Answer:
Option d ($20,000 Debit balance) is the appropriate option.
Explanation:
The given values are:
Total overhead costs,
= $400,000
Direct labor costs,
= $2,000,000
Actual overhead incurred,
= $380,000
Actual direct labor costs,
= $1,800,000
Now,
As a % of labor cost, the OH will be:
= [tex]\frac{400000}{2000000}\times 100[/tex]
= [tex]20 \ percent[/tex]
The absorbed overhead will be:
= [tex]1800000\times 20 \ percent[/tex]
= [tex]360,000[/tex]
Then,
The balance in overhead account will be:
= Actual overhead incurred - Absorbed overhead
= [tex]380000 - 360000[/tex]
= [tex]20,000[/tex] ($) (Debit balance)
On January 1, 2016, Rapid Airlines issued $200 million of its 8% bonds for $184 million. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Rapid Airlines records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2016, the fair value of the bonds was $188 million as determined by their market value in the over-the-counter market. Rapid determined that $1,000,000 of the increase in fair value was due to a decline in general interest rates.
Required:
1. Prepare the journal entry to record interest on June 30, 2016 (the first interest payment).
2. Prepare the journal entry to record interest on December 31, 2016 (the second interest payment).
3. Prepare the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2016, balance sheet.
Answer:
1. June 30, 2016
Dr Interest expense $9.2 million
Cr Discount on bonds payable $1.2million
Cr Cash $8 million
2. December 31, 2016
Dr Interest payment $9.26 million
Cr Discount on bonds payable $1.26million
Cr Cash $8 million
3. December 31, 2016
Dr Unrealized holding loss NI $1,000,000
Dr Unrealized holding loss OCI $5.46
Cr Fair value adjustment $6.46 million
Explanation:
1. Preparation of the journal entry to record interest on June 30, 2016
June 30, 2016
Dr Interest expense $9.2 million
( $184 million*10%2)
Cr Discount on bonds payable $1.2million
($9.2 million-$8 million)
Cr Cash $8 million
($200 million *8% /2)
(Being to record first interest payment)
2. Preparation of the journal entry to record interest on December 31, 2016
December 31, 2016
Dr Interest payment $9.26 million
( $184 million+$1.2million*10%2)
Cr Discount on bonds payable $1.26million
($9.26 million-$8 million)
Cr Cash $8 million
($200 million *8% /2)
(Being to record second interest payment)
3. Preparation of the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2016, balance sheet.
Dr Unrealized holding loss NI $1,000,000
Dr Unrealized holding loss OCI $5.46
($6.46 million-$1,000,000)
Cr Fair value adjustment $6.46 million
($188 million-$184 million+$1.2million+$1.26million)
(Being tl adjust the bonds to fair value)
define liquidity risk.
Explanation:
Liquidity risk occurs when an individual investor, business, or financial institution cannot meet its short-term debt obligations.
The following transactions were completed by the company. The company completed consulting work for a client and immediately collected $6,700 cash earned. The company completed commission work for a client and sent a bill for $5,200 to be received within 30 days. The company paid an assistant $2,000 cash as wages for the period. The company collected $2,600 cash as a partial payment for the amount owed by the client in transaction b. The company paid $940 cash for this period's cleaning services. Required: Enter the impact of each transaction on individual items of the accounting equation. (Enter decreases to account balances with a minus sign.)
Answer:
The impact of each transaction on individual items of the accounting equation is as follows:
1. Cash $6,700 Consulting Revenue $6,700:
Assets (Cash +$6,700) = Liabilities + Equity (Retained Earnings $6,700)
2. Accounts Receivable $5,200 Commission Revenue $5,200:
Assets (Accounts Receivable +$5,200) = Liabilities + Equity (Retained Earnings $5,200)
3. Wages Expense $2,000 Cash $2,000:
Assets (Cash -$2,000) = Liabilities + Equity (Retained Earnings -$2,000)
4. Cash $2,600 Accounts Receivable $2,600:
Assets (Cash +$2,600 Accounts Receivable -$2,600) = Liabilities + Equity
5. Cleaning Expense $940 Cash $940:
Assets (Cash -$940) = Liabilities + Equity (Retained Earnings -$940)
Explanation:
a) Data and Calculations:
Accounts affected by each transaction:
1. Cash $6,700 Consulting Revenue $6,700
2. Accounts Receivable $5,200 Commission Revenue $5,200
3. Wages Expense $2,000 Cash $2,000
4. Cash $2,600 Accounts Receivable $2,600
5. Cleaning Expense $940 Cash $940
b) The accounting equation is Assets = Liabilities + Equity. It is the basis of accounting, debit and credit sides of accounts or the double-entry system of accounting. It is always in balance with each business transaction when they are properly recorded in the journals and correctly posted to the general ledger.
Luebke Inc. has provided the following data for the month of November. The balance in the Finished Goods inventory account at the beginning of the month was $62,000 and at the end of the month was $31,000. The cost of goods manufactured for the month was $217,000. The actual manufacturing overhead cost incurred was $58,000 and the manufacturing overhead cost applied to Work in Process was $62,000. The company closes out any underapplied or overapplied manufacturing overhead to cost of goods sold. The adjusted cost of goods sold that would appear on the income statement for November is:____.
a. $255,700.
b. $182,400.
c. $260,600.
d. $221,500.
What conditions make a market perfectly competitive? A market is perfectly competitive if A. it has many buyers and one firm, which produces a product with no close substitutes, with barriers to new firms entering the market. B. it has many buyers and a few sellers, all of whom are selling differentiated products, with no barriers to new firms entering the market. C. it has many buyers and a few sellers, all of whom are selling identical products, with barriers to new firms entering the market. D. it has many buyers and many sellers, all of whom are selling identical products, with no barriers to new firms entering the market. E. it has many buyers and many sellers, all of whom are selling differentiated products, with no barriers to new firms entering the market.
Answer:
E. It has many buyers and many sellers , all of whom are selling differentiated products , with no barriers to new firms entering the market.
Explanation:
A perfect market is a market where there are large number of buyers such that all participants are price takers hence cannot influence the price of commodities sold in such market.
In a perfect market, there are no barriers to entry and exit. This also means that new firms can enter the market. Here, the buyers are free to buy from any person and the sellers are free to sell to anyone. Differentiated products are also sold there.
Madeline is a research assistant for her favorite biology professor, Dr. Ogechi. Dr. Ogechi is interested in studying the effects of aquarium temperature on the number of offspring produced by a certain species of fish.
Madeline knows from her economics class that to isolate the effects of a particular phenomenon, all other things must remain the same. In Latin, this is referred to as____.
a. pluribus unum.
b. dum versaste, nox fit.
c. onay oremay atinlay.
d. ceteris paribus.
In order to keep all other things the same and isolate the effects of one particular variable in the physics experiment, Madeline will want to do which of the following?
A. Hold constant the material used for the body of the car.
B. Make sure the incline is the same angle for each trial.
C. Clean up after her experiment carefully.
Answer:
D
B
Explanation:
ceteris paribus is a Latin phrase that means all other things being equal. It means that other variables are unchanged.
For example, according to the law of demand, all other things being equal, the higher the price, the lower the quantity demanded and the lower the price, the higher the quantity demanded.
For this law to hold, it is assumed that consumers tastes do not change or income do not change. If the income of a consumer changes and prices increases, the consumer would be able to buy more of a good at the higher price.
In order to isolate the effects of one particular variable in the physics experiment, she has to make sure the incline is the same angle for each trial. If the incline is different, it might affect the results of the experiment
Suppose the current price of a good is $167. At this price, the quantity supplied is 170 units, and the quantity demanded is 120 units. For every $1 decrease in price, the quantity supplied decreases by 10 units and the quantity demanded increases by 15 units. At the current price, the quantity demanded is than the quantity supplied. This means that the market is currently experiencing a . In order to adjust, the market price will until the quantity demanded and quantity supplied are equal. The result is an equilibrium quantity of and an equilibrium price of $ .
Answer:
is less than
surplus
fall
$165
150
Explanation:
Wjen demand exceeds supply, there is surplus
This is because price is greater than equilibrium price. Price would fall until equilibrium is restored
A non-current asset was depreciated at the end of the first year of ownership using the straight-line method based on the following information. Cost $20 000 Working life 4 years Residual value $4000 It was then found that the reducing balance method at 30% per annum should have been used. What was the effect on the profit for the year of correcting this error?
A Decrease by $2000
B Increase by $2000
C Decrease by $6000
D Increase by $6000
Answer:
Correcting the error, the residual value of the product would increase by $802.
Explanation:
Since a non-current asset was depreciated at the end of the first year of ownership using the straight-line method based on the following information: Cost $ 20,000 Working life 4 years Residual value $ 4000; and it was then found that the reducing balance method at 30% per annum should have been used, to determine what was the effect on the profit for the year of correcting this error the following calculation should be performed:
100 - 30 = 70
Year 0: 20,000
Year 1: 20,000 x 0.7 = 14,000
Year 2: 14,000 x 0.7 = 9,800
Year 3: 9,800 x 0.7 = 6,860
Year 4: 6,860 x 0.7 = 4,802
Thus, correcting this error, the residual value of the product would increase by $ 802.
Lucas Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: Units in beginning work in process inventory 900 Materials costs $ 9,600 Conversion costs $ 7,700 Percent complete with respect to materials 60 % Percent complete with respect to conversion 45 % Units started into production during the month 8,100 Units transferred to the next department during the month 6,900 Materials costs added during the month $ 115,800 Conversion costs added during the month $ 120,500 Ending work in process inventory: Units in ending work in process inventory 2,100 Percent complete with respect to materials 75 % Percent complete with respect to conversion 20 % The cost per equivalent unit for conversion costs for the first department for the month is closest to:
Answer:
$17.51
Explanation:
Note that Lucas Corporation uses the weighted-average method
Equivalent units
Conversion costs = 6,900 x 100 % + 2,100 x 20 %
= 7,320
Total Cost
Conversion costs = $ 7,700 + $ 120,500
= $128,200
Cost per equivalent unit
Cost per equivalent unit = $128,200 / 7,320 = $17.51
Conclusion
The cost per equivalent unit for conversion costs for the first department for the month is closest to $17.51.
Keyser Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $133 Units in beginning inventory 950 Units produced 8,850 Units sold 8,950 Units in ending inventory 850 Variable costs per unit: Direct materials $ 29 Direct labor $ 46 Variable manufacturing overhead $ 10 Variable selling and administrative expense $ 20 Fixed costs: Fixed manufacturing overhead $ 70,800 Fixed selling and administrative expense $164,200 The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. What is the net operating income for the month under absorption costing
Answer:
$93
Explanation:
Product cost under absorption costing = all manufacturing overheads
= $93
This is the Cost per unit manufactured
Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $6,700 cash and $33,700 of photography equipment in the company in exchange for common stock. 2 The company paid $2,300 cash for an insurance policy covering the next 24 months. 5 The company purchased office supplies for $900 cash. 20 The company received $3,531 cash in photography fees earned. 31 The company paid $695 cash for August utilities. Required: 1. Post the transactions to the T-accounts. 2. Use the amounts from the T-accounts in Requirement (1) to prepare an August 31 trial balance for Pose-for-Pics.
Answer:
1. See the attached excel file for the T-accounts.
2. Total of credit side = Total of debit side = $43,931
Explanation:
1. Post the transactions to the T-accounts.
Note: See the attached excel file for the T-accounts.
2. Use the amounts from the T-accounts in Requirement (1) to prepare an August 31 trial balance for Pose-for-Pics.
The trial balance will look as follows:
Pose-for-Pics
Trial balance
For August, 31
Details Debit ($) Credit ($)
Cash 6,336
Equipment 33,700
Common stock 40,400
Prepaid Insurance 2,204
Insurance Expenses 96
Office Supplies 900
Photography fees 3,531
Utilities Expense 695
Total 43,931 43,931
Winston Company estimates that the factory overhead for the following year will be $478,800. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 26,600 hours. The total machine hours for the year were 54,000 hours. The actual factory overhead for the year was $986,000. Enter the amount as a positive number.
Answer:
Results are below.
Explanation:
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= 478,800 / 26,600
Predetermined manufacturing overhead rate= $18 per machine hour
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 18*54,000
Allocated MOH= $972,000
Finally, the over/under allocation:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 986,000 - 972,000
Underallocated overhead= $14,000
XYZ Corporation is contemplating the replacement of an existing asset used in the operation of its business. The original cost of this asset was $28,000; since date of acquisition, the company has taken a total of $20,000 of depreciation expense on this asset. The current disposal (market) value of this asset is estimated as $18,000. XYZ is subject to a combined income tax rate, t, of 34%. What is the projected after-tax cash flow associated with the sale of the existing asset, rounded to nearest hundred dollars
Answer:
The projected after-tax cash flow associated with the sale of the existing asset is $14,600.
Explanation:
The projected after-tax cash flow can be calculated as follows:
Net book value of the asset = Original cost - Accumulated depreciation expense = $28,000 - $20,000 = $8,000
Capital gains = Estimated current disposal (market) value of the asset - Net book value of the asset = $18,000 - $8,000 = $10,000
Capital gains tax = Capital gains * Tax rate = $10,000 * 34% = $3,400
Projected after-tax cash flow = Estimated current disposal (market) value of the asset - Capital gains tax = $18,000 - $3,400 = $14,600
Therefore, the projected after-tax cash flow associated with the sale of the existing asset is $14,600.
26223-CZ company a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The 26223-CZ company based its predetermined overhead rate for the current year on the following data: Total machine-hours 50,000 Total fixed manufacturing overhead cost $ 400,000 Variable manufacturing overhead per machine-hour $ 6 Recently, Job D284 was completed with the following characteristics: Number of units in the job 40 Total machine-hours 100 Direct materials $ 750 Direct labor cost $ 2,750 If the company marks up its unit product costs by 60% then the selling price for a unit in Job D284 is closest to: (Round your intermediate calculations to 2 decimal places.)
Answer:
$4,900
Explanation:
Total variable overhead estimated
= $6 × 50,000
= $300,000
Therefore,
Total overhead estimated = Total variable overhead estimated + Total fixed overhead estimated
= $300,000 + $400,000
= $700,000
Predetermined overhead rate
= $700,000/50,000
= $14 per machine hour
Total overhead applied
= $14 × 100
= $1,400
Therefore,
Total job cost = Direct material + direct labor + total overhead
= $750 + $2,750 + $1,400
= $4,900
a) Why is ethical relativism considered to be self-contradictory?
b) Explain conceptual muddles with an example.
Answer:
El relativismo no puede ser contradictorio porque no afirma ni niega nada. La expresión de una actitud moral consiste en valorar la diversidad.
Explanation:
El relativismo no puede ser contradictorio porque no afirma ni niega nada. La expresión de una actitud moral consiste en valorar la diversidad.
express 75 kobo as a decimal of 1 naira 50 kobo
Bakery A sells bread for $2 per loaf that costs $0.50 per loaf to make. Bakery A gives an 80% discount for its bread at the end of the day. Demand for the bread is normally distributed with a mean of 300 and a standard deviation of 30. What order quantity maximizes expected profit for Bakery A
Answer:
324
Explanation:
Calculation to determine What order quantity maximizes expected profit for Bakery A
First step is for the Salvage value
Salvage value = $2 × (1 - 80%)
Salvage value= $0.40
Second step is to calculate the Overage cost
Overage cost = $0.50 - $0.40
Overage cost = $0.10
Second step is to calculate the Underage cost
Underage cost = $2 - $0.50
Underage cost = $1.50
Third step is to calculate the The critical ratio
The critical ratio = 1.5/(1.5 + 0.4) = 0.79. z = 0.8
Now let calculate the Order quantity
Order quantity = 300 + (0.8× 30)
Order quantity= 324
Therefore the order quantity maximizes expected profit for Bakery A is 324
Crowl Corporation is investigating automating a process by purchasing a machine for $972,000 that would have a 9 year useful life and no salvage value. By automating the process, the company would save $132,000 per year in cash operating costs. The new machine would replace some old equipment that would be sold for scrap now, yielding $21,000. The annual depreciation on the new machine would be $108,000. The simple rate of return on the investment is closest to (Ignore income taxes.): (Hint: Give answer in decimal format. For example, if an answer is 10%, use the format 0.10 not 10%.)
Answer:
2.5%
Explanation:
Calculation to determine what The simple rate of return on the investment is closest to
First step is to calculate the Annual incremental net operating income
Annual incremental net operating income=$132,000-$108,000
Annual incremental net operating income=$24,000
Second step is to calculate the Initial investment
Initial investment =$972,000-$21,000
Initial investment=$951,000
Now let calculate the Simple rate of return using this formula
Simple rate of return = Annual incremental net operating income ÷ Initial investment
Let plug in the formula
Simple rate of return= $24,000 ÷ $951,000
Simple rate of return=0.025*100
Simple rate of return= 2.5%
Therefore The simple rate of return on the investment is closest to 2.5%
define private equity funds economics.
Answer:
Private equity is an alternative investment class and consists of capital that is not listed on a public exchange. Private equity is composed of funds and investors that directly invest in private companies, or that engage in buyouts of public companies, resulting in the delisting of public equity.
The Skulls, a student social organization, has two different locations under consideration for constructing a new chapter house. The Skulls' president, a POM student, estimates that due to differing land costs, utility rates, etc., both fixed and variable costs would be different for each of the proposed sites, as follows LocationAnnual FixedVariableAlpha Ave.$5,000 $200per personBeta Blvd.$8,000 $150per person If it is estimated that 30 persons will be living in this new chapter house, which location should the Skulls select
Answer:
The Skulls
The location that Skulls should select is:
Alpha Avenue.
Explanation:
a) Data and Calculations:
Estimated number of persons living in this new chapter house = 30
Fixed Variable Total Cost
Alpha Ave. $5,000 $200 per person $11,000
Beta Blvd. $8,000 $150 per person $12,500
b) The location that Skulls should select must minimize the total cost. The location which meets this criterion is Alpha Avenue, with a total cost of $11,000. This is purely because of the number of persons living in the chapter house. Assuming that this number would increase, then it may be considered economically better to choose the Beta Boulevard instead of the Alpha Avenue.
Question 5 of 10
When should a writer establish common ground before the bottom-line
statement?
A. When the report does not have an executive summary
O B. When the document is minutes of a meeting
Ο Ο Ο Ο
C. When the reader may disagree with the bottom-line statement
O D. When the details are arranged in order of importance
SUBMIT
Answer:
C. When the reader may disagree with the bottom-line statement
Explanation:
A common ground can be regarded as an area of shared interests which is been held number of people or groups. It is a point at which opinions and interest is been agreed upon by parties. A bottom-line statement can be regarded as a likely closing statement made after an agreement has been reached, it's just like a conclusion after the whole statement. Hence, it is necessary for the writer to establish a common ground first before he/she will establish bottom line statement "when the reader may disagree with the bottom-line statement''
How are wages for a particular job determined?
by the federal Wage and Hour Department
by the amount of inflation in the economy
by the equilibrium between supply and demand for workers
by advertisements in the newspaper or online
Answer:
by the equilibrium between supply and demand for workers
Explanation:
Wages are the amount to pay workers for a particular job when employed. Therefore, determining the wages for a particular job is mostly dependent "on the equilibrium between supply and demand for workers, " and sometimes location.
This is because the higher the number of workers available, the lesser the employers would be willing to increase the wage level of employees given the fact that they can easily find another employee. However, where there is a lesser number of employees for a particular job, the employers would be willing to increase the employees' wages to entice them.
According to the labor market equilibrium, The wages for a particular job are determined by the equilibrium between supply and demand for workers. Thus, the correct answer is option (c).
The term "labor market," sometimes referred to as the "job market," describes the supply and demand for labor, with employers meeting the demand and employees meeting the supply.
The supply and demand of labor, which are met by employees and employers respectively, are referred to as the labor market.Both macroeconomic and microeconomic perspectives on the labor market are important because they provide useful information on employment and the state of the economy as a whole.Two crucial macroeconomic indicators are labor productivity rates and unemployment rates.Therefore, The wages for a particular job are determined by the equilibrium between supply and demand for workers. Thus, the correct answer is option (c).
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Institute Technologies is choosing new cost drivers for its accounting system. One driver is labor hours, the other is a combination of machine hours for unit variable costs and number of setups for a pool of batch-level costs. Data for the past year follow.
Budget
Labor hours 200,000
Machine hours 360,000
Number of setups 3,000
Unit variable cost pool $1,600,000
Batch-level cost pool $ 900,000
Actual
200,000
450,000
3,300
$2,000,000
$ 990,000
Assume that the two separate pools are used for Institute. The flexible budget dollar amounts for the actual level of machine hours and actual number of setups are: __________.
Unit Variable Cost Pool Batch-Level Cost Pool
a) $1,600,000 $900,000
b) $1,600,000 $990,000
c) $2,000,000 $900,000
d) $2,000,000 $990,000
e) $2,500,000 $ 0
Answer:
d) $2,000,000 $990,000
Explanation:
The computation is shown below:
Unit variable cost pool is
= Budgeted cost ÷ Budgeted machine hours
= $1,600,000 ÷ 360,000
=$ 4.444 per machine hour
And,
Batch-level cost pool = Budgeted cost ÷ Budgeted number of setups
= $900,000 ÷ 3000
= $ 300 per setup
Now
Unit variable cost pool is
= Actual machine hours × Activity rate
= 450000 × 4.44
= $2,000,000
And, Batch-level cost pool is
= Actual number of setups × Activity rate
= 3300 × 300
=$990,000
Suppose that the U.S. government decides to charge wine consumers a tax. Before the tax, 35 billion bottles of wine were sold every year at a price of $7 per bottle. After the tax, 29 billion bottles of wine are sold every year; consumers pay $8 per bottle (including the tax), and producers receive $4 per bottle. The amount of the tax on a bottle of wine is $1 per bottle. Of this amount, the burden that falls on consumers is $ per bottle, and the burden that falls on producers is $ per bottle. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on producers.
Answer:
1. The amount of tax on a bottle of wine is $4.
2. The tax burden on consumers is $1.
3. The tax burden on producers is $3.
4. The effect on the tax on the quantity sold would have been smaller if the tax had been levied on producers.
False.
Explanation:
a) Data and Calculations:
Before the tax, the number of bottles of wine sold every year at $7 per bottle = 35 billion bottles
After the tax, the number of bottles of wine sold every year at $8 per bottle = 29 billion bottles
Therefore, there is a reduction of 6 billion bottles as a result of the increased price of $1 per bottle (from $7 to $8).
The price received by producers = $4 per bottle
Therefore, there is a total tax of $4 ($8 - $4)
Consumers bear $1 ($8 - $7)
Producers bear $3 ($7 - $4)
The effect of the tax would have still increased the price to $8 or more. Thus, if the tax had been levied on producers, the quantity of bottles sold would have reduced drastically.
you recently increased you're spending on marketing by 10%. you now spend 5500 per month. revenue increase by 1000 per month and you're gross margin percentage is 70%. All other expenses stayed consant. Did the increase pay off?
Answer:
Answer is yes
Explanation:
ou are planning to save for retirement over the next 30 years. To do this, you will invest $890 per month in a stock account and $490 per month in a bond account. The return of the stock account is expected to be 10.9 percent, and the bond account will pay 6.9 percent. When you retire, you will combine your money into an account with a return of 7.9 percent. How much can you withdraw each month from your account assuming a 25-year withdrawal period
Answer:
Monthly withdraw= $23,294.99
Explanation:
Giving the following information:
Stock:
Monthly deposit= $890
Number of periods= 30*12= 360
Interest rate= 0.109 / 12= 0.0091
Bond:
Monthly deposit= $490
Number of periods= 30*12= 360
Interest rate= 0.069 / 12= 0.00575
First, we need to calculate the amount of money collected at the moment of retirement. We need to use the following formula on each investment:
FV= {A*[(1+i)^n-1]}/i
A= monthly deposit
Stock:
FV= {890*[(1.0091^360) - 1]} / 0.0091
FV= $2,452,918.1
Bond:
FV= {490*[(1.00575^360) - 1]} / 0.00575
FV= $586,123.47
Total FV= 2,452,918.1 + 586,123.47
Total FV= $3,039,041.57
Now, the monthly withdrawal for 25 years:
Number of periods= 25*12= 300
Interest rate= 0.079 / 12= 0.0066
Monthly withdraw= (FV*i) / [1 - (1+i)^(-n)]
Monthly withdraw= (3,039,041.57*0.0066) / [1 - (1.0066^-300)]
Monthly withdraw= $23,294.99
On December 31, 2017, Extreme Fitness has adjusted balances of $980,000 in Accounts Receivable and $91,000 in Allowance for Doubtful Accounts. On January 2, 2018, the company learns that certain customer accounts are not collectible, so management authorizes a write-off of these accounts totaling $28,000. What amount would the company report as its net accounts receivable on December 31, 2017
Answer:
Account receivable = $889,000
Explanation:
The company would record as net receivables, the total amount on accounts receivable less total amount on the allowance for uncollectible account.
The above means that the balance would represent the amount of credit that has gone bad hence the value represent balance on net receivable account.
Therefore,
Accounts receivable
= Adjusted balance in accounts receivable - Allowance for doubtful account
= $980,000 - $91,000
= $889,000
There are only two consumers in a market, Harry and Hermione. Harry is willing to buy 12 magic wands when the price is $20 per wand and 8 magic wands when the price is $30 per wand. Hermione is willing to buy 15 magic wands when the price is $20 per wand and 10 magic wands when the price is $30 per wand. Given that these are the only two individuals in the market, what is the market demand for wands when the price of wands is $30
Answer:
The answer is 14
Explanation:
Market demand is the certain product need that is required by the consumers at a specific price. The market demand, when the price of the wand is $30, is 18.
What is market demand?Market demand is a specific number of services or products that customers or the consumer purchase at a fixed specific value in the market.
As in the above case in the market, only two consumers are present and the formula for the market demand is given by adding the demands all together sold at the specific price.
At the price, $30, Harry is willing to buy 8 magic wands and Hermione is willing to buy 10 magic wands. Form this the two demands can be added as there are only two consumers, resulting in the market demand being 18.
Therefore, the market demand at $30 is 18.
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A company begins a review of ordering policies for its continuous review system by checking the current policies for a sample of SKUs. Following are the characteristics of one item:
Demand (D) = 72 units/week (Assume 48 weeks per year)
Ordering and setup cost (S) = $55 /order
Holding cost (H) = $18 /unit/year
Lead time (L) = 3 week(s)
Standard deviation of weekly demand = 18 units
Cycle-service level = 90 percent
EOQ = 145 units
Under the same information as above, develop the best policies for a periodic review system.
1. The value of P that gives the same approximate number of orders per year as the EOQ is weeks (Hint: please round your answer to the nearest positive integer number).
2. The target inventory level that provides an 88 percent cycle-service level is units (Hint: please round your answer to the nearest positive integer number).
Answer:
Explanation:
Given that:
weekly demand = 72 units
no of weeks in 1 year = 48
Then; total demand = 72 × 48 = 3456 units
No of orders = [tex]\dfrac{\text{total demand }}{EOQ}[/tex]
= [tex]\dfrac{\text{3456}}{145}[/tex]
∴
The periodic review (P) = [tex]\dfrac{1}{no \ of \ orders}[/tex]
= [tex]\dfrac{1}{\dfrac{3456}{145}}[/tex]
[tex]= \dfrac{145}{3456}[/tex]
= 0.041956 year
≅ 2 weeks
Z score based on 88 percent service level = NORMSINV(0.88) = 1.18
Here;
Lead time = 3 wks
P = 2 weeks
Thus protection interval = ( 3+2) weeks
= 5 weeks
Safety stock = z-score × std dev. of demand at (P+L) days
std dev = [tex]\sqrt{5 } \times 18[/tex] = 2.236 × 18
std dev = 40.248 units
Safety stock = 1.18 × 40.248
safety stock = 47.49 units
Safety stock ≅ 48 units
Average demand during(P + L) = 5 × 72 units
= 360 units
Target inventory level = average demand + safety stock
= 360 units + 48 units
= 408 units
A corporation can earn 7.5% if it invests in municipal bonds. The corporation can also earn 8.5% (before-tax) by investing in preferred stock. Assume that the two investments have equal risk. What is the break-even corporate tax rate that makes the corporation indifferent between the two investments
Answer:
39.22%
Explanation:
Calculation for the break-even corporate tax rate
Using this formula
Municipal yield = After-tax preferred yield
7.50% = BT preference return ´ [1 - (1 - Dividend exclusion %)(T)]
Let plug in the formula
7.50% = 8.50% ´ [1 - 30.00% ´ (T)]
88.24% = [1 - 30.00% ´ (T)]
Tax rate (T) = 39.22%
Therefore the break-even corporate tax rate that makes the corporation indifferent between the two investments is 39.22%