answer:
All are protective functions
Explanation:
The packaging is the process in which the firm wrap the product so that it cannot be damage stole or lost by maintaining its product id
There are various function of packaging like tamper-proofing, uniform weight, the material disclosed, content cushioned so that the packaging should be done in a systematic manner
Therefore the second option is correct
Reno contributed $104,000 in cash plus equipment valued at $27,000 to the RD Partnership. The journal entry to record the transaction for the partnership is:
Answer:
Debit cash $104,000; debit equipment $27,000; credit Reno, Capital $131,000.
Explanation:
In this scenario, Reno contributed $104,000 in cash plus equipment valued at $27,000 to the RD Partnership. The journal entry to record the transaction for the partnership is debit cash $104,000; debit equipment $27,000; credit Reno, capital $131,000.
In Financial accounting, debit refers to an entry made which would either increase an expense or asset account; therefore, decreasing an equity or liability account. Credit refers to an entry made which would either increase an equity or liability account; therefore, decreasing an expense or asset account.
Generally, debit is an accounting entry which is made to the left of an account while credit is an accounting entry which is made to the right of an account. The standard rule is that, when a credit decreases an account, the opposite account should be increased with a debit.
Hence, in this case the RD Partnership will debit the cash received, $104,000 plus equipment valued at $27,000. Also, the opposite account or receivable account (Reno, capital) would be credited with $131,000 ($104,000+$27,000 = $131,000).
You invest a single amount of $14,800 for 7 years at 15 percent. At the end of 7 years you take the proceeds and invest them for 14 years at 17 percent. How much will you have after 21 years
Answer:
Value of investment after 21 years = $354,608.11
Explanation:
The value of an amount invested at a certain rate of return for certain number of years where interest compounded annually is known as the future value.
The future value of an investment can be determined using the future value formula. This formula is stated below:
FV = PV × (1+r)^(n)
FV - Future Value , PV- Present Value, r-rate of return, n- number of years
For the first round of investment 15% for 7 years, future value would be:
FV = 14,800 × (1.15)^(7) = 39,368.29
Second round of investing 17% for 14 year, future value would be
FV = 39,368.29 × (1.17)^(14)= 354,608.11
Future Value =$354,608.11
Value of investment after 21 years = $354,608.11
Journalize the following transactions assuming a perpetual inventory system:
May 5
Purchased merchandise from Archie Co., $6,000, terms FOB shipping point, 2/10, n/30.
Prepaid freight costs of $100 were added to the invoice.
May 12
Issued a debit memo to Archie Co. for $2,500 of merchandise returned from purchase on May 5.
May 14
Paid Archie Co. for invoice of May 5, less debit memo of May 12.
Answer:
May 5
Merchandise Inventory $6,000 (debit)
Freight Charges $100 (debit)
Accounts Payable : Archie Co. $6,000 (credit)
Cash $100 (credit)
May 12
Accounts Payable : Archie Co. $2,500 (debit)
Merchandise Inventory $2,500 (credit))
May 14
Accounts Payable : Archie Co. $3,500 (debit)
Discount Received $70 (credit)
Cash $3,430 (credit)
Explanation:
May 5
Recognize the Assets of Merchandise and a Liability : Accounts Payable : Archie Co. as a result of purchase.
Also Recognize the Freight Expenses since this is a F.O.B delivery
May 12
De-recognize the Liability : Accounts Payable - Archie Co. and the Merchandise Inventory asset to the extend of Merchandise returned to Archie Co.
May 14
De-recognize the Liability : Accounts Payable : Archie Co. of $3,500 and the Cash assets to the extend of Payment made to Archie Co less cash discount of $3,430 .
Barb Campbell owns an entertainment company which has increased both its profits and revenues over an extended period of time. Barb's firm is experiencing:
Answer:
sustained growth
Explanation:
Based on this information it seems that Barb's firm is experiencing sustained growth. This term refers to the realistically attainable amount of growth that a company can have without running into problems. If a business grows way too fast it will not be able to fund that growth, but if they do not grow enough then they will amass debt and fail. Sustainable Growth is usually the goal for new companies.
When group investors become aware of overseas investment opportunities and are willing to diversify their portfolios internationally, __________.
Answer:
they benefit from an expanded opportunity set.
Explanation:
As most of the business organizations focused on grabbing the investment opportunities which leads to diversify their business in terms of expanding the business in various locations, maximize the market share etc
This can be done with the help of opportunity set i.e. to expanded through which the firm could get the benefit of it
Hence, this would be the answer
Through which strategy do you believe Lockheed Martin would be most profitable to pursue diversification?
Answer: Related diversification
Explanation:
Here is the complete question:
Lockheed Martin has been a recognized brand in technology for aeronautics and space systems fordecades. The U.S. government is Lockheed Martin’s main customer. Recently, as large-scale military actions have decreased across the globe, the government has been consuming less of Lockheed Martin’sofferings.
As a top of executive of Lockheed Martin, you’ve been asked to consider the opportunities to diversify into new markets in order to remain competitive and continue to increase profits.
Through which strategy do you believe Lockheed Martin would be most profitable to pursue diversification?
Related diversification occurs when a business or an organization expands its activities into similar product lines that to the ones it currently offers.
An example of related diversification is when a computer manufacturer starts making calculators.
By pursuing related diversification, Martin is exploring innovative products which are still within aeronautics scope.
Danaher Woodworking Corporation produces fine furniture. The company uses a job-order costing system in which its predetermined overhead rate is based on capacity. The capacity of the factory is determined by the capacity of its constraint, which is an automated lathe. Additional information is provided below for the most recent month: Estimates at the beginning of the month: Estimated total fixed manufacturing overhead $ 36,400 Capacity of the lathe 400 hours Actual results: Actual total fixed manufacturing overhead $ 36,400 Actual hours of lathe use 380 hours Required: a. Calculate the predetermined overhead rate based on capacity. b. Calculate the manufacturing overhead applied. c. Calculate the cost of unused capacity.
Answer:
a. Calculate the predetermined overhead rate based on capacity.
$91 per lathe hourb. Calculate the manufacturing overhead applied.
$34,580c. Calculate the cost of unused capacity.
$1,820Explanation:
Estimated total fixed manufacturing overhead $36,400
Capacity of the lathe 400 hours
predetermined overhead rate per lathe hour = $36,400 / 400 = $91
actual results:
Actual total fixed manufacturing overhead $36,400
Actual hours of lathe use 380 hours
applied overhead = $91 x 380 lathe hours = $34,580
cost of unused capacity = $36,400 - $34,580 = $1,820
Nichols Enterprises has an investment in 31,500 bonds of Elliott Electronics that Nichols accounts for as a security available for sale. Elliott bonds are publicly traded, and The Wall Street Journal quotes a price for those bonds of $10 per bond, but Nichols believes the market has not appreciated the full value of the Elliott bonds and that a more accurate price is $23 per bond. Nichols should carry the Elliott investment on its balance sheet at:
Answer: $315,000
Explanation:
From the question, we are informed that Nichols Enterprises has an investment in 31,500 bonds of Elliott Electronics that Nichols accounts for as a security available for sale. Elliott bonds are publicly traded, and The Wall Street Journal quotes a price for those bonds of $10 per bond, but Nichols believes the market has not appreciated the full value of the Elliott bonds and that a more accurate price is $23 per bond.
To get the amount that Nichols should carry on the balance sheet as Elliott investment, we multiply the bond invested by the price per bond. This will be:
= 31,500 × $10
= $315,000
The desired reserve ratio is 3 percent. Robert deposits $3,000 in Bank America. Bank America keeps its minimum desired reserves and lends the excess to Fredrica. How much does Bank America lend to Fredrica?
Answer: $2,910
Explanation:
Bank America is required by law to keep 3% of all deposits as reserves and they can lend the rest which they did to Fredrica.
The amount they lent to Fredrica therefore is;
= 3,000 (1 - 3%)
= 3,000 * 97%
= $2,910
In the following example, the proposed debt issue would raise $4,000,000; the interest rate would be 10%. In addition, the EBIT would be $2,000,000. What would be the increase in the Earnings Per Share (EPS) from to current to the proposed structure
Answer:
$1.67
Explanation:
The computation of the increase in earning per share is shown below:
But before that first we need to find out the current and proposed earning
per share
Particulars Current Proposed
Number of shares $400,000 $240,000 (a)
EBIT $2,000,000 $2,000,000
Less:
Interest $400,000
($4,000,000 ×0.10)
EBT $2,000,000 $1,600,000
Less
Taxes $0 $0
Net income $2,000,000 $1,600,000 (b)
EPS $5 $6.67 (a ÷ b)
Increase in EPS
= $6.67 - $5
= $1.67
The risk-free rate is 4.5 percent and the market expected return is 10.8 percent. What is the expected return of a stock that has a beta of 1.30
Answer:
Expected return = 12.69%
Explanation:
The capital asset pricing model is a risk-based model for estimating the return on a stock.. Here, the return on equity is dependent on the level of reaction of the the equity to changes in the return on a market portfolio. These changes are captured as systematic risk. Systematic risks are those which affect all economic actors in the market, they include factors like changes in interest rate, inflation, etc. The magnitude by which a stock is affected by systematic risk is measured by beta.
Under CAPM,
E(r)= Rf + β(Rm-Rf)
E(r)- expected return, Rf-risk-free rate , β= Beta, Rm= Return on market.
Using this model, we can work out the value of beta as follows:
β-1.30, Rf- 4.5%, Rm = 10.8%
E(r) = 4.5% + 1.30 × (10.8 - 4.5)%= 12.69
Expected return = 12.69%
On June 10, 20X8, Playoff Corporation acquired 100 percent of Series Company's common stock. Summarized balance sheet data for the two companies immediately after the stock acquisition are as follows:
Playoff Corp. Series Company
Item Book Value Fair Value
Cash $ 15,000 $ 5,000 $ 5,000
Accounts Receivable 30,000 10,000 10,000
Inventory 80,000 20,000 25,000
Buildings & Equipment (net) 120,000 50,000 70,000
Investment in Series Stock 100,000
Total $ 345,000 $ 85,000 $ 110,000
Accounts Payable $ 25,000 $ 3,000 $ 3,000
Bonds Payable 150,000 25,000 25,000
Common Stock 55,000 20,000
Retained Earnings 115,000 37,000
Total $ 345,000 $ 85,000 $ 28,000
Required:
a. Prepare the consolidating entries required to prepare a consolidated balance sheet immediately after the acquisition of Series Company shares. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
b. Record the excess value (differential) reclassification entry.
Answer:
a. Consolidating Journal Entries:
Description Debit Credit
June 10, 20X8:
Cash $5,000
Accounts receivable 10,000
Inventory 25,000
Building & Equipment 70,000
Unrealized Gain on fair value $25,000
Accounts payable 3,000
Bonds payable 25,000
Investment in Series Stock 100,000
Excess Value (differential) 43,000
To record consolidating entries in the consolidated parent.
Goodwill 43,000
Excess Value (differential) 43,000
To record the reclassification of the excess value as Goodwill on acquisition.
Explanation:
a) Summarized balance sheet data
Playoff Corporation Series Company
Item Book Value Fair Value
Cash $ 15,000 $ 5,000 $ 5,000
Accounts Receivable 30,000 10,000 10,000
Inventory 80,000 20,000 25,000
Buildings & Equipment (net) 120,000 50,000 70,000
Investment in Series Stock 100,000
Total $ 345,000 $ 85,000 $ 110,000
Accounts Payable $ 25,000 $ 3,000 $ 3,000
Bonds Payable 150,000 25,000 25,000
Common Stock 55,000 20,000
Retained Earnings 115,000 37,000
Total $ 345,000 $ 85,000 $ 28,000
b) Consolidated entries are made for assets and liabilities acquired of the subsidiary using fair values. An unrealized gain on fair value account is created to account for the differences in fair values. Any excess or differential after consolidation and above the fair values is regarded as Goodwill arising from the acquisition.
If Treasury bills are currently paying 6.5 percent and the inflation rate is 1.3 percent, what is the approximate and the exact real rate of interest
Answer:
the approximate real interest rate = nominal rate - inflation rate = 6.5% - 1.3% = 5.2%
the exact real interest rate is calculated using the following formula:
(1 + nominal interest rate) = (1 + real interest rate) (1 + expected rate of inflation)
(1 + 0.065) = (1 + real interest rate) x (1 + 0.013)
1 + real interest rate = (1 + 0.065) / (1 + 0.013) = 1.065 / 1.013 = 1.05133
real interest rate = 1.05133 - 1 = 0.05133 = 5.13%
Karim Corp. requires a minimum $9,900 cash balance. If necessary, loans are taken to meet this requirement at a cost of 2% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $10,300 and the company has no outstanding loans. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) follow.
July August September
Cash receipts $25,900 $33,900 $41,900
Cash payments 30,850 31,900 33,900
Prepare a cash budget for July, August, and September.
Answer:
Karim Corp.
Cash Budget
For July, August and September
JULY$ AUGUST$ SEPTEMBER$
Beginning cash balance 10,300 9,900 9,900
Cash receipts 25,900 33,900 41,900
Total cash available 36,200 43,800 51,800
Cash payment 30,850 31,900 33,900
Interest on bank loan 0 91 53
Preliminary cash balance 5,350 11,809 17,847
Additional loan(loan repayment) 4,550 -1,909 -2,641
Ending cash balance 9,900 9,900 15,206
Loan Balance
Loan balance - Beginning of month 0 4,550 2,641
Additional loan(loan repayment) 4,550 -1,909 -2,641
Loan balance - End of month 4,550 2,641 0
August Interest on bank loan = 4550 * 2% = $91
September interest on loan = 2641 * 2% = 52.82 = $53
The negotiated ________ agreement outlines the rights of both parties in the negotiating process, including work hours, wages, employee benefits and grievance procedures.
Answer:
labor-management
Explanation:
Labor-management agreement is when the leaders and the employees of a company make an agreement that has the goal of protecting the rights of the parties involved and define aspects like salaries and working conditions of the employees. According to this, the answer is that the negotiated labor-management agreement outlines the rights of both parties in the negotiating process, including work hours, wages, employee benefits and grievance procedures because this agreement between employees and employers establishes the conditions the employees will receive for their services to avoid disputes and protect the rights of the parties.
A pension plan that promises employees a fixed annual pension benefit, based on years of service and compensation, is called a(n)The journal entry a company uses to record accrued vacation privileges for its employees at the end of the year is
Answer:
1. Defined Benefit Plan
2. debit Vacation Pay Expense; credit Vacation Pay Payable
Explanation:
1. With a Defined Benefit Plan, employers promise to pay employees a pension based on factors like years of service and salary. The plan will be sponsored by the employer and will be managed by the company.
2. As the Vacation is an expense, it will need to be debited to an expense account being the Vacation Pay Expense account. It will also be credited to the Vacation Pay Payable to reflect that this is a liability that the company must fulfil.
Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $126,000 and then sells it to Watkins for $180,000. At the end of the year, Watkins still holds only $26,400 of merchandise. What amount of gross profit must Panner defer in reporting this investment using the equity method
Answer:
The gross profit that will be deferred is $2376
Explanation:
The cost of inventory = $126000
Selling price of inventory (revenue) = $180000
The remaining inventory with Watkins = $26400
Gross profit percentage = (revenue – cost) / revenue
Gross profit percentage = (180000 – 126000) / 180000 = 0.3 or 30%
Remaining value = $26400 × 30% = 7920
Ownership = 7920 × 30% = $2376
The gross profit that will be deferred is $2376
Hernandez, Inc. signed a ten-year noncancelable lease for a heavy duty drill press. The lease stipulated annual payments of $300,000 starting at the beginning of the first year, with title passing to Hernandez at the expiration of the lease. Hernandez treated this transaction as a operating lease. The drill press has an estimated useful life of 15 years, with no salvage value. Hernandez uses straight-line amortization for all of its plant assets. Aggregate lease payments were determined to have a present value of $1,800,000, based on implicit interest of 10%. What amount of amortization expense should be recorded for 2021?
Answer: $120,000
Explanation:
Depreciation is to be based on the cost of the asset being depreciated. In this scenario, the cost of the heavy duty drill press will be the Present Value of all the lease payments for the entire 10 years because it is said that the title will pass to Hernandez Inc. afterwards so the lease payments can be considered as payment.
Straight Line Amortisation = [tex]\frac{Cost of Asset - Salvage Value}{Estimated Useful Life}[/tex]
Straight Line Amortisation = [tex]\frac{1,800,000 - 0}{15}[/tex]
Straight Line Amortisation = $120,000 per year
A bond has a $1,000 par value, 20 years to maturity, and pays a coupon of 5.5% per year, annually. The bond is callable in ten years at $1,075. If the bond’s yield to maturity is 5.89% per year, what is its yield to call? Question 13 options: A) 5.87% B) 6.57% C) 6.11% D) 6.43% E) 6.68%
Answer:
6.68% , option E is correct
Explanation:
The price of the bond can be computed using the below formula for bond price calculation:
bond price=face value/(1+r)^n+coupon*(1-(1+r)^-n)/r
face value is $1000
r is the yield to maturity which is 5.89%
coupon=face value*coupon rate=1000*5.5%=55
n is the number of coupons the bond would pay which is 11 coupons over 20 years
bond price=1000/(1+5.89%)^20+55*(1-(1+5.89%)^-20)/5.89%
bond price=$ 954.87
The yield on the call can be determined using excel rate function as further explained below:
=rate(nper,pmt,-pv,fv)
nper is the number of coupons the bond would pay before being called in ten years' time i.e 10 coupons
pmt is the is the amount of annual coupon=$1000*5.5%=$55
pv is the current price of $954.87
fv is the call price which is $1,075
=rate(10,55,-954.87,1075)=6.68%
Hillside issues $2,000,000 of 6%, 15-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $2,447,990.Required:a. Prepare the January 1, 2013, journal entry to record the bonds issuance.b. Prepare the first two years of an amortization table using the straight-line method.c. Prepare the journal entries to record the first two interest payments.
Answer:
a.
Cash $2,447,990 (debit)
Investment in Bonds $2,447,990 (credit)
b.
Amortization Table for the first two years will be :
2013
Capital $22.307
Interest $97.693
Balance $2,425,683
2014
Capital $34,472
Interest $145,528
Balance $2,402,475
c.
First Payment : June 30, 2013
Interest Expense $48,957 (debit)
Investment in Bonds $11,043 (debit)
Cash $60,000 (credit)
Second Payment : December 31, 2013
Interest Expense $48,736 (debit)
Investment in Bonds $11,264 (debit)
Cash $60,000 (credit)
Explanation:
On the day of issuance of the Bonds, the entries will be :
Cash $2,447,990 (debit)
Investment in Bonds $2,447,990 (credit)
Use the data given to prepare an amortization schedule
Hint : First find the YTM as follows :
n = 15 × 2 = 30
FV = - $2,000,000
PV = $2,447,990
PMT = ($2,000,000 × 6%)/2 = $60,000
P/ yr = 2
YTM = ? 3.998
Using a financial calculator, the YTM is 3.998 or 4 %
Amortization Table for the first two years will be :
2013
Capital $22.307
Interest $97.693
Balance $2,425,683
2014
Capital $34,472
Interest $145,528
Balance $2,402,475
Journal Entries for the Payment of Interest :
First Payment : June 30, 2013
Interest Expense $48,957 (debit)
Investment in Bonds $11,043 (debit)
Cash $60,000 (credit)
Second Payment : December 31, 2013
Interest Expense $48,736 (debit)
Investment in Bonds $11,264 (debit)
Cash $60,000 (credit)
Meginnis Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 5.20 Direct labor $ 3.75 Variable manufacturing overhead $ 1.65 Fixed manufacturing overhead $ 2.60 Fixed selling expense $ 0.50 Fixed administrative expense $ 0.40 Sales commissions $ 1.50 Variable administrative expense $ 0.50 If 6,000 units are produced, the total amount of direct manufacturing cost incurred is closest to
Answer:
$53,700
Explanation:
Direct manufacturing cost = (Direct material per unit + Direct labor per unit) * Units produced
=($5.20 + $3.75) * 6,000 units
=$8.95 * 6,000
=$53,700
The total amount of direct manufacturing cost incurred is closest to $53,700
Suppose the price level and value of the U.S. Dollar in year 1 are 1 and $1, respectively. Instructions: Round your answers to 2 decimal places. a. If the price level rises to 1.55 in year 2, what is the new value of the dollar
Answer: $0.65
Explanation:
The Price Level and the value of a currency are inversely related because inflation erodes the value of the currency. Therefore if the price level increases, the value of the currency drops. The reverse is true.
The formula therefore is is;
New Value = [tex]\frac{1}{Price Level}[/tex]
New Value = [tex]\frac{1}{1.55}[/tex]
New Value = 0.6452
New Value = $0.65
On January 1, 20X7, Pisa Company acquired 80 percent of Siena Company by purchasing 40,000 shares of Siena's common stock. There was no differential related to this transaction. The noncontrolling interest had a fair value equal to 20 percent of book value. The book value of Siena on December 31, 20X7 was as follows:
On January 1, 20X8, Pisa purchased an additional 12,500 shares directly from Siena for $25 per share. The elimination entry to prepare the consolidated financial statements on December 31, 20X7 would include one of the following answers:
a. credit to common stock for $625,000
b. debit to retained earnings for $37,500
c. credit to Investment in Siena Co. for $976,500
d. credit to NCI in the net assets of Siena Co. for $232,500
Answer:
a. credit to common stock for $625,000
Explanation:
When a company acquires more than 75% of holding in any company along with significant control then it is known as subsidiary. The company Is then able to record investment in subsidiary as debit balance in its statement of financial position. The cash consideration paid for acquiring the stock is recorded as investment in subsidiary. When the Pisa Company acquired Siena Company it has recorded the investment in Siena but when additional share are purchased Pisa will raise its stock capital.
Lindon Company is the exclusive distributor for an automotive product that sells for $34.00 per unit and has a CM ratio of 30%. The company’s fixed expenses are $193,800 per year. The company plans to sell 21,600 units this year. Required: 1. What are the variable expenses per unit? (Round your "per unit" answer to 2 decimal places.) 2. What is the break-even point in unit sales and in dollar sales? 3. What amount of unit sales and dollar sales is required to attain a target profit of $91,800 per year? 4. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $3.40 per unit. What is the company’s new break-even point in unit sales and in dollar sales? What dollar sales is required to attain a target profit of $91,800?
Answer:
1. $23.80
2. Break even Point (units) = 19,000 units and Break even Point (dollars) = $646,000
3. Unit sales to attain a target profit = 28,000 units and Dollar sales to attain a target profit = $952,000
4. Break even Point (units) = 28,500 units, Break even Point (dollars) = $969,000 and Dollar sales to attain a target profit = $1,428,000.
Explanation:
Variable Cost % = 100% - 30%
= 70%
Thus, variable expenses per unit = $34.00 × 70%
= $23.80
Break even Point is the level of activity where a firm makes neither a profit nor a loss.
Break even Point (units) = Fixed Cost / Contribution per unit
= $193,800 / ($34.00 ×30%)
= $193,800 / $10.20
= 19,000 units
Break even Point (dollars) = Fixed Cost / CM Ratio
= $193,800 / 0.30
= $646,000
Unit sales to attain a target profit = (Fixed Cost + Target Profit) / Contribution per unit
= ($193,800 + $91,800) / $10.20
= 28,000
Dollar sales to attain a target profit = (Fixed Cost + Target Profit) / CM Ratio
= ($193,800 + $91,800) / 0.30
= $952,000
When variable expenses reduce by $3.40 per unit.
Break even Point (units) = Fixed Cost / Contribution per unit
= $193,800 / ($34.00 - $23.80 - $3.40 )
= $193,800 / $6.80
= 28,500 units
Break even Point (dollars) = Fixed Cost / CM Ratio
= $193,800 / ($6.80/ $34.00)
= $969,000
Dollar sales to attain a target profit = (Fixed Cost + Target Profit) / CM Ratio
= ($193,800 + $91,800) / 0.20
= $1,428,000
Economist C says all of the following: Expansionary fiscal policy is needed to raise aggregate demand and remove the economy from a recessionary gap. The choice of fiscal policy measures is between ________________ government spending and a _______________ in taxes. Since I am in favor of bigger government, I choose a(n) _________________ in _________________.
Answer:
The choice of fiscal policy measures is between ___increased_____________ government spending and a ____decrease___________ in taxes. Since I am in favor of bigger government, I choose a(n) ____increase_____________ in ____governmental spending_____________.
Explanation:
Government employ two fiscal measures to drive the economy toward stability. They are taxation and government expenditure. Depending on the desired outcome and the prevailing circumstances, an increase in taxation reduces the propensity to consume, thus fueling increased savings and investments. Increased government expenditure galvanizes the economy to grow and the increased expenditure acts as a stimulus to economic activities. But fiscal policy measures are not used in isolation. They are complemented by monetary policies by the Federal Reserve.
In a duopoly game we observe the following payouts: if the two firms collude they will each earn $50,000. If one firm cheats then he earns $60,000 and the other firm earns -$10,000. If both firms cheat then they each earn zero economic profit. In this game what is the Nash equilibrium?
Answer:
the Nash equilibrium for both players is to collude
Explanation:
A duopoly is when there are two firms operating in an industry.
Game theory looks at the interactions between participants in a competitive game and calculates the best choice for the player.
Dominant strategy is the best option for a player regardless of what the other player is playing.
Nash equilibrium is the best outcome for players where no player has an incentive to change their decisions.
the Nash equilibrium for both players is to collude because it is the best outcome for both players. if, a player cheats, there is a chance that the other player would cheat and both firms would end up earning a zero economic profit
Based on the various payoffs to be made, the Nash Equilibrium for this game would be that both firms should collude.
The Nash Equilibrium is the outcome that would be most beneficial for both firms to stay in. If either of them leave, they would incur losses.
If both firms decide to collude and one cheats, the other firm would cheat as well to avoid making a loss which would lead to both of them making zero economic profit.
Both firms will therefore collude so as to make $50,000 a piece.
In conclusion, the Nash Equilibrium is collusion between the two firms.
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Factory Overhead Rates, Entries, and Account Balance Eclipse Solar Company operates two factories. The company applies factory overhead to jobs on the basis of machine hours in Factory 1 and on the basis of direct labor hours in Factory 2. Estimated factory overhead costs, direct labor hours, and machine hours are as follows: Factory 1 Factory 2 Estimated factory overhead cost for fiscal year beginning August 1 $18,500,000 $44,000,000 Estimated direct labor hours for year 800,000 Estimated machine hours for year 1,250,000 Actual factory overhead costs for August $1,515,800 $3,606,300 Actual direct labor hours for August 64,500 Actual machine hours for August 105,000 a. Determine the factory overhead rate for Factory 1. Round your answer to two decimal places.
Answer:
Predetermined manufacturing overhead rate= $14.8 per machine hour
Explanation:
Giving the following information:
Factory 1
Estimated factory overhead= $18,500,000
Estimated machine hours for year 1,250,000
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 18,500,000/1,250,000
Predetermined manufacturing overhead rate= $14.8 per machine hour
Harmony Company sells handminusknit scarves. Each scarf sells for $ 45. The company pays $ 70 to rent vending space for one day. The variable costs are $ 12 per scarf. How many scarves should the company sell each day in order to break even? (Round your answer up to the nearest whole scarf.)
Answer:
2.12, rounded up to 3
Explanation:
To solve the equation, we first need to set up an equation.
Let x represent the number of scarves. We want one side of the equation to be the amount earned and the other to be the cost
45x is how much they earn since each scarf is $45
70+12x is how much they cost for rent and production
45x=70+12x
Subtract 12x from both sides
33x=70
Divide both sides by 33
x=2.12
It says we should round up so 3 scarves to break even
A machine can be purchased for $140,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied, using a five-year life and a zero salvage value.
Year 1 Year 2 Year 3 Year 4 Year 5
Net income $ 9,500 $ 23,500 $ 64,000 $ 35,500 $ 94,000
Compute the machine’s payback period (ignore taxes). (Round your intermediate calculations to 3 decimal places and round payback period answer to 3 decimal places.)
Year Net Income Depreciation Net Cash Flow Cumulative Cash Flow
0 $ (140,000) $ (140,000)
1 $ 9,500
2 23,500
3 64,000
4 35,500 0
5 94,000 0
Payback period =
Answer:
2.554 years
Explanation:
Payback period calculates the amount of time it takes to recover the amount invested in a project from its cumulative cash flows.
to derive cash flow from net income, add depreciation back
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
$140,000 / 5 = $28,000
depreciation expense each year would be $28,000
cash flow in year 1 = $9500 + $28,000 = $37,500
cash flow in year 2= $23,500 + $28,000 =$51,500
cash flow in year 3 =$64,000 + $28,000 = $92,000
cash flow in year 4 =$35,500 + $28,000 = $63,500
cash flow in year 5 =$94,000 + $28,000 = $122,000
in year 1, the amount recovered = $-140,000 + $37,500 = $-102,500
in year 2, the amount recovered = $-102,500 + $51,500 = $-51,000
in year 3, the amount recovered = $-51,000 + $92,000 = $41,000
the amount invested is recovered in 2 years + 51,000 / 92,000 = 2.554 years