Answer:
Piedmont Company
1. Computation of the Companywide break-even point:
Break-even point = Fixed Cost/Contribution per margin
= $215,000/$27 = 7,963 units
2. Computation of the break-even point in dollar sales for the North region:
Break-even point in dollar sales = Fixed Costs/Contribution margin percentage
= $107,500/30% = $358,333
3. Computation of the break-even point in dollar sales for the South region:
= $107,500/60% = $179,1667
Explanation:
a) Data
Piedmont Company Contribution format segmented income statement as shown:
Total Company North South
Sales $ 675,000 $ 450,000 $ 225,000
Variable expenses 405,000 315,000 90,000
Contribution margin 270,000 135,000 135,000
Traceable fixed expenses 150,000 75,000 75,000
Segment margin 120,000 $ 60,000 $ 60,000
Common fixed expenses 65,000 32,500 32,500
Net operating income $ 55,000 $27,500 $27,500
NB: The common fixed expenses must be shared in some way to calculate the break-even points.
b) Total fixed costs:
Company-wide = $215,000 ($150,000 + 65,000)
North = $107,500 ($75,000 + 32,500)
South = $107,500 ($75,000 + 32,500)
c) We assume that the sales unit of 5,000 each for the two regions. Total units = 10,000
d) Contribution per margin:
Company-wide = $270,000/10,000 = $27
North = $135,000/5,000 = $27
South = $135,000/5,000 = $27
e) Contribution margin percentage:
= Contribution/Sales x 100
Company-wide = $270,000/$675,000 x 100 = 40%
North = $135,000/$450,000 x 100 = 30%
South = $135,000/$225,000 x 100 = 60%
f) The break-even point is the quantity of sales that must be achieved for the fixed costs to be fully covered and no profit or loss is recorded. It is the point at which fixed costs are equal to the contribution. The contribution is the difference between the sales value and the variable costs.
Allowance for Doubtful Accounts has a debit balance of $441 at the end of the year (before adjustment), and Bad Debt Expense is estimated at 3% of sales. If net credit sales are $903,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is a.$26,649 b.$27,531 c.$27,090 d.$441
Answer: $27,090
Explanation:
From the question, we are informed that the allowance for doubtful accounts has a debit balance of $441 at the end of the year (before adjustment), and bad debt expense is estimated at 3% of sales and that the net credit sales are $903,000.
The amount of the adjusting entry to record the estimate of the uncollectible accounts will be 3% of $903,000. This will be:
= 3% × $903,000
= 3/100 × $903,000
= 0.03 × $903,000
= $27,090
The following data are for Paso Robles Company for the year ended 2009 December 31: Costs: Direct material $ 90,000 Direct labor 130,000 Manufacturing overhead: Variable 45,000 Fixed 90,000 Sales commissions (variable) 25,000 Sales salaries (fixed) 20,000 Administrative expenses (fixed) 35,000 Selling price per unit $ 10 Units produced and sold 60,000 Assume direct materials and direct labor are variable costs. Prepare a contribution margin income statement and a traditional income statement.
Answer:
Net operating income= 165,000
Explanation:
Giving the following information:
We need to make a contribution format income statement.
First, we will calculate the total variable cost:
Direct material= 90,000
Direct labor= 130,000
Variable overhead= 45,000
Sales commissions (variable)= 25,000
Total variable cost= 290,000
Contribution margin income statement:
Sales= 60,000*10= 600,000
Total variable cost= (290,000)
Total contribution margin= 310,000
Fixed overhead= (90,000)
Sales salaries (fixed)= (20,000)
Administrative expenses (fixed)= (35,000)
Net operating income= 165,000
The profit leverage effect (ratio) is calculated by A. dividing 1.0 by the profit margin. B. dividing pretax earnings by the cost of goods sold. C. dividing sales by the cost of goods sold. D. none of the above
Answer:
D. none of the above
Explanation:
The profit leverage effect shows that in order to increase net profits, it is better and more efficient to reduce operating expenses rather than increasing total net sales revenue. I.e. a $1 decrease in costs increases operating profits by $1, which is much more than the increase resulting from increasing sales by $1.
At Emmerson Company, one bookkeeper prepares the cash deposits while the other bookkeeper enters the collections in the journal and ledger. Which of the following is the best explanation of this type of internal control principle over cash reciepts?
a. mechanical controls
b. physical controls
c. documentation procedures
d. segregation of duties
Answer:
d. segregation of duties
Explanation:
Segregation of duties defines that when a different number of people doing their duties for the same purpose. For example a person receives an envelope of cheque and another person records in accounting system.
According to the given situation, one person who is bookkeeper prepared cash deposit and another person records the collection of journal and ledger. So, this indicates the segregation of duties
Paulson Company issues 6%, four-year bonds, on January 1 of this year, with a par value of $200,000 and semiannual interest payments.
Semiannual Period-End Unamortized Discount Carrying Value
(0) January 1, issuance $13,466 $ 186,534
(1) June 30, first payment 11,782 188,218
(2) December 31, second payment 10,098 189,902
Answer: Incomplete question.
the complete queston is
Use the above straight-line bond amortization table and prepare journal entries for the following.
(a) The issuance of bonds on December 31, 2020.
b) The first interest payment on June 30, 2021.
(c) The second interest payment on December 31, 2021.
find answer in explanation column.
Explanation:
Semiannual Period-End Unamortized Discount Carrying Value
(0) January 1, issuance $13,466 $ 186,534
(1) June 30, first payment 11,782 188,218
(2) December 31, second payment 10,098 189,902
1. to record issue of bonds payable
Date Account Debit Credit
Dec 31,2020 Cash(carrying value) $ 186,534
Discount on bonds payable $13,466
Bonds payable $200,000
2. To record first interest payment
Date Account Debit Credit
june 30, 2021 Interest expense $7,684
discount on bonds payable $1, 684
Cash $6,000
Calculation =
Cash paid towards interest every semi annual period = $200,000 X 6% X1/2 =$6,000.
interest expense = cash paid + discount on bonds payable written off.
= $6000 + $1, 684 = $7,684
discount on bonds payable = unamortised discount on 31 dec - unamortised discount on 30th june) ($13,466 -11,782 ==$1,684)
3.To record second interest payment on december 31,2021.
Date Account Debit Credit
Dec. 31 ,2021 Interest expense $7,684
discount on bonds payable $1.684
Cash $6,000
Calculation
discount on bonds payable = unamortised discount on 30th june - unamortised discount on 31st december 2021 =11,782-10,098 = $1.684
A $10,000 loan is being paid off by annual payments of $2,000 plus a smaller final payment. If the effective annual rate of interest is 15%, and the first payment is made one year after the time of the loan, find the amount of interest, $X, contained in the fifth payment.
Answer:
fifth payment $2,000
interests paid $1,125.50, principal paid $874.50
principal's balance $6,628.81
Explanation:
first payment $2,000
interests paid $1,500, principal paid $500
principal's balance $9,500
second payment $2,000
interests paid $1,425, principal paid $575
principal's balance $8,925
third payment $2,000
interests paid $1,338.75, principal paid $661.25
principal's balance $8,263.75
fourth payment $2,000
interests paid $1,239.56, principal paid $760.44
principal's balance $7,503.31
fifth payment $2,000
interests paid $1,125.50, principal paid $874.50
principal's balance $6,628.81
Wesimann Co. issued 12-year bonds a year ago at a coupon rate of 7.8 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6.1 percent, what is the current bond price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
Price of bond =1,143.18
Explanation:
The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).
Value of Bond = PV of interest + PV of RV
The value of bond for Wesimann Co can be worked out as follows:
Step 1
PV of interest payments
Semi annul interest payment
= 7.8% × 1000 × 1/2 = 39
Semi-annual yield = 6.1%/2 = 3.05 % per six months
Total period to maturity (in months)
= (2 × 12) = 24 periods (Note it was sold 12 years ago)
PV of interest =
39 × (1- (1+0.0305)^(-24)/) 0.0305 = 656.94
Step 2
PV of Redemption Value
= 1,000 × (1.0305)^(-24) = 486.237
Price of bond
= 656.94 +486.23 = 1,143.179
Price of bond =1,143.18
A July sales forecast projects that 6,000 units are going to be sold at a price of $10.50 per unit. The management forecasts 2% growth in sales each month. Total July sales are anticipated to be:
Answer:
Budgeted sales July= $63,000
Explanation:
Giving the following information:
A July sales forecast projects that 6,000 units are going to be sold at a price of $10.50 per unit.
To calculate the budgeted sales, we simply need to multiply the number of units sold for the selling price:
Budgeted sales July= 6,000*10.5= $63,000
Based on the following information for Builtrite, calculate the current value of its stock if the current dividend is $3.00, a projected super normal growth for three years at 20%, the growth rate after year 3 should remain constant at 9% and you want to earn a 16% annual return. What would you be willing to pay for Builtrite stock?
Answer:
$61.35
Explanation:
The computation of the current value of the stock is shown below:
Current Dividend = D0 = $3.00
Super Normal growth for next 3 years = g1 = 20% or 0.20
Growth Rate after 3 year = g2 = 9% or 0.09
Required rate of Return = r = 16% or 0.16
Now
as we know that
Value of Share (P0) is
= [D1 ÷ (1 + r)] + [D2 ÷ (1 + r)^2] + [D3 ÷ (1 + r)^3] + [P3 ÷ (1 +r )^3]
Where
D1 = Dividend in year 1
D2 = Dividend in year 2
D3 = Dividend in year 3
P3 = Value of share at the end of year 3
Now first we have to compute the P3 value which is
P3 = D4 ÷ (r - g2)
= D0 × (1 + g1)^3 (1 + g2) ÷(r - g2)
= $3.00 × (1 + 0.20)^3 (1 + 0.09) ÷ (0.16-0.09)
= $5.65056
Now
Value of Share (P0) is
= [D1 ÷ (1 + r)] + [D2 ÷ (1 + r)^2] + [D3 ÷ (1 + r)^3] + [P3 ÷ (1 + r)^3]
= [D0 × (1 + g1) ÷ (1 + r)^1] + [D0 × (1 + g1)^2 ÷ (1 + r)^2] + [D0 × (1 + g1)^3 ÷ (1 + r)^3] + [P3 ÷ (1 + r)^3]
= [$3.00 × (1 + 0.20) ÷ (1 + 0.16)^1] + [$3.00 × (1 + 0.20)^2 ÷ (1 + 0.16)^2] + [$3.00 × (1 + 0.20)^3 ÷ (1 + 0.16)^3] + [$5.65056 ÷ (1 + 0.16)^3]
= $3.10 + $3.21 + $ 3.32 + $51.72
= $61.35
A jewelry firm buys semiprecious stones to make bracelets and rings. The supplier quotes a price of $8.90 per stone for quantities of 600 stones or more, $9.30 per stone for orders of 400 to 599 stones, and $9.80 per stone for lesser quantities. The jewelry firm operates 108 days per year. Usage rate is 26 stones per day, and ordering costs are $46.
a. If carrying costs are $2 per year for each stone, find the order quantity that will minimize total annual cost.
b. If annual carrying costs are 20 percent of unit cost, what is the optimal order size?
c. If lead time is 5 working days, at what point should the company reorder?
Answer:
MOST LIKELY it's B
Explanation:
if not I'm really sorry I tried
A company's product sells at $12 per unit and has a $5 per unit variable cost. The company's total fixed costs are $98,000. The contribution margin per unit is:
Answer:
The contribution margin per unit is $7
Explanation:
The contribution margin per unit can be defined as the difference between the selling price per unit and the variable cost per unit.
Contribution margin per unit = Selling price - Variable cost
Contribution margin per unit = $12 - $5
Contribution margin per unit = $7
The contribution margin per unit is $7
Computing and analyzing acid-test and current ratios LO A1
Case X Case Y Case Z
Cash $ 2,000 $ 110 $ 1,000
Short-term investments 50 0 580
Current receivables 350 470 700
Inventory 2,600 2,420 4,230
Prepaid expenses 200 500 900
Total current assets $ 5,200 $ 3,500 $ 7,410
Current liabilities $ 2,000 $ 1,000 $ 3,800
Compute the current ratio and acid-test ratio for each of the above separate cases.
Current Ratio
Choose Numerator: Choose Denominaa Current Ratio
/ = Current ratio
Case X / = to 1
Case Y / = to 1
Case Z / = to 1
Acid-Test Ratio
Choose Numerator: Choose Denominator: Choose cid-Test Ratio
/ = Acid-test ratio
Case X / = to 1
Case Y / = to 1
Case Z / = to 1
Answer:
Current ratio
Case X 2.60
Case Y 3.50
Case Z 1.95
Acid -test ratio
Case X 1.20
Case Y 0.58
Case Z 0.60
Explanation:
Computation of the current ratio and acid-test ratio
CURRENT RATIO
Particulars Choose Numerator / Choose denominator = Current Ratio
Formula Current Assets / Current Liabilities = Current Ratio
Case X $5,200.00 / $2,000.00 = 2.60 to 1
Case Y $3,500.00 / $1,000.00 = 3.50 to 1
Case Z $7,410.00 / $3,800.00 = 1.95 to 1
ACID - TEST RATIO
Particulars Choose Numerator / Choose denominator = Acid Test Ratio
Formula Quick Assets / Current Liabilities = Acid Test Ratio
Case X $2,400.00 / $2,000.00 = 1.20 to 1
Case Y $580.00 / $1,000.00 = 0.58 to 1
Case Z $2,280.00 / $3,800.00 = 0.60 to 1
Note:
Quick Asset
Case X
Cash $ 2,000
Short-term investments 50
Current receivables 350
=$2,400
Case Y
Cash $ 110 $
Short-term investments 0
Current receivables 470
=$580
Case Z
Cash $ 1,000
Short-term investments 580
Current receivables 700
=$2,280
Therefore:
Current ratio will be:
Case X 2.60
Case Y 3.50
Case Z 1.95
Acid -test ratio will be:
Case X 1.20
Case Y 0.58
Case Z 0.60
Students arrive at the Administrative Services Office at an average of one every 15 minutes, and their requests take on average 10 minutes to be processed. The service counter is staffed by only one clerk, Judy Gumshoes, who works eight hours per day. Assume Poisson arrivals and exponential service times.
Required:
a. What percentage of time is Judy idle?
b. How much time, on average, does a student spend waiting in line?
c. How long is the (waiting) line on average?
d. What is the probability that an arriving student (just before entering the Administrative Services Office) will find at least one other student waiting in line?
Managers are important members of the organization. Within an organization, there are managers at four levels: top, middle, first-line, and team leaders.
a. True
b. False
Answer:
The correct answer is the option B: False.
Explanation:
To begin with, the managers are one of the most important parts of the organization due to the fact that they have the task to plan, organize, direct and control the operations of the company. There are at least three levels in which the managers can go and have their work done, like the management area(high), the department areas(middle) and the operations area(low): However, that will depend on the organization and its size due to that an organization can only have managers at one level.
definition of home trade
Answer:
Domestic trade, also known as internal trade or home trade, is the exchange of domestic goods within the boundaries of a country. This may be sub-divided into two categories, wholesale and retail
nterest rates on 2-year Treasury securities are currently 6.0%, while 6-year Treasury securities yield 6.5%. If the pure expectations theory is correct, what does the market believe that 4-year securities will be yielding 2 years from now
Answer:
The market believes that 4-years from now, the 4-year securities will be 6.75%
Explanation:
We proceed as follows using the pure expectations theory .
The theory states that the future rates are exclusively represented by the forward rate.
Mathematically;
(1 + .065)^6 = (1 + .^206)2 * (1 + x)^4
1.4591 = 1.1236 * (1 + x)^4
Divide both sides by 1.1236
1.2986 = (1 + x)^4
Take both sides to the 1/4 power to get rid of the power of 4
1.0675= 1 + x
x = .0675 or 6.75%
Coolibah Holdings is expected to pay dividends of $ 1.00 every six months for the next three years. If the current price of Coolibah stock is $ 21.90, and Coolibah's equity cost of capital is 14%, what price would you expect Coolibah's stock to sell for at the end of three years?
Answer: The price that would be expected for Coolibah's stock to sell for at the end of three years is $28.87
Explanation: It should be noted that to calculate a price that would be expected in Coolibah's stock to sell for at the end of three years can be calculated using financial calculator:
A) Using a financial calculator, PV = -$22.60 , PMT = $1.20, n = 6, I = 18% / 2;
calculate FV = $28.87 .
On July 23 of the current year, Dakota Mining Co. pays $6,110,400 for land estimated to contain 8,040,000 tons of recoverable ore. It installs machinery costing $723,600 that has a 10-year life and no salvage value and is capable of mining the ore deposit in eight years. The machinery is paid for on July 25, seven days before mining operations begin. The company removes and sells 414,250 tons of ore during its first five months of operations ending on December 31. Depreciation of the machinery is in proportion to the mine's depletion as the machinery will be abandoned after the ore is mined.
Required:
Prepare entries to record:
a. the purchase of the land
b. the cost and installation of machinery
c. the first five months' depletion assuming the land has a net salvage value of zero after the ore is mined.
d. the first five months' depreciation on the machinery.
Answer:
a.Purchase of Land
Land $6,110,400 (debit)
Cash $6,110,400 (credit)
b.Machinery Costs
Land $723,600 (debit)
Accounts Payable $723,600 (credit)
c. $314,830
d. $37,282.50
Explanation:
Purchase of Land
Land $6,110,400 (debit)
Cash $6,110,400 (credit)
Machinery Costs
Land $723,600 (debit)
Accounts Payable $723,600 (credit)
Depletion Expense = Cost of Asset / Expected Total Contents in Units × Number of Units taken in the Period.
= $6,110,400 / 8,040,000 tons × 414,250 tons
= $314,830
Depreciation Expense = Cost of Asset / Expected Total Contents in Units × Number of Units taken in the Period.
= $723,600 / 8,040,000 tons × 414,250 tons
= $37,282.50
A 5-year corporate bond yields 7.0%. A 5-year municipal bond (tax exempt bond) of equal risk yields 5.0%. Assume that the state tax rate is zero. At what federal tax rate are you indifferent between the two bonds?
Answer:
The tax rate is approximately(rounded to a whole) 29%
Explanation:
The federal tax that would make an investor indifferent between the 5-year corporate bond and the 5-year municipal bond can be derived by equating the return on the former to the taxable return of the latter as below:
5%=7%*(1-t)
where the t is the unknown tax rate
Note that the return on 5-year corporate bond is taxable while the return on the municipal bond is tax-free
5%=7%*(1-t)
5%/7%=1-t
0.7143 =1-t
t=1-0.7143
t=29%
The Bank of Bramblewood would like to increase its loans to customers, but it is currently mandated by a high reserve rate. As a Federal Reserve member bank, it will borrow additional funds from the Fed and charge its customers an interest rate that is higher than the ________________.
Answer: discount rate
Explanation:
It should be noted that the discount rate is the rate that is charged by the Federal Reserve when any of its member banks borrow money from it.
Therefore, Federal Reserve member bank, the Bank of Bramblewood will borrow additional funds from the Fed and charge its customers an interest rate that is higher than the discount rate.
Bramble Woodcrafters sells $202,300 of receivables to Commercial Factors, Inc. on a with recourse basis. Commercial assesses a finance charge of 5% and retains an amount equal to 4% of accounts receivable. Bramble estimates the fair value of the recourse liability to be $8,710. Prepare the journal entry for Bramble to record the sale.
Answer:
Dr Cash $184,093
Dr Due from Factor $8,092
Dr Loss on Sale of Receivables $18,825
Cr Accounts Receivable $202,300
Cr Recourse Liability $8,710
Explanation:
Preparation of the journal entry for for Bramble to record the sale.
Dr Cash $184,093
$202,300 – [$202,300 * (.05 + .04)]
$202,300-(202,300*0.09)
$202,300-$18,207
=$184,093
Dr Due from Factor $8,092
($202,300 *.04)
Dr Loss on Sale of Receivables $18,825
(184,093+8,092-$211,010)
Cr Accounts Receivable $202,300
Cr Recourse Liability $8,710
(Accounts Receivable $202,300 + Recourse Liability $8,710 =$211,010)
Johnson Industries manufactures a popular interactive stuffed animal for children that requires four computer chips inside each toy. The company pays $ 3 for each computer chip. To help to guard against stockouts of the computer chip, Johnson Industries has a policy that states that the ending inventory of computer chips should be at least 25% of the following month's production needs. The production schedule for the first four months of the year is as follows:
Stuffed animals to be produced
January 6,000
February 4,600
March 4,600
April 4,200
Requirement:
1. Prepare a direct meterials budget for the first quarter that shows both the number of computer chips needed and the dollar amount of the purchases in the budget.
2. Prepare the direct materials budget by first calculating the total quartile needed, than complete the budget.
Answer:
January February March
Budgeted Materials Purchase (units) 28,600 18,400 18,000
Budgeted Materials Purchase $85,800 $55,200 $54,000
Explanation:
Direct materials budget for the first quarter
January February March
Budgeted Production 6,000 4,600 4,600
Budgeted Material 24,000 18,400 18,400
Add Budgeted Closing Inventory 4,600 4,600 4,200
Materials Needed 28,600 23,000 22,600
Less Budgeted Opening Inventory 0 (4,600) (4,600)
Budgeted Materials Purchase 28,600 18,400 18,000
Cost of computer chip $3 $3 $3
Budgeted Materials Purchase $85,800 $55,200 $54,000
Where can Costco improve? Should it offer more products or advertise more? Why or why not?
Answer:
Costco should advertise more.
Explanation:
Costco is following traditional ways to advertise its products. Most of the organizations prefer to spend huge sums of money on advertising its products. Costco should advertise its products and reach out to its customers and potential customers through marketing. It spends no budget on advertising. It only sends targeted emails to its existing customers. This strategy will not enhance its customer portfolio and new customers might not reach out the company.
Answer:
where can Costco improve
xplanation:
_______ is a political strategy for managers to exercise power unobtrusively. Controlling uncertainty Being irreplaceable Generating resources Building alliances Relying on objective information
Answer:
Controlling uncertainty
Explanation:
The beta of an all equity firm is 2.3. If the firm changes its capital structure to 50% debt and 50% equity using 8% debt financing, what will be the equity beta of the levered firm
The beta of an all equity firm is 2.3. If the firm changes its capital structure to 50% debt and 50% equity using 8% debt financing, what will be the equity beta of the levered firm? The beta of debt is 0.2. (Assume no taxes.) Provide your answer with 2 digits after the comma.
Answer:
4.40
Explanation:
Equity beta, is a term in business or economics, which is.oftemr referred to as Levered beta, which measures the risk of a firm in respect to debt and equity in its capital structure to the volatility of the stock market.
Therefore, Formula for equity beta is giving as = βE = equity firm + (debt/equity)(equity firm - beta of debt)
Given that, equity firm = 2.3
Capital structure to debt = 50% = 0.5
Capital structure to equity = 50% = 0.5
Beta of debt = 0.2
βE = 2.3 + (0.5/0.5)(2.3 - 0.2) =
2.3 + (0.5/0.5)(2.3 - 02) =
= 2.3 + (1)(2.1)=
2.3 + 2.1= 4.40
Hence, the final is 4.40
Regina recently landed her dream job at a local clothes outlet. Within a few weeks of working in her new employment, however, Regina began to engage in fraud. Regina committed the fraud by doing the following:
When people returned merchandise, Regina would ring up an amount that was greater than the value of the item that was being returned. Regina would then pocket the extra cash and give the customer the amount due. Regina found this method of fraud very effective because people were, in reality, returning something and inventory and register totals wouldn't be out of balance at the end of the day.
Required:
1. What type of fraud is Regina committing?
2. How could her employer detect this kind of fraud?
Answer:
Fraudulent disbursements,
card statement review
Explanation:
Fraudulent disbursements are very common and occur when an employee misappropriates company funds by making inappropriate payments, fraudulent. They are also called on-book frauds and can only be traced by putting systems that keep these practices in check. The most likely way to have caught the employee in the above case was to review the card statement and review purchases made and to what amount the refund from the company's card was made
Proposal preparation is completed by Select one: a. a large team for a simple project. b. a single person when proposing a multimillion-dollar project. c. a proposal manager regardless of the project size. d. one or more people depending upon the requirements of the proposal.
Answer:
d. one or more people depending upon the requirements of the proposal.
Explanation:
A proposal can be defined as a plan or suggestion which are formally written to present an idea to an individual or organization for consideration.
Proposal preparation is completed by one or more people depending upon the requirements of the proposal.
In order to prepare a good proposal, it is very important to make it as formal as possible. The content of the proposal is strictly based on what the initiators wants to do or achieve, as well as how they wish to achieve.
Hence, a proposal is only prepared with regard to the requirements of the proposal and the number of people involved. Proposals are usually used by project managers or contractors seeking for a contract.
Consider a mutual fund with $200 million in assets at the start of the year and 10 million shares outstanding. The fund invests in a portfolio of stocks that provides dividend income at the end of the year of $2 million. The stocks included in the fund's portfolio increase in price by 8%, but no securities are sold and there are no capital gains distributions. The fund charges 12b-1 fees of 1%, which are deducted from portfolio assets at year-end. a. What is the fund's net asset value at the start and end of the year?
Answer:
At start = $20/share
At end = $21.384
Explanation:
DATA
ASSets at the start = $200m
Outstanding shares = 10m
Dividend income at the end = $2m
Gain in price = 8%
12b-1 fees = 1%
A.
Net assets at the start can be calculated by dividing assets at the start by outstanding shares
Net Assets value at start = Assets at start/Outstanding shares
Net Assets value at start = $200m/10m
Net Assets value at start = $20/share
Net Assets value at the end can be calculated by multiplying gain price with 12b-1 fees
Net assets value at the end = Gain Price x (1-12b-1 fees)
Net Assets value at the end = ($20x$1.08) x (1 - 0.01)
Net Assets value at the end = $21.6 x 0.99
Net Assets value at the end = $21.384
Demron is in serious negotiations to purchase a welding machine that will enable them to perform their own welding. They currently have their welding outsourced at a cost of $1.50 per weld and a fixed cost of $45,000. Their marketing team feels that they can sustain an annual sales volume sufficient to require 35,000 welds. If a fancy new welding rig costs $13,500 what is the maximum variable cost per weld that Demron should be willing to pay in order to bring this process in-house
Answer:
Demron
Outsourcing welding or Purchasing a welding machine for in-house welding:
Cost of outsourcing:
Variable cost = $1.50 x 35,000 = $52,500
Fixed cost 45,000
Total outsourcing costs $97,500
Cost of purchasing a welding machine:
Fixed cost = $13,500
Maximum Variable costs = $84,000
Total in-house cost = $97,500
Maximum variable cost per weld
= $84,000/35,000
= $2.40
Explanation:
This problem of outsourcing welding activities of Demron Company or buying the welding machine to enable in-house welding is like a make or buy decision challenge. The appropriate approach to tackling this challenge is to determine the total costs under each option. The option that yields the greater outcome is chosen. However, for Demron's case, a determination of the maximum variable costs that are acceptable for in-house option to be selected is made. The level required for this determination is the level of costs that makes no difference between outsourcing and in-housing welding.
Classify each of the following as:___________
a) Adding refrigerant to an air conditioning system
b) Fixing damage due to a car accident
c) Installing a new air conditioning system in an old building
d) Paving a new parking lot
e) Exterior and interior painting
f) Overhauling an engine in a large truck
g) Resurfacing a pool in an apartment building
h) New landscaping
Answer:
1. Ordinary maintenance and repairs.
a) Adding refrigerant to an air conditioning system.
b) Fixing damage due to a car accident.
e) Exterior and interior painting.
2. Assets improvements
c) Installing a new air conditioning system in an old building.
d) Paving a new parking lot.
h) New landscaping.
3. Extra ordinary repairs.
f) Overhauling an engine in a large truck.
g) Resurfacing a pool in an apartment building.
Explanation:
Assets improvements: this are improvements carried out on an assets for comfort and ease of use of such assets. Example is the installation of air conditioning unit in an old building.
Ordinary maintenance and repairs: this are maintenance and repairs carried out on machines, equipment and tools to bring them to the required working conditions or standard.
Extraordinary repairs: unlike ordinary maintenance and repairs this requires overhauling or changing of heavy components parts of a machine or equipment.